<PAGE>   1
                                                                    EXHIBIT 10.1

                              AMENDED AND RESTATED
                              EMPLOYMENT AGREEMENT

        This Amended and Restated Employment Agreement ("Agreement") is entered
into effective January 7, 1998 by and between REMEDYTEMP, INC., a California
corporation (the "Company"), and Robert E. McDonough, Sr., an individual person
("McDonough"), (collectively referred to herein as the "Parties").

        WHEREAS, an Employment Agreement was entered into effective December 5,
1994 by and between the Company and McDonough and subsequently was amended
effective May 1, 1996 (the "Original Agreement");

        WHEREAS, this Agreement has been prepared to amend the Original
Agreement pursuant to the approval, direction and authorization of the
Leadership Development and Compensation Committee of the Board of Directors of
the Company (the "Compensation Committee");

        WHEREAS, McDonough has served as Chairman of the Board of the Company
("Chairman") since its inception and Chief Executive Officer from its inception
until May 2, 1994; and

        WHEREAS, the Company desires to maintain the benefits of having
McDonough continue to serve as Chairman and McDonough desires to continue to
serve as Chairman.

        NOW, THEREFORE, in consideration of the foregoing promises and mutual
covenants, the Parties hereby amend and restate the Original Agreement and agree
to the following terms and conditions under which McDonough will serve as
Chairman:

        1. EMPLOYMENT SERVICES AND DUTIES

        The Company agrees to employ and retain the services of McDonough as
Chairman, and McDonough hereby agrees to continue employment with the Company as
its Chairman, for the term of this Agreement. McDonough agrees to perform his
duties as Chairman of the Board faithfully, to the best of his ability and in
the best interests of the Company, and to preserve and protect the confidential
information of the Company, and to perform both his regular duties and strategic
projects as requested by the Board of Directors.

        2. TERM OF EMPLOYMENT

        The Company agrees to employ McDonough, and McDonough agrees to serve,
as Chairman for the period commencing May 1, 1996 and ending on December 4, 2001
(the "Employment Period").

        3. COMPENSATION TERMS

        The Company agrees to compensate McDonough for his services rendered as
Chairman under this Agreement as follows:

                (a) McDonough shall receive a base salary set annually by the
Compensation Committee; provided, however, that such annual base salary shall
not be less than $390,000 per year.


<PAGE>   2

                (b) McDonough shall receive an annual performance bonus in an
amount to be determined by the Compensation Committee based on McDonough's
satisfaction of certain performance goals set annually by the Compensation
Committee. The amount of McDonough's annual performance bonus shall be no less
than $160,000 and no more than 100% of his base salary in any particular year,
provided, however, that during the term of that certain Employment Agreement
dated effective May 1, 1996, between the Company and Paul W. Mikos as Chief
Executive Officer of the Company, McDonough's bonus shall be determined on the
same basis and in the same amount as that of the Chief Executive Officer.

                (c) McDonough shall be entitled to and shall receive any and all
other benefits generally available to executive employees of the Company,
including participation in health insurance programs and retirement plans.

                (d) The Company shall pay any and all of McDonough's existing
life insurance premium payments as well as any additional life insurance premium
payments that McDonough shall deem reasonably appropriate. In the event that
McDonough is no longer Chairman or employed by the Company in any other
capacity, the Company shall continue to pay such premiums as required under each
and every life insurance policy. Notwithstanding the above, the total sum of
annual life insurance premium payments made by the Company for McDonough shall
not exceed $75,000 per year.

                (e) The Company shall indemnify McDonough in accordance with the
terms and conditions of its then current indemnification agreements with
directors of the Company.

                (f) In the event that McDonough becomes disabled and is unable
to perform his duties as Chairman of the Board, he shall continue to receive as
disability income the amount of his base salary under Section 3(a), but the
Board of Directors may elect another person to serve as Chairman of the Board
during the period of McDonough's disability.

        4. REGISTRATION RIGHTS

        The Company shall grant McDonough certain defined registration rights
for the stock of the Company owned by McDonough, individually or in a fiduciary
capacity, as set forth in that certain Registration Rights Agreement attached
hereto as Exhibit A.

        5. SEVERABILITY

        The provisions of this Agreement are severable. If a court of competent
jurisdiction determines that any one or more provisions of this Agreement is
invalid, void or unenforceable, in whole or in part, it will be severed
therefrom. The remaining provisions of this Agreement shall then continue in
full force without being impaired or invalidated in any way.



                                       2
<PAGE>   3


        6. BINDING EFFECT; ASSIGNMENT

        This Agreement shall inure to the benefit of and be binding on the
parties and their respective successors and assigns.

        7. ENTIRE AGREEMENT

        This Agreement constitutes the entire understanding between the parties
concerning the subject matter hereof. This Agreement supersedes all
negotiations, prior discussions and preliminary agreements. This Agreement may
not be amended except in a writing executed by the Parties.

        8. GOVERNING LAW

        This Agreement shall be governed by and construed in accordance with the
laws of the State of California.

        9. NOTICES

        All notices, requests, demands and other communication required or
contemplated under this Agreement shall be in writing and shall be deemed to
have been duly given when delivered personally or when enclosed in a properly
sealed and addressed envelope, registered or certified, and deposited (postage
prepaid) in a post office or branch post office regularly maintained by the
United States Government.

        Any notice given to the Company under the terms of this Agreement shall
be addressed to the Company at the address of its principal place of business.
Any notice to be given to McDonough shall be addressed to him at his home
address last shown on the Company's records, or at such other address as either
party may hereafter designate in writing to the other.

        10. WAIVER

        No waiver of any of the provisions of this Agreement shall be deemed, or
shall constitute, a waiver of any other provision, whether or not similar, nor
shall any waiver constitute a continuing waiver. No waiver shall be binding
unless executed in writing by the party making the waiver.

        11. COUNTERPARTS

        This Agreement may be executed in counterparts, and such counterparts
may be transmitted by facsimile, and all counterparts, taken together, will
constitute one and the same document.



                                       3
<PAGE>   4



                     IN WITNESS WHEREOF, the parties have duly executed this
Agreement effective January 7, 1998.



                                    REMEDYTEMP, INC.

                                    By:_________________________________________

                                    Name:_______________________________________

                                    Title:______________________________________



                                    ----------------------------
                                    Robert E. McDonough, Sr.




                                       4
<PAGE>   5




                                    EXHIBIT A



<PAGE>   6


                          REGISTRATION RIGHTS AGREEMENT



           THIS REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is made as of
May 1, 1996 by and between RemedyTemp, Inc., a California corporation (the
"COMPANY"), and Robert E. McDonough, Sr., an individual person ("McDonough").

                                    RECITALS

           A. Pursuant to that certain Employment Agreement ("EMPLOYMENT
AGREEMENT") of even date herewith by and between McDonough and the Company, the
Company is required to execute and deliver this Agreement.

           NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the parties agree as follows:

           1. CERTAIN DEFINITIONS. Terms used herein but not otherwise defined
shall have the meanings ascribed to them in the Employment Agreement. As used in
this Agreement, the following terms shall have the following respective
meanings:

                "COMMISSION" shall mean the Securities and Exchange Commission
of the United States or any other United States federal agency at the time
administering the Securities Act.

                "HOLDER" shall mean McDonough, all trusts established for the
benefit of McDonough or his immediate family, and their transferees as permitted
by Section 11, holding Registrable Securities or securities convertible into or
exercisable for Registrable Securities.

                "REGISTRABLE SECURITIES" means (i) the shares of common stock of
the Company held by McDonough individually, jointly or in a fiduciary capacity,
including as trustee of a trust (the "Shares") and (ii) any shares of common
stock of the Company or other securities ("COMMON STOCK") issued or issuable in
respect of the Shares upon any stock split, stock dividend, recapitalization, or
similar event. Shares shall only be treated as Registrable Securities if they
have not been (A) sold to or through a broker or dealer or underwriter in a
public distribution or a public securities transaction, or (B) sold in a single
transaction exempt from the registration and prospectus delivery requirements of
the Securities Act so that all transfer restrictions and restrictive legends
with respect thereto are removed upon the consummation of such sale.

                The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.



<PAGE>   7

                "REGISTRATION EXPENSES" shall mean all expenses, excluding
Selling Expenses (as defined below) except as otherwise stated below, incurred
by the Company in complying with Section 2, Section 3 and Section 4 hereof,
including, without limitation, all registration, qualification and filing fees,
printing expenses, escrow fees, fees and disbursements of counsel for the
Company and reasonable fees and disbursements of one counsel for the Holder
selected by the Holder and approved by the Company (which consent shall not be
unreasonably withheld), Blue Sky fees and expenses and the expense of any
special audits incident to or required by any such registration (but excluding
the compensation of regular employees of the Company which shall be paid in any
event by the Company).

                "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder, or any
similar United States federal statute.

                "SELLING EXPENSES" shall mean all underwriting discounts,
selling commissions and stock transfer taxes applicable to the securities
registered by the Holder. Such expenses shall be borne by the Holder.

        2. DEMAND REGISTRATION.

                (a) REQUEST FOR REGISTRATION. In the event the Company shall
receive a written request from Holder that the Company effect any registration,
qualification or compliance with respect to Registrable Securities having an
aggregate proposed selling price of not less than One Million Dollars
($1,000,000) (a "REGISTRATION NOTICE"), the Company will, as soon as
practicable, use its best efforts to effect such registration, qualification or
compliance (including, without limitation, appropriate qualification under
applicable Blue Sky or other state securities laws and appropriate compliance
with applicable regulations issued under the Securities Act and any other
governmental requirements or regulations) as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of such
Registrable Securities as are specified in such request. Notwithstanding the
foregoing, the Company shall not be obligated to take any action to effect any
such registration, qualification or compliance pursuant to this Section 2 (i)
prior to the effective date of the Company's first registered public offering of
its stock or (ii) after the Company has effected two registrations pursuant to
this Section 2 and such registrations have been declared or ordered effective.

                Subject to the foregoing clauses (i) and (ii), the Company shall
file a registration statement covering the Registrable Securities so requested
to be registered as soon as practicable, after receipt of the request or
requests of the Holder. Notwithstanding the foregoing, the Company shall be
entitled to defer for a reasonable period of time, but not in excess of 120
days, the filing of any registration statement otherwise required to be prepared
and filed by it under this Section 2 if (i) (A) the Company is at such time
conducting or about to conduct an underwritten public offering of its securities
for its own account and the Board of Directors of the Company determines in good
faith that such offering by the Company would be materially adversely affected
by such registration 



                                       2
<PAGE>   8

requested by the Holder(s), (B) the Company is pursuing an acquisition, merger,
reorganization, disposition or other similar transaction and the Board of
Directors of the Company determines in good faith that the Company's ability to
pursue or consummate such transaction would be materially adversely affected by
such registration requested by the Holder(s), or (C) the Company is in
possession of material nonpublic information concerning it or its business and
affairs and the Board of Directors of the Company determines in good faith that
the prompt public disclosure of such information in such registration requested
by the Holder(s) would have a material adverse effect on the Company; and (ii)
the Company so notifies the requesting Holder(s) within ten (10) days after the
Company's receipt of the Registration Notice from such Holder(s).

                (b) UNDERWRITING. In the event that a registration pursuant to
this Section is for a registered public offering involving an underwriting, the
Company shall so advise the Holder as part of the notice given pursuant to
Section 2(a). In such event, the right of the Holder to registration pursuant to
this Section shall be conditioned upon the Holder's participation in the
underwriting arrangements required by this Section, and the inclusion of the
Holder's Registrable Securities in the underwriting to the extent requested
shall be limited to the extent provided herein. The Holder shall, together with
the Company, enter into an underwriting agreement in customary form with the
managing underwriter selected for such underwriting by the Company, but subject
to the reasonable approval of the Holder. If the Holder disapproves of the terms
of any such underwriting, the Holder may elect to withdraw therefrom by written
notice to the Company and the managing underwriter. Any securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration.

        3. REGISTRATION ON FORM S-3.

                (a) REQUEST FOR REGISTRATION. If at any time, or from time to
time, the Holder requests that the Company file a registration statement on Form
S-3 (or any successor form to Form S-3) for a public offering of Registrable
Securities and the Company is a registrant entitled to use Form S-3 to register
the Registrable Securities for such an offering, the Company shall use its best
efforts to cause such Registrable Securities to be registered for the offering
on such form and to cause such Registrable Securities to be qualified in such
jurisdictions as the Holder may reasonably request. Notwithstanding the
foregoing, the Company shall not be obligated to take any action pursuant to
this Section 3 more than one (1) time per calendar year.

                Subject to the foregoing, the Company shall file a registration
statement covering the Registrable Securities so requested to be registered as
soon as practicable, after receipt of the request or requests of the Holder.
Notwithstanding the foregoing, the Company shall be entitled to defer for a
reasonable period of time, but not in excess of 120 days, the filing of any
registration statement otherwise required to be prepared and filed by it under
this Section 3 if (i) (A) the Company is at such time conducting or about to
conduct an underwritten public offering of its securities for its own account
and the Board of Directors of the Company determines in good faith that such
offering by the Company would be materially adversely affected by such
registration requested by the Holder(s), (B) the 



                                       3
<PAGE>   9

Company is pursuing an acquisition, merger, reorganization, disposition or other
similar transaction and the Board of Directors of the Company determines in good
faith that the Company's ability to pursue or consummate such transaction would
be materially adversely affected by such registration requested by the
Holder(s), or (C) the Company is in possession of material nonpublic information
concerning it or its business and affairs and the Board of Directors of the
Company determines in good faith that the prompt public disclosure of such
information in such registration requested by the Holder(s) would have a
material adverse effect on the Company; and (ii) the Company so notifies the
requesting Holder(s) within ten (10) days after the Company's receipt of the
registration request from such Holder(s).

                (b) UNDERWRITING. The substantive provisions of Section 2(b)
shall be applicable to each such registration initiated under this Section
involving an underwriting.



                                       4
<PAGE>   10



        4. INCIDENTAL REGISTRATIONS.

                (a) NOTICE OF REGISTRATION. If at any time or from time to time
the Company shall determine to file a registration statement under the
Securities Act for the general registration of any of its securities to be sold
for cash, either for its own account or the account of a security holder or
holders, other than (i) a registration relating solely to stock option or other
employee benefit plans or (ii) a registration relating solely to a Commission
Rule 145 transaction, the Company will: (A) promptly give the Holders written
notice thereof; and (B) include in such registration (and any related
qualification under Blue Sky laws or other compliance), and in any underwriting
involved therein, all the Registrable Securities specified in a written request
or requests, made within twenty (20) days after receipt of such written notice
from the Company, by the Holder, subject to the terms of Section 4(b).

                (b) UNDERWRITING. If the registration with respect to which the
Company gives notice is for a registered public offering involving an
underwriting, the Company shall so advise the Holder as a part of the written
notice given pursuant to Section 4(a)(i). In such event, the right of the Holder
to registration pursuant to this Section shall be conditioned upon the Holder's
participation in such underwriting and the inclusion of Registrable Securities
in the underwriting to the extent provided herein. The Holder shall, together
with the Company, enter into an underwriting agreement in customary form with
the managing underwriter selected for such underwriting by the Company. If the
Holder disapproves of the terms of any such underwriting, the Holder may elect
to withdraw therefrom by written notice to the Company and the managing
underwriter. Any securities excluded or withdrawn from such underwriting shall
be withdrawn from such registration.

                Notwithstanding any provision contained herein to the contrary,
if the managing underwriter or underwriters of the registration in which the
Company gives notice under this Section 4 shall advise the Company in writing
that, in its opinion, the total amount of Registrable Securities that the
Holder(s) request to include in such registration, together with any other
securities with similar incidental or piggyback registration rights
(collectively, the "REQUESTED SECURITIES") is sufficiently large to materially
and adversely affect the success of such registration, then the amount and kind
of Requested Securities to be offered for the accounts of any Holder whose
shares of Requested Securities were requested to be included in such
registration shall be reduced pro rata with respect to each such Holder to the
extent necessary to reduce the total amount of securities to be included in such
registration to the amount recommended by such managing underwriter or
underwriters; provided, however, that such reduction shall not include the
following: (i) if the registration initially occurs at the insistence of the
Company, shares to be issued by the Company; or (ii) if the registration occurs
due to a demand registration right, including the Demand Registration provided
in Section 2, shares of the Holder(s) making that demand.

                (c) RIGHT TO TERMINATE REGISTRATION. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section prior to the effectiveness of such registration whether or not the
Holder has elected to include Registrable 



                                       5
<PAGE>   11

Securities in such registration; provided, however, if the Holder elects to use
its demand registration right pursuant to Section 2, then such registration
shall be governed by Section 2 and it shall not be terminated.

        5. LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after the
date hereof, the Company will not, without the prior written consent of holders
of three-quarters of the Registrable Securities, enter into any agreement with
any holder or prospective holder of any securities of the Company which allows
such holder or prospective holder of any securities of the Company to include
such securities in any registration filed under Section 2 hereof, unless, under
the terms of such agreement, such holder or prospective holder may include such
securities in any such registration only to the extent that the inclusion of his
securities will not diminish the Holder's registration rights pursuant to such
Section 2.

        6. EXPENSES OF REGISTRATION.

                (a) REGISTRATION EXPENSES. The Company shall bear all
Registration Expenses incurred in connection with all registrations pursuant to
Section 2 or Section 4 hereof, and shall bear all Registration Expenses incurred
in connection with the first registration pursuant to Section 3. In the event
the Holder withdraws a Registration Notice, abandons a registration statement
or, following an effective registration pursuant to Section 2 hereof, does not
sell Registrable Securities, then all Registration Expenses in respect of such
Registration Notice shall be borne, at the Holder's option, either by the Holder
or by the Company (in which case, if borne by the Company, such withdrawn or
abandoned registration shall be deemed to be an effective registration for
purposes of Section 2(a)(ii) hereof). The Holder shall bear all Registration
Expenses incurred in connection with the second and any subsequent registration
pursuant to Section 3.

                (b) SELLING EXPENSES. Unless otherwise stated, all Selling
Expenses relating to securities registered on behalf of the Holders shall be
borne by the Holders pro rata on the basis of the number of shares so
registered.

           7. REGISTRATION AND QUALIFICATION. If and whenever the Company is
required to use its best efforts to effect the registration of any Registrable
Securities under the Securities Act pursuant to this Agreement, the Company will
as promptly as is practicable:

                (a) prepare and file with the Commission, as soon as
practicable, and use its best efforts to cause to become effective for a time
period not to exceed 90 days, a registration statement under the Securities Act
relating to the Registrable Securities to be offered on such form as the Holder,
or if not filed pursuant to Section 2 or Section 3 hereof, the Company,
determines and for which the Company then qualifies;

                (b) prepare and file with the Commission such amendments
(including post-effective amendments) and supplements to such registration
statement and the prospectus used in connection therewith as may be necessary to
keep such registration statement effective and to comply with the provisions of
the Securities Act with respect to the disposition of all Registrable Securities
until the earlier of such time as all of such 



                                       6
<PAGE>   12

Registrable Securities have been disposed of in accordance with the intended
methods of disposition set forth in such registration statement or the
expiration of ninety (90) days after such registration statement becomes
effective; provided that such ninety (90) day period shall be extended in the
case of a registration pursuant to Section 2 or Section 3 hereof for such number
of days that equals the number of days elapsing from (i) the date the written
notice contemplated by Section 7(f) hereof is given by the Company to (ii) the
date on which the Company delivers to the Holder the supplement or amendment
contemplated by Section 7(f) hereof;

                (c) furnish to the Holder and to any underwriter of Registrable
Securities such number of conformed copies of such registration statement and of
each such amendment and supplement thereto (in each case including all
exhibits), such number of copies of the prospectus included in such registration
statement (including each preliminary prospectus and any summary prospectus), in
conformity with the requirements of the Securities Act, such documents
incorporated by reference in such registration statement or prospectus, and such
other documents, as the Holder or such underwriter may reasonably request;

                (d) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of such registration statement at the
earliest possible moment;

                (e) if requested by the Holder, (i) furnish to the Holder an
opinion of counsel for the Company addressed to the Holder and dated the date of
the closing under the underwriting agreement (if any) (or if such offering is
not underwritten, dated the effective date of the registration statement), and
(ii) use its best efforts to furnish to the Holder a "comfort" or "special
procedures" letter addressed to the Holder and signed by the independent public
accountants who have audited the Company's financial statements included in such
registration statement, in each such case covering substantially the same
matters with respect to such registration statement (and the prospectus included
therein) as are customarily covered in opinions of issuer's counsel and in
accountants' letters delivered to underwriters in underwritten public offerings
of securities and such other matters as the Holder may reasonably request and,
in the case of such accountants' letter, with respect to events subsequent to
the date of such financial statements;

                (f) immediately notify the Holder in writing (i) at any time
when a prospectus relating to a registration hereunder is required to be
delivered under the Securities Act of the happening of any event as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, and
(ii) of any request by the Commission or any other regulatory body or other body
having jurisdiction for any amendment of or supplement to any registration
statement or other document relating to such offering, and in either such case
(i) or (ii) at the request of the Holder prepare and furnish to the Holder a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to



                                       7
<PAGE>   13

McDonough of such Registrable Securities, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statement therein, in light of the
circumstances under which they are made, not misleading;

                (g) use its best efforts to list all such Registrable Securities
covered by such registration statement on each securities exchange and
inter-dealer quotation system on which a class of common equity securities of
the Company is then listed, and to pay all fees and expenses in connection
therewith; and

                (h) upon the transfer of shares by the Holder in connection with
a registration hereunder, furnish unlegended certificates representing ownership
of the Registrable Securities being sought in such denominations as shall be
requested by the Holder or the underwriters.

        8. INDEMNIFICATION.

                (a) BY THE COMPANY. The Company will indemnify the Holders,
their respective officers, directors, partners, legal counsel and accountants,
and each person controlling any Holder within the meaning of Section 15 of the
Securities Act, with respect to which registration, qualification or compliance
has been effected pursuant to this Agreement, and each underwriter, if any, and
each person who controls any underwriter within the meaning of Section 15 of the
Securities Act, against all expenses, claims, losses, damages or liabilities (or
actions in respect thereof), including any of the foregoing incurred in
settlement of any litigation, commenced or threatened, arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any registration statement, prospectus, offering circular or other
document, or any amendment or supplement thereto, incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading, or any violation by the Company of the
Securities Act or any rule or regulation promulgated under the Securities Act
applicable to the Company in connection with any such registration,
qualification or compliance, and the Company will reimburse the Holder, its
officers, directors and partners, each person controlling the Holder, each such
underwriter and each person who controls any such underwriter, for any legal and
any other expenses reasonably incurred in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action,
provided that the Company will not be liable in any such case to the extent that
any such claim, loss, damage, liability or expense arises out of or is based on
any untrue statement or omission or alleged untrue statement or omission, made
in reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by the Holder, controlling person or
underwriter and stated to be specifically for use therein. If the Holder is
represented by counsel other than counsel for the Company, the Company will not
be obligated under this Section 8(a) to reimburse legal fees and expenses of
more than one separate counsel for the Holder.



                                       8
<PAGE>   14

                (b) BY THE HOLDER. The Holder will indemnify the Company, its
directors, officers, legal counsel, accountants, each underwriter, if any, of
the Company's securities covered by such a registration statement, and each
person who controls the Company or such underwriter within the meaning of
Section 15 of the Securities Act, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any such registration statement, prospectus, offering circular or other
document, or any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse the Company, such directors, officers,
underwriters or control persons for any legal or any other expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by the Holder and stated
to be specifically for use therein. Notwithstanding the foregoing, the liability
of the Holder under this subsection (b) shall be limited in an amount equal to
the net proceeds of the shares sold by the Holder, unless such liability arises
out of or is based on willful misconduct by the Holder.

                (c) PROCEDURE FOR INDEMNIFICATION. Each party indemnified under
paragraph (a) or (b) of this Section 8 (the "INDEMNIFIED PARTY") shall, promptly
after receipt of notice of any claim or the commencement of any action against
such Indemnified Party in respect of which indemnity may be sought, notify the
party required to provide indemnification (the "INDEMNIFYING PARTY") in writing
of the claim or the commencement thereof; provided that the failure of the
Indemnified Party to notify the Indemnifying Party shall not relieve the
Indemnifying Party from any liability which it may have to an Indemnified Party
on account of the indemnity agreement contained in paragraph (a) or (b) of this
Section 8, unless the Indemnifying Party was materially prejudiced by such
failure, and in no event shall relieve the Indemnifying Party from any other
liability which it may have to such Indemnified Party. If any such claim or
action shall be brought against an Indemnified Party, it shall notify the
Indemnifying Party thereof and the Indemnifying Party shall be entitled to
participate therein, and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the Indemnified Party. After notice from the
Indemnifying Party to the Indemnified Party of its election to assume the
defense of such claim or action, the Indemnifying Party shall not be liable
(except to the extent the proviso to this sentence is applicable, in which event
it will be so liable) to the Indemnified Party under this Section 8 for any
legal or other expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof other than reasonable costs of
investigation; provided that each Indemnified Party shall have the right to
employ separate counsel to represent it and assume its defense (in which case,
the Indemnifying Party shall not represent it) if (i) upon the advice of
counsel, the representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them, or
(ii) in the event the Indemnifying Party has not assumed the defense thereof
within ten (10) days of receipt of notice of such 



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<PAGE>   15

claim or commencement of action, and in which case the fees and expenses of one
such separate counsel shall be paid by the Indemnifying Party. If any
Indemnified Party employs such separate counsel it will not enter into any
settlement agreement which is not approved by the Indemnifying Party, such
approval not to be unreasonably withheld. If the Indemnifying Party so assumes
the defense thereof, it may not agree to any settlement of any such claim or
action as the result of which any remedy or relief, other than monetary damages
for which the Indemnifying Party shall be responsible hereunder, shall be
applied to or against the Indemnified Party, without the prior written consent
of the Indemnified Party. In any action hereunder as to which the Indemnifying
Party has assumed the defense thereof with counsel reasonably satisfactory to
the Indemnified Party, the Indemnified Party shall continue to be entitled to
participate in the defense thereof, with counsel of its own choice, but, except
as set forth above, the Indemnifying Party shall not be obligated hereunder to
reimburse the Indemnified Party for the costs thereof.

                If the indemnification provided for in this Section shall for
any reason be unavailable to an Indemnified Party in respect of any loss, claim,
damage or liability, or any action in respect thereof, referred to therein, then
each Indemnifying Party shall, in lieu of indemnifying such Indemnified Party,
contribute to the amount paid or payable by such Indemnified Party as a result
of such loss, claim, damage or liability, or action in respect thereof, in such
proportion as shall be appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and the Indemnified Party on the other with
respect to the statements or omissions which resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any other relevant
equitable considerations. The relative fault shall be determined by reference to
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the
Indemnifying Party on the one hand or the Indemnified Party on the other, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission, but not by
reference to any Indemnified Party's stock ownership in the Company. In no
event, however, shall the Holder of Registrable Securities be required to
contribute in excess of the amount of the net proceeds received by the Holder in
connection with the sale of Registrable Securities in the offering which is the
subject of such loss, claim, damage or liability. The amount paid or payable by
an Indemnified Party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this paragraph shall be deemed
to include, for purposes of this paragraph, any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such action or claim. No person guilty of fraudulent
misrepresentation (within the meaning of Section 12(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.

        9. INFORMATION FROM THE HOLDERS. Notwithstanding any provision contained
herein to the contrary, it shall be a condition precedent to the obligation of
the Company to take any action pursuant to this Agreement in respect of the
Registrable Securities that are to be registered at the request of any Holder
thereof that (i) such Holder furnish to the Company such information regarding
the Holder as shall be necessary to enable the Company to 



                                       10
<PAGE>   16

comply with the provisions hereof in connection with any registration,
qualification or compliance referred to in this Agreement, and (ii) such Holder
deliver and perform under any underwriting and selling shareholder agreements as
may be reasonably requested by the underwriters.

        10. RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the Commission that may at any time permit the
sale of the Restricted Securities to the public without registration, after such
time as a public market exists for the Common Stock of the Company, the Company
agrees to use its best efforts to:

                (a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all times
after the effective date that the Company becomes subject to the reporting
requirements of the Securities Act or the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT");

                (b) File with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements); and

                (c) Furnish to any Holder forthwith upon request a written
statement by the Company as to its compliance with the reporting requirements of
Rule 144 (at any time after ninety (90) days after the effective date of the
first registration statement filed by the Company for an offering of its
securities to the general public), and of the Securities Act and the Exchange
Act (at any time after it has become subject to such reporting requirements), a
copy of the most recent annual or quarterly report of the Company, and such
other reports and documents of the Company and other information in the
possession of or reasonably obtainable by the Company as the Holder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing the Holder to sell any such securities without registration.

        11. TRANSFER OF REGISTRATION RIGHTS. The rights to cause the Company to
register securities granted Holder under Section 2, Section 3 or Section 4 may
be assigned in connection with any transfer or assignment by the Holder of
Registrable Securities provided that: (a) such transfer may otherwise be
effected in accordance with applicable securities laws; (b) such transfer is
effected in compliance with the restrictions on transfer contained in this
Agreement and in any other agreement between the Company and the Holder; and (c)
such assignee or transferee acquires at least 10% of the Registrable Securities
then outstanding and shall execute a counterpart of this Agreement whereby such
assignor or transferee agrees to be bound by the terms of this Agreement and
assumes all of the obligations of the transferring Holder hereunder. No transfer
or assignment will divest the Holder or any subsequent owner of such rights and
powers unless all Registrable Securities are transferred or assigned.

        12. TERMINATION. This Agreement shall terminate at such time as all
Registrable Securities held by the Holders constitute less than one percent (1%)
of the voting securities of the Company (on an as-converted basis) and can be
sold pursuant to Rule 144, other than 



                                       11
<PAGE>   17

Rule 144(k), within a consecutive three (3) month period without compliance with
the registration requirements of the Securities Act. The respective indemnities,
representations and warranties of the McDonough and the Company shall survive
such termination.

        13. MARKET STAND-OFF. If requested by an underwriter of securities of
the Company, each Holder of Registrable Securities shall not sell or otherwise
transfer or dispose of any Registrable Securities held by such Holder during the
one-hundred twenty (120) day period following the effective date of a
registration statement; provided, however, that such agreement shall apply only
to the first registration statement covering the offered securities to be sold
on the Company's behalf to the public in an underwritten offering.

        14. MISCELLANEOUS.

                (a) GOVERNING LAW. This Agreement will be governed by and
construed in accordance with the State of California without given effect to the
conflicts of law principles thereof.

                (b) AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Holder of
at least 85% of the Registrable Securities, voting as a class. Any amendment or
waiver effected in accordance with this paragraph will be binding upon the
Company, each holder of any securities purchased under this Agreement at the
time outstanding (including securities into which such securities are
convertible), and any transferee of such securities.

                (c) SEVERABILITY. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, invalid, unenforceable or void, this Agreement shall continue in full
force and effect without said provision. In such event, the parties shall
negotiate, in good faith, a legal, valid and binding substitute provision which
most nearly effects the intent of the parties in entering into this Agreement.

                (d) NOTICES. All notices and other communications required or
permitted hereunder shall be in writing (or in the form of a telex or telecopy
(confirmed in writing) to be given only during the recipient's normal business
hours unless arrangements have otherwise been made to receive such notice by
telex or telecopy outside of normal business hours) and shall be mailed by
registered or certified mail, postage prepaid, or otherwise delivered by hand,
messenger, or telex-or telecopy (as provided above) addressed (a) if to the
McDonough, at such address as the McDonough shall have furnished to the Company
in writing or (b) if to the Company, one copy should be sent to its principal
executive offices and addressed to the attention of the Corporate Secretary, or
at such other address as the Company shall have furnished to the McDonough.

                Each such notice or other communication shall for all purposes
of this Agreement be treated as effective or having been given when delivered if
delivered 



                                       12
<PAGE>   18

personally or, if sent by mail, at the earlier of its receipt or 72 hours after
the same has been deposited in a regularly maintained receptacle for the deposit
of the United States mail, addressed and mailed as aforesaid, or, if by telex or
telecopy pursuant to the above, when received.

                (e) COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.

                (f) CAPTIONS. The section captions used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.



                                       13
<PAGE>   19


        IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.


                                    REMEDYTEMP, INC.



                                    By: ________________________________________

                                    Name:_______________________________________

                                    Its:________________________________________




                                    ___________________________________________
                                               Robert E. McDonough, Sr. 



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