Exhibit 10.38

SECOND AMENDMENT TO EMPLOYMENT AGREEMENT

This Second Amendment to Employment Agreement (the “Amendment”) is entered into
as of November 13, 2007 (the “Effective Date”), between Warren F. Bryant (the
“Executive”), Longs Drug Stores Corporation (the “Corporation”), and Longs Drug
Stores California, Inc. (“Longs California”).

RECITALS

WHEREAS, on October 30, 2002, the Executive, the Corporation and Longs
California entered into an Employment Agreement, and the agreement was amended
effective March 2, 2004 (as amended, the “Employment Agreement”); and

WHEREAS, the parties wish to amend certain provisions of the Employment
Agreement to reflect recent changes affecting the taxation of deferred
compensation arrangements under Section 409A of the Internal Revenue Code of
1986, as amended, pursuant to the terms and conditions set forth below.

AGREEMENT

NOW THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the parties hereby agree as follows effective as of the
Effective Date. Except as otherwise defined herein, capitalized terms shall have
the meanings assigned to them in the Employment Agreement.

1. Qualifying Termination. Section 9(a) of the Employment Agreement shall be
amended and restated in its entirety to read as follows:

(a) Qualifying Termination.

(1) A Qualifying Termination occurs if either (i) the Corporation terminates the
Executive’s employment for any reason other than Cause or Disability; or
(ii) the Executive resigns for Good Reason pursuant to Section 9(a)(2).

(2) For purposes of this Agreement, Good Reason means the occurrence of any of
the following conditions without the Executive’s written consent (each a “Good
Reason Condition”): (i) a material diminution in the Executive’s Base
Compensation, (ii) a material diminution in the Executive’s authority, duties,
or responsibilities, or (iii) a material change in the geographic location at
which the Executive must perform services pursuant to the Agreement. In order to
resign for Good Reason, the Executive must provide written notice to the Parent
or the Corporation, as the case may be, of the existence of the Good Reason
Condition within 90 days of the initial existence of such Good Reason Condition.
Upon receipt of such notice of the Good Reason Condition, the Parent or the
Corporation will be provided with a period of 30 days during which it may remedy
the Good Reason Condition and not be required to provide for the payments and
benefits described herein as a result of such proposed resignation

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due to the Good Reason Condition specified in the notice. If the Good Reason
Condition is not remedied within the period specified in the preceding sentence,
the Executive may resign for Good Reason based on the Good Reason Condition
specified in the notice, provided that such resignation must occur within two
years after the initial existence of such Good Reason Condition.

(3) For avoidance of doubt, termination of the Executive’s employment by reason
of death shall not constitute a Qualifying Termination.

2. Release of Claims. Section 9(f) of the Employment Agreement shall be amended
and restated in its entirety to read as follows:

Release of Claims. As a condition to the receipt of the payments and benefits
described in this Section 9, the Executive shall execute, within ninety
(90) days after his termination of employment due to a Qualifying Termination, a
covenant not to sue and release of all claims arising out of the Executive’s
employment or the termination thereof including, but not limited to, any claim
of discrimination under state or federal law in a form that is satisfactory to
the Corporation; provided that such release shall not impose restrictions or
requirements on the activities of the Executive beyond those described herein.

3. Excise Tax Restoration Payment. The following shall be added to the end of
Section 12(e) of the Employment Agreement:

With respect to each payment that is subject to the excise tax imposed by
section 4999 of the Code, the related Excise Tax Restoration Payment shall be
paid to the Executive on, or as soon as practicable following, the payment date
(and in any event, such Excise Tax Restoration Payment shall be paid to the
Executive by the end of the calendar year next following the calendar year in
which the Executive remits the Excise Tax).

4. Delay of Payments in Certain Circumstances. The following shall be added as a
new Section 18(n) of the Employment Agreement:

Notwithstanding any provision to the contrary in the Agreement, if the Executive
is deemed at the time of his separation from service to be a “specified
employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, to the extent
delayed commencement of any portion of the termination benefits to which
Executive is entitled under the Second and Third Parts of this Agreement is
required in order to avoid a prohibited distribution under
Section 409A(a)(2)(B)(i) of the Code, such portion of Executive’s termination
benefits shall not be provided to Executive prior to the earlier of (a) the
expiration of the six-month period measured from the date of the Executive’s
“separation from service” with the Corporation (as such term is defined in the
Treasury Regulations issued under Section 409A of the Code) or (b) the date of
Executive’s death. Upon the expiration of the applicable Code
Section 409A(a)(2)(B)(i) deferral period, all payments deferred pursuant to this
Section 18(n) shall be paid in a lump sum to the Executive, and any remaining
payments due under the Agreement shall be paid as otherwise provided herein.

 

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5. Continuation of Other Terms. Except as set forth herein, all other terms and
conditions of the Employment Agreement shall remain in full force and effect.

6. Applicable Law. This Amendment shall be governed by the law of the State of
California as such laws are applied to agreements between California residents
entered into and to be performed entirely within the State of California.

IN WITNESS WHEREOF, each of the parties has executed this Amendment, in the case
of the Corporation by its Lead Director and in the case of Longs California by a
duly authorized officer, as of the Effective Date.

 

WARREN F. BRYANT     LONGS DRUG STORES CORPORATION   /s/ Warren F. Bryant    
By:   /s/ Murray H. Dashe         Murray H. Dashe         Lead Director    
LONGS DRUG STORES CALIFORNIA, INC.       By:   /s/ Linda M. Watt         Linda
M. Watt         Senior Vice President—Human       Its:   Resources

 

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