<PAGE>

                                                                    EXHIBIT 10.9

      AGREEMENT made this 7th day of January, 1999 effective as of the 1st day
of September, 1998; by and between DUANE READE, A NEW YORK PARTNERSHIP, whose
principal office is located at 440 9th Avenue, New York, New York, hereinafter
designated as the "EMPLOYER" and ALLIED TRADES COUNCIL; whose office is located
at 467 Sylvan Avenue, Englewood Cliffs, New Jersey; hereinafter designated as
the "UNION".

      IN CONSIDERATION of the premises and of the mutual and reciprocal promises
herein made and obligations herein assumed, as more fully hereinafter set forth,
the parties agree as follows:

      FIRST: The Employer recognizes the Union as the sole collective bargaining
agent for the bargaining unit consisting of all employees in its employ,
excluding part-time employees, as defined below, Assistant Managers hired after
September 1, 1998, executives, office employees, supervisors, warehouse
employees, drivers and guards. Whenever the word "employees" is used in this
Agreement, it shall be deemed to refer to all employees except for those
specifically excluded above, regardless of whether or not they are members of
the Union.

      Part-time employees are defined as those employees working 30 hours or
less, on average, during 12 consecutive work weeks. Part-time schedules shall
not exceed 32 hours in any one work week.

      Part-time employees as defined above, shall not be part of the bargaining
unit covered by this agreement.

      At all times during the term hereof, the Employer agrees to employ not
less than 2,000 full-time employees. The Employer may employ up to 600 part-time
employees as defined above. In the event the full-time employee count exceeds
2,000, the Employer may utilize additional part-time employees as defined above,
in the ratio of 3 part-time employees in excess of the 600 level for each 10
full-time employees in excess of the 2,000 level.

      All employees shall, as a condition of continued employment, become and
remain members of the Union in good standing after they have completed thirty
days of employment or thirty days after execution of this Agreement, whichever
is later, provided, however, that no employee shall be removed from his
employment under this Article so long as he continues to tender uniform dues and
his initiation fee to the Union after such thirty-day period. Any employee who
fails to maintain his membership to the extent of not paying uniform dues and
his initiation fee after such thirty-day period, shall be discharged by the
Employer immediately upon notification from the Union in person or in writing.
All newly hired employees, except pharmacists, shall be on a trial period of
thirty calendar days. All newly hired pharmacists shall be on a trial period of
ninety calendar days. During an employee's trial period he or she may be
discharged without recourse to the grievance procedure.

      SECOND: The Employer agrees that authorized representatives of the Union
shall be permitted to enter the Employer's place of business at any time for the
adjustment of disputes, grievances or any other matters that may require their
presence.

      THIRD: The regular work week for all employees covered hereby, except
pharmacists, shall consist of forty hours per week, distributed among five
working days. Overtime shall be paid at the rate of time and one-half after
forty hours of work. Employees may voluntarily agree to work weeks of less than
forty hours. All employees shall be expected to work a reasonable amount of
overtime, including Saturdays and Sundays, provided however, that they shall be
given reasonable advance notice when overtime work is requested. Pharmacists
shall be paid for all hours worked at their straight-time hourly rate of pay.


                                       1
<PAGE>

      FOURTH: The Employer shall deduct uniform membership dues and initiation
fees from the wages paid to each employee. The Employer shall make such
deductions from the first payroll in each month and transmit all such funds
deducted no later than the tenth day of each month. All funds deducted from the
wages paid to employees for the payment of such dues and initiation fees shall
be held in trust by the Employer and shall be considered at all times the
property of the Union, provided, however, that prior to making such deductions
the Employer has received from each employee on whose account such deductions
are made, a written assignment, which shall not be irrevocable for a period of
more than one year or beyond the termination date of this Agreement, whichever
occurs sooner, and which may contain a clause that such assignment shall be
automatically renewed for additional periods of one year, unless the employee
shall terminate such assignment in writing within thirty days prior to any
expiration date thereof.

      FIFTH: No employee, whatever the performance, shall be discharged,
suspended, laid off or furloughed except for good and sufficient cause. In the
event an employee is proven to have committed an act amounting to dishonesty or
criminal negligence, the Employer may summarily discharge such employee. Layoffs
and recalls from layoffs shall be made in accordance with seniority.

      SIXTH: Should any dispute arise concerning the application,
interpretation, effect, purpose or breach of any term or condition of this
Agreement, or in the event that there shall exist any claim, demand, dispute or
controversy between the parties hereto, including but not limited to a demand or
dispute arising out of a proposed addition, deletion or modification of this
Agreement, the parties hereto shall first attempt to settle and adjust such
dispute, claim, demand or controversy by negotiation. In the event that said
dispute, claim, demand or controversy shall not be completely settled and
adjusted, the parties agree that either of them may submit the question,
including any damages that have been suffered, to arbitration before an
arbitrator designated by the New York State Board of Mediation, the American
Arbitration Association, or the Federal Mediation & Conciliation Service in
accordance with their rules. The arbitrator so designated shall conduct a
hearing in such manner as he shall consider proper, and shall serve as sole
arbitrator of the dispute between the parties. The arbitrator shall have the
right to conduct an ex parte hearing in the event of the failure of either party
to be present at the time and place designated for the arbitration, and shall
have the power to render a decision based on the testimony before him at such
hearing. The decision of the arbitrator shall be final and binding upon both
parties and may be entered as a final decree or judgment in the Supreme Court of
the State of New York or in a court of appropriate jurisdiction in any state
where such decision shall be rendered. The costs of arbitration, including the
arbitrator's fee, shall be borne equally by the Employer and the Union. It is
the intent of the parties hereto that all disputes between them both within and
outside of the Agreement, shall be submitted to arbitration and that no defense
to prevent the holding of the arbitration shall be permitted. Service of any
document or notice referred to in the above paragraph, or service of any notice
required by law in connection with the arbitration proceeding, may be made by
registered or certified mail.

      SEVENTH: (A) It is hereby agreed by and between the respective parties
that effective as of September 1, 1998 (being a continuation of contributions
previously made) the Employer shall contribute to the Vacation Fringe Benefit
Fund the sum of Four Per Cent, and commencing as of the week ending March 3,
2000, the sum of Five Per Cent of the Employer's total, gross, straight-time
payroll expense for each employee employed within the bargaining unit regardless
of whether or not any such employee is a member of the Union and regardless of
the number of hours worked during the week. Such payments shall be made weekly
for the last preceding payroll week. A list containing the names and
straight-time, weekly earnings of each employee in the bargaining unit shall
accompany each such payment. The Employer's payroll records, social security
records and other pertinent data shall be open for inspection and audit by the
Fund upon demand. Such payments shall be made directly to the Vacation Fringe
Benefit Fund and shall be held subject to the provisions of a trust indenture
dated February 17, 1971 and any amendments, changes or additions thereto.


                                       2
<PAGE>

      The Fund shall be managed and administered by a board of trustees equally
representative of the employers and the Union. In the event the Employer and
the Union trustees deadlock on the administration of the Fund, they shall
agree on an impartial umpire to decide such dispute; or in the event of their
failure to agree within a reasonable length of time, an impartial umpire
shall, on petition of either trustee, be appointed by the District Court of
the United States for the district where the Fund has its principal office.
The trustees shall make provisions for an annual audit of the Fund. A
statement of the results shall be available for inspection by interested
persons at the principal office of the Fund and at such other places as may
be designated by the trustees.

      The Fund shall be used for the purpose of providing annual and
supplementary vacation benefits, jury duty reimbursement and for such approved
similar and related purposes and benefits, and for the payment of the reasonable
administrative expenses of the Fund, as the trustees may determine. By executing
this Agreement, the Employer hereby authorizes the Trustees of the Vacation
Fringe Benefit Fund, on its behalf, as its express agent, and in its name and
stead, to remit to the appropriate Federal taxing authorities, the Employer's
share of any FICA taxes owed by the Employer as a result of vacation and/or
fringe benefit payments made by the Fund to employees of the Employer, together
with the employee's share of any such taxes, and, where applicable to remit to
the appropriate State taxing authorities the disability taxes owed as a result
of such payments. Similarly, by executing this Agreement, the Employer hereby
authorizes the Trustees of the Fund on its behalf, as its express agent and in
its name and stead, to issue to the appropriate governmental agencies and to its
employees receiving vacation and/or fringe benefit payments through the Fund,
Federal, State and City earnings statements showing gross wages, FICA tax
withheld, FICA wages, State income tax withheld and local tax withheld as a
result of such vacation and/or fringe benefit payments by the Fund. The Trustees
of the Fund shall have no obligation to report wages earned by the Employer's
employees, except such wages as are transmitted to the Employer's employees by
the Fund.

      All monies paid to the Fund shall be used and disbursed by the trustees
pursuant to the terms, conditions and provisions of the trust indenture or any
amendments, changes or additions thereto; and the rules, regulations and
resolutions adopted thereunder. Neither the Union, nor any member of the Union
individually or collectively; nor any International Union; nor any body with
which the Union may be affiliated; nor any participating Employer individually
or collectively, nor any combination thereof; nor any association, corporation,
group, entity, person or trust; nor any successor or assign thereof either
directly or indirectly, shall have any right, title, interest or claim in or to
the Fund or any part thereof, nor to any accounting, supervision or control
thereof, of whatsoever kind or nature.

      All monies, contributions, property, assets of the Fund and those
hereafter acquired and the ownership, control and the administration of the Fund
shall irrevocably, inseparably and forever remain vested exclusively in the
trustees of the Fund. No employee of any participating employer; nor any
employee of the Union; nor any person claiming by, through or under such
employee, either directly or indirectly, shall have any right, title, interest
or claim in or to the Fund or to any part thereof; nor to any accounting,
supervision or control thereof, of whatsoever kind or nature; nor any claim
against the Union, participating employers or the trustees, or to the
contributions of his or her Employer to the Fund or any assets or monies held by
the Fund except such benefits as are provided for by the Fund and/or by the
rules and regulations from time to time established and promulgated by the
trustees in accordance with the powers granted by the trust indenture as the
same may be amended or modified from time to time. The discretion of the
trustees as to the administration, use and disbursement of the Fund shall be
final and conclusive.

      All payments shall be due and payable on the first day of each week, for
the preceding week. The foregoing notwithstanding, however, if the Employer
fails to make all payments required hereunder, on or before the tenth day of the
month for the preceding month, then the Trustees may require, and the

                                       3
<PAGE>

Employer agrees to pay, interest on any unpaid balance at the applicable rate
as permitted by law. In addition, the Employer specifically agrees that it
shall be liable for all auditing expenses, collection costs and legal fees
incurred by the Union or by the Trustees of the Fund for the collection of
such payments.

      Conditioned upon the Employer's timely payment in full to the Fund of all
of its obligations as specified herein, no further liability whatsoever shall
attach hereunder to the Employer; and no claim can, shall or may be made by any
employee against the Employer based upon the terms hereof for any reason
whatsoever.

      (B) The amount of vacation to which an employee is entitled shall be
determined as of July 1 of each year:

                        Less than six months
                        of employment                   None

                        Six months but less than
                        one year of employment          One week (40 hours)

                        One year but less than
                        seven years of employment       Two weeks (80 hours)

                        Seven years but less than
                        twenty years of employment      Three weeks (120 hours)

                        Twenty or more years of
                        Employment                      Four weeks (160 hours)

      In determining eligibility for vacation leaves, all computations shall be
based upon each employee's total length of employment with the Employer. No
deductions shall be made from an employee's accumulated service except for
periods of non-employment by the Employer. Such deductions shall be made in
accordance with the provisions of the trust indenture, and/or resolutions
adopted by the trustees.

      Full power and authority will be lodged in the trustees of the Vacation
Fringe Benefit Fund to determine the extent of service credits to be allocated
to each employee as well as the rules and regulations pursuant to which
employees will be paid for any earned vacation pay.

      In accordance with the rules and regulations of the Fund and at such
intervals as they determine appropriate, the trustees of the Fund shall transmit
to each employee on whose behalf contributions have been made to such Fund, an
amount equal to the sum of such employee's vacation leave entitlement multiplied
by such employee's regular straight-time, hourly rate of pay as of the date of
such employee's vacation leave. This sum will be diminished by the amount of any
vacation payments made by the Fund to such employee during the preceding
vacation year (i.e. the period from July 1 of the preceding year through June 30
of the current year).

      EIGHTH: All employees shall receive pay for the following nine holidays
each year regardless of whether or not they are scheduled to work on any such
holidays:

                        New Year's Day              Thanksgiving Day
                        Presidents' Day             Christmas Day
                        Memorial Day                Two Personal Days


                                       4
<PAGE>

                        July 4th (Independence Day)
                        Labor Day

      NINTH: This contract shall not take effect until it is approved and
executed by an authorized officer of the Union. No term, condition or provision
of this Agreement may be modified or changed except in writing signed by both
parties.

      TENTH: Should the Employer fail to meet promptly the financial obligations
under the terms of this agreement or breach any term or condition thereof, such
shall be considered a material breach of this Agreement, and the Union reserves
the right thereafter to demand that the Employer post cash security or a bond in
a reasonable sum, and may institute additional appropriate measures, including
economic sanctions and/or cessation of work to assure the faithful performance
of this Agreement. The Union will at all times retain the right to proceed to
arbitration in accordance with the provisions of Article Sixth hereof.

      ELEVENTH: All good conditions, customs and privileges enjoyed by the
employees prior to the execution of this Agreement shall continue in full force
and effect without suspension or interruption as though they were actually
enumerated herein. The Employer shall not sell his establishment, or any part
thereof without 60 days' advance notice in writing to the Union, nor shall he
remove, terminate, discontinue, rent or lease any part thereof, without
providing similar advance notice. In no event shall such transaction be
consummated except on the basis that the purchaser or lessee shall assume this
Agreement and all of its terms and conditions and shall continue to recognize
the Union as the collective bargaining representative for all employees formerly
covered by this Agreement. In addition, the seller or renter, as well as the
purchaser or lessor, shall be responsible for all financial liabilities under
this Agreement up to and including the date of this transaction.

      TWELFTH: The Union may elect or select shop stewards from among the
employees, who shall receive top seniority for purposes of layoff only; and such
shop stewards shall have the authority to report grievances and violations of
the contract to the Union. No shop steward shall have the right to call any
strike, stoppage or cessation of work; and the sole duty and liability of the
Union, in the event that a shop steward so transcends his authority, shall be
limited to ordering the employees to return to work after written notice from
the Employer. The shop steward shall have the right during working hours to
discuss grievances or perform such other duties as the Union may require of him.

      THIRTEENTH: It is hereby agreed by and between the respective parties
that, commencing with ending September 4, 1998 (being a continuation of
contributions previously made), the Employer shall pay to the Allied Welfare
Fund the sum of Fifty-Nine ($59.00) Dollars, each and every week for each
employee who is employed within the bargaining unit, commencing with the first
day of employment of such employee, regardless of whether such employee is a
member of the Union and regardless of the number of hours worked during the
week. For each employee hired after September 1, 1998, such payments shall be
made commencing with the first day of the sixth month following each such
employee's starting date. The Employer shall submit to the Fund a list of the
employees for whom such payments are made. Vacations, holidays and sick leave
with pay shall be deemed time worked. The Employer's payroll records, social
security records or other pertinent data shall be open for inspection and audit
by the Fund upon demand. Such payments shall be made directly to the Allied
Welfare Fund and shall be held subject to the provisions of a trust indenture
effective January 26, 1954 and any amendments, changes or additions thereto. The
Fund shall be managed and administered by a board of trustees equally
representative of the employers and the Union. In the event the Employer and the
Union trustees deadlock on the administration of the Fund, they shall agree on
an impartial umpire to decide such dispute; or in the event of their failure to
agree within a reasonable length of time, an impartial umpire shall, on petition
of either trustee, be appointed by the District Court of the United States for
the

                                       5
<PAGE>

district where the Fund has its principal office. The trustees shall make
provisions for an annual audit of the Fund. A statement of the results shall be
available for inspection by interested persons at the principal office of the
Fund and at such other places as may be designated by the trustees.

      Such contributions shall be used for the purpose of providing insurance,
welfare, major medical insurance and similar benefits for employees employed by
the Employer, employees employed by all other employers similarly situated,
their families, and the payment of reasonable administrative expenses of the
Fund; and shall, in addition, be used and disbursed by the trustees pursuant to
the terms, conditions and provisions of the trust indenture or any amendments,
changes or additions thereto; and the rules, regulations and resolutions adopted
thereunder. Such contributions shall also be used for the purpose of providing
Major Medical Insurance and similar benefits for all employees of the Employer
and their families. Neither the Union, nor any member of the Union individually
or collectively; nor any International Union, nor any body with which the Union
may be affiliated; nor any participating employer individually or collectively;
nor any combination thereof; nor any association, corporation, group, entity,
person or trust; nor any successor or assign thereof, either directly or
indirectly, shall have any right, title, interest or claim in or to the Fund or
any part thereof; nor to any accounting, supervision or control thereof, of
whatsoever kind or nature. All monies, contributions, property, assets of the
Fund and those hereafter acquired; and the ownership control and the
administration of the Fund shall irrevocably, inseparably and forever remain
vested exclusively in the trustees of the Fund. No employee of any participating
employer; nor any employee of the Union; nor any person claiming by, through or
under such employee, either directly or indirectly, shall have any right, title,
interest or claim in or to the Fund or to any part thereof; nor to any
accounting, supervision or control thereof of whatsoever kind or nature; nor any
claim against the Union, participating employers, or the trustees, or to the
contributions of his or her employer to the Fund or any assets or monies held by
the Fund except such benefits as are provided for by the plan and/or by the
rules and regulations from time to time established and promulgated by the
trustees in accordance with the powers granted by the trust indenture, as the
same may be amended or modified from time to time. The discretion of the
trustees as to the administration, use and disbursement of the Fund shall be
final and conclusive.

      All payments shall be due and payable on the first day of each month, for
the preceding month. If the Employer fails to make a payment or payments
required hereunder, on or before the tenth day of the succeeding month, then the
Trustees may require, and the Employer agrees to pay, interest on any unpaid
balance at the applicable rate as permitted by law. In addition, the Employer
specifically agrees that it shall be liable for all auditing expenses,
collection costs and legal fees incurred by the Union or by the Trustees of the
Fund for the collection of such payments. From and out of the contributions made
to the Allied Welfare Fund as specified above, Eight Dollars per employee per
week shall be unconditionally and irrevocably allocated and paid to the Union
Mutual Medical Fund subject to the provisions of a trust indenture effective
September 6, 1978 and any amendments, changes or additions thereto, for the
benefit of retired employees of the Employer and retired employees of all other
employers similarly situated and their families who are receiving pension
benefits from the Union Mutual Fund, and those employees of the Employer and of
all other employers similarly situated whose pension benefits from the Union
Mutual Fund have been vested and who, in either case, are and remain members in
good standing of the Union Mutual Benefit Association. All sums contributed to
the Union Mutual Medical Fund and the affairs of said Fund shall be managed and
administered by a Board of Trustees equally representative of the employers and
the participants. All of the foregoing conditions and provisions applicable to
the Allied Welfare Fund shall be equally applicable to the Union Mutual Medical
Fund.

      FOURTEENTH: It is hereby agreed by and between the respective parties
that, commencing with the effective date of this Agreement (being a continuation
of contributions previously made), the Employer shall pay to the Union Mutual
Fund the sum of Twenty-Four Dollars each and every week for each employee who is
employed within the bargaining unit commencing with the first day of employment


                                       6
<PAGE>


of such employee, regardless of whether such employee is a member of the Union
and regardless of the number of hours worked during the week; and the Employer
shall submit to the Fund a list of the employees for whom such payments are
made. Vacations, holidays and sick leave with pay shall be deemed time worked.
The Employer's payroll records, social security records and other pertinent data
shall be open for inspection and audit by the Fund upon demand. Such payments
shall be made directly to the Union Mutual Fund and held subject to the
provisions of a trust indenture effective November 1, 1955 and any amendments,
changes or additions thereto. The Fund shall be managed and administered by a
board of trustees equally representative of the employers and the Union. In the
event the Employer and the Union trustees deadlock on the administration of the
Fund, the two shall agree on an impartial umpire to decide such dispute; or in
the event of their failure to agree within a reasonable length of time, an
impartial umpire shall, on petition of either trustee, be appointed by the
District Court of the United States for the district where the Fund has its
principal office. The trustees shall make provisions for an annual audit of the
Fund, a statement of the result of which shall be available for inspection by
interested persons at the principal office of the Fund and at such other places
as may be designated by the trustees.

      The Fund shall be used for the purpose of providing pensions and/or
annuities and similar benefits for employees employed by the Employer, employees
employed by all other employers similarly situated, the payment of reasonable
administrative expenses of the Fund and shall, in addition, be used and
disbursed by the trustees pursuant to the terms, conditions and provisions of
the trust indenture, or any amendments, changes or additions thereto; and the
rules, regulations and resolutions adopted thereunder. Neither the Union, nor
any member of the Union individually or collectively; nor any International
Union; nor any body with which the Union may be affiliated; nor any
participating employer individually or collectively; nor any combination
thereof; nor any association, corporation, group, entity, person or trust; nor
any successor or assign thereof either directly or indirectly, shall have any
right, title, interest or claim in or to the Fund, or any part thereof; nor to
any accounting, supervision or control thereof of whatsoever kind or nature. It
is understood and agreed that the Employer and all other employers similarly
situated may have a continuing financial obligation pursuant to the provisions
of the Employee Retirement Income Security Act of 1974, in the event of
termination or partial termination of the Fund. All monies, contributions,
property, assets of the Fund and those hereafter acquired; and the ownership,
control and the administration of the Fund shall irrevocably, inseparably and
forever remain vested exclusively in the trustees of the Fund. No employee of
any participating employer; nor any employee of the Union; nor any person
claiming by, through or under such employee, either directly or indirectly,
shall have any right, title, interest or claim in or to the Fund or any part
thereof; nor to any accounting, supervision or control thereof of whatsoever
kind or nature; nor any claim against the Union, participating employers or the
trustees; nor to the contributions of his or her employer to the Fund; nor to
any assets or monies held by the Fund except such benefits as are provided by
the plan and/or by the rules and regulations from time to time established and
promulgated by the trustees in accordance with the powers granted by the trust
indenture, as the same may be amended or modified from time to time. The
discretion of the trustees as to the administration, use and disbursement of the
Trust Fund shall be final and conclusive.

      All payments shall be due and payable on the first day of each month, for
the preceding month. If the Employer fails to make a payment or payments
required hereunder, on or before the tenth day of the succeeding month, then the
Trustees may require, and the Employer agrees to pay, interest on any unpaid
balance at the applicable rate as permitted by law. In addition, the Employer
specifically agrees that it shall be liable for all auditing expenses,
collection costs and legal fees incurred by the Union or by the Trustees of the
Fund for the collection of such payments.


                                       7
<PAGE>

      FIFTEENTH:

      1.    During the term hereof, the minimum hiring rate for all newly hired
            employees shall be $5.15 per hour.

      2.    Each employee working during the hours of midnight and 8:00 a.m.
            shall receive a premium payment of $1.50 per hour for all hours
            worked during such period.

      3.    Each employee who works beyond the normal closing time of a store
            for the purpose of taking stock shall receive a premium payment of
            forty cents ($.40) per hour in excess of the hourly rate received
            for work performed prior to the store's regularly scheduled closing
            time. Such payment shall be received for each hour worked beyond
            such normal closing time.

      The foregoing notwithstanding, should any such employee work beyond
midnight, he or she shall receive a premium payment of $1.50 per hour in excess
of the hourly rate received for work performed prior to the store's regularly
scheduled closing time. Such payment shall be received for all hours worked
after midnight.

      4.    Each full-time retail store employee, excluding pharmacists and
            Assistant Managers, hired by the Employer before September 1, 1997,
            shall receive a general wage increase of thirty cents ($.30) per
            hour ($12.00 per week) effective December 28, 1998. On or about
            January 4, 1999, each such employee employed by the Employer on
            January 4, 1999, shall receive a one-time payment of two hundred
            eight ($208.00) dollars, less applicable payroll taxes.

      5.    Effective September 1, 1999, each full-time retail store employee,
            excluding pharmacists and Assistant Managers, hired by the Employer
            before September 1, 1998 shall receive a general wage increase of
            thirty cents ($.30) per hour ($12.00 per week).

      6.    Effective September 1, 2000, each full-time retail store employee,
            excluding pharmacists and Assistant Managers, hired by the Employer
            before September 1, 1999 shall receive a general wage increase of
            thirty cents ($.30) per hour ($12.00 per week).

      7.    Each full-time retail store employee, excluding pharmacists and
            Assistant Managers with less than one year of employment with the
            Employer as of September 1 of any year during the term hereof, shall
            receive a wage increase of twenty cents ($.20) per hour ($8.00 per
            week) commencing on the first day of the month following such
            employee's first anniversary of employment, and an additional wage
            increase of ($.10) per hour ($4.00 per week) on the succeeding
            September 1. These two increases shall be in lieu of the general
            wage increase received by other employees on the September 1st
            immediately following each such employee's first anniversary.

      8.    Each Assistant Manger hired by the Employer before September 1,
            1997, shall receive a general wage increase of fifty cents ($.50)
            per hour ($20.00 per week) effective December 28, 1998. On or about
            January 4, 1999, each such Assistant Manager employed by the
            Employer on January 4, 1999, shall receive a one-time payment of
            three hundred forty-six ($346.00) dollars, less applicable payroll
            taxes.


                                       8
<PAGE>

      9.    Each Pharmacist hired by the Employer before September 1, 1997,
            shall receive a general wage increase of one dollar ($1.00) per hour
            ($40.00 per week) effective December 28, 1998.

      10.   The Employer shall institute an incentive "Bonus Plan" for all
            pharmacists commencing October 1, 1998. Such Plan shall provide for
            quarterly incentive bonuses payable on or about January 31, 1999 and
            on the last day of each third month thereafter, in the maximum
            amount of two thousand ($2,000.00) dollars per year and in the
            minimum amount of $750.00 per year. The terms of such "Bonus Plan"
            are subject to negotiation by the parties.

      SIXTEENTH: All employees who have been employed for six months or longer
shall be entitled to receive five (5) days of paid sick leave during each
contract year. Employees shall receive a day's wages at their then current daily
rate of pay for each day of sick leave utilized. On or about August 31, 1999,
and on or about August 31 of each year thereafter during the term hereof,
employees shall be reimbursed for all unused sick leave at their then current
daily rate of pay for each day of unused sick leave.

      Employees shall not be required to provide a doctor's note or other
substantiating evidence in order to be eligible to receive sick leave pay,
provided, however, that employees shall call the Company as early as possible on
the first day of any illness to advise the Company concerning the absence and
its anticipated length.

      SEVENTEENTH: This Agreement shall become effective as of the 1st day of
September, 1998, and shall remain operative and binding upon the parties hereto,
their heirs, successors, assignees, administrators and trustees in bankruptcy
for a period up to and including the 31st day of August, 2001, and shall
automatically continue thereafter for similar periods and may be terminated by
one's giving the other ninety days' notice by registered mail prior to each
expiration period of such intention to terminate this Agreement.

      IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and
seals this 7th day of January, 1999.

ALLIED TRADES COUNCIL                     DUANE READE, A NEW YORK PARTNERSHIP


By:        /s/ John Morro                 By:  /s/ James M. Azza  Vice President
   -------------------------------           -----------------------------------
   John Morro, Acting President              Employer             Title



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                             DUANE READE CORPORATION
                             ADJUSTED WAGE SCHEDULE

      Effective as of and retroactive to September 1, 1995, all pharmacists
shall receive a general wage increase of Thirty-Five Dollars per week ($.875 per
hour).

      Effective March 1, 1997, all pharmacists shall receive a general wage
increase of Thirty-Five Dollars per week ($.875 per hour).

      On or about October 12, 1995, each employee, other than pharmacists, who
was on the Employer's payroll on September 1, 1995, shall receive a bonus
amounting to 7.5% of such employee's straight-time earnings (including the
overnight differential, where applicable), during such part of the calendar year
commencing September 1, 1994 and ending August 31, 1995, as was worked by each
such employee.

      Effective September 1, 1996, each Assistant Manager shall receive a
general wage increase of Fifteen Dollars per week ($.38 per hour).

      Effective September 1, 1996, each employee other than pharmacists and
Assistant Managers shall receive a general wage increase of Ten Dollars per week
($.25 per hour).

      Effective September 1, 1997, each employee other than Pharmacists shall
receive a general wage increase of Ten Dollars per week ($.25 per hour).


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