Document:

<PAGE>
<TABLE>
<CAPTION>

                            CITY NATIONAL CORPORATION
                       DIRECTOR DEFERRED COMPENSATION PLAN

                                TABLE OF CONTENTS

                                                                                                                       PAGE
                                                                                                                       ----
<S>                                                                                                                    <C>
ARTICLE I................................................................................................................1

TITLE AND DEFINITIONS....................................................................................................1

1.1 -    Title...........................................................................................................1

1.2 -    Definitions.....................................................................................................1

ARTICLE II...............................................................................................................4

PARTICIPATION............................................................................................................4

2.1 -    Participation...................................................................................................4

ARTICLE III..............................................................................................................5

DEFERRAL ELECTIONS.......................................................................................................5

3.1 -    Elections to Defer Compensation.................................................................................5

3.2 -    Investment Elections............................................................................................5

ARTICLE IV...............................................................................................................7

DEFERRAL ACCOUNT.........................................................................................................7

4.1 -    Deferral Account................................................................................................7

ARTICLE V................................................................................................................8

VESTING..................................................................................................................8

5.1 - Deferral Account...................................................................................................8

ARTICLE VI...............................................................................................................9

DISTRIBUTIONS............................................................................................................9

6.1 -    Amount and Time of Distribution.................................................................................9

6.2 -    Form of Distribution............................................................................................9

6.3 -    Election to Receive Periodic Installments.......................................................................9

ARTICLE VII.............................................................................................................10

ADMINISTRATION..........................................................................................................10

7.1      Committee Action...............................................................................................10

7.2      Powers and Duties of the Committee.............................................................................10

7.3      Construction and Interpretation................................................................................10

7.4      Information....................................................................................................11

</TABLE>

                                      -i-
<PAGE>
<TABLE>
<CAPTION>
                                TABLE OF CONTENTS
                                   (CONTINUED)
                                                                                                                       PAGE

<S>                                                                                                                    <C>
7.5      Compensation, Expenses and Indemnity...........................................................................11

7.6      Quarterly Statements...........................................................................................11

ARTICLE VIII............................................................................................................12

MISCELLANEOUS...........................................................................................................12

8.1      Unsecured General Creditor.....................................................................................12

8.2 -    Restriction Against Assignment.................................................................................12

8.3 -    Withholding....................................................................................................12

8.4 -    Amendment, Modification, Suspension or Termination.............................................................12

8.5 -    Governing Law..................................................................................................12

8.6 -    Receipt or Release.............................................................................................13

8.7. -   Payments on Behalf of Person Under Incapacity..................................................................13

8.8. -   Headings, etc. Not Part of Agreement...........................................................................13

ARTICLE IX..............................................................................................................14

BENEFIT OFFSET..........................................................................................................14

9.1 -    Offset for Certain Benefits Payable Under Split-Dollar Life Insurance Policies.................................14

</TABLE>

                                      -ii-

<PAGE>

                            CITY NATIONAL CORPORATION
                       DIRECTOR DEFERRED COMPENSATION PLAN

         WHEREAS, City National Corporation (the "Company") desires to establish
a deferred compensation plan to provide supplemental retirement income benefits
to its outside directors through deferrals of directors' fees, effective as of
April 1, 1994; and

         WHEREAS, it is believed that the adoption of this plan providing for
deferred compensation at the election of each outside director will be in the
best interests of the Company;

         NOW, THEREFORE, it is hereby declared as follows:

                                    ARTICLE I
                              TITLE AND DEFINITIONS

1.1 -    Title

         This Plan shall be known as the City National Corporation Director
Deferred Compensation Plan.

1.2 -    Definitions.

         Whenever the following words and phrases are used in this Plan, with
the first letter capitalized, they shall have the meanings specified below.

         "Account" shall mean a Participant's Deferral Account.

"Annual Retainer" shall mean the annual retainer fee to which a Director is
entitled for service as a member of the Board of Directors of the Company and/or
the annual retainer fee to which a Director is entitled for service as a member
of the board of directors of the Bank.

         "Bank" shall mean City National Bank and any successor corporation.

         "Beneficiary" or "Beneficiaries" shall mean the person or persons,
including a trustee, personal representative or other fiduciary, last designated
in writing by a Participant in accordance with procedures established by the
Committee to receive the benefits specified hereunder in the event of the
Participant's death. If there is no valid Beneficiary designation in effect, or
if there is no surviving designated Beneficiary, then the Participant's
surviving spouse shall be the Beneficiary. If there is no surviving spouse to
receive any benefits payable in accordance with the preceding sentence, the duly
appointed and currently acting personal representative of the participant's
estate (which shall include either the Participant's probate estate or living
trust) shall be the Beneficiary. In any case where there is no such personal
representative of the Participant's estate duly appointed and acting in that
capacity within 90 days after the Participant's death (or such extended period
ad the Committee determines is reasonably necessary to allow such personal
representative to be appointed, but not to exceed 180 days

                                       1
<PAGE>

after the Participant's death), then Beneficiary shall mean the person or
persons who can verify by affidavit or court order to the satisfaction of the
Committee that they are legally entitled to receive the benefits specified
hereunder. In the event any amount is payable under the Plan to a minor, payment
shall not be made to the minor, but instead be paid (a) to that person's living
parent(s) to act as custodian, (b) if that person's parents are then divorced,
and one parent is the sole custodial patent, to such custodial parent, or (c) if
no parent of that person is then living, to a custodian selected by the
Committee to hold the funds for the minor under the Uniform Transfers or Gifts
to Minors Act in effect in the jurisdiction in which the minor resides. If no
parent is living and the Committee decides not to select another custodian to
hold the funds for the minor, then payment shall be made to the duly appointed
and currently acting guardian of the estate for the minor or, if no guardian of
the estate for the minor is duly appointed and currently acting within 60 days
after the date the amount becomes payable, payment shall be deposited with the
court having jurisdiction over the estate of the minor.

         "Board of Directors" or "Board" shall mean the Board of Directors of
the Company.

         "Code" shall mean the Internal Revenue Code of 1986, as amended.

         "Committed" shall mean the Company's Strategy and Planning Committee.

         "Company" shall mean City National Corporation, any successor
corporation and each corporation which is a member of a controlled group of
corporations (within the meaning of Section 414(b) of the Code) of which City
National Corporation is a component member.

         "Compensation" shall mean the Participant's Annual Retainer and Meeting
Fees.

         "Deferred Account" shall mean the bookkeeping account maintained by the
Committee for each Participant that is credited with amounts equal to the
portion of the Participant's Annual Retainer and Meeting Fees that he or she
elects to defer and interest pursuant to Section 4.1.

         "Director" shall mean a member of the Board of Directors of the Company
or a member of the board of directors of the Bank.

         "Effective Date" shall mean April 1, 1994.

         "Eligible Director" shall mean each Director who is not an employee of
the Company, the Bank or any subsidiary of the Company or Bank.

         "Fund" or "Funds" shall mean one or more of the mutual funds or
contracts selected by the Committee pursuant to Section 3.2(b).

         "Interest Rate" shall mean, for each Fund, an amount equal to the net
rate of gain or loss on the assets of such Fund during each month reduced by
one-twelfth of one and one-half percentage points.

         "Meeting Fees" shall mean the amounts to which a Director is entitled
for attending meetings of (a) the Board of Directors of the Company, (b) the
board of directors of the Bank, (c) a committee of the Board of Directors of the
Company or (d) a committed of the board of directors of the Bank.

                                       2
<PAGE>

"Participant" shall mean any Eligible Director who elects to defer Compensation
in accordance with Section 3.1.

         "Payment Eligibility Date" shall mean the first day of the month
following the end of the quarter following the quarter in which a Participant
terminates employment or dies.

         "Plan" shall mean the City National Corporation Director Deferred
Compensation Plan set forth herein, now in effect, or as amended from time to
time.

         "Plan Year" shall mean the 12 consecutive month period beginning on
January 1, except that the first Plan Year shall be a short year beginning on
April 1, 1994 and ending on December 31, 1994.

         "Tax Adjustment Factor" shall mean a member, determined by the
Committee, which is equal to one minus the sum of (1) the highest marginal
federal personal income tax rate then in effect and (2) the effective highest
marginal state income tax rate in the state in which the Participant resides,
net after the effect of the deduction for such state income tax or federal
income tax purposes.

                                       3
<PAGE>

                                   ARTICLE II
                                  PARTICIPATION

2.1 - Participation.

         An Eligible Director shall become a Participant in the Plan by electing
to defer all or a portion of his or her Compensation in accordance with Section
3.1.

                                       4
<PAGE>

                                   ARTICLE III
                               DEFERRAL ELECTIONS

3.1 - Elections to Defer Compensation.

         (a)      General Rule. Subject to the limitations set forth in
paragraph (c) below, an Eligible Director may elect to defer all or any
percentage of his or her Annual Retainer and/or all or any percentage of his or
her Meeting Fees.

         (b)      Deferral Election. Each Eligible Director may elect to defer
Compensation for the following Plan Year by filing with the Committee an
election that conforms to the requirements of this Section 3.1, on a form
provided by the Committee, no later than December 1 of the immediately preceding
Plan Year. With respect to the short Plan Year beginning April 1, 1994, an
election must be filed with the Committee no later than March 31, 1994. Any such
election shall be irrevocable during the Plan Year to which it applies.

         (c)      Minimum Deferrals. For each of the first four Plan Years
during which the Eligible Director is a Participant, the minimum amount of
Compensation which must be deferred under paragraph (a) of this Section 3.1 is
$10,000.

         (d)      Duration of Deferral Election. Any election made under this
Plan to defer Compensation shall remain in effect until changed or terminated by
filing a new election with the Committee in accordance with the terms of this
Section 3.1, which new election shall be effective for Compensation earned in
the subsequent Plan Year. Notwithstanding the foregoing, a Participant's
election to defer Compensation under this Plan shall cease upon such
Participant's ceasing to be an Eligible Director.

3.2 -    Investment Elections.

         (a) At the time of making the deferral elections described in Section
3.1, the Participant shall designate, on a form provided by the Committee, which
of the following types of mutual funds or contracts the Participant's Account
will be deemed to be invested in for purposes of determining the amount of
earnings to be credited to that Account:

             1)       Emerging Growth Equity Fund;
             2)       Balanced Assets Fund;
             3)       Common Stock Fund;
             4)       Real Estate Securities Fund;
             5)       Capital Growth Bond Fund; or
             6)       Money Market Fund.

In making the designation pursuant to this Section 3.2, the Participant may
specify that all or any 10% multiple of his Deferral Account be deemed to be
invested in one or more of the types of mutual funds or contracts listed above.
Effective as of the end of any calendar quarter, a Participant may change the
designation made under this Section 3.2 by filing an election, on a form
provided by the Committee, at least 30 days prior to the end of such quarter. If
a Participant fails to elect a type of fund under this Section 3.2, he or she
shall be deemed to have elected the Money Market Fund.

                                       5
<PAGE>

         (b) Although the Participant may designate the type of mutual funds or
contracts in paragraph (a) above, the Committee shall select from time to time,
in its sole discretion, a commercially available fund or contract of each of the
types described in paragraph (a) above to be the Funds. The Interest Rate of
each such commercially available fund or contract shall be used to determine the
amount of earnings to be credited to Participants' Accounts under Article IV.

                                       6
<PAGE>

                                   ARTICLE IV
                                DEFERRAL ACCOUNT

4.1 - Deferral Account.

         The Committee shall establish and maintain a Deferral Account for each
Participant under the Plan. Each Participant's Deferral Account shall be further
divided into separate subaccounts ("mutual funds subaccounts"), each of which
corresponds to a mutual fund or contract elected by the Participant pursuant to
Section 3.2(a). A Participant's Deferral Account shall be credited as follows:

         (a)      As of the last day of each month, the Committee shall credit
the mutual fund subaccounts of the Participant's Deferral Account with an amount
equal to the Compensation which the Director has elected to defer which would
have otherwise been paid to the Director during that month, that is, the portion
of the Participant's deferred Compensation that the Participant has elected to
be deemed to be invested in a certain type of mutual fund shall be credited to
the mutual fund subaccount corresponding to that mutual fund; and

         (b)      As of the last day of each month, each mutual fund subaccount
of a Participant's Deferral Account shall be credited with earnings in an amount
equal to that determined by multiplying the balance credited to such mutual fund
subaccount as of the last day of the preceding month by the Interest Rate for
the corresponding Fund selected by the Committee pursuant to Section 3.2(b).

                                       7
<PAGE>

                                    ARTICLE V
                                     VESTING

5.1 - Deferral Account.

         A Participant's Deferral Account shall be 100% vested at all times.

                                       8
<PAGE>

                                   ARTICLE VI
                                  DISTRIBUTIONS

6.1 - Amount and Time of Distribution.

         Each Participant (or, in the case of his or her death, Beneficiary)
shall be entitled to receive a distribution of benefits under this Plan as soon
as practicable following his or her Payment Eligibility Date. The amount payable
to the Participant shall be the amount credited to his or her Deferral Account
as of his or her Payment Eligibility Date.

6.2 -    Form of Distribution.

         The form of the distribution of benefits to a Participant (or his or
her Beneficiary) shall be a cash lump sum payment.

6.3 -    Election to Receive Periodic Installments.

         Notwithstanding the provisions of Section 6.1 and 6.2 of this Plan, any
Participant may at any time make an irrevocable election, on a form supplied by
the Committee, to have his or her benefits paid in ten substantially equal
annual installments beginning on the Participant's Payment Eligibility Date and
continuing on or about January 1 of each subsequent year; provided however, that
such election shall not be effective until the second anniversary of the date it
is filed with the Committee. Following the commencement of any installment
distribution, the undistributed amounts credited to the Participant's Account
shall be credited quarterly with interest at a rate equal to the mid-term
applicable federal rate (for quarterly compounding) published by the Internal
Revenue Service pursuant to Section 1274(d) of the Code for the month in which
the Participant's employment is terminated.

                                       9
<PAGE>

                                   ARTICLE VII
                                 ADMINISTRATION

7.1      Committee Action.

         The Committee shall act at meetings by affirmation vote of a majority
of the members of the Committee. Any action permitted to be taken at a meeting
may be taken without a meeting if, prior to such action, a written consent to
the action is signed by all members of the Committee and such written consent is
filed with the minutes of the proceedings of the Committee. A member of the
Committee shall not vote or act upon any matter which relates solely to himself
or herself as a Participant. The Chairman or any other member or members of the
Committee designated by the Chairman may execute any certificate or other
written direction on behalf of the Committee.

7.2      Powers and Duties of the Committee.

         (a)      The Committee, on behalf of the Participants and their
Beneficiaries, shall enforce the Plan in accordance with its terms, shall be
charged with the general administration of the Plan, and shall have all powers
necessary to accomplish its purposes, including, but not by way of limitation,
the following:

                  (1)      To select the funds or contracts to be the Funds in
                  accordance with Section 3.2(b) hereof;

                  (2)      To construe and interpret the terms and provisions of
                  this Plan;

                  (3)      To compute and certify to the amount and kind of
                  benefits payable to Participants and their Beneficiaries;

                  (4)      To maintain all records that may be necessary for the
                  administration of the Plan;

                  (5)      To provide for the disclosure of all information and
                  the filing or provision of all reports and statements to
                  Participants, Beneficiaries or governmental agencies as shall
                  be required by law;

                  (6)      To make and publish such rules for the regulation of
                  the Plan and procedures for the administration of the Plan as
                  are not inconsistent with the terms hereof; and

                  (7)      To appoint a plan administrator or any other agent,
                  and to delegate to them such powers and duties in connection
                  with the administration of the Plan as the Committee may from
                  time to time prescribe.

7.3      Construction and Interpretation.

         The Committee shall have full discretion to construe and interpret the
terms and provisions of this Plan, which interpretation or construction shall be
final and binding on all parties, including but not limited to the Company, the
Bank and any Participant of Beneficiary. The Committee shall administer such
terms and provisions in a uniform and nondiscriminatory manner and in full
accordance with any and all laws applicable to the Plan.

                                       10
<PAGE>

7.4      Information.

         To enable the Committee to perform its functions, the Company and the
Bank shall supply full and timely information to the Committee on all matters
relating to the Compensation of all Participants, their death or other cause of
termination, and such other pertinent facts as the Committee may require.

7.5      Compensation, Expenses and Indemnity.

         (a)      The members of the Committee shall serve without compensation
for their services hereunder.

         (b)      The Committee is authorized at the expense of the Company to
employ such legal counsel as it may deem advisable to assist in the performance
of its duties hereunder. Expenses and fees in connection with the administration
of the Plan shall be paid by the Company.

         (c)      To the extent permitted by applicable state law, the Company
shall indemnify and save harmless the Committee and each member thereof, the
Board of Directors and any delegate of the Committee who is an employee of the
Company or the Bank against any and all expenses, liabilities and claims,
including legal fees to defend against such liabilities and claims arising out
of their discharge in good faith of responsibilities under or incident to the
Plan, other than expenses and liabilities arising out of willful misconduct.
This indemnity shall not preclude such further indemnities as may be available
under insurance purchased by the Company or provided by the Company under any
bylaw, agreement or otherwise, as such indemnities are permitted under state
law.

7.6      Quarterly Statements.

         Under procedures established by the Committee, a Participant shall
receive a statement with respect to such Participant's Account on a quarterly
basis as of each March 31, June 30, September 30 and December 31 of each Plan
Year.

                                       11
<PAGE>

                                  ARTICLE VIII
                                  MISCELLANEOUS

8.1      Unsecured General Creditor.

Participants and their Beneficiaries, heirs, successors, and assigns shall have
no legal or equitable rights, claims, or interest in any specific property or
assets of the Company. No assets of the Company shall be held under any trust,
or held in any way as collateral security for the fulfilling of the obligations
of the Company under this Plan. Any and all of the Company's assets shall be,
and remain, the general unpledged, unrestricted assets of the Company. The
Company's obligation under the Plan shall be merely that of an unfunded and
unsecured promise of the Company to pay money in the future, and the rights of
the Participants and Beneficiaries shall be no greater than those of unsecured
general creditors.

8.2 -    Restriction Against Assignment.

         The Company shall pay all amounts payable hereunder only to the person
or persons designated by the Plan and not to any other person or corporation. No
part of a Participant's Account shall be liable for the debts, contracts, or
engagements of any Participant, his or her Beneficiary, or successors in
interest, nor shall a Participant's Account be subject to execution by levy,
attachment, or garnishment or by any other legal or equitable proceeding, nor
shall any such person have any right to alienate, anticipate, commute, pledge,
encumber, or assign any benefits or payments hereunder in any manner whatsoever.
If any Participant, Beneficiary or successor in interest is adjudicated bankrupt
or purports to anticipate, alienate, sell, transfer, assign, pledge, encumber or
charge any distribution or payment from the Plan, voluntarily or involuntarily,
the Committee, in its discretion, may cancel such distribution or payment (or
any part thereof) to or for the benefit of such Participant, Beneficiary or
successor in interest in such manner as the Committee shall direct.

8.3 -    Withholding.

         There shall be deducted from each payment made under the Plan any taxes
which are required to be withheld by the Company in respect to such payment. The
Company shall have the right to reduce any payment by the amount of cash
sufficient to provide the amount of said taxes.

8.4 -    Amendment, Modification, Suspension or Termination.

         The Company may amend, modify, suspend or terminate the Plan in whole
or in part, except that no amendment, modification, suspension or termination
shall have any retroactive effect to reduce any amounts allocated to a
Participant's Account. In the event that this Plan is terminated, the
distribution of the amounts credited to a Participant's Deferred Account shall
not be accelerated but shall be paid at such time and in such manner determined
under the terms of the Plan immediately prior to termination as if the Plan had
not been terminated.

8.5 -    Governing Law.

         This Plan shall be construed, governed and administered in accordance
with the laws of the State of California.

                                       12
<PAGE>

8.6 -    Receipt or Release.

Any payment to a Participant or the Participant's Beneficiary in accordance with
the provisions of the Plan shall, to the extent thereof, be in full satisfaction
of all claims against the Committee, the Company and the Bank. The Committee may
require such Participant or Beneficiary, as a condition precedent to such
payment, to execute a receipt and release to such effect.

8.7. -   Payments on Behalf of Person Under Incapacity.

         In the event that any amount becomes payable under the Plan to a person
who, in the sole judgement of the Committee, is considered by reason of physical
or mental condition to be unable to give a valid receipt therefore, the
Committee may direct that such payment be made to any person found by the
Committee, in its sole judgement, to have assumed the care of such person. Any
payment made pursuant to such determination shall constitute a full release and
discharge of the Committee, the Company and the Bank.

8.8. -   Headings, etc. Not Part of Agreement.

         Headings and subheadings in this Plan are inserted for convenience of
reference only and are not to be considered in the construction of the provision
hereof.

                                       13
<PAGE>

                                   ARTICLE IX
                                 BENEFIT OFFSET

9.1 -    Offset for Certain Benefits Payable Under Split-Dollar Life Insurance
         Policies.

         (a)      Notwithstanding anything contained herein to the contrary, any
benefits payable under this Plan shall be offset by the value of benefits
received by the Participants under certain life insurance policies as set forth
in this Section. Participants in this Plan may own life insurance policies (the
"Policies") purchased on their behalf by the Company. The exercise of ownership
rights under these Policies by each Participant is, however, subject to certain
conditions (set forth in a "Split-Dollar Life Insurance Agreement" between each
Participant and the Company, pursuant to which the Company holds a security
interest on the Policy) and, if the Participant fails to meet the conditions set
forth in the Split-Dollar Life Insurance Agreement, the Company may exercise its
security interest in the Policy and cause the Participant to lose certain
benefits under the Policy. In the event that a Participant satisfies the
conditions specified in Section 4 or 5 of the Split-Dollar Life Insurance
Agreement, so that the Participant or his or her beneficiary under the Policy
becomes entitled to exercise rights free from the Company's security interest
under one of those sections, or the Company's security interest is otherwise
released, the value of those benefits shall constitute an offset to any benefits
otherwise payable under this Plan which accrued in years in which premiums were
paid on the Policy. As the case may be, this offset (the "Offset Value") shall
be equal to the value of benefits payable under the Split-Dollar Life Insurance
Agreement, that is, the cash surrender value of the Policy or, in the case of
Participant's death, the death benefit payable to the beneficiary under the
Policy. The Offset Value shall then be compared to the Participant's Account,
and the amounts credited to the Account shall be reduced, but not to less than
zero, by the Offset Value; provided, however, that any portion of the Account
which is attributable to compensation deferred during Plan Years in which the
Company did not pay premiums on the Policy shall not be reduced by the Offset
Value, and the Committee shall maintain subaccounts of a Participant's Account
to the extent necessary to determine the portion of the Account which is subject
to offset and the portion which is not subject to offset.

         (b)      If the Policy in subsection (a) is not on the life of the
Participant and the insured dies prior to distribution of benefits under this
Plan, then the value of the benefits received by the participant under the
Policy will offset the Participant's Account under this Plan to the extent
described herein. This offset ("Offset Value") shall be equal to the amount of
death benefit payable to the Participant divided by the Tax Adjustment Factor.
This Offset Value shall then be compared to the Participant's Account, and the
amounts credited to the Account shall be reduced, but not to be less than zero,
by the Offset Value; provided, however, that any portion of the Account which is
attributable to compensation deferred during Plan Years in which the Company did
not pay premiums on the Policy shall not be reduced by the Offset Value.

         (c)      The reduction described in Section 9.1(a) or 9.1(b) shall be
made as of the date on which the Participant or his or her beneficiary becomes
entitled to exercise rights under the Policy free of the Company's security
interest.

         (d)      In the event of an offset as described in this Section 9, any
election to receive distribution of the amount credited to a Participant's
Account in the form of installments shall be

                                       14
<PAGE>

deemed to be revoked, and any benefits which are or become payable under this
Plan after such offset shall be paid in a lump sum on the Participant's Payment
Eligibility Date.

         IN WITNESS WHEREOF, the Corporation has caused this document to be
executed by its duly authorized officer on this 7th day of June, 1995.

                                       CITY NATIONAL CORPORATION

                                       BY:      /s/   BRAM GOLDSMITH
                                          -------------------------------------

                                       Title:            CHAIRMAN / CEO
                                             ----------------------------------

                                       15<PAGE>
                                                                Exhibit 10.18

                                [DUANE READE LETTERHEAD]

ANTHONY J. CUTI
Chairman & Chief Executive Officer

                                                          June 14, 1999

Mr. John Henry
Two Sage Rd.
Toms River, NJ 08753

Dear John,

         Received your executed employment letter and would like to take this
opportunity to congratulate you on joining our team.

         With regard to your modification of the Termination provision, I was
not clear on what you intended by specifying that it applies to your position of
Senior Vice President and Chief Financial Officer. If your concern was that
involuntary transfer to another responsibility should be considered termination
I do not have a problem with that. Otherwise, if I somehow missed the point,
please clarify.

         I would like to arrange a lunch with you, Gary, Jerry and Bill at your
earliest convenience before June 25th. Could you arrange this date with Patty?

                                   Sincerely,

                                   /s/ Anthony J. Cuti

                                   Anthony J. Cuti

AJC/pe
<PAGE>

                                  JOHN K. HENRY
                                  TWO SAGE ROAD
                              TOMS RIVER, NJ 08753
                            Telephone # 732-255-3788
                            Facsimile # 732-255-3729
                           E-mail: Jhenry@Prodigy.net

Via Facsimile # 212-244-6592

# Of Pages:  1

June 16, 1999

Mr. Anthony J. Cuti
Chairman, President & CEO
Duane Reade

Dear Tony:

You correctly interpreted my concern and I am fine with your response.

I will contact Patty today to set up the meeting you requested. It would be
helpful to me if the meeting could be at the beginning or end of a day. Lunch
meetings in the city consume almost half the business day considering the travel
time.

Thanks,

/s/ John K. Henry

John K. Henry

<PAGE>

                                  JOHN K. HENRY
                                  TWO SAGE ROAD
                              TOMS RIVER, NJ 08753
                            Telephone # 732-255-3788
                            Facsimile # 732-255-3729
                           E-mail: Jhenry@Prodigy.net

Via Facsimile # 212-244-6592

# Of Pages: 3

June 12, 1999

Mr. Anthony J. Cuti
Chairman, President & CEO
Duane Reade

Dear Tony:

Attached is the executed employment letter. I have executed this letter with the
understanding that the Termination Provision will apply to my position as Senior
Vice President and Chief Financial Officer. I recognize that this may not have
been your intention. While it's unlikely that this will ever be an issue, this
is protection I enjoy in my current employment agreement that I do not want to
lose. If this clarification is unacceptable to you or if you would like to
discuss further, I will be available at your convenience.

If this is acceptable to you, I would like to start receiving any financial and
operational reports, which will enhance my understanding of the company, and the
various issues in which I will become involved.

I am fully aware of the confidentiality requirements and would agree to keep any
and all information you would provide strictly confidential.

You can send any information to my home address. E-mail or fax # above.

Regards,

/s/ John K. Henry

John K. Henry

<PAGE>

                               [DUANE READE LETTERHEAD]

ANTHONY J. CUTI
Chairman & Chief Executive Officer

                                                               June 10, 1999

FACSIMILE-(732-255-3729)

                                                                     REVISED
Mr. John Henry
2 Sage Rd.
Toms River, NJ 08753

Dear John,

         As we discussed in our telephone conversation, I am pleased to offer
you the following poaition with Duane Reade:

POSITION:               Senior Vice President and Chief Financial Officer

SALARY:                 $245,000.00 Annual

INCENTIVE:              Management Incentive Plan of 50% of annual salary based
                        on Company EBITDA attainment of $84MM. Copy of MIP
                        plan structure attached.

BENEFITS:               Executive plan--coverage begins on first day of work.

                        Vacation will be four (4) weeks per year. No more
                        than two (2) weeks to be taken consecutively and in
                        conjunction with an executive vacation schedule
                        approved by the Chairman's office so as to avoid
                        excessive multiple absences of key management.

STOCK OPTIONS:          50,000 stock option shares, five year vesting at 20%
                        each year, strike price set on average trading price
                        for five (5) trading days preceding first day of
                        employment.

TRANSPORTATION:         $500.00 per month transportation allowance will be
                        provided by the Company.

START DATE:             You must be available for full time employment on or
                        before August 1,1999.

<PAGE>

Mr. John Henry
June 10, 1999
Page 2

TERMINATION:            Should your employment be involuntarily terminated
                        for any reason, except for cause, you will be
                        entitled to a severance equivalent of 12 months
                        salary. Additionally, should your termination be the
                        product of a change in control on a voluntary or
                        involuntary basis, your stock options will
                        immediately vest and the Company will assure that
                        gains on options exercised are equivalent to at least
                        one year salary.

                        A relocation of your principal office work location
                        outside the New York Metropolitan area will be
                        considered a termination without cause. "Cause" shall
                        be defined as a conviction of a crime, knowingly
                        commit a violation of Company policy resulting in
                        material damage to the Company, or refusal to perform
                        any of the responsibilities of the position. (See
                        attached Letter of Understanding).

REPORTS TO:             Anthony Cuti--Chairman/President/Chief Executive
                        Officer.

         I would ask that you make every effort to start earlier than
August 1, 1999. It is also expected that you spend some time at Duane Reade
each week from the date of your departure announcement of your current
employer so that you will start on a more informed basis.

         This offer of employment is effective for 72 hours from facsimile
transmission.

         Since public relations on your announcement is important, this offer is
confidential and all public releases of this information must be controlled by
Duane Reade.

         Lastly, let me take this opportunity to state that I believe your
capabilities are well matched with our needs and accordingly, you should find
this position a rewarding experience professionally.

         I look forward to your positive acceptance which you should indicate
with your signature below and return of this offer letter to our offices via
facsimile (212-244-6592).

                                    Sincerely,

                                    /s/ Anthony J. Cuti

                                    Anthony J. Cuti

ACCEPTED THIS 12TH DAY OF JUNE 1999

/s/ John Henry
----------------------------------------
John Henry

AJC/pe

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00004-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00004-of-00352.parquet"}]]