**Exhibit 4.2**

 

DuaneReade Inc.

 

and

The Guarantors Named on the Signature Pages Hereto

$80,000,000

91⁄4% Senior Subordinated Notes due 2008

SecondSupplemental Indenture

Dated as of May 20,  2002

To Indenture dated as of February 13, 1998,

As Amended by the First Supplemental Indenture

Dated as of August 22, 1999

StateStreet Bank and Trust Company

as Trustee

 

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SECOND SUPPLEMENTALINDENTURE, dated as of May 20, 2002 (this “Supplemental Indenture”), amongDuane Reade Inc., a Delaware corporation (the “Company”), the SubsidiaryGuarantors executing a signature page hereto (the “Subsidiary Guarantors”), andState Street Bank and Trust Company, as trustee (the “Trustee”).

W I T N E S S E T H:

WHEREAS, the Company, theSubsidiary Guarantors and the Trustee executed and delivered an Indenture,dated as of February 13, 1998 (the “Indenture”), providing for theissuance of $80,000,000 principal amount of 91⁄4% Senior Subordinated Notes due2008 (all capitalized terms used herein and not defined are used herein as definedin the Indenture);

WHEREAS, pursuant to Section9.02 of the Indenture, the Company, the Subsidiary Guarantors and the Trusteemay amend or supplement certain terms and covenants contained in the Indenturewith the written consent of the Holders of a majority in aggregate principalamount of the outstanding Notes;

WHEREAS, the Company hasoffered to purchase for cash all of the outstanding Notes, upon the terms andsubject to the conditions set forth in its Offer to Purchase and ConsentSolicitation Statement, dated May 3, 2002, and in the related Letter ofTransmittal and Consent (such offer, the “Offer”); in connection therewith theCompany has been soliciting written consents of the Holders to the substance ofthe amendments to the Indenture set forth herein (and to the execution of thisSupplemental Indenture), and the Company has now obtained such written consentsfrom the Holders of a majority in aggregate principal amount of the outstandingNotes; accordingly, this Supplemental Indenture and the amendments set forthherein are authorized pursuant to Section 9.02 of the Indenture referred toabove;

WHEREAS, the execution anddelivery of this Supplemental Indenture has been duly authorized by the partieshereto, and all other acts necessary to make this Supplemental Indenture avalid and binding supplement to the Indenture effectively amending theIndenture as set forth herein have been duly taken;

NOW THEREFORE, THISINDENTURE WITNESSETH, that, for and in consideration of the above premises, itis mutually covenanted and agreed, for the equal and proportionate benefit ofall Holders of the Notes, as follows:

**Section 1.              Amendments to the Indenture.**

Upon written notification tothe Trustee by the Company that it has purchased pursuant to the Offer all Notesvalidly tendered pursuant to the Offer and not withdrawn prior to theexpiration date for the Offer, the Company, the Subsidiary Guarantors and theTrustee hereby agree as follows:

#### a.             Section 1.01 of the Indenture isamended to remove the definitions of the following terms:

“Acquired Indebtedness”

 

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“AttributableIndebtedness”

“Capital ExpenditureIndebtedness”

“Existing Indebtedness”

“Investments”

“Permitted Investments”

 “Permitted Refinancing Indebtedness”

“Refinancing Plan”

“Restricted Investments”

“Restricted Payment”

“Stated Maturity”

“Weighted Average Life toMaturity”

#### b.             The following definition in Section1.01 of the Indenture is amended in its entirety to read as follows:

““AssetSale” means (a) the sale, lease, conveyance, disposition or other transfer(a “disposition”) of any properties, assets or rights (including, withoutlimitation, a sale and leaseback transaction) or (b) the issuance, sale ortransfer by the Company of Equity Interests of a Subsidiary, and in the case ofeither clause (a) or (b), whether in a single transaction or a series ofrelated transactions for Net Proceeds in excess of $1.0 million; provided,however, that the following transactions will be deemed not to be AssetSales: (i) sales of inventory in the ordinary course of business; (ii) adisposition of assets by the Company to a Wholly Owned Subsidiary or by aWholly Owned Subsidiary of the Company to the Company or to another WhollyOwned Subsidiary of the Company; (iii) a disposition of Equity Interests by aWholly Owned Subsidiary of the Company to the Company or to another WhollyOwned Subsidiary of the Company; and (iv) the sale and leaseback of any assetswithin 90 days of the acquisition of such assets.”

#### c.             Section 1.02 of the Indenture isamended in its entirety to read as follows:

“Section 1.02. Other Definitions.

 

 

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| **Term**                                    |   | **Defined in   Section** |
|---------------------------------------------|--------|--------------------------|
| “Act”                             |   | 1.07                     |
| “Asset Sale Offer”                |   | 3.10                     |
| “Change of Control Offer”         |   | 4.09                     |
| “Change of Control  Payment”      |   | 4.09                     |
| “Change of Control Payment  Date” |   | 4.09                     |
| “Covenant Defeasance”             |   | 8.03                     |
| “distribution”                    |   | 10.14                    |
| “DTC”                             |   | 2.03                     |
| “Event of Default”                |   | 6.01                     |
| “Excess Proceeds”                 |   | 4.10                     |
| “Legal Defeasance”                |   | 8.02                     |
| “Offer Amount”                    |   | 3.10                     |
| “Offer Period”                    |   | 3.10                     |
| “Paying Agent”                    |   | 2.03                     |
| “payment”                         |   | 10.14                    |
| “Payment Blockage Notice”         |   | 10.03                    |
| “Payment Default”                 |   | 6.01                     |
| “Payment in full”                 |   | 10.01                    |
| “Purchase Date”                   |   | 3.10                     |
| “Registrar”                       |   | 2.03”               |

####  

#### d.             Sections 4.04 through 4.08 of theIndenture are amended in their entirety to read as follows:

“Section 4.04.

[Intentionally omitted.]

Section 4.05.

[Intentionally omitted.]

Section 4.06.

[Intentionally omitted.]

Section 4.07.

[Intentionally omitted.]”

Section 4.08.

[Intentionally omitted.]”

 

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#### e.             Sections 4.11 through 4.19 of theIndenture are amended in their entirety to read as follows:

“Section 4.11.

[Intentionally omitted.]

Section 4.12.

[Intentionally omitted.]

Section 4.13.

[Intentionally omitted.]

Section 4.14.

[Intentionally omitted.]

Section 4.15.

[Intentionally omitted.]

Section 4.16.

[Intentionally omitted.]

Section 4.17.

[Intentionally omitted.]

Section 4.18.

[Intentionally omitted.]

Section 4.19.

[Intentionally omitted.]”

#### f.              Sections 5.01 through 5.02 of theIndenture are amended in their entirety to read as follows:

“Section 5.01.

[Intentionally omitted.]

Section 5.02.

[Intentionally omitted.]”

 

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#### g.             Sections 6.01(d) through 6.01(i) ofthe Indenture are amended in their entirety to read as follows:

“(d) [Intentionallyomitted];

(e) [Intentionally omitted];

(f) [Intentionally omitted];

(g) [Intentionally omitted];

(h) [Intentionally omitted];and

(i) [Intentionallyomitted].”

#### h.             Section 6.02 of the Indenture isamended in its entirety to read as follows:

“Section 6.02.  Acceleration.

Ifany Event of Default occurs and is continuing, the Trustee or the Holders of atleast 25% in principal amount of the then outstanding Notes may declare all theNotes to be due and payable immediately; provided, that so long as anyIndebtedness permitted to be incurred pursuant to the New Credit Agreementshall be outstanding, such acceleration shall not be effective until theearlier of (a) any acceleration of any such Indebtedness under the New CreditAgreement and (b) five Business Days after receipt by the Company of writtennotice of such acceleration.  Holders ofthe Notes may not enforce this Indenture or the Notes except as provided inthis Indenture.”

#### i.              Section 8.03 of the Indenture isamended in its entirety to read as follows:

“Section 8.03         Covenant Defeasance.

Upon the Company’s exerciseunder Section 8.01 hereof of the option applicable to this Section 8.03, theCompany and each Subsidiary Guarantor shall be released from its obligationsunder the covenants contained in Sections 4.09 and 4.10 with respect to theoutstanding Notes and Subsidiary Guarantees, on and after the date theconditions set forth below are satisfied (hereinafter, “Covenant Defeasance”),and the Notes and the Subsidiary Guarantees shall thereafter be deemed to benot “outstanding” for the purposes of any direction, waiver, consent ordeclaration or Act of Holders (and the consequences of any thereof) inconnection with such covenants, but shall continue to be deemed “outstanding”for all other purposes hereunder (it being understood that such Notes andSubsidiary Guarantees shall not be deemed outstanding for financial accountingpurposes). For this purpose, such Covenant Defeasance means that, with respectto the outstanding Notes and Subsidiary Guarantees, the Company and anySubsidiary Guarantor may omit to comply with and shall have no liability inrespect of any term, condition or limitation set forth in any such covenant,whether directly or indirectly, by reason of any reference elsewhere herein toany such covenant or by reason of any 

 

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reference in any suchcovenant to any other provision herein or in any other document and suchomission to comply shall not constitute a Default or an Event of Default underSection 6.01(c) hereof, but, except as specified above, the remainder of thisIndenture and such Notes and Subsidiary Guarantees shall be unaffectedthereby.”

#### j.              Section 11.03(b) of the Indentureis amended in its entirety to read as follows:

“(b) No Subsidiary Guarantorshall consolidate with or merge with or into (whether or not such SubsidiaryGuarantor is the surviving Person), or sell all or substantially all of itsassets to, another Person, whether or not affiliated with such Subsidiary Guarantor,unless, other than with respect to a merger between a Subsidiary Guarantor andanother Subsidiary Guarantor or a merger between a Subsidiary Guarantor and theCompany, (i) subject to the provisions of Section 11.04 hereof, the Personformed by or surviving any such consolidation or merger (if other than suchSubsidiary Guarantor) assumes all the obligations of such Subsidiary Guarantorpursuant to a supplemental indenture substantially in the form of Exhibit Chereto, under the Subsidiary Guarantee of such Subsidiary Guarantor and thisIndenture; (ii) immediately after giving effect to such transaction, no Defaultor Event of Default exists; and (iii) the Company would be permitted,immediately after giving effect to such transaction, to incur at least $1.00 ofadditional Indebtedness if the Company’s Fixed Charge Coverage Ratio for theCompany’s most recently ended four fiscal quarters for which internal financialstatements are available immediately preceding the date on which suchtransaction occurred would have been at least 2.0 to 1, determined on aconsolidated *pro forma*basis(including a *pro forma*applicationof the transaction), as if the transaction had occurred at the beginning ofsuch four-quarter period.”

**Section 2.              Ratification and Effect.**

Except as hereby expresslyamended, the Indenture is in all respects ratified and confirmed and all theterms, provisions and conditions thereof shall be and remain in full force andeffect.

Upon and after the executionof this Supplemental Indenture, each reference in the Indenture to “thisIndenture”, “hereunder”, “hereof” or words of like import referring to theIndenture shall mean and be a reference to the Indenture as modified hereby.

**Section 3.              Governing Law.**

THE INTERNAL LAWS OF THESTATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTALINDENTURE, THE INDENTURE AS SUPPLEMENTED AND AMENDED HEREBY, THE NOTES AND THESUBSIDIARY GUARANTEES WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLESTHEREOF.

**Section 4.              Counterpart Originals.**

The parties may sign anynumber of copies of this Supplemental Indenture.  Each signed copy shall be an original, but all of them togetherrepresent the same agreement.

 

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**Section 5.              The Trustee.**

The recitals in thisSupplemental Indenture shall be taken as the statements of the Company and theSubsidiary Guarantors, and the Trustee assumes no responsibility for theircorrectness.  The Trustee shall not beresponsible or accountable in any manner whatsoever for or with respect to thevalidity or sufficiency of this Supplemental Indenture.

[Signatureson following page]

 

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IN WITNESS WHEREOF, theparties hereto have caused this Supplemental Indenture to be duly executed inNew York, New York as of the date first written above.
| DUANE  READE INC.                     |
|---------------------------------------|
|                                  |
|                                  |
| By:                                   | /s/ John K. Henry |
| Name:                                 | John  K. Henry |
| Title:                                | Senior  Vice President and Chief Financial Officer |
|                                  |
|                                  |
| STATE  STREET BANK AND TRUST COMPANY, |
| as  Trustee                           |
|                                  |
|                                  |
| By:                                   | /s/ Susan Merker |
| Name:                                 | Susan  Merker |
| Title:                                | Vice  President |

 

 

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Each of the followingentities as Subsidiary Guarantor:
| DUANE READE              |              | DUANE READE INTERNATIONAL, INC. |
|--------------------------|-------------------|---------------------------------|
|                     |              |                            |   |   |
| By:                      | DUANE READE INC., |                            |   |   |
|                     | a general partner |                            |   |   |
|                     |              |                            |   |   |
|                     | By:               | /s/ John K. Henry               |   | By: : | /s/ John K. Henry |
|                     |              | Name:                           | John K. Henry |   | Name:  | John K. Henry |
|                     |              | Title:                     | Senior Vice President |   | Title:  | Senior Vice President |
|                     |              |                            |   |   |
|                     |              |                            |   |   |
| By:                      | DRI I INC.,       |                            |   |   |
|                     | a general partner |                            |   |   |
|                     |              |                            |   |   |
|                     | By:               | /s/ John K. Henry               |   |   |   |
|                     |              | Name:                           | John K. Henry |   |   |   |
|                     |              | Title:                          | Senior Vice President |   |   |   |
|                     |              |                            |   |   |
|                     |              |                            |   |   |
| DRI I INC.               |              |                            |   |
|                     |              |                            |   |   |
| By:                      | /s/ John K. Henry |                            |   |   |
|                     | Name:             | John K. Henry                   |   |   |   |
|                     | Title:            | Senior Vice President           |   |   |   |
|                     |              |                            |   |   |
|                     |              |                            |   |   |
| DUANE READE REALTY, INC. |              |                            |   |
|                     |              |                            |   |   |
| By: :                    | /s/ John K. Henry |                            |   |   |
|                     | Name:             | John K. Henry                   |   |   |   |
|                     | Title:            | Senior Vice President           |   |   |   |
|                          |                   |                                 |  |  |  |  |  |

 

 

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