**Exhibit 10.28**

ANNEX I

AMENDMENT NO. 1 TO FOURTH AMENDED AND RESTATED CREDITAGREEMENT

                AmendmentNo. 1 to the Fourth Amended and Restated Credit Agreement, dated as of April 9,2002 (this “Amendment”), among DUANE READE, a New York generalpartnership (the “Borrower”), DUANE READE INC., a Delaware corporation(“Holdings”), DRI I INC., a Delaware corporation (“DRI I” and,together with Holdings, collectively, the “Parent Guarantors”), DUANEREADE INTERNATIONAL, INC., a Delaware corporation (“Duane Reade IP”),DUANE READE REALTY, INC., a Delaware corporation (“Duane Reade Realty”and together with Duane Reade IP, collectively, the “Affiliate Guarantors”and, together with the Parent Guarantors, collectively, the “DesignatedGuarantors”), CREDIT SUISSE FIRST BOSTON (“CSFB”), as syndicationagent (in such capacity, the “Syndication Agent”) for the Lenders andFLEET NATIONAL BANK (“Fleet”), as administrative agent (in suchcapacity, the “Administrative Agent”) for the Lenders.

 

WITNESSETH:

 

                WHEREAS, the Borrower,Holdings, the Designated Guarantors, various financial institutions (the “Lenders”),the Agents and Credit Lyonnais New York Branch, as the documentation agent forthe Lenders, have heretofore entered into the Fourth Amended and RestatedCredit Agreement, dated as of July 10, 2001 (as amended or otherwise modifiedprior to the date hereof the “Existing Credit Agreement” and as soamended by this Agreement, the “Credit Agreement”); and

 

WHEREAS, the Borrower, Holdings and the DesignatedGuarantors desire, and the Lenders are willing, on the terms and subject to theconditions hereinafter set forth, to amend the Existing Credit Agreement as setforth herein to permit them to do so;

 

NOW, THEREFORE, theparties hereto hereby agree as follows:

PARTIDEFINITIONS

SUBPART 1.1  Certain Definitions.  Unless otherwise defined herein or thecontext otherwise requires, terms used in this Amendment, including itspreamble and recitals, have the following meanings (such meanings to be equallyapplicable to the singular and plural forms thereof):
|   |   | “Administrative Agent”  is defined in the preamble. |
|--------|--------|---------------------------------------------------------------|
|   |   |                                                          |
|   |   | “Affiliate Guarantors”  is defined in the preamble. |
|   |   |                                                          |
|   |   | “Amendment” is  defined in the preamble.            |

 

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|   | “Amendment Effective  Date” is defined in Subpart 3.1.        |
|--------|-------------------------------------------------------------------------|
|   |                                                                    |   |
|   | “Borrower” is  defined in the preamble.                       |
|   |                                                                    |   |
|   | “Credit Agreement”  is defined in the first recital.          |
|   |                                                                    |   |
|   | “CSFB” is defined  in the preamble.                           |
|   |                                                                    |   |
|   | “Designated Guarantors”  is defined in preamble.              |
|   |                                                                    |   |
|   | “DRI I” is defined  in the preamble.                          |
|   |                                                                    |   |
|   | “Duane Reade IP” is  defined in preamble.                     |
|   |                                                                    |   |
|   | “Duane Reade Realty”  is defined in preamble.                 |
|   |                                                                    |   |
|   | “Existing Credit  Agreement” is defined in the first recital. |
|   |                                                                    |   |
|   | “Holdings” is defined in the preamble.                        |
|   |                                                                    |   |
|   | “Lenders” is defined in the first recital.                    |
|   |                                                                    |   |
|   | “Parent Guarantors”  is defined in the preamble.              |
|   |                                                                    |   |
|   | “Syndication Agent” is defined in the preamble.               |

 

SUBPART 1.2  Other Definitions.  Unless otherwise defined herein or thecontext otherwise requires, terms used in this Amendment, including itspreamble and recitals, have the meanings set forth in the Existing CreditAgreement.  Each reference to “hereof”,“hereunder”, “herein” and “hereby” and each other similar reference and eachreference to “this Agreement” and each other similar reference contained in theExisting Credit Agreement shall from and after the Amendment Effective Daterefer to the Credit Agreement.

PARTIIAMENDMENTS TO EXISTING CREDIT AGREEMENT

Effective on (and subject to the occurrence of) theAmendment Effective Date, the Existing Credit Agreement is hereby amended inaccordance with this Part II.  Except tothe extent amended by this Amendment, the Existing Credit Agreement is andshall continue to be in full force and effect and is hereby ratified and confirmedin all respects.

SUBPART 2.1  Amendments to Article I.

(a)  Section 1.1 of the Existing Credit Agreementis hereby amended by inserting the following definitions in such section in theappropriate alphabetically sequence:

“First Amendment Effective Date” meansApril 9, 2002.

 

 

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“SeniorConvertible Note Documents” means the Senior Convertible Note Indenture,the Senior Convertible Notes Guarantee and the Senior Convertible Notes, ineach case on terms and conditions reasonably satisfactory to the SyndicationAgent.

 

                “Senior Convertible Note Indenture” means thatcertain indenture among Holdings and the Borrower and DRI I, as subsidiaryguarantors, and State Street Bank and Trust Company of Connecticut, N.A., asTrustee, as amended or otherwise modified from time to time after the FirstAmendment Effective Date in accordance with the terms hereof and thereof.

 

                “SeniorConvertible Notes” means the Senior Convertible Notes due April 2022 issuedby Holdings for gross cash proceeds of at least $100,000,000.

 

                “Senior Convertible Notes Guarantee” means thejoint and several guarantees of the Borrower, DRI I and each other Subsidiaryof Holdings in favor of the holders of the Senior Convertible Notes as setforth in the Senior Convertible Note Indenture and each other subsidiaryguarantee delivered pursuant to the terms of the Senior Convertible NoteIndenture and, in each case, as amended or otherwise modified from time to timeafter the First Amendment Effective Date in accordance with the terms hereofand thereof.

 

(b)  Clause (e) of the definition of  “Change in Control” is hereby deleted andreplaced with “any “Change of Control” or similar term, as such term is definedin the Senior Subordinated Note Indenture or the Senior Convertible NoteIndenture.”

(c)  The definition of “Material Documents” ishereby amended by inserting the words “, the Senior Convertible NoteDocuments,” immediately  preceding thewords “, the Recapitalization Agreement” and immediately following the words“the Senior Subordinated Note Documents,” in the second line of suchdefinition.

SUBPART 2.2  Amendments to Article VI.  Article VI is hereby amended by insertingthe following new Section 6.18 at the end of such Article:

                “SECTION 6.18. Issuance of Senior Convertible Notes.  (a) The Senior Convertible Notes have been issued and sold to theunderwriters thereof on the date of the issuance thereof in accordance with and pursuant to theSenior Convertible Note Indenture and the other Senior Convertible NoteDocuments and in compliance with all laws, including the Securities Act of1933, as amended and all other applicable federal and state securitieslaws.  The issuance of the SeniorConvertible Notes and the execution of the Senior Convertible Note Indentureand the other Senior Convertible Note Documents have been duly authorized byall necessary action on the part of the Borrower and each Designated Guarantorand will not require any consent or approval of any governmental agency orauthority that has not been obtained prior to the issuance thereof.  The issuance of the Senior Convertible Notesand the execution of the Senior Convertible Note Indenture and the other SeniorConvertible Note Documents do not conflict with (i) any material provision ofany material law, (ii) the Organic Documents of the Borrower or any DesignatedGuarantor, (iii) any material agreement binding upon the Borrower or 

 

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any Designated Guarantor,or (iv) any material court or administrative order or decree applicable to theBorrower or any Designated Guarantor, and do not and will not require, orresult in, the creation or imposition of any Lien on any asset of the Borroweror any Designated Guarantor.  Allrepresentations and warranties of the Borrower or any Designated Guarantorcontained in the Senior Convertible Note Indenture and the other SeniorConvertible Note Documents are true and correct in all material respects as ofthe date of the issuance thereof.

                (b) Each Senior Convertible Note Document (includingthe Senior Convertible Notes and the Senior Convertible Notes Guarantee)constitutes the legal, valid and binding obligation of each of the Borrower orany Designated Guarantor, as the case may be, enforceable against each of the Borroweror any Designated Guarantor as the case may be, in accordance with its terms.”

SUBPART 2.3  Amendments to Article VII.

(a)  Section 7.2.2 of the Existing CreditAgreement is hereby amended by (i) deleting the word “and” at the end of clause(m); (ii) relettering clause (n) as clause (o) and (iii) inserting thefollowing new clause (n) in appropriate alphabetical order:

                “(n) (i) Indebtedness of Holdings evidenced bythe Senior Convertible Notes and (ii) Indebtedness of the Borrower, DRI I andeach other Subsidiary of Holdings consisting of Contingent Liabilities underthe Senior Convertible Notes Guarantees in respect of the Indebtednessdescribed in clause (n)(i).”

(b)  The proviso at the end of Section 7.2.2 ofthe Existing Credit Agreement is hereby amended by (i) deleting the word “(n)”and substituting the word “(o) in each instance thereof, (ii) inserting theword “either (i)” immediately preceding the words “the Senior Subordinated NoteIndenture” and immediately following the words “under and as defined in” in the second to last line thereof and (iii)inserting the words “or (ii) the Senior Convertible Note Indenture” immediatelyafter the words “Closing Date” in the last line thereof.

(c)  Clause (l) of Section 7.2.5 of the ExistingCredit Agreement is hereby amended by (i) inserting the word “either (i)”immediately preceding the words “the Senior Subordinated NoteIndenture” and immediately after the words “under and as defined in” in the second to last line thereof and (ii)inserting the words “or (ii) the Senior Convertible Note Indenture”,immediately after the words “Closing Date” in the last line thereof.

(d)  Clause (b) of Section 7.2.6of the Existing Credit Agreement is hereby amended by (i) inserting the words“any Senior Convertible Note or” preceding the words “any subordinated note(including any Senior Subordinated Note)” in clauses (i) and (ii) thereof and(ii) inserting thewords “the Senior Convertible Notes Documents or” immediately preceding thewords “the documents and instruments memorializing” in clause (i) thereof.

 

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(e)  Section 7.2.6 of the Existing CreditAgreement is hereby amended by (i) amending and restating clause (c)(i)(B) toread “(B) such Restricted Payments are permitted to be paid at such time underthe Senior Subordinated Note Indenture”, (ii) deleting the number“$20,000,000” and replacing it with “30,000,000” in clause (c)(ii), (iii)deleting the word “and” at the end of clause (g), (iv) deleting the period at theend of clause (h) and replacing it with “;” and (v) adding new clauses (i), (j)and (k) inappropriate alphabetical order to read as follows:

“(i)  notwithstanding the provisions of clauses(a) or (b) above, the Borrower and each Affiliate Guarantor shall bepermitted to make Restricted Payments to DRI I (which shall in turn utilize allof any such Restricted Payment to make Restricted Payments to Holdings) and toHoldings, in each case to the extent necessary (i) to enable Holdings to payinterest on the Senior Convertible Notes as required by the Senior ConvertibleNote Indenture, (ii) to allow Holdings to purchase, redeem or defease theSenior Convertible Notes as may be required by the Senior Convertible NoteIndenture pursuant to a “Change in Control” (as defined in the SeniorConvertible Note Indenture), (iii) to allow Holdings to make any paymentsrequired to be made as a result of Holdings failure to file a registrationstatement with the SEC, the failure of such registration statement to become effectiveor the failure to keep the prospectus contained in the registration statementavailable, in each case for the time periods set forth and contemplated in theapplicable Senior Convertible Notes Documents and (iv) convert any SeniorConvertible Notes into Capital Stock of Holdings;

 

(j)  notwithstanding the provisions of clauses(a), (b), (c) or (i) above, in the event that theBorrower offers to make a voluntary prepayment of New Term B Loans pursuant to clause(a) of Section 3.1.1 and the Borrower allows the Lenders holding NewTerm B Loans to decline to accept such payment, the Borrower may makeRestricted Payments to DRI (which shall in turn utilize all of any suchRestricted Payment to make Restricted Payments to Holdings) and to Holdings inan amount equal to the amount declined by the Lenders holding New Term B Loansand Holdings may use such amount to purchase, redeem or defease the SeniorConvertible Notes or, so long as no Default has occurred and is continuing, theSenior Subordinated Notes; and

 

(k)  notwithstanding anything else contained inthis Agreement, the Borrower agrees for the period commencing on the FirstAmendment Effective Date and ending on the date that is 90 days following theFirst Amendment Effective Date, so long as no Default has occurred and iscontinuing, the Borrower shall not make any prepayment of New Term B Loanspursuant to clause (a) of Section 3.1.1.”

 

PARTIIICONDITIONS TO EFFECTIVENESS

SUBPART 3.1  Amendment Effective Date.  This Amendment shall become effective as ofthe date (the “Amendment Effective Date”) first set forth above when theAgents shall have 

 

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received counterparts of this Amendment, duly executedby each of the Borrower, Holdings, each of the Designated Guarantors, theSyndication Agent and the Administrative Agent on behalf of the RequiredLenders (including greater than 50% of the Lenders holding New Term B Loans)who shall have delivered to the Administrative Agent their written consent to theamendments, as explicitly set forth herein and subject to the terms hereof.

SUBPART 3.2  Amendment Fee.  The Agents shall havereceived (a) for the account of each Lender with Term Loans or a Revolving LoanCommitment an amendment fee in an amount equal to .20% (in the case of Lendersdelivering an executed signature page to the Amendment Agreement to theSyndication Agent prior to 5:00 p.m., New York City time, April 9, 2002) or..10% (in the case of Lenders delivering an executed signature page to the AmendmentAgreement to the Syndication Agent prior to 5:00 p.m., New York City time,April 15, 2002) of the sum of (i) the outstanding principal amount of TermLoans owing to such Lender on such date plus (ii) the product of suchLender’s Percentage of the Commitment to make Revolving Loans multiplied by theRevolving Loan Commitment Amount on such date and (b) all fees, costs andexpenses due and payable pursuant to Sections 3.3 and 11.3 of the ExistingCredit Agreement to the extent then invoiced.

SUBPART 3.3  Costs and Expenses, etc.  The Syndication Agent shall have receivedfor the account of each Lender, all fees, costs and expenses due and payablepursuant to Sections 3.3 and 11.3 of the Credit Agreement, if then invoiced.

SUBPART 3.4  Legal Details, etc.  All documents executed or submitted pursuanthereto shall be satisfactory in form and substance to the Syndication Agent andits counsel.  The Syndication Agent andits counsel shall have received all information, and such counterpart originalsor such certified or other copies of such materials, as the Syndication Agentor its counsel reasonably request.  Alllegal matters incident to the transactions contemplated by this Amendment shallbe satisfactory to the Syndication Agent and its counsel.

PARTIVWAIVER

SUBPART 4.1  The Lenders hereby agree that Net DebtProceeds resulting from the issuance of the Senior Convertible Notes shall beapplied as follows as set forth in this Subpart 4.1:

(a)  on the date of the issuance of the SeniorConvertible Notes (the “Issuance Date”), 100% of the Net Debt Proceedswill be contributed by Holdings to the Borrower;

(b)  up to the first $50,000,000 of Net DebtProceeds shall be applied to repay Revolving Loans outstanding on the IssuanceDate; provided, that (i) the Borrower agrees to repay all RevolvingLoans outstanding on the Issuance Date in full and (ii) the Lenders agree thatno reduction in the Revolving Loan Commitment shall result therefrom;

(c)  the Borrower may retain up to the next$30,000,000 of such proceeds for its working capital and general partnershippurposes; and

 

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(d)  all proceeds in excess thereof shall beapplied on a pro rata basis, to the outstanding principal amount of allremaining Term Loans and the remaining scheduled amortization payments inrespect thereof within 90 days of the Issuance Date; provided, however,that no more than $45,000,000 shall be applied to outstanding New Term B Loanswith the remainder to be retained by the Borrower.

PARTVMISCELLANEOUS

SUBPART 5.1  Expenses.  Each of the Borrower, Holdings and each Designated Guarantorhereby agrees to pay and reimburse the Agents for all of their respectivereasonable fees and expenses incurred in connection with the negotiation, preparation,execution and delivery of this Amendment and related documents, including allreasonable fees and disbursements of Mayer, Brown, Rowe & Maw, counsel tothe Agents.

SUBPART 5.2  Representations and Warranties.  The delivery of an executed counterparthereof by each of the Borrower, Holdings and each Designated Guarantor shallconstitute a representation and warranty by each of the Borrower, Holdings andeach Designated Guarantor that:

(a)  on the Amendment Effective Date, aftergiving effect to this Amendment, (i) all representations, warranties and otherstatements set forth in Article VI of the Existing Credit Agreement, as thenamended by this Amendment, are true and correct in all material respects as ofsuch date, except to the extent that such representation, warranty or statementexpressly relates to an earlier date (in which case such representation,warranty or statement shall have been true and correct in all material respectson and as of such earlier date) and (ii) no Default has occurred and is thencontinuing; and

(b)  this Amendment constitutes the legal, validand binding obligation of each of the Borrower, Holdings and each DesignatedGuarantor enforceable in accordance with its terms subject to the effects ofbankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium andother similar laws relating to or affecting creditors’ rights generally,general equitable principles (whether considered in a proceeding in equity orat law) and an implied covenant of good faith and fair dealing.

SUBPART 5.3  Loan Document Pursuant to CreditAgreement.  This Amendment is a LoanDocument executed pursuant to the Credit Agreement and shall (unless otherwiseexpressly indicated therein) be construed, administered and applied inaccordance with all of the terms and provisions of the Credit Agreement, asamended hereby.

SUBPART 5.4  Successors and Assigns.  This Amendment shall be binding upon andinure to the benefit of the parties hereto and their respective successors andassigns.

SUBPART 5.5  Counterparts.  This Amendment may be executed by theparties hereto in several counterparts, each of which when executed anddelivered shall be an original and all of which shall constitute together butone and the same agreement.

 

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SUBPART 5.6  Governing Law.  **THIS AMENDMENT SHALL BE GOVERNED BY, ANDCONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK****.**

 

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                IN WITNESS WHEREOF, thesignatories hereto have caused this Agreement to be executed by theirrespective officers thereunto duly authorized as of the day and year firstabove written.

 
|   |   |                                    |   |
|--------|--------|-----------------------------------------|--------|
|   |   | **BORROWER:**                           |   |
|   |   | DUANE READE                             |   |
|   |   | By Duane Reade Inc., a  general partner |
|   |   |                                    |
|   |   |                                    |
|   |   |                                    | By:    |   |
|   |   |                                    | Title: |   |
|   |   |                                    |   |   |
|   |   |                                    |   |   |
|   |   |                                    |   |   |
|   |   | By DRI I Inc., a general  partner       |
|   |   |                                    |
|   |   |                                    |
|   |   |                                    | By:    |   |
|   |   |                                    | Title: |   |
|   |   |                                    |   |   |
|   |   | **PARENT  GUARANTORS:**                 |
|   |   | DUANE READE INC.                        |
|   |   |                                    |
|   |   |                                    |
|   |   |                                    | By:    |   |
|   |   |                                    | Title: |   |
|   |   |                                    |   |   |
|   |   |                                    |   |   |
|   |   | DRI I INC.                              |
|   |   |                                    |
|   |   |                                    |
|   |   |                                    | By:    |   |
|   |   |                                    | Title: |   |
|        |        |                                         |        |  |  |  |

 

 

 

 

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|   |   | **AFFILIATE  GUARANTORS:**      |
|--------|--------|---------------------------------|
|   |   | DUANE READE INTERNATIONAL, INC. |
|   |   |                            |
|   |   |                            |
|   |   |                            | By: |   |
|   |   |                            | Title: |   |
|   |   |                            |   |   |
|   |   |                            |   |   |
|   |   | DUANE READE REALTY, INC.        |
|   |   |                            |
|   |   |                            |
|   |   |                            | By: |   |
|   |   |                            | Title: |   |
|        |        |                                 |  |  |  |

 

 

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|   |   | CREDIT SUISSE FIRST BOSTON, as the Syndication Agent |
|--------|--------|------------------------------------------------------|
|   |   |                                                 |
|   |   |                                                 |
|   |   |                                                 | By: |   |
|   |   |                                                 | Title: |   |
|   |   |                                                 |   |   |
|   |   |                                                 |   |   |
|   |   |                                                 | By: |   |
|   |   |                                                 | Title: |   |
|        |        |                                                      |  |  |  |

 

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|   |   | FLEET NATIONAL BANK, as  the Administrative Agent |
|--------|--------|---------------------------------------------------|
|   |   |                                              |
|   |   |                                              |
|   |   |                                              | By: |   |
|   |   |                                              | Title: |   |
|        |        |                                                   |  |  |  |

 

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