**Exhibit3.3**

 

THIRD AMENDED ANDRESTATED

 

AGREEMENT OF PARTNERSHIP

 

OF

 

DUANE READE

 

 

dated as of July 16, 2003

 

----

 

TABLE OF CONTENTS

 
| Article 1.  | DEFINITIONS, ETC.                             |
|-------------|-----------------------------------------------|
| 1.1         | Definitions                                   |
| 1.2         | Accounting Terms and  Determination           |
| 1.3         | Capital Account Balances                      |
|        |                                          |
| Article 2.  | GENERAL PROVISIONS                            |
| 2.1         | Existence                                     |
| 2.2         | Name                                          |
| 2.3         | Partnership  Office                           |
| 2.4         | Term                                          |
| 2.5         | Certificates;  Instruments; Actions           |
|        |                                          |
| Article 3.  | PURPOSES                                      |
|        |                                          |
| Article 4.  | CAPITAL CONTRIBUTIONS; PARTNERSHIP  INTERESTS |
| 4.1         | Capital Contributions                         |
| 4.2         | Partnership Interests                         |
| 4.3         | No Additional  Capital Contributions          |
| 4.4         | Use of Capital  Contributions                 |
|        |                                          |
| Article 5.  | MANAGEMENT                                    |
| 5.1         | Management                                    |
| 5.2         | Action                                        |
| 5.3         | Expenses                                      |
| 5.4         | Indemnification                               |
| 5.5         | Authority                                     |
|        |                                          |
| Article 6.  | ALLOCATIONS                                   |
| 6.1         | Allocation of  Taxable Income or Loss         |
| 6.2         | Capital  Accounts                             |
|        |                                          |
| Article 7.  | DISTRIBUTIONS                                 |
|        |                                          |
| Article 8.  | TRANSFER OF PARTNERSHIP INTERESTS             |
| 8.1         | No  Transfers                                 |
| 8.2         | Certain  Successors                           |
|        |                                          |
| Article 9.  | DISSOLUTION AND TERMINATION                   |
| 9.1         | Dissolution;  Withdrawal; Right to Continue   |
| 9.2         | Winding Up of  Partnership’s Business    |
| 9.3         | Continuation of  Indemnification              |
|        |                                          |
| Article 10. | ACCOUNTING; TAX                               |
| 10.1        | Books  of Accounts                            |

 

i

----

 
| 10.2        | Tax Returns                           |
|-------------|---------------------------------------|
| 10.3        | Information  Required for Tax Returns |
|        |                                  |
| Article 11. | GENERAL                               |
| 11.1        | Amendments                            |
| 11.2        | Notices and Consents                  |
| 11.3        | Binding Effects; Benefits             |
| 11.4        | Modification; Waiver                  |
| 11.5        | Entire  Agreement                     |
| 11.6        | Severability                          |
| 11.7        | Headings                              |
| 11.8        | Counterparts                          |
| 11.9        | Grammatical Construction              |
| 11.10       | Governing  Law                        |

 

ii

----

 

THIRD AMENDED ANDRESTATED

 

AGREEMENT OF PARTNERSHIP

 

OF

 

DUANE READE

 

THIRD AMENDED AND RESTATED AGREEMENT OF PARTNERSHIP,dated as of July 16, 2003, by and between DUANE READE INC., a Delawarecorporation (“Parent”), and DRI I INC., a Delaware corporation (“DRI”) (individually,a “Partner” and collectively, the “Partners”).

 

WHEREAS, Daboco Inc., a New York corporation(“Daboco”), together with DLR Inc., a New York corporation (“DLR”), DajacoInc., a New York corporation (“Dajaco”), and Duane Reade Corp., a Delawarecorporation (the “Corporation”), entered into an Agreement of Partnership,dated as of April 24, 1985 (the “Original Agreement”);

 

WHEREAS, as of March 31, 1989, the Partnershipredeemed the interest of the Corporation in the Partnership, and the OriginalAgreement was amended and restated in its entirety (the “First AmendedAgreement”);

 

WHEREAS, as of August 3, 1992, the First AmendedAgreement was amended by adding a new Section 9.1(d) thereof;

 

WHEREAS, as of September 25, 1992, Daboco contributedone percent (1%) of its interest in the Partnership to DRI, the Partnershipredeemed the interests of DLR and Dajaco in the Partnership (the“Redemptions”), and each of DLR and Dajaco withdrew as a general partner of thePartnership under the First Amended Agreement (the “Withdrawals”);

 

WHEREAS, as of September 25, 1992, as a result of theRedemptions and Withdrawals, the First Amended Agreement was amended andrestated in its entirety (the “Second Amended Agreement”);

 

----

 

WHEREAS, as of September 30, 1997, the Second AmendedAgreement was amended by Amendment No. 1 to the Second Amended Agreement, inconnection with the Credit Agreement, dated as of September 30, 1997, among thePartnership, as borrower, Daboco, the Parent and Duane Reade Holding Corp., aDelaware corporation, as the parent guarantors, and DLJ Capital Funding Inc.,as syndication agent, Fleet National Bank, as administrative agent, CreditLyonnais New York Branch, as documentation agent, and the various lendersthereunder, as the same may have been amended, modified, supplemented orrestated from time to time;

 

WHEREAS, in connection with the initial publicoffering (the “IPO”) of common stock, $.01 par value per share, of the Parent,and the concurrent issuance by the Parent of $80 million in aggregate principalamount of Senior Subordinated Notes due 2008 (the “Notes”) and relatedguarantees by each of DRI and the Partnership (the “Guarantees”), Daboco andDRI determined that it was in the best interest of the Partnership that Dabocobe merged with and into the Parent, with the Parent as the sole survivingcorporation (the “Merger”), succeeding to all of Daboco’s rights andobligations as a Partner under the Second Amended Agreement;

 

WHEREAS, upon the consummation of the Merger, theParent assumed all of Daboco’s obligations and succeeded to all of Daboco’srights under the Second Amended Agreement (the “Assumption”), and became aPartner for all purposes in accordance with the Second Amended Agreement;

 

WHEREAS, as of February 13, 1998, as a result of theIPO and the Assumption and in connection with the Credit Agreement (the “1998Credit Agreement”), dated as of February 13, 1998, among the Partnership, asborrower, DRI and the Parent, as parent guarantors and DLJ Capital FundingInc., as syndication agent, Fleet National Bank, as administrative

 

2

----

 

agent, Credit Lyonnais New York Branch, as documentation agent, and thevarious lenders thereunder, as the same may have been amended, modified,supplemented or restated from time to time, the Second Amended Agreement wasamended by Amendment No. 2 to the Second Amended Agreement;

 

WHEREAS, as of the date hereof, as a result of therefinancing of the 1998 Credit Agreement, the Second Amended Agreement is beingamended and restated in its entirety (the “Third Amended Agreement”).

 

NOW, THEREFORE, in consideration of the mutualpromises and covenants contained herein, the parties hereto hereby agree asfollows:

 

ARTICLE 1.   DEFINITIONS,ETC.

 

1.1                                 Definitions. For the purposes of this Agreement, the following terms shall have themeanings set forth in this Section 1.1:

 

“Agent.” The Agent, the Administrative Agent or such similar term as may bedefined in the Credit Agreement.

 

“Agreement.” This Third Amended and Restated Agreement of Partnership of Duane Reade,as amended from time to time as provided herein.

 

“Capital Accounts.”  As defined in Section 6.2.

 

“Capital Contributions.”  As defined in Section 4.1.

 

“Certificate.” As defined in Section 2.5.

 

“Code.” The Internal Revenue Code of 1986, or any successor thereto, as amendedfrom time to time.

 

“Collateral Agent.”  The Collateral Agent or such similar term as may be defined inthe Credit Agreement.

 

3

----

 

“Credit Agreement.”  On any date, the bank loan or credit agreement to which thePartnership and the Partners are party on such date, as the same may beamended, modified, supplemented, restated, refinanced, renewed or extended fromtime to time.

 

“Credit Documents.”  Credit Documents, Loan Documents or suchsimilar term as may be defined in the Credit Agreement.

 

“Event of Dissolution.”  As defined in Section 9.1.

 

“Fiscal Year.” A taxable year of the Partnership for purposes of the Code, including aperiod of less than twelve calendar months which is considered a taxable yearfor purposes of the Code.  The taxableyear of the Partnership shall end on the last Saturday of the applicable year.

 

“Partnership.” The general partnership continued under this Agreement.

 

“Partnership Pledge Agreement.”  Any agreement entered into from time to timein connection with a Credit Agreement by the Partners in favor of an Agent orCollateral Agent for the benefit of Secured Creditors pursuant to which thePartners pledge their Partnership interests in the Partnership, as the same maybe amended, modified, supplemented or restated from time to time.

 

“Percentage Interest.”  As defined in Section 4.2.

 

“Person.” An individual, partnership, corporation, trust, unincorporatedassociation or other entity or association.

 

“Reserves.” Reserve funds which may be established in the sole discretion of thePartnership for working capital, contingent liabilities, taxes, debt service,repairs, replacements, renewals, capital expenditures or other purposesconsistent with this Agreement.

 

4

----

 

“Secured Creditors.”  Secured Creditors, Secured Parties or such other similar term asmay be defined in the Credit Agreement.

 

“Senior Note Documents.”  The Indenture dated as of April 16, 2002among the Parent, the Guarantors party thereto and State Street Bank and TrustCompany, as Trustee relating to the Notes, and the documents related thereto.

 

“Taxable Income or Loss.”  As to any period, the income or loss,respectively, of the Partnership for such period as determined by thePartnership for purposes of the Code.

 

1.2                                 Accounting Terms and Determination.  All accounting terms used herein and nototherwise defined shall have the meanings accorded to them in accordance withgenerally accepted accounting principles as in effect from time to time, and,except as expressly provided herein, all accounting determinations shall bemade in accordance with generally accepted accounting principles consistentlyapplied.

 

1.3                                 Capital Account Balances.  All determinations of Capital Accountbalances shall be made in accordance with Article 6 hereof.

 

ARTICLE 2.   GENERALPROVISIONS

 

2.1                                 Existence. Pursuant to the terms of this Agreement, the Partners hereby continue(without any interruption whatsoever in such continuity) the Partnership(giving effect to the Redemptions, the Withdrawals and the Assumptionautomatically and without further acts) as a general partnership pursuant tothe provisions of the partnership law of the State of New York for the purposesand the period and upon the terms and conditions hereinafter set forth.

 

2.2                                 Name.  The name ofthe Partnership is Duane Reade.  ThePartnership may change its name or adopt such trade or fictitious name for theconduct of its business and affairs as the Partnership may determine.

 

5

----

 

2.3                                 Partnership Office.  The Partnership office shall be located at 440 Ninth Avenue, NewYork, New York 10001.  The Partnershipmay at any time change its office to another location within or outside theState of New York.

 

2.4                                 Term.  ThePartnership shall continue until December 31, 2040, unless terminated earlierpursuant to Article 9 hereof; provided that the term of the Partnership may beextended at any time and from time to time by written agreement of thePartners.

 

2.5                                 Certificates; Instruments; Actions.

 

(a)                                  ThePartners have heretofore executed Certificates to do Business (the“Certificates”) and, substantially simultaneously with the effectiveness ofthis Agreement, have caused these Certificates to be filed for record in theoffice of the County Clerk for each of the following jurisdictions:  New York, Queens, Kings, Richmond,Westchester, Suffolk, Nassau and Bronx Counties in the State of New York andEssex, Bergen and Hudson Counties in the State of New Jersey and such otherjurisdictions as from time to time may be deemed to be necessary orappropriate.

 

(b)                                 ThePartners shall, and shall cause the Partnership to, execute, deliver, publish,file and record any and all such further documents (including any amendments toany of the Certificates) and take any, and all further actions as may benecessary, or desirable in connection with the continuation and operation ofthe Partnership in accordance with the terms of this Agreement.

 

ARTICLE 3.   PURPOSES

 

The purposes of the Partnership shall include, butshall not be limited to, the following: (a) to buy and sell health and beauty aids, prescription drugs,vitamins, cosmetics and fragrances, tobacco products, convenience foods,hosiery and photo processing services and

 

6

----

 

supplies, and to otherwise carry on the business of a pharmacy andconvenience store or to transact business for any other lawful businesspurpose, (b) to purchase, lease or otherwise acquire, mortgage or otherwiseencumber, sell or otherwise dispose of or realize upon and generally deal inreal property and personal property, interests in real property and personalproperty of any kind or description in connection with the activities describedin the preceding clause (a), and (c) to enter into the Credit Agreement, theCredit Documents and any and all documents referred to therein or contemplatedthereby to which it is a party, including, but not limited to, the Senior NoteDocuments and any other agreements to which the Partnership is a party, toperform the obligations of the Partnership thereunder, and to consummate thetransactions contemplated thereby. Without limiting the generality of the foregoing, the Partnership maycarry out its business and accomplish its purposes as principal, whether by orthrough trustees or agents, along with or with associates or as a member of, oras a participant in any firm, association, trust, syndicate or otherentity.  The Partnership shall have allsuch powers as are necessary, appropriate or incidental to the furtherance ofthe purposes set forth in this Section 3 including, without limitation,the power to incur indebtedness and other obligations (including, withoutlimitation, pursuant to the Credit Documents) and to secure the repayment ofany such indebtedness and other obligations with any assets of the Partnershipor otherwise and to pay all fees and expenses in connection therewith.  Furthermore, the Partnership may enter intoany and all such other agreements and to execute such other documents,certificates or instruments and to take any and all further actions which arenecessary, desirable, appropriate or incidental to the purposes set forth inthis Article 3.

 

7

----

 

ARTICLE 4.   CAPITALCONTRIBUTIONS; PARTNERSHIP INTERESTS

 

4.1                                 Capital Contributions.  As of the date hereof, each Partner shall bedeemed to have made a capital contribution to the Partnership in an amountequal to such Partner’s Capital Account balance, as adjusted in accordance withArticle 6 through the date immediately preceding the date hereof (individually,a “Capital Contribution” and, collectively, the “Capital Contributions”).

 

4.2                                 Partnership Interests.  The Parent shall have a ninety-nine percent(99%) interest in the Partnership, and DRI shall have a one percent (1%)interest in the Partnership (individually, a “Percentage Interest” and collectively,the “Percentage Interests”).

 

4.3                                 No Additional Capital Contributions.  Except as otherwise provided in thisAgreement, as may be necessary to pay expenses as contemplated herein, or asmay be required by any applicable provision of law or the Credit Agreement, noPartner shall at any time be required to make any additional contributions tothe Partnership or lend funds to the Partnership, and no Partner shall beliable for any assessments by the Partnership. Notwithstanding the contribution of additional capital by any Partner,unless the Partners unanimously agree otherwise, there shall be no change inthe Percentage Interest of any Partner pursuant to Section 4.2 above.

 

4.4                                 Use of Capital Contributions.  The aggregate amount of all the CapitalContributions shall be available to the Partnership to carry out the purposesand business of the Partnership.

 

ARTICLE 5.   MANAGEMENT

 

5.1                                 Management. The Partnership and its business shall be managed by and under thedirection of the Partners, who shall have full and exclusive power andauthority to take

 

8

----

 

any and all actions which are necessary, appropriate or incidental inthe judgment of the Partners to the furtherance of the business and purposes ofthe Partnership.

 

5.2                                 Action.

 

(a)                                  Exceptas provided in Section 5.2(b), the vote of the Partners owning a majority ofthe Percentage Interests shall be necessary to authorize any action to be takenon behalf of and in the name of the Partnership and shall be effective to bindthe Partnership for purposes of this Section 5.2.

 

(b)                                 Subjectto the Credit Documents and notwithstanding anything herein to the contrary,the unanimous consent of the Partners shall be required for (i) the sale,transfer or other disposition of all or substantially all of the assets of thePartnership, (ii) the admission of any new partner and the determination of thePercentage Interest of such partner following such admission, (iii) anynon-cash distribution to the Partners by the Partnership, (iv) theincurrence of indebtedness for borrowed money or the guarantee of indebtednessby the Partnership, except (x) the incurrence of indebtedness or the issuanceof guarantees in connection with (1) the Credit Agreement and the other CreditDocuments and (2) the issuance of the Notes and the related Guarantees and (y)as such indebtedness is incurred or guaranteed in the ordinary course of thebusiness of the Partnership or (v) the increase or decrease of the PercentageInterest of any Partner.

 

5.3                                 Expenses.  NoPartner shall receive any compensation for its services hereunder or beentitled to interest on any portion of its capital contribution to thePartnership or its Capital Account; provided, however, that the Partners shallbe entitled to reimbursement for all expenses incurred in connection with themanagement of the business and affairs of the

 

9

----

 

Partnership and the fees and expenses of counsel, accountants and otherexperts incurred in the course of the performance of its duties under thisAgreement.

 

5.4                                 Indemnification.  The Partnership shall and does hereby agree to indemnify and holdharmless each Partner, and each controlling person, director, officer, employeeor agent of each Partner (individually, an “Indemnified Person” and,collectively, the “Indemnified Persons”), to the fullest extent permitted byapplicable law, from any loss, damage, liability, cost or expense (includingattorneys’ fees and expenses) arising out of or in connection with any act orfailure to act, done or omitted to be done in good faith, by an IndemnifiedPerson on any matter related to or in connection with the Partnership.  Any attorneys’ fees and expenses incurred inconnection with this Section 5.4 shall be paid by the Partnership as they areincurred upon receipt, in each case, of an undertaking by or on behalf of theIndemnified Person to repay such amounts if it is ultimately determined thatsuch Indemnified Person is not entitled to indemnification therefor.

 

5.5                                 Authority.

 

(a)                                  Exceptas provided in Section 5.2(b) of this Agreement, any Partner shall, eitherdirectly or indirectly through duly authorized officers, employees or agents ofthe Partnership or such Partner, as the case may be, as the Partner in questionshall appoint, be authorized with its signature alone, to bind the Partnershipunder, and to execute and deliver on behalf of the Partnership, such documentsand instruments as may be necessary, desirable or appropriate to carry out thedecisions made by the Partners.

 

(b)                                 Indealing with a Partner, no Person shall be required to inquire into itsauthority to bind the Partnership.

 

10

----

 

ARTICLE 6.   ALLOCATIONS

 

6.1                                 Allocation of Taxable Income or Loss.

 

Commencing as of the date hereof, Taxable Income orLoss of the Partnership (and items thereof) for any Fiscal Year or other periodshall be allocated among the Partners pro rata in accordance with theirrespective Percentage Interests.

 

6.2                                 Capital Accounts.

###  

(a)                                  EachPartner shall have a capital account established as of the date of thisAgreement (individually, a “Capital Account” and collectively, the “CapitalAccounts”).  Each Partner’s initialCapital Account shall be such Partner’s Capital Contribution determinedpursuant to Section 4.1.

 

(b)                                 TheCapital Account of each Partner shall be increased by (i) the amount of anycash or the value of any property subsequently contributed by such Partner tothe Partnership, (ii) the amount of any Taxable Income allocated to suchPartner pursuant to Section 6.1 and (iii) such Partner’s share (determinedas though it constituted additional Taxable Income) of any tax-exempt receiptsof the Partnership.

 

(c)                                  TheCapital Account of each Partner shall be reduced by (i) the amount of anyTaxable Loss allocated to such Partner pursuant to Section 6.1, (ii) the amountof all distributions to such Partner and (iii) such Partner’s share (determinedas though it constituted an additional deductible item) of any expendituresdescribed in Section 705(a)(2)(B) of the Code or which are so treated pursuantto regulations under Section 704(b) of the Code.

 

(d)                                 Ifthe Partnership at any time distributes any of its assets “in-kind” to anyPartner, the Capital Accounts of the Partners shall be adjusted to account forsuch Partners’ allocable shares of Taxable Income or Loss that would have beenrealized by the

 

11

----

 

Partnership had it sold the distributed assets at their respective fairmarket values immediately prior to their distributions.

 

ARTICLE 7.   DISTRIBUTIONS

 

All distributions other than liquidating distributionsby the Partnership to the Partners shall be made pro rata in accordance withsuch Partners’ Percentage Interests.

 

ARTICLE 8.   TRANSFEROF PARTNERSHIP INTERESTS

 

8.1                                 No Transfers. Except as required by the Credit Documents, no Partner may, directly orindirectly, sell, transfer, assign, dispose of, mortgage, hypothecate orotherwise dispose of, encumber or permit or suffer any encumbrance on all orany part of its interest in the Partnership to any Person or the Partnership,or withdraw from the Partnership, whether voluntarily or by operation of law,at a judicial sale or otherwise, except with the prior written consent of eachother Partner and as may be required by the provisions of the Credit Agreement,and any attempt so to transfer such interest shall be void and no other Partnershall be required to recognize any equitable or any other claims to anyinterest in such Partnership interest on the part of the transfereethereof.  As of the date hereof, all ofthe Parent’s and DRI’s interests in the Partnership have been pledged pursuantto the Partnership Pledge Agreement, if any.

 

8.2                                 Certain Successors.  In the event of any exercise by the Collateral Agent of theremedies set forth in the Partnership Pledge Agreement in the manner and inaccordance with the terms of the Partnership Pledge Agreement, if any, (i) thetransferee (including without limitation, an Administrative Agent, if any, orany designee thereof) of any interest in the Partnership shall, automaticallyupon execution of a copy of this Agreement, be a substituted partner, and noPartner shall have any right of approval or consent with respect to suchadmission, (ii) such transferee shall not be liable for any default under thisagreement which

 

12

----

 

occurred prior to its admission to the Partnership and (iii) thePartnership will execute and deliver any instrument reasonably requested by thetransferee to affirm or implement set forth in this Section 8.2.

 

ARTICLE 9.   DISSOLUTIONAND TERMINATION

 

9.1                                 Dissolution; Withdrawal; Right toContinue.

 

(a)                                  ThePartnership shall be dissolved and its business wound up upon the earliest tooccur of the following events (each of which is referred to herein as an “Eventof Dissolution”):

 

(i)                                     theexpiration of the term provided in Section 2.4;

 

(ii)                                  uponthe agreement of all the Partners to dissolve and liquidate the Partnership; or

 

(iii)                               the sale or otherdisposition of all or substantially all of the Partnership’s assets in thePartnership in a single transaction or series of transactions as a result ofwhich the entire business of the Partnership has been transferred.

 

(b)                                 ThePartners hereby agree that the Partnership shall not be dissolved by virtue ofthe Withdrawals or any other withdrawal of any Partner unless the remainingPartners, within 20 days of such event, elect not to continue the Partnershipand to wind up its affairs in accordance with Section 9.2.  The Partners agree further that, in theevent of any withdrawal, no further action shall be necessary to continue thePartnership in its then current form and under its then current name.

 

(c)                                  Ifan Event of Dissolution occurs under subsection (a) above or the Partnership isdeemed to be dissolved pursuant to any applicable provision of law orotherwise, the Partners hereby agree that simultaneously upon the occurrence ofsuch event, the Partnership

 

13

----

 

shall be deemed to be, and shall be reconstituted in its then currentform and under its then current name and that no further action on the part ofthe Partners or the Partnership shall be necessary to effectuate the same.  In any such event, the Partners agree thatthe security interest created by the Partnership Pledge Agreement, if any,shall continue in effect as to each reconstituted Partnership Interest and eachPartner shall execute and deliver instruments reasonably requested by theCollateral Agent to confirm the continuing existence of such security interestsubject to the provisions of the Partnership Pledge Agreement, if any.

 

9.2                                 Winding Up of Partnership’s Business.  Upon final liquidation of the Partnership orupon a Partner’s withdrawal (including a complete redemption) from thePartnership (after giving effect to all allocations of all Taxable Income orLoss, and other items referred to in Section 6.2, of the Partnership through suchdate), if any Partner (or the withdrawing Partner, in the case of a withdrawalother than the Withdrawals) has a negative Capital Account balance, suchPartner shall contribute the amount of such balance to the capital of thePartnership which amounts shall be applied in accordance with this Section9.2.  Upon the occurrence of an Event ofDissolution, except as provided in Section 9.1(c) of this Agreement, thePartnership promptly shall proceed to sell the assets of the Partnership to theextent necessary to pay or provide for payment of the debts of the Partnership,the expenses of the liquidation and dissolution and the setting up of Reservesto pay contingent obligations of the Partnership.  Any remaining proceeds shall be distributed or the remaining assetsdistributed in kind if the Partnership so elects, pro rata in accordance witheach Partner’s positive Capital Account balance after giving effect to allallocations of Taxable Income or Loss, and other items referred to in Section6.2, of the Partnership through such date.

 

14

----

 

9.3                                 Continuation of Indemnification.  After the occurrence of an Event ofDissolution and until the Partnership is fully wound up and its businessterminated as provided in Section 9.2 above, the provisions of Section 5.4above shall remain operative according to their terms and in full force andeffect regardless of the dissolution, winding up or termination of thePartnership.

 

ARTICLE 10.   ACCOUNTING; TAX

 

10.1                           Books of Accounts.  The Partners shall, on behalf of the Partnership, keep or causeto be kept, full and accurate records and books of account of all transactionsof the Partnership.  The Partnershipbooks and records will be kept in accordance with generally accepted accountingprinciples, shall be maintained at such place as the Partnership may determineand shall be open to inspection by the Partners or their duly authorizedrepresentatives at all reasonable times during normal business hours.

 

10.2                           Tax Returns. The Partnership shall prepare and file, or cause to be prepared andfiled, all appropriate Federal, state and local income or other tax returns forthe Partnership for each Fiscal Year.

 

10.3                           Information Required for Tax Returns.  As soon as practicable after the end of eachFiscal Year, the Partnership shall cause to be delivered to each Partner suchinformation as shall be required for the preparation by such Partner of itsFederal, state and local income or other tax returns.

 

ARTICLE 11.   GENERAL

 

11.1                           Amendments. This Agreement may not be amended without the unanimous written consentof the Partners and in accordance with the provisions of the CreditDocuments.  The effective date of anamendment to this Agreement shall be the date stated in the

 

15

----

 

written consent of the Partners or, if no effective date is stated, thedate on which the last of such required consents is given.

 

11.2                           Notices and Consents.  Any notice or consent required or permittedto be given under this Agreement shall in writing, signed by or on behalf ofthe person giving the notice and shall be deemed to have been given whendelivered by personal delivery or five days after being mailed by certifiedmail, postage prepaid return receipt requested and addressed to the person orpersons to whom such notice is to be given in accordance with Schedule Ahereto.

 

11.3                           Binding Effects; Benefits.  This Agreement shall be binding upon andinure to the benefit of the parties hereto and their successors and permittedassigns.  This Agreement shall inure tothe benefit of the Agent and the Collateral Agent, on behalf of the SecuredParties, as a third party beneficiary to the extent provided for herein.

 

11.4                           Modification; Waiver.  No modification or waiver of this Agreementor any part hereof and no notice or consent required or permitted to be givenpursuant to this Agreement shall be valid or effective unless made in writingin accordance with this Agreement and signed by the party or parties sought tobe charged.  No waiver of any breach orcondition of this Agreement shall be deemed to be a waiver of any othersubsequent breach or condition, whether of like or different nature.

 

11.5                           Entire Agreement.  This Agreement constitutes the entire agreement among the partieshereto and supersedes all prior agreements, understandings and arrangements,oral or written, among the parties hereto with respect to the subject matterhereof.

 

11.6                           Severability. Any term or provision of this Agreement which is invalid orunenforceable in any jurisdiction shall, as to such jurisdiction, beineffective to the extent of such invalidity or enforceability withoutrendering invalid or unenforceable the remaining terms and

 

16

----

 

provisions of this Agreement or affecting the validity orenforceability of any of the terms or provisions of this Agreement in any otherjurisdiction.

 

11.7                           Headings.  Thesection and other headings of this Agreement are for reference purposes only andshall not affect the meaning or interpretation hereof.

 

11.8                           Counterparts. This Agreement may be executed in any number of counterparts, each ofwhich, when duly executed, shall be deemed to be an original and all of whichtogether shall be deemed to be one and the same instrument.

 

11.9                           Grammatical Construction.  Whenever the context may require, anypronouns used herein shall include the corresponding masculine, feminine orneuter forms, and the singular form of nouns and pronouns shall include the pluraland vice versa.

11.10                     Governing Law. This Agreement shall be governed by and construed both as to validityand enforceability in accordance with the laws of the State of New Yorkapplicable to agreements made and to be performed entirely in the State of NewYork.

 

17

----

 

IN WITNESS WHEREOF, the parties hereto have executedthis Partnership Agreement as of the day and year first above written.

 

 
|   | DUANE READE INC. |
|--------|------------------|
|   |             |
|   |             |   |
|   | By:              | /s/ John K. Henry |   |
|   |             | John K. Henry |
|   |             | Chief Financial Officer |
|   |             |   |
|   |             |   |
|   | By:              | /s/ Michelle D. Bergman |   |
|   |             | Michelle D. Bergman |
|   |             | Vice President |
|   |             |   |
|   |             |   |
|   | DRI I INC.       |
|   |             |
|   |             |   |
|   | By:              | /s/ John K. Henry |   |
|   |             | John K. Henry |
|   |             | Chief Financial Officer |
|   |             |   |
|   |             |   |
|   | By:              | /s/ Michelle D. Bergman |   |
|   |             | Michelle D. Bergman |
|   |             | Vice President |

 

18

----

 

SCHEDULE A

Name and Address

 

Duane Reade Inc.440 Ninth AvenueNew York, New York 10001

 

DRI I Inc.Duane Reade Inc.440 Ninth AvenueNew York, New York 10001

 

19

----