Fifth Amendment to Credit Agreement



 Exhibit 10.19 
 FIFTH AMENDMENT TO CREDIT AGREEMENT 
 This Fifth Amendment to Credit Agreement (the
“Fifth Amendment”) is made as of this 7th day of August, 2009 by and among: 
 DUANE READE, a New York general partnership,
having its principal place of business at 440 Ninth Avenue, New York, New York 10001; and 
 DUANE READE INC. a Delaware corporation, having
its principal place of business at 440 Ninth Avenue, New York, New York 10001; and 
 DRI I INC., a Delaware corporation, having its principal
place of business at 440 Ninth Avenue, New York, New York 10001; and 
 DUANE READE INTERNATIONAL, LLC, a Delaware limited liability company,
having its principal place of business at 440 Ninth Avenue, New York, New York 10001; and 
 DUANE READE REALTY, INC., a Delaware corporation,
having its principal place of business at 440 Ninth Avenue, New York, New York 10001; and 
 DUANE READE HOLDINGS, INC, a Delaware
corporation, having its principal place of business at 440 Ninth Avenue, New York, New York 10001; and 
 the LENDERS party hereto; and

 BANK OF AMERICA, N.A. (f/k/a Fleet National Bank), as Issuing Bank, a national banking association having a place of business at 100
Federal Street, Boston, Massachusetts 02110; and 
 BANK OF AMERICA, N.A. (f/k/a/ Fleet National Bank), as Administrative Agent and Collateral
Agent for the Lenders, a national banking association having a place of business at 100 Federal Street, Boston, Massachusetts 02110; 
 in consideration of
the mutual covenants herein contained and benefits to be derived herefrom. 
 W I T N E S S E T H: 
 WHEREAS, on July 21, 2003, certain of the parties hereto entered into that certain Credit Agreement (as amended and in effect, the “Credit
Agreement”); and 
 WHEREAS, the Loan Parties have requested that the Lenders amend certain provisions of the Credit Agreement as
set forth herein; and 
 WHEREAS, Duane Reade International, Inc. has been converted from a Delaware corporation to a Delaware limited
liability company and the parties wish to ratify and confirm its obligations under the Credit Agreement and other Loan Documents. 
  

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 NOW, THEREFORE, it is hereby agreed as follows: 
 1. Capitalized Terms. All capitalized terms used herein and not otherwise defined shall have the same meaning herein as in the Credit Agreement.

 2. Amendments to Article I. The provisions of Article I of the Credit Agreement are hereby amended as follows: 
  

	 	(a)	The definition of “Applicable Margin” is hereby amended by deleting the pricing grid contained therein in its entirety and substituting the following in its stead:


  

									
	 Level
	  	 Performance Criteria
	  	Prime Rate Loans	 	 	LIBO Loans	 
	1	  	Average Excess Availability greater than or equal to $125,000,000	  	1.25	% 	 	2.25	% 
				
	2	  	Average Excess Availability greater than or equal to $70,000,000 but less than $125,000,000	  	1.25	% 	 	2.50	% 
				
	3	  	Average Excess Availability greater than or equal to $35,000,000 but less than $70,000,000	  	1.25	% 	 	2.75	% 
				
	4	  	Average Excess Availability greater than or equal to $25,000,000 but less than $35,000,000	  	1.50	% 	 	3.00	% 
				
	5	  	Average Excess Availability less than $25,000,000	  	1.75	% 	 	3.25	% 

  

	 	(b)	The second sentence of the definition of “Availability Reserves” is hereby amended by adding the word “and” before clause (v), by putting a “.”
at the end of clause (v) and by deleting clause (vi) in its entirety. 

  

	 	(c)	The definition of “Line Fee” is hereby amended by deleting the reference therein to “0.30%” and substituting in its stead a reference to
“0.50%”. 

  

	 	(d)	The last sentence of the definition of “Material Indebtedness” is hereby deleted in its entirety and the following is substituted in its stead:


  

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 “In all events, “Material Indebtedness” shall include Indebtedness under the Convertible
Indenture and the Senior Secured Indenture irrespective of the amounts due thereunder.” 
  

	 	(e)	The definition of “Obligations” is hereby amended by deleting the parenthetical at the end thereof in its entirety and substituting the following in its stead:


 (but excluding any obligations owing to any Lender or any of their respective Affiliates in connection with the Senior
Secured Indenture or the Senior Subordinated Notes). 
  

	 	(f)	The definition of “Total Commitment” is hereby deleted in its entirety and the following is substituted in its stead: 

 “Total Commitment” shall mean, at any time, the sum of the Commitments at such time. As of the Fifth Amendment Effective Date, the Total
Commitments aggregate $225,000,000. 
  

	 	(g)	The following definitions, and any and all references in the Credit Agreement thereto, are hereby deleted in their entirety: 

  

	 	(i)	“Bridge Loan” 

  

	 	(ii)	“Permanent Securities” 

  

	 	(iii)	“Rex Transaction Financing” 

  

	 	(iv)	“Securities Repayment Reserve” 

  

	 	(v)	“Supplemental Permanent Securities” 

  

	 	(h)	The following new definitions are hereby added in appropriate alphabetical order: 

  

	 	(i)	“Existing FRN Indenture” means the Indenture dated as of December 20, 2004, among Duane Reade Inc., Duane Reade, Duane Reade Holdings, Inc., and each of the
direct and indirect domestic subsidiaries of Duane Reade Inc. named in the signature pages thereto and U.S. Bank National Association, as trustee (as amended, supplemented or modified from time to time). 

  

	 	(ii)	“Fifth Amendment Effective Date” means August __, 2009. 

  

	 	(iii)	“Issuance Date” means the Fifth Amendment Effective Date. 

  

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	 	(iv)	“Senior Secured Indenture” means the Indenture dated as of August __, 2009 among Duane Reade Inc., Duane Reade, and U.S. Bank National Association, as Trustee,
relating to the         % Senior Secured Notes due 2015 in the aggregate original principal amount of up to $300,000,000. 

 3. Amendments to Article II. The provisions of Article II of the Credit Agreement are hereby amended as follows: 
  

	 	(a)	Section 2.13 of the Credit Agreement is hereby amended by deleting the reference in the second sentence thereof to “0.30%” and replacing it with a reference to
“0.50%”. 

 4. Amendment to Article V. Section 5.15 of the Credit Agreement is hereby deleted in its
entirety and the following is substituted in its stead: 
 “5.15 RESERVED.” 
 5. Amendments to Article VI. The provisions of Article VI of the Credit Agreement are hereby amended as follows: 
  

	 	(a)	Section 6.01(a) of the Credit Agreement is hereby amended by deleting clause (viii) thereof in its entirety and substituting the following in its stead:


 “(viii)(A) Indebtedness arising under the Convertible Indenture or any Permitted Refinancing thereof, and
(B) Indebtedness under the Existing FRN Indenture, including Indebtedness consisting of Guarantees of such Indebtedness; provided that any Indebtedness under the Existing FRN Indenture permitted under subclause (B) of this clause
(viii) is satisfied and discharged pursuant to Section 12.01 of the Existing FRN Indenture on the Fifth Amendment Effective Date;” 
  

	 	(b)	Section 6.01(a) of the Credit Agreement is hereby amended by deleting clause (xi) thereof in its entirety and substituting the following in its stead:


  

	 	“(xi)	RESERVED;” 

  

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	 	(c)	Section 6.01(a) of the Credit Agreement is hereby amended by deleting clause (xii) thereof in its entirety and substituting the following in its stead:


 “(xii) Indebtedness arising under (A) the Senior Secured Indenture and any Permitted Refinancing thereof, including
Indebtedness consisting of Guarantees of the Senior Secured Indenture and any Permitted Refinancing thereof, and (B) the Senior Subordinated Notes and any Permitted Refinancing thereof, including Indebtedness consisting of Guarantees of the
Senior Subordinated Notes and any Permitted Refinancing thereof; provided that, with respect to Indebtedness permitted under subclause (A) of this clause (xii), on or before the Issuance Date, the trustee and/or collateral agent under
the Senior Secured Indenture and the Administrative Agent shall have entered into a letter agreement confirming the continued effectiveness of the Intercreditor Agreement, in such form and containing such terms as the Administrative Agent and such
trustee or collateral agent may agree;” 
  

	 	(d)	Section 6.02 of the Credit Agreement is hereby amended by deleting clause (f) thereof in its entirety and substituting the following in its stead:


 “(f) Liens to secure Indebtedness permitted by clauses (viii) and (xii)(A) of Section 6.01(a), provided
that if the Loan Parties request that the Collateral Agent release its Lien on any collateral or subordinate the priority of its Lien on any collateral (other than in the Revolving Lender Priority Collateral (as defined in the Intercreditor
Agreement) as to which the Collateral Agent shall not be required to provide a release or subordination of its Lien) to the Lien of the holders of such Indebtedness in such collateral, the Collateral Agent shall so release or subordinate its Lien as
long as (i) the Intercreditor Agreement is in full force and effect, and (ii) no Default or Event of Default shall then exist or arise therefrom.” 
  

	 	(e)	Section 6.03 of the Credit Agreement is hereby amended by deleting the second sentence of clause (b) thereof in its entirety and substituting the following in its stead:


 “Without limiting the generality of the foregoing, the Parent shall not engage in any business, and shall not own any
property or assets, other than (i) acquiring and owning the capital stock of any other Loan Party, (ii) incurring Indebtedness and performing its obligations under the Existing FRN Indenture, the Senior Subordinated Notes, the Senior
Secured Indenture, and any Permitted Refinancing of any of the foregoing, and/or this Agreement, (iii) incurring other obligations under the Rex Transaction and the agreements contemplated thereby and engaging in activities contemplated therein
or required thereby, and (iv) otherwise incidental to the operation of the business of a holding company.” 
  

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	 	(f)	Section 6.04(c) of the Credit Agreement is hereby amended by deleting clause (i) thereof in its entirety and substituting the following in its stead:


 “(i) to pay amounts in respect of the Senior Secured Indenture, the Senior Subordinated Notes or any Permitted
Refinancing of any of the foregoing, to the extent permitted hereunder, and to pay accounting, legal and other professional fees, income taxes (including pursuant to the Tax Sharing Agreement), franchise taxes, management fees permitted under
Sections 6.07(e) and (f) hereof (to the extent not otherwise paid), and other general and administrative expenses incurred by the Parent for itself and the other Facility Guarantors and” 
  

	 	(g)	Section 6.04(d) of the Credit Agreement is hereby amended by deleting the word “Equity” and substituting the word “equity” in its stead.


  

	 	(h)	Section 6.06(a) of the Credit Agreement is hereby amended by deleting clause (iv)(x) thereof in its entirety and substituting the following in its stead:


 “(x) to pay amounts in respect of the Senior Secured Indenture, the Senior Subordinated Notes or any Permitted
Refinancing of any of the foregoing, to the extent permitted hereunder, and to pay accounting, legal and other professional fees, income taxes (including pursuant to the Tax Sharing Agreement), franchise taxes, management fees permitted under
Sections 6.07(e) and (f) hereof (to the extent not otherwise paid), and other general and administrative expenses incurred by the Parent for itself and the other Facility Guarantors and” 
  

	 	(i)	Section 6.06(b)(i) of the Credit Agreement is hereby amended by deleting clauses (B) and (C) thereof in their entirety and substituting the following in their stead:


 “(B) (x) the repayment, redemption or repurchase of the Indebtedness arising under the Existing FRN Indenture, the
Senior Secured Indenture or any Permitted Refinancing thereof, and (y) the repayment, redemption or repurchase of the Senior Subordinated Notes on the Issuance Date with the proceeds of equity contributions and Indebtedness issued under the
Senior Secured Indenture, or (C) as long as the Payment Conditions are satisfied, the repayment, redemption or repurchase of Indebtedness 

  

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evidenced by (1) the Convertible Indenture (other than Indebtedness repaid, redeemed or repurchased after the consummation of the Rex Transaction),
(2) Subordinated Indebtedness or (3) other Indebtedness described in Section 6.01(a)(xiii) hereof;” 
  

	 	(j)	Section 6.06(b)(ii) of the Credit Agreement is hereby deleted in its entirety and the following is substituted in its stead: 

 “(ii) payment of mandatory or regularly scheduled interest and principal payments as and when due in respect of any other Indebtedness permitted
hereunder, including, without limitation, on account of the Senior Secured Indenture and any Permitted Refinancing thereof;” 
  

	 	(k)	Section 6.06(b)(iv) of the Credit Agreement is hereby deleted in its entirety and the following is substituted in its stead: 

 “(iv) voluntary, non-mandatory prepayments of Indebtedness on account of the Senior Secured Indenture and any Permitted Refinancing thereof (other
than any Subordinated Indebtedness) as long as at such time Excess Availability shall be equal to or greater than 15% of the Borrowing Base and no Event of Default then exists or would arise therefrom.” 
  

	 	(l)	Section 6.07 of the Credit Agreement is hereby amended by adding the words “(other than any Loan Party)” after the word “Affiliates” in the fourth line
thereof. 

  

	 	(m)	Section 6.08 of the Credit Agreement is hereby amended by deleting the provisions of clause (i) of the proviso thereof in its entirety and substituting the following in
its stead: 

 “(i) the foregoing shall not apply to restrictions and conditions imposed by law or by any Loan Document, or
by any document relating to the Existing FRN Indenture, the Senior Secured Indenture, the Senior Subordinated Notes or any Permitted Refinancing of any of the foregoing,” 
  

	 	(n)	Section 6.09 of the Credit Agreement is hereby amended by deleting the provisions of clause (e) thereof in its entirety and substituting the following in its stead:


 “(e) the Existing FRN Indenture, the Senior Secured Indenture, the Senior Subordinated Notes or any Permitted
Refinancing of any of the foregoing, if as a result thereof a Default or an Event of Default would arise hereunder.” 
  

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 6. Amendments to Schedules. To the extent that any changes in any representations, warranties, and
covenants require any amendments to the schedules to the Credit Agreement or any of the other Loan Documents, such schedules are hereby updated, as evidenced by supplemental schedules (if any) annexed to this Fifth Amendment. 
 7. Joinder and Assumption of Obligations. Effective as of the date of this Fifth Amendment, Parent hereby acknowledges that it has received and reviewed
a copy of the Credit Agreement and the other Loan Documents, and hereby: 
  

	 	(a)	joins in the execution of, and becomes a party to, the Credit Agreement and the Facility Guarantee, as a Facility Guarantor thereunder, as indicated with its signature below;


  

	 	(b)	covenants and agrees to be bound by all covenants, agreements, liabilities and acknowledgments of a Facility Guarantor under the Credit Agreement and the Facility Guarantee, after
giving effect to the Fifth Amendment (other than covenants, agreements, liabilities and acknowledgments that relate solely to an earlier date), in each case, with the same force and effect as if Parent were a signatory to the Credit Agreement and
the Facility Guarantee and were expressly named as a Facility Guarantor therein; 

  

	 	(c)	(i) makes all representations, warranties, and other statements of a Facility Guarantor under the Credit Agreement and the Facility Guarantee, after giving effect to the Fifth
Amendment (other than representations, warranties and other statements that relate solely to an earlier date), in each case, with the same force and effect as if Parent were a signatory to the Credit Agreement and such Facility Guarantee and were
expressly named as a Facility Guarantor therein, and (ii) represents that it does not, and will not (unless it complies with Section 5.14(b) of the Credit Agreement) own any Inventory, Credit Card Receivables, prescription lists or
Eligible Third Party Receivables; and 

  

	 	(d)	assumes and agrees to perform all applicable duties and Obligations of the other Facility Guarantors under the Credit Agreement and the Facility Guarantee, after giving effect to
the Fifth Amendment. 

 8. Ratification of Loan Documents. Except as provided herein, all terms and conditions of the
Credit Agreement and of the other Loan Documents remain in full force and effect. The Loan Parties each hereby ratify, confirm, and reaffirm all of the representations and warranties contained therein. 
  

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 9. Conditions to Effectiveness. This Fifth Amendment shall not be effective until each of the
following conditions precedent has been fulfilled to the satisfaction of the Administrative Agent: 
  

	 	(a)	This Fifth Amendment shall have been duly executed and delivered by the Loan Parties and the Required Lenders. 

  

	 	(b)	The Loan Parties shall have received proceeds under the Senior Secured Indenture (as defined in this Fifth Amendment) and proceeds from equity contributions made to the Parent in an
aggregate amount sufficient to refinance in full the obligations of the Loan Parties under the Existing FRN Indenture (as defined in this Fifth Amendment) and to reduce the principal obligations of the Loan Parties under the Senior Subordinated
Notes to and amount not greater than $78,000,000. 

  

	 	(c)	All corporate and shareholder action on the part of the Loan Parties necessary for the valid execution, delivery and performance by the Loan Parties of this Fifth Amendment shall
have been duly and effectively taken and evidence thereof satisfactory to the Administrative Agent shall have been provided to the Administrative Agent. 

  

	 	(d)	No Default or Event of Default shall have occurred and be continuing. 

  

	 	(e)	The Loan Parties shall have executed and delivered such additional instruments, documents and agreements as the Administrative Agent may reasonably request.


 10. Miscellaneous. 
  

	 	(a)	Except as expressly provided herein, all provisions of the Credit Agreement and the other Loan Documents remain in full force and effect. Without limiting the foregoing, Duane Reade
International, LLC hereby ratifies and confirms its obligations thereunder (notwithstanding its organizational change from a corporation to a limited liability company) and ratifies and confirms its grant of a security interest in the Collateral to
secure the Obligations. 

  

	 	(b)	This Fifth Amendment may be executed in several counterparts and by each party on a separate counterpart, each of which when so executed and delivered shall be an original, and all
of which together shall constitute one instrument. 

  

	 	(c)	This Fifth Amendment expresses the entire understanding of the parties with respect to the transactions contemplated hereby. No prior negotiations or discussions shall limit,
modify, or otherwise affect the provisions hereof. 

  

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	 	(d)	Any determination that any provision of this Fifth Amendment or any application hereof is invalid, illegal or unenforceable in any respect and in any instance shall not affect the
validity, legality, or enforceability of such provision in any other instance, or the validity, legality or enforceability of any other provisions of this Fifth Amendment. 

  

	 	(e)	The Loan Parties shall pay all reasonable costs and expenses of the Agents, including, without limitation, reasonable attorneys’ fees in connection with the preparation,
negotiation, execution and delivery of this Fifth Amendment. 

  

	 	(f)	The Loan Parties warrant and represent that the Loan Parties have consulted with independent legal counsel of their selection in connection with this Fifth Amendment and are not
relying on any representations or warranties of the Agents or the Lenders or their counsel in entering into this Fifth Amendment. 

 [SIGNATURE PAGES FOLLOW] 
  

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 IN WITNESS WHEREOF, the parties have hereunto caused this Fifth Amendment to be executed and their seals
to be hereto affixed as of the date first above written. 
  

			
	DUANE READE
	as Borrower
		
	By: 	 	DUANE READE INC., its General Partner
		
	By:	 	/s/ John K. Henry
	Name:	 	John K. Henry
	Title:	 	Chief Financial Officer
		
	By:	 	/s/ Phillip A. Bradley
	Name:	 	Phillip A. Bradley
	Title:	 	Secretary
		
	By:	 	DRI I INC., its General Partner
		
	By:	 	/s/ John K. Henry
	Name:	 	John K. Henry
	Title:	 	Chief Financial Officer
		
	By:	 	/s/ Phillip A. Bradley
	Name:	 	Phillip A. Bradley
	Title:	 	Secretary
	
	DUANE READE INC., as Facility Guarantor
		
	By:	 	/s/ John K. Henry
	Name:	 	John K. Henry
	Title:	 	Chief Financial Officer
		
	By:	 	/s/ Phillip A. Bradley
	Name:	 	Phillip A. Bradley
	Title:	 	Secretary










			
	DRI I INC., as Facility Guarantor
		
	By:	 	/s/ John K. Henry
	Name:	 	John K. Henry
	Title:	 	Chief Financial Officer
		
	By:	 	/s/ Phillip A. Bradley
	Name:	 	Phillip A. Bradley
	Title:	 	Secretary
	
	 DUANE READE INTERNATIONAL, LLC.,
 as Facility
Guarantor

		
	By:	 	/s/ Joseph C. Magnacca
	Name:	 	Joseph C. Magnacca
	Title:	 	Manager
		
	By:	 	/s/ Phillip A. Bradley
	Name:	 	Phillip A. Bradley
	Title:	 	Manager
	
	 DUANE READE REALTY, INC.,
 as Facility
Guarantor

		
	By:	 	/s/ John K. Henry
	Name:	 	John K. Henry
	Title:	 	Chief Financial Officer
		
	By:	 	/s/ Phillip A. Bradley
	Name:	 	Phillip A. Bradley
	Title:	 	Secretary
	
	 DUANE READE HOLDINGS, INC.,
 as Facility
Guarantor

		
	By:	 	/s/ John K. Henry
	Name:	 	John K. Henry
	Title:	 	Chief Financial Officer
		
	By:	 	/s/ Phillip A. Bradley
	Name:	 	Phillip A. Bradley
	Title:	 	Secretary










			
	BANK OF AMERICA, N.A.,
	 As Administrative Agent, as Collateral
 Agent, as Issuing Bank, as Swingline Lender
 and as Lender

		
	By: 	 	/s/ David Vega
	Name:	 	David Vega
	Title:	 	Managing Director


  

			
	Address:	 	
	100 Federal Street 9th Floor
	Boston, Massachusetts 02110
	Attn: Keith Vercauteren
	Telephone:	 	(617) 434-4045
	Telecopy:	 	(617) 434-4339










			
	 GENERAL ELECTRIC CAPITAL CORPORATION, as Syndication Agent and
 Lender

		
	By: 	 	/s/ Peter F. Crispino
	Name:	 	Peter F. Crispino
	Title:	 	Duly Authorized Signatory


  

			
	Address:	 	10 Riverview Drive
		 	Danbury, CT 06810
	Telephone:	 	203-749-6220
	Telecopy:	 	203-749-4666










			
	 WELLS FARGO RETAIL FINANCE, LLC,
 as
Syndication Agent, as Co-Lead Arranger,
 and as Lender

		
	By: 	 	/s/ Connie Liu
	Name:	 	Connie Liu
	Title:	 	Assistant Vice President


  

			
	Address:	 	One Boston Place, 18th
Floor
		 	Boston, Massachusetts 02108
	Telephone:	 	617-854-7227
	Telecopy:	 	617-722-9485









 SCHEDULE 2.22(A) 
 DEMAND DEPOSIT ACCOUNTS 
  

							
	 Depository Name & Address
	  	 Account Numbers
	  	 Contact
	  	 Description of
Purpose for Which
Account Is
Used

	 Bank of America
 101 S. Tryon Street
 Charlotte, NC 28255-0001
	  	94051 89009	  	 David Vega,
 Bank of America
 Merrill Lynch,
 Retail Finance Group
 MAS-100-09-09
 100 Federal Street,
 Boston, MA 02110
 Fax: 617-434-4131
	  	 Main Operating
 Account

				
	 Bank of America
 101 S. Tryon Street
 Charlotte, NC 28255-0001
	  	93928 53387	  	 David Vega,
 Bank of America
 Merrill Lynch,
 Retail Finance Group
 MAS-100-09-09
 100 Federal Street,
 Boston, MA 02110
 Fax: 617-434-4131
	  	 Blocked Deposit
 Account for Credit Card
 Sales from the Stores

				
	 Bank of America
 101 S. Tryon Street
 Charlotte, NC 28255-0001
	  	94277 24201	  	 David Vega,
 Bank of America
 Merrill Lynch,
 Retail Finance Group
 MAS-100-09-09
 100 Federal Street,
 Boston, MA 02110
 Fax: 617-434-4131
	  	 Payroll Controlled
 Disbursement
Account

				
	 Bank of America
 101 S. Tryon Street
 Charlotte, NC 28255-0001
	  	8024 1276	  	 David Vega,
 Bank of America
 Merrill Lynch,
 Retail Finance Group
 MAS-100-09-09
 100 Federal Street,
 Boston, MA 02110
 Fax: 617-434-4131
	  	 Accounts Payable
 Controlled Disbursement
Account

				
	 Bank of America
 101 S. Tryon Street
 Charlotte, NC 28255-0001
	  	46259 75273	  	 David Vega,
 Bank of America
 Merrill Lynch,
 Retail Finance Group
 MAS-100-09-09
 100 Federal Street,
 Boston, MA 02110
 Fax: 617-434-4131
	  	 EEOC Settlement
 Account










							
	 Bank of America
 101 S. Tryon Street
 Charlotte, NC 28255-0001
	  	46287 89327	  	 David Vega,
 Bank of America
 Merrill Lynch,
 Retail Finance Group
 MAS-100-09-09
 100 Federal Street,
 Boston, MA 02110
 Fax: 617-434-4131
	  	 Blocked Deposit
 Account for third party
 pharmacy receipts









 SCHEDULE 2.22(C) 
 BLOCKED ACCOUNTS 
  

			
	 Depository Name
	  	Account Number:
	 Bank of America
	  	93928532809
	 Bank of America
	  	9392853387
	 Bank of America
	  	46287 89327








 SCHEDULE 3.06 
 DISCLOSED MATTERS 
 Material Litigation 
 1. In November 2004, Duane Reade Inc. was served with a purported class action complaint, Damassia v. Duane Reade Inc. The lawsuit was filed in the U.S. District Court for the Southern District of New York. The
complaint alleges that, from the period beginning November 1998, Duane Reade Inc. incorrectly gave some employees the title “Assistant Manager,” in an attempt to avoid paying these employees overtime, in contravention of the Fair Labor
Standards Act and New York law. In May 2008, the court certified this case as a class action. In April 2006, Duane Reade Holdings, Inc. and Duane Reade Inc. were served with a purported class action complaint, Chowdhury v. Duane Reade Inc. and Duane
Reade Holdings, Inc. The complaint alleges that, from a period beginning March 2000, Duane Reade Holdings, Inc. and Duane Reade Inc. incorrectly classified certain employees in an attempt to avoid paying overtime to such employees, thereby violating
the Fair Labor Standards Act and New York law. In May 2008, the court certified this case as a class action. The complaint seeks an unspecified amount of damages. In January 2009, Duane Reade Holdings, Inc. announced that, without admitting
liability, it has entered into a Memorandum of Understanding to settle these two class action cases for $3.5 million. The settlement is subject to the approval of the U.S. District Court for the Southern District of New York. As a result of this
settlement agreement, Duane Reade Holdings, Inc. recorded a $3.5 million one-time, pre-tax charge for the fourth quarter ended December 27, 2008. As of March 28, 2009, Duane Reade Holdings, Inc. has obtained the necessary letter of credit.
The Court granted final approval of the settlement on July 24, 2009. 
 2. In November 2007, Duane Reade Holdings, Inc. was served with a subpoena from
the Office of the Attorney General of the State of New York. The subpoena requested information regarding Duane Reade Holdings, Inc.’s services to customers with limited English proficiency. Duane Reade Holdings, Inc. entered into an Assurance
of Discontinuance with the OAG on April 21, 2009. No monetary sanctions were imposed or monetary relief agreed upon. 
 3. In January 2008, Duane Reade
Holdings, Inc. was served with a subpoena from the Department of Health and Human Services, Office of the Inspector General. The subpoena seeks information relating to the operation of Duane Reade Holdings, Inc.’s pharmacy kiosks and
information relating to a business relationship that Duane Reade Holdings, Inc. had with Mobility Plus, a provider of durable medical equipment. In February 2008, Duane Reade Holdings, Inc. received an identical subpoena from the Office of the
Attorney General of the State of New York, Medicaid Fraud Control Unit. Duane Reade Holdings, Inc. is in the process of responding to the information requests from both entities. 







 4. On September 1, 2006, Anthony J. Cuti, a former Chairman, President and Chief Executive Officer of Duane Reade
Holdings, Inc., initiated an arbitration before the American Arbitration Association against Duane Reade Inc., Duane Reade Holdings, Inc. and Duane Reade Shareholders, LLC (the “respondents”). The arbitration relates to his termination in
November 2005. Mr. Cuti asserts various claims including, with respect to his employment agreement, breach of contract relating to the notice of termination provision, failure to make certain payments toward his 1998 corporate-owned life
insurance policy, relief from the non-competition and non-solicitation covenants, failure to provide adequate information relating to the valuation of his profits interest and breach of the covenant of good faith and fair dealing. Other claims
relate to the patent rights for Duane Reade Holdings, Inc.’s virtual pharmacy kiosk system and payment of an alleged deferred 2001 bonus based on any insurance recovery Duane Reade Holdings, Inc. may obtain on its business interruption claim in
connection with the 2001 World Trade Center tragedy. On March 16, 2007, Mr. Cuti sought leave to file an amended demand asserting additional allegations in support of his claim for breach of contract for failure to comply with the notice
of termination provision in his employment agreement, and a claim for defamation. On May 17, 2007, the arbitrator issued an order granting leave to file Mr. Cuti’s amended demand. Mr. Cuti seeks monetary damages, declaratory
relief, rescission of his employment agreement and the payment of his legal costs and fees associated with his termination and the arbitration. 
 On November 22, 2006, the respondents filed counterclaims and affirmative defenses against Mr. Cuti in the arbitration, alleging that between 2000 and 2005, Mr. Cuti was responsible for improper practices involving invoice
credits and rebillings for the construction of Duane Reade stores, that led to overstating Duane Reade Holdings, Inc.’s publicly reported earnings, and that caused Duane Reade Holdings, Inc. to create and maintain inaccurate records and publish
financial statements containing misstatements. These counterclaims were based on information uncovered as of that date by an investigation conducted by independent legal counsel and forensic accountants at the direction of the Audit Committee.

 In a press release dated April 2, 2007, Duane Reade Holdings, Inc. disclosed that, based on new information provided to Duane Reade
Holdings, Inc., the Audit Committee, with the assistance of independent counsel and forensic accountants, was conducting a review and investigation concerning the propriety of certain real estate transactions and related matters and whether the
accounting for such transactions was proper. On April 9, 2007, the respondents sought leave to file proposed amended counterclaims based on that new information. On May 17, 2007, the arbitrator issued an order granting leave to file the
amended counterclaims. The amended counterclaims seek rescission of employment agreements entered into between Duane Reade Holdings, Inc. and Mr. Cuti, return of all compensation paid under the employment agreements, other compensatory and
punitive damages, and legal costs and fees associated with the Audit Committee’s investigation and the arbitration. 
 On May 18,
2007, the independent counsel and the forensic accountants completed their review and investigation. The independent counsel concluded that Mr. Cuti orchestrated certain real estate and other transactions that led to overstating Duane Reade
Holdings, Inc.’s publicly reported earnings, and that caused Duane Reade Holdings, Inc. to create and maintain inaccurate records and publish financial statements 








 
containing misstatements. On May 22, 2007, the Audit Committee determined, after considering the results of the review and investigation, that certain
of Duane Reade Holdings, Inc.’s previously-issued financial statements would have to be restated. Duane Reade Holdings, Inc. filed the necessary restated financial statements for the periods affected. 
 On May 22, 2007, Duane Reade Holdings, Inc. received a grand jury subpoena from the United States Attorney’s Office for the Southern District
of New York seeking documents relating to the allegations in the amended counterclaims discussed above. Duane Reade Holdings, Inc. has cooperated fully with the investigation. The SEC also requested that Duane Reade Holdings, Inc. provide it with
information related to this matter. 
 On May 25, 2007, the United States Attorney’s Office for the Southern District of New York
filed an application requesting that the arbitrator stay further proceedings in the arbitration, including discovery, pending further developments in its criminal investigation of Mr. Cuti. Following briefing by the parties on the application,
the arbitrator entered an order staying the arbitration proceedings. The stay has been extended from time to time. 
 On October 9,
2008, the United States Attorney’s Office for the Southern District of New York and the SEC announced the filing of criminal and civil securities fraud charges against Mr. Cuti and another former executive of the Company, William Tennant.
In the criminal indictment, the government charges that Mr. Cuti and Mr. Tennant engaged in a scheme, involving the credits and rebillings and real estate related transactions discussed above, to falsely inflate the income and reduce the
expenses that Duane Reade Holdings, Inc. reported to the investing public and others. The SEC’s complaint similarly alleges that Mr. Cuti and Mr. Tennant entered into a series of fraudulent transactions designed to boost reported
income and enable Duane Reade Holdings, Inc. to meet quarterly and annual earnings guidance. Both proceedings are continuing. 
 Environmental 

 None. 







 SCHEDULE 3.09 
 TAXES 
 None. 







 SCHEDULE 3.12 
 SUBSIDIARIES 
 Duane Reade Holdings, Inc. maintains a 100% ownership interest in Duane Reade Inc. 
 Duane Reade Inc. maintains a 100% ownership interest in each of DRI I Inc., Duane Reade Realty, Inc. and Duane Reade International, LLC. 
 Duane Reade Inc. also has a 99% ownership interest in Duane Reade, a New York General Partnership. The remaining 1% interest in the Duane Reade Partnership is owned by
DRI I Inc. 







 SCHEDULE 3.13 
 INSURANCE 
 Insurance Maintained By or on Behalf of Loan Parties and Subsidiaries 

 

												
	 Insurance
 Coverage
	  	 Insurance Company
	  	Coverage
Limit	 	SIR	  	Current
Insurance
Premium	  	Policy Period
	 New York w/ COMP
	  	NY State Ins. Fund	  	Fixed Dollar	 	 	N/A	  	$1,925,029	  	03/1/09-02/28/10
						
	 New Jersey w/COMP.
	  	Zurich	  	Fixed Dollar	 	 	N/A	  	$123,953	  	8/17/08-8/17/09
						
	 Property/Boiler
	  	Lexington (Primary)	  	$200
Million	 	$	250,000	  	$872,965	  	10/1/08-9/30/09
						
	 Auto
	  	Hartford	  	$1Million (single limit)	 			  	$242,562	  	10/1/08-9/30/09
						
	 Umbrella
	  	ACE - (Primary)	  	$50 Million	 	$	250,000	  	$760,486	  	10/1/08-9/30/09
	  	Liberty ($50MM X $25MM)	  	$25 Million	 			  		  	
	  	XL AMER.($25MM X $75MM)	  	$25 Million	 			  		  	
	  		  	(Total) $100 Million	 			  		  	
						
	 Director & Officer
	  	National Union (AIG)	  	(Primary)$15 Million	 	$	250,000	  	$200,000	  	07/30/09-07/30/10
	  	ACE ($10MM X $15MM)	  	$10 Million	 	$	250,000	  	$68,000	  	07/30/09-07/30/10
						
	 EMP. PRACTICES
	  	National Union - (AIG) (Primary)	  	$10 Million	 	$	1,000,000	  	$500,000	  	07/30/09-07/30/10
						
	 Crime
	  	National Union - (AIG)	  	$1 Million	 	$	100,000	  	$8,640	  	10/1/08-9/30/09
						
	 General Liability
	  	Columbia Casualty	  	$15 Million	 	$	250,000	  	$844,672	  	10/1/08-9/30/09








 SCHEDULE 3.14 
 LABOR MATTERS 
 None. 







 SCHEDULE 3.16(B) 
 FEDERAL RESERVE REGULATIONS 
 None. 







 SCHEDULE 6.02 
 LIENS 
  

															
	 Debtor
	  	 Jurisdiction
	  	Type of
filing found	  	 Secured
Party
	  	Collateral	  	Original
File Date	  	Original
File Number	 	Amdt.
File Date
	DRI I, Inc.	  	New York U.S. Southern District Court at New York City	  	Judgment	  	 Plaintiffs - Louis Kaplan, Gerald J. Herskowitz, Bruce Rogers, George L. Miranda, Rudolph Pascucci, Stephem Camdeco as Trustees of the Allied Welfare
Fund
  
 Defendants
 Duane Reade NY
 Duane Reade, Inc. and DRI Inc.
	  	Amount:
 $15,336.94
	  	11/05/2007	  	00CV094842
(AKH)	 	
								
	Duane Reade	  	 New York,
 Bronx County
	  	Judgment	  	Duane Reed Corp.	  	Amount:
 $ 1,000.00
	  	12/09/2005	  	000791652-01	 	
								
	Duane Reade	  	 New York,
 Kings Supreme
 Court
	  	Judgment	  	Leon Reich vs. Duane Reade, Inc.	  	Amount
 $323,091.25
	  	07/06/2007	  	18669/2004	 	
								
	Duane Reade	  	New York, Queens County	  	Judgment	  	NY City Department of Finance	  	Amount
 $ 33.42
	  	01/13/2003	  	000752038-01	 	
								
	Duane Reade	  	New York, Queens County	  	Judgment	  	NY City Department of Finance	  	Amount
 $ 33.42
	  	01/13/2003	  	000752038-02	 	
								
	Duane Reade Inc.	  	New York U.S. Southern District Court at New York City	  	Order and
Final
Judgment	  	Faty Ansoumana, Etal	  	Amount
 $ 320,000
	  	12/31/2003	  	00-CV-00253-AKH	 	









															
	 Debtor
	  	 Jurisdiction
	  	Type of
filing found	  	 Secured
Party
	  	Collateral	  	Original
File Date	  	Original
File Number	  	Amdt.
File Date
	Duane Reade Inc.	  	New York U.S. Southern District Court at New York City	  	Partial
Judgment	  	 Louis
 Kaplan, Et al.
	  	Amount
 $15,336.94
	  	11/05/2004	  	00-VC-09842-AKH	  	
								
	Duane Reade Inc.	  	New York U.S. Southern District Court at New York City	  	Consent and
Settlement
agreement	  	 Marty
 Sesmer et al
	  	Specific
performance
plus legal
fees	  	01/24/2006	  	01-CV-04692-DCF	  	
								
	Duane Reade Inc.	  	New York U.S. Southern District Court at New York City	  	Stipulation
and Order
of Settlement	  	 George
 Joseph Sallal
	  	Amount
 $22,222.00
	  	08/08/2008	  	07-CV-10346-JSR	  	
								
	Duane Reade Inc.	  	New York U.S. Southern District Court at New York City	  	Stipulation
and Order of Settlement
	  	 Elyse
 Parmentier
	  	Amount
 $15,000.00
	  	01/09/2009	  	08-CV-04039-CM	  	
								
	Duane Reade Inc.	  	New York, New York County	  	State Tax
Lien	  	 NY City Department
 of Finance
	  	Amount
 $6,340.90
	  	01/27/2006	  	002092816-01	  	
								
	Duane Reade Inc.	  	New York, New York County	  	State Tax
Lien	  	 NY City Department
 of Finance
	  	Amount
 $113.27
	  	09/17/2008	  	002459294-01	  	
								
	Duane Reade Inc.	  	New York, New York County	  	State Tax
Lien	  	 NY City Department
 of Finance
	  	Amount
 $113.27
	  	09/17/2008	  	002459295-01	  	
								
	Duane Reade Inc.	  	New York, New York County	  	State Tax
Lien	  	 NY City Department
 of Finance
	  	Amount
 $113.27
	  	09/17/2008	  	002459296-01	  	
								
	Duane Reade Inc.	  	New York, New York County	  	State Tax
Lien	  	 NY City Department
 of Finance
	  	Amount
 $113.27
	  	09/17/2008	  	002459297-01	  	
								
	Duane Reade Inc.	  	New York, New York County	  	State Tax
Lien	  	 NY City Department
 of Finance
	  	Amount
 $113.27
	  	09/17/2008	  	002459298-01	  	
								
	Duane Reade Inc.	  	New York, New York County	  	State Tax
Lien	  	 NY City Department
 of Finance
	  	Amount
 $482.33
	  	11/26/2008	  	002487972-01	  	
								
	Duane Reade a Partnership	  	New York, New York County	  	Judgment	  	 Tishman
 Speyer Properties, L.P.
	  	Amount
 $650.00
	  	09/23/2003	  	00175183-01	  	









															
	 Debtor
	  	 Jurisdiction
	  	Type of
filing found	  	 Secured
Party
	  	Collateral	  	Original
File Date	  	Original
File Number	  	Amdt.
File Date
								
	Duane Reade a Partnership	  	New York, New York County	  	Judgment	  	Turner Construction Company	  	Amount
 $650.00
	  	09/23/2003	  	00175183-02	  	
								
	Duane Reade	  	New York, New York County	  	Judgment	  	Mohamed Kwara	  	Amount
 $240.00
	  	12/01/2006	  	002205254-01	  	
								
	Duane Reade etal.	  	New York, New York County	  	Judgment	  	City of New York	  	Amount
 $5000.00
	  	07/18/2007	  	002293715-01	  	
								
	Duane Reade a Partnership	  	New York, New York Supreme Court	  	Judgment	  	405 Lexington, LLC, Tishman Speyer Properties, L.P. and Turner Construction Company	  	Amount
 $650.00
	  	09/23/2003	  	110178-1999	  	
								
	Duane Reade	  	New York, New York Supreme Court	  	Judgment	  	Mohamed Kwara	  	Amount
 $240.00
	  	12/01/2006	  	112769-2006	  	
								
	Gristede’s Foods, Inc.	  	New York U.S. Southern District Court at New York City	  	Settlement
Agreement	  	UFCS Local 174 Commercial Health Care Fund	  	Amount
 $143,763.80
plus
interest
and legal
fees.
	  	See Docket
and
agreement
for more
information	  	05/02/2005	  	04-CV-07026-GEL
								
	Gristede’s Foods, Inc.	  	New York, New York County	  	Judgment	  	Marie O’Neil	  	Amount
 $78,991.25
	  	12/07/2006	  	002207045-01	  	
								
	Gristede’s Foods, Inc.	  	New York, New York County	  	Judgment	  	Hudson Towers Housing Company Inc., Marina Towrs Associates L.P. and Gateway Plaza Management Corp.	  	Amount
 $1,015.00
	  	10/04/2007	  	002319945-02