**Exhibit 10.35**

**Richard Dreiling**CEO &President

August 29, 2006

Mr. Vincent A. Scarfone310 Cambridge DriveButler, New Jersey 07405

Dear Jim:

This letter will confirm an offer of employment to youby Duane Reade Inc. (the “Company”).

Your initial assignment will be as Senior VicePresident, Human Resources and Administration, reporting directly to me. Youwill be based at our headquarters office located at 440 9th Avenue, New York,NY. Your initial salary will be $250,000.00 ($8,615.38 paid bi-weekly). Futuresalary increases will be based on demonstrated job performance in accordancewith Company policy and practice.

The Company offers an executive benefit program inwhich you will be able to participate, subject to the terms of eligibility forthe individual benefit plans. You will receive three (3) weeks ofpaid vacation each calendar year subject to the restrictions of your jobrequirements. Please be aware that the Company’s vacation policy does not allowcarryover from year to year. Therefore, if the three weeks are not taken theyare forfeited each year.

As an executive of the Company, you will be eligibleto participate in the Company’s performance incentive plan at fifty percent(50%) of your annual salary. The program is based on the attainment of companyperformance towards EBITDA targets and your individual performance toward goalsmutually set between you and your immediate manager. Actual incentive paymentswill be paid yearly, usually at the end of the first quarter of each year,after Board approval. As with other executive benefits programs, eligibilityand participation are subject to the specific provisions of the plan.

As an executive, you will be eligible to participatein the employee stock option plan. Subject to the terms and conditions of thatplan, you will receive an initial grant of thirteen thousand (13,000) optionsto purchase Company Stock at a par value of One hundred dollars ($100.00) pershare. Under the current plan provisions, the shares vest at a rate of (20%)per year of service with the Company. They will be 100% vested at the end offive (5) consecutive years of employment. Nothing in this paragraph shallact as a guarantee of any specific value of the options or the Company’s stock,other than as described in the plan relating to such options.

Your employment with the Company will be “at will”,meaning that either you or the Company are entitled to terminate youremployment at any time for any reason, or no reason, with or without cause.Except as set forth in the following sentence, in the event the Companyterminates your employment other than for “cause” (as defined) you will be paidseverance equal to one year salary at your then current salary payable inbi-weekly installments. For purposes of this Agreement “cause” shall meantermination for: (1) a repeated refusal to comply with a lawful directive ofthe Chief Executive Officer; (2) serious misconduct, dishonesty or disloyaltydirectly related to the performance of duties for the Company, which resultsfrom a willful act or omission and which is materially injurious to theoperations, financial condition or business reputation of the Company or anysignificant subsidiary thereof; (3) being convicted (or entering into aplea bargain admitting criminal guilt) in any criminal proceeding that may havean adverse impact on the Company’s reputation and standing in the community;(4) willful and continued failure to substantially perform your dutiesunder this Agreement; or (5) any other material breach of the Agreement.In the event of termination for cause, you will be entitled to any unpaidsalary through the date of termination, 

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plus any earned and accrued unused vacation pay ordeferred compensation payments. You will not be entitled to any othercompensation from the Company, including without limitation, severance pay.

You will be reimbursed for all normal businessexpenses in accordance with Company policy.

Thisletter is intended to memorialize the offer of employment provided by theCompany and if these terms are acceptable to you, to create an at-willemployment relationship under these terms. Nothing in this letter is intendedor shall have the effect of modifying or amending the terms, conditions, orrequirements of any benefit plan, retirement plan or welfare plan orarrangement offered by the Company. During your employment, you will remainsubject to, and be required to abide by, all terms, conditions and requirementsof the policies and practices dictated by the Company for executive employees.
| Sincerely,                    |   |   |
|-------------------------------|--------|--------|
| /s/ RICHARD W. DREILING       |   |   |
| Richard W.  Dreiling          |   |   |
| /s/ VINCENT A. SCARFONE       |   |   |
| Mr. Vincent  A. Scarfone | Date   |   |

 

 

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