**Exhibit10.34**

**THIRD AMENDMENT TOCREDIT AGREEMENT**

This Third Amendment to Credit Agreement (the “ThirdAmendment”) is made as of this 7th day of  July 2006 by and among

DUANE READE, a New York general partnership, havingits principal place of business at 440 Ninth Avenue, New York, New York 10001;and

DUANE READE INC. a Delaware corporation, having itsprincipal place of business at 440 Ninth Avenue, New York, New York 10001; and

DRI I INC., a Delaware corporation, having itsprincipal place of business at 440 Ninth Avenue, New York, New York 10001;and

DUANE READE INTERNATIONAL, INC., a Delawarecorporation, having a mailing address at P.O. Box 32216, Newark, NewJersey 07102; and

DUANE READE REALTY, INC., a Delaware corporation,having its principal place of business at 440 Ninth Avenue, New York, New York10001; and

DUANE READE HOLDINGS, INC., a Delaware corporation,having its principal place of business at 440 Ninth Avenue, New York, New York10001; and

the LENDERS party hereto; and

BANK OF AMERICA, N.A. (f/k/a Fleet National Bank), asIssuing Bank, a national banking association having a place of business at 100Federal Street, Boston, Massachusetts 02110; and

BANK OF AMERICA, N.A. (f/k/a/ Fleet National Bank), asAdministrative Agent for the Lenders, a national banking associationhaving a place of business at 100 Federal Street, Boston, Massachusetts 02110;and

FLEET RETAIL GROUP, LLC (f/k/a Fleet Retail FinanceInc.), as Collateral Agent for the Lenders, a Delaware corporation, having itsprincipal place of business at 40 Broad Street, Boston, Massachusetts 02109;and

WACHOVIA BANK NATIONAL ASSOCIATION (f/k/a CongressFinancial Corporation), as Documentation Agent; and

GENERAL ELECTRIC CAPITAL CORPORATION as SyndicationAgent; and

WELLS FARGO RETAIL FINANCE, LLC, as Syndication Agentand Co-Lead Arranger

in consideration of themutual covenants herein contained and benefits to be derived herefrom.

**W I T N E S S E TH:**

WHEREAS, on July 21, 2003, certain of the partieshereto entered into that certain Credit Agreement (as amended and in effect,the “Credit Agreement”); and

WHEREAS, the Loan Parties have requested that theLenders amend certain provisions of the Credit Agreement as set forth herein.

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NOW, THEREFORE, itis hereby agreed as follows:

1.                *Capitalized Terms*.   All capitalized terms used hereinand not otherwise defined shall have the same meaning herein as in the CreditAgreement.

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

(a)           By deleting the definitionof “Applicable Margin” in its entirety and substituting the following in itsstead:

*“ApplicableMargin*” means initially, the rates for Prime Rate Loans andLIBO Loans, set forth in Level 3, below:

| **Level** | ** ** | **Performance Criteria**                                                                 | ** ** | **Prime Rate Loans** | ** ** | **LIBO Loans** | ** ** |
|-----------|------------|-----------------------------------------------------------------------------------------------|------------|--------------------------------|------------|---------------------|------------|
| 1         |       | Average Excess Availability  greater than or equal  to $125,000,000                           |       |                           | 0          | %                   |       |   | 1.00 | % |   |
| 2         |       | Average Excess Availability  greater than or equal  to $70,000,000 but less than $125,000,000 |       |                           | 0          | %                   |       |   | 1.25 | % |   |
| 3         |       | Average Excess Availability  greater than or equal  to $35,000,000 but less than $70,000,000  |       |                           | 0          | %                   |       |   | 1.50 | % |   |
| 4         |       | Average Excess Availability  greater than or equal  to $25,000,000 but less than $35,000,000  |       |                           | 0.25       | %                   |       |   | 1.75 | % |   |
| 5         |       | Average Excess Availability  less than $25,000,000                                            |       |                           | 0.50       | %                   |       |   | 2.00 | % |   |

 

The Applicable Margin shall be adjusted quarterly asof the first day of each Fiscal Quarter, based upon the average ExcessAvailability for the immediately preceding Fiscal Quarter. Upon the occurrenceof an Event of Default, at the option of the Administrative Agent or at thedirection of the Required Lenders, interest shall be determined in the mannerset forth in Section 2.11.

(b)          By adding the followingat the end of the definition of “Availability Reserves”:

and (vi) theSecurities Repayment Reserve.

(c)           deleting the definitionof “Maturity Date” in its entirety and substituting the following in its stead:

*“Maturity Date”*means July 21, 2011.

(d)          By adding the followingdefinitions in appropriate alphabetical order:

*“Securities Repayment Reserve*”means a Reserve in an amount not to exceed the outstanding amounts necessary torepay in full the Permanent Securities and the Supplemental PermanentSecurities, as applicable, which are not refinanced or restructured as and whenrequired by and in accordance with the provisions of Section 5.15 hereof.

*“Third Amendment”*means the Third Amendment to Credit Agreement dated as of July 7, 2006.

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3.                *Amendment to Article V.*   The provisions of Article Vof the Credit Agreement are hereby amended as follows:

(a)           Theprovisions of Section 5.01(f) of the Credit Agreement are herebydeleted in their entirety and the following substituted in their stead:

on the tenth Business Dayof each month, a certificate in the form of Exhibit E (a “*Borrowing Base Certificate*”) showing the Borrowing Base asof the close of business on the last day of the immediately preceding month,each Borrowing Base Certificate to be certified as complete and correct onbehalf of the Borrower by a Financial Officer of the Borrower; *provided that* at any time that, and as long as, ExcessAvailability is less than $30,000,000, a Borrowing Base Certificate shall beprovided weekly on Wednesday of each week (or, if Wednesday is not a BusinessDay, on the next succeeding Business Day) showing the Borrowing Base as of theclose of business on the immediately preceding Saturday;

(b)          The following newsection is hereby added to Article V of the Credit Agreement:

5.15 *Refinancing of thePermanent Securities and the Supplemental Permanent Securities.*

The Loan Parties shall refinanceor restructure the Permanent Securities and the Supplemental PermanentSecurities on terms reasonably acceptable to the Administrative Agent at least120 days prior to their scheduled maturity.

4.                *Amendments to Article VI*.   The provisions of Section 6.11(a) ofthe Credit Agreement are hereby deleted in their entirety and the followingsubstituted in their stead:

At any time thatAdjusted Excess Availability is less than ten percent (10%) of the lesser ofthe then Borrowing Base and the Total Commitments, the Loan Parties shallmaintain a Fixed Charge Coverage Ratio, calculated as of the last day of eachmonth, during the periods set forth below as follows:

| **Period**                                      | ** ** | ** ** | ** ** | **Minimum Ratio** | ** ** |
|-------------------------------------------------|------------|------------|------------|------------------------|------------|
| June 30, 2006 through March 31, 2007  |       |       | 0.50:1.00  |                   |       |   |
| April 1, 2007 through March 31, 2008  |       |       | 0.65:1.00  |                   |       |   |
| April 1, 2008 through March 31, 2009  |       |       | 0.85:1.00  |                   |       |   |
| April 1,  2009 and at all times thereafter |       |       | 1.00:1.00  |                   |       |   |

 

5.                *Ratification of Loan Documents.*   Except as providedherein, all terms and conditions of the Credit Agreement and of the other LoanDocuments remain in full force and effect. The Loan Parties each hereby ratify,confirm, and reaffirm all of the representations and warranties containedtherein.

6.                *Conditions to Effectiveness*.

This ThirdAmendment shall not be effective until each of the following conditionsprecedent have been fulfilled to the satisfaction of the Administrative Agent:

(a)           This Third Amendmentshall have been duly executed and delivered by the Loan Parties and the Lenders.

(b)          All corporate andshareholder action on the part of the Loan Parties necessary for the validexecution, delivery and performance by the Loan Parties of this Third Amendmentshall have been duly and effectively taken and evidence thereof satisfactory tothe Administrative Agent shall have been provided to the Administrative Agent.

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(c)           The Loan Parties shallhave paid the portion of the Amendment Fee due and payable on the effectivedate of this Third Amendment.

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

(e)           The Loan Parties shallhave executed such additional instruments, documents and agreements as theAdministrative Agent may reasonably request.

7.                *Miscellaneous.*

(a)           This Third Amendmentmay be executed in several counterparts and by each party on a separatecounterpart, each of which when so executed and delivered shall be an original,and all of which together shall constitute one instrument.

(b)          This Third Amendmentexpresses the entire understanding of the parties with respect to thetransactions contemplated hereby. No prior negotiations or discussions shalllimit, modify, or otherwise affect the provisions hereof.

(c)           Any determination thatany provision of this Third Amendment or any application hereof is invalid,illegal or unenforceable in any respect and in any instance shall not effectthe validity, legality, or enforceability of such provision in any otherinstance, or the validity, legality or enforceability of any other provisionsof this Third Amendment.

(d)          The Loan Parties shallpay all reasonable costs and expenses of the Agents, including, withoutlimitation, reasonable attorneys’ fees in connection with the preparation,negotiation, execution and delivery of this Third Amendment.

(e)           The Loan Partieswarrant and represent that the Loan Parties have consulted with independentlegal counsel of their selection in connection with this Third Amendment andare not relying on any representations or warranties of the Agents or theLenders or their counsel in entering into this Third Amendment.

 

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INWITNESS WHEREOF, the parties have hereunto caused this Third Amendment to beexecuted and their seals to be hereto affixed as of the date first abovewritten.

|        | 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/ MICHELLE D. BERGMAN |   |
|   | Name:                                            | Michelle D. Bergman |
|   | Title:                                           | *Senior  Vice President* |
|   | By:  DRI I  INC., its General Partner       |
|        | by                                               | /s/ JOHN K. HENRY |   |
|   | Name:                                            | John K. Henry |
|   | Title:                                           | *Chief Financial Officer* |
|        | by                                               | /s/ MICHELLE D. BERGMAN |   |
|   | Name:                                            | Michelle D. Bergman |
|   | Title:                                           | *Senior Vice President* |
|   | DUANE  READE INC., as Facility Guarantor         |
|        | by                                               | /s/ JOHN K. HENRY |   |
|   | Name:                                            | John K. Henry |
|   | Title:                                           | *Chief Financial Officer* |
|        | by                                               | /s/ MICHELLE D. BERGMAN |   |
|   | Name:                                            | Michelle D. Bergman |
|   | Title:                                           | *Senior Vice President* |
|   | DRI  I INC., as Facility Guarantor               |
|        | by                                               | /s/ JOHN K. HENRY |   |
|   | Name:                                            | John K. Henry |
|   | Title:                                           | *Chief Financial Officer* |
|        | by                                               | /s/ MICHELLE D. BERGMAN |   |
|   | Name:                                            | Michelle D. Bergman |
|   | Title:                                           | *Senior Vice President* |
|        |                                                  |  |  |  |

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|        | DUANE READE INTERNATIONAL,  INC., as Facility Guarantor |
|--------|---------------------------------------------------------|
|        | by                                                      | /s/ JOHN K. HENRY |   |
|   | Name:                                                   | John K. Henry |
|   | Title:                                                  | *Chief Financial Officer* |
|        | by                                                      | /s/ MICHELLE D. BERGMAN |   |
|   | Name:                                                   | Michelle D. Bergman |
|   | Title:                                                  | *Senior Vice President* |
|   | DUANE READE REALTY, INC.,  as Facility Guarantor        |
|        | by                                                      | /s/ JOHN K. HENRY |   |
|   | Name:                                                   | John K. Henry |
|   | Title:                                                  | *Chief Financial Officer* |
|        | by                                                      | /s/ MICHELLE D. BERGMAN |   |
|   | Name:                                                   | Michelle D. Bergman |
|   | Title:                                                  | *Senior Vice President* |
|   | DUANE READE HOLDINGS, INC.,  as Facility Guarantor      |
|        | by                                                      | /s/ JOHN K. HENRY |   |
|   | Name:                                                   | John K. Henry |
|   | Title:                                                  | *Chief Financial Officer* |
|        | by                                                      | /s/ MICHELLE D. BERGMAN |   |
|   | Name:                                                   | Michelle D. Bergman |
|   | Title:                                                  | *Senior Vice President* |
|   | FLEET  RETAIL GROUP, LLC,                               |
|   | As Collateral Agent, as Swingline Lender and as  Lender |
|        | By:                                                     | /s/ KEITH VERCAUTEREN |   |
|   | Name:                                                   | Keith Vercauteren |
|   | Title:                                                  | *Director* |
|   | Address:                                                | 40 Broad Street,  10th Floor |
|   |                                                    | Boston,  Massachusetts 02109 |
|   | Attn: Keith  Vercauteren                                |
|   | Telephone:                                              | (617) 434-4045 |
|   | Telecopy:                                               | (617) 434-4339 |
|        |                                                         |  |  |  |  |

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|        | BANK OF AMERICA,  N.A., as Administrative Agent and as Issuing Bank    |
|--------|------------------------------------------------------------------------|
|        | By:                                                                    | /s/ KEITH VERCAUTEREN |   |
|   | Name:                                                                  | Keith Vercauteren |
|   | Title:                                                                 | *Director* |
|   | Address:                                                               | 40 Broad Street, |
|   |                                                                   | Boston,  Massachusetts 02109 |
|   | Attn: Keith  Vercauteren                                               |
|   | Telephone:                                                             | (617) 434-4045 |
|   | Telecopy:                                                              | (617) 434-4339 |
|   | WACHOVIA BANK NATIONAL ASSOCIATION,  as Documentation Agent and Lender |
|   | By:                                                                    | /s/ JASON SEARLE |   |
|   | Name:                                                                  | Jason Searle |
|   | Title:                                                                 | *Vice  President* |
|   | Address:                                                               | 1133 Avenue of  the Americas |
|   |                                                                   | New York, NY  10036 |
|   | Telephone:                                                             | 212-545-4558 |
|   | Telecopy:                                                              | 212-545-4283 |
|   | GENERAL ELECTRIC CAPITAL  CORPORATION, as Syndication Agent and Lender |
|   | By:                                                                    | /s/ AMANDA J. VAN HEYST |   |
|   | Name:                                                                  | Amanda J. van  Heyst |
|   | Title:                                                                 | *Duly  Authorized Signatory* |
|   | Address:                                                               | 201 Merritt 7,  Norwalk, CT 06854 |
|   |                                                                   |   |
|   | Telephone:                                                             | (203) 956-4057 |
|   | Telecopy:                                                              | (203) 956-4004 |
|   | THE CIT GROUP/BUSINESS  CREDIT, INC., as Lender                        |
|   | By:                                                                    | /s/ MATTHEW DEFRANCO |   |
|   | Name:                                                                  | Matthew DeFranco |   |
|   | Title:                                                                 | *Assistant  Vice President* |   |
|   | Address:                                                               | 11 W. 42nd Street |
|   |                                                                   | New York, NY  10036 |
|   | Telephone:                                                             | 212-461-7715 |
|   | Telecopy:                                                              | 212-461-7762 |
|        |                                                                        |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

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|        | WELLS FARGO RETAIL FINANCE,  Llc, as Syndication  Agent, as Co-Lead Arranger, and as Lender |
|--------|---------------------------------------------------------------------------------------------|
|   | By:                                                                                         | /s/ CORY LOFTS |   |
|   | Name:                                                                                       | Cory Lofts |
|   | Title:                                                                                      | *VP  Account Executive* |
|   | Address:                                                                                    | One Boston Place,  18th Floor |
|   |                                                                                        | Boston,  Massachusetts 02108 |
|   | Telephone:                                                                                  | 617-854-7227 |
|   | Telecopy:                                                                                   | 617-722-9485 |
|        |                                                                                             |  |  |  |  |

 

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