Exhibit
10.34


THIRD AMENDMENT TO
CREDIT AGREEMENT


This Third Amendment to Credit Agreement (the “Third
Amendment”) is made as of this 7th day of  July 2006 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, INC., a Delaware
corporation, having a mailing address at P.O. Box 32216, Newark, New
Jersey 07102; 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 for the Lenders, a national banking association
having a place of business at 100 Federal Street, Boston, Massachusetts 02110;
and


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


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


GENERAL ELECTRIC CAPITAL CORPORATION as Syndication
Agent; and


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


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.



 1
 








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)           By deleting the definition
of “Applicable Margin” in its entirety and substituting the following in its
stead:


“Applicable
Margin” means initially, the rates for Prime Rate Loans and
LIBO 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 as
of the first day of each Fiscal Quarter, based upon the average Excess
Availability for the immediately preceding Fiscal Quarter. Upon the occurrence
of an Event of Default, at the option of the Administrative Agent or at the
direction of the Required Lenders, interest shall be determined in the manner
set forth in Section 2.11.


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


and (vi) the
Securities Repayment Reserve.


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


“Maturity Date”
means July 21, 2011.


(d)          By adding the following
definitions in appropriate alphabetical order:


“Securities Repayment Reserve”
means a Reserve in an amount not to exceed the outstanding amounts necessary to
repay in full the Permanent Securities and the Supplemental Permanent
Securities, as applicable, which are not refinanced or restructured as and when
required 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.



 2
 








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


(a)           The
provisions of Section 5.01(f) of the Credit Agreement are hereby
deleted in their entirety and the following substituted in their stead:


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


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


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


The Loan Parties shall refinance
or restructure the Permanent Securities and the Supplemental Permanent
Securities on terms reasonably acceptable to the Administrative Agent at least
120 days prior to their scheduled maturity.


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


At any time that
Adjusted Excess Availability is less than ten percent (10%) of the lesser of
the then Borrowing Base and the Total Commitments, the Loan Parties shall
maintain a Fixed Charge Coverage Ratio, calculated as of the last day of each
month, 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 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.


6.                Conditions to Effectiveness.


This Third
Amendment shall not be effective until each of the following conditions
precedent have been fulfilled to the satisfaction of the Administrative Agent:


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


(b)          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 Third Amendment
shall have been duly and effectively taken and evidence thereof satisfactory to
the Administrative Agent shall have been provided to the Administrative Agent.



 3
 








(c)           The Loan Parties shall
have paid the portion of the Amendment Fee due and payable on the effective
date of this Third Amendment.


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


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


7.                Miscellaneous.


(a)           This Third 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.


(b)          This Third 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.


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


(d)          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 Third Amendment.


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


 



 4















IN
WITNESS WHEREOF, the parties have hereunto caused this Third 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/ 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

  
					







 5
 








 




	
  

  	
  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

  
						







 6
 








 




	
  

  	
  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

  
																







 7
 








 




	
  

  	
  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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