Document:

EXHIBIT
10.29

Duane Reade Inc.

Duane Reade GP

and

The Guarantors named
herein

$ 50,000,000

Senior Secured Floating
Rate Notes due 2010

Purchase Agreement

dated August 4, 2005

Banc of America Securities
LLC

Table of Contents

	
  Section 1.

  	
   

  	
  Representations and
  Warranties

  	
  2

  
	
  (a)

  	
   

  	
  No
  Registration Required

  	
  2

  
	
  (b)

  	
   

  	
  No
  Integration of Offerings or General Solicitation

  	
  2

  
	
  (c)

  	
   

  	
  Non-Fungibility

  	
  3

  
	
  (d)

  	
   

  	
  The Offering
  Memorandum

  	
  3

  
	
  (e)

  	
   

  	
  The Purchase
  Agreement

  	
  3

  
	
  (f)

  	
   

  	
  The
  Registration Rights Agreement and DTC Agreement

  	
  3

  
	
  (g)

  	
   

  	
  Authorization
  of the Securities and the Exchange Securities

  	
  3

  
	
  (h)

  	
   

  	
  Authorization
  of the Indenture

  	
  4

  
	
  (i)

  	
   

  	
  Authorization
  of the Collateral Documents and the Transactions

  	
  4

  
	
  (j)

  	
   

  	
  Security
  Interests

  	
  4

  
	
  (k)

  	
   

  	
  Description
  of the Securities, the Exchange Securities, the Indenture, the Registration
  Rights Agreement, the Collateral Documents, the Revolving Credit Agreement,
  the Existing Notes and the Intercreditor Agreement

  	
  5

  
	
  (l)

  	
   

  	
  No
  Material Adverse Change

  	
  5

  
	
  (m)

  	
   

  	
  Independent
  Accountants

  	
  5

  
	
  (n)

  	
   

  	
  Preparation
  of the Financial Statements

  	
  5

  
	
  (o)

  	
   

  	
  Incorporation
  and Good Standing of Holdings, the Company and its subsidiaries

  	
  6

  
	
  (p)

  	
   

  	
  Capitalization
  and Other Capital Stock Matters

  	
  6

  
	
  (q)

  	
   

  	
  Non-Contravention
  of Existing Instruments; No Further Authorizations or Approvals Required 

  	
  6

  
	
  (r)

  	
   

  	
  No
  Material Actions or Proceedings

  	
  7

  
	
  (s)

  	
   

  	
  Intellectual
  Property Rights

  	
  7

  
	
  (t)

  	
   

  	
  All
  Necessary Permits, etc.

  	
  8

  
	
  (u)

  	
   

  	
  Compliance
  with Laws

  	
  8

  
	
  (v)

  	
   

  	
  Title
  to Properties

  	
  10

  
	
  (w)

  	
   

  	
  Tax
  Law Compliance

  	
  11

  
	
  (x)

  	
   

  	
  “Investment
  Company”

  	
  11

  
	
  (y)

  	
   

  	
  Insurance

  	
  11

  
	
  (z)

  	
   

  	
  No
  Price Stabilization or Manipulation

  	
  11

  
	
  (aa)

  	
   

  	
  Solvency

  	
  11

  
	
  (bb)

  	
   

  	
  Compliance
  with Sarbanes-Oxley

  	
  12

  
	
  (cc)

  	
   

  	
  MD&A

  	
  12

  
	
  (dd)

  	
   

  	
  Related
  Party Transactions

  	
  12

  
	
  (ee)

  	
   

  	
  Company’s
  Accounting System

  	
  12

  
	
  (ff)

  	
   

  	
  Compliance
  with Environmental Laws

  	
  12

  
	
  (gg)

  	
   

  	
  ERISA
  Compliance

  	
  13

  
	
  (hh)

  	
   

  	
  Compliance
  with Regulation S

  	
  13

  
	
  (ii)

  	
   

  	
  Taxes;
  Fees

  	
  13

  
	
  (jj)

  	
   

  	
  No
  Labor Disputes

  	
  13

  
	
  Section 2.

  	
   

  	
  Purchase,
  Sale and Delivery of the Securities

  	
  14

  
	
  (a)

  	
   

  	
  The
  Securities

  	
  14

  
	
  (b)

  	
   

  	
  The
  Closing Date

  	
  14

  
	
  (c)

  	
   

  	
  Delivery
  of the Securities

  	
  14

  
	
  (d)

  	
   

  	
  Delivery
  of Offering Memorandum to the Initial Purchaser

  	
  14

  
	
  (e)

  	
   

  	
  Initial
  Purchaser as Qualified Institutional Buyer

  	
  15

  
					

 i
 

 

	
  Section 3.

  	
   

  	
  Additional Covenants

  	
  15

  
	
  (a)

  	
   

  	
  Initial Purchaser’s Review
  of Proposed Amendments and Supplements

  	
  15

  
	
  (b)

  	
   

  	
  Additional
  Information, Amendments and Supplements to the Offering Memorandum and Other
  Securities Act Matters

  	
  15

  
	
  (c)

  	
   

  	
  Copies
  of the Offering Memorandum

  	
  15

  
	
  (d)

  	
   

  	
  Blue
  Sky Compliance

  	
  15

  
	
  (e)

  	
   

  	
  Use
  of Proceeds

  	
  16

  
	
  (f)

  	
   

  	
  The
  Depositary

  	
  16

  
	
  (g)

  	
   

  	
  Additional
  Issuer Information

  	
  16

  
	
  (h)

  	
   

  	
  Agreement
  Not To Offer or Sell Additional Securities

  	
  16

  
	
  (i)

  	
   

  	
  No
  Integration

  	
  16

  
	
  (j)

  	
   

  	
  Legended
  Securities

  	
  16

  
	
  (k)

  	
   

  	
  PORTAL

  	
  16

  
	
  (l)

  	
   

  	
  Security
  Interests

  	
  16

  
	
  Section 4.

  	
   

  	
  Payment of Expenses

  	
  17

  
	
  Section 5.

  	
   

  	
  Conditions of the
  Obligations of the Initial Purchaser

  	
  17

  
	
  (a)

  	
   

  	
  Accountants’
  Comfort Letter

  	
  18

  
	
  (b)

  	
   

  	
  No
  Material Adverse Change or Ratings Agency Change

  	
  18

  
	
  (c)

  	
   

  	
  Opinion
  of Counsel for the Issuers and Guarantors

  	
  18

  
	
  (d)

  	
   

  	
  Opinion
  of Counsel for the Initial Purchaser

  	
  18

  
	
  (e)

  	
   

  	
  Officers’
  Certificate

  	
  18

  
	
  (f)

  	
   

  	
  Bring-down
  Comfort Letter

  	
  19

  
	
  (g)

  	
   

  	
  PORTAL
  Listing

  	
  19

  
	
  (h)

  	
   

  	
  Other
  Agreements

  	
  19

  
	
  (i)

  	
   

  	
  Evidence
  of Security Interest

  	
  19

  
	
  (j)

  	
   

  	
  Evidence
  of Insurance

  	
  19

  
	
  (k)

  	
   

  	
  Additional
  Documents

  	
  19

  
	
  Section 6.

  	
   

  	
  Reimbursement
  of Initial Purchaser’s Expenses

  	
  20

  
	
  Section 7.

  	
   

  	
  Offer,
  Sale and Resale Procedures

  	
  20

  
	
  Section 8.

  	
   

  	
  Indemnification

  	
  21

  
	
  (a)

  	
   

  	
  Indemnification
  of the Initial Purchaser

  	
  21

  
	
  (b)

  	
   

  	
  Indemnification
  of the Issuers, their Directors and Officers

  	
  21

  
	
  (c)

  	
   

  	
  Notifications
  and Other Indemnification Procedures

  	
  22

  
	
  (d)

  	
   

  	
  Settlements

  	
  23

  
	
  Section 9.

  	
   

  	
  Contribution

  	
  23

  
	
  Section 10.

  	
   

  	
  Termination
  of this Agreement

  	
  24

  
	
  Section 11.

  	
   

  	
  Representations
  and Indemnities to Survive Delivery

  	
  24

  
	
  Section 12.

  	
   

  	
  Notices

  	
  25

  
	
  Section 13.

  	
   

  	
  Successors

  	
  25

  
	
  Section 14.

  	
   

  	
  Partial
  Unenforceability

  	
  25

  
	
  Section 15.

  	
   

  	
  Governing
  Law Provisions

  	
  25

  
	
  (a)

  	
   

  	
  Consent
  to Jurisdiction

  	
  25

  
	
  Section 16.

  	
   

  	
  No
  Advisory or Fiduciary Responsibility

  	
  26

  
	
  Section 17.

  	
   

  	
  General
  Provisions

  	
  26

  
					

 

 ii

Purchase Agreement

August 4, 2005

BANC OF AMERICA SECURITIES
LLC

9 West 57th Street

New York, New York 10019

Ladies and Gentlemen:

Introductory.   Duane
Reade Inc., a Delaware corporation (the “Company”) and Duane Reade, a New York
general partnership and subsidiary of the Company (“Duane Reade GP”, and
together with the Company, the “Issuers”) propose to issue and sell to Banc of
America Securities LLC (the “Initial Purchaser”) $50,000,000 aggregate
principal amount of the Issuers’ Senior Secured Floating Rate Notes due 2010
(the “Notes”). The Notes will be the joint and several obligations of each of
the Issuers.

The payment of principal, premium and Liquidated
Damages (as defined in the Indenture (as defined below)), if any, and interest
on the Notes and the Exchange Notes (as defined in the Offering Memorandum (as
defined below)), will be fully and unconditionally guaranteed on a senior
secured basis, jointly and severally, by Duane Reade Holdings, Inc., a
Delaware corporation (“Holdings”) and all the existing and future direct and
indirect domestic subsidiaries of the Company (other than Duane Reade GP), and
any subsidiary of the Company formed or acquired after the Closing Date (as
defined in Section 2) that executes an additional guarantee in accordance
with the terms of the Indenture, and their respective successors and assigns
(collectively, the “Guarantors”), pursuant to their guarantees (the “Guarantees”).
The Notes and the Guarantees thereof are herein collectively referred to as the
“Securities”; and the Exchange Notes and the Guarantees attached thereto are
herein collectively referred to as the “Exchange Securities.”

The Issuers have prepared and will deliver to the
Initial Purchaser copies of the final Offering Memorandum, dated on or
about the date hereof, describing the terms of the Securities, for use by the
Initial Purchaser in connection with its solicitation of offers to purchase the
Securities. As used herein, the “Offering Memorandum” shall mean, with respect
to any date or time referred to in this Agreement, the Issuers’ final Offering
Memorandum, dated on or about the date hereof, including amendments or
supplements thereto and any exhibits thereto, in the most recent form that has
been prepared and delivered by the Issuers to the Initial Purchaser in
connection with its solicitation of offers to purchase Securities and all
information incorporated therein by reference. Further, any reference to the
Offering Memorandum shall be deemed to refer to and include any Additional
Issuer Information (as defined in Section 3) furnished by the Issuers
prior to the completion of the distribution of the Securities.

The Securities will be issued pursuant to the
indenture, dated as of December 20, 2004 (the “Indenture”), among the
Issuers, U.S. Bank National Association, as trustee (the “Trustee”) and the
Guarantors. Securities issued in book-entry form will be issued in the name of
Cede & Co., as nominee of The Depository Trust Company (the “Depositary”)
pursuant to a DTC blanket issuer letter of representations (the “DTC Agreement”),
among the Issuers and the Depositary.

Concurrently with the issuance of the Securities, the
Issuers and the Guarantors will use the proceeds of the issuance of the Notes
to permanently repay part of the borrowings under the Credit Agreement, dated
as of July 21, 2003, as amended by Amendment No. 1 thereto, dated July 22,
2004, and Amendment No. 2 thereto, dated August 9, 2005, among the
Issuers, the Guarantors, and the agents and lenders thereunder (the “Revolving
Credit Agreement”) and for other purposes described under the caption “Use of
Proceeds” in the Offering Memorandum (collectively, the “Refinancing”).

The holders of the Securities and their direct and
indirect transferees will also be entitled to the benefit of security interests
(“Liens”) in various personal property and other assets (the “Collateral”) 

granted under the Amended
and Restated Security Agreement among the Issuers, the Guarantors and the
collateral agent named thereunder (the “Collateral Agent”), and the Pledge
Agreement, among the same parties, in each case, dated as of December 20,
2004 (collectively, the “Security Agreements”), and the other collateral
documents related thereto (the “Other Collateral Documents”). All of the
aforementioned Liens will be subject to the terms of the Intercreditor
Agreement, dated as of July 30, 2004, between the Collateral Agent and the
collateral agent for lenders under the Revolving Credit Agreement (as amended,
restated, supplemented or modified from time to time, the “Intercreditor
Agreement”). Together, the Security Agreements and the Other Collateral
Documents are referred to herein as the “Collateral Documents.” The issuance
and sale of the Securities, the Refinancing and all related transactions are
hereinafter referred to collectively as the “Transactions,” and documents
executed in connection therewith are referred to collectively as the “Transaction
Documents.”

The holders of the Securities will be entitled to the
benefits of a registration rights agreement, to be dated as of the Closing Date
(the “Registration Rights Agreement”), among the Issuers, the Guarantors and
the Initial Purchaser.

Each of the Issuers understands that the Initial
Purchaser proposes to make an offering of the Securities on the terms and in the
manner set forth herein and in the Offering Memorandum and agrees that the
Initial Purchaser may resell, subject to the conditions set forth herein, all
or a portion of the Securities to purchasers (the “Subsequent Purchasers”) at
any time after the date of this Agreement. The Securities are to be offered and
sold to or through the Initial Purchaser without being registered with the
Securities and Exchange Commission (the “Commission”) under the Securities Act
of 1933 (as amended, the “Securities Act,” which term, as used herein, includes
the rules and regulations of the Commission promulgated thereunder), in
reliance upon exemptions therefrom. The terms of the Securities and the
Indenture will require that investors who acquire Securities expressly agree that
Securities may only be resold or otherwise transferred, after the date hereof,
if such Securities are registered for sale under the Securities Act or if an
exemption from the registration requirements of the Securities Act is available
(including the exemptions afforded by Rule 144A (“Rule 144A”) or
Regulation S (“Regulation S”) thereunder).

The Issuers and the Guarantors hereby confirm their
agreement with the Initial Purchaser as follows:

SECTION 1.   Representations
and Warranties.   The
Issuers and Guarantors hereby represent, warrant and covenant, jointly and
severally, to the Initial Purchaser as follows:

(a)        No Registration Required.   Subject to compliance by the
Initial Purchaser with the representations, warranties and covenants set forth
in Section 2 and Section 7 hereof, it is not necessary in connection
with the offer, sale and delivery of the Securities to the Initial Purchaser
and to each Subsequent Purchaser in the manner contemplated by this Agreement
and the Offering Memorandum to register the offer, issuance and sale of the
Securities under the Securities Act or, until such time as the Exchange
Securities are issued pursuant to an effective registration statement, to
qualify the Indenture under the Trust Indenture Act of 1939 (the “Trust Indenture
Act,” which term, as used herein, includes the rules and regulations of
the Commission promulgated thereunder).

(b)        No Integration of Offerings or General Solicitation.   None of the Issuers, the
Guarantors or any of their respective subsidiaries or affiliates (as such term
is defined in Rule 501 under the Securities Act (each, an “Affiliate”))
have, directly or indirectly, solicited any offer to buy or offered to sell,
and will not, directly or indirectly, solicit any offer to buy or offer to
sell, in the United States or to any United States citizen or resident, any
security which is or would be integrated with the sale of the Securities in a
manner that would require the offer, issuance and sale of the Securities to be
registered under the Securities Act. None of the Issuers, the Guarantors, any
of their subsidiaries or Affiliates, or any person acting on its or any of
their behalf (other than the Initial Purchaser, as to whom the Issuers and the 

 2
 

Guarantors
make no representation or warranty) has engaged or will engage, in connection
with the offering of the Securities, in any form of general solicitation or
general advertising within the meaning of Rule 502 under the Securities
Act. With respect to those Securities sold
in reliance upon Regulation S, (i) none of the Issuers, the Guarantors, any of their subsidiaries or
Affiliates or any person acting on its or any of their behalf (other than the
Initial Purchaser, as to whom the Issuers and the Guarantors make no representation or warranty) has engaged or
will engage in any directed selling efforts within the meaning of
Regulation S and (ii) the Issuers, the Guarantors, any of their
subsidiaries or Affiliates and any person acting on its or their behalf (other
than the Initial Purchaser, as to whom the Issuers and the Guarantors make no
representation or warranty) have complied and will comply with the offering
restrictions set forth in Regulation S.

(c)        Non-Fungibility.   The Securities are eligible
for resale pursuant to Rule 144A and will not be, at the Closing Date, of
the same class as, within the meaning of Rule 144A, securities listed on a
national securities exchange registered under Section 6 of the Exchange
Act or quoted in a U.S. automated interdealer quotation system.

(d)        The Offering Memorandum.   The Offering Memorandum did not, as of its date and will
not, as of the Closing Date, include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided that this
representation, warranty and agreement shall not apply to statements in or
omissions from the Offering Memorandum made in reliance upon and in conformity
with information furnished to the Company in writing by the Initial Purchaser
expressly for use in the Offering Memorandum. The Offering Memorandum, as of
its date, contains all the information specified in, and meeting the
requirements of, Rule 144A in all material respects. Neither of the
Issuers has distributed, and the Issuers will not distribute, prior to the
later of the Closing Date and the completion of the Initial Purchaser’s
distribution of the Securities, any offering material in connection with the
offering and sale of the Securities other than the Offering Memorandum.

(e)        The Purchase Agreement.   This
Agreement has been duly authorized, executed and delivered by each of the
Issuers and Guarantors.

(f)         The Registration Rights Agreement and DTC Agreement.

(i)         The Registration Rights Agreement has been duly
authorized by the Issuers and the Guarantors and, at the Closing Date, will be
duly executed and delivered by, and, assuming due authorization, execution, and
delivery by each other party thereto, will constitute a valid and binding
agreement of, the Issuers and the Guarantors, enforceable against each such
party in accordance with its terms, except as the enforcement thereof may be
subject to bankruptcy, insolvency, reorganization, fraudulent conveyance or
transfer, moratorium or similar laws affecting creditors’ rights generally and
subject to general principles of equity (regardless of whether enforceability
is considered in a proceeding in equity or at law) and except as rights to
indemnification under the Registration Rights Agreement may be limited by
applicable law.

(ii)       The DTC Agreement has been duly authorized, executed
and delivered by, and is a valid and binding agreement of, each of the Issuers,
enforceable against each of the Issuers in accordance with its terms, except as
the enforcement thereof may be subject to bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or similar laws
affecting creditors’ rights generally and subject to general principles of
equity (regardless of whether enforceability is considered in a proceeding in
equity or at law).

(g)        Authorization
of the Securities and the Exchange Securities.   (i) The Notes to be purchased by the Initial
Purchaser from the Issuers are in the form contemplated by the Indenture, have
been duly authorized for issuance and sale pursuant to this Agreement and the
Indenture and, at the Closing Date, 

 3
 

will have
been duly executed by the Issuers and, when authenticated in the manner
provided for in the Indenture and delivered against payment of the purchase
price therefor, will constitute valid and binding agreements of each of the
Issuers, enforceable in accordance with their terms, except as the enforcement
thereof may be subject to bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer, moratorium or similar laws affecting creditors’ rights
generally and subject to general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law) and will be
entitled to the benefits of the Indenture. (ii) The Exchange Notes have
been duly and validly authorized for issuance by each of the Issuers, and when
issued and authenticated in accordance with the terms of the Indenture, the
Registration Rights Agreement and the Exchange Offer, will constitute valid and
binding obligations of each of the Issuers, enforceable against each of the
Issuers in accordance with their terms, except as the enforcement thereof may
be subject to bankruptcy, insolvency, reorganization, fraudulent conveyance or
transfer, moratorium or similar laws affecting creditors’ rights generally and
subject to general principles of equity (regardless of whether enforceability
is considered in a proceeding in equity or at law) and will be entitled to the
benefits of the Indenture. (iii) The Guarantees of the Notes and the
Exchange Notes are in the respective forms contemplated by the Indenture, have
been duly authorized for issuance and sale pursuant to this Agreement and the
Indenture and, at the Closing Date, will have been duly executed by each of the
Guarantors and, when the Notes have been authenticated in the manner provided
for in the Indenture and delivered against payment of the purchase price
therefor, will constitute valid and binding agreements of each such Guarantor,
enforceable against it in accordance with their terms, except as the
enforcement thereof may be subject to bankruptcy, insolvency, reorganization,
fraudulent conveyance or transfer, moratorium or similar laws affecting
creditors’ rights generally and subject to general principles of equity
(regardless of whether enforceability is considered in a proceeding in equity
or at law) and will be entitled to the benefits of the Indenture.

(h)        Authorization of the Indenture.   The Indenture has been duly authorized by each of the
Issuers and Guarantors and has been duly executed and delivered by each of the
Issuers and the Guarantors and constitutes a valid and binding agreement of
each of the Issuers and Guarantors enforceable against each of the Issuers and
Guarantors in accordance with its terms, except as the enforcement thereof may
be subject to bankruptcy, insolvency, reorganization, fraudulent conveyance or
transfer, moratorium or similar laws affecting creditors’ rights generally and
subject to general principles of equity (regardless of whether enforceability
is considered in a proceeding in equity or at law).

(i)         Authorization of the
Collateral Documents and the Transactions.   Each of the Collateral
Documents has been authorized by the Issuers and Guarantors that are
party thereto, and has been duly executed and delivered by the Issuers and the
Guarantors, and constitutes valid and binding agreements of each of the Issuers
and Guarantors party thereto, enforceable against each of the Issuers and
Guarantors party thereto, in accordance with their respective terms, except as
the enforcement thereof may be subject to bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or similar laws
affecting creditors’ rights generally and subject to general principles of
equity (regardless of whether enforceability is considered in a proceeding in
equity or at law). Each of the Transactions has been authorized by the Issuers
and Guarantors that are party thereto.

(j)         Security Interests.   The Collateral Documents are
effective to create, and have created, in favor of the Collateral Agent for the
benefit of the Collateral Agent and will create, in favor of the holders of the
Securities and the Exchange Securities (upon issuance of such Securities and
Exchange Securities as contemplated hereby), legal, valid and enforceable Liens
on or in all of the Collateral, and such Liens comprise a valid and perfected
lien in Collateral consisting of personal property, having the respective
priorities set forth in the Offering Memorandum, but nevertheless, on the
Closing Date, superior to and prior to the rights of all third persons other
than holders of Permitted Liens (as defined in the Indenture), and subject to
no other Liens except for Liens permitted under the Indenture.

 4

(k)        Description of the Securities, the Exchange
Securities, the Indenture, the Registration Rights Agreement, the Collateral
Documents, the Revolving Credit Agreement, the Existing Notes and the
Intercreditor Agreement.   The Notes, the Guarantees of the Notes,
the Indenture, the Registration Rights Agreement, each of the Collateral
Documents, the Revolving Credit Agreement, the Existing Notes (as defined in
the Offering Memorandum) and the Intercreditor Agreement conform, or will
conform, in all material respects to the respective descriptions thereof
contained in the Offering Memorandum. The Exchange Notes and the Guarantees of
the Exchange Notes will conform in all material respects to the respective
descriptions thereof contained in the Offering Memorandum.

(l)         No Material Adverse
Change.   Except
as otherwise disclosed in the Offering Memorandum, subsequent to the respective
dates as of which information is given in the Offering Memorandum: (i) there
has been no material adverse change, or any development that could reasonably
be expected to result in a material adverse change, in the condition, financial
or otherwise, or in the earnings, business or operations, whether or not
arising from transactions in the ordinary course of business, of the Issuers,
the Guarantors and their respective subsidiaries, considered as one entity (any
such change or development is called a “Material Adverse Change”); (ii) the
Issuers, the Guarantors and their respective subsidiaries, considered as one
entity, have not incurred any material liability or obligation, indirect,
direct or contingent, not in the ordinary course of business nor entered into
any material transaction or agreement not in the ordinary course of business;
and (iii) there has been no dividend or distribution of any kind declared,
paid or made by the Issuers, the Guarantors or their respective subsidiaries,
except for dividends paid to Issuers, the Guarantors or any of their respective
subsidiaries, on any class of capital stock or repurchase or redemption by the
Issuers, the Guarantors or any of their respective subsidiaries of any class of
capital stock.

(m)      Independent Accountants.   PricewaterhouseCoopers LLP,
who have expressed their opinion with respect to the financial statements
(which term as used in this Agreement includes the related notes thereto)
included in the Offering Memorandum, are, to the knowledge of the Company,
independent public or certified public accountants within the meaning of
Regulation S-X under the Securities Act and the Exchange Act, and any
non-audit services provided by PricewaterhouseCoopers LLP to either of the
Issuers or any of the Guarantors have been approved by the Audit Committee of
the Board of Directors of the Company.

(n)        Preparation of the Financial Statements.   Except as stated therein, the
financial statements, together with the related schedules and notes, included
in the Offering Memorandum present fairly in all material respects the
consolidated financial position of the Company and its subsidiaries as of and
at the dates indicated and the results of their operations and cash flows for
the periods specified. Such financial statements have been prepared in
conformity with generally accepted accounting principles in the United States
applied on a consistent basis throughout the periods involved, except as
disclosed therein. Except as stated
therein, the pro forma financial statements and other pro forma and as
adjusted information presented in the Offering Memorandum present fairly the
information shown therein, have been prepared in accordance with Article 11
of Regulation S-X with respect to pro forma financial statements and have been
properly compiled on the basis described therein, and the assumptions used in
the preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions and circumstances referred to
therein. Except as stated therein, the
financial statements and the financial information included in the Offering
Memorandum comply as to form with the requirements applicable to financial statements required in a
registration statement on Form S-1 under the Securities Act. The
financial data set forth in the Offering Memorandum under the captions “Summary—Summary
Historical Financial Information and Statistical Data” and “Selected
Consolidated Financial and Operating Data” fairly present in all material
respects the information set forth therein on a basis consistent with that of
the audited financial statements contained in the Offering Memorandum. The financial
data set forth in the Offering Memorandum under the captions “Summary—Summary
Unaudited Pro Forma Financial 

 5
 

Information
and Statistical Data” fairly present the information set forth therein on a
basis consistent with that of the pro forma financial statements contained in
the Offering Memorandum.

(o)        Incorporation and Good Standing of Holdings,
the Company and its subsidiaries.   Each of Holdings, the Company and its subsidiaries has
been duly incorporated or formed and is validly existing as a corporation or
partnership, as the case may be, in good standing under the laws of the
jurisdiction of its incorporation or formation and has corporate or
partnership, as the case may be, power and authority to own, lease and operate
its properties and to conduct its business as described in the Offering
Memorandum and, in the case of each of the Issuers and Guarantors party
thereto, to enter into and perform its respective obligations under each of
this Agreement, the Registration Rights Agreement, the DTC Agreement, the
Securities, the Exchange Securities, the Indenture, each of the Collateral
Documents and the Intercreditor Agreement, as the case may be. Each of
Holdings, the Company and its subsidiaries is duly qualified as a foreign
corporation or partnership, as the case may be, to transact business and is in
good standing in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of business,
except for such jurisdictions where the failure to so qualify or to be in good
standing would not, individually or in the aggregate, result in a Material
Adverse Change.

(p)        Capitalization
and Other Capital Stock Matters.   At June 25, 2005, on a historical basis, and on an
as adjusted basis, after giving effect to the Transactions, the Company would
have an authorized and outstanding capitalization as set forth in the Offering
Memorandum under the caption “Capitalization” (other than for subsequent
issuances of capital stock, if any, pursuant to employee benefit plans
described in the Offering Memorandum or upon exercise of outstanding options
described in the Offering Memorandum). All of the outstanding shares of capital
stock of the Company have been duly authorized and validly issued, are fully
paid and nonassessable and have been issued in compliance with federal and
state securities laws. None of the outstanding shares of Common Stock of the
Company were issued in violation of any preemptive rights, rights of first
refusal or other similar rights to subscribe for or purchase securities of the
Company. There are no authorized or outstanding options, warrants, preemptive
rights, rights of first refusal or other rights to purchase, or equity or debt
securities convertible into or exchangeable or exercisable for, any capital
stock of the Company or any of its subsidiaries other than those accurately
described in the Offering Memorandum. All of the issued and outstanding capital
stock or partnership interests of each subsidiary of the Company has been duly
authorized and validly issued, is fully paid and nonassessable and is owned by
the Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance or claim (other than any transfer restrictions imposed
by the Securities Act, the securities or Blue Sky laws of certain jurisdictions
and any security interest pursuant to agreements described in the Offering
Memorandum). The Company does not own or control, directly or
indirectly, any corporation, association or other entity other than the
subsidiaries listed in Exhibit A hereto.

(q)        Non-Contravention of Existing Instruments;
No Further Authorizations or Approvals Required.   Except as otherwise disclosed in the Offering
Memorandum, none of the Issuers, Guarantors or any of their respective
subsidiaries is in violation of its charter, by-laws or similar
constitutive document or is in default (or, with the giving of notice or lapse
of time, would be in default) (“Default”) under any indenture, mortgage, loan
or credit agreement, note, contract, franchise, lease, license or other
instrument to which either of the Issuers, any of the Guarantors or any of
their respective subsidiaries is a party or by which it or any of them may be
bound (including, without limitation, the Revolving Credit Agreement, the
Indenture, the Intercreditor Agreement and the Existing Notes) or to which any
of the property or assets of either of the Issuers, any of the Guarantors or
any of their respective subsidiaries is subject (each, an “Existing Instrument”),
except for such Defaults as would not, individually or in the aggregate, result
in a Material Adverse Change. Except as set forth in the Offering Memorandum,
and assuming the accuracy of, and the Initial Purchaser’s compliance with, the
representations, warranties and agreements of the Initial 

 6
 

Purchaser
set forth in Sections 2 and 7 of this Agreement, and the compliance by the
holders of the Securities with the offering and transfer restrictions set forth
in the Offering Memorandum, the execution, delivery and performance of this
Agreement, the Registration Rights Agreement and the Securities by each Issuer
and each Guarantor party thereto, the Issuers’ performance of the DTC
Agreement, and the issuance and delivery of the Securities or the Exchange
Securities, and consummation of the transactions contemplated hereby and
thereby and by the Offering Memorandum (i) will not result in any
violation of the provisions of the charter, by-laws, partnership
agreement, operating agreement or other similar constitutive document of either
of the Issuers, any of the Guarantors or any of their respective subsidiaries, (ii) will
not conflict with or constitute a breach of, or Default or a Debt Repayment
Triggering Event (as defined below) under, or result in the creation or
imposition of any lien, charge or encumbrance (other than Liens granted
pursuant to the Collateral Documents) upon any property or assets of either of
the Issuers, any of the Guarantors or any of their respective subsidiaries
pursuant to, or require the consent of any other party to, any Existing
Instrument, except for such conflicts, breaches, Defaults, liens, charges or
encumbrances as would not, individually or in the aggregate, result in a
Material Adverse Change, and (iii) will not result in any violation of any
law, administrative regulation or administrative or court decree applicable to
either of the Issuers, any of the Guarantors or any of their respective
subsidiaries. Assuming the accuracy of the representations and warranties of
the Initial Purchaser in Sections 2 and 7 of this Agreement, no consent,
approval, authorization or other order of, or registration or filing with, any
court or other governmental or regulatory authority or agency (collectively, “Consents”),
is required for the Issuers’ and the Guarantors’ execution, delivery and
performance (as applicable) of this Agreement, the Registration Rights
Agreement, the DTC Agreement, the Indenture, any of the Collateral Documents or
the Intercreditor Agreement, to which either of the Issuers or any of the
Guarantors is a party, or the issuance and delivery of the Securities or the
Exchange Securities, or consummation of the transactions contemplated hereby
and thereby and by the Offering Memorandum, except (A) such Consents as
have been or will be obtained or made on or prior to the Closing Date; and (B) registration
of the Exchange Offer or resale of the Notes under the Securities Act pursuant
to the Registration Rights Agreement, and qualification of the Indenture under
the Trust Indenture Act, in connection with the issuance of the Exchange Notes.
As used herein, a “Debt Repayment Triggering Event” means any event or
condition which gives, or with the giving of notice or lapse of time would
give, the holder of any note, debenture or other evidence of indebtedness (or
any person acting on such holder’s behalf) the right to require the repurchase,
redemption or repayment of all or a portion of such indebtedness by the
Issuers, the Guarantors or any of their respective subsidiaries.

(r)        No Material
Actions or Proceedings.   Except
as otherwise disclosed in the Offering Memorandum, there are no known legal or
governmental actions, suits, investigations or proceedings pending or, to
either of the Issuers’ or any of the Guarantors’ knowledge, threatened against
either of the Issuers, any of the Guarantors or any of their respective
subsidiaries, or the officers, directors or agents (as defined in 42 C.F.R. Part 420
Subpart C and 42 C.F.R. Section 1001.1001(a)(2)) of either of the Issuers,
any of the Guarantors or any of their respective subsidiaries, which has as the
subject thereof any property owned or leased by, either of the Issuers, any of
the Guarantors or any of their respective subsidiaries, where in any such case
there is a reasonable possibility that such action, suit or proceeding might be
determined adversely to such Issuer, such Guarantor or such subsidiary and any
such action, suit, investigation or proceeding, if so determined adversely,
would reasonably be expected to result in a Material Adverse Change or
materially adversely affect the consummation of the transactions contemplated
by this Agreement.

(s)        Intellectual Property Rights.   The Issuers, the Guarantors
and their respective subsidiaries own, possess or license sufficient
trademarks, trade names, patent rights, copyrights, licenses, approvals, trade
secrets and other similar rights (collectively, “Intellectual Property Rights”)
reasonably necessary to conduct their businesses as now conducted, except where
the failure to own, possess or license such Intellectual Property Rights,
individually or in the aggregate, would not reasonably be expected to result in

 7
 

a Material
Adverse Change. None of the Issuers, the Guarantors or any of their respective
subsidiaries has received any written notice of infringement or conflict with
asserted Intellectual Property Rights of others, which infringement or
conflict, if the subject of an unfavorable decision, ruling or filing would reasonably be expected to result in a
Material Adverse Change. None of the Issuers, the Guarantors or any of their
respective subsidiaries is in default under the terms of any license or similar
agreement related to any Intellectual Property Rights necessary to conduct
their business as now conducted or contemplated except as would not reasonably
be expected to result in a Material Adverse Change.

(t)         All Necessary Permits, etc.

(i)         Except
as otherwise disclosed in the Offering Memorandum, the Issuers, the Guarantors
and their respective subsidiaries possess such valid and current franchises,
grants, easements, variances, exceptions, certificates, certifications,
registrations, authorizations, qualifications, licenses, permits, consents or
approvals (including pharmacy licenses, Medicare and Medicaid provider
agreements, accreditations and other similar documentation, or approvals of any
health departments) and other permits of any Governmental Entity (“Permits”)
necessary to conduct their respective businesses except for those Company
Permits the failure to possess would not reasonably be expected, either
individually or in the aggregate, to result in a Material Adverse Change
(collectively, the “Company Permits”), and none of the Issuers, the Guarantors
or any of their respective subsidiaries has received any notice of proceedings
relating to the revocation, suspension, cancellation, or modification of, or
non-compliance with, any of the Company Permits which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
reasonably be expected to result in a Material Adverse Change.

(ii)       The
Issuers, the Guarantors and each of their respective subsidiaries that directly
or indirectly receive reimbursement or payments under Titles XVIII and XIX of
the Social Security Act (the “Medicare and Medicaid programs”) are certified
for participation and reimbursement under the Medicare and Medicaid programs. The
Issuers, the Guarantors and each of their respective subsidiaries that directly
or indirectly receive reimbursement or payments under the Medicare and Medicaid
programs, the CHAMPUS and TRICARE programs and such other similar federal,
state or local reimbursement or governmental programs, (collectively, the “Government
Programs”), have current provider numbers and provider agreements required
under such Government Programs. The Issuers, the Guarantors and each of their
respective subsidiaries that directly or indirectly receive payments under any
non-governmental program, including any private insurance program
(collectively, the “Private Programs”), have all provider agreements and
provider numbers that are required under such Private Programs.

(u)        Compliance with Laws.

(i)         Except
as otherwise disclosed in the Offering Memorandum, none of the Issuers, the
Guarantors, each of their respective subsidiaries or any of their respective
directors, officers, managers, employees or agents, is, and during the past two
years has not been, in conflict with, or in default or violation of, (A) any
domestic or foreign laws, statutes, ordinances, rules, regulations, codes or
executive orders enacted, issued, adopted, promulgated or applied by any Governmental Entity (defined below) (“Laws”) applicable
to the Issuers, the Guarantors or each of their respective subsidiaries or by
which any of their respective assets or properties is bound or (B) any
Company Permits, except, in the case of each (A) and (B), as would not
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Change. Except as otherwise disclosed in the Offering
Memorandum, no violation, default, order, judgment, injunction, award, decree
or writ handed down, adopted or imposed by any domestic or foreign, international, national, federal, state,
provincial or local governmental, regulatory or administrative authority,
agency, commission, court, tribunal, arbitral body or self-regulated entity
(each, a “Governmental 

 8
 

Entity”)
or legal action, claim,
demand, arbitration, hearing, charge, complaint, investigation, examination,
indictment, litigation, suit or other civil, criminal, administrative or
investigative proceeding exists with respect to the aforementioned
Company Permits, Medicare or Medicaid certifications, provider agreements or
provider numbers (collectively, “Company Regulatory Authorizations”), except as
would not reasonably be expected, individually or in the aggregate, to result
in a Material Adverse Change. Neither the Issuers, the Guarantors, or each of
their respective subsidiaries has received any written or oral notice of any
pending and unresolved (or, if resolved, without material liability or
obligation of any kind, whether accrued, contingent, absolute, inchoate or
otherwise, whether due or to become due and whether known or unknown to the
Issuers, the Guarantors or each of their respective subsidiaries) violation or
of any investigation or inquiry into an alleged or suspected violation of any
Law or of any of the Company Regulatory Authorizations that would reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Change. To the knowledge of the Issuers, the Guarantors and each of their
respective subsidiaries, no event has occurred that, with the giving of notice,
the passage of time, or both, would constitute grounds for a material violation
or order with respect to any such Company Regulatory Authorizations, or to
revoke, withdraw or suspend any such Company Regulatory Authorizations, or to
terminate the participation of the Issuers, the Guarantors or each of their
respective subsidiaries in any Government Program or Private Program that
would, individually or in the aggregate, reasonably be expected to result in a
Material Adverse Change.

(ii)       To the
knowledge of the Issuers, the Guarantors and each of their respective
subsidiaries, since January 1, 2001, none of the Issuers, the Guarantors,
each of their respective subsidiaries or any officer, professional employee or
contractor of the Issuers, the Guarantors or each of their respective
subsidiaries (during the term of such individual’s employment by either of the
Issuers or any of the Guarantors, as the case may be, or while acting as an
agent of either of the Issuers or any of the Guarantors, as the case may be) or
Affiliates has been convicted of any crime, or knowingly engaged in any
conduct, for which debarment or similar punishment is mandated or permitted by
any applicable Law. None of the Issuers, the Guarantors, each of their
respective subsidiaries or any officer, director or managing employee of the
Issuers, the Guarantors or each of their respective subsidiaries and no person
providing professional services in connection with the operations of the
Issuers, the Guarantors or each of their respective subsidiaries has engaged in
any activities that are prohibited, or cause for the imposition of penalties or
mandatory or permissive exclusion, under 42 U.S.C. §§ 1320a-7, 1320a-7a,
1320a-7b, 1395nn or 1396b, 31 U.S.C. §§ 3729-3733, or the
federal CHAMPUS/TRICARE statute (or other federal or state statutes related to
false or fraudulent claims) or the regulations promulgated thereunder pursuant
to such Laws or related Laws, or under any criminal Laws relating to health
care services or payments, or that are prohibited by rules of professional
conduct except such activities as would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Change.

(iii)      Except
as otherwise disclosed in the Offering Memorandum, since January 1, 2001,
the Issuers, the Guarantors and each of their respective subsidiaries have
timely filed all reports and billings required to be filed prior to the date
hereof with respect to the Government Programs and Private Programs, all fiscal
intermediaries and other insurance carriers and all such reports and billings
are complete and accurate in all material respects and have been prepared in
compliance in all material respects with all applicable Laws, regulations,
rules, manuals and guidance governing reimbursement and claims, except where
the failure to file in a timely manner would not reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Change. Except
as otherwise disclosed in the Offering Memorandum, the Issuers, the Guarantors
and each of their respective subsidiaries have paid or caused to be paid all
known and undisputed refunds, overpayments, discounts or adjustments that have
become due pursuant to such reports and billings, except those payments the
failure to pay would not, individually or in the aggregate, reasonably be 

 9
 

expected to result in a
Material Adverse Change. To the knowledge of the Issuers, the Guarantors and
each of their respective subsidiaries, the Issuers, the Guarantors and each of
their respective subsidiaries have not claimed or received reimbursements from
Government Programs or Private Programs in excess of amounts permitted by Law,
and have no liability or obligation of any kind, whether accrued, contingent,
absolute, inchoate or otherwise, whether due or to become due, under any
Government Program or Private Program for any material refund, overpayment,
discount or adjustment. There are no pending appeals, adjustments, challenges,
audits, inquiries, litigation or written notices of intent to audit with
respect to such prior reports or billings, and during the last three years none
of the Issuers, the Guarantors or each of their respective subsidiaries has
been audited, or otherwise examined by any Government Program or Private
Program.

(iv)       None of the Issuers, the Guarantors or
each of their respective subsidiaries (A) is a party to any consent,
agreement or memorandum of understanding with any Governmental Entity,
(B) is subject to any order, judgment, injunction, award, decree or writ
handed down, adopted or imposed by any Governmental Entity or (C) has
adopted any board resolutions at the request of any Governmental Entity, in any
case that restricts the conduct of its business or that in any manner relates
to the management or operation of its business (collectively, “Company
Regulatory Agreements”). To the knowledge of the Issuers, the Guarantors and
each of their respective subsidiaries, none of the Issuers, the Guarantors or
each of their respective subsidiaries has been advised by any Governmental
Entity that such Governmental Entity is considering issuing or requesting any
Company Regulatory Agreement.

(v)        To the knowledge of the Issuers, the Guarantors and each of
their respective subsidiaries, none of the Issuers, the Guarantors or each of
their respective subsidiaries, nor any director, officer, employee, agent or
representative of the Issuers, the Guarantors or each of their respective
subsidiaries has made, directly or indirectly, any (A) bribe or kickback,
(B) illegal political contribution, (C) payment from corporate funds
which was improperly recorded on the books and records of Holdings, the Company
or any of its subsidiaries, (D) unlawful payment from corporate funds to
governmental officials for the purpose of influencing their actions or the
actions of the Governmental Entity which they represent or (E) unlawful
payment from corporate funds to obtain or retain any business.

(v)        Title to
Properties.   The
Issuers, the Guarantors and each of their respective subsidiaries have good and
marketable title to all items of real property and valid title to all personal
property reflected as owned in the Offering Memorandum, in each case free and
clear of any security interests, mortgages, liens, encumbrances, equities,
claims and other defects of any
third party, except (A) such as do not materially interfere with
the use made or proposed to be made of such property by such Issuer, such
Guarantor or such subsidiary, (B) as otherwise disclosed in the Offering
Memorandum, (C) as created pursuant to the Indenture, the Revolving Credit
Agreement and each of the Collateral Documents or (D) liens permitted by
the Indenture, the Revolving Credit Agreement and each of the Collateral
Documents. The real property, improvements, equipment and personal property
held under lease by either of the Issuers, any of the Guarantors or any of
their respective subsidiaries are held under valid and enforceable leases
(subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors’ rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity), and to limitations of public policy), with such exceptions as do
not materially interfere with the use made or proposed to be made of such real
property, improvements, equipment or personal property by such Issuer, such
Guarantor or such subsidiary and would not reasonably be expected to,
individually or in the aggregate, result in a Material Adverse Change.

 10

(w)       Tax Law
Compliance.   Except
as otherwise disclosed in the Offering Memorandum, the Issuers, the Guarantors
and their respective subsidiaries have filed all necessary federal, state and
foreign income and franchise tax returns and have paid all taxes required to be
paid by any of them and, if due and payable, any related or similar assessment,
fine or penalty levied against any of them, other than those being contested in
good faith and for which reserves have been provided in accordance with
generally accepted accounting principles or those currently payable without
penalty or interest and except where the failure to make such required filings
or payments would not, individually or in the aggregate, reasonably be expected
to result in a Material Adverse Change. Except as set forth in the Offering
Memorandum, each of the Issuers and Guarantors has made adequate charges,
accruals and reserves in the applicable financial statements referred to in Section 1(n) above
in respect of all federal, state and foreign income and franchise taxes for all
periods as to which the tax liability of the Issuers, the Guarantors, or any of
their respective subsidiaries has not been finally determined, except with
respect to such charges, accruals and reserves the failure of which to make
would not, individually or in the aggregate, reasonably be expected to result
in a Material Adverse Change.

(x)        “Investment Company”.   Each
of the Issuers, Guarantors and their respective subsidiaries is not, and after
receipt of payment for the Securities and the application of the proceeds
therefrom as described in the Offering Memorandum, will not be, required to
register as an “investment company” within the meaning of Investment Company
Act of 1940, as amended.

(y)        Insurance.   Except as otherwise disclosed in the Offering
Memorandum, Holdings, the Company and its subsidiaries are insured by
institutions with policies in such amounts and with such deductibles and policy
limits and covering such risks as are generally deemed adequate, appropriate
and customary for their businesses. The Company has no reason to believe that
it, or any of its subsidiaries or Holdings will not be able (i) to renew
its existing insurance coverage as and when such policies expire or (ii) to
obtain adequate and comparable coverage from similar institutions as may be
necessary or appropriate to conduct its business as now conducted and at a cost
that would not result in a Material Adverse Change. Except as otherwise
disclosed in the Offering Memorandum, to the best of their knowledge, neither Holdings, the Company
nor any of its subsidiaries have been denied any insurance coverage which it
has sought or for which it has applied and there are no claims by Holdings, the Company or any of its
subsidiaries under any current insurance policy as to which any insurance
company or institution is denying, or will deny, liability or coverage or
defending under a reservation of rights clause, other than such claims which
would not, individually or in the aggregate, reasonably be expected to result
in a Material Adverse Change.

(z)        No Price Stabilization or Manipulation.   None of the Issuers, the
Guarantors or any of their respective Affiliates has taken or will take,
directly or indirectly, any action designed to or that might be reasonably
expected to cause or result in stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of the Securities.

(aa)      Solvency.   Each of the Issuers and
Guarantors is, and immediately after the Closing Date will be, Solvent. As used
herein, the term “Solvent” means, with respect to any person on a particular
date, that on such date (i) the fair market value of the assets of such
person is greater than the total amount of liabilities (including contingent
liabilities) of such person, (ii) the present fair salable value of the
assets of such person is greater than the amount that will be required to pay
the probable liabilities of such person on its debts as they become absolute
and matured, (iii) such person is able to realize upon its assets and pay
its debts and other liabilities, including contingent obligations, as they
mature and (iv) such person does not intend to, and does not believe that
it will, incur debts or liabilities beyond such entity’s ability to realize
upon its assets and pay its debts and other liabilities, including contingent obligations,
as they mature in their ordinary course, and (v) such person does not have
unreasonably small capital.

 11
 

(bb)     Compliance
with Sarbanes-Oxley.   Except as otherwise disclosed in
the Offering Memorandum, the Company and its subsidiaries and their respective
officers and directors are in compliance with the applicable provisions of the
Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act,” which term, as used
herein, includes the rules and regulations of the Commission promulgated
thereunder).

(cc)      MD&A.   There are no
transactions, arrangements or other relationships, including but not limited to
off balance sheet transactions, which would be required to be included in the
Offering Memorandum if the Offering Memorandum were a registration statement on
Form S-1 by Item 303 of Regulation S-K under the Securities Act
which are not so described or are not described as required.

(dd)     Related Party Transactions.   No
relationship, direct or indirect, exists between or among either of the
Issuers, any of the Guarantors or any of their respective Affiliates, on the
one hand, and any former or current director, officer, stockholder, customer or
supplier of any of them, on the other hand, which would be required to be
included in the Offering Memorandum by the Securities Act or by the rules and
regulations enacted thereunder if the Offering Memorandum were a registration
statement on Form S-1 which is not so described or is not described
as required.

(ee)      Company’s
Accounting System.   Holdings, the Company
and its subsidiaries maintain a system of accounting controls that is
sufficient to provide reasonable assurances that: (i) transactions are
executed in accordance with management’s general or specific authorization; (ii) transactions
are recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

(ff)       Compliance with Environmental Laws.   Except as otherwise disclosed in the Offering Memorandum or as would not,
individually or in the aggregate, reasonably
be expected to result in a Material Adverse Change: (i) the
Issuers, the Guarantors and each of their respective subsidiaries have all permits,
authorizations and approvals required under any applicable Environmental Laws
(as defined below) and are in compliance with their requirements, (ii) none
of the Issuers, the Guarantors or any of their respective subsidiaries is in
violation of any federal, state, local or foreign law or regulation relating to
pollution or protection of human health or the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or subsurface
strata) or wildlife, including without limitation, laws and regulations
relating to emissions, discharges, releases or threatened releases of
chemicals, pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum and petroleum products (collectively, “Materials of Environmental
Concern”), or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Materials of
Environmental Concern (collectively, “Environmental Laws”), which violation
includes, but is not limited to, noncompliance with any permits or other
governmental authorizations required for the operation of the business of the
Issuers, the Guarantors or their respective subsidiaries under applicable
Environmental Laws, or noncompliance with the terms and conditions thereof, nor
has either of the Issuers, any of the Guarantors or any of their respective
subsidiaries received any written communication, whether from a governmental
authority, citizens group, employee or otherwise, that alleges that either of
the Issuers, any of the Guarantors or any of their respective subsidiaries is
in violation of any Environmental Law and that either of the Issuers or any of
the Guarantors reasonably believes would result in a Material Adverse Change; (iii) there
is no claim, action or cause of action filed with a court or governmental
authority, no investigation with respect to which either of the Issuers has
received written notice, and no written notice by any person or entity alleging
potential liability for investigatory costs, cleanup costs, governmental
responses costs, natural resources damages, property damages, personal
injuries, attorneys’ fees or penalties arising out of, based on or resulting
from the presence, or release into the environment, of any 

 12
 

Material
of Environmental Concern at any location owned, leased or operated by either of
the Issuers, any of the Guarantors or any of their respective subsidiaries, now
or in the past (collectively, “Environmental Claims”), pending or, to the
Issuers’ and the Guarantors’ knowledge, threatened against either of the
Issuers, any of the Guarantors or any of their respective subsidiaries or any
person or entity whose liability for any Environmental Claim either of the
Issuers, any of the Guarantors or any of their respective subsidiaries has
retained or assumed either contractually or by operation of law; and (iv) to
the Issuers’ and the Guarantors’ knowledge, there are no past or present
actions, activities, circumstances, conditions, events or incidents, including,
without limitation, the release, emission, discharge, presence or disposal of
any Material of Environmental Concern, that reasonably could result in a
violation of any Environmental Law or form the basis of a potential
Environmental Claim against either of the Issuers, any of the Guarantors or any
of their respective subsidiaries or against any person or entity whose
liability for any Environmental Claim either of the Issuers, any of the
Guarantors or any of their respective subsidiaries has retained or assumed
either contractually or by operation of law.

(gg)      ERISA Compliance.   Each “employee benefit plan”
within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”), established or maintained by Holdings, the Company, its
subsidiaries or their “ERISA Affiliates” (as defined below) (“Employee Benefit
Plan”) is in compliance in all material respects with ERISA. “ERISA Affiliate”
means, with respect to Holdings, the
Company or a subsidiary of the Company, any member of any group of
organizations described in Sections 414(b), (c), (m) or (o) of
the Internal Revenue Code of 1986, as amended, (the “Code”) of which Holdings, the Company or such
subsidiary is a member. No “reportable event” (as defined under ERISA) has
occurred or is reasonably expected to occur with respect to any Employee
Benefit Plan. No Employee Benefit Plan, if terminated, would have an “amount of
unfunded benefit liabilities” (as defined in Section 4001(a)(18) of ERISA).
Neither Holdings, the Company,
its subsidiaries nor any of their ERISA Affiliates has incurred or reasonably
expects to incur any liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any Employee Benefit Plan or (ii) Sections 412,
4971, 4975 or 4980B of the Code. Each Employee Benefit Plan that is intended to be qualified under Section 401
of the Code is so qualified and nothing has occurred, whether by action or
failure to act, which would cause the loss of such qualification.

(hh)     Compliance with
Regulation S.   The Issuers, the Guarantors and their
respective subsidiaries and Affiliates and all persons acting on their behalf
(other than the Initial Purchaser, as to whom the Issuers and the Guarantors
make no representation) have complied with and will comply with the offering
restrictions requirements of Regulation S in connection with the offering
of the Securities outside the United States and, in connection therewith, the
Offering Memorandum will contain the disclosure required by Rule 902. The
Securities sold in reliance on Regulation S will be represented upon
issuance by a temporary global security that may not be exchanged for
definitive securities until the expiration of the 40-day restricted
period referred to in Rule 903 of the Securities Act and only upon
certification of beneficial ownership of such Securities by non-U.S. persons or
U.S. persons who purchased such Securities in transactions that were exempt
from the registration requirements of the Securities Act.

(ii)       Taxes; Fees.   There
are no stamp or other issuance or transfer taxes or duties or other similar
fees or charges required to be paid in connection with the execution and
delivery of this Agreement or the issuance or sale by the Issuers of the
Securities.

(jj)        No Labor Disputes.   Except as otherwise disclosed in
the Offering Memorandum, (i) there is no unfair labor practice complaint
pending against Holdings, the Company or any of its subsidiaries or, to the
best knowledge of Holdings, the
Company and its subsidiaries, threatened against any of them, before the
National Labor Relations Board or any state or local labor relations board, and
no significant grievance or significant arbitration proceeding arising out of
or under any collective bargaining agreement is so pending against Holdings, the
Company or any of its subsidiaries or, to the best knowledge of Holdings, the Company and its
subsidiaries, threatened against any of them, other than such complaints 

 13
 

pending
that would not, individually or in the aggregate, reasonably be expected to
result in a Material Adverse Change, (ii) there is no material strike,
labor dispute, slowdown or stoppage pending against Holdings, the Company
or any of its subsidiaries or, to the knowledge of Holdings, the Company and
its subsidiaries, threatened against Holdings, the Company, or its
subsidiaries, and (iii) none of Holdings, the Company or its subsidiaries
is aware of any existing, threatened or imminent labor disturbance by the
employees of any of its principal customers, suppliers, manufacturers or contractors,
in each case which is likely to result in a Material Adverse Change.

Any certificate signed by an officer of either of the
Issuers, any of the Guarantors or any of their respective subsidiaries and
delivered to the Initial Purchaser or to counsel for the Initial Purchaser
shall be deemed to be a representation and warranty by such Issuer, such
Guarantor or such subsidiary to the Initial Purchaser as to the matters set
forth therein.

SECTION 2.   Purchase,
Sale and Delivery of the Securities.

(a)        The Securities.   On the basis of the
representations, warranties and covenants herein contained, and upon the terms
but subject to the conditions herein contained, the Issuers agree to issue and
sell to the Initial Purchaser all of the Securities. On the basis of the
representations, warranties and agreements of the Issuers and Guarantors herein
contained, and upon the terms but subject to the conditions herein set forth,
the Initial Purchaser agrees to purchase from the Issuers all of the
Securities, at a purchase price of 93.25% of the aggregate principal amount of
the Securities payable on the Closing Date (which represents an offering price
to investors of 95.5% of the aggregate principal amount of the Securities less
an Initial Purchaser’s discount of 2.25% of the aggregate principal amount of
the Securities). In addition, on the Closing Date, the Initial Purchaser agrees
to forward to the Issuers accrued interest paid on the Securities by investors
in an amount totaling $595,958.90.

(b)        The Closing
Date.   Delivery
of certificates for the Securities in definitive form to be purchased by the
Initial Purchaser and payment therefor shall be made at the offices of Paul,
Weiss, Rifkind, Wharton & Garrison LLP,
1285 Avenue of the Americas, New York, New York 10019 (or such other
place as may be agreed to by the Company and the Initial Purchaser) at
9:00 a.m. New York City time, on August 9,  2005 or such
other time and date as mutually
agreed to by the Company and the Initial Purchaser (the time and date of
such closing are called the “Closing Date”). The Company hereby acknowledges
that circumstances under which the Initial Purchaser may provide notice to
postpone the Closing Date as originally scheduled include, but are in no way
limited to, any determination by the Company or the Initial Purchaser to
recirculate to investors copies of an amended or supplemented Offering
Memorandum.

(c)        Delivery of the Securities.   The Issuers shall deliver, or
cause to be delivered, to the Initial Purchaser certificates for the Notes and
the Guarantees at the Closing Date against the irrevocable release of a wire
transfer of immediately available funds for the amount of the purchase price
therefor to an account or
accounts specified by the Company. The certificates for the Notes shall
be in such denominations and registered in the name of Cede & Co., as
nominee of the Depositary, pursuant to the DTC Agreement, and shall be made
available for inspection on the business day preceding the Closing Date at a
location in New York City, as the Initial Purchaser may designate. Time shall
be of the essence, and delivery at the time and place specified in this
Agreement is a further condition to the obligations of the Initial Purchaser.

(d)        Delivery of
Offering Memorandum to the Initial Purchaser.   Not later than 12:00 p.m. New York City time
on the second business day following the date of this Agreement, the Company
shall deliver or cause to be delivered copies of the Offering Memorandum in
such quantities and at such places as the Initial Purchaser shall reasonably
request.

 14

(e)        Initial
Purchaser as Qualified Institutional Buyer.   The Initial Purchaser represents and warrants to, and
agrees with, the Company that it is a “qualified institutional buyer” within
the meaning of Rule 144A (a “Qualified Institutional Buyer”) and an “accredited
investor” within the meaning of Rule 501 under the Securities Act (an “Accredited
Investor”).

SECTION 3.   Additional
Covenants.   The
Issuers and the Guarantors, jointly and severally, further covenant and agree
with the Initial Purchaser as follows:

(a)        Initial Purchaser’s Review of Proposed
Amendments and Supplements.   Prior to amending or supplementing
the Offering Memorandum (including any amendment or supplement through
incorporation by reference of any report filed under the Exchange Act), the Issuers
and the Guarantors shall furnish to the Initial Purchaser for review a copy of
each such proposed amendment or supplement, and the Issuers shall not use any
such proposed amendment or supplement to which the Initial Purchaser reasonably
objects.

(b)        Additional Information, Amendments and
Supplements to the Offering Memorandum and Other Securities Act Matters.   The
Issuers and the Guarantors will immediately notify the Initial Purchaser, and
confirm such notice in writing, of (x) any filing made by either of the
Issuers or any of the Guarantors with any securities exchange or any other
regulatory body in the United States or any other jurisdiction or (y) any
press release issued by either of the Issuers or any of the Guarantors. If,
prior to the completion of the placement of the Securities by the Initial
Purchaser with the Subsequent Purchasers, any event shall occur or condition
exist as a result of which it is necessary to amend or supplement the Offering
Memorandum in order to make the statements therein, in the light of the
circumstances when the Offering Memorandum is delivered to a purchaser, not
misleading, or if in the reasonable opinion of the Initial Purchaser or counsel
for the Initial Purchaser it is otherwise necessary to amend or supplement the
Offering Memorandum to comply with law, the Issuers and the Guarantors agree to
promptly prepare (subject to Section 3(a) hereof), and furnish at
their own expense to the Initial Purchaser, amendments or supplements to the
Offering Memorandum so that the statements in the Offering Memorandum as so
amended or supplemented will not, in the light of the circumstances when the
Offering Memorandum is delivered to a purchaser, be misleading or so that the
Offering Memorandum, as amended or supplemented, will comply with law.

The Issuers and the
Guarantors hereby expressly acknowledge that the indemnification and contribution
provisions of Sections 8 and 9 hereof are specifically applicable and
relate to the Offering Memorandum and each amendment or supplement referred to
in this Section 3.

(c)        Copies of
the Offering Memorandum.   The Issuers agree to furnish the
Initial Purchaser, without charge, as many copies of the Offering Memorandum
and any amendments and supplements thereto as it shall have reasonably
requested.

(d)        Blue Sky
Compliance.   The
Issuers and the Guarantors shall use their commercially reasonable efforts to
cooperate with the Initial Purchaser and counsel for the Initial Purchaser to
qualify or register the Securities for sale under (or obtain exemptions from
the application of) the Blue Sky or state securities laws of those
jurisdictions the Initial
Purchaser may reasonably request, shall comply with such laws and shall
continue such qualifications, registrations and exemptions in effect so long as
required for the distribution of the Securities. The Issuers and the Guarantors
shall not be required to qualify as a foreign corporation or to take any action
that would subject it to general service of process in any such jurisdiction
where it is not presently qualified or where it would be subject to taxation as
a foreign corporation. The Issuers and the Guarantors will advise the Initial
Purchaser promptly of the suspension of the qualification or registration of
(or any such exemption relating to) the Securities for offering, sale or
trading in any jurisdiction or any initiation or threat of any proceeding for
any such purpose, and in the event of the issuance of any order suspending such
qualification, registration or exemption, the Issuers 

 15
 

shall use
their commercially reasonable efforts to obtain the withdrawal thereof at the
earliest practicable time.

(e)        Use of
Proceeds.   The
Issuers shall apply the net proceeds from the sale of the Securities
substantially in the manner described under the caption “Use of Proceeds” in
the Offering Memorandum.

(f)         The
Depositary.   The
Issuers will cooperate with the Initial Purchaser and use their commercially
reasonable efforts to permit the Securities to be eligible for clearance and
settlement through the facilities of the Depositary.

(g)        Additional
Issuer Information.   Prior
to the completion of the placement of the Securities by the Initial Purchaser
with the Subsequent Purchasers, the Company shall file, on a timely basis, with
the Commission all reports and documents required to be filed under Section 13
or 15 of the Exchange Act. Additionally, at any time when either of the Issuers
is not subject to Section 13 or 15 of the Exchange Act, for the benefit of
holders and beneficial owners from time to time of Securities, the Issuers
shall furnish, at their expense, upon request, to holders and beneficial owners
of Securities and prospective purchasers of Securities information (“Additional
Issuer Information”) satisfying the requirements of subsection (d)(4) of
Rule 144A.

(h)        Agreement
Not To Offer or Sell Additional Securities.   During the period of 90 days following the date of
the Offering Memorandum, each of the Issuers and Guarantors will not, without
the prior written consent of the Initial Purchaser (which consent may be
withheld at the sole discretion of the Initial Purchaser), directly or
indirectly, sell, offer, contract or grant any option to sell, pledge, transfer
or establish an open “put equivalent position” within the meaning of Rule 16a-1
under the Exchange Act, or otherwise dispose of or transfer, or announce the
offering of, or file any registration statement under the Securities Act in
respect of, any debt securities of either of the Issuers or any of the
Guarantors or securities exchangeable for or convertible into debt securities
of either of the Issuers or any of the Guarantors (other than as contemplated
by this Agreement and to register the Exchange Securities).

(i)         No
Integration.   The
Issuers agree that they will not, and will cause their Affiliates and
subsidiaries not to, make any offer or sale of securities of Holdings, the Company or any of their
respective subsidiaries of any class if, as a result of the doctrine of “integration”
referred to in Rule 502 under the Securities Act, such offer or sale would
render invalid (for the purpose of (i) the sale of the Securities by the
Issuers to the Initial Purchaser, (ii) the resale of the Securities by the
Initial Purchaser to Subsequent Purchasers or (iii) the resale of the
Securities by such Subsequent Purchasers to others) the exemption from the
registration requirements of the Securities Act provided by Section 4
thereof or by Rule 144A or by Regulation S thereunder or otherwise.

(j)         Legended
Securities.   Each
certificate for a Note will bear a legend substantially similar to the legend
contained in “Notice to Investors” in the Offering Memorandum for the time
period and upon the other terms stated in the Offering Memorandum.

(k)        PORTAL.   The Issuers will use their commercially reasonable
efforts to cause such Notes to be eligible for the National Association of
Securities Dealers, Inc. PORTAL market (the “PORTAL market”).

(l)         Security Interests.   The
Issuers and the Guarantors shall take all actions, if any, needed for the
Securities to be secured by perfected first and second priority liens, as
applicable, on the personal property and assets of the Issuers and the
Guarantors to the extent and in the manner provided for in the Indenture, the
Collateral Documents and the Intercreditor Agreement and as described in the
Offering Memorandum. The Issuers and the Guarantors will do and perform all
things required to be done and performed under the Collateral Documents, if
any, including without limitation, all things necessary or advisable to obtain (1) a
valid and perfected, first or second priority security interest, as applicable,
with respect to each of the assets which constitute the Collateral and (2) all
termination statements, mortgage 

 16
 

releases
and other documents necessary to terminate or assign any liens on the
Collateral (other than liens created by the Indenture, the Revolving Credit
Agreement and the Collateral Documents and other than Permitted Liens).

The Initial Purchaser may, in its sole discretion,
waive in writing the performance by the Issuers and the Guarantors of any one
or more of the foregoing covenants or extend the time for their performance.

SECTION 4.   Payment
of Expenses.   The
Issuers and the Guarantors agree to pay all costs, fees and expenses incurred
in connection with the performance of the obligations of the Issuers and the
Guarantors hereunder, including without limitation (i) all expenses
incident to the issuance and delivery of the Securities (including all printing
and engraving costs), (ii) all necessary issue, transfer and other stamp
taxes in connection with the issuance and sale of the Securities to the Initial
Purchaser, (iii) all fees and expenses of the Issuers and the Guarantors’
counsel, independent public or certified public accountants and other advisors,
(iv) all costs and expenses incurred in connection with the printing,
filing, shipping and distribution of the Offering Memorandum (including
financial statements and exhibits), and all amendments and supplements thereto,
this Agreement, the Registration Rights Agreement, the Indenture, the DTC
Agreement, the Notes, the Guarantees, the Revolving Credit Agreement, each of
the Collateral Documents and the
Intercreditor Agreement, (v) all reasonable filing fees, attorneys’
fees and expenses incurred by the Issuers, the Guarantors or the Initial
Purchaser in connection with qualifying or registering (or obtaining exemptions
from the qualification or registration of) all or any part of the Securities
for offer and sale under the securities laws of the several states of the
United States or provinces of Canada (including, without limitation, the cost
of printing and mailing preliminary and final Blue Sky or legal investment
memoranda and any related supplements to the Offering Memorandum) and advising
the Initial Purchaser of such qualifications, registrations and exemptions, (vi) the
reasonable fees and expenses of the Trustee, including the fees and
disbursements of counsel for the Trustee in connection with the Indenture, the
Securities, the Exchange Securities, the Collateral Documents and the
Intercreditor Agreement, (vii) the reasonable fees and expenses of the
Collateral Agent, including the fees and disbursements of counsel for the
Collateral Agent in connection with the Indenture, the Securities, the Exchange
Securities, the Collateral Documents and the Intercreditor Agreement, (viii) all
costs and expenses incurred by the Collateral Agent, or the Issuers, or the
Guarantors, or the Trustee in connection with the creation, effectiveness,
priority and perfection, including the recording and filing, of the Liens on or
in all of the Collateral, in the manner provided under the Collateral
Documents, or in relation to any other action contemplated by the Collateral
Documents or the Intercreditor Agreement, (ix) any fees payable in
connection with the rating of the Securities or the Exchange Securities with
the ratings agencies and the listing of the Securities with the PORTAL market, (x) any
filing fees incident to, and any reasonable fees and disbursements of counsel
to the Initial Purchaser in connection with the review by the National
Association of Securities Dealers, Inc., if any, of the terms of the sale
of the Securities or the Exchange Securities, (xi) all fees and expenses
(including reasonable fees and expenses of counsel) of the Issuers and the
Guarantors in connection with approval of the Securities by DTC for “book-entry”
transfer, and the performance by the Issuers and the Guarantors of their
respective other obligations under this Agreement and (xii) except as otherwise
provided in the last sentence of this Section 4, all costs and expenses of
the Issuers payable or incurred in connection with any roadshow or marketing
effort for the Securities. Except as
provided in this Section 4, Section 6, Section 8 and Section 9
hereof, the Initial Purchaser shall pay (i) its own expenses, including
the fees and disbursements for its counsel, (ii) the expenses of any
private airplane or jet used in connection with any roadshow or marketing
effort for the Securities and (iii) the expenses of any group functions
and/or group meetings with prospective investors in the Securities.

SECTION 5.   Conditions of the Obligations of the
Initial Purchaser.   The
obligations of the Initial Purchaser to purchase and pay for the Securities as
provided herein on the Closing Date shall be subject to the accuracy of the
representations and warranties on the part of the Issuers and the Guarantors
set forth 

 17
 

in Section 1 hereof as of the date hereof and as of the Closing
Date as though then made and to the timely performance by each of the Issuers
and Guarantors of its covenants and other obligations hereunder, and to
compliance with each of the following additional conditions:

(a)        Accountants’ Comfort Letter.   As promptly as reasonably
practicable after the date hereof, the Initial Purchaser shall have received
from PricewaterhouseCoopers LLP, independent public or certified public
accountants for the Company, a letter addressed to the Initial Purchaser, in form
and substance satisfactory to the Initial Purchaser, containing statements and
information of the type ordinarily included in accountant’s “comfort letters”
to Initial Purchaser, delivered according to Statement of Auditing Standards
Nos. 72, 76 and 100 (or any successor bulletins), with respect to the audited
and unaudited financial statements and certain financial information contained
in the Offering Memorandum.

(b)        No
Material Adverse Change or Ratings Agency Change.   For
the period from and after the date of this Agreement and prior to the Closing
Date:

(i)         in
the judgment of the Initial Purchaser there shall not have occurred any
Material Adverse Change; and

(ii)       there
shall not have occurred any downgrading, nor shall any notice have been given
of any intended or potential downgrading or of any review for a possible change
that does not indicate the direction of the possible change, in the rating
accorded any securities of either of the Issuers, any of the Guarantors or any
of their respective subsidiaries by any “nationally recognized statistical
rating organization” as such term is defined for purposes of Rule 436
under the Securities Act.

(c)        Opinion of Counsel for the Issuers and Guarantors.   On the Closing Date the
Initial Purchaser shall have received the opinions of (i) Paul, Weiss,
Rifkind, Wharton & Garrison LLP, counsel for the Issuers and
Guarantors, dated as of such Closing Date, either (1) opinions of
substantially similar tenor (and subject to substantially similar
qualifications, exceptions and limitations) to those delivered by such counsel
in connection with the Purchase Agreement, dated as of December 8, 2004,
among the Initial Purchaser and Credit Suisse First Boston LLC and the Issuers
and Guarantors (the “December Notes Purchase Agreement”), or (2) opinions
otherwise reasonably acceptable to the Initial Purchaser, (ii) Michelle
Bergman, Esq., General Counsel of the Company, dated as of such Closing
Date, an opinion of substantially similar tenor (and subject to substantially
similar qualifications, exceptions and limitations) to that delivered by such
counsel in connection with the December Notes Purchase Agreement or an
opinion otherwise reasonably acceptable to the Initial Purchaser, (iii) Benesch,
Friedlander, Coplan & Aronoff LLP, special regulatory counsel for the
Company, dated as of such Closing Date, an opinion of substantially similar
tenor (and subject to substantially similar qualifications, exceptions and
limitations) to that delivered by such counsel in connection with the December Notes
Purchase Agreement or an opinion otherwise reasonably acceptable to the Initial
Purchaser, and (iv) Grotta, Glassman & Hoffman (or other counsel
reasonably acceptable to the Initial Purchaser), special labor counsel for the
Company, dated as of such Closing Date, an opinion of substantially similar
tenor (and subject to substantially similar qualifications, exceptions and
limitations) to that delivered by such counsel in connection with the December Notes
Purchase Agreement or an opinion otherwise reasonably acceptable to the Initial
Purchaser.

(d)        Opinion of
Counsel for the Initial Purchaser.   On the Closing Date the Initial Purchaser shall have
received the opinion of Fried, Frank, Harris, Shriver & Jacobson LLP,
counsel for the Initial Purchaser, dated as of such Closing Date, with respect
to such matters as may be reasonably requested by the Initial Purchaser.

(e)        Officers’
Certificate.   On
the Closing Date the Initial Purchaser shall have received a written
certificate executed by the respective Chief Executive Officer or President and
the respective Chief 

 18
 

Financial Officer of each of the Issuers and Guarantors, dated as of
the Closing Date, to the effect set forth in subsection (b) (ii) of
this Section 5, and further to the effect that:

(i)         for the period from and after the date of this Agreement and
prior to the Closing Date there has not occurred any Material Adverse Change;

(ii)       the representations, warranties and
covenants set forth in Section 1 of this Agreement are true and correct
with the same force and effect as though expressly made on and as of the
Closing Date; and

(iii)      each of the Issuers and Guarantors has
complied with all the agreements and satisfied all the conditions contained in
this Agreement required to be performed or satisfied by the Issuers and the
Guarantors at or prior to the Closing Date.

(f)         Bring-down Comfort Letter.   Unless
the comfort letter as described under subsection (a) of this Section 5
is delivered on the Closing Date, on the Closing Date the Initial Purchaser
shall have received from PricewaterhouseCoopers LLP, independent public or
certified public accountants for the Company, a letter dated such date, in form
and substance satisfactory to the Initial Purchaser, to the effect that they
reaffirm the statements made in the letter furnished by them pursuant to
subsection (a) of this Section 5 with respect to the audited and
unaudited financial statements and certain financial information contained in
the Offering Memorandum, except that the specified date referred to therein for
the carrying out of procedures shall be no more than three business days prior
to the Closing Date.

(g)        PORTAL Listing.   At the
Closing Date the Notes shall have been designated for trading on the PORTAL
market.

(h)        Other Agreements.   The
Issuers and the Guarantors shall have entered into the Registration Rights
Agreement and all Transaction Documents to which either of the Issuers or any
of the Guarantors is a party; there shall be no amendment to the Indenture, the
Intercreditor Agreement, and all Collateral Documents to which either of the
Issuers or any of the Guarantors is a party, except as approved by the Initial
Purchaser; the Trustee shall have entered into the Indenture and all other
Transaction Documents to which it is a party; the Collateral Agent shall have
entered into the Collateral Documents and all other Transaction Documents to
which it is a party and the Initial Purchaser shall have received executed
counterparts thereof.

(i)         Evidence
of Security Interest.   As of the Closing Date, the
Issuers and Guarantors shall have delivered to the Initial Purchaser
satisfactory evidence as to the security interests securing the Notes as
reasonably requested by the Initial Purchaser.

(j)         Evidence of Insurance.   Receipt
by the Collateral Agent of copies of insurance policies or certificates of
insurance of each of the Issuers and Guarantors and their respective
subsidiaries evidencing liability and casualty insurance meeting the
requirements set forth in the Transaction Documents, including, but not limited
to, naming the Collateral Agent as additional insured and loss payee on behalf
of the Issuers and the Guarantors.

(k)        Additional Documents.   On
or before the Closing Date, the Initial Purchaser and counsel for the Initial
Purchaser shall have received such information, documents and opinions as they
may reasonably require for the purposes of enabling them to pass upon the
issuance and sale of the Securities as contemplated herein, or in order to
evidence the accuracy of any of the representations and warranties, or the
satisfaction of any of the conditions or agreements, herein contained.

If any condition specified
in this Section 5 is not satisfied when and as required to be satisfied,
this Agreement may be terminated by the Initial Purchaser by notice to the
Company at any time on or prior to the Closing Date, which termination shall be
without liability on the part of any party to any other party, except that
Section 4, Section 6, Section 8 and Section 9 shall at all
times be effective and shall survive such termination.

 19

SECTION 6.   Reimbursement
of Initial Purchaser’s Expenses.   If
this Agreement is terminated by the Initial Purchaser pursuant to Section 5
or Section 10, including if the sale to the Initial Purchaser of the
Securities on the Closing Date is not consummated because of any refusal,
inability or failure on the part of either of the Issuers or any of the
Guarantors to perform any agreement herein or to comply with any provision
hereof, the Issuers and the Guarantors agree to reimburse the Initial
Purchaser, upon demand for all out-of-pocket costs and expenses that shall have
been reasonably incurred by the Initial Purchaser in connection with the
proposed purchase and the offering and sale of the Securities, including but
not limited to fees and disbursements of counsel, printing expenses, travel
expenses, expenses associated with the road show for the marketing of the
Securities, postage, facsimile and telephone charges.

SECTION 7.   Offer,
Sale and Resale Procedures.   The
Initial Purchaser, on the one hand, and the Issuers and the Guarantors, on the
other hand, hereby establish and agree to observe the following procedures in
connection with the offer and sale of the Securities:

Offers and sales of the Securities will be made only
by the Initial Purchases or Affiliates thereof qualified to do so in the
jurisdictions in which such offers or sales are made. Each such offer or sale
shall only be made to persons whom the offeror or seller reasonably believes to
be qualified institutional buyers (as defined in Rule 144A under the
Securities Act) or non-U.S. persons outside the United States to whom the
offeror or seller reasonably believes offers and sales of the Securities may be
made in reliance upon Regulation S under the Securities Act, upon the
terms and conditions set forth in Annex I hereto, which Annex I is hereby
expressly made a part hereof.

No general solicitation or general advertising (within
the meaning of Rule 502 under the Securities Act) has been or will be used
in the United States in connection with the offering of the Securities.

Upon original issuance by the Issuers, and until such
time as the same is no longer required under the applicable requirements of the
Securities Act, the Notes (and all securities issued in exchange therefor or in
substitution thereof, other than the Exchange Securities) shall bear the
following legend:

“THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY
WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5
OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED
THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5
OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE
SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE ISSUERS THAT (A) SUCH
SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) INSIDE
THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A
UNDER THE SECURITIES ACT, (b) OUTSIDE THE UNITED STATES TO A FOREIGN
PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR RULE 904 OF
REGULATION S UNDER THE SECURITIES ACT, (c) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
APPLICABLE) OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL ACCEPTABLE TO THE ISSUERS IF THE ISSUERS SO REQUEST), (2) TO THE 

 20
 

ISSUERS OR (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER OF THE SECURITY EVIDENCED HEREBY OF THE
RESALE RESTRICTIONS SET FORTH IN CLAUSE (A) ABOVE. NO REPRESENTATION CAN
BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 FOR RESALE
OF THE SECURITY EVIDENCED HEREBY.”

Following the sale of the Securities by the Initial
Purchaser to Subsequent Purchasers pursuant to the terms hereof, the Initial
Purchaser shall not be liable or responsible to either of the Issuers or any of
the Guarantors for any losses, damages or liabilities suffered or incurred by
either of the Issuers or any of the Guarantors, including any losses, damages
or liabilities under the Securities Act, arising from or relating to any resale
or transfer of any Security.

SECTION 8.   Indemnification.

(a)        Indemnification
of the Initial Purchaser.   The Issuers and the
Guarantors, jointly and severally, agree to indemnify and hold harmless the
Initial Purchaser, its directors, officers and employees, and each person, if
any, who controls the Initial Purchaser within the meaning of the Securities
Act and the Exchange Act against any loss, claim, damage, liability or expense,
as incurred, to which the Initial Purchaser, such director, officer, employee
or such controlling person may become subject, under the Securities Act, the
Exchange Act or other federal or state statutory law or regulation, or at
common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of the Company), insofar as
such loss, claim, damage, liability or expense (or actions in respect thereof
as contemplated below) arises out of or is based: (i) upon any untrue
statement or alleged untrue statement of a material fact contained in the
Offering Memorandum (or any amendment or supplement thereto), or the omission
or alleged omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; or (ii) any act or failure to act or any alleged act
or failure to act by the Initial Purchaser in connection with, or relating in
any manner to, the offering contemplated hereby, and which is included as part
of or referred to in any loss, claim, damage, liability or action arising out
of or based upon any matter covered by clause (i) above, provided
that the Issuers and the Guarantors shall not be liable under this clause (ii) to
the extent that a court of competent jurisdiction shall have determined by a
final judgment that such loss, claim, damage, liability or action resulted
directly from any such acts or failures to act undertaken or omitted to be
taken by the Initial Purchaser through its gross negligence or willful
misconduct; and to reimburse the Initial Purchaser and each such director,
officer, employee or controlling person for any and all expenses (including the
fees and disbursements of counsel chosen by the Initial Purchaser) as such
expenses are reasonably incurred by the Initial Purchaser or such director,
officer, employee or controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action; provided, however, that the foregoing indemnity
agreement shall not apply to any loss, claim, damage, liability or expense to
the extent, but only to the extent, arising out of or based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to the
Issuers by the Initial Purchaser expressly for use in the Offering Memorandum
(or any amendment or supplement thereto). The indemnity agreement set forth in
this Section 8(a) shall be in addition to any liabilities that the
Issuers and the Guarantors may otherwise have.

(b)        Indemnification of the
Issuers, their Directors and Officers.   The Initial Purchaser
agrees to indemnify and hold harmless each of the Issuers and each of their
directors and each person, if any, who controls any of the Issuers within the
meaning of the Securities Act or the Exchange Act, against any loss, claim, damage,
liability or expense, as incurred, to which any such Issuer or any such
director, or 

 21
 

controlling
person may become subject, under the Securities Act, the Exchange Act, or other
federal or state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected with
the written consent of the Initial Purchaser), insofar as such loss, claim,
damage, liability or expense (or actions in respect thereof as contemplated
below) arises out of or is based upon any untrue statement or alleged untrue
statement of a material fact contained in the Offering Memorandum (or any
amendment or supplement thereto), or the omission or alleged omission therefrom
of a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in the Offering
Memorandum (or any amendment or supplement thereto), in reliance upon and in
conformity with written information furnished to the Issuers by the Initial
Purchaser expressly for use therein; and to reimburse each such Issuer and each
such director or controlling person for any and all expenses (including the
fees and disbursements of counsel) as such expenses are reasonably incurred by
such Issuer or such director or controlling person in connection with
investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action. The Issuers hereby acknowledge
that the only information that the Initial Purchaser has furnished to the
Issuers expressly for use in the Offering Memorandum (or any amendment or supplement
thereto) are the statements in the second sentence of the second paragraph, second sentence of the fourth
paragraph, fourth sentence of the sixth paragraph, the eighth paragraph
and the tenth paragraph under the caption “Plan of Distribution” in the
Offering Memorandum. The indemnity agreement set forth in this Section 8 (b) shall
be in addition to any liabilities that the Initial Purchaser may otherwise
have.

(c)        Notifications
and Other Indemnification Procedures.   Promptly after
receipt by an indemnified party under this Section 8 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 8,
notify the indemnifying party in writing of the commencement thereof, but the
omission so to notify the indemnifying party will not relieve the indemnifying party from any
liability which it may have to any indemnified party for contribution or
otherwise than under the indemnity agreement contained in this Section 8
or to the extent it is not prejudiced as a proximate result of such failure. In
case any such action is brought against any indemnified party and such
indemnified party seeks or intends to seek indemnity from an indemnifying
party, the indemnifying party will be entitled to participate in and, to the
extent that it shall elect, jointly with all other indemnifying parties
similarly notified, by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party; provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that a conflict may arise
between the positions of the indemnifying party and the indemnified party in
conducting the defense of any such action or that there may be legal defenses
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on behalf
of such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of such indemnifying party’s
election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be liable to such
indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate
counsel in accordance with the proviso to the immediately preceding sentence
(it being understood, however, that the indemnifying party shall not be liable
for the expenses of more than one separate counsel (together with local
counsel), approved by the indemnifying party, representing the indemnified
parties who are parties to such action), (ii) the indemnifying party shall
not have employed counsel satisfactory to the indemnified party to represent
the indemnified party within a reasonable time after notice of 

 22
 

commencement
of the action, in each of which cases the fees and expenses of counsel shall be
at the expense of the indemnifying party, or (iii) the employment of such
counsel shall have been authorized in writing by the indemnifying parties in
connection with the defense of such action.

(d)        Settlements.   The indemnifying party under
this Section 8 shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party against any loss, claim, damage, liability or
expense by reason of such settlement or judgment. Notwithstanding the foregoing
sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by Section 8 hereof, the indemnifying party agrees
that it shall be liable for any settlement of any proceeding effected without
its written consent if (i) such settlement is entered into more than
60 days after receipt by such indemnifying party of the aforesaid request,
(ii) such indemnifying party shall not have reimbursed the indemnified
party in accordance with such request prior to the date of such settlement, and
(iii) such indemnified party shall have given the indemnifying party at
least 30 days’ prior notice of its intention to settle. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement, compromise or consent to the entry of judgment in any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is or could have been a party and indemnity was or could have been sought
hereunder by such indemnified party, unless such settlement, compromise or
consent includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such action, suit or
proceeding and does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.

SECTION 9.   Contribution.   If the indemnification provided for in Section 8
is for any reason held to be unavailable to or otherwise insufficient to hold
harmless an indemnified party in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount paid or payable by such indemnified party,
as incurred, as a result of any losses, claims, damages, liabilities or
expenses referred to therein (i) in such proportion as is appropriate to
reflect the relative benefits received by the Issuers and the Guarantors, on
the one hand, and the Initial Purchaser, on the other hand, from the offering
of the Securities pursuant to this Agreement or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Issuers and
the Guarantors, on the one hand, and the Initial Purchaser, on the other hand,
in connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Issuers and the
Guarantors, on the one hand, and the Initial Purchaser, on the other hand, in
connection with the offering of the Securities pursuant to this Agreement shall
be deemed to be in the same respective proportions as the total net proceeds
from the offering of the Securities pursuant to this Agreement (before
deducting expenses) received by the Company and the total discount received by
the Initial Purchaser bear to the aggregate initial offering price of the
Securities. The relative fault of the Issuers or the Guarantors, on the one
hand, and the Initial Purchaser, on the other hand, shall be determined by
reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by either of the Issuers or any
of the Guarantors, on the one hand, or the Initial Purchaser, on the other
hand, and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.

The amount paid or payable by a party as a result of
the losses, claims, damages, liabilities and expenses referred to above shall
be deemed to include, subject to the limitations set forth in Section 8,
any legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action or claim. The provisions set
forth in Section 8 with respect to notice of 

 23
 

commencement of any action
shall apply if a claim for contribution is to be made under this
Section 9; provided, however, that no
additional notice shall be required with respect to any action for which notice
has been given under Section 8 for purposes of indemnification.

The Issuers and the Guarantors, and the Initial
Purchaser agree that it would not be just and equitable if contribution
pursuant to this Section 9 were determined by pro rata allocation or by
any other method of allocation which does not take account of the equitable
considerations referred to in this Section 9.

Notwithstanding the provisions of this Section 9,
the Initial Purchaser shall not be required to contribute any amount in excess
of the total discount and commissions received by the Initial Purchaser in
connection with the Securities distributed by it. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11 of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this
Section 9, each director, officer and employee of the Initial Purchaser
and each person, if any, who controls the Initial Purchaser within the meaning
of the Securities Act and the Exchange Act shall have the same rights to
contribution as the Initial Purchaser, and each director of each of the Issuers
and each person, if any, who controls either of the Issuers within the meaning
of the Securities Act and the Exchange Act shall have the same rights to
contribution as the Issuers.

SECTION 10.   Termination
of this Agreement.   Prior
to the Closing Date, this Agreement may be terminated by the Initial Purchaser
by notice given to the Issuers if at any time (i) trading or quotation in
any of the Company’s securities shall have been suspended or limited by the
Commission or by the New York Stock Exchange or trading in securities generally
on either the Nasdaq Stock Market or the New York Stock Exchange shall have been
suspended or limited, or minimum or maximum prices shall have been generally
established on any of such stock exchanges by the Commission or the NASD;
(ii) a general banking moratorium shall have been declared by any of
federal, New York or Delaware authorities; (iii) there shall have occurred
any outbreak or escalation of national or international hostilities or any
crisis or calamity, or any change in the United States or international
financial markets, or any substantial change or development involving a
prospective substantial change in United States’ or international political,
financial or economic conditions, as in the judgment of the Initial Purchaser
is material and adverse and makes it impracticable or inadvisable to market the
Securities in the manner and on the terms described in the Offering Memorandum
or to enforce contracts for the sale of securities; (iv) in the judgment
of the Initial Purchaser there shall have occurred any Material Adverse Change;
or (v) Holdings, the Company and its subsidiaries shall have sustained a
loss by strike, fire, flood, earthquake, accident or other calamity of such
character as in the judgment of the Initial Purchaser may interfere materially
with the conduct of the business and operations of the Company and its
subsidiaries regardless of whether or not such loss shall have been insured.
Any termination pursuant to this Section 10 shall be without liability on
the part of (i) the Issuers to the Initial Purchaser, except that the
Issuers shall be obligated to reimburse the expenses of the Initial Purchaser
pursuant to Sections 4 and 6 hereof, (ii) the Initial Purchaser
to the Issuers, or (iii) any party hereto to any other party, except that
the provisions of Section 8 and Section 9 shall at all times be
effective and shall survive such termination.

SECTION 11.   Representations
and Indemnities to Survive Delivery.   The
respective indemnities, agreements, representations, warranties and other
statements of the Issuers and the Guarantors and of each of their respective
officers and of the Initial Purchaser set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any investigation
made by or on behalf of the Initial Purchaser or either of the Issuers or any
of the Guarantors or any of its or their partners, officers or directors or any
controlling person, as the case may be, and will survive delivery of and
payment for the Securities sold hereunder. The agreements contained in Sections 1, 4, 6,
8, and 9 shall survive the termination of this Agreement, including pursuant to
Section 10.

 24

SECTION 12.   Notices.   All communications hereunder shall
be in writing and shall be mailed, hand delivered or telecopied and confirmed
to the parties hereto as follows:

If to the Initial
Purchaser:

Banc of America Securities
LLC

9 West 57th Street

New York, NY 10019

Facsimile: (212) 847-6441

Attention: Bruce R. Thompson

with a copy to:

Fried, Frank, Harris,
Shriver & Jacobson LLP

One New York Plaza

New York, New York 10004

Facsimile: (212) 859-4000

Attention: Valerie Ford Jacob, Esq.

If to the Company, Duane
Reade GP or any of the Guarantors:

Duane Reade Inc.

440 Ninth Avenue

New York, New York 10001

Facsimile: 212-594-0832

Attention: Michelle
Bergman, Esq.

General Counsel

with a copy to:

Paul, Weiss, Rifkind,
Wharton & Garrison LLP

1285 Avenue of the Americas

New York, New York 10019

Facsimile: 212-757-3990
Attention: Lawrence G. Wee, Esq.

Any party hereto may change the address for receipt of
communications by giving written notice to the others.

SECTION 13.   Successors.   This Agreement will inure to the benefit of and be
binding upon the parties hereto, and to the benefit of the indemnified parties
referred to in Section 8 and Section 9, and in each case their
respective successors, and no other person will have any right or obligation
hereunder. The term “successors” shall not include any purchaser of the
Securities as such from the Initial Purchaser merely by reason of such
purchase.

SECTION 14.   Partial
Unenforceability.   The
invalidity or unenforceability of any Section, paragraph or provision of this
Agreement shall not affect the validity or enforceability of any other Section,
paragraph or provision hereof. If any Section, paragraph or provision of this
Agreement is for any reason determined to be invalid or unenforceable, there
shall be deemed to be made such minor changes (and only such minor changes) as
are necessary to make it valid and enforceable.

SECTION 15.   Governing
Law Provisions.   THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
IN SUCH STATE.

(a)        Consent to Jurisdiction.   Any legal suit, action or proceeding arising out of
or based upon this Agreement or the transactions contemplated hereby (“Related
Proceedings”) may be instituted in the 

 25
 

federal courts of the United States of America located in the City and
County of New York or the courts of the State of New York in each case located
in the City and County of New York (collectively, the “Specified Courts”), and
each party irrevocably submits to the exclusive jurisdiction (except for
proceedings instituted in regard to the enforcement of a judgment of any such
court (a “Related Judgment”), as to which such jurisdiction is non-exclusive)
of such courts in any such suit, action or proceeding. Service of any process,
summons, notice or document by mail to such party’s address set forth above
shall be effective service of process for any suit, action or other proceeding
brought in any such court. The parties irrevocably and unconditionally waive
any objection to the laying of venue of any suit, action or other proceeding in
the Specified Courts and irrevocably and unconditionally waive and agree not to
plead or claim in any such court that any such suit, action or other proceeding
brought in any such court has been brought in an inconvenient forum.

SECTION 16.   No
Advisory or Fiduciary Responsibility.   Each of the Issuers and Guarantors acknowledges and
agrees that: (i) the purchase and sale of the Securities pursuant to this
Agreement, including the determination of the offering price of the Securities
and any related discounts and commissions, is an arm’s-length commercial
transaction between the Issuers and the Guarantors, on the one hand, and the
Initial Purchaser, on the other hand, and the Issuers and the Guarantors are
capable of evaluating and understanding and understand and accept the terms,
risks and conditions of the transactions contemplated by this Agreement; (ii) in
connection with each transaction contemplated hereby and the process leading to
such transaction the Initial Purchaser is and has been acting solely as a
principal and is not the agent or fiduciary of the Issuers, the Guarantors or
their respective affiliates, stockholders, creditors or employees or any other
party; (iii) the Initial Purchaser has not assumed and will not assume an
advisory or fiduciary responsibility in favor of the Issuers or the Guarantors
with respect to any of the transactions contemplated hereby or the process
leading thereto (irrespective of whether the Initial Purchaser has advised or
is currently advising the Issuers or the Guarantors on other matters) or any
other obligation to the Issuers or the Guarantors except the obligations
expressly set forth in this Agreement; (iv) the Initial Purchaser and its
respective affiliates may be engaged in a broad range of transactions that
involve interests that differ from those of the Issuers and the Guarantors and
that the Initial Purchaser has no obligation to disclose any of such interests
by virtue of any fiduciary or advisory relationship; and (v) the Initial
Purchaser has not provided any legal, accounting, regulatory or tax advice with
respect to the offering contemplated hereby and the Issuers and the Guarantors
have consulted their own legal, accounting, regulatory and tax advisors to the
extent they deemed appropriate.

This Agreement supersedes
all prior agreements and understandings (whether written or oral) between the
Issuers, the Guarantors and the Initial Purchaser, or any of them, with respect
to the subject matter hereof. The Issuers and the Guarantors hereby waive and
release, to the fullest extent permitted by law, any claims that the Issuers
and the Guarantors may have against the Initial Purchaser with respect to any
breach or alleged breach of fiduciary duty.

SECTION 17.   General
Provisions.   This
Agreement constitutes the entire agreement of the parties to this Agreement and
supersedes all prior written or oral and all contemporaneous oral agreements,
understandings and negotiations with respect to the subject matter hereof. This
Agreement may be executed in two or more counterparts, each one of which shall
be an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument. This Agreement may not be amended or modified
unless in writing by all of the parties hereto, and no condition herein
(express or implied) may be waived unless waived in writing by each party whom
the condition is meant to benefit. The section headings herein are for the
convenience of the parties only and shall not affect the construction or
interpretation of this Agreement.

 26

If the
foregoing is in accordance with your understanding of our agreement, kindly
sign and return to the Company the enclosed copies hereof, whereupon this
instrument, along with all counterparts hereof, shall become a binding
agreement in accordance with its terms.

	
   

  	
  Very truly yours,

  
	
   

  	
  DUANE
  READE INC., a Delaware corporation

  
	
   

  	
  By:

  	
  /s/ JOHN K. HENRY

  
	
   

  	
  Name:

  	
  John K. Henry

  
	
   

  	
  Title:

  	
  Senior Vice President and Chief

  Financial Officer

  
				

 

 

	
  

  	
  DUANE READE, a New
  York general partnership

  
	
   

  	
  By: Duane Reade Inc., a
  Delaware corporation

  and its general partner

  
	
   

  	
  By:

  	
  /s/ JOHN K. HENRY

  
	
   

  	
  Name:

  	
  John K. Henry

  
	
   

  	
  Title:

  	
  Senior Vice President and Chief

  Financial Officer

  
				

 

 

	
  

  	
  DUANE READE
  HOLDINGS, INC., a Delaware

  corporation

  
	
   

  	
  By:

  	
  /s/ MICHAEL S. GREEN

  
	
   

  	
  Name:

  	
  Michael S. Green

  
	
   

  	
  Title:

  	
  Vice President

  
				

 

 

	
  

  	
  DRI I, INC.,
  a Delaware corporation

  
	
   

  	
  DUANE
  READE INTERNATIONAL, INC., a Delaware

  corporation

  
	
   

  	
  DUANE
  READE REALTY, INC., a Delaware

  corporation

  
	
   

  	
  By:

  	
  /s/ JOHN K. HENRY

  
	
   

  	
  Name:

  	
  John K. Henry

  
	
   

  	
  Title:

  	
  Senior Vice President and Chief

  Financial Officer

  
				

 

 

The
foregoing Purchase Agreement is hereby confirmed and accepted by the Initial
Purchaser as of the date first above written.

	
  BANC OF AMERICA SECURITIES LLC

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

EXHIBIT A

Subsidiaries
of Duane Reade Inc.

	
  Name

  	
   

  	
   

  	
   

  	
  Jurisdiction of Incorporation or Formation

  
	
  DRI I, Inc.

  	
   

  	
  Delaware

  
	
  Duane Reade
  International, Inc.

  	
   

  	
  Delaware

  
	
  Duane Reade
  Realty, Inc.

  	
   

  	
  Delaware

  
	
  Duane Reade (a general partnership)

  	
   

  	
  New York

  

 

 A-1

ANNEX I

Resale
Pursuant to Regulation S or Rule 144A.   The Initial Purchaser understands that:

The Initial Purchaser agrees that it has not offered
or sold and will not offer or sell the Securities in the United States or to,
or for the benefit or account of, a U.S. Person (other than a distributor), in
each case, as defined in Rule 902 under the Securities Act (i) as
part of its distribution at any time or (ii) otherwise until 40 days after
the later of the commencement of the offering of the Securities pursuant hereto
and the Closing Date, other than in accordance with Regulation S of the
Securities Act or another exemption from the registration requirements of the
Securities Act. The Initial Purchaser agrees that, during such 40-day
restricted period, it will not cause any advertisement with respect to the
Securities (including any “tombstone” advertisement) to be published in any
newspaper or periodical or posted in any public place and will not issue any
circular relating to the Securities, except such advertisements as permitted by
and include the statements required by Regulation S.

The Initial Purchaser agrees that, at or prior to
confirmation of a sale of Securities by it to any distributor, dealer or person
receiving a selling concession, fee or other remuneration during the 40-day
restricted period referred to in Rule 903 under the Securities Act, it
will send to such distributor, dealer or person receiving a selling concession,
fee or other remuneration a confirmation or notice to substantially the following
effect:

“The Securities covered hereby have not been
registered under the U.S. Securities Act of 1933, as amended (the “Securities
Act”), and may not be offered or sold within the United States or to, or for
the account or benefit of, U.S. persons (i) as part of your distribution
at any time or (ii) otherwise until 40 days after the later of the
commencement of the Offering and the Closing Date, except in either case in
accordance with Regulation S under the Securities Act (or Rule 144A in
transactions that are exempt from the registration requirements of the
Securities Act), and in connection with any subsequent sale by you of the Notes
covered hereby in reliance on Regulation S during the period referred to above
to any distributor, dealer or person receiving a selling concession, fee or
other remuneration, you must deliver a notice to substantially the foregoing
effect. Terms used above have the meanings assigned to them in Regulation S.”

The Initial Purchaser agrees that the Securities
offered and sold in reliance on Regulation S will be represented upon issuance
by a global security that may not be exchanged for definitive securities until
the expiration of the 40-day restricted period referred to in Rule 903
of the Securities Act and only upon certification of beneficial ownership of
such Securities by non-U.S. persons or U.S. persons who purchased such
Securities in transactions that were exempt from the registration requirements
of the Securities Act.

The Initial Purchaser
acknowledges that the Company and, for purposes of the opinions to be delivered
to them pursuant to Section 5(c) hereof, counsel to the Company and
counsel to the Initial Purchaser, will rely upon the accuracy and truth of the
foregoing representations, and the Initial Purchaser hereby consents to such
reliance.

 I-1Exhibit 10.1

 

Confidential Materials omitted
and filed separately with the 

Securities and Exchange Commission. 
Asterisks denote omissions.

 

 

FIFTH SUPPLEMENT TO

MASTER LOAN GUARANTY AGREEMENT

 

This Fifth Supplement to Master Loan Guaranty
Agreement (this “Supplement”) is made as of this 6th day of October,
2005, by and between The Education Resources Institute, Inc., a private
non-profit corporation organized under Chapter 180 of the Massachusetts General
Laws, with its principal place of business at Park Square Building, 4th Floor,
31 St. James Avenue, Boston, Massachusetts 02116 (“TERI”), and The First
Marblehead Corporation, a Delaware corporation having a principal place of
business at 800 Boylston Street, 34th Floor, Boston, Massachusetts 02199 (“FMC”),
and amends and supplements that certain Master Loan Guaranty Agreement dated as
of February 2, 2001 by and between TERI and FMC, as amended (the “Master Loan
Guaranty Agreement”).  Capitalized terms
used herein without definition have the meaning set for the in the Master Loan
Guaranty Agreement.

 

WHEREAS, pursuant to that certain Master Loan Guaranty
Agreement, numerous FMC Purchase Programs have been created and have resulted
in the origination of loans for purchase by FMC or its designee;

 

WHEREAS, pursuant to the Fourth Supplement to Master
Loan Guaranty Agreement dated June 1, 2004 (the “Fourth Supplement”), TERI and
FMC agreed to amend the Master Loan Guaranty Agreement to adjust the amount of
guaranty fees that are held in the Pledged Account and the relative ownership
percentages of residual equity interests in the Purchaser Trust; and

 

 WHEREAS, the
parties desire to make further amendments to the Master Loan Guaranty Agreement
as provided herein.

 

NOW, THEREFORE, in consideration of these presents and
the covenants contained herein and for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as follows:

 

1.                                       For any Securitization closing from and
after the date hereof through and including June 30, 2006 (each, a “2006
Securitization”), the parties agree as follows:

 

(a)(i)  The amount of guaranty fees that are held in
the Pledged Account for any 2006 Securitization shall be reduced (such
reduction, the “[**] Reduction”) by [**] basis points ([**]%) multiplied by the
principal amount of loans included in the applicable Securitization which are,
in the case of the first 

 

 

2006 Securitization originated and guaranteed, and in
the case of each other 2006 Securitization, guaranteed by TERI (“TERI Loans”).

 

                (ii)  The ownership percentages of residual equity
interests in the Purchaser Trust for each 2006 Securitization shall be adjusted
as follows:  TERI hereby agrees to
transfer to FMC a portion of its residual equity interest, the present value of
which (using a [**]% discount factor) equals the amount of the [**] Reduction.

 

(b)(i)  TERI shall be deemed to have made the
election set forth in Section 2 of the Fourth Supplement to receive the
Additional Administrative Fee for each 2006 Securitization.  Such election provides that pursuant to
Section 1 of the Fourth Supplement, the amount of guaranty fees that are held
in the Pledged Account for any 2006 Securitization shall be reduced (such
reduction, the “[**] Reduction”) by [**] basis points ([**]%) multiplied by the
principal amount of TERI Loans included in the applicable Securitization.

 

(ii)  Section 4 of the Fourth Amendment shall not
apply to any 2006 Securitization. 
Instead, the ownership percentages of residual equity interests in the
Purchaser Trust for each 2006 Securitization shall be adjusted as follows:  TERI hereby agrees to transfer to FMC a
portion of its residual equity interest, the present value of which (using a
[**]% discount factor) equals the amount of the [**] Reduction.

 

(c)  FMC shall structure each 2006 Securitization
such that the [**] Reduction and the [**] Reduction shall be released to TERI
from the Pledged Account at the time the Pledged Account is transferred to the
applicable Purchaser Trust.  The [**] Reduction
and the [**] Reduction shall be calculated based upon the principal amount of
the TERI Loans as estimated on the closing date of the applicable 2006
Securitization and shall be reconciled based on final portfolio information in
connection with the customary reconciliation procedures for such 2006
Securitization.

 

2.                                       TERI agrees that notwithstanding anything
to the contrary contained in any Loan Origination Agreement, TERI shall not
increase any origination fees payable to TERI by the lenders thereunder
(excluding so-called “make and hold” lenders) from and after [**] (it being
understood that an increase may go into effect on or after [**]).

 

3.                                       FMC agrees that it shall pay to TERI [**]
dollars ($[**]) (the “$[**] Payment”), such payment to be made from the closing
of the 2006 Securitizations on a proportional basis based upon the loan volume
securitized in such transactions.  To the
extent that the $[**] Payment does not equal the sum of the [**] Reduction and
the [**] Reduction, multiplied by the principal amount of non TERI originated
loans that are included in the first 2006 Securitization, then the parties will
adjust the $[**] payment to accurately reflect such sum. Upon each such
payment, the ownership percentages of residual equity interests in the
Purchaser Trust for such 2006 Securitizations shall be adjusted to reflect such
payment using the same methodology provided in Section 1(a)(ii) above.

 

2

 

4.                                       Except as amended and supplemented
hereby, the Master Loan Guaranty Agreement shall continue in full force and
effect.

 

5.                                       This Supplement shall be governed by and
construed in accordance with the laws of The Commonwealth of Massachusetts
(without reference to choice-of-law rules).

 

6.                                       This Supplement may be executed in any
number of counterparts, all of which together shall constitute one agreement.

 

 

IN WITNESS WHEREOF, the parties hereto have caused
this Supplement to be executed under seal as of the date above first written.

 

 

THE EDUCATION RESOURCES

INSTITUTE, INC.

 

 

	
  By: 

  	
  /s/ Willis Hulings III

  	
   

  
	
   

  	
  Name: 

  	
  Willis Hulings III

  
	
   

  	
  Title: 

  	
  President & CEO

  
				

 

 

THE FIRST MARBLEHEAD
CORPORATION

 

 

	
  By: 

  	
  /s/ Anne P. Bowen

  	
   

  
	
   

  	
  Name: 

  	
  Anne P. Bowen

  
	
   

  	
  Title: 

  	
  Executive Vice President

  
				

 

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