COLLECTIVE BARGAINING AGREEMENT

CONTENTS

AGREEMENT made and entered into April 1, 2006 by and between DUANE READE, INC., 440 9 th  Avenue, New York, (hereafter called the “Employer”), and LOCAL 340A, New York, JOINT BOARD, UNITE-HERE, 31 West 15 th  Street, New York, New York 10011 (hereafter called the “Union”).

WITNESSETH:

WHEREAS, the parties hereto desire to cooperate in establishing and maintaining proper and suitable conditions, and to secure uniform and equitable terms of employment and conditions of labor satisfactory to Employer and employees;

NOW, THEREFORE, in consideration of the mutual covenants and agreement hereinafter contained, it is mutually agreed as follows:

ARTICLE 1. RECOGNITION AND UNION SECURITY

A.    The Employer recognizes the Union as the sole and exclusive bargaining agent for all clerks, cashiers, pharmacy clerks, pharmacy technicians, and photo technicians employed in the Employer’s stores.

B.     It shall be a condition of employment that all employees of the Employer covered by this Agreement, who are members of the Union in good standing on the effective date of this Agreement shall remain members in good standing, and those who are not members on the effective date of this Agreement shall on the 45 th  day following the effective date of this Agreement, or after the execution date of the Agreement, whichever is later, become and remain members in good standing in the Union. It shall also be a condition of employment that all employees covered by this Agreement and hired on or after its effective date shall on the 45 th  day following the beginning of such employment become and remain members in good standing in the Union.

ARTICLE 2. COLLECTIVE BARGAINING UNIT

A.    The collective bargaining unit covered by this Agreement shall consist of all Covered employees employed in the Employer’s Stores who are employed for twenty (20) hours or more per week, excluding store managers, assistant store managers, pharmacists, clericals, individuals supplied by contractors, guards and supervisory employees as may be defined in the National labor Relations Act, as amended.

B.     Seasonal employees hired temporarily or supplied by a contractor for the Christmas season no earlier than December 15 th  and terminated no later than the next January 5 th  in any year shall also be excluded from the coverage of this Agreement.

C.     The Employer agrees to layoff sub part-time employees in a store (those who work less than 20 hours per week) before reducing the hours of bargaining unit employees in the same store. The preceding sentence only applies to situations when the Employer chooses to reduce the hours of a bargaining unit employee by three (3) or more hours per week.

ARTICLE 3. TRIAL PERIOD

A.    A trial period of sixty (60) days shall be in effect for all new employees hired by the Employer, during which period the employee may be discharged with or without cause in the sole determination of the Employer, and such determination shall not be subject to the arbitration provision hereinafter set forth. The trial period for any new employee will be extended an additional sixty (60) days upon the Employer’s written request therefore. Employees retained in the employ of the Employer subsequent to the expiration of such trial period shall be deemed regular employees and placed on a seniority list of the employees of the Employer, such seniority to date back to the beginning of their employment.

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ARTICLE 4. SENIORITY

A.    Seniority for entitlement purposes (such as vacation and benefit eligibility) shall be measured from date of hire by the Employer.

B.     Seniority for relative purposes (such as for layoff and recall) shall be recognized on a store by store basis. In no case shall seniority in one store be counted as seniority in another store.

C.     Seniority on a single store basis shall govern in all layoffs and rehirings provided the most senior employee has the present ability to satisfactorily perform the available work.

D.    An employee shall lose seniority in the event of the occurrence of any one of the following events.

1.      Quit

2.                  Discharge for cause

3.                  After layoff the employee is notified in writing to return to work and the employee fails to inform the Employer of his intention to so return within 48 hours after receipt of such notice.

4.                  The employee is on continuous layoff more than for six (6) months.

5 .                  No show-no call. by failing to inform management of absences at least one hour before shift begins, except in emergencies. Informing management means speaking to the Store Manager or the Shift management, not another employee.

E.     Employees will be covered without a waiting period, for medical benefits only, in a company acquired store, providing said employee was covered by a previous medical plan at the time of acquisition.

ARTICLE 5. HOURS OF WORK

A.    The regular work week for all full-time employees shall not exceed forty (40) hours per week for any five (5) days out of a seven (7) day week in any store regularly opened seven (7) days per week. A full-time employee is defined as an employee who averages a minimum of thirty (30) hours per week over a quarter.

B.     Overtime shall be paid at the rate of time and one-half for all work over forty (40) hours per week.

C.     Part-time employees shall receive payment for vacations and holiday pay on a pro-rata basis of a forty (40) hour work week.

D.    All full-time employees based on seniority shall have the ability to request all available hours in their home stores, in order to maintain their full-time status. Employees cannot claim hours that they are already working in another store. It is understood that the employer will accommodate transfers, when the business allows, in stores under the jurisdiction of the Union. The Employer shall not involuntarily transfer an employee to a store outside this bargaining unit except as needed on a temporary basis.

E.     The Company shall make every reasonable commercial effort to maintain an employee ratio of 65% full time and 35% part time employees in all stores represented by the Union.

F.     The Employer will provide a 10-minute paid break for each four-hour block of work time. The Employer will allow a one half hour unpaid meal break for each six hour block of work time.

G.    Considering the needs of the business and the requirement that stores be staffed properly, work schedules shall be posted as far in advance as reasonably practicable before implementation.

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ARTICLE 6. HOLIDAY

A.    Each employee who has completed six (6) months of service, excluding absences, shall be paid for the holidays listed in Paragraph B below regardless of whether the employee works on the holiday.

B.     The holidays to which the employee shall be entitled hereunder shall be:

Employees will also be entitled to three (3) personal days each year. Personal days must be approved by the Store Manager, in advance, by giving forty eight (48) hours notice to the Store Manager in order to be paid. There will be no carry over of personal days. Eligible days not taken will be forfeited. Employees are not entitled to pay for unused personal days upon separation of employment.

C.     Should any of the aforementioned holidays to which an employee is entitled, fall on his day off or during his vacation, such employee shall, in addition to his regular pay, be paid for such holiday. Should any employee be called in to work on any holiday to which he is entitled, he shall receive holiday pay and straight-time pay for all hours worked on the holiday. Exclusive of holiday pay, if eligible, employees will only receive overtime pay if they actually work over forty (40) hours in a Holiday week.

D.    To be eligible for holiday pay, employees must work their scheduled day before and the scheduled day after a paid holiday.

E.     Part-time employees shall be entitled to holidays (including personal days) with pay on the same basis as herein above set forth but pro-rated in the proportion that their work hours bear to the full work week in the category in which employed based on average hours worked for the preceding quarter.

ARTICLE 7. LAYOFF AND DISCHARGE

A.    The Employer shall have the right to determine the number of employees from time to time required in the operation of its business and to determine the necessity for or extent of layoffs. The Employer will provide seven (7) days notice to the Union of layoffs resulting from a store closing.

B.     Employees, after the expiration of their trial period, may be discharged only for cause which includes but is not limited to reasons outlined in the company’s Rules of Conduct and Orientation booklet. In the event of any dispute as to the existence of cause for discharge, such dispute shall be determined in accordance with the grievance and arbitration provisions hereinafter contained. Unless the Employer receives a written claim of wrongful discharge within two (2) weeks of date of discharge, discharge shall be deemed to be for good cause.

ARTICLE 8. VACATIONS

A.    The Company agrees that, upon request, vacation pay shall be paid prior to the employee’s scheduled time off. All requests must be made on the pay period prior to the scheduled time off. It is understood that all eligible vacations must be taken in the calendar year or it will be forfeited. If an employee requests a delay and/or store management requests the vacation delay, it must be made in writing to the VP/Human Resources, who will respond within seven (7) days, in writing, if the request for delay is rejected.

B.     A blackout period will exist from November 1 st  each year until December 31 st  of each year where no vacation will be allowed. An employee will never be paid for vacation in lieu of time off. Employees

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who qualify for vacation during the blackout period, November 1 st  through December 31 st , shall be eligible to take their vacation after January 1 st  of the next calendar year.

C.     All full and part-time employees shall be eligible for vacation pay as follows:

1.                  Upon completing six (6) months employment—one (1) week

2.                  Upon completing one (1) year employment—two (2) weeks

3.                  Upon completing seven (7) years employment—three (3) weeks

4.                  Upon completing fifteen (15) years employment—four (4) weeks

5.                  Upon completing twenty (20) years employment—five (5) weeks

Part-time employees shall be entitled to vacation on the same basis as set forth herein, but pro-rated in the proportion that their work hours bear to the full work-week based on average hours worked for the preceding quarter.

ARTICLE 9. FAIR TREATMENT AND RESPECT

A.    The Employer agrees that each employee should be treated with respect and dignity. The Employer will not tolerate verbal abuse or threats by managers. Corrective discussions should not be administered in the store selling areas or in front of other bargaining unit employees. The Union member may request the presence of the Union Steward or other witness at any disciplinary meeting. Discipline shall be administered in a professional, adult and non-confrontational manner.

B.     All written complaints regarding this section shall be addressed within ten (10) calendar days of receipt in the Company’s Human Resource department. Upon request, the Union will be provided a written summary of all actions resulting from such complaints.

ARTICLE 10. CHECKOFF

A.    During the second week of each and every month the Employer agrees to deduct and remit to the Union the Union’s regular membership dues and initiation fees, upon condition that the Union shall furnish the Employer with a lawful checkoff authorization form executed by the employee.

B.     The Employer will notify the Union of any revocation of such authorization received by it.

C.     This authorization shall automatically renew itself unless written authorization for revocation is submitted as above directed.

D.    Any monies deducted, except monies deducted in error, from the employees are to remain the property of the Union, and in no event shall the Employer be permi