Fairway Group Holdings Corp - Form S-1A(Apr-04-2013)

Table of ContentsAs filed with the Securities and Exchange Commission on April 4, 2013

Registration No. 333- 184063

UNITED STATESSECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

AMENDMENT NO. 2TO

FORM S- 1REGISTRATION STATEMENT

UNDERTHE SECURITIES ACT OF 1933

Fairway Group Holdings Corp.(Exact name of registrant as specified in its charter)

Delaware(State or other jurisdiction ofincorporation or organization)

5411(Primary Standard IndustrialClassification Code Number)

74- 1201087(I.R.S. Employer

Identification Number)2284 12th Avenue

New York, New York 10027(646) 616- 8000

(Address, including zip code, and telephone number, includingarea code, of registrant's principal executive offices)

Herbert Ruetsch, Chief Executive OfficerFairway Group Holdings Corp.

2284 12th AvenueNew York, New York 10027

(646) 616- 8000(Name, address, including zip code, and telephone number, including area code, of agent for service)

With copies to:

Paul Jacobs, Esq.Roy L. Goldman, Esq.Steven I. Suzzan, Esq.

Fulbright & Jaworski L.L.P.666 Fifth Avenue

New York, New York 10103Telephone (212) 318- 3000

Fax (212) 318- 3400

Nathalie Augustin, Esq.Senior Vice President- General Counsel

Fairway Group Holdings Corp.2284 12th Avenue

New York, New York 10027Telephone (646) 616- 8070

Fax (212) 234- 2603

Robert Evans III, Esq.Shearman & Sterling LLP

599 Lexington AvenueNew York, New York 10022Telephone (212) 848- 4000

Fax (646) 848- 8830

Approximate date of commencement of proposed sale to the public:As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under theSecurities Act, check the following box. o If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the followingbox and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post- effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list theSecurities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post- effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list theSecurities Act registration statement number of the earlier effective registration statement for the same offering. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non- accelerated filer, or a smaller reportingcompany. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b- 2 of the Exchange Act.Large accelerated filer o Accelerated filer o Non- accelerated filer ý

(Do not check if asmaller reporting company)

Smaller reporting company o

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securitiesto be Registered

Amount to beRegistered(1)

ProposedMaximumAggregateOfferingPrice(2)

Amount ofRegistration

Fee(3)

Class A common stock, par value $0.00001 per share 15,697,500 $188,370,000 $22,423.67

(1)Includes the shares of common stock that may be sold if the over- allotment option granted by certain of our stockholders to theunderwriters is exercised.

(2)Estimated solely for the purpose of calculating the registration fee under Rule 457(a) of the Securities Act.

(3)Of this amount, $20,259 was previously paid and $2,164.67 has been paid in connection with this filing.

The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date untilthe registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective inaccordance with Section 8(a) of the Securities Act or until this Registration Statement shall become effective on such date as the Commission,acting pursuant to said Section 8(a), may determine.

Table of ContentsSUBJECT TO COMPLETION, DATED APRIL 4, 2013

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with theSecurities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy thesesecurities in any state where the offer or sale is not permitted.

13,650,000 Shares

FAIRWAY GROUP HOLDINGS CORP.Class A Common Stock

This is the initial public offering of shares of our Class A common stock. Prior to this offering, there has been no public market for our Class Acommon stock. We are selling 13,363,564 shares of Class A common stock, and the selling stockholders identified in this prospectus are selling286,436 shares of Class A common stock. We will not receive any proceeds from the sale of shares by the selling stockholders. The initial publicoffering price of our Class A common stock is expected to be between $10.00 and $12.00 per share. We have applied to list our Class A commonstock on the NASDAQ Global Market under the symbol "FWM".

We have two classes of common stock, Class A common stock and Class B common stock, which have identical rights, except voting andconversion rights. Each share of Class A common stock is entitled to one vote. Each share of Class B common stock is entitled to ten votes and isconvertible at any time into one share of Class A common stock. The holders of our outstanding shares of Class B common stock will holdapproximately 85.7% of the voting power of our outstanding capital stock following this offering, and investment funds affiliated with SterlingInvestment Partners will hold approximately 72.5% of the voting power of our outstanding capital stock following this offering through theirownership of Class B common stock and approximately 77.1% of the voting power of our outstanding common stock following this offering throughtheir ownership of Class A common stock and Class B common stock. We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act.

Investing in our common stock involves risks. See "Risk Factors" on page 19. The underwriters have an option to purchase up to an additional 2,047,500 shares of Class A common stock from certain of our stockholders atthe initial public offering price less the underwriting discount, within 30 days from the date of this prospectus to cover over- allotments of shares.

Initial publicoffering price

Underwritingdiscount

Proceeds,before

expenses, toFairway

Proceeds toselling

stockholdersPer Share $ $ $ $Total $ $ $ $ Delivery of the shares of Class A common stock will be made on or about , 2013.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securitiesor determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

CreditSuisse

BofA MerrillLynch Jefferies

WilliamBlair

BB&T CapitalMarkets

GuggenheimSecurities

Oppenheimer &Co.

Wolfe TrahanSecurities

Morgan JosephTriArtisan

The date of this prospectus is , 2013

TABLE OF CONTENTSPage

BASIS OF PRESENTATION iiTRADEMARKS AND TRADE NAMES iiTERMS USED IN THIS PROSPECTUS iiMARKET AND INDUSTRY DATA iiPROSPECTUS SUMMARY 1RISK FACTORS 19SPECIAL NOTE REGARDING FORWARD- LOOKING STATEMENTS 46USE OF PROCEEDS 48DIVIDEND POLICY 49CAPITALIZATION 50DILUTION 54SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA 56MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 63BUSINESS 92MANAGEMENT 108EXECUTIVE COMPENSATION 119PRINCIPAL AND SELLING STOCKHOLDERS 131CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS 134DESCRIPTION OF CERTAIN INDEBTEDNESS 140DESCRIPTION OF CAPITAL STOCK 142SHARES ELIGIBLE FOR FUTURE SALE 147MATERIAL U.S. FEDERAL INCOME AND ESTATE TAX CONSIDERATIONS TO NON- U.S. HOLDERS 149UNDERWRITING 153LEGAL MATTERS 158EXPERTS 158WHERE YOU CAN FIND MORE INFORMATION 158INDEX TO FINANCIAL STATEMENTS F-

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Neither we nor the selling stockholders have authorized anyone to provide you with information or to make any representations otherthan those contained in this prospectus. We take no responsibility for, and can provide no assurance as to the reliability of, any otherinformation that others may give you. This document may only be used where it is legal to sell these securities. The information in thisdocument may only be accurate on the date of this document.

Dealer Prospectus Delivery Obligation Until , 2013 (25 days after the commencement of the offering), all dealers that effect transactions in these securities,

whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealer's obligation to delivera prospectus when acting as an underwriter and with respect to unsold allotments or subscriptions.

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BASIS OF PRESENTATION Our fiscal year is the 52- or 53- week period ending on the Sunday closest to March 31. Our last four completed fiscal years ended on March 28,2010, April 3, 2011, April 1, 2012 and March 31, 2013. For ease of reference, we identify our fiscal years in this prospectus by reference to thecalendar year in which the fiscal year ends. For example, "fiscal 2012" refers to our fiscal year ended April 1, 2012.

TRADEMARKS AND TRADE NAMES This prospectus includes our trademarks and service marks, FAIRWAY®, FAIRWAY "Like No Other Market"®, LIKE NO OTHERMARKET® and FAIRWAY WINES & SPIRITS®, which are protected under applicable intellectual property laws and are the property of Fairway.This prospectus also contains trademarks, service marks, trade names and copyrights of other companies, which are the property of their respectiveowners. Solely for convenience, trademarks and trade names referred to in this prospectus may appear without the ® or TM symbols. We do not intendour use or display of other parties' trademarks, trade names or service marks to imply, and such use or display should not be construed to imply, arelationship with, or endorsement or sponsorship of us by, these other parties.

TERMS USED IN THIS PROSPECTUS As used in this prospectus, the term "Greater New York City metropolitan area" means New York City and the New York, New Jersey andConnecticut suburbs within a 50 mile radius of New York City. References to "stores in suburban areas" or similar expressions refer to stores locatedin the Greater New York City metropolitan area outside of the Borough of Manhattan in New York City. References to "Sterling InvestmentPartners" are to the investment funds managed by affiliates of Sterling Investment Partners that own shares of our common and preferred stock. Theterm "SKU" refers to inventory stock- keeping units. "Comparable store sales" refers to the percentage change in our same- store sales as compared tothe prior comparable period. Our practice is to include sales from a store in same- store sales beginning on the first day of the fourteenth full monthfollowing the store's opening. This practice may differ from the methods that other food retailers use to calculate comparable or "same- store" sales.We define "store contribution margin" as gross profit less direct store expenses (excluding depreciation and amortization included in direct storeexpenses).

MARKET AND INDUSTRY DATA Unless otherwise indicated, information contained in this prospectus concerning our industry and the markets in which we operate is based oninformation from independent industry and research organizations, such as the Buxton Company, Willard Bishop Consulting LLC, the FoodMarketing Institute and other thirdparty sources (including industry publications, surveys and forecasts), and management estimates. Managementestimates are derived from publicly available information released by independent industry analysts and thirdparty sources, as well as data from ourinternal research, and are based on assumptions made by us upon reviewing such data and our knowledge of such industry and markets, which webelieve to be reasonable. In addition, projections, assumptions and estimates of the future performance of the industry in which we operate and ourfuture performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in "RiskFactors." These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties andby us.

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PROSPECTUS SUMMARYThis summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should

consider in making your investment decision. You should read this entire prospectus, including the sections entitled "Risk Factors" and"Management's Discussion and Analysis of Financial Condition and Results of Operations," before deciding to invest in our Class A common stock.Some of the statements in this summary constitute forward- looking statements, with respect to which you should review the section of this prospectusentitled "Special Note Regarding Forward- Looking Statements." Except where the context otherwise requires or where otherwise indicated, (i) theterms "Fairway" "we," "us," "our," "our Company" and "our business" refer to Fairway Group Holdings Corp., together with its consolidatedsubsidiaries as a combined entity, and (ii) "issuer" refers to Fairway Group Holdings Corp. as the issuer of the Class A common stock in thisoffering, exclusive of any of its subsidiaries.Our Company Fairway Market is a high- growth food retailer offering customers a differentiated one- stop shopping experience "Like No Other Market". Sincebeginning as a small neighborhood market in the 1930s, Fairway has established itself as a leading food retailing destination in the Greater New YorkCity metropolitan area, an approximately $30 billion food retail market that is the largest in the United States. Our stores emphasize an extensiveselection of fresh, natural and organic products, prepared foods and hard- to- find specialty and gourmet offerings, along with a full assortment ofconventional groceries. Our prices typically are lower than natural / specialty stores and competitive with conventional supermarkets. We believe thatthe combination of our broad product selection, in- store experience and value pricing creates a premier food shopping experience that appeals to abroad demographic. We operate 12 high- volume locations in the Greater New York City metropolitan area, three of which include Fairway Wines & Spirits stores.(1)

We expect to open an additional food store in Manhattan's Chelsea neighborhood in summer 2013 and in Nanuet, New York in fall 2013. Four of ourfood stores, which we refer to as our "urban stores," are located in Manhattan, and the remainder, which we refer to as our "suburban stores," arelocated in New York (outside of Manhattan), New Jersey and Connecticut. We believe our stores are among the most productive in the industry in net sales per store and net sales per square foot as a result of ourdistinctive merchandising strategies, value positioning and efficient operating structure. We have increased our net sales from $401.2 million in fiscal2010 to $554.9 million in fiscal 2012, or 38.3%, and our Adjusted EBITDA from $23.9 million in fiscal 2010 to $35.8 million in fiscal 2012, or49.8%, while significantly investing in corporate infrastructure to support our growth, including new store expansion. We increased our net salesfrom $404.5 million in the thirty- nine weeks ended January 1, 2012 to $482.5 million in the thirty- nine weeks ended December 30, 2012, or 19.3%,and our Adjusted EBITDA from $24.9 million in the thirty- nine weeks ended January 1, 2012 to $33.8 million in the thirty- nine weeks endedDecember 30, 2012, or 35.9%, due principally to new store openings and leveraging our infrastructure. We had net losses of $7.1 million,$18.6 million, $11.9 million, $10.0 million and $56.2 million in fiscal 2010, fiscal 2011 and fiscal 2012 and the thirty- nine weeks ended January 1,2012 and December 30, 2012, respectively. For a discussion of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net loss, see note 11to the tables included in "- Summary Historical Consolidated Financial and Other Data."

(1)Our Red Hook, Brooklyn, New York location was temporarily closed from October 29, 2012 to February 28, 2013 due to substantialdamage sustained during Hurricane Sandy.

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Table of Contents Fairway provides a highly differentiated one- stop shopping experience "Like No Other Market".

*The companies shown are companies that we view as strong operators in the category listed.

Our Competitive Strengths We believe the following strengths contribute to our success as a premier destination food retailer and position us for sustainable growth: Iconic brand. We believe our Fairway brand has a well established reputation for delivering high- quality, value- priced fresh, specialty andconventional groceries. Fairway has served millions of passionate customers in the Greater New York City metropolitan area for more than 75 years,recording approximately 12.7 million customer transactions in fiscal 2012. We believe the strength of the Fairway brand enhances our ability to:(i) attract a broad demographic of customers from a wider geographic radius than a conventional supermarket; (ii) source hard- to- find, uniquegourmet and specialty foods; (iii) build a trusted connection with our customers that results in a high degree of loyalty; (iv) attract and retain highlytalented employees; (v) secure attractive real estate locations; and (vi) successfully open new stores. Destination food shopping experience "Like No Other Market". We provide our customers a differentiated one- stop shopping experience byoffering a unique mix of product breadth, quality and value in a visually appealing in- store environment. Fairway creates a fun and engagingatmosphere in which customers select from an abundance of fresh foods and other high- quality products while

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Table of Contentsinteracting with our attentive and knowledgeable employees throughout the store. Customers will find in our stores a "specialty shop" orientationdesigned to recreate the best features of local specialty markets, such as a gourmet cheese purveyor, full service butcher shop, seafood market andbakery, all in one location. We believe the distinctive Fairway food shopping experience drives loyalty, referrals and repeat business. Distinctive merchandising strategy. Our merchandising strategy is the foundation of our highly differentiated, one- stop shopping experience.We offer a unique product assortment generally not found in either conventional grocery stores or natural / specialty stores, consisting of a largevariety of high- quality produce, meats and seafood, as well as gourmet, specialty and prepared foods and a full selection of everyday conventionalgroceries. High- quality perishables and prepared foods account for approximately 65% of our sales, compared to the more typical one- quarter toone- third of a conventional grocer's sales. We believe that our distinctive merchandising strategy has enabled us to build a trusted connection withour customers. Powerful store format with industry leading productivity. We believe our stores are among the most productive in the industry in net sales perstore, net sales per square foot and store contribution margin. During fiscal 2012, for food stores open more than 13 full months, our net sales perstore and net sales per selling square foot averaged $64.8 million and $1,859, respectively. In addition, during fiscal 2012, the contribution margin ofour food stores open more than 13 full months was 12.3%. Our highly productive store format delivers attractive returns on investment due to thefollowing key characteristics:

High- volume one- stop shopping destination. Our high volumes result in operating efficiencies and generate high inventoryturnover, which enables us to maintain a fresher selection of quality perishables than most of our competitors, in turn helping todrive customer traffic and sales.

Attractive product mix. Our broad assortment of high- quality fresh, natural and organic products and prepared foods, whichaccount for approximately 65% of our sales, and specialty items, which account for approximately 7% of our sales, enhance grossmargins and store productivity.

Direct- store delivery. We believe that our "farm- to- shelf" time is shorter than that of many of our competitors. The majority ofour perishables are delivered directly to our stores and not stored in a warehouse during the transport period, reducing supplychain costs while enhancing product freshness.

Strong vendor relationships. We have built valued, longstanding relationships with both large and small vendors that enable usto achieve attractive pricing on our broad merchandise offering.

Maximum merchandising flexibility. We generally enable our merchandising teams to control our on- shelf product selection andpositioning, rather than permitting vendors to do so through slotting fees.

Proven ability to replicate store model. Since March 2009, we have successfully opened eight new food stores, including three FairwayWines & Spirits locations, more than doubling our store base. Our urban food store operating model for new stores is based primarily on a store size of approximately 40,000 gross square feet (approximately25,000 selling square feet), a net cash investment, including store opening costs, of approximately $16 million, not all of which requires an immediatecash outlay, net sales after two years of approximately $75 million to $85 million, a contribution margin at maturity of approximately 17% to 20%,and an average payback period on our initial investment of less than two years. Our suburban food store operating model for new stores is based primarily on a store size of approximately 60,000 gross square feet(approximately 40,000 selling square feet), a net cash

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Table of Contentsinvestment, including store opening costs, of approximately $15 million, not all of which requires an immediate cash outlay, net sales after two yearsof approximately $45 million to $55 million, a contribution margin at maturity of approximately 10% to 13%, and an average payback period on ourinitial investment of approximately 3 to 3.5 years. We may elect to opportunistically open stores in desirable locations that differ from our prototypical new store model in square footage and/ornet sales but that we believe will provide similar contribution margins and returns on invested capital. Passionate and experienced management team. We are led by a management team with a proven track record, complemented by hands- onsenior merchants and store operations managers who have broad responsibility for merchandising and store operations. Our senior merchants have anaverage of 32 years in the food retailing industry and an average of 14 years at Fairway, and we believe they are widely recognized as authorities intheir product categories.Our Growth Strategy We plan to pursue the following growth strategies: Open stores in existing and new markets. We currently plan to open two new stores in fiscal 2014, and for the next several years thereafter,we intend to grow our store base in the Greater New York City metropolitan area at a rate of three to four stores annually. Over time, we also plan toexpand Fairway's presence into new, high- density metropolitan markets. Based on demographic research conducted for us by the Buxton Company,a customer analytics research firm, we believe, based on these demographics, we have the opportunity to more than triple the number of stores in ourexisting marketing region, the Northeast market (from New England to the District of Columbia) can support up to 90 stores and the U.S. market cansupport more than 300 additional stores (including stores in the Northeast) operating under our current format. Capitalize on consumer trends. We believe that our differentiated format positions us to capitalize on evolving consumer preferences andother key trends currently shaping the food retail industry, which include:

Increasing focus on the customer shopping experience;

Increasing consumer focus on healthy eating; and

Increasing consumer interest in private label product offerings.

Improve our operating margins. We intend to improve our operating margins by leveraging our well- developed and scalable infrastructureand continuing to implement our key operating initiatives. We have made significant investments in management, information technology systems,infrastructure, compliance and marketing to enable us to pursue our growth plans without a significant increase in infrastructure spending.Risks Affecting Our Business While we have set forth our competitive strengths above, food retail is a large and highly competitive industry, and our business involves manyrisks and uncertainties, including:

our ability to open new stores on a timely basis or at all;

our ability to achieve sustained sales and profitable operating margins at new stores;

the availability of financing to pursue our new store openings on satisfactory terms or at all;

our ability to compete effectively with other retailers;

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our ability to maintain price competitiveness;

the geographic concentration of our stores;

our ability to maintain or improve our operating margins;

our history of net losses;

ordering errors or product supply disruptions in the delivery of perishable products;

restrictions on our use of the Fairway name other than on the East Coast and in California and certain parts of Michigan andOhio;

our ability to retain and attract senior management, key employees and qualified store- level employees;

rising costs of providing employee benefits, including increased healthcare costs and pension contributions due to unfundedpension liabilities;

our ability to satisfy our ongoing capital needs and unanticipated cash requirements;

funds managed by affiliates of Sterling Investment Partners, which own common stock representing approximately 67.6% of thevoting power of our outstanding common stock before this offering and the Exchange referred to below, will, upon completion ofthis offering, own shares of Class A common stock and Class B common stock representing approximately 52.0% of ouroutstanding common stock and approximately 77.1% of the voting power of our common stock, enabling them to control allmatters submitted to our stockholders and limiting or precluding other stockholders from influencing corporate matters for theforeseeable future;

we will be a "controlled company" with less stringent requirements concerning the independence of our board of directors and itscommittees under the corporate governance rules of the NASDAQ Global Market;

the market price of our Class A common stock may be volatile or may decline, and you may not be able to resell your shares at orabove the initial public offering price; and

we qualify as an "emerging growth company" under the JOBS Act, and as such will be permitted to, and intend to, rely onexemptions from certain accounting and executive compensation disclosure and stockholder advisory vote requirements that areapplicable to other public companies.

Investing in our Class A common stock involves substantial risk. The factors that could adversely affect our results and performance, including thoseidentified above, are discussed under the heading "Risk Factors" immediately following this summary. Before you invest in our Class A commonstock, you should carefully consider all of the information in this prospectus, including matters set forth under the heading "Risk Factors."Recent Developments Our fourth fiscal quarter and our fiscal year ended on March 31, 2013 and, accordingly, our results for the quarter and fiscal year are not yetavailable. We track sales on a daily basis and, as a result, based on information available to date, we expect to report total net sales for our fourthfiscal quarter of between $175 million and $178 million, compared to $150 million for the fourth fiscal quarter ended April 1, 2012, and comparablestore sales growth of between 2.0% and 2.3% for the fourth quarter of fiscal 2013, compared to (8.1%) for the fourth quarter of fiscal 2012, excludingthe Red Hook store in both periods. This growth in net sales was principally due to the three new stores we opened in fiscal 2013, partially offset bythe effect of the temporary closure of our Red Hook, Brooklyn, New York store for almost all of the first two months of the fiscal fourth quarter as aresult of damages suffered

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Table of Contentsduring Hurricane Sandy. Sales at the Red Hook store in the fourth quarter of fiscal 2012 for the same period that the Red Hook store was closed in thefourth quarter of fiscal 2013 were approximately $12 million. We reopened our Red Hook store on March 1, 2013, and for the month of March 2013our net sales at our Red Hook store were approximately 13% greater than our net sales at that store in March 2012, due in part to increasedpromotional activities associated with the reopening of the store. The occurrence of the Easter and Passover holidays in the fourth quarter of fiscal2013, but not in the fourth quarter of fiscal 2012, may have modestly impacted our sales growth rates for the quarter. We have provided ranges for the information above because our fiscal quarter just ended and we have not completed our financial closingprocedures. Our independent registered public accounting firm has not audited, reviewed, compiled or performed any procedures with respect to suchinformation. Our independent registered public accounting firm is in the process of beginning its review of our financial statements for the fiscalquarter and fiscal year ended March 31, 2013. We currently expect that our final results will be consistent with the estimates described above.However, the estimates described above are preliminary and represent the most current information available to management. Please refer to thesection entitled "Cautionary Statement Regarding Forward- Looking Statements" in this prospectus for additional information.Exchange Prior to the completion of this offering, we will complete an internal recapitalization pursuant to which we will effect a 118.58- for- one stocksplit and reclassify our outstanding common stock into shares of Class A common stock. As a result of the stock split and reclassification, ouroutstanding warrants will become warrants to purchase 1,930,822 shares of Class A common stock. At the closing of this offering, we will issue15,504,296 shares of our Class B common stock, of which 33,576 shares will automatically convert into 33,576 shares of Class A common stock atthe closing of this offering, in exchange for our outstanding preferred stock (including accrued dividends thereon that are not being paid in cash witha portion of the proceeds of this offering). See "Use of Proceeds." For ease of reference, we collectively refer to the 118.58- for- one stock split,reclassification of our outstanding common stock into shares of Class A common stock and issuance of shares of Class B common stock in exchangefor our preferred stock as the "Exchange." Upon completion of the Exchange, our authorized capital stock will consist of 150,000,000 shares ofClass A common stock, par value $0.00001 per share, 31,000,000 shares of Class B common stock, par value $0.001 per share, and 5,000,000 sharesof undesignated preferred stock, par value $0.001 per share. See "Description of Capital Stock."Corporate Information The issuer was incorporated as a Delaware corporation on September 29, 2006. Our corporate headquarters is located at 2284 12th Avenue, NewYork, New York 10027. Our telephone number is (646) 616- 8000. Our website address is http://www.fairwaymarket.com. The information on ourwebsite is not deemed, and you should not consider such information, to be part of this prospectus.Implications of Being an Emerging Growth Company We qualify as an "emerging growth company" as defined in the JOBS Act. As a result, we are permitted to, and intend to, rely on exemptionsfrom certain disclosure requirements that are applicable to other companies that are not emerging growth companies. Accordingly, we have includedonly four, rather than five, years of selected financial data due to a change in our fiscal year, included detailed compensation information for only ourthree most highly compensated executive officers and not included a compensation discussion and analysis (CD&A) of our executive compensationprograms

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Table of Contentsin this prospectus. In addition, for so long as we are an emerging growth company, we will not be required to:

have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes- Oxley Act of2002 (the "Sarbanes- Oxley Act");

comply with any requirement that may be adopted by the Public Company Accounting Oversight Board (the "PCAOB")regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the auditand the financial statements (i.e., an auditor discussion and analysis);

submit certain executive compensation matters to shareholder advisory votes, such as "say- on- pay", "say- on- frequency" and"say- on- golden parachutes"; and

disclose certain executive compensation related items such as the correlation between executive compensation and performanceand comparisons of the CEO's compensation to median employee compensation.

While we are an emerging growth company the JOBS Act also permits us to delay the adoption of certain accounting standards until thosestandards would otherwise apply to private companies. We have elected to delay the adoption of new or revised accounting pronouncementsapplicable to public and private companies until such pronouncements become mandatory for private companies. We will remain an emerging growth company until the earliest to occur of: (i) our reporting $1 billion or more in annual gross revenues; (ii) theend of fiscal 2019; (iii) our issuance, in a three year period, of more than $1 billion in non- convertible debt; and (iv) the end of the fiscal year inwhich the market value of our common stock held by non- affiliates exceeds $700 million on the last business day of our second fiscal quarter.

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THE OFFERINGClass A common stock offered by us 13,363,564 shares.Class A common stock offered by the selling stockholders 286,436 shares.Class A common stock to be outstanding immediately after thisoffering 25,767,540 shares.Class B common stock to be outstanding immediately after this offering 15,470,720 shares.Total Class A common stock and Class B common stock to beoutstanding immediately after this offering 41,238,260 shares.Underwriters' option to purchase additional shares of Class A commonstock from certain of our stockholders 2,047,500 shares.Use of proceeds We estimate that our net proceeds from this offering will be

approximately $133.4 million, assuming an initial public offering priceof $11.00 per share, which is the midpoint of the price range set forthon the cover page of this prospectus, after deducting underwritingdiscounts and commissions and estimated offering expenses payable byus. We intend to use the net proceeds that we receive from this offeringfor new store growth and other general corporate purposes, after(i) paying accrued but unpaid dividends on our Series A preferred stocktotaling approximately $16.2 million (averaging $376.16 per share ofSeries A preferred stock), (ii) paying accrued but unpaid dividends onour Series B preferred stock totaling approximately $48.8 million($762.35 per share of Series B preferred stock), (iii) paying$9.2 million to an affiliate of Sterling Investment Partners inconnection with the termination of our management agreement withsuch affiliate and (iv) paying contractual initial public offering bonusesto certain members of our management totaling approximately$7.3 million.If the price per share to the public is below $11.00, which is themidpoint of the price range set forth on the cover page of thisprospectus, we intend to proportionately reduce the amount of the netproceeds we use to pay the accrued dividends on our preferred stock,and if the price per share to the public is above $11.00, we intend toproportionately increase the amount of the net

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Table of Contentsproceeds we use to pay the accrued dividends on our preferred stock.The number of shares of Class B common stock that we issue inexchange for our preferred stock (including accrued dividends thereonthat are not being paid in cash with a portion of the proceeds of thisoffering) will not change if we decrease or increase the amount ofaccrued dividends we pay in cash with the net proceeds of this offering.The accrued dividends of $12,597,184 on the Series A preferred stockthat are not paid in cash and the liquidation preference of the Series Apreferred stock of $55,975,400 will be satisfied through the issuance of6,233,871 shares of Class B common stock in connection with thisoffering. We received $43,058,000 in the aggregate, or $1,000 pershare, upon the issuance of the Series A preferred stock. The accrueddividends of $37,957,698 on the Series B preferred stock that are notpaid in cash and the liquidation preference of the Series B preferredstock of $64,016,980 will be satisfied through the issuance of 9,270,425shares of Class B common stock in connection with this offering, basedon a price of $11.00 per share. We received $52,277,000 in theaggregate, or $1,000 per share, upon the issuance of the Series Bpreferred stock. In addition, we issued Series B preferred stock havinga value of $12,739,980 to the sellers in connection with our acquisitionof the four then existing Fairway stores in January 2007.We will not receive any proceeds from the sale of shares being sold bythe selling stockholders.See "Use of Proceeds."

Risk factors Investing in shares of our Class A common stock involves a highdegree of risk. See "Risk Factors" beginning on page 19 of thisprospectus for a discussion of factors you should carefully considerbefore investing in shares of our Class A common stock.

Voting rights Shares of Class A common stock are entitled to one vote per share.Shares of Class B common stock are entitled to ten votes per share.

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Table of ContentsHolders of our Class A common stock and Class B common stock willgenerally vote together as a single class, unless otherwise required bylaw. Investment funds affiliated with Sterling Investment Partners,which after our initial public offering will control approximately 77.1%of the voting power of our outstanding capital stock, will have theability to control the outcome of all matters submitted to ourstockholders for approval, including the election of our directors. See"Description of Capital Stock."All outstanding shares of Class A common stock and Class B commonstock will automatically convert into a single class of common stockwhen Sterling Investment Partners and its permitted transferees nolonger own any shares of Class B common stock.

Proposed NASDAQ Global Market symbol "FWM".Reserved Share Program At our request, the underwriters have reserved for sale, at the initial

public offering price, up to 682,500 of the shares offered by thisprospectus for sale to some of our directors, officers, employees andrelated persons.

The table below sets forth information concerning IPO- related bonuses that will be received by certain of our directors and officers and netoffering proceeds that will be received by the selling stockholders in this offering:

Name Position

IPO-Related

Bonuses(1)

NetOfferingProceeds

HowardGlickberg Director and Vice Chairman of Development $1,840,000(2) -Herbert Ruetsch Chief Executive Officer $ 678,792 $ 279,003NathalieAugustin Senior Vice President- General Counsel and Secretary $ 150,000 -KevinMcDonnell Senior Vice President- Chief Operating Officer $ 220,440 -BrianRiesenburger Senior Vice President- Chief Merchandising Officer $ 678,792 $ 279,003Charles Farfaglia Vice President- Human Resources $ 220,440 -Steven Jenkins Vice President- Specialty Products $ 678,792 $ 279,003Peter Romano Vice President- Produce $ 678,792 $ 279,003John Rossi Vice President- Deli & Bakery $ 678,792 $ 279,003Paul Weiner Vice President- Organic Groceries $ 678,792 $ 140,223Daniel Glickberg Former Director and Vice President $ 145,000 $1,395,004Randi Glickberg Vice President $ 647,266 -

(1)Assumes an initial public offering price of $11.00 per share, which is the midpoint of the price range set forth on the cover page of thisprospectus. Certain of these bonuses are based on the net proceeds we receive in this offering or the valuation of us based on this offeringand therefore will increase if the initial offering price is above $11.00 per share or will decrease if the initial public offering price is below$11.00 per share.

(2)Does not include IPO- related bonuses to be paid to Mr. Glickberg's sister and adult son.

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Table of Contents Unless otherwise indicated, all information in this prospectus relating to the number of shares of capital stock outstanding immediately after thisoffering:

gives effect to a 118.58- for- one stock split and the reclassification of our outstanding common stock into shares of Class Acommon stock, including the effect of the stock split and reclassification on our outstanding warrants;

gives effect to the issuance of 15,504,296 shares of our Class B common stock in exchange for our outstanding preferred stock(including the accrued dividends thereon that are not paid in cash with a portion of the proceeds of this offering), of which 33,576shares will automatically convert into 33,576 shares of Class A common stock at the closing of this offering;

assumes the effectiveness of our amended and restated certificate of incorporation and amended and restated bylaws;

excludes an aggregate of 2,296,838 shares of our Class A common stock subject to restricted stock unit ("RSUs") awards to begranted under our 2013 Long- Term Incentive Plan in connection with this offering, 1,135,772 shares of Class A common stockissuable upon the exercise of options to be granted under our 2013 Long- Term Incentive Plan in connection with this offering,2,039,526 shares of Class A common stock reserved for future grants under our 2013 Long- Term Incentive Plan and 1,930,822shares of our Class A common stock reserved for issuance upon the exercise of outstanding warrants; and

assumes (i) no exercise by the underwriters of their option to purchase up to 2,047,500 additional shares of Class A commonstock from certain of our stockholders; and (ii) an initial public offering price of $11.00 per share, the midpoint of the initialpublic offering price range indicated on the cover page of this prospectus.

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Summary Historical Consolidated Financial and Other Data The following tables summarize our financial data as of the dates and for the periods indicated. We have derived the summary consolidatedfinancial data for the fiscal years ended March 29, 2009, March 28, 2010, April 3, 2011 and April 1, 2012 from our audited consolidated financialstatements for such years and for the thirty- nine weeks ended January 1, 2012 and December 30, 2012 from our unaudited consolidated financialstatements for such periods. Our audited consolidated financial statements as of April 3, 2011 and April 1, 2012 and for the fiscal years endedMarch 28, 2010, April 3, 2011 and April 1, 2012 have been included in this prospectus. Our unaudited consolidated financial statements as ofDecember 30, 2012 and for the thirty- nine weeks ended January 1, 2012 and December 30, 2012 have been included in this prospectus and, in theopinion of management, include all adjustments (inclusive only of normally recurring adjustments) necessary for a fair presentation. Results ofoperations for an interim period are not necessarily indicative of results for a full year. Each of our fiscal years ended March 29, 2009, March 28,2010 and April 1, 2012 consists of 52 weeks; our fiscal year ended April 3, 2011 consists of 53 weeks. The differing length of certain fiscal yearsmay affect the comparability of certain data and the temporary closure of our Red Hook, Brooklyn, New York store due to damage sustained duringHurricane Sandy may affect the comparability of certain data for the thirty- nine weeks ended January 1, 2012 and December 30, 2012. Since March 2009, we have opened eight food stores (two urban and six suburban) in the Greater New York City metropolitan area, three ofwhich include Fairway Wines & Spirits locations, bringing our total stores open to 12. During fiscal 2013 we opened our Woodland Park, New Jerseystore in June 2012, our Westbury, New York store in August 2012 and our Kips Bay, Manhattan, New York store in late December 2012. We had totemporarily close our Red Hook, Brooklyn, New York store from October 29, 2012 through February 28, 2013 due to damage from Hurricane Sandy.Our income (loss) from operations in each period shown has been affected by the number of stores open and the number of stores in the process ofbeing opened in each period and, for the thirty- nine weeks ended December 30, 2012, the temporary closure of our Red Hook store. We believe our food stores are among the most productive in the industry in net sales per store and net sales per square foot as a result of ourdistinctive merchandising strategies, value proposition and efficient operating structure. As the Selected Operating Data table reflects, however, ouraverage net sales per store and average net sales per gross square foot have declined as we have increased the number of suburban stores that weoperate. Our suburban stores are larger in size (average of approximately 65,000 gross square feet (approximately 39,000 selling square feet)) thanour urban stores that have greater real estate constraints (average of approximately 51,000 gross square feet (approximately 23,000 selling squarefeet)) and generate comparatively lower sales and contribution margin. While we have increased our net sales from $401.2 million in fiscal 2010 to $554.9 million in fiscal 2012, or 38.3%, and our Adjusted EBITDAfrom $23.9 million in fiscal 2010 to $35.8 million in fiscal 2012, or 49.8%, our comparable store sales have been impacted by sales transfer from ourexisting stores to our newly opened stores that are in closer proximity to some of our customers and by our price optimization initiative. As we opennew stores in closer proximity to our customers who currently travel longer distances to shop at our stores, we expect some of these customers to takeadvantage of the convenience of our new locations. As a result, we have experienced in the past, and expect to experience in the future, some salesvolume transfer from our existing stores to our new stores as some of our existing customers switch to new, closer locations. However, we believethat by making shopping at our stores for those customers who travel longer distances more convenient, our overall sales to these customers willincrease as they increase the frequency and amount of purchases from our stores. We launched our price optimization initiative across our storenetwork late in fiscal 2011 to refine the pricing and balance of our promotional activities across our mix of highermargin perishable items and

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Table of Contentseveryday value- oriented conventional grocery items. Our price optimization initiative has resulted in an increase in our gross margins. The summary historical consolidated data presented below should be read in conjunction with the sections entitled "Risk Factors," "SelectedHistorical Consolidated Financial and Other Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" andthe consolidated financial statements and the related notes and other financial data included elsewhere in this prospectus.Statement of Income Data

Fiscal Year Ended Thirty- Nine Weeks EndedMarch 29,

2009(1)March 28,

2010April 3,

2011April 1,

2012January 1,

2012December 30,

2012(dollars in thousands, except for per share data)

Net sales(2) $ 343,106 $ 401,167 $ 485,712 $ 554,858 $ 404,527 $ 482,539Cost of sales andoccupancy costs(3) 230,912 271,599 326,207 368,728 269,641 326,808

Gross profit(4) 112,194 129,568 159,505 186,130 134,886 155,731Direct storeexpenses 70,371 85,840 109,867 132,446 97,659 111,362General andadministrativeexpenses(5) 28,998 34,676 40,038 44,331 30,598 39,746Store openingcosts(6) 3,066 3,949 10,006 12,688 11,181 19,349

Income (loss) fromoperations 9,759 5,103 (406) (3,335) (4,552) (14,726)Businessinterruptioninsurancerecoveries(7) - - - - - 2,500Interest expense,net (10,279) (13,787) (19,111) (16,918) (12,370) (17,439)Loss on earlyextinguishment ofdebt(8) - (2,837) (13,931) - - -

Loss beforeincome taxes (520) (11,521) (33,448) (20,253) (16,922) (29,665)Income tax benefit(provision)(9) 851 4,426 14,860 8,304 6,940 (26,514)

Net income (loss) $ 331 $ (7,095) $ (18,588) $ (11,949) $ (9,982) $ (56,179)

Net lossattributable tocommonstockholders(10) $ (10,836) $ (23,750) $ (39,021) $ (36,677) $ (28,518) $ (78,289)

Net (loss) per shareattributable tocommonstockholders (basicand diluted)(10) $ (0.89) $ (1.95) $ (3.22) $ (3.01) $ (2.33) $ (6.35)Net income (loss)per share (proforma) basic anddiluted(10) $ 0.02 $ (0.34) $ (0.84) $ (0.51) $ (0.43) $ (2.19)Weighted averagenumber ofcommon sharesoutstanding (in000s)(10)Basic and diluted 12,187 12,190 12,122 12,189 12,245 12,324Pro forma basicand diluted 18,027 20,945 22,151 23,588 23,999 25,703Other Financial Data

Fiscal Year EndedThirty- Nine Weeks

EndedMarch 29,

2009March 28,

2010April 3,

2011April 1,

2012January 1,

2012December 30,

2012(dollars in thousands)

Adjusted EBITDA(11) $ 21,785 $ 23,874 $29,309 $35,775 $ 24,905 $ 33,842

Depreciation and amortization $ 7,175 $ 10,233 $14,588 $19,202 $ 13,937 $ 15,900Capital expenditures $ 21,650 $ 21,658 $27,797 $44,528 $ 35,591 $ 45,199Gross margin(12) 32.7% 32.3% 32.8% 33.5% 33.3% 32.3%Adjusted EBITDA margin(13) 6.3% 6.0% 6.0% 6.4% 6.2% 7.0%Pro forma Adjusted EBITDA margin(13)(14) 6.3% 6.0% 6.0% 6.4% 6.2% 6.8%

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2009March 28,

2010April 3,

2011April 1,

2012January 1,

2012December 30,

2012Locations at end of period(15) 5 5 7 9 9 12Total gross square feet at end of period 292,774 292,774 454,146 552,900 552,900 741,375Change in square footage for period(16) 20.7% - 55.1% 21.7% 21.7% 34.1%Average store sizeGross square feet 58,555 58,555 64,878 61,433 61,433 61,781Selling square feet(17) 31,157 31,157 36,348 34,976 34,976 35,417Average net sales per square footGross square foot(18) $1,409 $1,370 $1,307 $1,029 $779 $836Selling square foot(18) $2,774 $2,575 $2,457 $1,859 $1,407 $1,461Average net sales per store per week ($000)(19) $1,642 $1,543 $1,472 $1,246 $1,257 $1,242Comparable store sales growth (decrease) per period(20) 10.1% 0.5% (4.3)% (7.9)% (7.8)% (3.5)%

New stores opened in period (location/date) Paramus,

NJ(3/2009)

-

PelhamManor, NY(4/2010);Stamford,

CT(11/2010)

Upper EastSide, NY(7/2011);

Douglaston,NY

(11/2011)


Douglaston,NY

(11/2011)

WoodlandPark, NJ(6/2012)

Westbury, NY(8/2012)

Kips Bay, NY(12/2012)

Balance Sheet DataAs of December 30, 2012

ActualPro

Forma(21)

Pro FormaAs

Adjusted(22)(dollars in thousands)

Cash and cash equivalents(23) $ 29,172 $ 23,392 $ 75,339Total assets 339,178 334,227 385,297Total debt(24) 254,627 259,390 259,390Redeemable preferred stock 226,533 226,533 -Total stockholders' (deficit) equity (219,570) (226,539) 51,063

(1)Amounts have been reclassified to match presentation of subsequent years.

(2)Our Red Hook store was temporarily closed beginning October 29, 2012 due to damage sustained in Hurricane Sandy. During the period inthe prior fiscal year corresponding to the period in the current fiscal year that this store was closed, net sales at the Red Hook store wereapproximately $12.7 million.

(3)Excludes depreciation and amortization.

(4)Our Red Hook store was temporarily closed beginning October 29, 2012 due to damage sustained in Hurricane Sandy. Managementestimates that during the period in the prior fiscal year corresponding to the period in the current fiscal year that this store was closed, theRed Hook store generated approximately $4 million of gross profit.

(5)In the thirty- nine weeks ended December 30, 2012, we recognized approximately $3.0 million for reimbursable ongoing business expensesand remediation costs incurred in connection with Red Hook and recorded this amount as a reduction in general and administrativeexpense, a direct offset to the associated expenses.

(6)Costs (principally payroll, rent expense and real estate taxes) incurred in opening new stores are expensed as incurred. During fiscal 2009,we incurred $3.1 million of store opening costs related to the store we opened during fiscal 2009. During fiscal 2010 and fiscal 2011, weincurred $3.9 million and $6.8 million, respectively, of store opening costs related to the two stores we opened during fiscal 2011. Duringfiscal 2011 and fiscal 2012, we incurred $3.2 million and $11.9 million, respectively, of store opening costs related to the two stores weopened during fiscal 2012. During fiscal 2012, we incurred $0.7 million of store opening costs related to the store we opened in the firstquarter of fiscal 2013. During the thirty- nine weeks ended January 1, 2012, we incurred $11.2 million of store

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opening costs related to the two stores we opened during fiscal 2012 and during the thirty- nine weeks ended December 30, 2012, weincurred $18.9 million and $400,000 of store opening costs related to the three stores we opened in that period and the reopening of our RedHook, Brooklyn, New York store, respectively.

(7)Represents non- refundable reimbursement from our insurance carriers for business interruption losses sustained due to the temporaryclosure of our Red Hook store as a result of damage sustained during Hurricane Sandy.

(8)In fiscal 2010, we incurred a loss on early extinguishment of debt in connection with the refinancing of our then existing first and secondlien credit agreements. In fiscal 2011, we incurred a loss on early extinguishment of debt in connection with the refinancing of our thenexisting credit agreement with our 2011 senior credit facility that we subsequently refinanced in August 2012.

(9)During the thirteen weeks ended December 30, 2012, we recorded a partial valuation allowance against our December 30, 2012 deferredtax asset. See Note 13 to our financial statements appearing elsewhere in this prospectus.

(10)Common stockholders do not share in net income unless earnings exceed the unpaid dividends on our preferred stock. Accordingly, prior tothis offering, there were no earnings available for common stockholders because in fiscal 2010, fiscal 2011, fiscal 2012 and the thirty- nineweeks ended January 1, 2012 and December 30, 2012 we reported a net loss and in fiscal 2009 unpaid dividends exceeded our net income.During any period in which we had a net loss, the loss was attributed only to the common stockholders. Net income (loss) per share (proforma basic and diluted) and the pro forma weighted average number of shares gives effect to the exchange of our then outstandingpreferred stock (including accrued but unpaid dividends thereon that exceed the portion of the proceeds of this offering being utilized to payaccrued dividends) for shares of our Class B common stock based on a price of $11.00 per share, as if such exchange had occurred on thelast day of each period. We will not have any preferred stock outstanding after the completion of this offering.

A reconciliation of the denominator used in the calculation of pro forma basic and diluted net income (loss) per common share is asfollows:


EndedMarch 29,

2009March 28,

2010April 3,

2011April 1,

2012January 1,

2012December 30,

2012(in thousands)

Weighted average number of common shares outstanding, basic and diluted 12,187 12,190 12,122 12,189 12,245 12,324Issuance of shares in the Exchange 5,840 8,755 10,029 11,399 11,154 13,379

Weighted average number of common shares outstanding, pro forma basic and diluted 18,027 20,945 22,151 23,588 23,399 25,703

Our Class A common stock and Class B common stock will share equally on a per share basis in our net income or net loss.

(11)We present Adjusted EBITDA, a non- GAAP measure, in this prospectus to provide investors with a supplemental measure of our operating performance.We believe that Adjusted EBITDA is a useful performance measure and is used by us to facilitate a comparison of our operating performance on a consistentbasis from period- to- period and to provide for a more complete understanding of factors and trends affecting our business than GAAP measures can providealone. Our board of directors and management also use Adjusted EBITDA as one of the primary methods for planning and forecasting overall expectedperformance and for evaluating on a quarterly and annual basis actual results against such expectations, and as a performance evaluation metric indetermining achievement of certain compensation programs and plans for employees, including our senior executives. In addition, the financial covenants in

our senior credit facility are based on Adjusted EBITDA, subject to dollar limitations on certain adjustments.

We define Adjusted EBITDA as earnings before interest expense, income taxes, depreciation and amortization expense, amortization of deferred financingcosts, store opening costs, loss on early extinguishment of debt, non- recurring expenses and management fees. Omitting interest, taxes and the other itemsprovides a financial measure that facilitates comparisons of our results of operations with those of companies having different capital structures. Since thelevels of indebtedness and tax structures that other companies have are different from ours, we omit these amounts to facilitate investors' ability to

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make these comparisons. Similarly, we omit depreciation and amortization because other companies may employ a greater or lesser amount of ownedproperty, and because in our experience, whether a store is new or one that is fully or mostly depreciated does not necessarily correlate to the contributionthat such store makes to operating performance. We will not be paying management fees following the consummation of this offering. We also believe thatinvestors, analysts and other interested parties view our ability to generate Adjusted EBITDA as an important measure of our operating performance and thatof other companies in our industry. Adjusted EBITDA should not be considered as an alternative to net income for the periods indicated as a measure of ourperformance. Other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.The use of Adjusted EBITDA has limitations as an analytical tool and you should not consider this performance measure in isolation from, or as analternative to, GAAP measures such as net income (loss). Adjusted EBITDA is not a measure of liquidity under GAAP or otherwise, and is not an alternativeto cash flow from continuing operating activities. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results willbe unaffected by the expenses that are excluded from that term or by unusual or non- recurring items. The limitations of Adjusted EBITDA include: (i) itdoes not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments; (ii) it does not reflect changes in, or cashrequirements for, our working capital needs; (iii) it does not reflect income tax payments we may be required to make; (iv) it does not reflect the cashrequirements necessary to service interest or principal payments associated with indebtedness; and (v) although depreciation and amortization are non- cashcharges, the assets being depreciated and amortized often will have to be replaced in the future, and Adjusted EBITDA does not reflect any cashrequirements for such replacements.To properly and prudently evaluate our business, we encourage you to review our consolidated financial statements included elsewhere in this prospectus andthe reconciliation to Adjusted EBITDA from net income (loss), the most directly comparable financial measure presented in accordance with GAAP, setforth in the following table. All of the items included in the reconciliation from net income to Adjusted EBITDA are either (i) non- cash items or (ii) itemsthat management does not consider in assessing our ongoing operating performance. In the case of the non- cash items, management believes that investorsmay find it useful to assess our comparative operating performance because the measures without such items are less susceptible to variances in actualperformance resulting from depreciation, amortization and other non- cash charges and more reflective of other factors that affect operating performance. Inthe case of the other items that management does not consider in assessing our ongoing operating performance, management believes that investors mayfind it useful to assess our operating performance if the measures are presented without these items because their financial impact may not reflect on- goingoperating performance.


EndedMarch 29,

2009March 28,

2010April 3,

2011April 1,

2012January 1,

2012December 30,


Net income (loss)(a) $ 331 $ (7,095) $ (18,588) $ (11,949) $ (9,982) $ (56,179)Interest expense, net(b) 10,279 13,787 19,111 16,918 12,370 17,439Depreciation and amortization expense 7,175 10,233 14,588 19,202 13,937 15,900Income tax (benefit) provision(c) (851) (4,426) (14,860) (8,304) (6,940) 26,514Store opening costs(d) 3,066 3,949 10,006 12,688 11,181 19,349Loss on early extinguishment of debt(e) - 2,837 13,931 - - -Non- recurring items(f) 1,285 3,378 3,541 4,573 2,819 8,187Management fees(g) 500 1,211 1,580 2,647 1,520 2,632

Adjusted EBITDA $ 21,785 $ 23,874 $ 29,309 $ 35,775 $ 24,905 $ 33,842

(a)See notes 2, 4, 7 and 9 above.

(b)Includes amortization of deferred financing costs.

(c)See note 9 above.

(d)See note 6 above.

(e)See note 8 above.

(f)Consists principally of recruiting costs relating to the strengthening of our management team, severance costs associated with the termination of employmentof certain executives and, in fiscal 2011 and fiscal 2012, bringing

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our systems and procedures into compliance with the Sarbanes- Oxley Act. The thirty- nine weeks ended December 30, 2012 also includes costs associatedwith our August 2012 refinancing and pre- offering related costs.

(g)Represents management fees paid to an affiliate of Sterling Investment Partners pursuant to an agreement that will terminate upon the consummation of thisoffering in exchange for a payment of $9.2 million.

(12)We calculate gross margin by subtracting cost of sales and occupancy costs from net sales and dividing by our net sales for each of the applicable periods.Gross margin does not give effect to lost net sales and gross profit attributable to the temporary closure of the Red Hook, Brooklyn location followingHurricane Sandy. See notes (2) and (4) above.

(13)We calculated Adjusted EBITDA margin by dividing our Adjusted EBITDA by our net sales for each of the applicable periods. We present AdjustedEBITDA margin because it is used by management as a performance measure of Adjusted EBITDA generated from net sales. See note 11 above for furtherinformation regarding how we calculate Adjusted EBITDA, which is a non- GAAP measure. In calculating Adjusted EBITDA margin for the thirty- nineweeks ended December 30, 2012, Adjusted EBITDA includes the $2.5 million of business interruption insurance recoveries we received, approximating thelost EBITDA of the Red Hook, Brooklyn location during the period it was closed, but net sales does not include any net sales for the period the store wasclosed. See note 14 below. Sales at certain of our other stores may have benefitted from customers of our Red Hook store shopping at our other stores whilethe Red Hook store is temporarily closed. See note 2 above.

(14)We calculated pro forma Adjusted EBITDA margin as described in note 13 above, except that for the thirty- nine weeks ended December 30, 2012, we addedto net sales $12.7 million, representing our net sales at Red Hook during the period in fiscal 2012 corresponding to the same period in fiscal 2013 that thestore was temporarily closed.

(15)The food stores and adjacent Fairway Wines & Spirits locations in Pelham Manor and Stamford, respectively, are considered as one store location in thenumber of stores and square footage.

(16)For the thirty- nine week periods, represents the percentage change since the end of the comparable period in the prior fiscal year.

(17)Excludes the square footage of the kitchen, bakery, meat department, produce coolers and storage in our stores.

(18)The amount for fiscal 2011 has been decreased (by subtracting one week of average weekly net sales) to reflect a 52- week year so as to be comparable tofiscal 2009, 2010 and 2012. Stores not open for the entire fiscal period have been excluded. Does not include net sales from our Fairway Wines & Spiritslocations. For the thirty- nine week periods ended January 1, 2012 and December 30, 2012, excludes our Red Hook store due to its temporary closure as aresult of damages suffered during Hurricane Sandy.

(19)We calculated average net sales per store per week by dividing net sales by the number of stores open during the entire fiscal period and then dividing by thenumber of weeks in the fiscal period. Does not include net sales from our Fairway Wines & Spirits locations. For the thirty- nine week periods endedJanuary 1, 2012 and December 30, 2012, excludes our Red Hook store due to its temporary closure as a result of damages suffered during Hurricane Sandy.

(20)Represents the percentage change in our same- store sales as compared to the prior comparable period. Our practice is to include sales from a store in same-store sales beginning on the first day of the fourteenth full month following the store's opening. This practice may differ from the methods that other foodretailers use to calculate comparable or "same- store" sales. As a result, data in this prospectus regarding our same- store sales may not be comparable tosimilar data made available by other food retailers. Comparable same store sales for fiscal 2011 has been adjusted (by subtracting one week of averageweekly net sales) to reflect a 52- week year so as to be comparable to fiscal 2009, 2010 and 2012. Does not include net sales from our Fairway Wines &Spirits locations. For the thirty- nine week periods ended January 1, 2012 and December 30, 2012, excludes our Red Hook store due to its temporary closureas a result of damages suffered during Hurricane Sandy.

(21)Gives effect to (i) our entry into a new senior credit facility on February 14, 2013, consisting of a $275 million term loan facility and a $40 million revolvingcredit facility, with the proceeds of the term loan facility being used to repay $264.5 million of outstanding borrowings (including accrued interest) under ourprior senior credit facility, pay fees and expenses and provide us with $3.5 million to repay our outstanding subordinated note, (ii) our repayment of ouroutstanding subordinated note (including accrued interest) and (iii) our repurchase of 129,963 shares of Class A common stock for $1.5 million, as if suchtransactions had occurred on December 30, 2012.

(22)Gives effect to: (i) the Exchange; (ii) the closing of our new senior credit facility, repayment of our outstanding subordinated note and repurchase of Class Acommon stock described in note 21 above; (iii) our receipt of estimated net proceeds from our issuance and sale of 13,363,564 shares of Class A commonstock in this offering at an assumed initial public offering price of $11.00 per share, which is the midpoint of the price range listed on the cover page of thisprospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us (adjusted for approximately $1.0 millionof offering expenses paid by us prior to December 30, 2012); and (iv) the use of

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the net proceeds that we receive from this offering to pay accrued dividends on our preferred stock of $65 million, pay $9.2 million to an affiliate of SterlingInvestment Partners in connection with the termination of our management agreement with such affiliate, and pay contractual initial public offering bonusesto certain members of our management totaling approximately $7.3 million, in each case as if such transactions had occurred on December 30, 2012.

(23)The following table shows the pro forma and pro forma as adjusted adjustments to cash and cash equivalents as a result of the refinancing of our 2012 seniorcredit facility in February 2013, the repayment of our outstanding subordinated promissory note in March 2013, the repurchase of shares of our Class Acommon stock in March 2013 and the net proceeds of the offering to us after deducting underwriting discounts and commissions and estimated offeringexpenses payable by us (adjusted for approximately $1.0 million of offering expenses paid by us prior to December 30, 2012), and the application of theproceeds from the offering as described under "Use of Proceeds":

As of December 30, 2012(dollars inthousands)

Actual cash and cash equivalents $ 29,172Plus: proceeds to us from our 2013 senior credit facility after repaying outstanding loans under our 2012 senior credit facility and fees andexpenses 3,453Less: repayment of principal and accrued interest on subordinated promissory note (7,733)Less: repurchase of shares of Class A common stock (1,500)

Pro forma cash and cash equivalents 23,392Plus: net cash proceeds to us from this offering 51,947

Pro forma as adjusted cash and cash equivalents $ 75,339

(24)Net of unamortized original issue discount on our senior debt of $12.1 million actual and $15.6 million pro forma and pro forma as adjusted and accrueddeferred interest on our subordinated note of $240,000 actual. The accrued deferred interest, the payment of which was deferred until maturity and classifiedas other long- term liabilities in our financial statements, was paid in full in connection with the repayment of our outstanding subordinated note. See Notes 8and 16 to our financial statements included elsewhere in this prospectus for more information regarding our original issue discount.

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RISK FACTORSInvesting in our Class A common stock involves a high degree of risk. You should carefully consider the risks described below, together with the

financial and other information contained in this prospectus, before you decide to purchase shares of our Class A common stock. If any of thefollowing risks actually occur, our business, financial condition, results of operations, cash flow and prospects could be materially and adverselyaffected. As a result, the trading price of our Class A common stock could decline and you could lose all or part of your investment in our Class Acommon stock. Before deciding whether to invest in our Class A common stock, you should also refer to the other information contained in thisprospectus, including our consolidated financial statements and related notes.Risks Relating to Our Business Our continued growth depends on new store openings and on increasing same store sales, and our failure to achieve these goals couldnegatively impact our results of operations and financial condition. Our growth strategy depends, in large part, on opening new stores in existing and new areas and operating those stores successfully. Successfulimplementation of this strategy is dependent on finding suitable locations and negotiating acceptable lease terms for store sites, and we facecompetition from other retailers for such sites. There can be no assurance that we will continue to grow through new store openings. We may not beable to open new stores timely or within budget or operate them successfully, and there can be no assurance that store opening costs for, net sales of,contribution margin of and average payback period on initial investment for new stores will conform to our operating model for new urban andsuburban stores discussed elsewhere in this prospectus. New stores, particularly those we open outside the Greater New York City metropolitan area,may not achieve sustained sales and operating levels consistent with our mature store base on a timely basis or at all. Lower contribution marginsfrom new stores, along with the impact of related store opening and store management relocation costs, may have an adverse effect on our financialcondition and operating results. In addition, if we acquire stores in the future, we may not be able to successfully integrate those stores into ourexisting store base and those stores may not be as profitable as our existing stores. Also, we may not be able to successfully hire, train and retain new store employees or integrate those employees into the programs, policies andculture of Fairway. We, or our third party vendors, may not be able to adapt our distribution, management information and other operating systems toadequately supply products to new stores at competitive prices so that we can operate the stores in a successful and profitable manner. We may nothave the level of cash flow or financing necessary to support our growth strategy. Additionally, our opening of new stores will place increased demands on our operational, managerial and administrative resources. Theseincreased demands could cause us to operate our existing business less effectively, which in turn could cause a deterioration in the financialperformance of our existing stores. If we experience a decline in performance, we may slow or discontinue store openings, or we may decide to closestores that we are unable to operate in a profitable manner. Additionally, some of our new stores may be located in areas where we have little experience or a lack of brand recognition. Those markets mayhave different competitive conditions, market conditions, consumer tastes and discretionary spending patterns than our existing markets, which maycause these new stores to be less successful than stores in our existing markets. Our operating results may be materially impacted by fluctuations in our same store sales, which have fluctuated in the past and will likelyfluctuate in the future. A variety of factors affect our same- store sales, including:

our openings of new stores that cannibalize store sales in existing stores;

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our price optimization initiative;

our competition, including competitor store openings or closings near our stores;

the number and dollar amount of customer transactions in our stores;

overall economic trends and conditions in our markets;

consumer preferences, buying trends and spending levels;

the pricing of our products, including the effects of inflation or deflation and promotions;

our ability to provide product offerings that generate new and repeat visits to our stores;

the level of customer service that we provide in our stores;

our in- store merchandising- related activities;

our ability to source products efficiently; and

the number of stores we open in any period.

Adverse changes in these factors may cause our same- store sales results to be materially lower than in recent periods, which would harm ourbusiness and could result in a decline in the price of our Class A common stock. Further, we have experienced in the past, and expect to experience inthe future, some sales volume transfer from our existing stores to our new stores as some of our existing customers switch to new, closer locations. Our operating results and stock price will be adversely affected if we fail to implement our growth strategy or if we invest resources in a growthstrategy that ultimately proves unsuccessful. Our newly opened stores may negatively impact our financial results in the short- term and may not achieve sales and operating levelsconsistent with our mature store base on a timely basis or at all. We have actively pursued new store growth and plan to continue doing so in the future. We cannot assure you that our new store openings willbe successful or result in greater sales and profitability. New store openings may negatively impact our financial results in the short- term due to theeffect of store opening costs and lower sales and contribution margin during the initial period following opening. New stores build their sales volumeand their customer base over time and, as a result, generally have lower margins and higher operating expenses, as a percentage of net sales, than ourmore mature stores. A new store can take more than a year to achieve a level of operating performance comparable to our similarly existing stores.Stores that we have opened in higher density urban markets typically have generated higher sales volumes and margins than stores in suburban areas.Further, we have experienced in the past, and expect to experience in the future, some sales volume transfer from our existing stores to our new storesas some of our existing customers switch to new, closer locations. All of our existing stores are located in the Greater New York City metropolitan area and, as a result, new store openings can cannibalizesales in our stores in close proximity to the new store and our financial results can be effected by economic and competitive conditions in thisarea. All of our existing stores are located in a concentrated market area in the Greater New York City metropolitan area, and we intend to grow ourstore base in this area in the near term at a rate of three to four stores annually. As we open new stores in closer proximity to our customers whocurrently travel longer distances to shop at our stores, we expect some of these customers to take advantage of the convenience of our new locations.As a result, we have experienced in the past, and expect to experience in the future, some sales volume transfer from our existing stores to our newstores as some of our existing customers switch to these new, closer locations. Consequently, our new stores will adversely impact sales at ourexisting stores in close proximity.

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Table of Contents In addition, since substantially all of our revenues are derived from stores in the Greater New York City metropolitan area, any material changein economic and competitive conditions in this area or in legislation or regulation in the States of New York, New Jersey or Connecticut and in thelocal jurisdictions in which we operate within those states could adversely affect our business or financial performance. Part of our growth strategy is to expand our stores into new markets outside the Greater New York City metropolitan area. We do not haveexperience opening and operating stores in other areas and there can be no assurance we can successfully open Fairway stores in other markets or thatFairway stores will be successful in other markets. We operate in a highly competitive industry. The food retail industry as a whole, particularly in the Greater New York City metropolitan area, is highly competitive. Because we offer a fullassortment of fresh, natural and organic products, prepared foods and hard- to- find specialty and gourmet offerings, along with a full assortment ofconventional groceries, we compete with various types of retailers, including alternative food retailers, such as natural foods stores, smaller specialtystores and farmers' markets, conventional supermarkets, supercenters and membership warehouse clubs. Our principal competitors include alternativefood retailers such as Whole Foods and Trader Joe's, traditional supermarkets such as Stop & Shop, ShopRite, Food Emporium and A&P, retailerswith "big box" formats such as Target and Wal- Mart and warehouse clubs such as Costco and BJ's Wholesale Club. These businesses compete withus for customers, products and locations. In addition, some are expanding aggressively in marketing a range of natural and organic foods, preparedfoods and quality specialty grocery items. Some of these potential competitors have more experience operating multiple store locations or havegreater financial or marketing resources than we do and are able to devote greater resources to sourcing, promoting and selling their products. Due tothe competitive environment in which we operate, our operating results may be negatively impacted through a loss of sales, reduction in margin fromcompetitive price changes and/or greater operating costs such as marketing. We also face limited competition from restaurants and fast- food chains.In addition, other established food retailers could enter our markets, increasing competition for market share. We rely on a combination of product offerings, customer service, store format, location and pricing to compete. We compete with other food retailers on a combination of factors, primarily product selection and quality, customer service, store format,location and price. Our success depends on our ability to offer products that appeal to our customers' preferences. Failure to offer such products, or toaccurately forecast changing customer preferences, could lead to a decrease in the number of customer transactions at our stores and in the amountcustomers spend at our stores. We also attempt to create a convenient and appealing shopping experience for our customers in terms of customerservice, store format and location. Pricing in particular is a significant driver of consumer choice in our industry and we expect competitors to continue to apply pricing and othercompetitive pressures. To the extent that our competitors lower prices, our ability to maintain gross profit margins and sales levels may be negativelyimpacted. Some of our competitors have greater resources than we do and do not have unionized work forces, which may result in lower labor andbenefit costs. These competitors could use these advantages to take measures, including reducing prices, which could adversely affect our competitiveposition, financial condition and results of operations.

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Table of Contents If we do not succeed in offering attractively priced products that consumers want to buy or are unable to provide a convenient and appealingshopping experience, our sales, operating margins and market share may decrease, resulting in reduced profitability. Economic conditions that impact consumer spending could materially affect our business. Ongoing economic uncertainty continues to negatively affect consumer confidence and discretionary spending. Our operating results may bematerially affected by changes in economic conditions nationwide or in the regions in which we operate that impact consumer confidence andspending, including discretionary spending. This risk may be exacerbated if customers choose lower- cost alternatives to our product offerings inresponse to economic conditions. In particular, a decrease in discretionary spending could adversely impact sales of certain of our higher marginproduct offerings. Future economic conditions affecting disposable consumer income, such as employment levels, business conditions, changes inhousing market conditions, the availability of consumer credit, interest rates, tax rates and fuel and energy costs, could reduce overall consumerspending or cause consumers to shift their spending to lower- priced competitors. In addition, inflation or deflation can impact our business. Fooddeflation could reduce sales growth and earnings, while food inflation, combined with reduced consumer spending, could reduce gross profit margins.As a result, our results of operations could be materially adversely affected. The geographic concentration of our stores creates an exposure to the Greater New York City metropolitan area economy and any downturn inthis region could materially adversely affect our financial condition and results of operations. We reported net losses in fiscal 2010, fiscal 2011 and fiscal 2012 and the thirty- nine weeks ended January 1, 2012 and December 30, 2012,and we expect to incur net losses through at least fiscal 2014. We reported a net loss of $7.1 million in fiscal 2010, $18.6 million in fiscal 2011, $11.9 million in fiscal 2012, $10.0 million for the thirty- nineweeks ended January 1, 2012 and $56.2 million for the thirty- nine weeks ended December 30, 2012, and we expect to incur net losses through atleast fiscal 2014. Our net losses are primarily attributable to the costs associated with new store openings, increased production and corporateoverhead and associated costs of capital, in fiscal 2010 and fiscal 2011 losses on the early extinguishment of debt and in fiscal 2012 and the thirty-nine weeks ended December 30, 2012 refinancing and pre- offering related costs and a partial valuation allowance against our December 30, 2012deferred tax asset. For example, we typically incur higher than normal employee costs at the time of a new store opening associated with set- up andother opening costs. Operating margins are also affected by promotional discounts and other marketing costs and strategies associated with new storeopenings, as well as higher shrink, primarily due to overstocking, and costs related to hiring and training new employees. Additionally, a new storebuilds its sales volume and its customer base over time and, as a result, generally has lower margins and higher operating expenses, as a percentage ofsales, than our more mature stores. A new store can take more than a year to achieve a level of operating performance comparable to our similarlyexisting stores. Our growth strategy depends, in large part, on opening new stores in existing and new areas and, as a result, our results of operationswill continue to be materially affected by the timing and number of new store openings and the amount of new store opening costs. Other factors thathave affected and may in the future affect our results of operations include general economic conditions and changes in consumer behavior that canaffect our sales, inflation and deflation trends, the extent of our infrastructure investments in the applicable period, the effectiveness of our priceoptimization and productivity initiatives, competitive developments and the extent of our debt service obligations. While we believe that we willgenerate future taxable income sufficient to utilize all prior years' net operating losses, we cannot assure you that we will not continue to incur netlosses or if and when we will report net income. See Note 13 to

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Table of Contentsour financial statements included elsewhere in this prospectus for information about our net operating losses. We will incur compensation related charges against our earnings in the quarter in which this offering is consummated and in subsequentperiods. In connection with this offering, we anticipate granting to our directors and employees an aggregate of 2,296,838 restricted stock units in respectof Class A common stock, or RSUs, and options to purchase 1,135,722 shares of Class A common stock. These RSUs will vest on the thirdanniversary of the date of the closing of this offering in the case of our non- employee directors, and in the case of members of our seniormanagement team, contingent upon the executive's continued employment, half on each of the third and fourth anniversary of the date of closing ofthis offering. The options will vest in four equal annual installments commencing on the first anniversary of the closing of this offering. We estimatethat we will record compensation expense associated with these grants, resulting in a reduction in net earnings, of approximately $8.7 million forfiscal 2014, approximately $9.0 million for each of fiscal 2015 and fiscal 2016, $2.7 million for fiscal 2017 and $0.1 million for fiscal 2018, in eachcase net of tax, assuming an initial public offering price of $11.00, which is the midpoint of the price range set forth on the cover page of thisprospectus. We will from time to time in the future make additional restricted stock unit awards, option grants and restricted stock awards under our2013 Long- Term Incentive Plan, which will result in compensation expense in future periods. In addition, contractual arrangements with certain ofour management require us to pay them bonuses upon consummation of the offering being made hereby which aggregate approximately $7.3 million,assuming an initial public offering price of $11.00, which is the midpoint of the price range set forth on the cover page of this prospectus. As a result,we will incur charges of approximately $7.3 million against earnings in the quarter in which we consummate this offering. In addition, we will incur acharge of approximately $1.1 million against earnings in the fourth fiscal quarter ending March 31, 2013 relating to severance due to a former seniorexecutive and a former officer and director. See "Management's Discussion and Analysis of Financial Condition and Results of Operations- ChargesRelating to Executive Compensation," "Management- Director Compensation," "Executive Compensation- Equity Compensation Plans- 2013 Long-Term Incentive Plan- Initial Awards" "and "- IPO Bonuses" for more information. We may be unable to improve our operating margins, which could adversely affect our financial condition and ability to grow. We intend to improve our operating margins in an environment of increased competition through various initiatives, including increased sales ofperishables and prepared foods and continued cost discipline focused on improving labor productivity and reducing shrink, and the development of acentralized production facility to serve our current and future stores in the Greater New York City metropolitan area. Some of our competitors do nothave unionized work forces, which may result in lower labor and benefit costs. If competitive pressures cause us to lower our prices, our operatingmargins may decrease. If the percentage of our net sales represented by perishables decreases, our operating margins may be adversely affected. Anyfailure to achieve gains in labor productivity, particularly the reduction of overtime, or to reduce inventory shrink may adversely impact our operatingmargins. There can be no assurance that we can successfully develop a centralized production facility or that it will result in labor efficiencies orimprove product quality and consistency. If we encounter operational problems at our centralized production facility, the delivery of products to, andsales at, our stores, could be adversely affected. If our operating margins stagnate or decline, our financial condition and ability to generate cash tofund our growth could be adversely affected.

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Table of Contents Perishable products make up a significant portion of our sales, and ordering errors or product supply disruptions may have an adverseeffect on our profitability and operating results. We have a significant focus on perishable products. Sales of perishable products accounted for approximately 65% of our net sales in fiscal2012. We rely on various suppliers and vendors to provide and deliver our product inventory on a continuous basis. We could suffer significantperishable product inventory losses in the event of the loss of a major supplier or vendor, disruption of our supply chain, extended power outages,natural disasters or other catastrophic occurrences. While we have implemented certain systems to ensure our ordering is in line with demand, wecannot assure you that our ordering systems will always work efficiently, in particular in connection with the opening of new stores, which have no,or a limited, ordering history. If we were to over- order, we could suffer inventory losses, which would negatively impact our operating results. Disruption of significant supplier relationships could negatively affect our business. White Rose, Inc. is our single largest thirdparty supplier, accounting for approximately 13% of our total purchases in fiscal 2012. Under ouragreement with White Rose, we are obligated to purchase all our requirements for specified products, principally warehouse conventional grocery,dairy, frozen food and ice cream products, for our existing stores. In addition, United Natural Foods, Inc. ("UNFI"), which is our primary supplier ofspecified natural and organic products, principally dry grocery, frozen food, vitamins/supplements and health, beauty and wellness, accounted forapproximately 9% of our total purchases in fiscal 2012. Due to this concentration of purchases from White Rose and UNFI, the cancellation of oursupply arrangement with either White Rose or UNFI or the disruption, delay or inability of White Rose or UNFI to deliver product to our stores maymaterially and adversely affect our operating results while we establish alternative distribution channels. We also depend on thirdparty suppliers forour private label products, and the cancellation of our supply arrangement with any of these suppliers or the disruption, delay or inability of thesesuppliers to provide our private label products, particularly private label organic products, could adversely affect our private label sales. If oursuppliers fail to comply with food safety or other laws and regulations, or face allegations of non- compliance, their operations may be disrupted. Wecannot assure you that we would be able to find replacement suppliers on commercially reasonable terms. Our success depends upon our ability to source and market new products that meet our high standards and customer preferences and ourability to offer our customers an aesthetically pleasing shopping environment. Our success depends on our ability to source and market new products that meet our standards for quality and appeal to our customers'preferences. Failure to source and market such products, or to accurately forecast changing customer preferences, could lead to a decrease in thenumber of customer transactions at our stores and in the amount customers spend at our stores. In addition, the sourcing of our products is dependent,in part, on our relationships with our vendors. We rely on a large number of small vendors in order to offer a broad array of products, and as weexpand it may become more difficult to manage and maintain these relationships. If we are unable to maintain these relationships we may not be ableto continue to source products at competitive prices that both meet our standards and appeal to our customers. We also attempt to create a pleasantand appealing shopping experience. If we are not successful in creating a pleasant and appealing shopping experience, we may lose customers to ourcompetitors. If we do not succeed in maintaining good relationships with our vendors, introducing and sourcing new products that consumers want tobuy or are unable to provide a pleasant and appealing shopping environment or maintain our level of customer service, our sales, operating marginsand market share may decrease, resulting in reduced profitability.

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Table of Contents We may experience negative effects to our brand and reputation from real or perceived quality or health issues with our food products,which could lead to product liability claims or have an adverse effect on our operating results. We believe that our reputation for providing our customers with fresh, high- quality food products is an important component of our customervalue proposition and that maintaining our brand is critical to our success. Brand value is based in large part on perceptions of subjective qualities,and even isolated incidents can erode trust and confidence, particularly if they result in adverse publicity, especially in social media outlets,governmental investigations or litigation, which can have an adverse impact on these perceptions and lead to adverse effects on our business.Concerns regarding the safety or quality of our food products or of our food supply chain could cause consumers to avoid purchasing certain productsfrom us, or to seek alternative sources of food, even if the basis for the concern is unfounded, has been addressed or is outside of our control. Foodproducts containing contaminants or allergens could be inadvertently manufactured, prepared or distributed by us and, if processing at the consumerlevel does not eliminate them, these contaminants could result in illness or death. Adverse publicity about these concerns, whether or not ultimatelybased on fact, and whether or not involving products sold at our stores, could discourage consumers from buying our products, which could have anadverse effect on our brand, reputation and operating results. In addition, our stores are subject to unscheduled inspections on a regular basis, which,if violations are found, could result in the assessment of fines, suspension of one or more needed licenses and, in the case of repeated "critical"violations, closure of the store until a re- inspection demonstrates that we have remediated the problem. In September 2012, several television news shows and websites posted pictures of rodents in our Broadway store. While we believe the incidentwas primarily due to construction in the area and have taken comprehensive remedial steps, there can be no assurance that this will not recur at thisstore or occur at any of our other stores. Similar future incidents could damage our reputation and cause consumers to avoid our stores, which couldhave an adverse effect on our business. Furthermore, the sale of food products entails an inherent risk of product liability claims, product recall and the resulting negative publicity. Anysuch claims, recalls or adverse publicity with respect to our private- label products may have an even greater negative effect on our sales andoperating results, in addition to generating adverse publicity for our brand. Moreover, product liability claims of this sort may not be covered byinsurance or any rights to indemnity or contribution we have against others. Any lost confidence in us on the part of our customers would be difficult and costly to re- establish. Any such adverse effect could significantlyreduce our brand value. Issues regarding the safety of any food items sold by us, regardless of the cause, could have a substantial and adverse effecton our sales and operating results. We were forced to temporarily close our Red Hook, Brooklyn, New York store as a result of damages sustained during Hurricane Sandy,which has impacted our results of operations, and there can be no assurance that our sales or gross profit at the store will return to prior levels. Our Red Hook store suffered substantial damage, including the loss of all inventory and a substantial portion of our equipment, during HurricaneSandy and, as a result, the store was closed from October 29, 2012 through February 28, 2013. We are insured for property, business interruption andother hurricane- related expenses, and have received $10.5 million to date. However, we cannot assure you that our insurance will cover all out- of-pocket and other costs incurred by us in connection with the storm. The closure of this store impacted our results of operations in our third fiscalquarter ended December 30, 2012 and we expect it to impact our results of operations in our fourth fiscal quarter due to lost revenue and the fact thatwe retained substantially all of the employees of that store, as well as the timing of insurance recoveries and the achievement of certain milestones inthe rebuilding process. We cannot assure you that all of the former customers of the store will return to

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Table of Contentsthe store, that our sales or gross profit at the store will return to prior levels or that our sales or gross profit at other stores will not decrease as a resultof former customers of the Red Hook store returning to the Red Hook store. We may be unable to protect or maintain our intellectual property, which could result in customer confusion, a negative perception of ourbrand and adversely affect our business. We believe that our intellectual property has substantial value and has contributed significantly to the success of our business. In particular, ourtrademarks and servicemarks, including our FAIRWAY®, FAIRWAY "Like No Other Market"®, LIKE NO OTHER MARKET® and FAIRWAYWINES & SPIRITS® trademarks, are valuable assets that reinforce our customers' favorable perception of our stores. From time to time, third parties have used names similar to ours, have applied to register trademarks similar to ours and, we believe, haveinfringed or misappropriated our intellectual property rights. We respond to these actions on a case- by- case basis, including, where appropriate, bysending cease and desist letters and commencing opposition actions and litigation. The outcomes of these actions have included both negotiated out-of- court settlements as well as litigation. We are currently party to a settlement with a midwestern grocery company, "Fareway," with respect to theuse of the Fairway name and trademarks which prohibits us from using the Fairway name other than on the East Coast and in California and certainparts of Michigan and Ohio, and prohibits that company from using the Fareway name on the East Coast and in California and certain parts ofMichigan and Ohio. Our inability to use the Fairway name in these prohibited areas could adversely affect our growth strategy. We are also party to asettlement agreement that prohibits us from opening any new stores under the Fairway name in certain parts of the New Jersey counties of Bergen,Essex, Hudson and Passaic. We believe this agreement will preclude us from opening one store that we otherwise might have opened in this territory. We cannot assure you that the steps we have taken to protect our intellectual property rights are adequate, that our intellectual property rights canbe successfully defended and asserted in the future or that third parties will not infringe upon or misappropriate any such rights. In addition, ourtrademark rights and related registrations may be challenged in the future and could be canceled or narrowed. Failure to protect our trademark rightscould prevent us in the future from challenging third parties who use names and logos similar to our trademarks, which may in turn cause consumerconfusion or negatively affect consumers' perception of our brand and products, which could, in turn, adversely affect our sales and profitability.Moreover, intellectual property disputes and proceedings and infringement claims may result in a significant distraction for management andsignificant expense, which may not be recoverable regardless of whether we are successful. Such proceedings may be protracted with no certainty ofsuccess, and an adverse outcome could subject us to liabilities, force us to cease use of certain trademarks or other intellectual property or force us toenter into licenses with others. Any one of these occurrences may have a material adverse effect on our business, results of operations and financialcondition. We rely on information technology and administrative systems and any inadequacy, failure, interruption or security breach of those systemsmay harm our ability to effectively operate our business. We rely extensively on our information technology and administrative systems to effectively manage our business data, communications, supplychain, order entry and fulfillment and other business processes. The failure of our information technology or administrative systems to perform as weanticipate could disrupt our business and result in transaction errors, processing inefficiencies and the loss of sales and customers, causing ourbusiness to suffer. In addition, our information technology and administrative systems may be vulnerable to damage or interruption fromcircumstances beyond our control, including fire, natural disasters, systems failures, cyber- attacks, viruses and security breaches,

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Table of Contentsincluding breaches of our transaction processing or other systems that could result in the compromise of confidential customer data. Any suchdamage or interruption could have a material adverse effect on our business, cause us to face significant fines, customer notice obligations or costlylitigation, harm our reputation with our customers, require us to expend significant time and expense developing, maintaining or upgrading ourinformation technology or administrative systems, or prevent us from paying our suppliers or employees, receiving payments from our customers orperforming other information technology or administrative services on a timely basis. Any material interruption in our information systems may havea material adverse effect on our operating results. If we experience a data security breach and confidential customer information is disclosed, we may be subject to penalties and experiencenegative publicity, which could affect our customer relationships and have a material adverse effect on our business. We and our customers could suffer harm if customer information were accessed by third parties due to a security failure in our systems. Thecollection of data and processing of transactions require us to receive, transmit and store a large amount of personally identifiable and transactionrelated data. This type of data is subject to legislation and regulation in various jurisdictions. Recently, data security breaches suffered by well-known companies and institutions have attracted a substantial amount of media attention, prompting state and federal legislative proposals addressingdata privacy and security. If some of the current proposals are adopted, we may be subject to more extensive requirements to protect the customerinformation that we process in connection with the purchases of our products. We may become exposed to potential liabilities with respect to the datathat we collect, manage and process, and may incur legal costs if our information security policies and procedures are not effective or if we arerequired to defend our methods of collection, processing and storage of personal data. Future investigations, lawsuits or adverse publicity relating toour methods of handling personal data could adversely affect our business, results of operations, financial condition and cash flows due to the costsand negative market reaction relating to such developments. Additionally, if we suffer data breaches one or more of the credit card processingcompanies that we rely on may refuse to allow us to continue to participate in their network, which would limit our ability to accept credit cards atour stores and could adversely affect our business, results of operations, financial condition and cash flows. Data theft, information espionage or other criminal activity directed at the retail industry or computer or communications systems maymaterially adversely affect our business by causing us to implement costly security measures in recognition of actual or potential threats, by requiringus to expend significant time and expense developing, maintaining or upgrading our information technology systems and by causing us to incursignificant costs to reimburse third parties for damages. Such activities may also materially adversely affect our financial condition, results ofoperations and cash flows by reducing consumer confidence in the marketplace and by modifying consumer spending habits. The landlord for a portion of our Broadway store has the right to terminate the lease at any time after June 30, 2017, which could adverselyaffect our business. Our Broadway store is one of our most important stores. The store is located in two properties with two different landlords. The landlord for thebuilding in which approximately half of this store is located has the right, at any time after June 30, 2017, to terminate the lease, upon at least18 months' prior notice, in order to make substantial renovations to the existing building or construct a new building. If the landlord elects toterminate the lease, then we have the option to enter into a new lease for space on the lower level, ground floor and second level of the renovated ornew building constructed on those premises with no less than the current square footage. However, during the renovation or construction, the portionof the Broadway store located in this building will be closed, and we expect that the remaining portion of the store will need to be closed for at least aportion of such period. If we are not able to find a suitable replacement location nearby for this store or if we are

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Table of Contentsnot able to operate at least a portion of the store during this period of renovation or construction, our business and results of operations would beadversely affected. We lease certain of our stores and related properties from a related party. Howard Glickberg, one of our directors and executive officers, owns a one- third interest in entities which lease to us the premises at which aportion of our Broadway store is located, the premises at which our Harlem store, Harlem bakery and Harlem warehouse are located and the premisesat which the parking lot for our Harlem store is located. The remainder of these entities is owned by Mr. Glickberg's former business partners (the"Former Partners"). Mr. Glickberg also owns a 16.67% interest in the landlord for the premises where our Red Hook store is located. During fiscal2010, fiscal 2011 and fiscal 2012 and the thirty- nine weeks ended December 30, 2012, rental payments (excluding maintenance and taxes that we areobligated to pay) under the leases for the Harlem properties and portion of the Broadway store aggregated $2,519,755, $2,525,583, $2,569,403 and$3,322,875, respectively, of which, based on his ownership and before giving effect to any expenses, Mr. Glickberg is entitled to $839,918, $841,861,$856,468 and $1,107,514, respectively. During fiscal 2010, fiscal 2011 and fiscal 2012 and the thirty- nine weeks ended December 30, 2012, rentalpayments (excluding maintenance and taxes that we are obligated to pay) under the lease for the Red Hook store aggregated $1,461,595, $1,421,151,$1,421,151 and $1,047,643, respectively, of which, based on his ownership and before giving effect to any expenses, Mr. Glickberg is entitled to$243,599, $236,859, $236,859 and $174,642, respectively. The leases for each of these properties provides for a periodic reset of base rent to fairmarket rent based upon the highest and best retail use of the premises (without reference to the lease). The leases provide that if we and these entitiescannot agree on the fair market rent, the fair market rent will be determined by arbitration. In December 2012, we agreed with the landlords of theHarlem properties and a portion of the Broadway store to a reset of the annual base rent for these properties that will increase our base rent for theseproperties by an aggregate of approximately $1.8 million for fiscal 2013. As a result of this increase, we have paid the landlords an aggregate of$1,647,505, representing the additional rent due for the period from February 1, 2012 through December 30, 2012, of which Mr. Glickberg's share,based on his ownership and before giving effect to any expenses, is $549,108. We and the landlord for the Red Hook store are currently indiscussions regarding the reset of the base rent to fair market rent. We cannot predict the outcome of these discussions or any arbitration; however, ifthe arbitrator chooses the amount proposed by our landlord, it could have an adverse effect on our results of operations and gross margin. In addition,our Red Hook store is required to obtain its electricity, heated/chilled water, hot and cold potable water and sewer services from an entity owned bythe owners of the premises where our Red Hook store is located. We believe that the owner of the co- generation plant has overcharged us for utilitiessince our initial occupancy of the premises in December 2005. Since November 2008, we have not fully paid the utility invoices, but instead remittedlesser amounts based on the methodology that we believe represents the parties' original intentions with respect to the utility charge calculations.There can be no assurance that we will not be required to pay the amounts we withheld. See "Certain Relationships and Related Party Transactions-Transactions with Howard Glickberg- Real Estate Leases." Failure to retain our senior management and other key personnel may adversely affect our operations. Our success is substantially dependent on the continued service of our senior management and other key personnel. These executives, and inparticular Charles Santoro, our Executive Chairman, and Herb Ruetsch, our Chief Executive Officer, have been primarily responsible for determiningthe strategic direction of our business and for executing our growth strategy and are integral to our brand and culture, and the reputation we enjoywith suppliers and consumers. The loss of the services of any of these executives and other key personnel could have a material adverse effect on ourbusiness and prospects, as we may not be able to find suitable individuals to replace them on a timely basis, if at all. In addition, any such departurecould be viewed in a negative light by investors and analysts, which may cause our stock price to decline. The loss of key employees could negativelyaffect our business.

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Table of Contents If we are unable to attract, train and retain employees, we may not be able to grow or successfully operate our business. The food retail industry is labor intensive, and our success depends in part upon our ability to attract, train and retain a sufficient number ofemployees who understand and appreciate our culture and are able to represent our brand effectively and establish credibility with our businesspartners and consumers. Our ability to meet our labor needs, while controlling wage and labor- related costs, is subject to numerous external factors,including the availability of a sufficient number of qualified persons in the work force in the markets in which we are located, unemployment levelswithin those markets, unionization of the available work force, prevailing wage rates, changing demographics, health and other insurance costs andchanges in employment legislation. In the event of increasing wage rates, if we fail to increase our wages competitively, the quality of our workforcecould decline, causing our customer service to suffer, while increasing our wages could cause our earnings to decrease. If we are unable to hire andretain employees capable of meeting our business needs and expectations, our business and brand image may be impaired. Any failure to meet ourstaffing needs or any material increase in turnover rates of our employees may adversely affect our business, results of operations and financialcondition. Changes in and enforcement of immigration laws could increase our costs and adversely affect our ability to attract and retain qualifiedstore- level employees. Federal and state governments from time to time implement laws, regulations or programs that regulate our ability to attract or retain qualifiedemployees. Some of these changes may increase our obligations for compliance and oversight, which could subject us to additional costs and makeour hiring process more cumbersome, or reduce the availability of potential employees. Although we have implemented, and are in the process ofenhancing, procedures to ensure our compliance with the employment eligibility verification requirements, there can be no assurance that theseprocedures are adequate and some of our employees may, without our knowledge, be unauthorized workers. The employment of unauthorizedworkers may subject us to fines or civil or criminal penalties, and if any of our workers are found to be unauthorized we could experience adversepublicity that negatively impacts our brand and makes it more difficult to hire and keep qualified employees. We have from time to time beenrequired to terminate the employment of certain of our employees who were determined to be unauthorized workers. For example, following an auditby the Department of Homeland Security of the work authorization documents of our employees in our Pelham Manor, NY store that began inFebruary 2011, we were notified in May 2012 that approximately 55 employees may not have had valid employment authorization documents, andwe then terminated the approximately 35 employees still working for us who could not then provide valid documentation, resulting in a temporaryincrease in labor costs and disruption of our operations as we hired and trained new employees. We may be subject to fines or other penalties as aresult of this audit. There can be no assurance that any future audit will not require us to terminate employees and pay fines or other penalties. Thetermination of a significant number of employees may disrupt our operations, cause temporary increases in our labor costs as we train new employeesand result in additional adverse publicity. Our financial performance could be materially harmed as a result of any of these factors. Prolonged labor disputes with unionized employees and increases in labor costs could adversely affect our business. Our largest operating costs are attributable to labor costs and, therefore, our financial performance is greatly influenced by increases in wage andbenefit costs, including pension and health care costs. As a result, we are exposed to risks associated with a competitive labor market and, morespecifically, to any disruption of our unionized work force. As of December 30, 2012, approximately 81% of our employees were represented byunions and covered by collective bargaining agreements that are subject

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Table of Contentsto periodic renegotiation. Two of our current collective bargaining agreements expire in March 2014, one expires in April 2014 and one expires inFebruary 2015. In the renegotiation of our current contracts and the negotiation of our new contracts, rising health care and pension costs and the nature andstructure of work rules will be important issues. The terms of the renegotiated collective bargaining agreements could create either a financialadvantage or disadvantage for us as compared to our major competitors and could have a material adverse effect on our results of operations andfinancial condition. Our labor negotiations may not conclude successfully or may result in a significant increase in labor costs, and work stoppages orlabor disturbances could occur. A prolonged work stoppage could have a material adverse effect on our financial condition, results of operations andcash flows. We also expect that in the event of a work stoppage or labor disturbance, we could incur additional costs and face increased competition. The cost of providing employee benefits continues to increase and is subject to factors outside of our control. We provide health benefits to substantially all of our full- time employees and, under our collective bargaining agreements, contribute to the costof health benefits provided by the unions. Even though employees generally pay a portion of the cost, our cost of providing these benefits hasincreased steadily over the last several years. We anticipate future increases in the cost of health benefits, partly, but not entirely, as a result of theimplementation of federal health care reform legislation. We currently pay all of the healthcare insurance premiums for our unionized employees.However, the healthcare insurance coverage for our unionized employees currently does not meet the minimum coverage requirements of the PatientProtection and Affordable Care Act, or PPACA. If the union plans are amended to meet the minimum requirements of PPACA, such change willlikely require a meaningful increase in the amount of such health insurance premiums that we pay. If the union plans are not amended to meet theminimum requirements of PPACA beginning January 1, 2014, we will either be required (subject to collective bargaining) to provide healthcareinsurance meeting the minimum requirements or pay an annual penalty of $2,000 (or $3,000 in certain circumstances) for every full- time unionizedemployee and each of our part- time unionized employee that works an average of 30 hours or more per week. At December 30, 2012, we hadapproximately 3,300 unionized employees. We cannot at this time predict the financial impact of PPACA on our financial condition and results ofoperations, as it will depend in large part on whether the union amends its healthcare plans for employees who work an average of 30 hours or moreper week to comply with PPACA and, if so, the cost of such plans, as well as the number of unionized employees we have who work at least 30 hoursper week, although the financial impact could be material. If we are unable to control healthcare costs, we will experience increased operating costs,which may adversely affect our financial condition and results of operations. We participate in one underfunded multiemployer pension plan on behalf of most of our union- affiliated employees, and we are required tomake contributions to this plan under our collective bargaining agreement. This multiemployer pension plan is currently underfunded in part due toincreases in the costs of benefits provided or paid under the plan as well as lower returns on plan assets. The unfunded liabilities of this plan mayrequire increased future payments by us and other participating employers. In 2012, this multiemployer plan was deemed by its plan actuary to be"endangered" because the plan is less than 80% funded. As a result, the plan has adopted a funding improvement plan to increase the plan's fundingpercentage. In the future, our required contributions to this multiemployer plan could increase as a result of many factors, including the outcome ofcollective bargaining with the union, actions taken by trustees who manage the plan, government regulations, the actual return on assets held in theplan and the payment of a withdrawal liability if we choose to exit the plan. Our risk of future increased payments may be greater if otherparticipating employers withdraw from the plan and are not able to pay the total liability assessed as a result of such withdrawal, or if the pensionplan adopts surcharges and/or increased pension contributions as part of a

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Table of Contentsrehabilitation plan. Increased pension costs may adversely affect our financial condition and results of operations. See note 12 to our consolidatedfinancial statements included elsewhere in this prospectus. Various aspects of our business are subject to federal, state and local laws and regulations. Our compliance with these regulations mayrequire additional capital expenditures and could materially adversely affect our ability to conduct our business as planned. We are subject to federal, state and local laws and regulations relating to zoning, land use, environmental protection, workplace safety, foodsafety, public health, community right- to- know and alcoholic beverage and tobacco sales. In particular, the states in which we operate and severallocal jurisdictions regulate the licensing of supermarkets and the sale of alcoholic beverages. In addition, certain local regulations may limit ourability to sell alcoholic beverages at certain times. We are also subject to laws governing our relationship with employees, including minimum wagerequirements, overtime, working conditions, immigration, disabled access and work permit requirements. Compliance with new laws in these areas,or with new or stricter interpretations of existing requirements, could reduce the revenue and profitability of our stores and could otherwise materiallyadversely affect our business, financial condition or results of operations. Our new store openings could be delayed or prevented or our existing storescould be impacted by difficulties or failures in our ability to obtain or maintain required approvals or licenses. Our stores are subject to unscheduledinspections on a regular basis, which, if violations are found, could result in the assessment of fines, suspension of one or more needed licenses and,in the case of repeated "critical" violations, closure of the store until a re- inspection demonstrates that we have remediated the problem. Certain ofour parking lots and warehouses either have only temporary certificates of occupancy or are awaiting a certificate of occupancy which, if not granted,would require us to stop using such property. Our central bakery does not have a certificate of occupancy and, due to the age and structure of thebuilding, we do not believe we would be able to obtain one without substantial modifications to the building. We are in the process of relocating thecentral bakery; however, until we do so, if we are not permitted to continue our central bakery operations at our current facility, our results ofoperations could be adversely affected. The buildings in which our Broadway and Harlem stores are located are old and therefore require greatermaintenance expenditures by us in order to maintain them in compliance with applicable building codes. If we are unable to maintain these stores incompliance with applicable building codes, we could be required by the building department to close them. Additionally, a number of federal, stateand local laws impose requirements or restrictions on business owners with respect to access by disabled persons. Our compliance with these lawsmay result in modifications to our properties, or prevent us from performing certain further renovations. We cannot predict the nature of future laws,regulations, interpretations or applications, or determine what effect either additional government regulations or administrative orders, when and ifpromulgated, or disparate federal, state and local regulatory schemes would have on our business in the future. The terms of our senior credit facility may restrict our current and future operations, which could adversely affect our ability to respond tochanges in our business and to manage our operations. Our senior credit facility includes a number of customary restrictive covenants that could impair our financing and operational flexibility andmake it difficult for us to react to market conditions and satisfy our ongoing capital needs and unanticipated cash requirements. Specifically, suchcovenants may restrict our ability and, if applicable, the ability of our subsidiaries to, among other things:

incur additional debt;

make certain investments;

enter into certain types of transactions with affiliates;

limit dividends or other payments by our restricted subsidiaries to us;

use assets as security in other transactions;

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pay dividends on our common stock or repurchase our equity interests;

sell certain assets or merge with or into other companies;

guarantee the debts of others;

enter into new lines of business;

make capital expenditures;

prepay, redeem or exchange our other debt; and

form any joint ventures or subsidiary investments.

In addition, our senior credit facility requires us to maintain specified financial ratios. Our ability to comply with the covenants and other terms of our senior credit facility will depend on our future operating performance and, inaddition, may be affected by events beyond our control, and we cannot assure you that we will meet them. If we fail to comply with such covenantsand terms, we would be required to obtain waivers from our lenders or agree with our lenders to an amendment of the facility's terms to maintaincompliance under such facility. If we are unable to obtain any necessary waivers and the debt under our senior credit facility is accelerated, it wouldhave a material adverse effect on our financial condition and future operating performance. Our senior credit facility requires us to use 50% of our annual adjusted excess cash flow (which percentage will decrease upon achievement andmaintenance of specified leverage ratios) to prepay our outstanding term loans. This requirement will reduce the funds available to us for new storegrowth and working capital. Our senior credit facility limits the amount of capital expenditures that we can make in any fiscal year that are not financed with proceeds fromthe sale of our equity securities. This limitation may adversely affect our ability to open new stores or result in additional dilution if we issueadditional equity securities. Our senior credit facility provides that if any person other than Sterling Investment Partners owns, directly or indirectly, beneficially or ofrecord, shares representing more than 35% of the voting power of our outstanding common stock, the lenders can declare all borrowings under thesenior credit facility to be immediately due and payable. We have significant debt service obligations and may incur additional indebtedness in the future which could adversely affect our financialhealth and our ability to react to changes to our business. As of March 31, 2013, we had total debt of approximately $274.3 million (including unamortized original issue discount of approximately$15.0 million on our senior debt). We will continue to have significant debt service obligations following the completion of this offering. Ourindebtedness, or any additional indebtedness we may incur, could require us to divert funds identified for other purposes for debt service and impairour liquidity position. If we cannot generate sufficient cash flow from operations to service our debt, we may need to refinance our debt, dispose ofassets or issue equity to obtain necessary funds. We do not know whether we will be able to take any of such actions on a timely basis, on termssatisfactory to us or at all. Our level of indebtedness has important consequences to you and your investment in our Class A common stock. For example, our level of indebtedness may:

require us to use a substantial portion of our cash flow from operations to pay interest and principal on our debt, which wouldreduce the funds available to us for working capital, new store growth and other general corporate purposes;

limit our ability to pay future dividends;

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limit our ability to obtain additional financing for working capital, new store growth, capital expenditures and other investments,which may limit our ability to implement our business strategy;

heighten our vulnerability to downturns in our business, the food retail industry or the general economy and limit our flexibility inplanning for, or reacting to, changes in our business and the food retail industry;

expose us to the risk of increased interest rates as our borrowings under our senior credit facility are at variable rates; or

prevent us from taking advantage of business opportunities as they arise or successfully carrying out our plans to expand our storebase and product offerings.

We and our subsidiaries may incur substantial additional indebtedness in the future, subject to the restrictions contained in our senior creditfacility. If new indebtedness is added to our current debt levels, the related risks that we now face could intensify. We cannot assure you that our business will generate sufficient cash flow from operations or that future financing will be available to us inamounts sufficient to enable us to make payments on our indebtedness or to fund our operations. Our plans to open new stores require us to spend capital, which must be allocated among various projects. Failure to use our capitalefficiently could have an adverse effect on our profitability. Our growth strategy depends on our opening new stores, which will require us to use cash generated by our operations and a portion of the netproceeds of this offering, as well as borrowings under our senior credit facility. We cannot assure you that cash generated by our operations, the netproceeds of this offering and borrowings under our senior credit facility will be sufficient to allow us to implement our growth strategy. If this cash isnot allocated efficiently among our various projects, or if any of these initiatives prove to be unsuccessful, we may experience reduced profitabilityand we could be required to delay, significantly curtail or eliminate planned store openings, which could have a material adverse effect on ourfinancial condition and future operating performance and the price of our Class A common stock. Litigation may materially adversely affect our business, financial condition and results of operations. Our operations are characterized by a high volume of customer traffic and by transactions involving a wide variety of product selections. Theseoperations carry a higher exposure to consumer litigation risk when compared to the operations of companies operating in many other industries.Consequently, we may be a party to individual personal injury, product liability and other legal actions in the ordinary course of our business,including litigation arising from food- related illness. The outcome of litigation, particularly class action lawsuits and regulatory actions, is difficult toassess or quantify. Plaintiffs in these types of lawsuits may seek recovery of very large or indeterminate amounts, and the magnitude of the potentialloss relating to such lawsuits may remain unknown for substantial periods of time. The cost to defend future litigation may be significant. There mayalso be adverse publicity associated with litigation that may decrease consumer confidence in our businesses, regardless of whether the allegations arevalid or whether we are ultimately found liable. As a result, litigation may materially adversely affect our businesses, financial condition, results ofoperations and cash flows. Increased commodity prices and availability may impact profitability. Many of our products include ingredients such as wheat, corn, oils, milk, sugar, cocoa and other commodities. Commodity prices worldwidehave been increasing. While commodity price inputs do not typically represent the substantial majority of our product costs, any increase incommodity prices may cause our vendors to seek price increases from us. Although we typically are able to mitigate vendor efforts to increase ourcosts, we may be unable to continue to do so, either in whole or in part. In the

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Table of Contentsevent we are unable to continue mitigating potential vendor price increases, we may in turn consider raising our prices, and our customers may bedeterred by any such price increases. Our profitability may be impacted through increased costs to us which may impact gross margins, or throughreduced revenue as a result of a decline in the number and average size of customer transactions. Severe weather, natural disasters and adverse climate changes may materially adversely affect our financial condition and results ofoperations. Severe weather conditions and other natural disasters in areas where we have stores or from which we obtain the products we sell may materiallyadversely affect our retail operations or our product offerings and, therefore, our results of operations. Such conditions may result in physical damageto, or temporary or permanent closure of, one or more of our stores, an insufficient work force in our markets and/or temporary disruption in thesupply of products, including delays in the delivery of goods to our stores or a reduction in the availability of products in our stores. In addition,adverse climate conditions and adverse weather patterns, such as drought or flood, that impact growing conditions and the quantity and quality ofcrops may materially adversely affect the availability or cost of certain products within our supply chain. Any of these factors may disrupt ourbusinesses and materially adversely affect our financial condition, results of operations and cash flows. For example, we temporarily closed all of our stores as a result of Hurricane Sandy, which struck the Greater New York City metropolitan areaon October 29, 2012. While all but one of our stores were able to reopen within a day or two following the storm, we experienced businessdisruptions due to inventory delays as a result of transportation issues, loss of electricity at certain of our locations and the inability of some of ouremployees to travel to work due to transportation issues. In addition, our Red Hook store suffered substantial damage, including the loss of allinventory and a substantial portion of its equipment, and it was not reopened until March 1, 2013. See "- We were forced to temporarily close our RedHook, Brooklyn, New York store as a result of damages sustained during Hurricane Sandy, which has impacted our results of operations, and therecan be no assurance that our sales or gross profit at the store will return to prior levels." The occurrence of a widespread health epidemic may materially adversely affect our financial condition and results of operations. Our business may be severely impacted by wartime activities, threats or acts of terror or a widespread regional, national or global healthepidemic, such as pandemic flu. Such activities, threats or epidemics may materially adversely impact our business by disrupting production anddelivery of products to our stores, by affecting our ability to appropriately staff our stores and by causing customers to avoid public gathering placesor otherwise change their shopping behaviors. Proposed changes to financial accounting standards could require our store leases to be recognized on the balance sheet. In addition to our significant level of indebtedness, we have significant obligations relating to our current operating leases. Proposed changes tofinancial accounting standards could require such leases to be recognized on the balance sheet. All of our existing stores are subject to leases, whichhave remaining terms of up to 27 years, and as of December 30, 2012, we had undiscounted operating lease commitments of approximately$571.9 million, scheduled through 2039, related primarily to our stores, including one store that is not yet open. These commitments represent theminimum lease payments due under our operating leases, excluding common area maintenance, insurance and taxes related to our operating leaseobligations, and do not reflect fair market value rent reset provisions in the leases. These leases are classified as operating leases and disclosed inNote 14 to our consolidated financial statements included elsewhere in this prospectus, but are not reflected as liabilities on our consolidated balancesheets. During fiscal 2012 and the thirty- nine weeks ended December 30, 2012, our cash operating lease expense was approximately $16.3 millionand $17.9 million, respectively.

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Table of Contents In August 2010, the Financial Accounting Standards Board ("FASB") and the International Accounting Standards Board ("IASB") issued a jointdiscussion paper highlighting proposed changes to financial accounting standards for leases. Currently, Accounting Standards Codification 840("ASC 840"), Leases (formerly Statement of Financial Accounting Standards 13, Accounting for Leases) requires that operating leases are classifiedas an off- balance sheet transaction and only the current year operating lease expense is accounted for in the income statement. In order to determinethe proper classification of our stores as either operating leases or capital leases, we must make certain estimates at the inception of the lease relatingto the economic useful life and the fair value of an asset as well as select an appropriate discount rate to be used in discounting future lease payments.These estimates are utilized by management in making computations as required by existing accounting standards that determine whether the lease isclassified as an operating lease or a capital lease. All of our store leases have been classified as operating leases, which results in rental paymentsbeing charged to expense over the terms of the related leases. Additionally, operating leases are not reflected in our consolidated balance sheets,which means that neither a leased asset nor an obligation for future lease payments is reflected in our consolidated balance sheets. The proposedchanges to ASC 840 would require that substantially all operating leases be recognized as assets and liabilities on our balance sheet. The right to usethe leased property would be capitalized as an asset and the present value of future lease payments would be accounted for as a liability. Theproposed changes are currently being reviewed by FASB, IASB and others, and are currently expected to be finalized in 2013. The effective date,which has not been determined, could be as early as 2013 and may require retrospective adoption. While we have not quantified the impact thisproposed standard would have on our financial statements, if our current operating leases are instead recognized on the balance sheet, it will result ina significant increase in the liabilities reflected on our balance sheet and in the interest expense and depreciation and amortization expense reflected inour income statement, while reducing the amount of rent expense. This could potentially decrease our net income. Our high level of fixed lease obligations could adversely affect our financial performance. Our high level of fixed lease obligations will require us to use a significant portion of cash generated by our operations to satisfy theseobligations, and could adversely impact our ability to obtain future financing to support our growth or other operational investments. We will requiresubstantial cash flows from operations to make our payments under our operating leases, all of which provide for periodic increases in rent. If we arenot able to make the required payments under the leases, the lenders or owners of the stores may, among other things, repossess those assets, whichcould adversely affect our ability to conduct our operations. In addition, our failure to make payments under our operating leases could triggerdefaults under other leases or under agreements governing our indebtedness, which could cause the counterparties under those agreements toaccelerate the obligations due thereunder. Certain of our leases are with entities affiliated with our vice chairman of development and are currentlythe subject of negotiation to reset the annual base rent for these leases to fair market rent. See "- We lease certain of our stores and other propertiesfrom a related party" and "Certain Relationships and Related Party Transactions- Transactions with Howard Glickberg- Real Estate Leases." If our goodwill becomes impaired, we may be required to record a significant charge to earnings. We have a significant amount of goodwill. As of December 30, 2012, we had goodwill of approximately $95.4 million, which representedapproximately 28.1% of our total assets as of such date. Goodwill is reviewed for impairment on an annual basis in the fourth fiscal quarter orwhenever events occur or circumstances change that would more likely than not reduce the fair value of our reporting unit below its carrying amount.Fair value is determined based on the discounted cash flows and comparable market values of our single reporting unit. If the fair value of thereporting unit is less than its carrying value, the fair value of the implied goodwill is calculated as the difference between the fair value of ourreporting unit and the fair value of the underlying assets and liabilities, excluding goodwill.

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Table of ContentsIn the event an impairment to goodwill is identified, an immediate charge to earnings in an amount equal to the excess of the carrying value over theimplied fair value would be recorded, which would adversely affect our operating results. See "Management's Discussion and Analysis of FinancialCondition and Results of Operations- Critical Accounting Policies and Estimates- Goodwill and Other Intangible Assets." Determining market values using a discounted cash flow method requires that we make significant estimates and assumptions, including long-term projections of cash flows, market conditions and appropriate market rates. Our judgments are based on historical experience, current markettrends and other information. In estimating future cash flows, we rely on internally generated forecasts for operating profits and cash flows, includingcapital expenditures. Based on our annual impairment test during fiscal 2010, 2011 and 2012, no goodwill impairment charge was required to berecorded. Changes in estimates of future cash flows caused by items such as unforeseen events or changes in market conditions could negativelyaffect our reporting unit's fair value and result in an impairment charge. Factors that could cause us to change our estimates of future cash flowsinclude a prolonged economic crisis, successful efforts by our competitors to gain market share in our core markets, our inability to competeeffectively with other retailers or our inability to maintain price competitiveness. An impairment of a significant portion of our goodwill couldmaterially adversely affect our financial condition and results of operations.Risks Relating to this Offering and Ownership of Our Class A Common Stock Upon completion of this offering, we will be controlled by investment funds managed by affiliates of Sterling Investment Partners, whoseinterests in our business may be different from yours. Our Class B common stock has ten votes per share, and our Class A common stock, which is the stock we are offering in our initial publicoffering, has one vote per share. Upon completion of this offering, Sterling Investment Partners will own approximately 8,381,639 shares of Class Acommon stock and 13,080,655 shares of Class B common stock, or 52.0% of our outstanding common stock, representing approximately 77.1% ofthe voting power of our outstanding common stock (7,461,056 shares of Class A common stock and 13,080,655 shares of Class B common stockrepresenting approximately 47.8% of our outstanding common stock and approximately 76.1% of the voting power of our outstanding common stock,if the underwriters exercise their over- allotment option in full). In addition, Sterling Investment Partners will own warrants to purchase 1,699,949shares of Class A common stock which, if exercised, would result in them owning approximately 53.7% of our outstanding common stock,representing approximately 77.2% of the voting power of our outstanding common stock, and approximately 51.2% of our outstanding commonstock, representing approximately 76.4% of the voting power of our outstanding common stock, if the underwriters exercise their over- allotmentoption in full. As such, Sterling Investment Partners will have significant influence over our reporting and corporate management and affairs, and,because of the ten- to- one voting ratio between our Class B and Class A common stock, Sterling Investment Partners will continue to control amajority of the combined voting power of our common stock and therefore be able to control all matters submitted to our stockholders for approval solong as the shares of Class B common stock owned by Sterling Investment Partners and its permitted transferees represent at least 5% of alloutstanding shares of our Class A and Class B common stock. Sterling Investment Partners will, for so long as the shares of Class B common stockowned by it and its permitted transferees represent at least 5% of all outstanding shares of our Class A and Class B common stock, effectively controlactions to be taken by us and our board of directors, including the election of directors, amendments to our certificate of incorporation and bylaws andapproval of significant corporate transactions, including mergers and sales of substantially all of our assets. These actions may be taken even if otherstockholders oppose them. Sterling Investment Partners' control may have the effect of delaying or preventing a change in control of our company ordiscouraging others from making tender offers for our shares, which could prevent

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Table of Contentsstockholders from receiving a premium for their shares. This concentrated control will limit or preclude your ability to influence corporate matters forthe foreseeable future. Our amended and restated certificate of incorporation provides that the doctrine of "corporate opportunity" will not apply to Sterling InvestmentPartners, or any of our directors who are associates of, or affiliated with, Sterling Investment Partners, in a manner that would prohibit them frominvesting in competing businesses. It is possible that the interests of Sterling Investment Partners and their affiliates may in some circumstancesconflict with our interests and the interests of our other stockholders, including you, and Sterling Investment Partners may act in a manner thatadvances its best interests and not necessarily those of our other stockholders. Future transfers by holders of Class B common stock will generally result in those shares converting to Class A common stock, subject tolimited exceptions, such as certain transfers effected for estate planning purposes and transfers to members of Sterling Investment Partners. Theconversion of Class B common stock to Class A common stock will have the effect, over time, of increasing the relative voting power of thoseholders of Class B common stock who retain their shares in the long term. All outstanding shares of Class A common stock and Class B commonstock will automatically convert into a single class of common stock when Sterling Investment Partners and its permitted transferees no longer ownany shares of Class B common stock. For a description of the dual class structure, see "Description of Capital Stock- Anti- Takeover Provisions." Sterling Investment Partners is not subject to any contractual obligation to retain its controlling interest, except that it has agreed, subject tocertain exceptions, not to sell or otherwise dispose of any shares of our common stock or other securities exercisable or convertible into our commonstock for a period of at least 180 days after the date of this prospectus without the prior written consent of Credit Suisse Securities (USA) LLC. Therecan be no assurance as to the period of time during which Sterling Investment Partners will in fact maintain its ownership of our common stockfollowing the offering. We have elected to take advantage of the "controlled company" exemption to the corporate governance rules for publicly- listed companies,which could make our Class A common stock less attractive to some investors or otherwise harm our stock price. Because we qualify as a "controlled company" under the corporate governance rules for publicly- listed companies, we are not required to have amajority of our board of directors be independent, nor are we required to have a compensation committee or an independent nominating function. Inlight of our status as a controlled company, our board of directors has determined not to have a majority of our board of directors be independent,have a compensation committee composed solely of independent directors or have an independent nominating function and has chosen to have thefull board of directors be directly responsible for nominating members of our board. Accordingly, should the interests of Sterling Investment Partners,as our controlling stockholder, differ from those of other stockholders, the other stockholders may not have the same protections afforded tostockholders of companies that are subject to all of the corporate governance rules for publicly- listed companies. Our status as a controlled companycould make our Class A common stock less attractive to some investors or otherwise harm our stock price. Although we qualify as a "controlled company", we must have an independent audit committee consisting of three members. The rules of theNASDAQ Global Market, the exchange on which we have applied to list our Class A common stock, permit the composition of our audit committeeto be phased- in as follows: (i) one independent committee member at the time of this offering; (ii) a majority of independent committee memberswithin 90 days of this offering; and (iii) all independent committee members within one year of the effective date of the registration statement ofwhich this prospectus is a part. We currently have two independent directors. If we cannot satisfy or continue to satisfy the phase- in requirement forour audit committee under the applicable listing rules, our Class A common stock will be delisted, which would negatively impact the price of, andyour ability to sell, our Class A common stock.

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Conflicts of interest may arise because some of our directors are representatives of our controlling stockholders. Messrs. Santoro, Selden and Barr, who are representatives of Sterling Investment Partners, serve on our board of directors, and Mr. Santoroserves as our Executive Chairman. Sterling Investment Partners and affiliated funds may hold equity interests in entities that directly or indirectlycompete with us, and companies in which they currently invest may begin competing with us. As a result of these relationships, when conflictsbetween the interests of Sterling Investment Partners and its affiliates, on the one hand, and the interests of our other stockholders, on the other hand,arise, these directors may not be disinterested. Although our directors and officers have a duty of loyalty to us under Delaware law and our certificateof incorporation, transactions that we enter into in which a director or officer has a conflict of interest are generally permissible so long as (i) thematerial facts relating to the director's or officer's relationship or interest as to the transaction are disclosed to our board of directors and a majority ofour disinterested directors, or a committee consisting solely of disinterested directors, approves the transaction, (ii) the material facts relating to thedirector's or officer's relationship or interest as to the transaction are disclosed to our stockholders and a majority of our disinterested stockholdersapproves the transaction or (iii) the transaction is otherwise fair to us. Under our amended and restated certificate of incorporation, representatives ofSterling Investment Partners are not required to offer to us any transaction opportunity of which they become aware and could take any suchopportunity for themselves or offer it to other companies in which they have an investment, unless such opportunity is offered to them solely in theircapacity as a director of ours. An active, liquid trading market for our Class A common stock may not develop following this offering, which could limit your ability to sellyour shares of our Class A common stock at an attractive price, or at all. Prior to this offering, there has been no public market for our Class A common stock. We cannot predict the extent to which investor interest inour company will lead to the development of an active trading market in our Class A common stock or how liquid that market might become. Anactive public market for our Class A common stock may not develop or be sustained after the offering. If an active public market does not develop oris not sustained, it may be difficult for you to sell your shares of Class A common stock at a price that is attractive to you, or at all. The initial publicoffering price for the shares of our common stock will be determined by negotiations among us, Sterling Investment Partners and the representativesof the underwriters and may not be indicative of prices that will prevail in the open market following this offering. The market price for shares of ourClass A common stock may decline below the initial public offering price, and you may not be able to resell your shares of Class A common stock ator above the initial public offering price. Our stock price may be volatile or may decline regardless of our operating performance, and you may lose part or all of your investment. Following the completion of this offering, the market price for our Class A common stock is likely to be volatile, in part because our shares havenot been previously traded publicly. In addition, the market price of our Class A common stock may fluctuate significantly in response to a number offactors, most of which we cannot predict or control, including:

announcements of new store openings or initiatives, commercial relationships, acquisitions or other events by us or ourcompetitors;

failure of any of our initiatives to achieve commercial success;

fluctuations in stock market prices and trading volumes of securities of similar companies;

general market conditions and overall fluctuations in U.S. equity markets;

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variations in our operating results, or the operating results of our competitors;

actual or anticipated growth rates relative to our competitors;

changes in our financial guidance to investors and analysts or our failure to achieve such expectations;

delays in, or our failure to provide, financial guidance;

changes in securities analysts' estimates of our financial performance or our failure to achieve such estimates;

sales of large blocks of our Class A common stock, including sales by Sterling Investment Partners or by our executive officers ordirectors;

additions or departures of any of our key personnel;

changes in accounting principles or methodologies;

economic, legal and regulatory factors unrelated to our performance;

changing legal or regulatory developments in the U.S.;

discussion of us or our stock price by the financial press and in online investor forums; and

negative publicity about us in the media and online.

In addition, the stock market in general has experienced substantial price and volume volatility that is often seemingly unrelated to the operatingperformance of particular companies. These broad market fluctuations may cause the trading price of our Class A common stock to decline. In thepast, securities class action litigation has often been brought against a company after a period of volatility in the market price of its common stock.We may become involved in this type of litigation in the future. Any securities litigation claims brought against us could result in substantialexpenses and the diversion of our management's attention from our business. If you purchase shares of Class A common stock sold in this offering, you will incur immediate and substantial dilution. If you purchase shares of Class A common stock in this offering, you will incur immediate and substantial dilution in the amount of $12.70 pershare, because the assumed initial public offering price of $11.00 per share, the midpoint of the price range set forth on the cover page of thisprospectus, is substantially higher than the pro forma net tangible book value per share of our outstanding common stock. This means that you willpay a higher price per share than the amount of our total tangible assets, less our total liabilities, divided by the number of shares of common stockoutstanding. In addition, you may also experience additional dilution upon future equity issuances or the exercise of stock options to purchasecommon stock granted to our employees, executive officers, consultants and directors under our stock option and equity incentive plans. Foradditional information, see "Dilution." Because we have no current plans to pay cash dividends on our Class A common stock for the foreseeable future, you may not receive anyreturn on investment unless you sell your Class A common stock for a price greater than you paid. We have never declared or paid cash dividends on our common stock. We currently intend to retain any future earnings to finance the operationand expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future. As a result, you may only receive areturn on your investment in our Class A common stock if the market price of our Class A common stock increases. In addition, our senior creditfacility contains restrictions on our ability to pay dividends.

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Future sales of our Class A common stock, or the perception in the public markets that these sales may occur, may depress our stock price. The price of our Class A common stock could decline if there are substantial sales of our Class A common stock, particularly sales by ourdirectors, executive officers, employees and significant stockholders, or when there is a large number of shares of our Class A common stockavailable for sale. These sales, or the perception that these sales might occur, could depress the market price of our Class A common stock and mightmake it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. Upon completion of this offering, there will be 41,238,260 shares of our common stock outstanding. Of these, the 13,650,000 shares of Class Acommon stock being sold in this offering (or 15,697,500 shares of Class A common stock if the underwriters exercise their option to purchaseadditional shares from certain of our selling stockholders in full) will be freely tradable immediately after this offering (except for any sharespurchased by our affiliates and other than shares purchased by any of our existing stockholders pursuant to the reserved share program who aresubject to lock- up agreements, if any) and 27,588,260 shares will be subject to lock- up agreements for 180 days after the date of this prospectus. Alarge portion of our shares are held by Sterling Investment Partners. Moreover, Sterling Investment Partners has rights, subject to some conditions, torequire us to file registration statements covering the shares they and our other existing stockholders currently hold, or to include these shares inregistration statements that we may file for ourselves or other stockholders. See "Certain Relationships and Related- Party Transactions- RegistrationRights Agreement." Credit Suisse Securities (USA) LLC may, in its sole discretion, permit our executive officers, our directors, Sterling Investment Partners and ourother stockholders to sell shares prior to the expiration of the restrictive provisions contained in the lock- up agreements with the underwriters. We also intend to register all common stock that we may issue under our 2013 Long- Term Incentive Plan. Effective upon the completion of thisoffering, an aggregate of 5,472,136 shares of our Class A common stock will be reserved for issuance under the 2013 Long- Term Incentive Plan,including 2,296,838 shares subject to RSU awards and 1,135,772 shares subject to option grants to be granted in connection with this offering. Oncewe register these shares, which we plan to do shortly after the completion of this offering, they can be freely sold in the public market upon issuance,subject to the lock- up agreements referred to above. If a large number of these shares are sold in the public market, the sales could reduce the tradingprice of our Class A common stock. Also, in the future, we may issue shares of our Class A common stock in connection with investments or acquisitions. The amount of shares ofour Class A common stock issued in connection with an investment or acquisition could constitute a material portion of our thenoutstanding sharesof common stock. The market price of the shares of our Class A common stock could decline as a result of the sale of a substantial number of our shares of Class Acommon stock in the public market or the perception in the market that the holders of a large number of shares intend to sell their shares. Our future operating results may fluctuate significantly and our current operating results may not be a good indication of our futureperformance. Fluctuations in our quarterly financial results could affect our stock price in the future. Our operating results have historically varied from period- to- period, and we expect that they will continue to do so as a result of a number offactors, many of which are outside of our control. If our quarterly financial results or our forecasts of future financial results fail to meet theexpectations of securities analysts and investors, our Class A common stock price could be negatively affected. Any volatility in our quarterlyfinancial results may make it more difficult for us to raise capital in the

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future or pursue acquisitions that involve issuances of our stock. Our operating results for prior periods may not be effective predictors of our futureperformance. Factors associated with our industry, the operation of our business and the markets for our products may cause our quarterly financial results tofluctuate, including:







ongoing economic uncertainty;



negative effects to our reputation from real or perceived quality or health issues with our food products;

our ability to protect or maintain our intellectual property;

the failure of our information technology or administrative systems to perform as anticipated;

data security breaches and the release of confidential customer information;



our ability to renegotiate expiring collective bargaining agreements and new collective bargaining agreements;

changes in law;

additional indebtedness incurred in the future;


claims made against us resulting in litigation;

increases in commodity prices;

severe weather and other natural disasters in areas in which we have stores;

wartime activities, threats or acts of terror or a widespread regional, national or global health epidemic;

changes to financial accounting standards regarding store leases;

our high level of fixed lease obligations; and

impairment of our goodwill.

Any one of the factors above or the cumulative effect of some of the factors referred to above may result in significant fluctuations in ourquarterly financial and other operating results, including

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fluctuations in our key metrics. This variability and unpredictability could result in our failing to meet our internal operating plan or the expectationsof securities analysts or investors for any period. If we fail to meet or exceed such expectations for these or any other reasons, the market price of ourshares could fall substantially and we could face costly lawsuits, including securities class action suits. In addition, a significant percentage of ouroperating expenses are fixed in nature and based on forecasted revenue trends. Accordingly, in the event of revenue shortfalls, we are generallyunable to mitigate the negative impact on margins in the short term. The supervoting rights of our Class B common stock and other anti- takeover provisions in our organizational documents and Delaware lawmight discourage or delay attempts to acquire us that you might consider favorable. Our amended and restated certificate of incorporation and bylaws that will be in effect at the closing of our initial public offering will containprovisions that may make the acquisition of our company more difficult, including the following:

any transaction that would result in a change in control of our company will require the approval of a majority of our outstandingClass B common stock voting as a separate class;

we have a dual class common stock structure, which provides Sterling Investment Partners with the ability to control the outcomeof matters requiring stockholder approval, even if they own significantly less than a majority of the shares of our outstandingClass A and Class B common stock;

when we no longer have outstanding shares of our Class B common stock, certain amendments to our amended and restatedcertificate of incorporation or bylaws will require the approval of two- thirds of the combined vote of our thenoutstanding sharesof common stock;

when we no longer have outstanding shares of our Class B common stock, vacancies on our board of directors will be able to befilled only by our board of directors and not by stockholders;

our board of directors will be classified into three classes of directors with staggered three- year terms so that not all members ofour board of directors are elected at one time and directors will only be able to be removed from office for cause;

when we no longer have outstanding shares of our Class B common stock, our stockholders will only be able to take action at ameeting of stockholders and not by written consent;

only our chairman or a majority of our board of directors will be authorized to call a special meeting of stockholders;

advance notice procedures will apply for stockholders to nominate candidates for election as directors or to bring matters beforean annual meeting of stockholders;

our board of directors is expressly authorized to make, alter or repeal our amended and restated bylaws;

our amended and restated certificate of incorporation will authorize undesignated preferred stock, the terms of which may beestablished, and shares of which may be issued, without stockholder approval, and which may include super voting, specialapproval, dividend, or other rights or preferences superior to the rights of the holders of common stock; and

certain litigation against us can only be brought in Delaware.

In addition, we are governed by the provisions of Section 203 of the Delaware General Corporation Law (the "DGCL"), which limits the abilityof certain stockholders owning in excess of

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15% of our outstanding voting stock to merge or combine with us. Although we believe these provisions collectively provide for an opportunity toobtain greater value for stockholders by requiring potential acquirers to negotiate with our board of directors, they would apply even if an offerrejected by our board were considered beneficial by some stockholders. In addition, these provisions may frustrate or prevent any attempts by ourstockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors,which is responsible for appointing the members of our management. These anti- takeover provisions and other provisions under Delaware law could discourage, delay or prevent a transaction involving a change incontrol of our company, even if doing so would benefit our stockholders. These provisions could also discourage proxy contests and make it moredifficult for you and other stockholders to elect directors of your choosing and to cause us to take other corporate actions you desire. For information regarding these and other provisions, see "Description of Capital Stock- Anti- Takeover Provisions." Failure to establish and maintain effective internal controls in accordance with Section 404 of the Sarbanes- Oxley Act could have amaterial adverse effect on our business and stock price. We are not currently required to comply with the rules of the Securities and Exchange Commission (the "SEC") implementing Section 404 ofthe Sarbanes- Oxley Act and are therefore not required to make a formal assessment of the effectiveness of our internal control over financialreporting for that purpose. Upon becoming a public company, we will be required to comply with the SEC's rules implementing Sections 302 and 404of the Sarbanes- Oxley Act, which will require management to certify financial and other information in our quarterly and annual reports and providean annual management report on the effectiveness of controls over financial reporting. Though we will be required to disclose changes made in ourinternal controls and procedures on a quarterly basis, we will not be required to make our first annual assessment of our internal control over financialreporting pursuant to Section 404 until the year following our first annual report required to be filed with the SEC. However, as an "emerging growthcompany," as defined in the JOBS Act, our independent registered public accounting firm will not be required to formally attest to the effectivenessof our internal control over financial reporting pursuant to Section 404 until the later of the year following our first annual report required to be filedwith the SEC or the date we are no longer an emerging growth company. At such time, our independent registered public accounting firm may issue areport that is adverse in the event it is not satisfied with the level at which our controls are documented, designed or operating. To comply with the requirements of being a public company, we may need to undertake various actions, such as implementing new internalcontrols and procedures and hiring additional accounting or internal audit staff. Testing and maintaining internal control can divert our management'sattention from other matters that are important to the operation of our business. In addition, when evaluating our internal control over financialreporting, we may identify material weaknesses that we may not be able to remediate in time to meet the applicable deadline imposed upon us forcompliance with the requirements of Section 404. If we identify material weaknesses in our internal control over financial reporting or are unable tocomply with the requirements of Section 404 in a timely manner or assert that our internal control over financial reporting is effective, or if ourindependent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting,investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our Class A common stock could benegatively affected, and we could become subject to investigations by the stock exchange on which our securities are listed, the SEC or otherregulatory authorities, which could require additional financial and management resources.

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We are an "emerging growth company" and we cannot be certain if the reduced disclosure requirements applicable to emerging growthcompanies will make our Class A common stock less attractive to investors. We qualify as an "emerging growth company" under the JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions fromcertain disclosure requirements that are applicable to other public companies that are not emerging growth companies. Accordingly, we have includedonly four, rather than five, years of selected financial data due to a change in our fiscal year, included detailed compensation information for only ourthree most highly compensated executive officers and have not included a compensation discussion and analysis (CD&A) of our executivecompensation programs in this prospectus. For so long as we are an emerging growth company, we will not be required to:

have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes- Oxley Act;

comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to theauditor's report providing additional information about the audit and the financial statements (i.e., an auditor discussion andanalysis);

submit certain executive compensation matters to shareholder advisory votes, such as "say- on- pay," "say- on- frequency" and"say- on- golden parachutes"; and

disclose certain executive compensation related items such as the correlation between executive compensation and performanceand comparisons of the CEO's compensation to median employee compensation.

In addition, while we are an emerging growth company the JOBS Act will permit us to delay the adoption of certain accounting standards until thosestandards would otherwise apply to private companies. We have elected to delay the adoption of new or revised accounting pronouncementsapplicable to public and private companies until such pronouncements become mandatory for private companies. As a result, our financial statementsmay not be comparable to the financial statements of issuers who are required to comply with the effective dates for new or revised accountingstandards that are applicable to public and private companies. We will remain an emerging growth company until the earliest to occur of: (i) our reporting $1 billion or more in annual gross revenues; (ii) theend of fiscal 2019; (iii) our issuance, in a three year period, of more than $1 billion in non- convertible debt; and (iv) the end of the fiscal year inwhich the market value of our common stock held by non- affiliates exceeds $700 million on the last business day of our second fiscal quarter. We cannot predict if investors will find our Class A common stock less attractive because we may rely on these exemptions. If some investorsfind our Class A common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may bemore volatile. We will incur significant increased costs as a result of operating as a public company, and our management will be required to divertattention from operational and other business matters to devote substantial time to public company requirements. We have operated as a private company. As a public company, we will incur significant legal, accounting and other expenses that we did notincur as a private company. For example, we will be required to comply with the reporting requirements of the Securities Exchange Act of 1934, asamended (the "Exchange Act"), the rules and regulations of the NASDAQ Global Market and the requirements of the Sarbanes- Oxley Act, as well asrules and regulations subsequently implemented by the SEC and the NASDAQ Global Market, including the establishment and maintenance ofeffective disclosure and financial controls and changes in corporate governance practices. We expect that

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compliance with these requirements will increase our legal and financial compliance costs and will make some activities more time- consuming andcostly. In addition, we expect that our management and other personnel will need to divert attention from operational and other business matters todevote substantial time to these public company requirements. In particular, we expect to incur significant expenses and devote substantialmanagement effort toward ensuring compliance with the requirements of Section 404 of the Sarbanes- Oxley Act. In that regard, we currently have alimited internal audit function, and we will need to hire additional accounting and financial staff with appropriate public company experience andtechnical accounting knowledge and provide significant management oversight. We may not be successful in implementing these requirements, andimplementing them could materially adversely affect our business, results of operations and financial condition. If we do not implement or complywith such requirements in a timely manner, we might be subject to sanctions or investigation by regulatory authorities. Any such action could harmour reputation and the confidence of investors and customers in our company, and could materially adversely affect our business and cause ourClass A common stock price to decline. We also expect that operating as a public company will make it more difficult and more expensive for us toobtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher coststo obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified people to serve on our board ofdirectors and our board committees or as executive officers. Our business and stock price may suffer as a result of our lack of public company operating experience. In addition, if securities or industryanalysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume coulddecline. We have been a privately- held company, and our lack of public company operating experience may make it difficult to forecast and evaluateour future prospects. If we are unable to execute our business strategy, either as a result of our inability to effectively manage our business in a publiccompany environment or for any other reason, our business, prospects, financial condition and results of operations may be harmed. The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us orour business. As a new public company we do not currently have and may never obtain research coverage by securities and industry analysts. If nosecurities or industry analysts commence coverage of our company, the trading price for our stock would be negatively impacted. If we obtainsecurities or industry analyst coverage and if one or more of the analysts who covers us downgrades our stock or publishes inaccurate or unfavorableresearch about our business, our stock price would likely decline. If one or more of these analysts ceases coverage of us or fails to publish reports onus regularly, demand for our stock could decrease, which could cause our stock price and trading volume to decline.

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SPECIAL NOTE REGARDING FORWARD- LOOKING STATEMENTS This prospectus contains forward- looking statements that are subject to risks and uncertainties. All statements other than statements of historicalfact included in this prospectus are forward- looking statements. Forward- looking statements give our current expectations and projections relating toour financial condition, results of operations, plans, objectives, future performance and business. You can identify forward- looking statements by thefact that they do not relate strictly to historical or current facts. These statements may include words such as "anticipate," "estimate," "expect,""project," "forecast," "continue," "plan," "intend," "believe," "may," "will," "should," "can have," "likely" and other words and terms of similarmeaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. For example, allstatements we make relating to our estimated and projected store openings, costs, expenditures, cash flows, growth rates and financial results, ourplans and objectives for future operations, growth or initiatives, strategies or the expected outcome or impact of pending or threatened litigation areforward- looking statements. All forward- looking statements are subject to risks and uncertainties that may cause actual results to differ materiallyfrom those that we expected, including:







ongoing economic uncertainty;


our history of net losses;


negative effects to our reputation from real or perceived quality or health issues with our food products;

restrictions on our use of the Fairway name other than on the East Coast and in California and certain parts of Michigan andOhio;

our ability to protect or maintain our intellectual property;

the failure of our information technology or administrative systems to perform as anticipated;

data security breaches and the release of confidential customer information;



our ability to renegotiate expiring collective bargaining agreements and new collective bargaining agreements;

changes in law;

additional indebtedness incurred in the future;

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claims made against us resulting in litigation;

increases in commodity prices;

severe weather and other natural disasters in areas in which we have stores;

wartime activities, threats or acts of terror or a widespread regional, national or global health epidemic;

changes to financial accounting standards regarding store leases;

our high level of fixed lease obligations;

impairment of our goodwill; and

other factors discussed under "Risk Factors."

We derive many of our forward- looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions.While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossiblefor us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from ourexpectations, or cautionary statements, are disclosed under the sections entitled "Risk Factors" and "Management's Discussion and Analysis ofFinancial Condition and Results of Operations" in this prospectus. All written and oral forward- looking statements attributable to us, or personsacting on our behalf, are expressly qualified in their entirety by the cautionary statements as well as other cautionary statements that are made fromtime to time in our other SEC filings and public communications. You should evaluate all forward- looking statements made in this prospectus in thecontext of these risks and uncertainties, and you should not rely upon forward- looking statements as predictions of future events. We caution you that the important factors described in the sections in this prospectus entitled "Risk Factors" and "Management's Discussion andAnalysis of Financial Condition and Results of Operations" may not be all of the factors that are important to you. In addition, we cannot assure youthat we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences oraffect us or our operations in the way we expect. Moreover, we operate in a very competitive and rapidly changing environment. New risks emergefrom time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent towhich any factor, or combination of factors, may cause actual results to differ materially and adversely from those contained in any forward- lookingstatements we may make. The forward- looking statements included in this prospectus are made only as of the date hereof. We undertake noobligation to publicly update or revise any forward- looking statement as a result of new information, future events or otherwise, except as otherwiserequired by law.

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USE OF PROCEEDS We estimate that the net proceeds to us from our issuance and sale of 13,363,564 shares of Class A common stock in this offering will beapproximately $133.4 million, assuming an initial public offering price of $11.00 per share, which is the midpoint of the price range listed on thecover page of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. A $1.00 increase (decrease) in the assumed initial public offering price of $11.00 per share would increase (decrease) our net proceeds from thisoffering by approximately $12.4 million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remainsthe same, and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the net proceeds that we receive from this offering for new store growth and other general corporate purposes, after (i) payingaccrued but unpaid dividends on our Series A preferred stock totaling approximately $16.2 million (averaging $376.16 per share of Series A preferredstock), (ii) paying accrued but unpaid dividends on our Series B preferred stock totaling approximately $48.8 million ($762.35 per share of Series Bpreferred stock), (iii) paying $9.2 million to an affiliate of Sterling Investment Partners in connection with the termination of our managementagreement with such affiliate and (iv) paying contractual initial public offering bonuses to certain members of our management totalingapproximately $7.3 million. If the price per share to the public is below $11.00, which is the midpoint of the price range set forth on the cover page of this prospectus, weintend to proportionately reduce the amount of the net proceeds we use to pay the accrued dividends on our preferred stock, and if the price per shareto the public is above $11.00, we intend to proportionately increase the amount of the net proceeds we use to pay the accrued dividends on ourpreferred stock. The number of shares of Class B common stock that we issue in exchange for our preferred stock (including accrued dividendsthereon that are not being paid in cash with a portion of the proceeds of this offering) will not change if we decrease or increase the amount ofaccrued dividends we pay in cash with the net proceeds of this offering. The accrued dividends of $12,597,184 on the Series A preferred stock that are not paid in cash and the liquidation preference of the Series Apreferred stock of $55,975,400 will be satisfied through the issuance of 6,233,871 shares of Class B common stock in connection with this offering(of which 33,576 shares will automatically convert into 33,576 shares of Class A common stock at the closing of this offering). We received$43,058,000 in the aggregate, or $1,000 per share, upon the issuance of the Series A preferred stock. The accrued dividends of $37,957,698 on theSeries B preferred stock that are not paid in cash and the liquidation preference of the Series B preferred stock of $64,016,980 will be satisfiedthrough the issuance of 9,270,425 shares of Class B common stock in connection with this offering. We received $52,277,000 in the aggregate, or$1,000 per share, upon the issuance of the Series B preferred stock. In addition, we issued Series B preferred stock having a value of $12,739,980 tothe sellers in connection with our acquisition of the four then existing Fairway stores in January 2007. We will not receive any of the proceeds from the sale of the shares by the selling stockholders.

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DIVIDEND POLICY We have never declared or paid cash dividends on our common stock. We currently intend to retain any future earnings for use in the operationof our business and do not intend to declare or pay any cash dividends on our common stock in the foreseeable future. Any further determination topay dividends on our capital stock will be at the discretion of our board of directors, subject to applicable laws, and will depend on our financialcondition, results of operations, capital requirements, general business conditions, and other factors that our board of directors considers relevant. Inaddition, the terms of our senior credit facility contains restrictions on our ability to pay dividends.

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CAPITALIZATION The following table sets forth our cash and cash equivalents and our consolidated capitalization as of December 30, 2012 on:

an actual basis;

a pro forma basis to give effect to (i) our entry into a new senior credit facility on February 14, 2013, consisting of a $275 millionterm loan facility and a $40 million revolving credit facility, with the proceeds of the term loan facility being used to repay$264.5 million of outstanding borrowings (including accrued interest of approximately $5.3 million) under our prior senior creditfacility, pay fees and expenses and provide us with $3.5 million to repay our outstanding subordinated note, (ii) repayment of ouroutstanding subordinated note (including accrued interest of $400,000) on March 6, 2013 ((i) and (ii) collectively, the"Refinancing") and (iii) our repurchase of shares of Class A common stock for $1.5 million in March 2013 (the "StockRepurchase"), as if such transactions had occurred on December 30, 2012; and

a pro forma as adjusted basis to give effect to (i) the Refinancing and the Stock Repurchase, as described above, (ii) our issuanceand sale of 13,363,564 shares of Class A common stock in this offering at an assumed initial public offering price of $11.00 pershare, which is the midpoint of the price range listed on the cover page of this prospectus, after deducting underwriting discountsand commissions and estimated offering expenses payable by us, and the application of the proceeds from the offering asdescribed under "Use of Proceeds" and (iii) our issuance of 15,504,296 shares of Class B common stock (of which 33,576 shareswill automatically convert into 33,576 shares of Class A common stock at the closing of this offering) in exchange for the sharesof our outstanding preferred stock, based on an aggregate liquidation value of $68,572,584 for the Series A preferred stock(including accrued but unpaid dividends thereon not paid in cash with a portion of the proceeds of this offering) and$101,974,678 for the Series B preferred stock (including accrued but unpaid dividends thereon not paid in cash with a portion ofthe proceeds of this offering), as if such transactions had occurred on December 30, 2012.

You should read the following table in conjunction with the sections entitled "Use of Proceeds," "Selected Historical Consolidated Financial andOther Data," "Management's Discussion and Analysis

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Table of Contentsof Financial Condition and Results of Operations" and our consolidated financial statements and related notes included elsewhere in this prospectus.

As of December 30, 2012

Actual Pro FormaPro Forma

As Adjusted(unaudited)

(dollars in thousands)Cash and cashequivalents(1) $ 29,172 $ 23,392 $ 75,339

Long- term debt(including currentmaturities):Senior credit facility(2) $ 247,294 $ 259,390 $ 259,390Subordinated note(3) 7,333 - -

Total debt 254,627 259,390 259,390Redeemable preferredstockSeries A preferredstock, $0.001 par value,52,982 sharesauthorized, 43,058shares issued andoutstanding actual, noshares issued andoutstanding as adjusted(inclusive of cumulativedeemed dividends of$25,752) 81,727 81,727 -Series B preferredstock, $0.001 par value,64,018 sharesauthorized, 64,016.98shares issued andoutstanding actual, noshares issued andoutstanding as adjusted(inclusive of cumulativedeemed dividends of$80,789) 144,806 144,806 -

Total redeemablepreferred stock 226,533 226,533 -Stockholders' equityCommon stock, $0.001par value, 150,000shares authorized,105,473 shares issuedand outstanding actual,no shares authorized,issued or outstanding asadjusted - - -Class A common stock,$0.00001 par value pershare; no sharesauthorized, issued oroutstanding, actual;150,000,000 sharesauthorized and27,767,540 sharesissued and outstandingas adjusted - - -Class B common stock,$0.001 par value pershare; no sharesauthorized, issued oroutstanding, actual;31,000,000 sharesauthorized and

- - 15

15,470,720 sharesissued and outstandingas adjustedPreferred stock, $0.001par value per share; noshares authorized,issued or outstanding,actual and pro forma;5,000,000 sharesauthorized, no sharesissued and outstandingas adjusted - - -Additional paid- incapital(4) - (1,500) 302,459Accumulated deficit(5) (219,570) (225,039) (251,411)

Total stockholders'(deficit) equity (219,570) (226,539) 51,063

Total capitalization $ 261,590 $ 259,384 $ 310,453

(1)The following table shows the pro forma and pro forma as adjusted adjustments to cash and cash equivalents as a result of the refinancingof our 2012 senior credit facility in February 2013, the repayment of our outstanding subordinated promissory note in March 2013, therepurchase of shares of our Class A common stock in March 2013 and the net proceeds of the offering to us after deducting underwritingdiscounts and commissions and estimated offering expenses payable

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by us (adjusted for approximately $1.0 million of offering expenses paid by us prior to December 30, 2012), and the application of theproceeds from the offering as described under "Use of Proceeds":

As of December 30, 2012(dollars inthousands)

Actual cash and cash equivalents $ 29,172Plus: proceeds to us from our 2013 senior credit facility after repaying outstanding loans under our 2012 senior credit facility andfees and expenses 3,453Less: repayment of principal and accrued interest through the date of payment on subordinated promissory note (7,733)Less: repurchase of 129,963 shares of Class A common stock (1,500)

Pro forma cash and cash equivalents 23,392Plus: net cash proceeds to us from this offering 51,947

Pro forma as adjusted cash and cash equivalents $ 75,339

(2)Net of unamortized original issue discount of approximately $12.1 million actual and $15.6 million pro forma and pro forma as adjusted.See Notes 8 and 16 to our financial statements included elsewhere in this prospectus for more information regarding our original issuediscount.

(3)Net of $240,000 of deferred interest, actual. The deferred interest, which is classified as other long- term liabilities in our financialstatements, was paid in full in connection with the repayment of this note.

(4)On a pro forma as adjusted basis, additional paid- in capital includes adjustments for our (i) issuance of 15,504,296 shares of Class Bcommon stock (of which 33,576 shares will automatically convert into 33,576 shares of Class A common stock at the closing of thisoffering) in exchange for the shares of our outstanding preferred stock (including accrued but unpaid dividends thereon that are not beingpaid in cash with a portion of the proceeds of this offering), based on an aggregate liquidation value of $68,572,584 for the Series Apreferred stock (including accrued but unpaid dividends not paid in cash with a portion of the proceeds of this offering) and $101,974,678for the Series B preferred stock (including accrued but unpaid dividends not paid in cash with a portion of the proceeds of this offering),and (ii) issuance and sale by us of 13,363,564 shares of Class A common stock in this offering at an assumed initial public offering price of$11.00 per share, which is the midpoint of the price range listed on the cover page of this prospectus, after deducting underwritingdiscounts and commissions and estimated offering expenses payable by us.

(5)On a pro forma adjusted basis, total stockholders' (deficit) equity reflects (i) the write- off of deferred management fees of $877,000 and(ii) a compensation charge for the contractual bonuses due to certain members of our management as a result of the offering being madehereby totaling approximately $7.3 million.

The table above excludes:

1,930,822 shares of Class A common stock issuable upon the exercise of outstanding warrants having an exercise price of$0.00008 per share;

2,296,838 shares of Class A common stock subject to RSUs to be granted under our 2013 Long- Term Incentive Plan inconnection with this offering;

649,360 shares of Class A common stock issuable upon the exercise of options to be granted under our 2013 Long- TermIncentive Plan in connection with this offering having an exercise price equal to the initial public offering price set forth on thecover page of this prospectus;

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486,412 shares of Class A common stock issuable upon the exercise of options to be granted under our 2013 Long- TermIncentive Plan in connection with this offering having an exercise price equal to 120% of the initial public offering price set forthon the cover page of this prospectus; and

2,039,526 shares of Class A common stock reserved for future grants under our 2013 Long- Term Incentive Plan.

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DILUTION After giving effect to the Exchange and the Refinancing and Stock Repurchase described above under "Capitalization," our pro forma nettangible book value as of December 30, 2012 would have been approximately $(186.2) million, or approximately $(6.68) per share. Pro forma nettangible book value per share represents the amount of our total tangible assets less the amount of our total liabilities, divided by the number of sharesof common stock outstanding at December 30, 2012, prior to the sale by us of 13,363,564 shares of our Class A common stock offered in thisoffering, but giving effect to the Exchange, the Refinancing and the Stock Repurchase. Dilution in pro forma net tangible book value per sharerepresents the difference between the amount per share paid by investors in this offering and the net tangible book value per share of our commonstock outstanding immediately after this offering. After giving effect to the completion of the Exchange, the Refinancing, the Stock Repurchase and the sale by us of 13,363,564 shares of ourClass A common stock in this offering, based upon an assumed initial public offering price of $11.00 per share, the midpoint of the price range setforth on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated expenses payable by us inconnection with this offering, our pro forma as adjusted net tangible book value as of December 30, 2012 would have been approximately$(70.1) million, or $(1.70) per share of common stock. This represents an immediate increase in pro forma net tangible book value of $4.98 per shareto existing stockholders and immediate dilution of $12.70 per share to new investors purchasing shares of Class A common stock in this offering atthe initial public offering price. The following table illustrates this per share dilution:

Assumed initial publicoffering price per share $ 11.00Pro forma net tangible bookvalue (deficit) per share as ofDecember 30, 2012 (whichgives effect to the Exchange,the Refinancing and theStock Repurchase) (6.68)Increase in net tangible bookvalue per share attributableto new investors 4.98

Pro forma as adjusted nettangible book value (deficit)per share as of December 30,2012 (which gives effect tothe Exchange, theRefinancing, the StockRepurchase and thisoffering) (1.70)

Dilution per share to newinvestors $ 12.70

The following table summarizes, as of December 30, 2012, on a pro forma as adjusted basis giving effect to the Exchange, the Refinancing, theStock Repurchase and the sale by us of 13,363,564 shares of Class A common stock in this offering, the number of shares of our Class A commonstock purchased from us, the aggregate cash consideration paid to us and the average price per share paid to us by existing stockholders and to be paidby new investors purchasing shares of our Class A common stock from us in this offering. The table assumes an initial public offering price of $11.00per share, the midpoint of the price range set forth on the cover page of this prospectus, before deducting estimated

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Table of Contentsunderwriting discounts and commissions and estimated offering expenses payable by us in connection with this offering.

Shares Purchased Total Consideration AveragePrice

Per ShareNumber Percentage Amount PercentageExisting stockholders(1) 27,874,696 67.6% $170,547,262 53.7% $ 6.12New investors 13,363,564 32.4 146,999,204 46.3% 11.00

Total 41,238,260 100% $317,546,466 100%

(1)Gives effect to our issuance of 15,504,296 shares of our Class B common stock, based on a price of $11.00 per share, in exchange for ouroutstanding preferred stock (including accrued but unpaid dividends thereon that are not being paid in cash with a portion of the proceeds ofthis offering.)

A $1.00 increase (decrease) in the assumed initial public offering price of $11.00 per share, the midpoint of the price range set forth on the coverpage of this prospectus, would increase (decrease) the total consideration paid by investors participating in this offering by $13.4 million, or increase(decrease) the percentage of total consideration paid by investors participating in this offering by 2.2% (2.4%), assuming that the number of sharesoffered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts andcommissions and estimated offering expenses payable by us. Sales of shares of Class A common stock by the selling stockholders in this offering will reduce the number of shares held by our existingstockholders to 27,588,260, or approximately 66.9% of the total shares of our common stock outstanding after this offering, and will increase thenumber of shares held by new investors to 13,650,000, or approximately 33.1% of the total shares of our common stock outstanding after thisoffering. Except as otherwise indicated, the discussion and tables above assume no exercise of the underwriters' option to purchase additional shares. Ifthe underwriters' option to purchase additional shares is exercised in full, our existing stockholders would own approximately 61.9% and our newinvestors would own approximately 38.1% of the total number of shares of our common stock outstanding after this offering. The tables and calculations above are based on shares of common stock outstanding as of December 30, 2012 (after giving effect to theExchange and the Stock Repurchase) and exclude:

1,930,822 shares of Class A common stock issuable upon the exercise of outstanding warrants having an exercise price of$0.00008 per share;

2,296,838 shares of Class A common stock subject to RSUs to be granted under our 2013 Long- Term Incentive Plan inconnection with this offering;

649,360 shares of Class A common stock issuable upon the exercise of options to be granted under our 2013 Long- TermIncentive Plan in connection with this offering having an exercise price equal to the initial public offering price set forth on thecover page of this prospectus;

486,412 shares of Class A common stock issuable upon the exercise of options to be granted under our 2013 Long- TermIncentive Plan in connection with this offering having an exercise price equal to 120% of the initial public offering price set forthon the cover page of this prospectus; and

2,039,526 shares of Class A common stock reserved for future grants under our 2013 Long- Term Incentive Plan.

To the extent that any options or other equity incentive grants are issued in the future with an exercise price or purchase price below the initialpublic offering price, new investors will experience further dilution.

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA The following tables summarize our financial data as of the dates and for the periods indicated. We have derived the selected consolidatedfinancial data for the fiscal years ended March 29, 2009, March 28, 2010, April 3, 2011 and April 1, 2012 from our audited consolidated financialstatements for such years and for the thirty- nine weeks ended January 1, 2012 and December 30, 2012 from our unaudited consolidated financialstatements for such periods. Our audited consolidated financial statements as of April 3, 2011 and April 1, 2012 and for the fiscal years endedMarch 28, 2010, April 3, 2011 and April 1, 2012 have been included in this prospectus. Our unaudited consolidated financial statements as ofDecember 30, 2012 and for the thirty- nine weeks ended January 1, 2012 and December 30, 2012 have been included in this prospectus and, in theopinion of management, include all adjustments (inclusive only of normally recurring adjustments) necessary for a fair presentation. Results ofoperations for an interim period are not necessarily indicative of results for a full year. Each of our fiscal years ended March 29, 2009, March 28,2010 and April 1, 2012 consists of 52 weeks; our fiscal year ended April 3, 2011 consists of 53 weeks. The differing length of certain fiscal yearsmay affect the comparability of certain data and the temporary closure of our Red Hook, Brooklyn, New York store due to damage sustained duringHurricane Sandy may affect the comparability of certain data for the thirty- nine weeks ended January 1, 2012 and December 30, 2012. Since March 2009, we have opened eight food stores (two urban and six suburban) in the Greater New York City metropolitan area, three ofwhich include Fairway Wines & Spirits locations, bringing our total stores open to 12. We opened our Woodland Park, New Jersey store in June2012, our Westbury, New York store in August 2012 and our Kips Bay, Manhattan, New York store in late December 2012, and had to temporarilyclose our Red Hook, Brooklyn, New York store from October 29, 2012 through February 28, 2013 due to damage from Hurricane Sandy. Our income(loss) from operations in each period shown has been affected by the number of stores open and the number of stores in the process of being openedin each period and, for the thirty- nine weeks ended December 30, 2012, the closure of our Red Hook store. We expect to open an additional foodstore in Manhattan's Chelsea neighborhood in summer 2013 and in Nanuet, New York in fall 2013. We believe our food stores are among the most productive in the industry in net sales per store and net sales per square foot as a result of ourdistinctive merchandising strategies, value proposition and efficient operating structure. As the Selected Operating Data table reflects, however, ouraverage net sales per store and average net sales per gross square foot have declined as we have increased the number of suburban stores that weoperate. Our suburban stores are larger in size (average of 65,000 gross square feet (39,000 selling square feet)) than our urban stores that havegreater real estate constraints (average of 51,000 gross square feet (23,000 selling square feet)) and generate comparatively lower sales andcontribution margin. While we have increased our net sales from $401.2 million in fiscal 2010 to $554.9 million in fiscal 2012, or 38.3%, and our Adjusted EBITDAfrom $23.9 million in fiscal 2010 to $35.8 million in fiscal 2012, or 49.8%, our comparable store sales have been impacted by sales transfer from ourexisting stores to our newly opened stores that are in closer proximity to some of our customers and by our price optimization initiative that welaunched across our store network late in fiscal 2011 to refine the pricing and balance of our promotional activities across our mix of higher- marginperishable items and everyday value- oriented conventional grocery items. Our price optimization initiative has resulted in an increase in our grossmargins. We had net losses of $7.1 million, $18.6 million and $11.9 million in fiscal 2010, fiscal 2011 and fiscal 2012, respectively. For a discussionof Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net loss, see note 11 below. The selected historical consolidated data presented below should be read in conjunction with the sections entitled "Risk Factors," "Management'sDiscussion and Analysis of Financial Condition and

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Table of ContentsResults of Operations" and the consolidated financial statements and the related notes thereto and other financial data included elsewhere in thisprospectus.Statement of Income Data


2009(1)March 28,

2010April 3,

2011April 1,

2012January 1,

2012December 30,

2012(unaudited) (unaudited)

(dollars in thousands, except for per share data)Net sales(2) $ 343,106 $ 401,167 $ 485,712 $ 554,858 $ 404,527 $ 482,539Cost of sales andoccupancy costs(3) 230,912 271,599 326,207 368,728 269,641 326,808

Gross profit(4) 112,194 129,568 159,505 186,130 134,886 155,731Direct storeexpenses 70,371 85,840 109,867 132,446 97,659 111,362General andadministrativeexpenses(5) 28,998 34,676 40,038 44,331 30,598 39,746Store openingcosts(6) 3,066 3,949 10,006 12,688 11,181 19,349

Income (loss) fromoperations 9,759 5,103 (406) (3,335) (4,552) (14,726)Businessinterruptioninsurancerecoveries(7) - - - - - 2,500Interest expense,net (10,279) (13,787) (19,111) (16,918) (12,370) (17,439)Loss on earlyextinguishment ofdebt(8) - (2,837) (13,931) - - -

Loss beforeincome taxes (520) (11,521) (33,448) (20,253) (16,922) (29,665)Income tax benefit(provision)(9) 851 4,426 14,860 8,304 6,940 (26,514)

Net income (loss) $ 331 $ (7,095) $ (18,588) $ (11,949) $ (9,982) $ (56,179)

Net (loss)attributable tocommonstockholders(10) $ (10,836) $ (23,750) $ (39,021) $ (36,677) $ (28,518) $ (78,289)

Net (loss) pershare attributableto commonstockholders (basicand diluted)(10) $ (0.89) $ (1.95) $ (3.22) $ (3.01) $ (2.33) $ (6.35)Net income (loss)per share(pro forma basicand diluted)(10) $ 0.02 $ (0.34) $ (0.84) $ (0.51) $ (0.43) $ (2.19)

Weighted averagenumber ofcommon sharesoutstanding (in000s)(10) 12,187 12,190 12,122 12,189 12,245 12,324Basic and dilutedPro forma basicand diluted 18,027 20,945 22,151 23,588 23,399 25,703

Other Financial Data


EndedMarch 29,

2009March 28,

2010April 3,

2011April 1,

2012January 1,

2012December 30,


Adjusted EBITDA(11) $ 21,785 $ 23,874 $29,309 $35,775 $ 24,905 $ 33,842

Depreciation and amortization $ 7,175 $ 10,233 $14,588 $19,202 $ 13,937 $ 15,900Capital expenditures $ 21,650 $ 21,658 $27,797 $44,528 $ 35,591 $ 45,199Gross margin(12) 32.7% 32.3% 32.8% 33.5% 33.3% 32.3%Adjusted EBITDA margin(13) 6.3% 6.0% 6.0% 6.4% 6.2% 7.0%Pro forma Adjusted EBITDA margin(13)(14) 6.3% 6.0% 6.0% 6.4% 6.2% 6.8%

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2009March 28,

2010April 3,

2011April 1,

2012January 1,

2012December 30,

2012Locations at end of period(15) 5 5 7 9 9 12Total gross square feet at end of period 292,774 292,774 454,146 552,900 552,900 741,375Change in square footage for period(16) 20.7% - 55.1% 21.7% 21.7% 34.1%Average store sizeGross square feet 58,555 58,555 64,878 61,433 61,433 61,781Selling square feet(17) 31,157 31,157 36,348 34,976 34,976 35,417Average net sales per square footGross square foot(18) $1,409 $1,370 $1,307 $1,029 $779 $836Selling square foot(18) $2,774 $2,575 $2,457 $1,859 $1,407 $1,461Average net sales per store per week ($000)(19) $1,642 $1,543 $1,472 $1,246 $1,257 $1,242Comparable store sales growth (decrease) per period(20) 10.1% 0.5% (4.3)% (7.9)% (7.8)% (3.5)%

New stores opened in period (location/date) Paramus,

NJ(3/2009)

-

PelhamManor, NY(4/2010);Stamford,

CT(11/2010)


Douglaston,NY

(11/2011)


Douglaston,NY

(11/2011)

WoodlandPark, NJ(6/2012)

Westbury, NY(8/2012)

Kips Bay, NY(12/2012)

Balance Sheet DataMarch 29,

2009(1)March 28,

2010April 3,

2011April 1,

2012December 30,


Cash and cash equivalents $ 15,816 $ 22,594 $ 58,067 $ 30,172 $ 29,172Total assets 209,293 242,206 313,665 321,590 339,178Total debt(21) 93,747 122,544 194,297 203,552 254,627Redeemable preferred stock 120,730 146,794 179,695 204,423 226,533Total stockholders' deficit (41,792) (65,542) (104,562) (141,364) (219,570)

(1)Amounts have been reclassified to match presentation of subsequent years.

(2)Our Red Hook store was temporarily closed beginning October 29, 2012 due to damage sustained in Hurricane Sandy. During the period inthe prior fiscal year corresponding to the period in the current fiscal year that this store was closed, net sales at the Red Hook store wereapproximately $12.7 million.

(3)Excludes depreciation and amortization.

(4)Our Red Hook store was temporarily closed beginning October 29, 2012 due to damage sustained in Hurricane Sandy. Managementestimates that during the period in the prior fiscal year corresponding to the period in the current fiscal year that this store was closed, theRed Hook store generated approximately $4 million of gross profit.

(5)In the thirty- nine weeks ended December 30, 2012, we recognized approximately $3.0 million for reimbursable ongoing business expensesand remediation costs incurred in connection with Red Hook and recorded this amount as a reduction in general and administrativeexpense, a direct offset to the associated expenses.

(6)Costs (principally payroll, rent expense and real estate taxes) incurred in opening new stores are expensed as incurred. During fiscal 2009,we incurred $3.1 million of store opening costs related to the store we opened during fiscal 2009. During fiscal 2010 and fiscal 2011, weincurred $3.9 million and $6.8 million, respectively, of store opening costs related to the two stores we opened during fiscal 2011. Duringfiscal 2011 and fiscal 2012, we incurred $3.2 million and $11.9 million, respectively, of store opening costs related to the two stores weopened during fiscal 2012. During

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fiscal 2012, we incurred $0.7 million of store opening costs related to the store we opened in the first quarter of fiscal 2013. During thethirty- nine weeks ended January 1, 2012 we incurred $11.2 million of store opening costs related to the two stores we opened during fiscal2012 and during the thirty- nine weeks ended December 30, 2012 we incurred $18.9 million and $400,000 of store opening costs related tothe three stores we opened in that period and the reopening of our Red Hook, Brooklyn, New York store, respectively.

(7)Represents non- refundable reimbursement from our insurance carriers for business interruption losses sustained due to the temporaryclosure of our Red Hook store as a result of damage sustained during Hurricane Sandy.

(8)In fiscal 2010, we incurred a loss on early extinguishment of debt in connection with the refinancing of our then existing first and secondlien credit agreements. In fiscal 2011, we incurred a loss on early extinguishment of debt in connection with the refinancing of our thenexisting credit agreement with our 2011 senior credit facility that we subsequently refinanced in August 2012.

(9)During the thirteen weeks ended December 30, 2012, we recorded a partial valuation allowance against our December 30, 2012 deferredtax asset. See Note 13 to our financial statements appearing elsewhere in this prospectus.

(10)Common stockholders do not share in net income unless earnings exceed the unpaid dividends on our preferred stock. Accordingly, prior tothis offering, there were no earnings available for common stockholders because in fiscal 2010, fiscal 2011, fiscal 2012 and the thirty- nineweeks ended January 1, 2012 and December 30, 2012 we reported a net loss and in fiscal 2009 unpaid dividends exceeded our net income.During any period in which we had a net loss, the loss was attributed only to the common stockholders. Net income (loss) per commonshare (pro forma basic and diluted) and the pro forma weighted average number of shares gives effect to the exchange of our thenoutstanding preferred stock (including accrued but unpaid dividends thereon that exceed the portion of the proceeds of this offering beingutilized to pay accrued dividends) for shares of our Class B common stock, based on a price of $11.00 per share, as if such exchange hadoccurred on the last day of each period. We will not have any preferred stock outstanding after this offering.

A reconciliation of the denominator used in the calculation of pro forma basic and diluted net income (loss) per common share is asfollows:


2009March 28,

2010April 3,

2011April 1,

2012January 1,

2012December 30,

2012(in thousands)

Weightedaverage numberof commonsharesoutstanding,basic anddiluted 12,187 12,190 12,122 12,189 12,245 12,324Issuance ofshares in theExchange 5,840 8,755 10,029 11,399 11,154 13,379

Weightedaverage numberof commonsharesoutstanding,pro forma basicand diluted 18,027 20,945 22,157 23,588 23,399 25,703

Our Class A common stock and Class B common stock will share equally on a per share basis in our net income or net loss.

(11)We present Adjusted EBITDA, a non- GAAP measure, in this prospectus to provide investors with a supplemental measure of ouroperating performance. We believe that Adjusted EBITDA is a useful performance measure and is used by us to facilitate a comparison ofour operating performance on a consistent basis from period- to- period and to provide for a more complete

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understanding of factors and trends affecting our business than GAAP measures can provide alone. Our board of directors and managementalso use Adjusted EBITDA as one of the primary methods for planning and forecasting overall expected performance and for evaluating ona quarterly and annual basis actual results against such expectations, and as a performance evaluation metric in determining achievement ofcertain compensation programs and plans for employees, including our senior executives. In addition, the financial covenants in our seniorcredit facility are based on Adjusted EBITDA, subject to dollar limitations on certain adjustments.We define Adjusted EBITDA as earnings before interest expense, income taxes, depreciation and amortization expense, amortization ofdeferred financing costs, store opening costs, loss on early extinguishment of debt, non- recurring expenses and management fees. Omittinginterest, taxes and the other items provides a financial measure that facilitates comparisons of our results of operations with those ofcompanies having different capital structures. Since the levels of indebtedness and tax structures that other companies have are differentfrom ours, we omit these amounts to facilitate investors' ability to make these comparisons. Similarly, we omit depreciation andamortization because other companies may employ a greater or lesser amount of owned property, and because in our experience, whether astore is new or one that is fully or mostly depreciated does not necessarily correlate to the contribution that such store makes to operatingperformance. We will not be paying management fees following the consummation of this offering. We also believe that investors, analystsand other interested parties view our ability to generate Adjusted EBITDA as an important measure of our operating performance and thatof other companies in our industry. Adjusted EBITDA should not be considered as an alternative to net income for the periods indicated asa measure of our performance. Other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting itsusefulness as a comparative measure.The use of Adjusted EBITDA has limitations as an analytical tool and you should not consider this performance measure in isolation from,or as an alternative to, GAAP measures such as net income (loss). Adjusted EBITDA is not a measure of liquidity under GAAP orotherwise, and is not an alternative to cash flow from continuing operating activities. Our presentation of Adjusted EBITDA should not beconstrued as an inference that our future results will be unaffected by the expenses that are excluded from that term or by unusual or non-recurring items. The limitations of Adjusted EBITDA include: (i) it does not reflect our cash expenditures or future requirements for capitalexpenditures or contractual commitments; (ii) it does not reflect changes in, or cash requirements for, our working capital needs; (iii) it doesnot reflect income tax payments we may be required to make; (iv) it does not reflect the cash requirements necessary to service interest orprincipal payments associated with indebtedness; and (v) although depreciation and amortization are non- cash charges, the assets beingdepreciated and amortized often will have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements forsuch replacements.To properly and prudently evaluate our business, we encourage you to review our consolidated financial statements included elsewhere inthis prospectus and the reconciliation to Adjusted EBITDA from net income (loss), the most directly comparable financial measurepresented in accordance with GAAP, set forth in the table below. All of the items included in the reconciliation from net income toAdjusted EBITDA are either (i) non- cash items or (ii) items that management does not consider in assessing our ongoing operatingperformance. In the case of the non- cash items, management believes that investors may find it useful to assess our comparative operatingperformance because the measures without such items are less susceptible to variances in actual performance resulting from depreciation,amortization and other non- cash charges and more reflective of other factors that affect operating performance. In the case of the otheritems that management does not consider in assessing our ongoing operating performance, management believes that investors may find ituseful to assess our operating performance if the measures are

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presented without these items because their financial impact may not reflect ongoing operating performance.


EndedMarch 29,

2009March 28,

2010April 3,

2011April 1,

2012January 1,

2012December 30,


Net income (loss)(a) $ 331 $ (7,095) $(18,588) $(11,949) $ (9,982) $ (56,179)Interest expense, net(b) 10,279 13,787 19,111 16,918 12,370 17,439Depreciation and amortization expense 7,175 10,233 14,588 19,202 13,937 15,900Income tax (benefit) provision(c) (851) (4,426) (14,860) (8,304) (6,940) 26,514Store opening costs(d) 3,066 3,949 10,006 12,688 11,181 19,349Loss on early extinguishment of debt(e) - 2,837 13,931 - - -Non- recurring items(f) 1,285 3,378 3,541 4,573 2,819 8,187Management fees(g) 500 1,211 1,580 2,647 1,520 2,632

Adjusted EBITDA $ 21,785 $ 23,874 $ 29,309 $ 35,775 $ 24,905 $ 33,842

(a)See notes 2, 4, 7 and 9 above.

(b)Includes amortization of deferred financing costs.

(c)See note 9 above.

(d)See note 6 above.

(e)See note 8 above.

(f)Consists principally of recruiting costs relating to the strengthening of our management team, severance costs associated with thetermination of employment of certain executives and, in fiscal 2011 and fiscal 2012, bringing our systems and procedures into compliancewith the Sarbanes- Oxley Act. The thirty- nine weeks ended December 30, 2012 also includes costs associated with our August 2012 re-financing and pre- offering related costs.

(g)Represents management fees paid to an affiliate of Sterling Investment Partners pursuant to an agreement that will terminate upon theconsummation of this offering in exchange for a payment of $9.2 million.

(12)We calculate gross margin by subtracting cost of sales and occupancy costs from net sales and dividing by our net sales for each of theapplicable periods.

(13)We calculated Adjusted EBITDA margin by dividing our Adjusted EBITDA by our net sales for each of the applicable periods. We presentAdjusted EBITDA margin because it is used by management as a performance measure of Adjusted EBITDA generated from net sales. Seenote 11 above for further information regarding how we calculate Adjusted EBITDA, which is a non- GAAP measure. In calculatingAdjusted EBITDA margin for the thirty- nine weeks ended December 30, 2012, Adjusted EBITDA includes the $2.5 million of businessinterruption insurance recoveries we received, approximating the lost EBITDA of the Red Hook, Brooklyn location during the period it wasclosed, but net sales does not include any net sales for the period the store was closed. See note 14 below. Sales at certain of our stores mayhave benefitted from customers of our Red Hook store shopping at our other stores while the Red Hook store was temporarily closed. Seenote 2 above.

(14)We calculated pro forma Adjusted EBITDA margin as described in note 13 above, except that for the thirty- nine weeks endedDecember 30, 2012, we added to net sales $12.7 million, representing

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our net sales at Red Hook during the period in fiscal 2012 corresponding to the same period in fiscal 2013 that the store was temporarilyclosed.

(15)The food stores and adjacent Fairway Wines & Spirits locations in Pelham Manor and Stamford, respectively, are considered as one storelocation in the number of stores and square footage.

(16)For the thirty- nine week periods, represents the percentage change since the end of the comparable period in the prior fiscal year.

(17)Excludes the square footage of the kitchen, bakery, meat department, produce coolers and storage in our stores.

(18)The amount for fiscal 2011 has been decreased (by subtracting one week of average weekly net sales) to reflect a 52- week year so as to becomparable to fiscal 2009, 2010 and 2012. Stores not open for the entire fiscal period have been excluded. Does not include net sales fromour Fairway Wines & Spirits locations. For the thirty- nine week periods ended January 1, 2012 and December 30, 2012, excludes our RedHook store due to its temporary closure as a result of damages suffered during Hurricane Sandy.

(19)We calculated average net sales per store per week by dividing net sales by the number of stores open during the entire fiscal period andthen dividing by the number of weeks in the fiscal period. Does not include net sales from our Fairway Wines & Spirits locations. For thethirty- nine week periods ended January 1, 2012 and December 30, 2012, excludes our Red Hook store due to its temporary closure as aresult of damages suffered during Hurricane Sandy.

(20)Represents the percentage change in our same- store sales as compared to the prior comparable period. Our practice is to include sales froma store in same- store sales beginning on the first day of the fourteenth full month following the store's opening. This practice may differfrom the methods that other food retailers use to calculate comparable or "same- store" sales. As a result, data in this prospectus regardingour same- store sales may not be comparable to similar data made available by other food retailers. Comparable same store sales for fiscal2011 has been adjusted (by subtracting one week of average weekly net sales) to reflect a 52- week year so as to be comparable to fiscal2009, 2010 and 2012. Does not include net sales from our Fairway Wines & Spirits locations. For the thirty- nine week periods endedJanuary 1, 2012 and December 30, 2012, excludes our Red Hook store due to its temporary closure as a result of damages suffered duringHurricane Sandy.

(21)Net of (i) unamortized original issue discount on our senior debt of $1.5 million, $4.2 million, $2.7 million, $1.9 million and $12.1 millionat March 29, 2009, March 28, 2010, April 3, 2011, April 1, 2012 and December 30, 2012, respectively, and (ii) accrued deferred interest onour subordinated note of $0, $0, $443,617, $130,595 and $240,000 at March 29, 2009, March 28, 2010, April 3, 2011, April 1, 2012 andDecember 30, 2012, respectively. The accrued deferred interest is due at maturity and is classified as other long- term liabilities in ourfinancial statements. See Note 8 to our financial statements included elsewhere in this prospectus for more information regarding ouroriginal issue discount.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis in conjunction with the information set forth under "Selected Historical ConsolidatedFinancial and Other Data" and our consolidated financial statements and the notes to those statements included elsewhere in this prospectus. Thestatements in this discussion regarding our expectations of future performance, liquidity and capital resources and other non- historical statements inthis discussion are forward- looking statements. These forward- looking statements are subject to numerous risks and uncertainties, including, butnot limited to, the risks and uncertainties described under "Risk Factors" and "Special Note Regarding Forward- Looking Statements." Our actualresults may differ materially from those contained in or implied by any forward- looking statements.Overview Fairway Market is a high- growth food retailer offering customers a differentiated one- stop shopping experience "Like No Other Market". Sincebeginning as a small neighborhood market in the 1930s, Fairway has established itself as a leading food retailing destination in the Greater New YorkCity metropolitan area, an approximately $30 billion food retail market that is the largest in the United States. Our stores emphasize an extensiveselection of fresh, natural and organic products, prepared foods and hard- to- find specialty and gourmet offerings, along with a full assortment ofconventional groceries. Our prices typically are lower than natural / specialty stores and competitive with conventional supermarkets. We believe thatthe combination of our broad product selection, in- store experience and value pricing creates a premier food shopping experience that appeals to abroad demographic. We operate 12 locations in New York, New Jersey and Connecticut, three of which include Fairway Wines & Spirits stores. Four of our foodstores, which we refer to as "urban stores," are located in Manhattan, and the remainder, which we refer to as "suburban stores," are located in NewYork (outside of Manhattan), New Jersey and Connecticut. We were forced to temporarily close our Red Hook, Brooklyn, New York location fromOctober 29, 2012 through February 28, 2013 due to damage sustained during Hurricane Sandy. This store reopened March 1, 2013. We believe our stores are among the most productive in the industry in net sales per store and net sales per square foot as a result of ourdistinctive merchandising strategies, value positioning and efficient operating structure. Through our focused efforts on expanding our store base,enhancing our customers' shopping experience and improving the value proposition we offer our customers, we have increased our net sales from$401.2 million in fiscal 2010 to $554.9 million in fiscal 2012, or 38.3%, and our Adjusted EBITDA from $23.9 million in fiscal 2010 to$35.8 million in fiscal 2012, or 49.8%, while significantly investing in corporate infrastructure to support our growth, including new store expansion.We increased our net sales from $404.5 million in the thirty- nine weeks ended January 1, 2012 to $482.5 million in the thirty- nine weeks endedDecember 30, 2012, or 19.3%, and our Adjusted EBITDA from $24.9 million in the thirty- nine weeks ended January 1, 2012 to $33.8 million in thethirty- nine weeks ended December 30, 2012, or 35.9%, due principally to new store openings and leveraging our infrastructure. For a discussion ofAdjusted EBITDA and a reconciliation of Adjusted EBITDA to net loss, see note 11 to the tables included in "Selected Historical ConsolidatedFinancial and Other Data." While our net sales and Adjusted EBITDA have grown significantly over the last three fiscal years, our comparable storesales have been impacted by sales transfer from our existing stores to our newly opened stores that are in closer proximity to some of our customersand by our price optimization initiative that we launched across our store network late in fiscal 2011. Our price optimization initiative has resulted inan increase in our gross margins. Since Sterling Investment Partners acquired Fairway in January 2007, we have made significant additions to our company's personnel, includingexperienced industry executives and the next generation management and merchandising teams to support our long- term growth objectives. We have

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Table of Contentsupgraded our systems and enhanced our new store development and training processes. We have also developed a robust, proprietary daily reportingportal that enables us to effectively manage our growing number of new stores and have implemented initiatives to reduce shrink and improve laborproductivity throughout our operations. We believe we can leverage these investments to improve our operating margins as we grow our store base.Since March 2009, we have opened eight food stores, three of which include Fairway Wines & Spirits locations.Outlook We intend to continue our strong growth by expanding our store base in our existing and new markets, capitalizing on consumer trends andimproving our operating margins. We opened an additional food store and integrated Fairway Wines & Spirits location in Woodland Park, NewJersey in June 2012, an additional food store in Westbury, New York in August 2012, and an additional food store in Manhattan's Kips Bayneighborhood in late December 2012. We reopened our Red Hook, Brooklyn, New York store, which was temporarily closed due to damagesustained during Hurricane Sandy, on March 1, 2013, and we expect to open an additional food store in Manhattan's Chelsea neighborhood insummer 2013 and in Nanuet, New York in fall 2013. For the next several years beginning in fiscal 2015, we intend to grow our store base in theGreater New York City metropolitan area at a rate of three to four stores annually. Over time, we also plan to expand Fairway's presence into new,high- density metropolitan markets. Based on demographic research conducted for us by the Buxton Company, a customer analytics research firm,we believe, based on these demographics, we have the opportunity to more than triple the number of stores in our existing marketing region of theGreater New York City metropolitan area, the Northeast market (from New England to the District of Columbia) can support up to 90 stores and theU.S. market can support more than 300 additional stores (including stores in the Northeast) operating under our current format. We believe that we are well positioned to capitalize on evolving consumer preferences and other key trends currently shaping the food retailindustry. These trends include an increasing consumer focus on the shopping experience and on healthy eating choices and fresh, quality offerings,including locally sourced products, as well as growing interest in high- quality, value- oriented private label product offerings. We intend to improve our operating margins through scale efficiencies, improved systems, continued cost discipline and enhancements to ourmerchandise offerings. We expect store growth will also permit us to benefit from economies of scale in sourcing products and will enable us toleverage our existing infrastructure.Factors Affecting Our Operating Results Various factors affect our operating results during each period, including:

Store Openings

We expect the new stores we open to be the primary driver of our sales, operating profit and market share gains. Our results of operations havebeen and will continue to be materially affected by the timing and number of new store openings and the amount of new store opening costs. Forexample, we typically incur higher than normal employee costs at the time of a new store opening associated with set- up and other opening costs.Operating margins are also affected by promotional discounts and other marketing costs and strategies associated with new store openings, as well ashigher shrink, primarily due to overstocking, and costs related to hiring and training new employees. Additionally, promotional activities may resultin higher than normal net sales in the first several weeks following a new store opening. A new store builds its sales volume and its customer baseover time and, as a result, generally has lower margins and higher operating expenses, as a percentage of sales, than our more mature stores. A newstore can take more than a year to achieve a level of operating performance

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Table of Contentscomparable to our similarly existing stores. Stores that we have opened in higher density urban markets typically have generated higher sales volumesand margins than stores in suburban areas. We believe our differentiated format and destination one- stop shopping appeal attracts customers from as far as 25 miles away. As we open newstores in closer proximity to our customers who currently travel longer distances to shop at our stores, we expect some of these customers to takeadvantage of the convenience of our new locations. As a result, we have experienced in the past, and expect to experience in the future, some salesvolume transfer from our existing stores to our new stores as some of our existing customers switch to these new, closer locations. Consequently,while we expect our new stores will impact sales at our existing stores in close proximity, we believe that by making shopping at our stores for thosecustomers who travel longer distances more convenient, our overall sales to these customers will increase as they increase the frequency and amountof purchases from our stores.

General Economic Conditions and Changes in Consumer Behavior

The overall economic environment in the Greater New York City metropolitan area and related changes in consumer behavior have a significantimpact on our business. In general, positive conditions in the broader economy promote customer spending in our stores, while economic weaknessresults in a reduction in customer spending. Macroeconomic factors that can affect customer spending patterns, and thereby our results of operations,include employment rates, business conditions, changes in the housing market, the availability of consumer credit, interest rates, tax rates and fueland energy costs. Although continuing economic weakness has decreased overall consumer spending, we believe, based on information from the Food MarketingInstitute, that many consumers are spending less of their overall food budget on meals away from home and more at food retailers. As a result, webelieve that the impact of the current economic slowdown on our recent operating results has at least been partially mitigated by increased consumerpreferences for meals at home.

Inflation and Deflation Trends

Inflation and deflation can impact our financial performance. During inflationary periods, our financial results can be positively impacted in theshort term as we sell lower- priced inventory in a higher price environment. Over the longer term, the impact of inflation is largely dependent on ourability to pass through inventory price increases to our customers, which is subject to competitive market conditions. In recent inflationary periods,we have generally been able to pass through most cost increases. In fiscal 2010, the food retail sector began experiencing deflation, as input costsdeclined and price competition among retailers intensified, pressuring sales across the industry. While food deflation moderated in fiscal 2011, webegan to experience inflation starting in early fiscal 2012, particularly in some commodity driven categories, although we were generally able to passthrough the effect of these higher prices. Food inflation moderated in early fiscal 2013 and was essentially flat through the remainder of calendar2012. The U.S. Department of Agriculture Economic Research Service currently expects food inflation of 3- 4% in calendar 2013, primarily due tothe severe drought in the midwest United States in calendar 2012.

Infrastructure Investment

Our historical operating results reflect the impact of our ongoing investments in infrastructure to support our growth. Since Sterling InvestmentPartners acquired Fairway in January 2007, we have made significant investments in management, information technology systems, infrastructure,compliance and marketing. These investments include significant additions to our company's personnel, including experienced industry executivesand the next generation management and merchandising teams to support our long- term growth objectives.

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Pricing Strategy

Our strategy is to price our broad selection of fresh, natural and organic foods, hard- to- find specialty and gourmet items and prepared foods atprices typically lower than those of natural / specialty stores. We price our full assortment of conventional groceries at prices competitive with thoseof conventional supermarkets. Beginning late in fiscal 2011, we launched a comprehensive price optimization initiative across our store network torefine the pricing and balance of our promotional activities across our mix of highermargin perishable items and everyday value- oriented traditionalgrocery items. Our price optimization initiative involves determining prices that will improve our operating margins based upon our analysis of howdemand varies at different price levels, as well as our costs and inventory levels. This initiative has resulted in an increase in our gross margins.

Productivity Initiatives

In addition to our price optimization initiative, we have undertaken a number of other initiatives to improve our gross margin and operatingcosts. We are focused on a number of initiatives to control and reduce product shrink (e.g., spoiled, damaged, stolen or out- of- date inventory). Wehave also developed a robust, proprietary daily reporting portal that enables us to improve store labor productivity and effectively manage ourgrowing number of new stores.

Developments in Competitive Landscape

The food retail industry as a whole, particularly in the Greater New York City metropolitan area, is highly competitive. Because we offer a fullassortment of fresh, natural and organic products, prepared foods and hard- to- find specialty and gourmet offerings, along with a full assortment ofconventional groceries, we compete with various types of retailers, including alternative food retailers such as natural foods stores, smaller specialtystores and farmers' markets, conventional supermarkets, supercenters and membership warehouse clubs. Our principal competitors include alternativefood retailers such as Whole Foods and Trader Joe's, traditional supermarkets such as Stop & Shop, ShopRite, Food Emporium and A&P, retailerswith "big box" formats such as Target and Wal- Mart and warehouse clubs such as Costco and BJ's Wholesale Club. These businesses compete withus for customers, products and locations. In addition, some are expanding aggressively in marketing a range of natural and organic foods, preparedfoods and quality specialty grocery items. Some of these potential competitors have more experience operating multiple store locations or havegreater financial or marketing resources than we do and are able to devote greater resources to sourcing, promoting and selling their products. Due tothe competitive environment in which we operate, our operating results may be negatively impacted through a loss of sales, reduction in margin fromcompetitive price changes, and/or greater operating costs such as marketing. In addition, other established food retailers could enter our markets,increasing competition for market share.

Changes in Interest Expense and Loss on Debt Extinguishment

Our interest expense in any particular period is impacted by our overall level of indebtedness during that period and changes in the interest ratespayable on such indebtedness. In connection with Sterling Investment Partners' acquisition of Fairway in 2007, we entered into first and second liencredit facilities consisting of $81 million of term debt and a $6 million revolving credit facility, and issued $22 million aggregate principal amount ofsubordinated debt to the sellers. In December 2009, we refinanced our existing first and second lien credit facilities with a new credit facilityconsisting of $105 million of term debt (which we subsequently increased to $115 million in November 2010) and a $9 million revolving creditfacility, and in connection therewith we incurred a loss on early extinguishment of debt of $2.8 million in fiscal 2010. In March 2011, we refinancedour $124 million credit facility with a new senior credit facility, consisting of $175 million of term debt (which we subsequently increased to$200 million in December 2011) and a revolving credit facility of $25 million (which we subsequently increased to $35 million in July 2012), and inconnection therewith we incurred

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Effect of Hurricane Sandy

We temporarily closed all of our stores as a result of Hurricane Sandy, which struck the Greater New York City metropolitan area onOctober 29, 2012. While all but one of our stores were able to reopen within a day or two following the storm, we experienced business disruptionsdue to inventory delays as a result of transportation issues, loss of electricity at certain of our locations and the inability of some of our employees totravel to work due to transportation issues. Our store located in Red Hook, Brooklyn, New York sustained substantial damage from the effects ofHurricane Sandy, and did not reopen until March 1, 2013. We also sustained property and equipment damage and losses on merchandise inventoriesat certain other stores resulting from this storm. As a result of these damages, we wrote- off approximately $2.1 million of unsalable merchandiseinventories and approximately $3.4 million of impaired property and equipment in the thirty- nine weeks ended December 30, 2012. We havesubmitted claims to our insurance carriers of approximately $20 million for losses sustained from this storm, including estimated businessinterruption losses on Red Hook of approximately $2.0 million per month, which includes continuing operating expenses, primarily payroll. Wecontinue to evaluate our estimates of storm- related losses and in the future may make adjustments to our claim. In November and December 2012, we received advances of $5.5 million in partial settlement of our insurance claims, and in February 2013received an additional $5.0 million advance. The insurance carriers have designated $2.5 million of the November 2012 advance as non- refundablereimbursement for business interruption losses sustained at Red Hook, which amount has been recorded as business interruption insurance recoveriesin our consolidated statement of operations for the thirty- nine weeks ended December 30, 2012. Additionally, we have recognized approximately$3.0 million for reimbursable ongoing business expenses and remediation costs incurred in connection with Red Hook and recorded this amount as areduction in general and administrative expenses, a direct offset to the associated expenses, in our consolidated statement of operations for the thirty-nine weeks ended December 30, 2012 as the realization of the claim for loss recovery has been deemed to be probable. We do not believe these events will materially impact our annual results but they may impact our quarterly results depending on the timing ofcertain milestones in the rebuilding and insurance claim process.How We Assess the Performance of Our Business In assessing performance, we consider a variety of performance and financial measures, principally growth in net sales, gross profit andAdjusted EBITDA. The key measures that we use to evaluate the performance of our business are set forth below:

Net Sales

We evaluate sales because it helps us measure the impact of economic trends and inflation or deflation, the effectiveness of our merchandising,marketing and promotional activities, the impact of new store openings and the effect of competition over a given period. Our net sales comprisegross sales net of coupons and discounts. We do not record sales taxes as a component of retail revenues as we consider ourselves a pass- throughconduit for collecting and remitting sales taxes.

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Table of Contents We do not consider same store sales, which controls for the effects of new store openings, to be as meaningful a measure for us as it may be forother retailers because as a destination food retailer in a concentrated market area we have in the past experienced, and in the future expect toexperience, sales transfer from our existing stores to our newly opened stores that are in closer proximity to some of our customers. Our practice is toinclude sales from a store in same- store sales beginning on the first day of the fourteenth full month following the store's opening. This practice maydiffer from the methods that our competitors use to calculate same- store or "comparable" sales. As a result, data in this prospectus regarding oursame- store sales may not be comparable to similar data made available by our competitors. Various factors may affect our same- store sales, including:

our opening of new stores in the vicinity of our existing stores;


our competition, including competitor store openings or closings near our stores;

the number and dollar amount of customer transactions in our stores;

overall economic trends and conditions in our markets;

consumer preferences, buying trends and spending levels;

the pricing of our products, including the effects of inflation or deflation and promotions;

our ability to provide product offerings that generate new and repeat visits to our stores;

the level of customer service that we provide in our stores;

our in- store merchandising- related activities; and

our ability to source products efficiently.

As we continue to pursue our growth strategy, we expect that a significant percentage of our increase in net sales will continue to come from newstores not included in comparable store sales. The food retail industry and our sales are affected by general economic conditions and seasonality, as well as the other factors discussed below,that affect store sales performance. Consumer purchases of high- quality perishables and specialty food products are particularly sensitive to anumber of factors that influence the levels of consumer spending, including economic conditions, the level of disposable consumer income, consumerdebt, interest rates and consumer confidence. In addition, our business is seasonal and, as a result, our average weekly sales fluctuate during the yearand are usually highest in our third fiscal quarter, from October through December, when customers make holiday purchases, and typically lowerduring the summer months in our second fiscal quarter. Although adverse economic conditions affected our sales beginning in fiscal 2009 and continuing in fiscal 2010 and fiscal 2011 due to decreasedlevels of consumer spending, disposable income and confidence, this adverse effect was more than offset in fiscal 2010 and fiscal 2011 by growth insales attributable to the new store we opened in fiscal 2009 and the two stores and adjacent Fairway Wines & Spirits locations we opened in fiscal2011. In addition, growth in sales attributable to the new stores we opened in fiscal 2012 contributed significantly to increased net sales.

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Gross Profit

We use gross profit to measure the effectiveness of our pricing and procurement strategies as well as initiatives to increase sales of highermargin items and to reduce shrink. We calculate gross profit as net sales less cost of sales and occupancy costs. Gross margin measures gross profit asa percentage of our net sales. Cost of sales includes the cost of merchandise inventory sold during the year (net of discounts and allowances),distribution costs, food preparation costs (primarily labor) and shipping and handling costs. Occupancy costs include store rental costs and propertytaxes. The components of our cost of sales and occupancy costs may not be identical to those of our competitors. As a result, data in this prospectusregarding our gross profit and gross margin may not be comparable to similar data made available by our competitors. Changes in the mix of products sold may impact our gross margin. Unlike natural / specialty stores, we also carry a full assortment ofconventional groceries, which generally have lower margins than fresh, natural and organic foods, prepared foods and specialty and gourmet items.We expect to enhance our gross margins through:

economies of scale resulting from expanding the store base;


productivity gains through process and program improvements;

reduced shrinkage as a percentage of net sales; and

leveraging our purchasing power and that of our suppliers to obtain volume discounts from vendors.

Stores that we operate in higher density urban markets typically have generated higher sales volumes and margins than stores that we operate insuburban areas. As the percentage of our sales volumes provided by our suburban stores increases, our overall gross margins may decline.

Direct Store Expenses

Direct store expenses consist of store- level expenses such as salaries and benefits for our store work force, supplies, store depreciation andstore- specific marketing costs. Store- level labor costs are generally the largest component of our direct store expenses. The components of our directstore expenses may not be identical to those of our competitors. As a result, data in this prospectus regarding our direct store expenses may not becomparable to similar data made available by our competitors.

General and Administrative Expenses

General and administrative expenses consist primarily of personnel costs that are not store specific, corporate sales and marketing expenses,depreciation and amortization expense as well as other expenses associated with our corporate headquarters, management expenses and expenses foraccounting, information systems, legal, business development, human resources, purchasing and other administrative departments. Since SterlingInvestment Partners acquired Fairway in January 2007, we have made significant investments in management, information technology systems,infrastructure, compliance and marketing to support our growth strategy. Our general and administrative expenses include management fees paid toSterling Investment Partners, which we will cease paying upon consummation of the offering being made hereby. See "Certain Relationships andRelated Party Transactions- Management Agreement with Sterling Advisers."

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Table of Contents The components of our general and administrative expenses may not be identical to those of our competitors. As a result, data in this prospectusregarding our general and administrative expenses may not be comparable to similar data made available by our competitors. We expect that ourgeneral and administrative expenses will increase in future periods due to additional legal, accounting, insurance and other expenses we expect toincur as a result of being a public company.

Store Opening Costs

Store opening costs include rent expense incurred during construction of new stores and costs related to new location openings, including costsassociated with hiring and training personnel, supplies, the costs associated with our dedicated store opening team and other miscellaneous costs.Rent expense is recognized upon receiving possession of a store site, which generally ranges from three to six months before the opening of a store,although in some situations, the possession period can exceed twelve months. Store opening costs vary among locations due to several key factors,including the length of time between possession date and the date on which the location opens for business along with the time designated as thetraining period for new staff for the store. Accordingly, we expect store opening costs to vary from period to period depending on the number of newstores opened in the period, whether such stores opened early or late in the period and whether new stores will open early in the following period.Store opening costs are expensed as incurred.

Income from Operations

Income from operations consists of gross profit minus direct store expenses, general and administrative expenses and store opening costs.Income from operations will vary from period to period based on a number of factors, including the number of stores open and the number of storesin the process of being opened in each period.

Adjusted EBITDA

We believe that Adjusted EBITDA is a useful performance measure and we use it to facilitate a comparison of our operating performance on aconsistent basis from period- to- period and to provide for a more complete understanding of factors and trends affecting our business than GAAPmeasures alone can provide. We also use Adjusted EBITDA as one of the primary methods for planning and forecasting overall expectedperformance and for evaluating on a quarterly and annual basis actual results against such expectations, and as a performance evaluation metric indetermining achievement of certain compensation programs and plans for employees, including our senior executives. In addition, the financialcovenants in our senior credit facility are based on Adjusted EBITDA, subject to dollar limitations on certain adjustments. Other companies in ourindustry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure. We define Adjusted EBITDA as earnings before interest expense, income taxes, depreciation and amortization expense, amortization of deferredfinancing costs, store opening costs, loss on early extinguishment of debt, non- recurring expenses and management fees. All of the omitted items areeither (i) non- cash items or (ii) items that we do not consider in assessing our ongoing operating performance. Because it omits non- cash items, webelieve that Adjusted EBITDA is less susceptible to variances in actual performance resulting from depreciation, amortization and other non- cashcharges and more reflective of other factors that affect our operating performance. Because it omits the other items, we believe Adjusted EBITDA isalso more reflective of our ongoing operating performance.

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Table of ContentsBasis of Presentation Our fiscal year is the 52- or 53- week period ending on the Sunday closest to March 31. The three completed fiscal years discussed in this"Management's Discussion and Analysis of Financial Condition and Results of Operations" ended on March 28, 2010, April 3, 2011 and April 1,2012. For ease of reference, we identify our fiscal years in this prospectus by reference to the calendar year in which the fiscal year ends. Forexample, "fiscal 2012" refers to our fiscal year ended April 1, 2012. Fiscal 2010 and fiscal 2012 consist of 52 weeks and fiscal 2011 consists of53 weeks. The differing length of certain fiscal years may affect the comparability of certain data.Results of Operations The following tables summarize key components of our results of operations for the periods indicated, both in dollars and as a percentage of netsales and have been derived from our consolidated financial statements.


2010April 3,

2011April 1,

2012January 1,

2012December 30,

2012(unaudited) (unaudited)

(dollars in thousands)Net sales $401,167 $485,712 $554,858 $ 404,527 $ 482,539Cost of sales and occupancy costs(1) 271,599 326,207 368,728 269,641 326,808

Gross profit 129,568 159,505 186,130 134,886 155,731Direct store expenses 85,840 109,867 132,446 97,659 111,362General and administrative expenses 34,676 40,038 44,331 30,598 39,746Store opening costs 3,949 10,006 12,688 11,181 19,349

Income (loss) from operations 5,103 (406) (3,335) (4,552) (14,726)Business interruption insurance recoveries - - - - 2,500Interest expense, net (13,787) (19,111) (16,918) (12,370) (17,439)Loss on early extinguishment of debt (2,837) (13,931) - - -

Loss before income taxes (11,521) (33,448) (20,253) (16,922) (29,665)Income tax benefit (provision) 4,426 14,860 8,304 6,940 (26,514)

Net loss $ (7,095) $ (18,588) $ (11,949) $ (9,982) $ (56,179)

Net sales 100.0% 100.0% 100.0% 100.0% 100.0%Cost of sales and occupancy costs(1) 67.7 67.2 66.5 66.7 67.7

Gross profit 32.3 32.8 33.5 33.3 32.3Direct store expenses 21.4 22.6 23.9 24.1 23.1General and administrative expenses 8.6 8.2 8.0 7.6 8.2Store opening costs 1.0 2.1 2.3 2.8 4.0

Income (loss) from operations 1.3 (0.1) (0.6) (1.1) (3.1)Business interruption insurance recoveries - - - - 0.5Interest expense, net (3.4) (3.9) (3.0) (3.1) (3.6)Loss on early extinguishment of debt (0.7) (2.9) - - -

Loss before income taxes (2.9) (6.9) (3.7) (4.2) (6.1)Income tax benefit (provision) 1.1 3.1 1.5 1.7 (5.5)

Net loss (1.8)% (3.8)% (2.2)% (2.5)% (11.6)%

Figures may not sum due to rounding

(1)Excludes depreciation and amortization

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Table of ContentsThirty- nine weeks ended December 30, 2012 compared to thirty- nine weeks ended January 1, 2012 The effects of Hurricane Sandy, the temporary closure of all of our stores for one or two days and our Red Hook store for two months and thereceipt of insurance proceeds may affect the comparability of the financial data for the thirty- nine week periods ended January 1, 2012 andDecember 30, 2012.

Net Sales

We had net sales of $482.5 million in the thirty- nine weeks ended December 30, 2012, an increase of $78.0 million, or 19.3%, from$404.5 million in the thirty- nine weeks ended January 1, 2012. This increase was attributable to the $43.0 million of net sales from the three newstores (including one integrated Fairway Wines & Spirits location) that we opened subsequent to January 1, 2012 and $35.0 million in increased netsales at stores open during both periods. One of the new stores was open for 208 days, one for 131 days and the other for 10 days in the thirty- nineweeks ended December 30, 2012. Excluding net sales of the Red Hook store in both periods as a result of its temporary closure, net sales increased26.0%, due to the $43.0 million of net sales from the three new stores (including one integrated Fairway Wines & Spirits location) that we openedsubsequent to January 1, 2012 and $48.5 million in increased net sales at stores, excluding Red Hook, open during both periods. Comparable store sales, excluding Red Hook, decreased 3.5% in the thirty- nine weeks ended December 30, 2012 compared to the thirty- nineweeks ended January 1, 2012, primarily as a result of sales transferred to our newly opened stores and the implementation of our price optimizationinitiative. This initiative involves refinement in the pricing and balance of our promotional activities across our mix of highermargin perishableitems and everyday conventional grocery items. Customer transactions in our comparable stores decreased by 2.2% and average transaction size atour comparable stores decreased by 1.3%.

Gross Profit

Gross profit was $155.7 million for the thirty- nine weeks ended December 30, 2012, an increase of $20.8 million, or 15.5%, from$134.9 million for the thirty- nine weeks ended January 1, 2012. Excluding gross profit of the Red Hook store in both periods as a result of itstemporary closure, gross profit increased $26.2 million, or 22.4%. Gross margin (both including and excluding the Red Hook store) was 32.3% forthe thirty- nine weeks ended December 30, 2012, compared to 33.3% for the thirty- nine weeks ended January 1, 2012. This decrease in gross marginwas primarily attributable to increased occupancy costs as a result of fair market rent increases in three of our older stores and, to a lesser extent,lower merchandise gross margins, partially offset by our price optimization initiative. In addition, we had lower gross margins in our new suburbanstores. We continue to refine our price optimization initiative, which involves increases and decreases to prices on certain items, lower prices fromcertain vendors and the continuing benefit of our shrink management initiative launched in fiscal 2009. We calculate gross profit as net sales less costof sales and occupancy costs, which includes the cost of merchandise inventory sold during the year (net of discounts and allowances), distributioncosts, food preparation costs (primarily labor), shipping and handling costs and store occupancy costs.


Direct store expenses were $111.4 million in the thirty- nine weeks ended December 30, 2012, an increase of $13.7 million, or 14.0%, from$97.7 million in the thirty- nine weeks ended January 1, 2012. Excluding Red Hook's direct store expenses in both periods as a result of its temporaryclosure, direct store expenses increased $17.4 million, or 20.2%, for the thirty- nine weeks ended December 30, 2012. The increase in direct storeexpenses was primarily attributable to the three new stores (including one integrated Fairway Wines & Spirits location) that we opened subsequent toJanuary 1, 2012. With more

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Table of Contentsstores in operation during the thirty- nine weeks ended December 30, 2012, our store labor expenses increased $6.7 million and our other storeoperating expenses increased $4.1 million compared to the thirty- nine weeks ended January 1, 2012. The portion of our depreciation expenseincluded in direct store expenses, which includes amortization of prepaid rent, increased $2.9 million, or 30.2%, to $12.6 million for the thirty- nineweeks ended December 30, 2012, compared to direct store depreciation expense for the thirty- nine weeks ended January 1, 2012 of $9.7 million. Theincrease in direct store depreciation expense for the thirty- nine weeks ended December 30, 2012 compared with the thirty- nine weeks endedJanuary 1, 2012 is primarily attributable to the increase in the number of stores. Direct store expenses as a percentage of net sales decreased to 23.1% in the thirty- nine weeks ended December 30, 2012 from 24.1% for thethirty- nine weeks ended January 1, 2012, due to the success of our continued cost controls, including labor management. Excluding Red Hook'sdirect store expenses in both periods as a result of its temporary closure, direct store expenses as a percentage of net sales decreased to 23.3% for thethirty- nine weeks ended December 30, 2012 from 24.4% for the thirty- nine weeks ended January 1, 2012.


General and administrative expenses were $39.7 million for the thirty- nine weeks ended December 30, 2012, an increase of $9.1 million, or29.9%, from $30.6 million for the thirty- nine weeks ended January 1, 2012. The increase in our general and administrative expenses was attributableto our continued investments in management, information technology systems, infrastructure, compliance and marketing to support continuedexecution of our growth plans of approximately $3.6 million, an increase in our non- recurring costs of approximately $2.6 million, of whichapproximately $1.4 million relates to this offering and $1.0 million consists of management bonuses in connection with our 2012 senior creditfacility, fees associated with our new senior credit facility entered into in August 2012 of approximately $2.8 million, including $1.7 million paid toan affiliate of Sterling Investment Partners, and increased management fees of approximately $1.1 million. Excluding the fees and expenses related toour new senior credit facility, general and administrative expenses were $36.9 million, an increase of 20.7%. In the thirty- nine weeks endedDecember 30, 2012, we recognized approximately $3.0 million for reimbursable ongoing business expenses and remediation costs incurred inconnection with Red Hook and recorded this amount as a reduction in general and administrative expenses, a direct offset to the associated expenses.The realization of the claim for loss recovery has been deemed to be probable. The portion of our depreciation and amortization expense included ingeneral and administrative expenses decreased by $0.9 million, or 22.0%, to $3.3 million for the thirty- nine weeks ended December 30, 2012 from$4.3 million in the thirty- nine weeks ended January 1, 2012. Our general and administrative expenses include management fees of $2.6 million and$1.5 million paid to an affiliate of Sterling Investment Partners in the thirty- nine weeks ended December 30, 2012 and January 1, 2012, respectively.We will cease paying these management fees upon consummation of the offering being made hereby. See "Certain Relationships and Related PartyTransactions- Management Agreement with Sterling Advisers." As a percentage of net sales, general and administrative expenses increased to 8.2% for the thirty- nine weeks ended December 30, 2012 from7.6% for the thirty- nine weeks ended January 1, 2012. Excluding the one- time debt refinancing fees and expenses incurred in connection with ournew senior credit facility, general and administrative expenses, as a percentage of net sales, was 7.7%.

Store Opening Costs

Store opening costs were $19.3 million for the thirty- nine weeks ended December 30, 2012, an increase of $8.2 million from $11.2 million forthe thirty- nine weeks ended January 1, 2012. Store opening costs for the thirty- nine weeks ended December 30, 2012 include approximately$4.8 million related to the Woodland Park, New Jersey store and integrated Fairway Wines & Spirits location that

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Table of Contentsopened in June 2012, $5.9 million for our new Westbury, Long Island store that opened in August 2012, $8.2 million for the Fairway Market openedin Manhattan's Kips Bay neighborhood in December 2012 and $0.4 million of deferred rent for the period the Red Hook, Brooklyn, New York storewas temporarily closed due to damage sustained during Hurricane Sandy. Store opening costs for the thirty- nine weeks ended December 30, 2012were adversely affected by an approximately two month delay in opening our Kips Bay store due to construction delays resulting from bedrock issuesand the impact of Hurricane Sandy. Store opening costs for the thirty- nine weeks ended January 1, 2012 primarily consist of $4.7 million for thestore we opened on the Upper East Side of Manhattan in July 2011 and $6.5 million for the Douglaston, N.Y. store we opened in November 2011.Approximately $2.2 million and $1.8 million of store opening costs in the thirty- nine weeks ended December 30, 2012 and January 1, 2012,respectively, did not require the expenditure of cash in the period, primarily due to deferred rent and other landlord allowances.

Income (loss) from Operations

For the thirty- nine weeks ended December 30, 2012, our operating loss was $14.7 million, an increase of $10.2 million from $4.6 million for thethirty- nine weeks ended January 1, 2012. The increase in the loss from operations in the thirty- nine weeks ended December 30, 2012 over the sameperiod in the prior year was primarily due to increased direct store, store opening, and general and administrative expenses, and expenses and feesrelated to our new senior credit facility, partially offset by increased gross profit. Excluding the income (loss) from operations of the Red Hook storein both periods as a result of its temporary closure as well as the fees related to our new senior credit facility, the increase in our loss from operationswas $5.6 million.

Business Interruption Insurance Recoveries

Business interruption insurance recoveries for the thirty- nine weeks ended December 30, 2012 represents non- refundable reimbursement fromour insurance carriers for business interruption losses sustained due to the temporary closure of our Red Hook store due to damage sustained duringHurricane Sandy.

Interest Expense

Interest expense increased 41.0%, or $5.1 million, to $17.4 million for the thirty- nine weeks ended December 30, 2012, from $12.4 million forthe thirty- nine weeks ended January 1, 2012, due to higher average borrowings related to the new senior credit facility entered into in August 2012and higher interest rates.

Net Loss

Our net loss was $56.2 million for the thirty- nine weeks ended December 30, 2012, an increase of $46.2 million from $10.0 million for thethirty- nine weeks ended January 1, 2012. The increase in net loss was primarily attributable to the recognition of a partial deferred tax valuationallowance of $39.0 million, expenses and fees related to the senior credit facility entered into in August 2012 and increased store opening, directstore, general and administrative and interest expenses, partially offset by increased gross profit. Excluding the operations of the Red Hook store inboth periods as a result of its temporary closure and the related insurance recovery, the partial deferred tax valuation allowance and fees related to ourAugust 2012 senior credit facility, the increase in our net loss was $5.2 million. See Note 13 to our financial statements appearing elsewhere in thisprospectus for additional information about our partial deferred tax valuation allowance.

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Table of ContentsFiscal year ended April 1, 2012 compared to fiscal year ended April 3, 2011 Fiscal 2012 consists of 52 weeks while fiscal 2011 consists of 53 weeks; accordingly, the differing lengths of the fiscal years may affect thecomparability of certain data.

Net Sales

We had net sales of $554.9 million in fiscal 2012, an increase of $69.2 million, or 14.2%, from $485.7 million in fiscal 2011. The increase wasattributable to the $103.3 million of net sales from the two stores and adjacent Fairway Wines & Spirits locations that we opened during fiscal 2011and the two stores that we opened during fiscal 2012. The increase was partially offset by a $34.1 million decrease in sales at stores open during bothperiods. We estimate that the extra week in fiscal 2011 compared to fiscal 2012 increased our fiscal 2011 net sales by approximately $9.2 million,representing our average weekly net sales in fiscal 2011. If fiscal 2011 had been a 52 week year, we estimate our net sales would have beenapproximately $476.5 million. Comparable store sales decreased 7.9% in fiscal 2012 compared to fiscal 2011, primarily as a result of sales transferred from our existing storesto our newly opened stores and the launch in late fiscal 2011 of our price optimization initiative to refine the pricing and balance of our promotionalactivities across our mix of highermargin perishable items and everyday conventional grocery items. Customer transactions in our comparable storesdecreased by 9.1% and average transaction size at our comparable stores increased 1.3%. Amounts for fiscal 2011 have been adjusted to reflect a 52-week year.

Gross Profit

Gross profit was $186.1 million for fiscal 2012, an increase of $26.6 million, or 16.7%, from $159.5 million for fiscal 2011. Gross marginincreased 70 basis points to 33.5% for fiscal 2012 from 32.8% for fiscal 2011. The increase in our gross margin was primarily attributable to our priceoptimization initiative, which involved increases and decreases to prices on various items, lower prices from certain vendors and the continuingbenefit from our shrink management initiative launched in fiscal 2009, partially offset by increased occupancy costs resulting from the two stores andadjacent Fairway Wines & Spirits locations we opened in fiscal 2011 and the two stores we opened in fiscal 2012. We estimate that the extra week infiscal 2011 compared to fiscal 2012 increased our fiscal 2011 gross profit by approximately $3.0 million, representing our average weekly grossprofit in fiscal 2011. If fiscal 2011 had been a 52 week year, we estimate our gross profit would have been approximately $156.5 million. Wecalculate gross profit as net sales less cost of sales and occupancy costs, which includes the cost of merchandise inventory sold during the year (net ofdiscounts and allowances), distribution costs, food preparation costs (primarily labor), shipping and handling costs and store occupancy costs.


Direct store expenses were $132.4 million in fiscal 2012, an increase of $22.6 million, or 20.6%, from $109.9 million in fiscal 2011. Theincrease in direct store expenses was primarily attributable to the two new stores we opened in fiscal 2012 and the two stores and adjacent FairwayWines & Spirits locations opened in fiscal 2011 that were open for a full year in fiscal 2012. With more stores in operation during fiscal 2012, ourstore labor expenses increased $12.5 million and our other store operating expenses increased $10.1 million compared to fiscal 2011. The portion ofour depreciation expense included in direct store expenses, which includes amortization of prepaid rent, increased $3.2 million, or 30.8%, to$13.5 million for fiscal 2012, compared to direct store depreciation expense for fiscal 2011 of $10.3 million. The increase in direct store depreciationexpense for fiscal year 2012 compared with fiscal 2011 is directly attributable to the increase in the number of stores. We estimate

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Table of Contentsthat the extra week in fiscal 2011 compared to fiscal 2012 increased our fiscal 2011 direct store expenses by approximately $2.1 million, representingour average weekly direct store expenses in fiscal 2011. If fiscal 2011 had been a 52 week year, we estimate our direct store expenses would havebeen approximately $107.8 million. Direct store expenses as a percentage of net sales increased to 23.9% in fiscal 2012 from 22.6% in fiscal 2011. This increase was primarilyattributable to higher expenses as a percentage of net sales at our newly opened stores as we built sales at these stores.


General and administrative expenses were $44.3 million for fiscal 2012, an increase of $4.3 million, or 10.7%, from $40.0 million in fiscal 2011.The increase in our general and administrative expenses was primarily attributable to our continued investments in management, informationtechnology systems, infrastructure, compliance and marketing to enable us to pursue our growth plans. The portion of our depreciation andamortization expense included in general and administrative expenses increased $1.4 million, or 32.6%, to $5.7 million for fiscal 2012 from$4.3 million in fiscal 2011. Our general and administrative expenses include management fees of $2.6 million and $1.6 million paid to an affiliate ofSterling Investment Partners in fiscal 2012 and fiscal 2011, respectively. We will cease paying these management fees upon consummation of theoffering being made hereby. See "Certain Relationships and Related Party Transactions- Management Agreement with Sterling Advisers." Ourgeneral and administrative expenses in fiscal 2012 also includes $0.4 million in non- stock compensation expense relating to shares of restricted stockthat we issued at below fair market value. We estimate that the extra week in fiscal 2011 compared to fiscal 2012 increased our fiscal 2011 generaland administrative expenses by approximately $755,000, representing our average weekly general and administrative expenses in fiscal 2011. Iffiscal 2011 had been a 52 week year, we estimate our general and administrative expenses would have been approximately $39.3 million. As a percentage of net sales, general and administrative expenses for fiscal 2012 were 8.0%, or 20 basis points lower, than the 8.2% we recordedin fiscal 2011. This improvement was primarily a result of our revenue growth and leveraging of our infrastructure investment made during the lastseveral years.

Store Opening Costs

Store opening costs were $12.7 million in fiscal 2012, an increase of $2.7 million from $10.0 million in fiscal 2011. We opened two new storesin fiscal 2012 and two new stores and adjacent Fairway Wines & Spirits locations in fiscal 2011. Store opening costs for fiscal 2011 includes$3.2 million related to the two stores we opened in fiscal 2012, and we incurred $3.9 million of store opening costs related to the stores we opened infiscal 2011 in fiscal 2010. Approximately $2.0 million of store opening costs in fiscal 2012 are attributable to our decision to delay the opening of ourstore in Douglaston, New York in order to focus on opening our new store in Manhattan, which opened in July 2011. Approximately $0.7 million ofour fiscal 2012 store opening costs relate to the store and integrated Fairway Wines & Spirits location we opened in the first quarter of fiscal 2013.Approximately $3.4 million and $4.2 million of store opening costs in fiscal 2012 and fiscal 2011, respectively, did not require the expenditure ofcash in the period, primarily due to deferred rent and other landlord allowances.

Income (Loss) from Operations

For fiscal 2012 our operating loss was $3.3 million, an increase of $2.9 million from $0.4 million for fiscal 2011. The increase in operating losswas primarily due to the $22.5 million increase in direct store expenses, $4.3 million increase in general and administrative expenses and $2.7 millionincrease in

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Table of Contentsstore opening costs in fiscal 2012 compared to fiscal 2011, partially offset by the $26.6 million increase in gross profit.

Interest Expense

Interest expense decreased 11.5%, or $2.2 million, to $16.9 million for fiscal 2012, as compared to $19.1 million for fiscal 2011, due to lowerinterest rates, partially offset by higher average borrowings.

Loss on Early Extinguishment of Debt

In fiscal 2011, we refinanced our $124 million credit facility with our $200 million senior credit facility, which we subsequently increased to$225 million in December 2011 and $235 million in July 2012, and in connection therewith we incurred a loss on early extinguishment of debt of$13.9 million. The loss consisted of the write off of unamortized deferred financing fees of $6.1 million and unamortized discount of $2.6 million, aswell as the expensing of $5.2 million of placement fees.

Net Loss

Our net loss was $11.9 million in fiscal 2012, a decrease of $6.7 million from $18.6 million for fiscal 2011. The decrease in net loss wasprimarily attributable to an increased gross margin, no loss on early extinguishment of debt and lower interest expense, partially offset by increaseddirect store and store opening costs.Fiscal year ended April 3, 2011 compared to the fiscal year ended March 28, 2010 Fiscal 2011 consists of 53 weeks while fiscal 2010 consists of 52 weeks; accordingly, the differing lengths of the fiscal years may affect thecomparability of certain data.

Net Sales

We had net sales of $485.7 million in fiscal 2011, an increase of $84.5 million, or 21.1%, from $401.2 million in fiscal 2010. The increase wasattributable to the $95.6 million of net sales from the two stores and adjacent Fairway Wines & Spirits locations that we opened during fiscal 2011.The increase was partially offset by an $11.1 million decrease in net sales at stores open during both periods. We estimate that the extra week infiscal 2011 compared to fiscal 2010 increased our fiscal 2011 net sales by approximately $9.2 million, representing our average weekly net sales infiscal 2011. If fiscal 2011 had been a 52 week year, we estimate our net sales would have been approximately $476.5 million. Comparable store sales decreased 4.3% in fiscal 2011 compared to fiscal 2010, primarily as a result of sales transferred from our existing storesto our newly opened stores. Customer transactions in our comparable stores decreased by 4.4% and average transaction size at our comparable storesincreased by 0.1%. Amounts for fiscal 2011 have been adjusted to reflect a 52- week year.

Gross Profit

Gross profit was $159.5 million for fiscal 2011, an increase of $29.9 million, or 23.1%, from $129.6 million for fiscal 2010. Our gross marginincreased 50 basis points to 32.8% for fiscal 2011 from 32.3% for fiscal 2010. The increase in our gross margin was primarily attributable to thelaunch of our price optimization initiative, which involved increases and decreases to prices on various items, lower prices from certain vendors, thediscontinuation of certain promotional activities in our suburban stores and reduced inventory shrinkage as a result of the shrink managementinitiative we launched in fiscal 2009, partially offset by increased occupancy costs resulting from the two stores and adjacent Fairway Wines &Spirits locations we opened in fiscal 2011 and supplies expense. We estimate that the

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Table of Contentsextra week in fiscal 2011 compared to fiscal 2010 increased our fiscal 2011 gross profit by approximately $3.0 million, representing our averageweekly gross profit in fiscal 2011. If fiscal 2011 had been a 52 week year, we estimate our gross profit would have been approximately$156.5 million.


Direct store expenses were $109.9 million in fiscal 2011, an increase of $24.0 million, or 28.0%, from $85.8 million in fiscal 2010. The increasein direct store expenses was primarily attributable to the two new stores and adjacent Fairway Wines & Spirits locations we opened in fiscal 2011.With more stores in operation during fiscal 2011, our store labor expenses increased $11.6 million and our other store operating expenses increased$12.5 million compared to fiscal 2010. The portion of our depreciation expense included in direct store expenses, which includes amortization ofprepaid rent, increased $3.3 million, or 47.6%, to $10.3 million for fiscal 2011, compared to direct store depreciation expense for fiscal 2010 of$7.0 million. The increase in direct store depreciation expense for fiscal 2011 compared with fiscal 2010 is directly attributable to the increase in thenumber of stores. We estimate that the extra week in fiscal 2011 compared to fiscal 2010 increased our fiscal 2011 direct store expenses byapproximately $2.1 million, representing our average weekly direct store expenses in fiscal 2011. If fiscal 2011 had been a 52 week year, we estimateour direct store expenses would have been approximately $107.8 million. Direct store expenses as a percentage of net sales increased to 22.6% in fiscal 2011 from 21.4% in fiscal 2010. This increase was primarilyattributable to higher expenses as a percentage of net sales at our newly opened stores as we built sales at these stores.


General and administrative expenses were $40.0 million for fiscal 2011, an increase of $5.3 million, or 15.5%, from $34.7 million in fiscal 2010.The increase in our general and administrative expenses was primarily attributable to our continued investments in management, informationtechnology systems, infrastructure, compliance and marketing to enable us to pursue our growth plans. The portion of our depreciation andamortization expense included in general and administrative expenses increased $1.1 million, or 34.4%, to $4.3 million for fiscal 2011, from$3.2 million in fiscal 2010. Our general and administrative expenses include management fees of $1.6 million and $1.2 million paid to an affiliate ofSterling Investment Partners in fiscal 2011 and fiscal 2010, respectively. We will cease paying these management fees upon consummation of theoffering being made hereby. See "Certain Relationships and Related Party Transactions- Management Agreement with Sterling Advisers." Weestimate that the extra week in fiscal 2011 compared to fiscal 2010 increased our fiscal 2011 general and administrative expenses by approximately$755,000, representing our average weekly general and administrative expenses in fiscal 2011. If fiscal 2011 had been a 52 week year, we estimateour general and administrative expenses would have been approximately $39.3 million. As a percentage of net sales, general and administrative expenses for fiscal 2011 were 8.2%, or 40 basis points lower than the 8.6% we recordedin fiscal 2010. This improvement was primarily a result of our revenue growth and leveraging of our infrastructure investment made during the lastseveral years.

Store Opening Costs

Store opening costs were $10.0 million in fiscal 2011, an increase of $6.1 million from $3.9 million in fiscal 2010. We opened two new storesand adjacent Fairway Wines & Spirits locations in fiscal 2011. Store opening costs for fiscal 2011 includes $3.2 million related to the two stores weopened in fiscal 2012, and store opening costs for fiscal 2010 includes $3.9 million related to the two stores and adjacent Fairway Wines & Spiritslocations we opened in fiscal 2011. Approximately $4.2 million and

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Table of Contents$0.9 million of store opening costs in fiscal 2011 and fiscal 2010, respectively, did not require the expenditure of cash in the period, primarily due todeferred rent and other landlord allowances.

Income (Loss) from Operations

For fiscal 2011, our operating loss was $0.4 million, a decrease of $5.5 million from operating income of $5.1 million in fiscal 2010. Thedecrease in operating income was due to the $24.0 million increase in direct store expenses, $5.3 million increase in general and administrativeexpenses and $6.1 million increase in store opening costs in fiscal 2011 compared to fiscal 2010, partially offset by the $29.9 million increase ingross profit.

Interest Expense

Interest expense increased 38.6%, or $5.3 million, to $19.1 million for fiscal 2011, compared to $13.8 million for fiscal 2010, due primarily toincreased weighted average borrowings, partially offset by lower interest rates.

Loss on Early Extinguishment of Debt

In fiscal 2011, we refinanced our $124 million credit facility with our $200 million senior credit facility, which we subsequently increased to$225 million in December 2011 and to $235 million in July 2012, and in connection therewith we incurred a loss on early extinguishment of debt of$13.9 million. The loss consisted of the write off of unamortized deferred financing fees of $6.1 million and unamortized discount of $2.6 million, aswell as the expensing of $5.2 million of placement fees. In fiscal 2010, we refinanced our existing first and second lien credit facilities with a new$114 million credit facility, which we subsequently increased to $124 million in November 2010, and in connection therewith we incurred a loss onearly extinguishment of debt of $2.8 million. The loss consisted of the write off of unamortized deferred financing fees and unamortized discount.

Net Loss

Our net loss was $18.6 million in fiscal 2011, an increase of $11.5 million from $7.1 million for fiscal 2010. The increase in net loss wasprimarily due to an $11.1 million increase in loss on early extinguishment of debt, a $6.1 million increase in store opening costs and a $5.3 millionincrease in interest expense, partially offset by increased sales and gross profit and a $10.4 million increase in income tax benefit.Quarterly Results of Operations The following tables set forth unaudited quarterly consolidated statement of income data for all quarters of fiscal 2011 and fiscal 2012 and thefirst three quarters of fiscal 2013. We have prepared the statement of income data for each of these quarters on the same basis as the auditedconsolidated financial statements included elsewhere in this prospectus and, in the opinion of our management, each statement of income includes alladjustments, consisting solely of normal recurring adjustments, necessary for the fair presentation of the results of operations for these periods. Thisinformation should be read in conjunction with the audited consolidated financial statements and related notes included elsewhere in this prospectus.These quarterly operating results are not necessarily indicative of our operating results for any future period. Each fiscal quarter consists of a 13-week period except for the fiscal quarter ended April 3, 2011, which consists of 14 weeks; accordingly, the differing lengths of the fiscal quartersmay affect the comparability of certain data. The effects of Hurricane Sandy, the temporary closure of all of our stores for one or two days and ourRed Hook store for two months and

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Table of Contentsthe receipt of insurance proceeds may affect the comparability of the financial data for the thirteen weeks ended December 30, 2012.

Fiscal 2011 Quarter Ended Fiscal 2012 Quarter EndedFiscal 2013

Quarter EndedJune 27,

2010September 26,

2010December 26,

2010April 3,

2011July 3,2011

October 2,2011

January 1,2012

April 1,2012

July 1,2012

September 30,2012

December 30,2012

(unaudited) (unaudited) (unaudited)

(dollars in thousands)Statementof incomedataNet sales $118,019 $111,462 $124,145 $132,086 $122,484 $129,914 $152,129 $150,331 $154,683 $160,510 $167,346Cost ofsales andoccupancycosts(1) 79,736 78,452 84,008 84,011 81,838 86,662 101,141 99,087 103,996 108,631 114,181

Grossprofit 38,283 33,010 40,137 48,075 40,646 43,252 50,988 51,244 50,687 51,879 53,165Directstoreexpenses 26,721 24,057 27,913 31,176 29,356 32,588 35,715 34,787 34,484 38,504 38,374Generalandadministrativeexpenses 8,470 7,695 9,165 14,708 9,348 10,077 11,173 13,733 11,717 14,650 13,379Storeopeningcosts 2,320 1,816 3,996 1,874 3,263 3,123 4,795 1,507 6,478 6,653 6,218

Income(loss)fromoperations 772 (558) (937) 317 (1,321) (2,536) (695) 1,217 (1,992) (7,928) (4,806)Businessinterruptioninsurancerecoveries - - - - - - - - - - 2,500Interestexpense,net (4,311) (4,557) (5,082) (5,161) (4,174) (4,037) (4,159) (4,548) (4,584) (5,785) (7,070)Loss onearlyextinguishmentof debt - - - (13,931) - - - - - - -

Lossbeforeincometaxes (3,539) (5,115) (6,019) (18,775) (5,495) (6,573) (4,854) (3,331) (6,576) (13,713) (9,376)Incometaxbenefit(provision) 1,488 2,150 3,332 7,890 2,249 2,690 2,001 1,364 2,695 5,886 (35,095)

Net loss $(2,051) $(2,965) $(2,687) $(10,885) $(3,246) $(3,883) $(2,853) $(1,967) $(3,881) $(7,827) $(44,471)

(1)Excluding depreciation and amortization.

Fiscal 2011 Quarter Ended Fiscal 2012 Quarter EndedFiscal 2013

Quarter EndedJune 27,

2010September 26,

2010December 26,

2010April 3,

2011July 3,2011

October 2,2011

January 1,2012

April 1,2012

July 1,2012

September 30,2012

December 30,2012

(unaudited) (unaudited) (unaudited)

(as a percentage of net sales)Statementof incomedataNet sales 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%Cost ofsales andoccupancycosts(1) 67.6 70.4 67.7 63.6 66.8 66.7 66.5 65.9 67.2 67.7 68.2

32.4 29.6 32.3 36.4 33.2 33.3 33.5 34.1 32.8 32.3 31.8

GrossprofitDirectstoreexpenses 22.6 21.6 22.5 23.6 24.0 25.1 23.5 23.1 22.3 24.0 22.9Generalandadministrativeexpenses 7.2 6.9 7.4 11.1 7.6 7.8 7.3 9.1 7.6 9.1 8.0Storeopeningcosts 2.0 1.6 3.2 1.4 2.7 2.4 3.2 1.0 4.2 4.1 3.7

Income(loss)fromoperations 0.7 (0.5) (0.8) 0.2 (1.1) (2.0) (0.5) 0.8 (1.3) (4.9) (2.9)Businessinterruptioninsurancerecoveries - - - - - - - - - - 1.5Interestexpense,net (3.7) (4.1) (4.1) (3.9) (3.4) (3.1) (2.7) (3.0) (3.0) (3.6) (4.2)Loss onearlyextinguishmentof debt - - - (10.5) - - - - - - -

Lossbeforeincometaxes (3.0) (4.6) (4.8) (14.2) (4.5) (5.1) (3.2) (2.2) (4.3) (8.5) (5.6)Incometax benefit(provision) 1.3 1.9 2.7 6.0 1.8 2.1 1.3 0.9 1.7 3.7 (21.0)

Net loss (1.7)% (2.7)% (2.2)% (8.2)% (2.7)% (3.0)% (1.9)% (1.3)% (2.5)% (4.9)% (26.6)%

(1)Excluding depreciation and amortization.

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Table of ContentsLiquidity and Capital Resources

Overview

Our primary sources of liquidity are cash generated from operations and borrowings under our senior credit facility. Our primary uses of cashare purchases of merchandise inventories, operating expenses, capital expenditures, primarily for opening new stores and infrastructure, and debtservice. We believe that the cash generated from operations, together with the borrowing availability under our senior credit facility, will be sufficientto meet our normal working capital needs for at least the next twelve months, including investments made, and expenses incurred, in connection withopening new stores. Our ability to continue to fund these items may be affected by general economic, competitive and other factors, many of whichare outside of our control. If our future cash flow from operations and other capital resources are insufficient to fund our liquidity needs, we may beforced to reduce or delay our expected new store openings, sell assets, obtain additional debt or equity capital or refinance all or a portion of our debt.Our working capital position benefits from the fact that we generally collect cash from sales to customers the same day or, in the case of credit ordebit card transactions, within a few business days of the related sale. At December 30, 2012, we had $29.2 million in cash and cash equivalents and $24.1 million in borrowing availability pursuant to our priorsenior credit facility. We were in compliance with all debt covenants under our prior senior credit facility as of December 30, 2012. Our currentsenior credit facility is discussed under "- Senior Credit Facility" below. While we believe we have sufficient liquidity and capital resources to meet our current operating requirements and expansion plans, we mayelect to pursue additional expansion opportunities within the next year that could require additional debt or equity financing. If we are unable tosecure additional financing at favorable terms in order to pursue such additional expansion opportunities, our ability to pursue such opportunitiescould be materially adversely affected. A summary of our operating, investing and financing activities are shown in the following table:


EndedMarch 28,

2010April 3,

2011April 1,

2012January 1,

2011December 30,

2012(Amounts in thousands)

Net cash (used in) provided by operating activities $ (101) $ (6,997) $ 8,817 $ 8,960 $ (3,252)Net cash (used in) investing activities (21,658) (27,797) (44,528) (35,591) (45,199)Net cash provided by (used in) financing activities 28,538 70,266 7,816 8,314 47,451

Net increase (decrease) in cash and cash equivalents $ 6,779 $ 35,472 $ (27,895) $(18,317) $ (1,000)

Operating Activities

Net cash (used in) provided by operating activities consists primarily of net income (loss) adjusted for non- cash items, including depreciation,changes in deferred income taxes and loss on early extinguishment of debt, and the effect of working capital changes. We used cash in operating activities of $3.3 million during the thirty- nine weeks ended December 30, 2012, and our operating activitiesprovided cash of $9.0 million during the thirty- nine weeks ended January 1, 2012. The increase in net cash used in operating activities in the thirty-nine weeks ended December 30, 2012 compared to the thirty- nine weeks ended January 1, 2012 was

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Table of Contentsprimarily due to the increase in our net loss and increased working capital needs, primarily related to new store openings. We used cash in operating activities of $0.1 million and $7.0 million during fiscal 2010 and fiscal 2011, respectively, and our operating activitiesprovided cash of $8.8 million in fiscal 2012. The increase in net cash used in operating activities in fiscal 2011 compared to fiscal 2010 was primarilydue to the increase in our net loss, and increased working capital needs, primarily due to an increase in accounts receivable, merchandise inventoriesand prepaid expenses, in fiscal 2011, partially offset by the increase in loss on early extinguishment of debt and deferred income taxes. Net cash wasprovided by operations in fiscal 2012 compared to net cash used in operations in fiscal 2011 primarily due to decreases in net loss, inventories,prepaid expenses, an increase in depreciation and amortization and reduced working capital needs, primarily due to an increase in accrued expensesand other and a decrease in merchandise inventories, in fiscal 2012, partially offset by a reduction in deferred income taxes and no loss on earlyextinguishment of debt.

Investing Activities

Cash used in investing activities consists primarily of capital expenditures for opening new stores and infrastructure, as well as investments ininformation technology and merchandising enhancements. We made capital expenditures of $45.2 million in the thirty- nine weeks ended December 30, 2012, of which $39.3 million was in connectionwith the three stores (one of which included an integrated Fairway Wines & Spirits location) we opened in the period and $2.0 million was inconnection with the store we expect to open in fall 2013. The remaining approximately $3.9 million of capital expenditures in this period was formerchandising initiatives and equipment upgrades and enhancements to existing stores. We made capital expenditures of $35.6 million in the thirty-nine weeks ended January 1, 2012, of which $31.6 million was in connection with the two stores we opened in July and November 2011 andapproximately $4.0 million was for merchandising initiatives and equipment upgrades and enhancements to existing stores. We made capital expenditures of $44.5 million in fiscal 2012, of which $31.7 million was in connection with the two stores we opened in fiscal2012, $4.1 million was in connection with the store and integrated Fairway Wines & Spirits location we opened in the first quarter of fiscal 2013 and$1.8 million was in connection with the stores we opened in August 2012 and December 2012. The remaining approximately $6.9 million of capitalexpenditures in fiscal 2012 was for merchandising initiatives and equipment upgrades and enhancements to existing stores. We made capitalexpenditures of $27.8 million in fiscal 2011, of which $17.3 million was in connection with the two stores and adjacent Fairway Wines & Spiritslocations we opened in fiscal 2011 and $4.8 million was in connection with the two stores we opened in fiscal 2012, and approximately $5.7 millionwas for merchandising initiatives and equipment upgrades and enhancements to existing stores. We made capital expenditures of $21.7 million infiscal 2010, of which $13.7 million was in connection with the two stores and adjacent Fairway Wines & Spirits locations we opened in fiscal 2011,with the remaining approximately $8.0 million for merchandising initiatives and equipment upgrades and enhancements to existing stores. We plan to spend approximately $50 million to $60 million on capital expenditures during the fiscal year ending March 31, 2013, primarilyrelated to the new store and Fairway Wines & Spirits location we opened in June 2012, the new stores we opened in August 2012 and December2012 and stores we plan to open in calendar 2013.

Financing Activities

Cash flows from financing activities consists principally of borrowings and payments under our senior credit facility, and proceeds from theissuance of capital stock, net of equity issuance costs. We

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Ended

March 28,2010

April 3,2011

April 1,2012

January1,

2012

December30,

2012(Amounts in thousands)

Proceeds from long- term debt, net of issuance costs $ 95,224 $ 173,535 $ 31,688 $ 31,688 $ 48,601Payments on long- term debt (76,095) (115,738) (23,875) (23,374) (1,150)Proceeds from issuance of preferred and common stock, net of issuance costs 9,409 12,469 3 - -

Net cash provided by (used in) financing activities $ 28,538 $ 70,266 $ 7,816 $ 8,314 $ 47,451

Net cash provided by financing activities during fiscal 2010, fiscal 2011 and fiscal 2012 was $28.5 million, $70.3 million and $7.8 million,respectively. Net cash provided by financing activities during the thirty- nine weeks ended January 1, 2012 and December 30, 2012 was $8.3 millionand $47.5 million, respectively. In the thirty- nine weeks ended January 1, 2012, we repaid $22.0 million aggregate principal amount of subordinateddebt, together with accrued interest, and issued $7.3 million of subordinated debt. In August 2012, we entered into a new senior credit facility, whichwas treated as a debt modification for accounting purposes, that, after repaying the loans outstanding under our 2011 senior credit facility, providedadditional net proceeds of approximately $48.6 million, which was used to finance growth. In December 2009, we refinanced our existing first and second lien credit facilities with a new $114 million credit facility, which wesubsequently increased to $124 million in November 2010. In March 2011, we refinanced our $124 million credit facility with a new $200 millionsenior credit facility, which we subsequently increased to $225 million in December 2011 and $235 million in July 2012. In fiscal 2012, we used aportion of the proceeds from the borrowing under the 2011 senior credit facility to repay $22.0 million aggregate principal amount of subordinateddebt, together with accrued interest, and issued $7.3 million of subordinated debt. In August 2012, we refinanced the 2011 senior credit facility. In October 2009, we issued 9,650 shares of Series A preferred stock and received proceeds of approximately $9.4 million net of issuance costsof approximately $241,000. In October 2010, we issued 12,788 shares of Series A preferred stock and received net proceeds of approximately$12.5 million net of issuance costs of approximately $321,000.

Senior Credit Facility

In February 2013, we and our wholly- owned subsidiary Fairway Group Acquisition Company, as the borrower, entered into a senior securedcredit facility consisting of a $275 million term loan (the "Term Facility") and a $40 million revolving credit facility, which includes a $40 millionletter of credit subfacility (the "Revolving Facility" and together with the Term Facility, the "Credit Facility") with the Term Facility maturing inAugust 2018 and the Revolving Facility maturing in August 2017. We used the proceeds from the Term Facility to repay the $264.5 million ofoutstanding borrowings (including accrued interest) under our prior senior credit facility, pay fees and expenses and provide us with $3.5 million torepay our outstanding subordinated note. Affiliates of certain of the underwriters participate as lenders under the Credit Facility, and Credit SuisseAG, an affiliate of Credit Suisse Securities (USA) LLC, acts as administrative agent and collateral agent. Credit Suisse Securities (USA) LLC,Merrill Lynch, Pierce, Fenner & Smith Incorporated and Jefferies Finance LLC, an affiliate of Jefferies LLC, acted as joint bookrunners and jointlead arrangers of the Credit Facility,

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Table of ContentsBank of America, N.A., an affiliate of Merrill Lynch, Pierce, Fenner & Smith Incorporated, acted as syndication agent and Jefferies Finance LLCacted as documentation agent. Borrowings under the Credit Facility bear interest, at our option, at (i) adjusted LIBOR (subject to a 1.25% floor) plus 5.50% or (ii) an alternatebase rate plus 4.50%. The 5.50% and 4.50% margins will each be reduced by 50 basis points at any time following completion of the offering beingmade hereby when our public corporate family rating from Moody's Investor Services Inc. is B2 or higher and our public corporate rating fromStandard & Poors rating service is B or higher, in each case with a stable outlook, and as long as certain events of default have not occurred. Inaddition, there is a fee payable quarterly in an amount equal to 1% per annum of the undrawn portion of the Revolving Facility, calculated based on a360- day year. Interest is payable quarterly in the case of base rate loans and on maturity dates or every three months, whichever is shorter, in the caseof adjusted LIBOR loans. In addition, we would have been required to repay $7.7 million of the outstanding term loan on May 15, 2013 if we had notrepaid in full our outstanding subordinated note by that date. All of the borrower's obligations under the Credit Facility are unconditionally guaranteed (the "Guarantees") by us and each of our direct andindirect subsidiaries (other than the borrower and any future unrestricted subsidiaries as we may designate, at our discretion, from time to time) (the"Guarantors"). Additionally, the Credit Facility and the Guarantees are secured by a first- priority perfected security interest in substantially allpresent and future assets of the borrower and each Guarantor, including accounts receivable, equipment, inventory, general intangibles, leases,intellectual property, investment property and intercompany notes among Guarantors. Mandatory prepayments under the Credit Facility are required with (i) 50% of adjusted excess cash flow (which percentage will decrease to 25%upon achievement and maintenance of a leverage ratio of less than 5.0:1.0, and to 0% upon achievement and maintenance of a leverage ratio of lessthan 4.0:1.0); (ii) 100% of the net cash proceeds of assets sales or other dispositions of property by us and our restricted subsidiaries (subject tocertain exceptions and reinvestment provisions); and (iii) 100% of the net cash proceeds of issuances, offerings or placements of debt obligations(subject to certain exceptions). The Credit Facility contains customary affirmative covenants, including (i) maintenance of legal existence and compliance with laws andregulations; (ii) delivery of consolidated financial statements and other information; (iii) maintenance of properties in good working order;(iv) payment of taxes; (v) delivery of notices of defaults, litigation, ERISA events and material adverse changes; (vi) maintenance of adequateinsurance; and (vii) inspection of books and records. The Credit Facility also contains customary negative covenants, including restrictions on (i) the incurrence of additional debt; (ii) liens and sale-leaseback transactions; (iii) loans and investments; (iv) guarantees and hedging agreements; (v) the sale, transfer or disposition of assets andbusinesses; (vi) dividends on, and redemptions of, equity interests and other restricted payments (although the Credit Facility permits us to use theproceeds of this offering to pay accrued but unpaid dividends on our outstanding preferred stock), including dividends and distributions to the issuerby its subsidiaries; (vii) transactions with affiliates; (viii) changes in the business conducted by us; (ix) payment or amendment of subordinated debtand organizational documents; and (x) maximum capital expenditures. We are also required to comply with the following financial covenants: (i) amaximum total leverage ratio and (ii) a minimum cash interest coverage ratio. Events of default under the Credit Facility include:

failure to pay principal, interest, fees or other amounts under the Credit Facility when due, taking into account any applicablegrace period;

any representation or warranty proving to have been incorrect in any material respect when made;

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failure to perform or observe covenants or other terms of the Credit Facility subject to certain grace periods;

a cross- default and cross- acceleration with certain other debt;

bankruptcy events;

a change in control, which includes any person other than Sterling Investment Partners owning, directly or indirectly, beneficiallyor of record, shares representing more than 35% of the voting power of our outstanding common stock or a majority of ourdirectors being persons who were not nominated by the board or appointed by directors so nominated;

certain defaults under ERISA; and

the invalidity or impairment of any security interest.

The foregoing is a brief summary of the material terms of the Credit Facility, and is qualified in its entirety by reference to the Credit Facilityfiled as an exhibit to the registration statement relating to this prospectus. See "Where You Can Find More Information." See Note 8 to our financial statements found elsewhere in this prospectus for information regarding our prior senior credit facilities.

Subordinated Notes

In connection with Sterling Investment Partners' acquisition of Fairway in January 2007, we issued to certain of the selling entities subordinatedpromissory notes in an aggregate principal amount of $22.0 million, together with accrued interest. The notes bore interest at the rate of 10% perannum, which rate was increased to 12% in April 2010, with the additional two percent deferred until maturity, and were due in January 2015.Mr. Howard Glickberg, our Vice Chairman of Development and a director, owned one- third of each of the entities that received a promissory note.In May 2011, we used a portion of the proceeds from our 2011 senior credit facility to repay these notes. In May 2011, we sold to Mr. Glickberg asubordinated promissory note in the aggregate principal amount of $7.3 million. This note bore interest at a rate of 12% per annum, of which 10%was paid in cash quarterly and 2% was deferred until maturity. The maturity date of the note was March 3, 2018. In March 2013, we repaid this note,including all accrued deferred interest, in full. See "Certain Relationships and Related Party Transactions- Transactions with Howard Glickberg-Subordinated Notes."Contractual Obligations The following table summarizes our contractual obligations as of April 1, 2012.

Payment by period

(amounts in thousands) TotalLess than

1 year1 -

3 years 3 - 5 yearsMore than

5 yearsLong- term debt obligations(1) $205,458 $ 2,000 $ 4,000 $192,125 $ 7,333Estimated interest on long- term debt obligations(2) 81,413 17,021 32,505 30,211 1,676Operating lease obligations(3) 455,898 19,745 41,219 42,004 352,930

Total $742,769 $ 38,766 $ 77,724 $264,340 $ 361,939

(1)Reflects the outstanding balance on our $225.0 million 2011 senior credit facility at April 1, 2012, including unamortized discount of$1.9 million, and our subordinated promissory note. Does not include $9.9 million of outstanding letters of credit under our 2011 seniorcredit facility. For a more detailed description of our 2011 senior credit facility, see note 8 to our financial statements

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found elsewhere in this prospectus. See the table below for information regarding our long- term debt obligations on a pro forma basisgiving effect to our new senior credit facility that we entered into in February 2013 and the repayment of our outstanding subordinated note.

(2)Borrowings under our 2011 senior credit facility bore interest, at our option, at (i) adjusted LIBOR (subject to a 1.5% floor) plus 6% or(ii) an alternate base rate plus 5%. At April 1, 2012, the interest rate on our outstanding borrowings was 7.5%. For the purposes of thistable, we have estimated interest expense to be paid during the remaining term of our revolving credit facility using the outstanding balanceand interest rate as of April 1, 2012. Our actual cash payments for interest on the senior credit facility will fluctuate as the outstandingbalance changes with our cash needs and the LIBOR rate fluctuates. For a more detailed description of the interest requirement for ourlong- term debt under our 2011 senior credit facility, see note 8 to our financial statements found elsewhere in this prospectus. A onepercentage point increase in LIBOR above the 1.5% floor would have caused an increase to interest expense of $2.1 million for the "lessthan 1 year" period, $3.9 million for "1 - 3 years" and $3.7 million for "3 - 5 years." The debt in the "more than 5 years" period has a fixedrate of interest and an increase in interest rates will not affect the amount of interest payable. See the table below for information regardingour estimated interest on long- term debt obligations on a pro forma basis giving effect to our new senior credit facility that we entered intoin February 2013 and the repayment of our outstanding subordinated note.

(3)Represents the minimum lease payments due under our operating leases, excluding maintenance, insurance and taxes related to ouroperating lease obligations, which combined represented approximately 19.5% of our minimum lease obligations for the fiscal year endedApril 1, 2012, and does not reflect fair market value rent reset provisions in the leases. For a more detailed description of our operatingleases, see note 14 to our financial statements found elsewhere in this prospectus. See the table below for information regarding ouroperating lease obligations on a pro forma basis giving effect to the amendment of our related party leases in December 2012.

The following summarizes our contractual obligations as of April 1, 2012 on a pro forma basis after giving effect to (i) our entry into a newsenior credit facility on February 14, 2013, consisting of a $275 million term loan facility and a $40 million revolving credit facility, (ii) therepayment of our outstanding subordinated note in March 2013, and (iii) the amendment of our related party leases in December 2012, as if thesetransactions had occurred on April 1, 2012:

Payment by period

(amounts in thousands) TotalLess than

1 year1 -

3 years3 -

5 yearsMore than

5 yearsLong- term debt obligations(1) $275,000 $ 2,750 $ 5,500 $ 5,500 $ 261,250Estimated interest on long- term debt obligations(2) 114,912 19,604 38,964 38,633 17,711Operating lease obligations(3) 505,676 23,526 48,859 48,851 384,440

Total $895,588 $ 45,880 $ 93,323 $ 92,984 $ 663,401

(1)Reflects the outstanding balance on our $315.0 million 2013 senior credit facility as if we had entered into that facility at April 1, 2012,including unamortized discount of $15.6 million. Does not include $9.9 million of outstanding letters of credit at April 1, 2012 under ournew senior credit facility. For a more detailed description of our senior credit facility, see "- Senior Credit Facility", "Description of CertainIndebtedness- Senior Credit Facility" and note 8 to our financial statements found elsewhere in this prospectus.

(2)Borrowings under our senior credit facility bear interest, at our option, at (i) adjusted LIBOR (subject to a 1.25% floor) plus 5.50% or(ii) an alternate base rate plus 4.50%, subject to reduction if we achieve certain specified ratings following completion of the offering beingmade hereby. At April 1, 2012, the interest rate on our outstanding borrowings under our new senior

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credit facility would have been 6.75%. For the purposes of this table, we have estimated interest expense to be paid during the remainingterm of our revolving credit facility using the outstanding balance and interest rate as of April 1, 2012 as if we had entered into our newcredit facility on that date. Our actual cash payments for interest on the senior credit facility will fluctuate as the outstanding balancechanges with our cash needs and the LIBOR rate fluctuates. For a more detailed description of the interest requirement for our long- termdebt, see "- Senior Credit Facility", "Description of Certain Indebtedness- Senior Credit Facility" and note 8 to our financial statementsfound elsewhere in this prospectus. A one percentage point increase in LIBOR above the 1.25% floor would cause an increase to interestexpense of $2.7 million for the "less than 1 year" period, $5.5 million for the "1 - 3 years" period, $5.4 million for the "3 - 5 years" periodand $2.6 million for "more than 5 years" period.

(3)Represents the minimum lease payments due under our operating leases, excluding common area maintenance, insurance and taxes relatedto our operating lease obligations, which combined represented approximately 19.5% of our minimum lease obligations for the year endedApril 1, 2012, and does not reflect fair market value rent reset provisions in the leases. For a more detailed description of our operatingleases, see note 14 to our financial statements found elsewhere in this prospectus.

We periodically make other commitments and become subject to other contractual obligations that we believe to be routine in nature andincidental to the operation of our business. We believe that such routine commitments and contractual obligations do not have a material impact onour business, financial condition or results of operations.Off- Balance Sheet Arrangements We are not party to any off- balance sheet arrangements.Multiemployer Plans We are a party to one underfunded multiemployer pension plan on behalf of our union- affiliated employees. This underfunding has increased inpart due to increases in the costs of benefits provided or paid under these plans as well as lower returns on plan assets. The unfunded liabilities ofthese plans may result in increased future payments by us and other participating employers. Going forward, our required contributions to thesemultiemployer plans could increase as a result of many factors, including the outcome of collective bargaining with the unions, actions taken bytrustees who manage the plans, government regulations, the actual return on assets held in the plans and the payment of a withdrawal liability if wechoose to exit a plan. Our risk of future increased payments may be greater if other participating employers withdraw from the plan and are not ableto pay the total liability assessed as a result of such withdrawal, or if the pension plan adopts surcharges and/or increased pension contributions aspart of a rehabilitation plan. For a more detailed description of this underfunded plan, see note 12 to our financial statements found elsewhere in thisprospectus.Quantitative and Qualitative Disclosure About Market Risk Our market risks relate primarily to changes in interest rates. Borrowings under our existing senior credit facility bear floating interest rates thatare tied to LIBOR or alternate base rates and, therefore, our statements of income and our cash flows will be exposed to changes in interest rates. Aone percentage point increase in LIBOR above the 1.25% minimum floor would cause an annual increase to the interest expense on our borrowingsunder our senior credit facilities of approximately $2.7 million. Pursuant to the requirements of our 2011 senior credit facility, in fiscal 2012 weentered into an interest rate cap agreement with Credit Suisse AG to cap the LIBOR interest rate at 4% on $70 million notional amount of the termloan for the period July 19, 2011 through June 14, 2012 and

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Table of Contents$120 million notional amount of the term loan from June 14, 2012 through July 19, 2013. We paid Credit Suisse AG $98,000 for this interest ratecap. Pursuant to the requirements of our prior 2009 senior credit facility, in fiscal 2011 we entered into an interest rate cap agreement with CreditSuisse AG to cap the LIBOR interest on $50.1 million of the outstanding term loan at 5% for the period June 4, 2010 through June 14, 2011 and 4%from June 14, 2011 through June 14, 2012. We paid Credit Suisse AG a fee of $118,000 for this agreement. At December 30, 2012, we had cash and cash equivalents of $29.2 million. These amounts are held primarily in cash and money market funds.We do not enter into investments for trading or speculative purposes. Due to the short- term nature of these investments, we believe that we do nothave any material exposure to changes in the fair value of our investment portfolio as a result of changes in interest rates. We do not have any foreign currency or any other material derivative financial instruments.Critical Accounting Policies and Estimates The preparation of our financial statements in conformity with GAAP requires us to make estimates, assumptions and judgments that affectamounts of assets and liabilities reported in the consolidated financial statements, the disclosure of contingent assets and liabilities as of the date ofthe financial statements and reported amounts of revenues and expenses during the year. We believe our estimates and assumptions are reasonable;however, future results could differ from those estimates. Critical accounting policies reflect material judgment and uncertainty and may result in materially different results using different assumptionsor conditions. We identified the following critical accounting policies and estimates: merchandise inventories, goodwill and other intangible assets,impairment of long- lived assets and income taxes. For a detailed discussion of accounting policies, please refer to the notes to our consolidatedfinancial statements included elsewhere in this prospectus.

Merchandise Inventories

Perishable inventories are stated at the lower of cost (first in, first out) or market. Non- perishable inventories are stated principally at the lowerof cost or market, with cost determined under the retail method, which approximates average cost. We value inventories at the lower of cost ormarket. Under the retail method, the valuation of inventories at cost and the resulting gross margins are determined by applying a cost- to- retail ratiofor various groupings of similar items to the retail value of inventories. Inherent in the retail inventory method calculations are certain managementjudgments and estimates which could impact the ending inventory valuation at cost as well as the resulting gross margins.

Goodwill and Other Intangible Assets

We account for goodwill and other intangible assets in accordance with Financial Accounting Standards Board ("FASB") Accounting StandardsCodification ("ASC") Topic No. 350- Intangibles- Goodwill and Other. Accordingly, goodwill and identifiable intangible assets with indefinite livesare not amortized, but instead are subject to annual testing for impairment. Goodwill is tested for impairment on an annual basis at the end of each fiscal year or between annual tests if an event occurs or circumstanceschange that would reduce the fair value of a reporting unit below its carrying amount. To the extent the carrying amount of a reporting unit exceedsthe fair value of the reporting unit, we are required to perform a second step, as this is an indication that the reporting unit goodwill may be impaired.In this step, we compare the implied fair value of the reporting unit goodwill with the carrying amount of the reporting unit goodwill. The implied fairvalue of goodwill is determined by allocating the fair value of the reporting unit to all of the assets (recognized and unrecognized) and liabilities ofthe reporting unit in a manner similar to a purchase

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Table of Contentsprice allocation The residual fair value after this allocation is the implied fair value of the reporting unit goodwill. Based on this annual impairmentanalysis, there was no impairment of non- amortizable intangible assets, including goodwill, as of April 1, 2012, April 3, 2011 and March 28, 2010. We test for intangibles that are not subject to amortization whenever events or changes in circumstances indicate that the carrying amount maynot be recoverable. We test indefinite- lived assets using a two- step approach. The first step screens for potential impairment while the second stepmeasures the amount of impairment. We use a discounted cash flow analysis to complete the first step in the process. The amount of the impairmentloss, if any, is measured as the difference between the net book value of the asset and its estimated fair value. As of April 1, 2012, April 3, 2011 andMarch 28, 2010 no impairment charges have been recorded.

Impairment of Long- Lived Assets

ASC 360, "Impairment of Long- Lived- Assets" requires that long- lived assets other than goodwill and other non- amortizable intangibles bereviewed for impairment whenever events such as adjustments to lease terms or other adverse changes in circumstances indicate that the carryingamount of the asset may not be recoverable. In reviewing for impairment, we compare the carrying value of such assets with finite lives to theestimated undiscounted future cash flows expected from the use of the assets and their eventual disposition. When the estimated undiscounted futurecash flows are less than their carrying amount, an impairment loss is recognized equal to the difference between the assets' fair value and theircarrying value. We have concluded that the carrying amount of the long- lived assets is recoverable as of April 1, 2012, April 3, 2011 and March 28,2010.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future taxconsequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective taxbases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which thosetemporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities for a change in tax rates is recognized inincome in the period that includes the enactment date.

Stock Based Compensation

We measure and recognize stock- based compensation expense for all equity- based payment awards made to employees using estimated fairvalues. The fair value of the award that is ultimately expected to vest is recognized as compensation expense over the requisite service period. Forawards with a change of control condition, an evaluation is made at the grant date and future periods as to the likelihood of the condition being met.Compensation expense is adjusted in future periods for subsequent changes in the expected outcome of the change of control conditions until thevesting date. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from thoseestimates. In fiscal 2010, fiscal 2011, fiscal 2012 and the thirty- nine weeks ended December 30, 2011, we issued restricted shares of Class A commonstock at a price per share of $0.01. We estimated the fair value of a share of Class A common stock to be $0.70, $1.33, $3.44 and $1.61 in fiscal 2010,fiscal 2011, fiscal 2012 and the thirty- nine weeks ended January 1, 2012, respectively, compared to an initial public offering price of $11.00 pershare, which is the midpoint of the price range set forth on the cover page of this prospectus. As part of our responsibility in determining an estimateof the fair value of common stock at April 1, 2012, we considered the analysis of an unrelated valuation specialist, using probability- weightedexpected returns considering three discrete scenarios: consummate an initial public offering

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Table of Contentswithin six months, sell the company or remain a private company. During fiscal 2012 and the thirty- nine weeks ended January 1, 2012 andDecember 30, 2012, we charged to operations approximately $437,000, $329,000 and $83,000, respectively, for non- cash stock based compensationexpense. We issued no stock in the thirty- nine week period ended December 30, 2012. In connection with this offering, we anticipate granting to our directors and employees an aggregate of 2,296,838 RSUs in respect of Class Acommon stock and options to purchase 1,135,722 shares of Class A common stock. These RSUs will vest on the third anniversary of the date of theclosing of this offering in the case of our non- employee directors, and in the case of members of our senior management team, contingent upon theexecutive's continued employment, half on each of the third and fourth anniversary of the date of closing of this offering. The options will vest in fourequal annual installments commencing on the first anniversary of the closing of this offering. We estimate that we will record compensation expenseassociated with these grants, resulting in a reduction in net earnings, of approximately $8.7 million for fiscal 2014, approximately $9.0 million foreach of fiscal 2015 and fiscal 2016, $2.7 million for fiscal 2017 and $0.1 million for fiscal 2018, in each case net of tax, assuming an initial publicoffering price of $11.00, which is the midpoint of the price range set forth on the cover page of this prospectus. We will from time to time in thefuture make additional restricted stock unit awards, option grants and restricted stock awards under our 2013 Long- Term Incentive Plan, which willresult in compensation expense in future periods. In addition, contractual arrangements with certain of our management require us to pay thembonuses upon consummation of the offering being made hereby which aggregate approximately $7.3 million, assuming an initial public offering priceof $11.00, which is the midpoint of the price range set forth on the cover page of this prospectus. As a result, we will incur charges of approximately$7.3 million against earnings in the quarter in which we consummate this offering. In addition, we will incur a charge of approximately $1.1 millionagainst earnings in the fourth fiscal quarter ending March 31, 2013 relating to severance due to a former senior executive and a former officer anddirector. See "Risk Factors- Risks Relating to Our Business- We will incur compensation related charges in the quarter in which this offering isconsummated and in subsequent periods," "Management- Director Compensation," "Executive Compensation- Equity Compensation Plans- 2013Long- Term Incentive Plan- Initial Awards" and "- IPO Bonuses" for more information.Recent Accounting Pronouncements In September 2011, the FASB issued Accounting Standards Update ("ASU") No. 2011- 08- Intangibles- Goodwill and Other (ASC TopicNo. 350)- Testing Goodwill for Impairment. The ASU simplifies how entities test for goodwill impairment. The ASU permits an entity to first assessthe qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basisfor determining if performing the two- step goodwill impairment test, as defined, is necessary. The ASU is effective for annual goodwill impairmenttests performed for fiscal years beginning after December 15, 2011. We do not believe that the adoption of this ASU will have a material impact onour consolidated financial statements. In September 2011, the FASB issued an amendment related to multiemployer pension plans. This amendment increases the quantitative andqualitative disclosures about an employer's participation in individually significant multiemployer plans that offer pension and other postretirementbenefits. The guidance is effective for fiscal years ended after December 15, 2011. We have adopted the guidance and modified the disclosuressurrounding our participation in multiemployer plans in note 12 to our financial statements appearing elsewhere in this prospectus. We do not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on theaccompanying consolidated financial statements.

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Table of ContentsJOBS Act The JOBS Act provides that an emerging growth company can delay the adoption of certain accounting standards until those standards wouldotherwise apply to private companies. We have elected to delay the adoption of new or revised accounting pronouncements applicable to public andprivate companies until such pronouncements become mandatory for private companies. As a result, our financial statements may not be comparableto the financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards that are applicableto public and private companies. Additionally, as an "emerging growth company", we are not required to, among other things, (i) provide an auditor's attestation report on oursystem of internal controls over financial reporting pursuant to Section 404 or (ii) comply with any requirement that may be adopted by the PCAOBregarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financialstatements (auditor discussion and analysis).

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BUSINESSOur Company Fairway Market is a high- growth food retailer offering customers a differentiated one- stop shopping experience "Like No Other Market". Sincebeginning as a small neighborhood market in the 1930s, Fairway has established itself as a leading food retailing destination in the Greater New YorkCity metropolitan area, an approximately $30 billion food retail market that is the largest in the United States. Our stores emphasize an extensiveselection of fresh, natural and organic products, prepared foods and hard- to- find specialty and gourmet offerings, along with a full assortment ofconventional groceries. Our prices typically are lower than natural / specialty stores and competitive with conventional supermarkets. We believe thatthe combination of our broad product selection, in- store experience and value pricing creates a premier food shopping experience that appeals to abroad demographic. We operate 12 locations in the Greater New York City metropolitan area, three of which include Fairway Wines & Spirits stores. Four of ourfood stores, which we refer to as our "urban stores," are located in Manhattan, and the remainder, which we refer to as our "suburban stores," arelocated in New York (outside of Manhattan), New Jersey and Connecticut. Our Red Hook location was temporarily closed from October 29, 2012through February 28, 2013 due to substantial damage sustained during Hurricane Sandy and reopened March 1, 2013. We expect to open anadditional food store in Manhattan's Chelsea neighborhood in summer 2013 and in Nanuet, New York in fall 2013. Since Sterling InvestmentPartners' acquisition of Fairway in 2007, we have made significant investments in infrastructure required to accelerate our future growth, and, sinceMarch 2009, have opened seven food stores, including the three Fairway Wines & Spirits stores. We have a proven track record of growth led by a seasoned management team. We believe our stores are among the most productive in theindustry in net sales per store and net sales per square foot as a result of our distinctive merchandising strategies, value positioning and efficientoperating structure. Through our focused efforts on expanding our store base, enhancing our customers' shopping experience and improving the valueproposition we offer our customers, we have increased our net sales from $401.2 million in fiscal 2010 to $554.9 million in fiscal 2012, or 38.3%,and our Adjusted EBITDA from $23.9 million in fiscal 2010 to $35.8 million in fiscal 2012, or 49.8%, while significantly investing in corporateinfrastructure to support our growth, including new store expansion. We increased our net sales from $404.5 million in the thirty- nine weeks endedJanuary 1, 2012 to $482.5 million in the thirty- nine weeks ended December 30, 2012, or 19.3%, and our Adjusted EBITDA from $24.9 million in thethirty- nine weeks ended January 1, 2012 to $33.8 million in the thirty- nine weeks ended December 30, 2012, or 35.9%, due principally to new storeopenings and leveraging our infrastructure. We had net losses of $7.1 million, $18.6 million, $11.9 million, $10.0 million and $56.2 million in fiscal2010, fiscal 2011, fiscal 2012 and the thirty- nine weeks ended January 1, 2012 and December 30, 2012, respectively. For a discussion of AdjustedEBITDA and a reconciliation of Adjusted EBITDA to net loss, see note 11 to the tables included in "Selected Historical Consolidated Financial andOther Data."Our History Fairway began in the 1930s as a fruit and vegetable stand located at our Broadway store's current location on Broadway and 74th Street inManhattan under the name "74th Street Market." In 1954, we expanded the 74th Street location, adding groceries, meat, cheese, dairy products andfrozen foods, and renamed the store "FAIRWAY" to convey the concept of "fair prices." In the mid- 1970s, Fairway began expanding into gourmet and specialty categories, transforming its retail grocery operations into a full servicefood superstore known for high quality and value pricing. During this transformation, we also began hiring the team of ambitious, hardworking"foodies" who

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Table of Contentswould eventually become our category experts and senior merchants. In the late 1970s, we adopted the slogan "Like No Other Market" in recognitionof our distinctive format. In January 2007, Sterling Investment Partners acquired 80.1% of Fairway. With Sterling Investment Partners' support, we made significantinvestments in infrastructure required to accelerate our future growth and, in early 2009, began to execute our successful new store expansionprogram. The issuer was incorporated as a Delaware corporation on September 29, 2006. Each of our stores is owned by a separate Delaware subsidiary.Our Competitive Strengths We believe the following strengths contribute to our success as a premier destination food retailer and position us for sustainable growth: Iconic brand. We believe our Fairway brand has a well established reputation for delivering high- quality, value- priced fresh, specialty andconventional groceries. Fairway has served millions of passionate customers in the Greater New York City metropolitan area for more than 75 years.We recorded approximately 12.7 million customer transactions in fiscal 2012, and believe the Fairway brand is widely recognized throughout theGreater New York City metropolitan area. Our food experts regularly appear on nationally syndicated food and cooking programs. We believe thestrength of the Fairway brand enhances our ability to: (i) attract a broad demographic of customers from a wider geographic radius than aconventional supermarket; (ii) source hard- to- find, unique gourmet and specialty foods; (iii) build a trusted connection with our customers thatresults in a high degree of loyalty; (iv) attract and retain highly talented employees; (v) secure attractive real estate locations; and (vi) successfullyopen new stores. Destination food shopping experience "Like No Other Market". We provide our customers a differentiated one- stop shopping experience byoffering a unique mix of product breadth, quality and value in a visually appealing in- store environment. Fairway creates a fun and engagingatmosphere in which customers select from an abundance of fresh foods and other high- quality products while interacting with our attentive andknowledgeable employees throughout the store. When customers enter a Fairway, they are immediately greeted by our signature towering displays offresh produce. As they continue through the store, customers will find a "specialty shop" orientation designed to recreate the best features of localspecialty markets, such as a gourmet cheese purveyor, full service butcher shop, seafood market and bakery, all in one location. Our stores provide asensory experience, including aromas of fresh coffee roasts and freshly baked bread, an array of vibrant colors across our produce displays, cheeseexperts describing selections of our over 600 artisanal cheeses, samples of our approximately 135 varieties of olive oil and free tastings of ourdelicious prepared foods. Our stores feature whimsical and informative signs designed to educate customers about the quality, origin andcharacteristics of our products, and offer tips and suggestions on food preparation and pairings. We encourage a high level of interaction among ouremployees and customers, which results in a more informed, engaged and satisfied customer. We believe the distinctive Fairway food shoppingexperience drives loyalty, referrals and repeat business. Distinctive merchandising strategy. Our merchandising strategy is the foundation of our highly differentiated, one- stop shopping experience.We offer a unique product assortment generally not found in either conventional grocery stores or natural / specialty stores, consisting of a largevariety of high- quality produce, meats and seafood, as well as gourmet, specialty and prepared foods and a full selection of everyday conventionalgroceries. High- quality perishables and prepared foods account for approximately 65% of our sales, compared to the more typical one- quarter toone- third of a conventional grocer's sales. Fairway stores also showcase hard- to- find specialty and gourmet items that expand our customers'culinary interests, and we believe we are often one of the first retailers to carry or import a new product. Our Fairway- branded products represent ahigh- quality, value- oriented

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Table of Contentsspecialty alternative unlike the more typical generic, low- cost option presented by conventional food retailers. In product lines where we offer aFairway- branded alternative, it is typically among the store's top sellers in the category. Fairway's prices typically are lower than natural / specialtyfood stores and competitive with conventional grocery stores. Our dedicated merchandising team focuses on continuously enhancing the Fairwayexperience for our loyal customers. We believe that our distinctive merchandising strategy has enabled us to build a trusted connection with ourcustomers, who value the quality and fair prices of our food, our merchandising teams' expertise and our one- stop shopping convenience. Powerful store format with industry leading productivity. We believe our stores are among the most productive in the industry in net sales perstore, net sales per square foot and store contribution margin. During fiscal 2012, for food stores open more than 13 full months, our net sales perstore and net sales per selling square foot averaged $64.8 million and $1,859, respectively. In addition, during fiscal 2012, the contribution margin ofour food stores open more than 13 full months was 12.3%. Our highly productive store format delivers attractive returns on investment due to thefollowing key characteristics:

High- volume one- stop shopping destination. Our distinctive merchandising strategy, locations in high density markets andiconic brand drive strong customer traffic to our stores. Our high volumes result in operating efficiencies that provide us with agreater ability to offer competitive prices while maintaining or improving our operating margins. In addition, our strong per storevolumes generate high inventory turnover, which enables us to maintain a fresher selection of quality perishables than most of ourcompetitors, in turn helping to drive customer traffic and sales.

Attractive product mix. Our broad assortment of high- quality fresh, natural and organic products and prepared foods, whichaccount for approximately 65% of our sales, and specialty items, which account for approximately 7% of our sales, enhance grossmargins and store productivity.

Direct- store delivery. We believe that our "farm- to- shelf" time is shorter than that of many of our competitors. The majority ofour perishables are delivered directly to our stores and not stored in a warehouse during the transport period. Given our large storevolumes, our ability to utilize directstore delivery for a greater portion of our perishables than other food retailers helps us toensure the highest quality and fastest delivery from our suppliers. Direct- store distribution eliminates multiple logistical layers,reducing supply chain costs while enhancing product freshness.

Strong vendor relationships. We have built valued, longstanding relationships with both large and small vendors that enable usto achieve attractive pricing on our broad merchandise offering. Fairway is viewed as an important strategic partner by many ofour smaller suppliers, helping them to build scale. We source our perishable products locally whenever possible to ensurefreshness. As we grow our sales, we expect that we and our vendors will benefit from increasing economies of scale.

Maximum merchandising flexibility. We generally enable our merchandising teams to control our on- shelf product selection andpositioning, rather than permitting vendors to do so through slotting fees. This permits us to offer the products customers wantmost and provides us with the flexibility to expand or contract our product offerings as demand warrants.

Proven ability to replicate store model. Since March 2009, we have successfully opened eight new food stores, three of which include FairwayWines & Spirits locations, more than doubling our store base. In aggregate, the two food stores we opened in July and November 2011 added$88.4 million of net sales and increased our store contribution by $11.4 million in fiscal 2012. We leverage our well- developed corporateinfrastructure, including our dedicated store opening team and flexible supply chain, to open in desirable locations using a disciplined approach tonew store site selection. We

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Table of Contentsbenefit from economies of scale and expect to enhance our operating efficiency as we expand our store footprint, further reinforcing our competitiveposition and ability to grow our sales profitably. As a result of our iconic brand and customer traffic, many landlords seek us out as a tenant. Our urban food store operating model for new stores is based primarily on a store size of approximately 40,000 gross square feet (approximately25,000 selling square feet), a net cash investment, including store opening costs, of approximately $16 million, not all of which requires an immediatecash outlay, net sales after two years of approximately $75 million to $85 million, a contribution margin at maturity of approximately 17% to 20%,and an average payback period on our initial investment of less than two years. Our suburban food store operating model for new stores is based primarily on a store size of approximately 60,000 gross square feet(approximately 40,000 selling square feet), a net cash investment, including store opening costs, of approximately $15 million, not all of whichrequires an immediate cash outlay, net sales after two years of approximately $45 million to $55 million, a contribution margin at maturity ofapproximately 10% to 13%, and an average payback period on our initial investment of approximately 3 to 3.5 years. We may elect to opportunistically open stores in desirable locations that differ from our prototypical new store model in square footage and/ornet sales but that we believe will provide similar contribution margins and returns on invested capital. Passionate and experienced management team. We are led by a management team with a proven track record, complemented by hands- onsenior merchants and store operations managers who have broad responsibility for merchandising and store operations. Our senior merchants have anaverage of 32 years in the food retailing industry and an average of 14 years at Fairway. We believe that our senior merchants for each broadmerchandising category (e.g., produce, meat, deli, cheese) are widely recognized as authorities in their area and are more invested in the success oftheir product categories than employees of most conventional food retailers because they provide significant merchandising input. We also believeour management and senior merchants' depth of experience and continuity as a team have significantly contributed toward our success in offeringcustomers a compelling food shopping experience. In addition, since Sterling Investment Partners acquired Fairway in January 2007, we have madesignificant additions to our company's personnel, including experienced industry executives and the next generation management and merchandisingteams to support our long- term growth objectives.Our Growth Strategy We plan to pursue the following growth strategies: Open stores in existing and new markets. We operate in the Greater New York City metropolitan area, an approximately $30 billion foodretail market that is the largest in the United States. Although we have significantly grown our sales in the Greater New York City metropolitan area,we believe our existing market presents a significant opportunity for our continued growth. In fiscal 2013 we opened an additional food store and integrated Fairway Wines & Spirits location in Woodland Park, New Jersey in June 2012,an additional food store in Westbury, New York in August 2012, and an additional food store in Manhattan's Kips Bay neighborhood in lateDecember 2012. We expect to open an additional food store in Manhattan's Chelsea neighborhood in summer 2013 and in Nanuet, New York in fall2013. For the next several years beginning in fiscal 2015, we intend to grow our store base in the Greater New York City metropolitan area at a rateof three to four stores annually. Over time, we also plan to expand Fairway's presence into new, high- density metropolitan markets. Based ondemographic research conducted for us by the Buxton Company, a customer analytics research firm, we believe, based on these demographics, wehave the opportunity to more than triple the number of stores in our existing marketing region of the Greater New York City

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Table of Contentsmetropolitan area, the Northeast market (from New England to the District of Columbia) can support up to 90 stores and the U.S. market can supportmore than 300 additional stores (including stores in the Northeast) operating under our current format. As we continue to open new stores in our existing markets, we expect these stores to be the primary driver of our sales, operating profit andmarket share gains. We believe our differentiated format and destination one- stop shopping appeal attracts customers from as far as 25 miles away.As we open new stores in closer proximity to our customers who currently travel longer distances to shop at our stores, we expect some of thesecustomers to take advantage of the convenience of our new locations. As a result, we have experienced in the past, and expect to experience in thefuture, some sales volume transfer from our existing stores to our new stores as some of our existing customers switch to these new, closer locations.Consequently, while we expect our new stores will impact sales at our existing stores, we believe that by making shopping at our stores for thosecustomers who travel longer distances more convenient, our overall sales to these customers will increase as they increase the frequency and amountof purchases from our stores. Capitalize on consumer trends. We believe that our differentiated format positions us to capitalize on evolving consumer preferences andother key trends currently shaping the food retail industry, which include:

Increasing focus on the customer shopping experience. Fairway's merchandise breadth, quality and value, market- style storelayout and personalized customer service cater to shoppers looking for a differentiated shopping experience.

Increasing consumer focus on healthy eating. Fairway offers a large variety of high- quality natural and organic foods at pricesthat are typically lower than natural / specialty food stores. Our merchandise mix of high- quality fresh and prepared foods, whichaccounts for approximately 65% of our sales, and broad array of specialty items appeals to customers seeking healthier eatingchoices.

Increasing consumer interest in private label product offerings. Fairway's branded products represent a high- quality, value-oriented specialty alternative unlike the more typical generic, low- cost option presented by conventional food retailers. Inproduct lines where we offer a Fairway- branded alternative it is typically the store's top seller in the category. We will continueto expand our Fairway- branded product portfolio, selectively offering new high- quality specialty alternatives designed tostrengthen our relationship with our customers.

Improve our operating margins. We intend to improve our operating margins by the following key initiatives:

Leverage our well- developed and scalable infrastructure. We have made significant investments in management, informationtechnology systems, infrastructure, compliance and marketing to enable us to pursue our growth plans without a significantincrease in infrastructure spending. Since Sterling Investment Partners acquired Fairway in January 2007, we have madesignificant additions to the company, including experienced industry executives and the next generation management andmerchandising teams to support our long- term growth objectives. We have upgraded our systems and enhanced our new storedevelopment and training processes. We have also developed a robust, proprietary daily reporting portal that enables us toeffectively manage our growing number of new stores and have implemented initiatives to improve labor productivity and reduceshrink throughout our operations. We believe we can leverage these investments to improve our operating margins as we growour store base.

Continue implementing our operating initiatives. As we grow our store base, we will continue to use proprietary analytical, datadriven techniques to optimize sales and profitability across our network. We will continue to focus on: (i) price optimization,where we refine the pricing and balance of our promotional activities across our mix of highermargin perishable items and

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everyday value oriented conventional grocery items; (ii) labor productivity, where we utilize Fairway's intelligence portal to moreeffectively manage store labor; and (iii) shrink reduction, where we identify and capture opportunities to reduce waste andinventory loss.

Establish a centralized production facility. We are currently pursuing the development of a centralized production facility toserve our current and future stores in the Greater New York City metropolitan area. We expect that this facility would contain acentralized commissary/kitchen and bakery as well as a large refrigerated storage area and an expanded cross- dock facility. Webelieve this centralized production facility will increase labor efficiency, improve product quality and consistency and increasethe amount of selling space in our stores, as we would have to devote less of our store space to these operations, which isparticularly important in our Manhattan stores. We expect to locate this facility in an area that is easily accessible by truck andrail.

Industry Overview and Trends The U.S. retail grocery market includes a variety of distribution channels, from small grocery shops and convenience stores to supermarkets,natural / specialty food stores, warehouse clubs and supercenters. According to Willard Bishop's June 2012 publication, The Future of FoodRetailing, the U.S. retail market for groceries and consumables was approximately $1 trillion in 2011. We operate in the supermarket channel, whichaccounted for nearly 50% of the retail grocery and consumables market in 2011, with approximately $500 billion in sales. The supermarket segment is comprised of Conventional, Supercenter, Limited Assortment (under 1,500 items), Natural / Specialty and Other.Conventional stores are defined as full- line, self- service retail stores that sell dry groceries, perishable items and some non- food items. Despitebeing the largest segment of the supermarket category, conventional grocers have seen their overall share shrink from 73.2% in 2005 to 68.2% in2011, according to the Progressive Grocer, as consumers have migrated towards other grocery retail formats. Supercenters such as Wal- Mart andTarget have gained significant market share from traditional supermarkets through competitive pricing while specialty, natural / organic and gourmetgrocers have continued to attract customers away from conventional grocers based on their unique product offering and differentiated shoppingexperience. Key trends impacting our industry include: Increasing focus on the customer shopping experience. Consumers are increasingly focused on their shopping experience. According to the2011 Food Marketing Institute study, The Food Retailing Industry Speaks (the "2011 Food Marketing Institute Study"), 60% of shoppers do not shopat the store most convenient to their home. Variety, price and higher- quality produce and meats are the primary drivers for customers travellingfurther to shop for food. The combination of a deep selection of center store items, a wide variety of perishables, better customer service and a cleanerstore environment all contribute to this trend. Along with shoppers' willingness to devote time to shopping in their primary location, they are alsomore loyal to their primary store, with 69% of their total grocery budget spent at that location according to a survey in the Food Marketing Institute'sUS Grocery Shopper Trends 2012. To address this shift in consumer focus, supermarkets are striving to be more responsive to consumer preferences through their consumerinteractions and product offerings. Retailers are using these expanded product ranges along with updated store design to create differentiatedshopping experiences. According to the 2011 Food Marketing Institute Study, retailers focusing on store design and product selection increased from74.4% of retailers in 2007 to 86.6% in 2011, and retailers emphasizing one- stop shopping increased from 45.1% to 56.7%, respectively. Increasing consumer focus on healthy eating. A growing consumer focus on healthy eating has prompted food retailers to offer an enhancedassortment of fresh and minimally processed foods and

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Table of Contentsnatural and organic products. The increased popularity of farmers' markets over the past few years is also indicative of a consumer preference forfresh food items. Additionally, the growing consumer demand for fresh, quality offerings has improved the infrastructure for, and increased supplyof, these items, resulting in improved sourcing, distribution and pricing. The percentage of natural and organic food sales has been rising. According to data in the August 2012 Nutrition Business Journal, natural andorganic food sales grew 11% in 2011 and are expected to grow at a compound annual growth rate of approximately 10% through 2013 and, accordingto the 2011 Food Marketing Institute Study, in 2010 66.2% of retailers added natural and organic items to their product lineup while 64.6% noted anincrease in sales in the prior 12 months. We believe the strength of a food retailer's natural and organic product offering attracts customersincreasingly focused on health and wellness who are willing to pay a premium for high- quality, natural and organic products. Increasing private label offerings. Consumers continue to purchase private label alternatives as part of their focus on quality products at valuepricing and private label brands typically present a strong value proposition to both consumers and retailers. Rather than product emulation ofnational brands, selected retailers have increased their own- brand development, particularly in the area of health and wellness related offerings.According to the 2011 Food Marketing Institute Study, sales of private brands as a percentage of total sales increased from 14.3% in 2009 to 16.1%in 2011. Fairway's branded products represent a high- quality, value- oriented specialty alternative unlike the more typical generic, low- cost optionpresented by conventional food retailers.Our Market We currently operate in the Greater New York City metropolitan area, an approximately $30 billion food retail market that is the largest in theUnited States. Based on demographic research conducted for us by the Buxton Company, a customer analytics research firm, we believe, based onthese demographics, we have the opportunity to more than triple the number of stores in our existing marketing region of the Greater New York Citymetropolitan area.Our Products We have a significant focus on perishable product categories, which include produce, natural and organic, deli, specialty, cheese, butcher,seafood, bakery, coffee and kosher foods. Our non- perishable product categories consist of conventional groceries as well as specialty foods. Weemphasize fresh items that are of premium quality as compared to our conventional competitors. The following is a breakdown of our perishable andnon- perishable sales mix:

Sales by product

Thirty- NineWeeks Ended

Fiscal year January1,

2012

December30,

20122010 2011 2012Product typePerishable 65.6% 64.7% 64.6% 65.5% 65.7%Specialty 7.3 7.1 7.2 7.2 6.9

Subtotal 72.9 71.8 71.8 72.7 72.6Conventional grocery(1) 27.1 28.2 28.2 27.3 27.4

Total 100.0% 100.0% 100.0% 100.0% 100.0%

(1)Includes sales of our Fairway Wines & Spirits locations.

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Table of Contents Our in- house senior merchants are the "authority" on their respective departments and actively seek high- quality products from a wide range ofvendors. Our stores are designed in a market- style "specialty shop" orientation with portions of each store allocated to specific specialty categories. Produce. When customers walk into a Fairway, they are immediately greeted by our signature towering displays of fresh produce, carefullyand methodically stacked high. We also offer our shoppers a wide assortment of organic fruits and vegetables. Fairway sources fruits and vegetablesdirectly from the growers, who deliver their produce to our stores directly from the fields, groves, orchards and hothouses daily. We believe thismakes Fairway's fruits and vegetables days fresher than produce at other stores. Natural and organic. Fairway offers a large variety of high- quality natural and organic foods at prices that are typically lower than natural /specialty food stores and that appeal to customers seeking healthier eating choices. Our extensive natural and organic product categories include:fruits and vegetables, natural and fresh juices, organic OBE beef and organic chicken, fresh organic peanut butter and natural almond butter, freshroasted coffees and loose teas, dried fruits and nuts, full assortment of natural and organic groceries, cold cuts and cheeses, breads, supplements(homeopathy, vitamins, herbs), nutritional bars and protein powders, health and beauty aids, dairy, including Fairway- branded organic milk, eggs,including Fairway- branded organic eggs, vegetarian dairy alternatives, frozen foods, extensive gluten- free selections, baby food and baby care itemsand environmentally friendly cleaning products. Deli. We offer a classic New York deli counter. We carry smoked salmon prepared using our own recipe and hand- craft our own freshmozzarella daily. Our employees are frequent contributors to our prepared foods recipes. We offer authentic tastes from many different cultures andbackgrounds, and a variety that will please a range of appetites. Our stores offer full displays of many possibilities for delicious sandwiches, sidedishes, toppings, platters, snacks and main dishes. Specialty. Our Specialty Imports and Specialty Grocery departments provide shoppers with hard- to- find specialty and gourmet items, such asLapalisse pure and virgin nut oils; authentic Sicilian foodstuffs; Burgundy's organic La Trinquelinette fruit preserves made in small batches usingonly unrefined raw cane sugar; ready- to- eat vacuum- packed beets from the Loire Valley; L'Herbier de Milly La Forêt verbena, hibiscus, peppermintand linden blossom infusions; La Quiberonnaise Vintage Sardines from Brittany, France; Pruneaux d'Agen (stuffed prunes); Royal Medjool dates,Quercy's soft dried figs and apricots. We carry approximately 115 varieties of specialty olive oil, including numerous imported unfiltered olive oils,and offer all- day, every day tasting of olive oils in each of our stores. Cheese. At any of our locations, on any day of the week, consumers will find more than 600 artisanal cheeses at affordable prices. Our cheeseexperts can help customers design cheese platters to suit their needs. Butcher. Our meat department team sources and selects each of our cuts of meat. We have meat delivered every day and it is cut and packagedat each of our stores within 24 hours of receipt. We also receive daily deliveries of fresh ice- packed chicken. This ensures peak freshness of the meatand chicken and proper packaging for discerning customers. We carry a full range of prime beef cuts at everyday low prices and grind our own beef.We also dry age our prime beef on the premises of many of our stores, which improves the flavor, texture and tenderness of the meat. Seafood. We receive the majority of our fish whole and fillet them in our stores, reminiscent of the way fish was sold from an outdoor freshmarket in Europe or an old- time fish market in New York City. We typically offer 50 to 80 different selections of fresh fish and seafood in each storeevery day. We employ high freshness, taste and safety standards in selecting our seafood.

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Table of Contents Bakery. We utilize a combination of on- site and centralized bakeries to produce our baked goods. The presence of on- site baking enhancesour customer's shopping experience and reinforces the freshness of our hand- crafted products. When consumers walk through a Fairway, they willencounter aromas of fresh- baked bagels and baguettes, similar to a European marketplace. Our full- service bakery prepares our signature cookies,tarts, cupcakes, baguettes and bagels. Coffee. All of our coffees are 100% Arabica beans, grown in the high mountains. We buy directly from farmers and from select specialtybrokers and roast the coffee ourselves, or have it roasted on our behalf, in small batches six days a week. We offer over 100 types of artisanal coffeebeans sold by the pound, as well as over a dozen varieties of Fair Trade certified and organic coffee. Our decaffeinated coffee is water- processed, notchemically processed, which protects the flavor. Kosher. We offer an extensive array of kosher options, including Fairway's branded products, our conventional and specialty groceries, ourcoffee, as well as our baked goods, dairy, organic, gluten- free, imported, and frozen items. We offer a variety of cuts of kosher poultry, red meat andseafood. Conventional grocery. We carry a full range of conventional grocery items. Our grocery aisles are stacked high with the most recognizednational brand names- Tide, Bounty, Kleenex, Charmin, Lysol, Poland Spring, Oreo, Cheerios, Lipton, Hershey's, Coke, Green Giant, and manymore. In addition, we offer an extensive array of ethnic groceries that cater to each store's local demographic.

Fairway- branded products

Fairway's branded products represent a high- quality, value- oriented specialty alternative unlike the more typical generic, low- cost optionpresented by conventional food retailers. Our Fairway- branded products are designed to strengthen our relationship with our customers through high-quality gourmet offerings. We display our own brands prominently in our stores, and in product lines where we offer a Fairway- branded alternative itis typically among the store's top sellers in the category. In fiscal 2012 and the thirty- nine weeks ended December 30, 2012, our portfolio of Fairway-branded items, including prepared foods, represented approximately 7.5% of our net sales. We maintain direct relationships with numerous producerswith whom we work to develop and provide our Fairway- branded product offerings. These include rare barrel olive oils from Spain, Italy, andFrance that are exclusive to Fairway. Time Magazine named them one of The Five Best Presents For Foodies in their 2010 Holiday Shopping Guide.At our stores you will also find, among other items, Fairway golden honey, organic maple syrup, organic jams in five flavors, chocolates, a wideselection of spices, olive, artichoke and sundried tomato pastes, pasta and pizza sauces and coffees from exotic coffee- growing regions.Pricing Strategy Our original store was named "FAIRWAY" in 1954 to convey the concept of "fair prices." Our strategy is to price our broad selection of fresh,natural and organic foods, hard- to- find specialty, and gourmet items and prepared foods at prices typically lower than those of natural / specialtystores. We price our full assortment of conventional groceries at prices competitive with those of conventional supermarkets. Beginning late in fiscal2011, we launched a comprehensive price optimization initiative across our store network to refine the pricing and balance of our promotionalactivities across our mix of highermargin perishable items and everyday value oriented traditional grocery items. We believe that the uniquecombination of our extensive product selection, our in- store experience, and our value pricing creates a premier food shopping experience thatappeals to a broad demographic. In our suburban stores, we supplement our value pricing strategy with weekly promotions to highlight discounts in key departments and tocompete effectively with conventional supermarkets in the same area. We distribute a weekly circular to the surrounding homes communicating ourpromotions and discounted items.

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Table of ContentsSeasonality The food retail industry and our sales are affected by seasonality. Our average weekly sales fluctuate during the year and are usually highest inour third fiscal quarter, from October through December, when customers make holiday purchases, and typically lower during the summer months inour second fiscal quarter.Our Stores Our stores are designed to recreate the best features of local specialty markets, such as the butcher shop, fish market, bakery and cheese monger,all in one location. When customers enter a Fairway, they are immediately greeted by our signature towering displays of fresh produce, carefully andmethodically stacked high. As they continue through the store, customers will find a market- style "specialty shop" orientation, with sections of eachstore devoted to categories such as our world class cheese department, full service butcher shop and seafood market that are designed to bring the bestof traditional local merchants to our stores. Each individual department is run by an expert who can answer any customer questions and provide thelevel of service found in a specialty shop. Most stores also have an in- house production bakery, full kitchen and coffee roaster. Our stores typicallyinclude sit- down eating areas where food is prepared to order. Our stores provide a sensory experience, including aromas of fresh coffee roasts and freshly baked bread, an array of vibrant colors across ourproduce displays, cheese experts describing selections of our over 600 artisanal cheeses, samples of our approximately 100 varieties of olive oil andfree tastings of our delicious prepared foods. Fairway creates a fun and engaging atmosphere in which customers select from an abundance of freshfoods and other high- quality products while interacting with our attentive and knowledgeable employees throughout the store. Our stores featurewhimsical and informative signs designed to educate customers about the quality, origin and characteristics of our products, and offer tips andsuggestions on food preparation and pairings. Each of our stores is organized around distinct departments with engaging merchandise displays that reinforce our emphasis on freshness andservice. We position our full- service departments around the perimeter of the store and adjacent to each other to provide a "market feel" and fosterinteraction between employees and customers. We generally enable our merchandising teams to control our on- shelf product selection andpositioning, rather than permitting vendors to do so through slotting fees. This permits Fairway to offer the products customers want most andprovides us with the flexibility to expand or contract our product offerings as demand warrants. We have a comprehensive selection of 70,000 SKUsacross our store network, many of which we believe are unique to Fairway or carried by a limited number of other food retailers. Our Fairway Wines & Spirits locations offer a full assortment of wines and spirits at everyday low prices, and are designed with the samegeneral themes of our food stores, emphasizing abundance, variety and hard to find products from around the world. Our wine stores also offer a fullselection of kosher, organic and low sulfite wines. Each store has certified wine specialists. We believe our Fairway Wines & Spirits locationscomplement our food stores and enhance the shopping experience we offer to consumers. We believe that our success and our growth are dependent upon hiring, training, retaining and promoting qualified and enthusiastic employeeswho share our passion for delivering an extraordinary food shopping experience. Each of our stores is managed by a store manager and one or twoassistant managers who oversee full- time and part- time employees within each store. Each store manager is responsible for the day- to- dayoperations of his or her store, including the unit's operating results, maintaining a clean and appealing store environment and the hiring, training anddevelopment of personnel. Many of our store managers are promoted from within, and we actively track and reward mobility to ensure a sufficientpipeline of store managers and assistant store managers. We have

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Table of Contentswell- established store operating policies and procedures and an in- store training program for new store managers, assistant managers and staff. Ourcustomer service and store procedure training programs are designed to enable our employees to assist customers in a friendly manner and to help tocreate a positive sales- driven environment and culture as well as teach successful operating practices and procedures. We employ numerous analytical tools and metrics to monitor "the Fairway customer experience" and ensure that our execution is consistent andpredictable. Beginning in 2010, we engaged a third party "secret shopper" service to visit our stores anonymously and measure key customer serviceparameters. Each visit measures 55 variables across eight categories, such as cleanliness, wait times and cashier friendliness using a survey created byFairway management. Each store is visited regularly and results are distributed to the entire Fairway management team weekly. Results from thesurveys are used by store management to identify specific issues in their store and by senior management to evaluate store management, identifyissues that may be affecting the customer experience across the chain and identify emerging trends. We also conduct a quarterly survey with randomcustomers at our stores to get their opinions on topics such as pricing, product selection and other variables that could affect consumer behavior, witha goal of making Fairway the number one destination for shoppers in the markets we serve. We also receive significant feedback from customers viasocial media, such as Facebook, Twitter and the growing number of food "blogs" in the local New York market. We have a dedicated team ofcustomer service employees who monitor the social media sites and respond to comments about Fairway and distribute important customer commentsto key Fairway managers.Store Growth and Site Selection We employ a detailed, analytical process to identify new store locations. We target locations based on demographic characteristics, includingincome and education levels, drive times and population density, as well as other key characteristics including convenience for customers, visibility,access, signage and parking availability and availability of attractive lease terms. After we have selected a target site, our development groupconducts a comprehensive site study and sales projection and develops construction and operating cost estimates. We generally visit a potentiallocation multiple times to perform on- site diligence and interview potential customers. As a result of our iconic brand and customer traffic, manylandlords seek us out as a tenant. We have a dedicated new store opening team, including a new store operations manager, which is exclusively focused on ensuring a consistentnew store opening process and training our new store employees. We generally hire employees for our new stores several months in advance andprovide them with extensive training at existing stores prior to the store opening. A new store is typically staffed by a combination of new employeesand experienced employees from other Fairway locations being promoted into new store jobs. Although we have a prototypical layout we prefer, our first priority is the quality of the location, and we will creatively work to fit ourdepartments into any potential layout. Our urban food store operating model for new stores is based primarily a store size of approximately 40,000gross square feet (approximately 25,000 selling square feet), a net cash investment, including store opening costs, of approximately $16 million, notall of which requires an immediate cash outlay, net sales after two years of approximately $75 million to $85 million, a contribution margin atmaturity of approximately 17% to 20%, and an average payback period on our initial investment of less than two years. Our suburban food store operating model for new stores is based primarily on a store size of approximately 60,000 gross square feet(approximately 40,000 selling square feet), a net cash investment, including store opening costs, of approximately $15 million, not all of whichrequires an immediate cash outlay, net sales after two years of approximately $45 million to $55 million, a

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Table of Contentscontribution margin at maturity of approximately 10% to 13%, and an average payback period on our initial investment of approximately 3 to3.5 years. We may elect to opportunistically open stores in desirable locations that differ from our prototypical new store model in square footage and/ornet sales but that we believe will provide similar contribution margins and returns on invested capital. The required cash investment for new stores varies depending on the size of the store, geographic location, degree of work performed by thelandlord and complexity of site development issues. As a result, the average cost per square foot may vary significantly from project to project andfrom year to year. New store openings may negatively impact our financial results in the short- term due to the effect of store opening costs and lower sales andcontribution margin during the initial period following opening. A new store builds its sales volume and customer base over time and, as a result,generally has lower margins and higher operating expenses, as a percentage of sales, than our more mature stores. A new store can take a year ormore to achieve a level of operating performance comparable to our similarly existing stores. Stores that we have opened in higher density urbanmarkets typically have generated higher sales volumes and margins than stores in suburban areas.Marketing and Advertising We believe that the distinct and superior food shopping experience we offer our customers, and our customers' association of that shoppingexperience with Fairway, are major drivers of our comparable store sales and enable us to spend less on advertising than our conventionalcompetitors. We employ various advertising and promotional strategies to reinforce the quality, value and appeal of our products and services. Wepromote these core values using many of the traditional advertising vehicles including radio, television, newspaper, and sponsorship. We also connectand engage with our customers through social media websites, in addition to e- newsletters, and our own website. Our stores spend most of theirmarketing budgets on in- store merchandising- related activities, including promotional signage and events such as taste fairs, classes, tours, cookingdemonstrations and product samplings. We use in- store signage to highlight new products and any differentiated aspects of our products.Sourcing and Distribution We source our products from approximately 1,000 vendors and suppliers. Our in- house merchants source only those products that meet our highspecifications for quality, and we maintain strict control over the products that are sold in our stores. We have built longstanding vendor relationshipsthat enable us to achieve attractive pricing on our broad offering of hard- to- find fresh, specialty and natural / organic offerings. Fairway is viewed asan important strategic partner to many of these small businesses. Substantially all of our products are delivered directly to our stores by our suppliers and vendors. Direct- store- distribution eliminates multiplelogistical layers, further compressing the supply chain and reducing costs. A refrigerated cross- docking facility opened in October 2010 at theHarlem location supports this flexible supply chain. White Rose, Inc. is our single largest thirdparty supplier, accounting for approximately 13% of our total purchases in fiscal 2012. Under ouragreement with White Rose, we are obligated to purchase all our requirements for specified products, principally warehouse conventional grocery,dairy, frozen food and ice cream products, for our existing stores. In addition, United Natural Foods, Inc. ("UNFI"), which is our primary supplier ofspecified natural and organic products, principally dry grocery, frozen food, vitamins/supplements and health, beauty and wellness, accounted forapproximately 9% of our

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Table of Contentstotal purchases in fiscal 2012. The use of White Rose and UNFI gives us purchasing power through the volume discounts they receive frommanufacturers. See "Risk Factors- Risks Relating to Our Business- Disruption of significant supplier relationships could negatively affect ourbusiness."Properties We currently operate 12 locations in New York, New Jersey and Connecticut, three of which include Fairway Wines & Spirits stores. We leaseall of our locations, most of them pursuant to long- term leases with initial terms of at least 15 years and several five to 10 year renewal options. Webelieve our portfolio of long- term leases is a valuable asset supporting our retail operations. Information regarding our stores is as follows:

Location Date Opened

SellingSquare

Footage(1)

GrossSquareFootage

Broadway (Manhattan), New York(2) 1933 21,731 59,468Harlem (Manhattan), New York(3) December 1995 25,853 52,005Plainview, New York May 2001 36,579 55,180Red Hook (Brooklyn), New York(3)(4) May 2006 38,977 75,814Paramus, New Jersey March 2009 32,643 50,307Pelham Manor, New York April 2010 49,963(5) 75,310Stamford, Connecticut November 2010 48,691(5) 86,062Upper East Side (Manhattan), New York July 2011 22,109 41,394Douglaston, New York November 2011 38,239 57,360Woodland Park, New Jersey June 2012 41,452(5) 63,491Westbury, New York August 2012 44,640 68,357Kips Bay (Manhattan), New York December 2012 24,129 56,627Chelsea (Manhattan), New York Not yet open -(6) 26,455(7)Nanuet, New York Not yet open 50,500(7) 66,000(7)

(1)Includes any outdoor produce areas, café and bakery areas, but excludes the square footage of the kitchen, bakery, meat department andproduce coolers in our stores.

(2)The landlord for a portion of this property has the right, at any time after June 30, 2017, to terminate this lease, upon at least 18 months'prior notice, in order to make substantial renovations to the existing building or construct a new building. If the landlord elects to terminatethe lease, then we have the option to enter into a new lease for space on the lower level, ground floor and second level of the renovated ornew building constructed on those premises with no less than the current square footage. See "Risk Factors- Risks Relating to OurBusiness- The landlord for a portion of our Broadway store has the right to terminate the lease at any time after June 30, 2017, which couldadversely affect our business." We lease the remainder of this property from an entity in which Howard Glickberg, our vice chairman ofdevelopment and a director, owns an interest. See "Certain Relationships and Related Party Transactions- Transactions with HowardGlickberg- Real Estate Leases" and "Risk Factors- Risks Relating to Our Business- We lease certain of our stores and related propertiesfrom a related party."

(3)We lease this property from entities in which Howard Glickberg, our vice chairman of development and a director, owns an interest. See"Certain Relationships and Related Party Transactions- Transactions with Howard Glickberg- Real Estate Leases" and "Risk Factors- RisksRelating to Our Business- We lease certain of our stores and related properties from a related party."

(4)This store was temporarily closed from October 29, 2012 through February 28, 2013 due to damage sustained during Hurricane Sandy. See"Risk Factors- Risks Relating to our Business- We were forced to temporarily close our Red Hook, New York store as a result of damagessustained during Hurricane Sandy, which has impacted our results of

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operations, and there can be no assurance that our sales or gross profit at the store will return to prior levels."

(5)Selling square footage includes adjacent (Pelham Manor, 4,808 sq. ft.; Stamford, 5,736 sq. ft.) or integrated (Woodland Park, 2,755 sq. ft.)Fairway Wines & Spirits location.

(6)Not yet determined.

(7)Estimated, as this location has not yet opened.

We lease our corporate headquarters, parking lots by certain of our stores and warehouse space.Employees As of December 30, 2012, we had approximately 4,200 employees, of which approximately 930 are full- time employees and 3,300 part- timeemployees. Under our collective bargaining agreements, employees working 35 hours or less Monday through Friday are considered part- timeemployees, even if such employees also work during the weekend. Approximately 19% of our employees were not subject to a collective bargaining agreement as of December 30, 2012. With respect to ourunionized employees, we had four collective bargaining agreements in effect as of December 30, 2012 covering 71.3%, 4.6%, 4.2% and 1.0% of ourunionized employees and scheduled to expire March 29, 2014, April 25, 2014, February 28, 2015 and March 29, 2014, respectively. We consider ouremployee relations to be good. We have never experienced a strike or significant work stoppage.Information Technology Our management information systems provide a full range of business process assistance and timely information to support our merchandisingstrategy, warehouse management, stores and operating and financial teams. We currently use a combination of off- the- shelf and custom softwarerunning on clusters of commodity computers. We believe our current systems provide us with competitive advantages, operational efficiencies, scalability, management control and timelyreporting that allow us to identify and respond to merchandising, pricing, cost and operating trends in our business. We use a combination of internaland external resources and systems to support store point- of- sale, merchandise planning and buying, inventory management, financial reporting,customer contact and administrative functions. We believe that our information systems have the capacity to accommodate our growth plans. Weconstantly evaluate new hardware alternatives and software techniques to help further reduce our costs and enhance our competitive advantagethrough innovation.Intellectual Property We maintain registered trademarks such as FAIRWAY®, FAIRWAY "Like No Other Market"®, LIKE NO OTHER MARKET® andFAIRWAY WINES & SPIRITS®. Trademarks are generally renewable on a 10 year cycle. We consider our trademarks to be valuable assets thatreinforce our customers' favorable perception of our stores and an important way to establish and protect our brands in a competitive environment. From time to time, third parties have used names similar to ours, have applied to register trademarks similar to ours and, we believe, haveinfringed or misappropriated our intellectual property rights. We respond to these actions on a case- by- case basis, including, where appropriate, bysending cease and desist letters and commencing opposition actions and litigation. The outcomes of these actions have included both negotiated out-of- court settlements as well as litigation. We are currently

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Table of Contentsparty to an agreement with a midwestern company, Fareway, with respect to the use of the Fairway name and trademarks which prohibits us fromusing the Fairway name other than on the East Coast and in California and certain parts of Michigan and Ohio, and prohibits that company from usingthe Fareway name on the East Coast and in California and certain parts of Michigan and Ohio. Our inability to use the Fairway name in theseprohibited areas could adversely affect our growth strategy. We are also party to a settlement agreement that prohibits us from opening any newstores under the Fairway name in the New Jersey counties of Bergen, Essex, Hudson and Passaic. We believe this agreement will preclude us fromopening one store that we otherwise might have opened in this territory. See "Risk Factors- Risks Relating to Our Business- We may be unable toprotect or maintain our intellectual property, which could result in customer confusion, a negative perception of our brand and adversely affect ourbusiness."Competition The food retail industry as a whole, particularly in the Greater New York City metropolitan area, is highly competitive. We compete withvarious types of retailers, including alternative food retailers, such as natural foods stores, smaller specialty stores and farmers' markets, conventionalsupermarkets, supercenters and membership warehouse clubs. Our principal competitors include alternative food retailers such as Whole Foods andTrader Joe's, traditional supermarkets such as Stop & Shop, ShopRite, Food Emporium and A&P, retailers with "big box" formats such as Target andWal- Mart and warehouse clubs such as Costco and BJ's Wholesale Club. These businesses compete with us for customers, products and locations. Inaddition, some are expanding aggressively in marketing a range of natural and organic foods, prepared foods and quality specialty grocery items.Some of these potential competitors have more experience operating multiple store locations or have greater financial or marketing resources than wedo and are able to devote greater resources to sourcing, promoting and selling their products. As competition in certain areas intensifies, our operatingresults may be negatively impacted through a loss of sales, reduction in margin from competitive price changes, and/or greater operating costs such asmarketing. We also face limited competition from restaurants and fast- food chains. In addition, other established food retailers could enter ourmarkets, increasing competition for market share.Regulation We are subject to federal, state and local laws and regulations relating to zoning, land use, environmental protection, workplace safety, foodsafety, public health, community right- to- know and alcoholic beverage and tobacco sales. In particular, the states in which we operate and severallocal jurisdictions regulate the licensing of supermarkets and the sale of alcoholic beverages. Under current law we are only able to have one FairwayWines & Spirits location in New York State, two locations in New Jersey and three locations in Connecticut, and accordingly will not be able to openanother Fairway Wines & Spirits location in New York State and will only be able to open one additional Fairway Wines & Spirits location in NewJersey and two additional Fairway Wines & Spirits locations in Connecticut. In addition, certain local regulations may limit our ability to sellalcoholic beverages at certain times. We are also subject to laws governing our relationship with employees, including minimum wage requirements,overtime, working conditions, immigration, disabled access and work permit requirements. Our stores are subject to regular but unscheduledinspections. Certain of our parking lots and warehouses and our bakery either have only temporary certificates of occupancy or are awaiting acertificate of occupancy. Additionally, a number of federal, state and local laws impose requirements or restrictions on business owners with respectto access by disabled persons. We believe that we are in material compliance with such laws and regulations. See "Risk Factors- Risks Relating toOur Business- Various aspects of our business are subject to federal, state and local laws and regulations. Our compliance with these regulations mayrequire additional capital expenditures and could materially adversely affect our ability to conduct our business as planned."

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Table of ContentsLegal Proceedings We are subject to various legal claims and proceedings which arise in the ordinary course of our business, including employment related claims,involving routine claims incidental to our business. Although the outcome of these routine claims cannot be predicted with certainty, we do notbelieve that the ultimate resolution of these claims will have a material adverse effect on our results of operations, financial condition or cash flows.

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MANAGEMENT Below is a list of the names and ages, as of March 31, 2013, of the members of the board of directors of the issuer and our executive officers, aswell as a summary of their business experience.Name Age PositionCharles W. Santoro 53 Executive Chairman of the Board of DirectorsMichael Barr 42 DirectorHoward Glickberg 65 Director and Vice Chairman of DevelopmentStephen L. Key 69 DirectorWilliam Selden 65 DirectorFarid Suleman 61 DirectorHerbert Ruetsch 54 Chief Executive OfficerWilliam E. Sanford 53 PresidentEdward C. Arditte 57 Executive Vice President- Chief Financial Officer

Nathalie Augustin 42Senior Vice President- General Counsel &Secretary

Aaron J. Fleishaker 52Senior Vice President- Real Estate andDevelopment

Kevin McDonnell 49 Senior Vice President- Chief Operating Officer

Brian Riesenburger 46Senior Vice President- Chief MerchandisingOfficer

Larry Santoro 53Senior Vice President- Chief AdministrativeOfficer

Peter Romano 55 Vice President- Produce

Linda M. Siluk 55Vice President- Finance and Chief AccountingOfficer

Directors We believe our board of directors should be comprised of individuals with sophistication and experience in many substantive areas that impactour business. We believe experience, qualifications or skills in the following areas are most important: retail sales, marketing, accounting, finance andcapital structure, strategic planning and leadership of complex organizations, legal and regulatory affairs, people management and board practices ofother entities. We believe that all of our current board members possess the professional and personal qualifications necessary for board service andhave highlighted particularly noteworthy attributes for each board member in the individual biographies below.

Charles W. Santoro has served as Executive Chairman of the Board of Fairway since September 2012 and as Chairman of the Board fromJanuary 2007. Mr. Santoro is co- founder and a managing partner of Sterling Investment Partners, a Westport, Connecticut based private equity firm.Before co- founding Sterling Investment Partners in 1998, Mr. Santoro was Vice Chairman, Investment Banking of Paine Webber Group, Inc. from1995 to May 2000. Prior to joining Paine Webber in 1995, Mr. Santoro was a Managing Director of Smith Barney, Inc., in charge of that firm'sMulti- Industry and New Business Development Groups. Prior to that, Mr. Santoro was responsible for Smith Barney's cross- border and internationalinvestment banking activities in New York and London, serving on its International Board of Directors. Mr. Santoro began his career at MorganStanley in New York and London, where he served as vice president, and was the operations officer of the European Mergers & AcquisitionsDepartment. Mr. Santoro earned a B.A. degree from Columbia University and an M.B.A. from Harvard Business School. From April 2000 throughMay 2012, Mr. Santoro served on the Board of Directors of Interline Brands, Inc., a New York Stock Exchange listed leading national distributor anddirect marketer of maintenance, repair and operations products, and its predecessors. Mr. Santoro also serves as chairman of the board or a director ofa variety of private companies. Mr. Santoro's qualifications to sit on our board include his substantial experience in the areas of operations, corporatestrategy, international and domestic business, logistics and distribution, outsourcing, sales and marketing, and finance, including capital markets andmergers and acquisitions.

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Table of ContentsMichael A. Barr has served as a director of Fairway since January 2007. Mr. Barr is a principal of Sterling Investment Partners. From 1999

until joining Sterling Investment Partners in 2001, Mr. Barr served as Vice President of Finance of Wellsteads, Inc., an eRestaurant start- up companyoffering takeout and delivery, where he was responsible for all financial functions. From 1998 to 1999, Mr. Barr was an Associate in the CorporateFinance Department of Lehman Brothers, Inc. and from 1993 to 1996, he was an auditor at Arthur Andersen, L.L.P. Mr. Barr earned a B.A. degreefrom Claremont McKenna College and an M.B.A. from The Wharton School at the University of Pennsylvania. Mr. Barr also serves as a director of avariety of private companies. Mr. Barr's qualifications to sit on our board include his substantial experience in the areas of corporate strategy,accounting, operations, logistics and distribution, and finance, including capital markets and mergers and acquisitions.

Howard Glickberg has served as a director since January 2007 and as our Vice Chairman of Development since January 1, 2012. He previouslyserved as our Chief Executive Officer from January 2007, when we were acquired by Sterling Investment Partners, to December 2011 and as ourPresident from January 2007 until June 2010. Prior to our acquisition by Sterling Investment Partners, Mr. Glickberg served our company in variouscapacities since 1974, including Chief Executive Officer, President and Chief Financial Officer. Mr. Glickberg is the grandson of our founder.Mr. Glickberg's qualifications to sit on our board include his involvement as an owner and operator of our company for almost 40 years and hissubstantial experience in the areas of retail food sales, merchandising, marketing, store development, strategic planning and leadership of complexorganizations and people management.

Stephen L. Key has served as a director of Fairway since August 2012. Since 2003, Mr. Key has been the sole proprietor of KeyConsulting, LLC, a financial consulting firm. From 1995 to 2001, Mr. Key served as Executive Vice President and Chief Financial Officer ofTextron Inc., a New York Stock Exchange listed major diversified aerospace and defense company. From 1992 to 1995, Mr. Key served as theExecutive Vice President and Chief Financial Officer of ConAgra, Inc., a New York Stock Exchange listed leading food company in North America.Prior to this, Mr. Key occupied multiple roles at Ernst & Young, including Managing Partner of the New York Office from 1988 to 1992. Mr. Key isa Certified Public Accountant in the State of New York. Mr. Key earned an A.B. from Dartmouth College and an M.B.A. from Cornell University.Mr. Key has served as a member of the Board of Directors and Chairman of the Audit Committee of Greenhill & Co., Inc., an investment bank, since2004, and 1- 800 Contacts, Inc., a contact lens distributor, from 2005 to June 2012. From 2010 through 2012, Mr. Key served on the Board ofDirectors of Forward Industries, Inc., a manufacturer of carrying cases. From 2006 through 2007, Mr. Key served on the Board of Directors of Sitel, abusiness- to- business service provider. He previously served as a member of the Senior Executive Advisory Board of Sterling Investment Partners.Mr. Key's qualifications to sit on our board include his substantial experience in the areas of public accounting, his knowledge of the food industryand his service on the board of directors and audit committees of other public companies.

William L. Selden has served as a director of Fairway since January 2007. Mr. Selden is co- founder and a managing partner of SterlingInvestment Partners, a Westport, Connecticut based private equity firm. Before co- founding Sterling Investment Partners in 1998 and its predecessor,Sterling Ventures Limited, in 1991, Mr. Selden was a Managing Director at Shearson Lehman Brothers, Inc., an Executive Vice President at E.F.Hutton & Co., Inc., a Vice President at Eastdil Realty, Inc., Chief Financial Officer of Sunbelt Communications, Inc. and a Vice President at BankersTrust Co. Mr. Selden earned a B.A. degree from Dartmouth College and an M.B.A. from Columbia University. Mr. Selden also serves as chairman ofthe board or as a director of a variety of private companies, and served as chairman of the board of American Buildings Company, a publicly- tradeddiversified manufacturer and marketer of construction products and services for non- residential and residential applications. Mr. Selden'squalifications to sit on our board include his substantial experience in the

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Table of Contentsareas of real estate, corporate strategy, international and domestic business, logistics and distribution, sales and marketing, and finance, includingcapital markets and mergers and acquisitions.

Farid Suleman has served as a director of Fairway since August 2012. Mr. Suleman was the President and Chief Executive Officer of CitadelBroadcasting Corporation and a member of its board of directors from March 2002 to September 2011 and was also the Chairman of the board fromMarch 2002 through June 2010. From February 1994 until February 2007, he was a director of Westwood One, Inc. and was a special limited partnerof Forstmann Little & Co., a private equity firm, from March 2002 until June 2007. He previously served as a member of the Senior ExecutiveAdvisory Board of Sterling Investment Partners. Mr. Suleman's qualifications to sit on our board include his substantial experience in the areas ofcorporate strategy, as well as general executive and leadership expertise and his service on the board of directors and audit committees of other publiccompanies. Each of the current members of our board of directors was elected according to our stockholders' agreement, pursuant to which SterlingInvestment Partners has the right to designate four directors in aggregate, one of whom shall serve as Chairman, and Howard Glickberg and HaroldSeybert, one of our former owners, acting jointly, have the right to designate two directors. Messrs. Barr, Santoro and Selden are the designees ofSterling Investment Partners and Mr. Howard Glickberg is the designee of Messrs. Glickberg and Seybert pursuant to our stockholders' agreement.Prior to his resignation as a director, Mr. Daniel Glickberg was the second nominee of Messrs. Glickberg and Seybert. In addition, SterlingInvestment Partners has the right to designate as directors additional persons who are not employed by or affiliates of Sterling Investment Partnersand have relevant business experience, and Sterling Investment Partners has so designated Messrs. Key and Suleman. Our stockholders' agreementwill terminate upon consummation of the offering being made hereby. However, upon consummation of this offering Sterling Investment Partnerswill own shares of common stock representing approximately 77.1% of the voting power of our common stock and, for so long as the outstandingshares of our common stock owned by Sterling Investment Partners and its permitted transferees represent a majority of the combined voting powerof our common stock, Sterling Investment Partners and its permitted transferees will have the ability to control the nomination and election ofdirectors. See "Risk Factors- Risks Relating to this Offering and Ownership of Our Class A Common Stock- Upon completion of this offering, wewill be controlled by investment funds managed by affiliates of Sterling Investment Partners, whose interests in our business may be different fromyours."Executive Officers

Herbert Ruetsch has served as our Chief Executive Officer since February 2012, as our President from June 2010 until March 2012, as our ChiefOperating Officer from January 2007 to December 2011 and as our Chief Financial Officer from September 1998 to September 2007. Prior to joiningus in September 1998, Mr. Ruetsch served in various financial positions for Grand Union for approximately 16 years. Mr. Ruetsch earned a B.S.degree from LaSalle College and is a certified public accountant.

William E. Sanford has served as our President since April 2012. Mr. Sanford joined us in October 2008 as our Chief Administrative Officerand served as our acting Chief Financial Officer from September 2011 to April 2012 and as our Chief Financial Officer from April 2012 to December2012. Mr. Sanford has been an operating partner of Sterling Investment Partners since 2008, assisting them in their review of industrial and consumervalue- added distribution opportunities, and serves on the board of directors of one other portfolio company of Sterling Investment Partners. From1998 to June 2008, Mr. Sanford held various senior positions, including chief financial officer, president and chief operating officer, with InterlineBrands, Inc., a New York Stock Exchange listed company that is a leading national distributor and direct marketer of maintenance, repair andoperations products. Mr. Sanford has over 25 years of experience in the wholesale distribution field, having also held senior positions with Airgas andMSC Industrial Direct. Mr. Sanford is also a director of EverBank Financial

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Table of ContentsCorp., a diversified financial services company that is listed on the New York Stock Exchange. Mr. Sanford earned a B.S. degree from VanderbiltUniversity.

Edward C. Arditte has served as Executive Vice President and Chief Financial Officer of Fairway since December 2012, and served as aconsultant to us in October and November 2012. Mr. Arditte has over 25 years of finance and operating experience with large, multi- industrycompanies including Tyco International Ltd., where he served from May 2003 to May 2010 as a Senior Vice President with responsibility forstrategy, investor relations and communications. Prior to joining us, Mr. Arditte had a consulting firm specializing in finance, strategy and investorrelations. Immediately prior to joining Tyco International, he served as the Chief Financial Officer of BancBoston Capital, the private equity divisionof Fleet National Bank, for 16 months. Mr. Arditte also spent 16 years at Textron Inc., where he served in a variety of management roles includingVice President & Treasurer, Chief Financial Officer of a major operating division and Vice President of Investor Relations and Risk Management. Hebegan his career as a corporate banker at Security Pacific National Bank. Mr. Arditte earned a B.A. degree from the University of California atRiverside and an M.B.A. degree from Boston University.

Nathalie Augustin has served as our Senior Vice President- General Counsel and Secretary since April 2012. Ms. Augustin joined us in June2007 as Vice President- General Counsel and Secretary. Prior to joining us, Ms. Augustin served in various capacities at The Donna KaranCompany LLC, an international fashion design house and a subsidiary of LVMH Moët Hennessy Louis Vuitton, from June 1999 to May 2007, mostrecently as Vice President and Associate General Counsel. Prior to joining Donna Karan, Ms. Augustin was an associate at Cleary Gottlieb Steen &Hamilton LLP for approximately 5 years. Ms. Augustin began her legal career as a law clerk to the Honorable Sterling Johnson of the United StatesDistrict Court for the Eastern District of New York. She received her law degree from Harvard Law School and a B.A. degree from ColumbiaCollege.

Aaron Fleishaker has served as our Senior Vice President- Real Estate and Development since September 2011. Mr. Fleishaker joined us inFebruary 2008 as our Vice President- Real Estate. Prior to joining us, Mr. Fleishaker was Senior Vice President, Real Estate, of United RetailGroup, Inc., a specialty retailer of large- size women's fashion apparel, from November 2006, Senior Managing Director, Equity Investments of DJMAsset Management, LLC, a diversified real estate consulting and advisory firm, from September 2005 to November 2006, Executive Vice Presidentof Kimco Realty Corporation, a New York Stock Exchange listed real estate investment trust that owns and operates neighborhood and communityshopping centers, from February 2002 to September 2005, Senior Vice President, General Counsel, Director of Real Estate for Modell's SportingGoods, a sporting goods retailer, from July 1991 to January 2002 and General Counsel of Dresses for Less, a retail and wholesale women's garmentcompany, from March 1989 to June 1991. Mr. Fleishaker began his career as a real estate attorney. Mr. Fleishaker received his law degree fromBoston University School of Law and a B.S.B.A. degree from the Boston University School of Management.

Kevin McDonnell has served as our Senior Vice President- Chief Operating Officer since April 2012, and served as our Chief MerchandisingOfficer from August 2007 to April 2012. Prior to joining us in August 2007, Mr. McDonnell served in various capacities at The Great Atlantic &Pacific Tea Company for over 27 years, most recently as Senior Vice President of Sales and Merchandising.

Brian Riesenburger has served as our Senior Vice President- Chief Merchandising Officer since April 2012, and served as our Senior VicePresident of Merchandising and Operations from January 2011 to April 2012 and our Vice President of Merchandising and Operations from January2007 to December 2010. Mr. Riesenburger joined us in May 1995 and served in various capacities, including specialty products buyer, GeneralManager of our Broadway store and from 2002 to January 2007 as a junior partner responsible for merchandising and operations. Prior to joining usin May 1995, Mr. Riesenburger spent approximately five years working as a restaurant manager in South Africa.

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Table of Contents Larry Santoro has served as our Senior Vice President- Chief Administrative Officer since April 2012. Prior to joining us, Mr. Santoro served

as a consultant to us from December 2010 to April 2012, primarily in connection with a strategic review of our financial systems and operations.Prior to joining us, Mr. Santoro was an operating partner at Sterling Investment Partners, where he was responsible for direct new opportunityoutreach and business development. From 2004 to 2010, Mr. Santoro was the founding partner responsible for the U.S. private equity effort of NewVernon Capital, LLC, an asset management firm investing in a range of Indian and U.S. assets. Before that, Mr. Santoro was a Managing Director inMerrill Lynch's Investment Banking Group, where he variously served as Head of Global Internet Infrastructure Investment Banking, Head of EastCoast Technology Investment Banking and as a member of the Mergers and Acquisitions Group. Mr. Santoro joined Merrill Lynch in 1987. Prior tojoining Merrill Lynch, Mr. Santoro worked as an electrical engineer for Intel Corporation. Mr. Santoro received an M.B.A. from Harvard BusinessSchool in 1987 and his Bachelor of Engineering from Dartmouth College in 1982. Mr. Santoro is the brother of Charles Santoro, our chairman.

Peter Romano has served as our Vice President- Produce since January 2007. He joined the company in April 1977 and served in variouscapacities, including as produce buyer, produce supervisor, produce manager and, from 2002 to January 2007 as a junior partner responsible forproduce.

Linda M. Siluk has served as our our Vice President- Finance and Chief Accounting Officer since October 2011, as our Vice President, Financeand Corporate Controller from October 2010 to October 2011, and as a Senior Project Manager from August 2009 to October 2010, focusingprimarily on the implementation of a general ledger software package. Prior to joining us, Ms. Siluk served as the Chief Financial Officer at DrugFair, a New Jersey- based drug store chain from October 2008 to May 2009. From September 2006 to April 2008, Ms. Siluk was the Senior VicePresident, Finance at Ann Taylor. Ms. Siluk received her B.S. in Business Administration from Montclair State College. Ms. Siluk is a certifiedpublic accountant.Family Relationships of Directors and Executive Officers Howard Glickberg, a director and executive officer of Fairway, is the father of Daniel Glickberg, a former vice president and director ofFairway. Larry Santoro, our Senior Vice President- Chief Administrative Officer, is the brother of Charles W. Santoro, our Executive Chairman.Corporate Governance

Board Composition

Each of the current members of our board of directors was elected according to our stockholders' agreement, pursuant to which SterlingInvestment Partners has the right to designate four directors in aggregate, one of whom shall serve as Chairman, and Howard Glickberg and HaroldSeybert, acting jointly, have the right to designate two directors. Messrs. Barr, Santoro and Selden are the designees of Sterling Investment Partnersand Howard Glickberg is the designee of Messrs. Glickberg and Seybert. Prior to his resignation as a director, Mr. Daniel Glickberg was the secondnominee of Messrs. Glickberg and Seybert. In addition, Sterling Investment Partners has the right to designate as directors additional persons who arenot employed by or affiliates of Sterling Investment Partners and have relevant business experience, and Sterling Investment Partners has sodesignated Messrs. Key and Suleman. Our stockholders' agreement will terminate upon consummation of the offering being made hereby. Our certificate of incorporation, which will be in effect prior to the completion of this offering, will provide that our board of directors shallconsist of such number of directors as determined from time to time by resolution adopted by a majority of the total number of directors then inoffice. Initially, our board of directors will consist of six members, of whom Messrs. Key and Suleman each qualify as an "independent director," asdefined under the rules of the NASDAQ Global Market, the exchange on

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Table of Contentswhich we have applied to list our common stock. Any additional directorships resulting from an increase in the number of directors may only befilled by the directors then in office. For so long as the outstanding shares of our common stock held by Sterling Investment Partners and its permittedtransferees represent a majority of the combined voting power of common stock, Sterling Investment Partners and its permitted transferees will havethe ability to control the election of our board of directors.

Classified Board

Our amended and restated certificate of incorporation and amended and restated bylaws that will be in effect at the closing of our initial publicoffering will provide for a classified board of directors consisting of three classes, each serving staggered three- year terms. Initially, Messrs. CharlesSantoro and Howard Glickberg will comprise the first class, which will serve for a three- year term, Messrs. Michael Barr and Stephen Key willcomprise the second class, which will serve for a two- year term, and Messrs. William Selden and Farid Suleman will comprise the third class,serving a oneyear term. Upon expiration of the term of a class of directors, directors for that class will be elected for three- year terms at the annual meeting ofstockholders in the year in which that term expires. As a result, only one class of directors will be elected at each annual meeting of our stockholders,with the other classes continuing for the remainder of their respective three- year terms. Each director's term continues until the election andqualification of his or her successor, or his or her earlier death, resignation, or removal. So long as our board of directors is classified, only our board of directors may fill vacancies on our board. Any additional directorships resultingfrom an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, one- third of the additionalnumber of directors will be allotted to each class. The classification of our board of directors may have the effect of delaying or preventing changes in our control or management. See"Description of Capital Stock- Anti- Takeover Provisions- Restated Certificate of Incorporation and Bylaw Provisions."

Controlled Company

Upon completion of this offering, Sterling Investment Partners will continue to control a majority of the voting power of our outstandingcommon stock. As a result, we will be a "controlled company" under the corporate governance standards of the NASDAQ Global Market, theexchange on which we have applied to list our Class A common stock. As a controlled company, we may elect not to comply with certain corporategovernance requirements, including the requirements:

that a majority of our board of directors consists of "independent directors," as defined under the rules of the NASDAQ GlobalMarket;

that we have a nominating committee that is composed entirely of independent directors with a written charter addressing thecommittee's purpose and responsibilities;

that we have a compensation committee that is composed entirely of independent directors with a written charter addressing thecommittee's purpose and responsibilities; and

that we conduct annual performance evaluations of the nominating committee and compensation committee.

These exemptions do not modify the independence requirements for our audit committee, and we intend to comply with the applicablerequirements of the Sarbanes- Oxley Act and rules with respect to our audit committee within the applicable time frame. The rules of the NASDAQGlobal Market permit the composition of our audit committee to be phased- in as follows: (1) one independent

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Table of Contentscommittee member at the time of this offering; (2) a majority of independent committee members within 90 days of this offering; and (3) allindependent committee members within one year of the effective date of the registration statement of which this prospectus is a part. When SterlingInvestment Partners no longer otherwise owns or controls more than 50% of the voting power of our outstanding common stock, we will no longer bea "controlled company." At that time, we will have to comply with the independent board committee requirements as they relate to the nominatingand compensation committees, on the same phase- in schedule as set forth above, with the trigger date being the date we are no longer a "controlledcompany." Additionally, we will have 12 months from the date we cease to be a "controlled company" to have a majority of independent directors onour board of directors. Additionally, as described in the section entitled "Description of Capital Stock- Anti- Takeover Provisions- Restated Certificate of Incorporationand Bylaw Provisions," so long as the outstanding shares of our Class B common stock represent a majority of the combined voting power of ourcommon stock, Sterling Investment Partners and its permitted transferees will be able to effectively control all matters submitted to our stockholdersfor a vote, as well as the overall management and direction of our company.

Board Committees

In connection with this offering, our board of directors has established an audit committee and a compensation committee. Each of thecommittees will report to the board of directors as it deems appropriate and as the board may request. The composition, duties and responsibilities ofthese committees are set forth below. In the future, our board may establish other committees, as it deems appropriate, to assist it with itsresponsibilities.

Audit Committee

The audit committee will be responsible for, among other matters: (1) appointing, retaining, terminating, and evaluating our independentregistered public accounting firm and approving all services to be performed by them; (2) overseeing our independent registered accounting firm'squalifications, independence and performance; (3) overseeing the financial reporting process and discussing with management and our independentregistered public accounting firm the interim and annual financial statements that we file with the SEC; (4) reviewing and monitoring our accountingprinciples, accounting policies, financial and accounting controls and compliance with legal and regulatory requirements; (5) establishing proceduresfor the confidential anonymous submission of concerns regarding questionable accounting, internal controls or auditing matters; and (6) reviewingand approving certain related person transactions. Our audit committee consists of Messrs. Key, Suleman and Barr, and Mr. Key serves as the chairman of such committee. We believe Mr. Keyqualifies as our "audit committee financial expert," as such term is defined in Item 401(h) of Regulation S- K. The designation does not impose onMr. Key any duties, obligations or liabilities that are greater than are generally imposed on members of our audit committee and our board ofdirectors. We expect to add another board member to our audit committee who will qualify as an independent director according to the rules of theSEC and the NASDAQ Global Market with respect to audit committee membership within one year of the effective date of the registration statementof which this prospectus is a part, at which time Mr. Barr will resign from our audit committee. Our board of directors will adopt a written charter forthe audit committee, which will be available on our corporate website at http://www.fairwaymarket.com upon the completion of this offering. Theinformation on our website is not part of this prospectus.

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Compensation Committee

The compensation committee will be responsible for, among other matters: (1) reviewing key employee compensation goals, policies, plans andprograms; (2) reviewing and approving the compensation of our directors, chief executive officer and other executive officers; (3) reviewing andapproving employment agreements and other similar arrangements between us and our executive officers; and (4) administering our stock plans andother incentive compensation plans. Our compensation committee consists of Messrs. Suleman, Key and Barr and Mr. Suleman serves as the chairman of such committee.

Risk Oversight

The board of directors oversees the risk management activities designed and implemented by our management. The board of directors executesits oversight responsibility for risk management both directly and through its committees. The full board of directors considers specific risk topics,including risks associated with our strategic plan, business operations and capital structure. In addition, the board of directors receives detailedregular reports from members of our senior management and other personnel that include assessments and potential mitigation of the risks andexposures involved with their respective areas of responsibility. The board has delegated to the audit committee oversight of our risk management process. Our other board committees also consider andaddress risk as they perform their respective committee responsibilities. All committees report to the full board as appropriate, including when amatter rises to the level of a material or enterprise level risk.

Compensation Committee Interlocks and Insider Participation

Prior to the offering being made hereby, our board served as our compensation committee. During fiscal 2010, 2011 and 2012 and the thirty-nine weeks ended December 30, 2012, we paid to an affiliate of Sterling Investment Partners ("Sterling Advisers") monitoring and transaction feesaggregating $3,920,717, $6,186,340, $3,293,737 and $4,631,573, respectively, and in fiscal 2010, 2011 and 2012 and the thirty- nine weeks endedDecember 30, 2012 paid to Mr. Glickberg transaction related bonuses of $0, $630,000, $383,484 and $300,000, respectively. In connection with ourentry into our new credit facility in February 2013, we paid Sterling Advisers a fee of $2,205,000 and Mr. Glickberg a transaction related bonus of$330,750. We intend to pay Sterling Advisers $9.2 million of the net proceeds that we receive from this offering in connection with the termination ofour management agreement with Sterling Advisers. Messrs. Santoro and Selden are managing members, and Mr. Barr is a principal, of SterlingAdvisers. None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensationcommittee of any entity that has one or more executive officers serving on our board of directors or compensation committee.

Code of Business Conduct

We will adopt a code of business conduct applicable to our principal executive, financial and accounting officers and all persons performingsimilar functions. A copy of that code will be available on our corporate website at http://www.fairwaymarket.com upon completion of this offering.We expect that any amendments to the code, or any waivers of its requirements, will be disclosed on our website. The information on our website isnot part of this prospectus.

Limitation on Liability and Indemnification Matters

Our amended and restated certificate of incorporation, which will become effective immediately prior to the consummation of this offering,contains provisions that limit the liability of our directors

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Table of Contentsfor monetary damages to the fullest extent permitted by Delaware law. Consequently, our directors will not be personally liable to us or ourstockholders for monetary damages for any breach of fiduciary duties as directors, except liability for:

any breach of the director's duty of loyalty to us or our stockholders;

any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;

unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the DelawareGeneral Corporation Law; or

any transaction from which the director derived an improper personal benefit.

Our amended and restated certificate of incorporation and amended and restated bylaws, which will become effective immediately prior to theconsummation of this offering, provide that we are required to indemnify our directors and officers, in each case to the fullest extent permitted byDelaware law. Our amended and restated bylaws also provide that we are obligated to advance expenses incurred by a director or officer in advanceof the final disposition of any action or proceeding, and permit us to secure insurance on behalf of any officer, director, employee or other agent forany liability arising out of his or her actions in that capacity regardless of whether we would otherwise be permitted to indemnify him or her underDelaware law. We intend to enter into agreements to indemnify our directors, executive officers and other employees as determined by our board ofdirectors. With specified exceptions, these agreements will provide for indemnification for related expenses including, among other things, attorneys'fees, judgments, fines and settlement amounts incurred by any of these individuals in any action or proceeding. We believe that these bylawprovisions and indemnification agreements are necessary to attract and retain qualified persons as directors and officers. We also maintain directors'and officers' liability insurance. The limitation of liability and indemnification provisions in our amended and restated certificate of incorporation and amended and restatedbylaws may discourage stockholders from bringing a lawsuit against our directors and officers for breach of their fiduciary duty. They may alsoreduce the likelihood of derivative litigation against our directors and officers, even though an action, if successful, might benefit us and ourstockholders. Further, a stockholder's investment may be adversely affected to the extent that we pay the costs of settlement and damages.Director Compensation We pay each of our non- employee directors $75,000 per year; however, the payment of this fee to Messrs. Barr, Santoro and Selden will onlycommence upon the closing of the offering being made hereby. In addition, we pay each of Messrs. Key, Santoro and Suleman an additional $25,000per year for serving as chairman of the audit committee, board of directors and the compensation committee, respectively. In calendar 2012 we paideach of Messrs. Key and Suleman $20,833 for their service as a director, which commenced in August 2012. None of our non- employee directorsreceived any cash or equity compensation during fiscal 2012, although we paid Sterling Advisers monitoring and management fees. We did, however,reimburse our directors for their expenses incurred in connection with attending board and committee meetings and fulfilling their duties as membersof our board of directors. Upon completion of this offering, non- employee directors will receive equity awards pursuant to our 2013 Long- Term Incentive Plan asfollows:

each of Messrs. Key, Santoro and Suleman will receive a grant of 145,924 restricted stock units, and

each of Messrs. Barr and Selden will receive a grant of 97,282 restricted stock units.

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Table of Contents The restricted stock units will vest on the earliest to occur of (i) the third anniversary of the closing of the offering being made hereby, subject tothe recipient's continued service as a director, (ii) a Company Sale Event (as that term is defined in the 2013 Long- Term Incentive Plan) or (iii) theindividual not being renominated by the board of directors for election as a director or elected a director by the stockholders. Any vested restrictedstock units will be settled in shares of our Class A common stock on the earlier to occur of (x) the third anniversary of the closing of the offeringbeing made hereby and (y) a Company Sale Event. See "Executive Compensation- Equity Compensation Plans- 2013 Long- Term Incentive Plan." In addition, commencing upon the closing of the offering being made hereby, we will pay Mr. Santoro certain additional compensationdescribed below for his services as an executive officer. In addition, we will continue to reimburse our non- employee directors for reasonable travel expenses and other out- of- pocket costs incurred inconnection with attending board and committee meetings and fulfilling their duties as members of our board of directors. The table below sets forth the annual compensation earned by Mr. Daniel Glickberg in his capacity as an officer of Fairway in fiscal 2012.Information relating to the compensation paid to Mr. Howard Glickberg is set forth below under "Executive Compensation."

Name Salary ($)Stock

Awards ($)

Non- equityincentive plancompensation

($)

All othercompensation

($) Total ($)Daniel Glickberg 175,000 63,709(1) 90,000 18,722(2) 347,431(2)

(1)Aggregate grant date fair value in excess of cost computed in accordance with FASB ASC Topic 718 of 47,787 shares of restricted stockissued to Mr. Glickberg on April 20, 2011 at a cost of $0.01 per share (determined using the Black- Scholes option pricing model, andvalued based on volatility of 41.0%, an estimated life of 3.0 years and a risk- free rate of return of 1.31%).

(2)Includes $18,632 for automobile- related expenses and $90 of group term life insurance premiums.

We entered into an employment agreement with Mr. Daniel Glickberg on January 18, 2007. The initial term of his employment was to end onJanuary 18, 2017, but automatically would have extended for two additional one year periods unless either we or Mr. Glickberg elected to terminatethe agreement. Mr. Glickberg was receiving an annual base salary $175,000, which was subject to increase, but not decrease, by the board ofdirectors. In addition, Mr. Glickberg was entitled to participate in our benefit plans and arrangements for senior management personnel.Mr. Glickberg's employment agreement also contained customary noncompetition and non- disclosure provisions. Mr. Glickberg was also entitled to a bonus in the event of a "qualifying liquidity event" (as defined in his employment agreement), such as ourinitial public offering, in an amount determined based on the net proceeds of our initial public offering or the amount received by our stockholders ina sale of the company and the internal rate of return and cash on cash return received by Sterling Investment Partners. Pursuant to his separationagreement described below, upon consummation of this offering, Mr. Glickberg will receive a bonus of $145,000. Mr. Glickberg's employment would have terminated upon his death, disability, termination by the board of directors with or without "justifiablecause," termination by Mr. Glickberg with or without "good reason" or upon our non- renewal of his employment agreement (as such terms aredefined in his employment agreement). We were prohibited from terminating Mr. Glickberg's employment without "justifiable cause" prior to theoccurrence of a "qualifying liquidity event." In the event Mr. Glickberg's employment was terminated by us without justifiable cause or by Mr. Glickberg for good reason, he was entitled tohis annual salary for a period ending on the later of

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Table of ContentsJanuary 18, 2017 or one year following the date of termination of his employment. In addition, he was entitled to the amount of any bonuses whichhad been accrued through the date of his termination. If we elected not to renew Mr. Glickberg's employment during either of the two automaticrenewals, he was entitled to continue to receive his salary for a period of one year, as well as any accrued bonuses. In the event his employment wasterminated by us without justifiable cause or by Mr. Glickberg for good reason within 24 months after a "change of control" of the company (asdefined in his employment agreement), Mr. Glickberg was entitled, for a period of two years from the date of termination, to an amount equal to(x) his then current annual salary and (y) the amount of any bonus, if any, awarded to him in the year prior to termination of his employment.Pursuant to Mr. Glickberg's employment agreement, this offering did not constitute a change of control. If Mr. Glickberg's employment wasterminated, as described above, we would also pay Mr. Glickberg's and his eligible dependents' COBRA health coverage premiums until the earliestof (i) the end of the "severance period" (as defined in his employment agreement), (ii) his employment with another company offering substantiallysimilar benefits or (iii) he or his dependents ceasing to be eligible for coverage. These severance payments were contingent on Mr. Glickbergexecuting a general release and his compliance with certain provisions in his employment agreement. In March 2013, we and Mr. Daniel Glickberg entered into a separation agreement in connection with his stepping down as a director and officerto pursue other opportunities. Pursuant to the separation agreement, we agreed, among other things, to pay him severance through January 2015 of$325,000, pay him a bonus of $145,000 upon consummation of this offering, pay him a bonus of between $60,000 and $75,000 for the fiscal 2013and continue certain of his benefits for a specified period of time. We also repurchased 129,963 shares of his Class A common stock for a purchaseprice of $1.5 million and agreed to allow him to sell $1.5 million of shares of Class A common stock in this offering, which is 136,364 shares,assuming an initial public offering price of $11.00 per share, which is the midpoint of the price range set forth on the cover page of this prospectus.Mr. Glickberg agreed that he would not compete with us for a period of five years anywhere on the East Coast. Mr. Glickberg also entered into avoting agreement with one of the funds affiliated with Sterling Investment Partners pursuant to which he granted this fund an irrevocable proxy tovote his shares. For his services as an executive officer following consummation of this offering, we have agreed to pay Mr. Santoro, our Executive Chairman,compensation of $50,000 per year and to issue to him 218,885 restricted stock units and options to purchase 121,603 shares of our Class A commonstock at a purchase price equal to $13.20, which is equal to 120% of the midpoint of the price range set forth on the cover page of this prospectus,assuming an initial public offering price of $11.00. The restricted stock units will vest on the earliest to occur of (i) the third anniversary of theclosing of the offering being made hereby, subject to his continued service as a director, (ii) a Company Sale Event (as that term is defined in the2013 Long- Term Incentive Plan) or (iii) Mr. Santoro not being renominated by the board of directors for election as a director or elected a directorby the stockholders. Any vested restricted stock units will be settled in shares of our Class A common stock on the earlier to occur of (x) the thirdanniversary of the closing of the offering being made hereby and (y) a Company Sale Event. The options will vest in four equal installmentscommencing on the first anniversary of the closing of the offering being made hereby, subject to acceleration upon a Company Sale Event.

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EXECUTIVE COMPENSATION We are providing compensation disclosure that satisfies the requirements applicable to emerging growth companies, as defined in the JOBS Act.Summary Compensation Table As an emerging growth company, we have opted to comply with the executive compensation rules applicable to "smaller reporting companies,"as such term is defined under the Securities Act of 1933, as amended (the "Securities Act"), which require compensation disclosure for our principalexecutive officer and the two most highly compensated executive officers other than our principal executive officer. The table below sets forth theannual compensation earned during fiscal 2012 by our principal executive officer and our next two most highly- compensated executive officers (our"Named Executive Officers" or "NEOs").

Name and Principal Position Salary ($) Bonus ($) Stock Awards ($)(1)All Other

Compensation ($) Total ($)Herbert RuetschChief Executive Officer(3)

450,000 180,000 - 34,393(2) 664,393(2)

Howard GlickbergDirector and Vice Chairman ofDevelopment(5)

1,088,128 383,484 - 112,500(4) 1,584,112(4)

William E. SanfordVice President- ChiefAdministrative Officer and actingChief Financial Officer(7)

325,000 180,000 94,927 186,690(6) 786,617(6)

(1)Aggregate grant date fair value in excess of cost computed in accordance with FASB ASC Topic 718 of 72,096 shares of restricted stockissued to Mr. Sanford on May 24, 2011 at a cost of $0.01 per share (determined using the Black- Scholes option pricing model, and valuedbased on volatility of 41.0%, an estimated life of 3.0 years and a risk- free rate of return of 1.31%).

(2)Includes $17,551 for automobile- related expenses, a $15,600 food allowance and $1,242 of group term life insurance premiums.

(3)Mr. Ruetsch became our Chief Executive Officer in February 2012; prior to that he served as our President and Chief Operating Officer.

(4)Includes a $50,000 food and materials allowance, $35,000 of reimbursement of legal fees in negotiating his employment agreement,$23,936 for automobile- related expenses and $3,564 of group term life insurance premiums.

(5)Mr. Glickberg served as our Chief Executive Officer until January 2012.

(6)Includes $176,825 for housing- related expenses (of which $49,470 relates to an income tax gross up for calendar 2010 that was paid inDecember 2011), $8,623 for automobile- related expenses and $1,242 of group term life insurance premiums.

(7)During fiscal 2012 Mr. Sanford served as Vice President- Chief Administrative Officer and from August 2011 as our acting Chief FinancialOfficer. Mr. Sanford became our President and Chief Financial Officer in April 2012. Mr. Sanford ceased to serve as our Chief FinancialOfficer in December 2012.

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Table of Contents Only Mr. Sanford received a stock award during fiscal 2012; none of our NEOs received option awards or non- equity incentive plancompensation during fiscal 2012. In addition, we did not maintain a pension plan or nonqualified deferred compensation plan for any of our NEOsin fiscal 2012.Narrative Disclosure to the Summary Compensation Table Each of our NEOs has entered into an employment agreement with us. Under the employment agreements, each NEO is entitled to an annualizedbase salary and is eligible for discretionary bonuses, bonuses based upon performance criteria or bonuses payable upon the occurrence of specifiedevents, as described in his respective employment agreement. In addition, each NEO is entitled to a food allowance and other specified perquisites.The employment agreements also contain severance provisions, including potential payments upon termination or a change in control. See "-Employment Agreements" for a summary of each employment agreement. Our employment agreements with Messrs. Ruetsch and Glickberg were effective during fiscal 2012. Our employment agreement withMr. Sanford was entered into in fiscal 2013. Mr. Sanford's base salary of $325,000, bonus and other compensation for fiscal 2012 were set pursuantto discussions among Mr. Sanford, Sterling Investment Partners and us. His fiscal 2012 compensation included the payment of housing expenses of$176,825, consisting of reimbursement of apartment rental and parking expenses of $15,100 and $54,000 in respect of the first quarter of the 2012and the 2011 calendar years, and the payment of income tax gross- ups amounts of $58,255 and $49,470 with respect to Mr. Sanford's 2011 and 2010calendar year housing expenses. Under Mr. Ruetsch's employment agreement, he was eligible for an annual bonus of $150,000 if our actual EBITDA equaled 100% of the targetEBITDA (as such terms are defined in his employment agreement), subject to specified adjustment if actual EBITDA was less than or greater thantarget EBITDA, and up to $150,000 based on meeting criteria established by the board of directors. Pursuant to Mr. Glickberg's employmentagreement, he was awarded bonuses in fiscal 2012 equal to a specified percentage of the gross proceeds received by us in connection with our 2011senior credit facility. The bonus for Mr. Sanford for fiscal 2012 was determined by our board of directors and was based on our financial performancecompared to our budget as well as his individual performance. See "- Employment Agreements" for additional information regarding the bonuses dueMessrs. Ruetsch and Glickberg.Employment Agreements Herbert Ruetsch. We entered into an amended and restated employment agreement with Mr. Ruetsch, our Chief Executive Officer, onJanuary 1, 2011. The initial term of his employment ends on March 31, 2013, but was automatically extended through September 30, 2014 and willautomatically extend for additional 18 month periods unless either we or Mr. Ruetsch elect to terminate the agreement. Mr. Ruetsch currentlyreceives an annual base salary of $475,000, which is subject to increase, but not decrease, by the board of directors. In addition, Mr. Ruetsch receivesa car and food allowance of $30,000 annually and is entitled to participate in our benefit plans and arrangements for senior management personnel.Mr. Ruetsch's employment agreement also contains customary noncompetition and non- disclosure provisions. Mr. Ruetsch is eligible for an annual bonus of $150,000 if our actual EBITDA equals 100% of the target EBITDA for the fiscal year (as suchterms are defined in his employment agreement). This annual bonus is subject to adjustment in the event that the actual EBITDA is greater or lowerthan the target EBITDA. If the actual EBITDA is less than 100% of the target EBITDA but at least 90% of the target EBITDA, the bonus amountequals the difference between (1) $150,000 and (2) the product determined by multiplying (x) $450,000 by (y) a fraction, the numerator of which isthe difference between target EBITDA and actual EBITDA and the denominator of which is the target EBITDA. If

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Table of Contentsthe actual EBITDA is more than 100% of the target EBITDA, the bonus amount equals the sum of (1) $150,000 plus (2) the product determined bymultiplying $450,000 by (y) a fraction, the numerator of which is the difference between the target EBITDA and the actual EBITDA and thedenominator of which is the target EBITDA. If the actual EBITDA is less than 90% of the target EBITDA, Mr. Ruetsch is not entitled to a bonusbased on EBITDA performance. Mr. Ruetsch is also entitled to a bonus of up to $150,000, which is based on meeting criteria established by the board of directors. He is alsoentitled to a bonus in the event of a "qualifying liquidity event" (as defined in his employment agreement) such as our initial public offering. If thequalifying liquidity event is our initial public offering, the amount of his bonus is equal to the lesser of (x) 0.642857% of the IPO Net Proceeds (asdefined in his employment agreement) or (y) $642,857.00. If the qualifying event were a sale of the company (as defined in his employmentagreement), Mr. Ruetsch would have received a bonus equal to the lesser of (x) 0.3214285% of the Net Sale Proceeds (as defined in his employmentagreement) or (y) $1,071,428.50. In addition, if at December 31, 2012 and through the closing of a sale of the company we were in compliance withall accounting requirements necessary to consummate an initial public offering, but sold the company instead of conducting an offering, Mr. Ruetschwould have been entitled to receive an additional bonus. Upon consummation of this offering, Mr. Ruetsch will receive a bonus of $378,792,assuming an initial public offering price of $11.00 per share, which is the midpoint of the price range set forth on the cover page of this prospectus,pursuant to his employment agreement, and an additional bonus of $300,000. Mr. Ruetsch's employment will terminate upon his death, disability, termination by the board of directors with or without "justifiable cause,"termination by Mr. Ruetsch with or without "good reason" or upon the expiration of his employment term (as such terms are defined in hisemployment agreement). In the event Mr. Ruetsch's employment is terminated by us without justifiable cause or by Mr. Ruetsch for good reason, he is entitled to hisannual salary for a period ending 18 months following the date of termination of his employment. In addition, he is entitled to the amount of anybonuses which have been accrued through the date of his termination. In the event his employment is terminated by us without justifiable cause or byMr. Ruetsch for good reason within 24 months after a "change of control" of the company (as defined in his employment agreement), Mr. Ruetsch isentitled, for a period of two years from the date of termination, to an amount equal to (x) his then current annual salary and (y) the amount of anybonus, if any, awarded to him in the year prior to termination of his employment. Pursuant to Mr. Ruetsch's employment agreement, this offeringdoes not constitute a change of control. If Mr. Ruetsch's employment is terminated, as described above, we will also pay Mr. Ruetsch's and hiseligible dependents' COBRA health coverage premiums until the earliest of (i) the end of the "severance period" (as defined in his employmentagreement), (ii) his employment with another company offering substantially similar benefits or (iii) he or his dependents ceasing to be eligible forcoverage. These severance payments are contingent on Mr. Ruetsch executing a general release and his compliance with certain provisions in hisemployment agreement. Howard Glickberg. We entered into an amended and restated employment agreement with Mr. Glickberg, our Vice Chairman ofDevelopment, on December 29, 2011. Pursuant to his employment agreement, Mr. Glickberg reports solely to the board of directors. Theemployment agreement has an initial term ending January 18, 2015, which initial term automatically extends for two oneyear periods unless eitherMr. Glickberg or we give notice of non- extension. After this two year period, we may extend Mr. Glickberg's employment for additional one yearperiods, but Mr. Glickberg may elect not to accept the extension of his employment term. If during the initial term a "qualifying sale" (as defined inhis employment agreement) occurs, the initial term is automatically extended to January 18, 2017 and the two automatic extensions terminate;provided that he may elect to retire at any time beginning 12 months after such qualifying sale and take a lump sum severance payment equal

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Table of Contentsto the remaining salary he would have received through January 18, 2017 and bonuses based on an average of historical bonuses over theemployment term. Mr. Glickberg currently receives an annual base salary of $1,100,000, which is subject to increase, but not decrease, by the board of directors.Mr. Glickberg is entitled to bonuses as determined by the board of directors. In the event of a "Qualifying Liquidity Event" (i.e., an initial publicoffering of our equity securities or a sale of the company as defined in his employment agreement), Mr. Glickberg is entitled to a cash bonus equal to20% of the gross amount received by Sterling Advisers, an affiliate of Sterling Investment Partners. In the event that Sterling Advisers receives a fee for assisting us in (i) an equity or debt financing (other than this offering) or in a transactionthat results in a sale of Fairway, whether public or private, or (ii) any acquisition by us, Mr. Glickberg is entitled to a bonus equal to (x) 0.45% of thegross proceeds received by us in any equity financing other than this offering, (y) 0.30% of the gross proceeds of any debt financing, and (z) 0.45% ofthe transaction value of an acquisition by us. Mr. Glickberg is not entitled to such amounts in the event of a "sale of the company" (as defined in hisemployment agreement). Upon consummation of this offering, Mr. Glickberg will receive a bonus of $1,840,000. In the event that there had been a "sale of the company" prior to conducting this initial public offering, Mr. Glickberg would have been entitledto an additional bonus based on the proceeds to the stockholders and the returns achieved by Sterling Investment Partners. In addition, Mr. Glickberg's employment agreement provides that if we become a publiclytraded company and in connection with the offeringadopt an equity compensation program, he will be able to participate in the program at a level determined by the board of directors taking intoaccount his duties, level of responsibility and performance. In addition, Mr. Glickberg receives a yearly food and materials allowance of $50,000 and is entitled to participate in our benefit plans andarrangements for senior management personnel. Mr. Glickberg's employment agreement contains customary noncompetition (for a period of5 years) and non- disclosure provisions. Mr. Glickberg's employment will terminate upon his death, disability, termination by the board of directors with or without "justifiable cause,"his resignation with or without "good reason" (as defined in Mr. Glickberg's employment agreement) or upon the expiration of his employment term. In the event that we terminate Mr. Glickberg's employment without justifiable cause or Mr. Glickberg terminates his employment for goodreason during his initial term, he is entitled to: (i) his annual salary for a period equal to the longer of (x) the remainder of the initial term or (y) oneyear from the date of termination and (ii) the amount of any bonus which has been accrued through the date of termination. In the event we terminateMr. Glickberg's employment without justifiable cause or Mr. Glickberg terminates his employment for good reason after the initial term,Mr. Glickberg is entitled to (i) his then annual salary for a period of one year from the date of termination and (ii) the amount of any bonus which hasbeen accrued through the date of termination. In the event we elect not to renew Mr. Glickberg's employment agreement for an additional term, wewill, following the end of the applicable term, (i) continue to pay Mr. Glickberg his annual salary for a period of one year from the earlier of (x) thedate we notify Mr. Glickberg that we do not intend to renew his employment agreement or (y) the 59th day prior to the expiration date of the thenapplicable term and (ii) pay Mr. Glickberg the amount of any bonus which has been accrued through the date of termination. If Mr. Glickberg'semployment is terminated, as described above, we will, in addition, pay Mr. Glickberg's and his eligible dependents' COBRA continuation healthcoverage premiums until the earlier of (i) the end of the severance period, (ii) his employment with another company offering substantially similarbenefits or (iii) he and his dependents ceasing to be eligible for coverage. These

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Table of Contents"severance payments" (as defined in his employment agreement) are contingent on Mr. Glickberg executing a general release and his compliancewith certain provisions in his employment agreement. William E. Sanford. We entered into an employment agreement with Mr. Sanford, our President, on March 28, 2013. The initial term of hisemployment ends March 31, 2014, but automatically extends for additional one year periods unless either we or Mr. Sanford elect to terminate theagreement. During each fiscal year, Mr. Sanford shall be eligible for an annual performance bonus determined by the board of directors from time totime in its sole discretion. Such bonus will be targeted at fifty percent (50%) of annual salary and will be based upon, among other things, hisperformance and our financial performance. Mr. Sanford currently receives an annual base salary of $415,000, which is subject to increase, but notdecrease, by the board of directors. In addition, Mr. Sanford receives a car allowance of $20,000 annually and is entitled to participate in our benefitplans and arrangements for senior management personnel. His employment agreement also contains customary noncompetition and non- disclosureprovisions. Mr. Sanford's employment will terminate upon his death, disability, termination by the board of directors with or without "justifiable cause" orupon the expiration of his employment term (as such terms are defined in his employment agreement). In the event Mr. Sanford's employment isterminated by us without justifiable cause, he is entitled to his annual salary for a period ending one year following the date of termination of hisemployment. In addition, he is entitled to the amount of any bonuses which have been accrued through the date of termination. In the eventMr. Sanford's employment is terminated by us without justifiable cause within one year after a "change of control" of us (as defined in hisemployment agreement), Mr. Sanford is entitled to his annual salary for a period of two years following the date of termination of his employmentand to the payment of any bonuses that have been accrued through the date of termination. Pursuant to Mr. Sanford's employment agreement, thisoffering does not constitute a change of control. If Mr. Sanford's employment is terminated, as described above, we will also pay Mr. Sanford's andhis eligible dependents' COBRA health coverage premiums until the earliest of (i) the end of the "severance period" (as defined in his employmentagreement), (ii) his employment with another company offering substantially similar benefits or (iii) he or his dependents ceasing to be eligible forcoverage. These severance payments are contingent on Mr. Sanford executing a general release and his compliance with certain provisions in hisemployment agreement.Outstanding Equity Awards at Fiscal 2012 Year- End As of April 1, 2012, we had not granted any options to purchase shares of our common stock. We have not granted shares of restricted stock toMr. Howard Glickberg under our 2007 Equity Compensation Plan. In May 2011, we granted 72,096 shares of restricted common stock toMr. Sanford under our 2007 Equity Compensation Plan, of which 43,400 shares are vested and an additional 14,348 shares will vest on each ofJune 1, 2013 and 2014. We have the right to repurchase all unvested shares at cost upon Mr. Sanford ceasing to be an employee, and the right torepurchase vested shares at cost if Mr. Sanford's employment is terminated for "justifiable cause" or if, following his ceasing to be an employee, heviolates his non- compete obligations; however, the right to repurchase the vested shares will terminate upon consummation of this offering. Allshares of restricted common stock granted to Mr. Ruetsch under our 2007 Equity Compensation Plan are fully vested. We have the right torepurchase certain of Mr. Ruetsch's vested shares if his employment is terminated for "justifiable cause", he terminates his employment without"good reason" or following his ceasing to be an employee, he violates his non- compete obligations; however, the right to repurchase the vestedshares will terminate upon consummation of this offering. See "Security Ownership of Certain Beneficial Owners."

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Table of ContentsOutstanding Equity Awards at Fiscal Year- End April 1, 2012

Stock Awards

Name

Equity incentive planawards:

Number of shares thathave

not vested(#)

Equity incentive planawards:

Market value ofshares that

have not vested($)

William E. SanfordVice President- Chief Administrative Officer and acting Chief Financial Officer(1)

28,696(2) 315,656(3)

(1)During fiscal 2012, Mr. Sanford served as Vice President- Chief Administrative Officer and from August 2011 as our acting ChiefFinancial Officer. Mr. Sanford became our President and Chief Financial Officer in April 2012. Mr. Sanford ceased to serve as our ChiefFinancial Officer in December 2012.

(2)14,348 shares will vest on each of June 1, 2013 and 2014.

(3)Based on an initial public offering price of $11.00 per share, which is the midpoint of the price range set forth on the cover page of thisprospectus.

Equity Compensation Plans

2013 Long- Term Incentive Plan

Our board of directors and stockholders have adopted and approved our 2013 Long- Term Incentive Plan, which will become effectiveimmediately prior to the date this offering becomes effective. The purpose of our 2013 Plan is to enable us to grant equity- based incentive awardsintended to attract, motivate and retain qualified employees, directors and other eligible service providers, and to align their financial interests withthose of our stockholders. Following is a brief summary of the material terms of our 2013 Plan. Eligibility for Participation. Our 2013 Plan permits the grant of incentive stock options, within the meaning of Section 422 of the U.S. InternalRevenue Code of 1986, as amended (the "Code"), to our and any of our subsidiaries' employees, and the grant of non- statutory stock options, stockappreciation rights, restricted stock, restricted stock units, performance units, performance shares and other forms of equity- based awards to our andany of our subsidiaries' employees, directors, consultants and advisors. Authorized Shares. We have reserved 5,472,136 shares of our Class A common stock for issuance under our 2013 Plan, of which 608,015shares may only be issued in the form of options having an exercise price per share that is at least 120% of the fair market value of our common stockon the date of grant. The following unissued shares covered by awards granted under our 2013 Plan will remain available for issuance under newawards: (a) shares covered by an option or stock appreciation right that is forfeited or otherwise terminated or canceled for any reason other thanexercise; (b) shares covered by an award that is forfeited or that are repurchased by us at the original purchase price; (c) shares covered by an awardthat is settled in cash or that otherwise terminates without shares being issued; and (d) shares covered by an award that are used to pay the exerciseprice or satisfy the tax withholding obligations under the award. No more than 1,000,000 shares may be issued pursuant to awards granted in anycalendar year to any person. Administration. In general, our 2013 Plan will be administered by the compensation committee of our board of directors. In the case of awardsintended to qualify for the "performance- based compensation" exemption from Section 162(m) of the Code, the committee will consist of at leasttwo "outside directors" within the meaning of Section 162(m) of the Code. Subject to the terms of our 2013 Plan, the committee (or its designee) mayselect the persons who will receive awards, the types of awards to be granted, the purchase price (if any) to be paid for shares covered by the awards,and the

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Table of Contentsvesting, forfeiture and other terms and conditions of the awards, and will have the authority to make all other determinations necessary or advisablefor the administration of the plan. Stock Options. The exercise price of any option granted under our 2013 Plan must be at least equal to the fair market value of our Class Acommon stock on the date the option is granted (110% of fair market value in the case of "incentive stock options" granted to ten percentstockholders). The maximum term of an option granted under our 2013 Plan is ten years. Subject to our 2013 Plan, the compensation committee willdetermine the vesting and other terms and conditions of options granted under our 2013 Plan. Generally, a vested option will remain exercisable for alimited period of time after termination of the option holder's employment or other service. In no event, however, may an option be exercised after theexpiration of its term. Stock Appreciation Rights. The compensation committee may grant stock appreciation rights under our 2013 Plan. A stock appreciation rightallows the recipient to receive payment, in cash and/or shares of our Class A common stock, of the appreciation in the fair market value of ourClass A common stock between the date the stock appreciation right is granted and the date it is exercised. The maximum term of a stockappreciation right granted under our 2013 Plan is ten years. The compensation committee will determine the vesting and other terms and conditionsof stock appreciation rights granted under our 2013 Plan. Restricted Stock. Under a restricted stock award, we issue shares of our Class A common stock to the recipient of the award, subject to vestingconditions and transfer restrictions that lapse over time or upon achievement of performance conditions. Unless the compensation committeedetermines otherwise, the recipient may vote and receive dividends on shares of restricted stock issued under our 2013 Plan. Generally, if therecipient of a restricted stock award terminates employment or service, any unvested shares will be forfeited to or repurchased by us. Restricted Stock Units. Restricted stock units represent the right to receive shares of our Class A common stock in the future, subject tospecified vesting and other terms and conditions determined by our compensation committee. Vested restricted stock units may be settled in cashand/or shares of our Class A common stock. The holder of restricted stock units may not vote the underlying shares before the units become vestedand the shares are issued. The compensation committee may provide for the payment of dividend equivalents on restricted stock units granted underour 2013 Plan. Unless the compensation committee determines otherwise, unvested restricted stock units will be forfeited upon termination of arecipient's employment or other service. Performance Units/Performance Shares. Performance units and performance shares are awards that are payable in cash or shares of ourClass A common stock upon the achievement of specific performance goals established in advance by our compensation committee. A performanceshare is an award that has an initial value equal to one share of our Class A common stock. A performance unit is an award that has an initial valueequal to a specified dollar amount. The value of a performance share or performance unit at the end of the applicable performance period will dependon whether and the extent to which the specified performance goals are achieved. Unless our compensation committee determines otherwise,performance shares and performance units will be forfeited if the performance goals are not achieved or if the recipient's employment or other serviceterminates before the end of the performance period. Other Forms of Award. Our compensation committee may make other forms of equity- based awards under our 2013 Plan, including, forexample, stock bonus awards and dividend equivalent awards. The vesting and other terms and conditions of any such other forms of award will bedetermined by our compensation committee, acting within its discretion under our 2013 Plan. In addition, our 2013 Plan authorizes us to make annualand other cash incentive awards based on

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Table of Contentsachieving performance goals that are pre- established by our compensation committee. No more than $5,000,000 may be awarded as a cash incentiveaward to any participant for any calendar year. Performance Goals. The compensation committee may grant awards of restricted stock, performance units, performance shares and otherstock- based awards that are intended to qualify as "performance- based compensation" for purposes of Section 162(m) of the Code. These awardsmay be granted, vest and be paid based on attainment of specified performance goals established by the committee. Any one or more of the followingperformance factors may be used by the compensation committee in establishing performance goals for awards intended to qualify as "performance-based compensation": (a) net earnings or net income (before or after taxes); (b) basic or diluted earnings per share (before or after taxes); (c) pre- orafter- tax income (before or after allocation of corporate overhead and bonus); (d) operating income (before or after taxes); (e), net sales or net salesgrowth; (f) gross profit or gross profit growth; (g) net operating profit (before or after taxes); (h) earnings, including earnings before or after taxes,interest, depreciation and/or amortization; (i) return measures (including, but not limited to, return on assets, net assets, capital, total capital, tangiblecapital, invested capital, equity, sales, or total stockholder return); (j) cash flow (including, but not limited to, operating cash flow, free cash flow,cash flow return on capital, cash flow return on investment, and cash flow per share (before or after dividends); (k) gross profit, operating or cashmargins; (l) share price (including, but not limited to, growth measures and total stockholder return); (m) expense or cost targets; (n) objectivemeasures of customer satisfaction; (o) working capital targets; (p) measures of economic value added, or economic value- added models or equivalentmetrics; (q) inventory control; (r) debt targets; (s) stockholders' equity; (t) implementation, completion or attainment of measurable objectives withrespect to new store openings, acquisitions and divestitures, and recruiting and maintaining personnel or (u) other objective criteria determined by thecompensation committee. To the extent permitted by law, the compensation committee may also exclude the impact of an event or occurrence which the compensationcommittee determines should be appropriately excluded, such as (1) restructurings, discontinued operations, extraordinary items and other unusual ornon- recurring charges; (2) an event either not directly related to our operations or not within the reasonable control of management; or (3) a changein tax law or accounting standards required by generally accepted accounting principles. Performance goals may also be based on an individual participant's performance goals, as determined by the compensation committee. In addition, all performance goals may be based upon the attainment of specified levels of our performance, or the performance of a subsidiary,division or other operational unit, under one or more of the measures described above relative to the performance of other corporations. Thecompensation committee may designate additional business criteria on which the performance goals may be based or adjust, modify or amend thosecriteria. Award Agreements. Awards granted under the 2013 Plan will be evidenced by award agreements, which need not be identical, that provideadditional terms, conditions, restrictions or limitations covering the grant of the award, including, without limitation, additional terms providing forthe acceleration of exercisability or vesting of awards in the event of a change in control or conditions regarding the participant's employment, asdetermined by the compensation committee. Transferability of Awards. In general, awards made under our 2013 Plan may not be transferred or assigned, except as may be permitted byour compensation committee. An option or stock appreciation right granted under our 2013 Plan may be exercised only by the recipient during his orher lifetime. Recoupment of Awards. The 2013 Plan provides that awards granted under the 2013 Plan are subject to any recoupment policy we may havein place or any obligation that we may have regarding

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Table of Contentsthe clawback of "incentive- based compensation" under the Exchange Act or under any applicable rules and regulations promulgated by the SEC. Capital Changes. In the event of certain changes in our capitalization, such as a reorganization, stock split, merger or similar change in ourcorporate structure or the number of outstanding shares of our Class A common stock, our compensation committee will make appropriateadjustments to the aggregate and individual share limits and to the number, class and/or exercise price under outstanding awards in order to preventundue diminution or enlargement of the benefits or potential benefits available under our 2013 Plan. Change in Control. In the event of a "company sale event" (as defined in the 2013 Plan), outstanding awards under our 2013 Plan, includingany vesting provisions, may be assumed or substituted by the successor company. In general, if an outstanding award is not assumed or substituted,the award will become fully vested and canceled (either as part of the transaction or immediately before the transaction) based upon the transactionvalue of the shares covered by the award. Amendment and Termination. Our board of directors has the authority to amend or terminate our 2013 Plan, provided such action does notadversely affect then outstanding awards. Amendments to our 2013 Plan will be subject to stockholder approval if such approval is necessary in orderto satisfy applicable legal or stock exchange listing requirements. Unless sooner terminated, our 2013 Plan will automatically terminate in 2023, onthe tenth anniversary of its effective date. Certain U.S. Income Tax Consequences. Set forth below is a summary of material U.S. income tax consequences applicable to awards madeunder our 2013 Plan. This discussion is intended for general informational purposes relating to this offering and not as tax guidance to any participantwho may receive an award under our 2013 Plan.

Nonqualified Stock Options

A nonqualified stock option is an option that does not qualify as an "incentive stock option" under Section 422 of the Code. The grant of anonqualified stock option is not a taxable event. In general, a participant who exercises a nonqualified stock option will realize ordinary income onthe date the option is exercised equal to the excess of the value of the shares acquired on that date and the option exercise price paid for the shares,and we will be entitled to a corresponding deduction. The participant's tax basis for the shares will be equal to the value of the shares on the date theoption is exercised, and the participant's holding period for the shares will begin on that date. Gain or loss on a subsequent sale of the shares will belong- or short- term capital gain or loss, depending on whether the sale occurs more than one year after the participant's holding period begins.

Incentive Stock Options

In general, no taxable event will occur upon either the grant or exercise of an option that qualifies as an "incentive stock option" under Section422 of the Code (although the exercise may have alternative minimum tax consequences to the participant). A participant will realize taxable income(or loss) when shares acquired upon the exercise of an "incentive stock option" are subsequently sold. If the participant sells the shares more than twoyears after the date the option is granted and more than one year after the date the option is exercised, any gain or loss realized on the sale will belong- term capital gain or loss, and we will not be entitled to a deduction. If the participant sells the shares before the end of either of those twoholding periods, any gain realized on the sale will be taxable as ordinary income to the extent that the value of the shares on the date the option isexercised exceeds the option exercise price paid for the shares, and any remaining gain will be capital gain. In general, we will be entitled to adeduction equal to any ordinary income realized by the participant upon the sale of the shares.

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Stock Appreciation Rights

The grant of a stock appreciation right is not a taxable event. In general, a participant will realize ordinary income when a stock appreciationright is exercised, equal to the value of the shares of our Class A common stock and/or the amount of cash received by the participant in connectionwith such exercise, and we will be entitled to a corresponding deduction.

Restricted Stock

In general, a participant who receives shares of restricted stock under our 2013 Plan will not realize taxable income. With respect to awardsother than options and SARs that result in a transfer to the recipient of shares or other property, if no restriction on transferability or substantial risk offorfeiture applies to the transferred amounts, the recipient generally must recognize ordinary income equal to the fair market value of shares or otherproperty actually received. If a restriction on transferability and substantial risk of forfeiture applies to shares or other property transferred to arecipient under an award (such as, for example, restricted stock), the recipient generally must recognize ordinary income equal to the fair marketvalue of the transferred shares or other property at the earliest time either the transferability restriction or risk of forfeiture lapses, and we are entitledto a corresponding tax deduction. A recipient may make an early income election with respect to the receipt of restricted stock, in which case therecipient will realize ordinary income equal to the value of the stock on the date it is transferred to him or her. If the stock later vests and is sold, anygain from the sale will be taxable as capital gain. We would be entitled to a deduction for the amount of any ordinary income realized by the recipientas a result of an early income election is made.

Other Awards

In general, a participant who receives shares of our Class A common stock and/or cash in settlement of a restricted stock unit, performance unit,performance share or other award under our 2013 Plan, will realize ordinary income upon such receipt equal to the then fair market value of theshares and/or the amount of cash received by the participant, and we will be entitled to a corresponding deduction. The participant's tax basis in anysuch shares will generally be equal to the value of the shares on the date that ordinary income is realized, and the participant's tax holding period forthe shares will generally begin on that date. Gain or loss on a subsequent sale of the shares will be long- or short- term capital gain or loss, dependingon whether the sale occurs more than one year after the participant's holding period begins. Initial Awards. In connection with this offering, we will issue an aggregate of 2,296,838 RSUs in respect of Class A common stock to certainof our employees and directors and options to purchase an aggregate of 1,135,772 shares of Class A common stock to certain of our employees anddirectors. The exercise price of the options will be the initial public offering price of our Class A common stock, except that the exercise price ofoptions to purchase 486,412 shares of our Class A common stock will be 120% of the initial public offering price of our Class A common stock. The table below sets forth information concerning restricted stock unit and option grants that will be received by our named executive officersunder the 2013 Plan in connection with this offering:

Name Position

RestrictedStock

Units(1) Options(2)Howard Glickberg Director and Vice Chairman of Development 145,924(2) 48,641(3)Herbert Ruetsch Chief Executive Officer 182,405(2) 304,008(4)William E. Sanford President 97,282(2) 97,282(5)

(1)Fifty percent of the restricted stock units will vest and be delivered on the third anniversary of the closing of the offering being made herebyand the remaining 50% will vest on the fourth

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anniversary of the closing of the offering being made hereby, subject to the recipient's continued service. The recipient is prohibited fromselling 20% of the shares of Class A common stock received in respect of the restricted stock units until the fifth anniversary of the closingof the offering being made hereby.

(2)The options will vest in four equal installments commencing on the first anniversary of the closing of the offering being made hereby,subject to the recipient's continued service with us. If a Company Sale Event occurs, all unvested options will immediately vest unless theoptions are assumed by the purchaser. Except as otherwise indicated, these options have an exercise price equal to the initial public offeringprice.

(3)These options have an exercise price equal to 120% of the initial public offering price.

(4)121,603 of these options have an exercise price equal to 120% of the initial public offering price; the remainder have an exercise priceequal to the initial public offering price.

(5)48,641 of these options have an exercise price equal to 120% of the initial public offering price; the remainder have an exercise price equalto the initial public offering price.

See "Management- Director Compensation" for information regarding grants of restricted stock units and options to our non- employeedirectors.

2007 Equity Compensation Plan

Our board of directors adopted, and our stockholders approved, the 2007 Equity Compensation Plan in January 2007. The 2007 Plan providedfor the grant of options and restricted stock awards. As of December 30, 2012, we had issued 1,834,721 shares of restricted stock under the 2007 Planat a price per share of $0.01, of which 1,632,241 are fully vested. Subsequent to December 30, 2012, we have not issued any restricted stock orgranted any options. Following this offering and in connection with the effectiveness of our 2013 Long- Term Incentive Plan, the 2007 Plan willterminate and no further awards will be granted under the 2007 Plan. However, all outstanding awards will continue to be governed by their existingterms. Administration. Our board of directors, or a committee thereof appointed by our board of directors, has the authority to administer the 2007Plan and the awards granted under it. Stock Options. The 2007 Plan provides for the grant of incentive stock options, or ISOs, within the meaning of Section 422 of the Code, andnon- qualified stock options, or NQSOs. ISOs may be granted only to employees. NQSOs may be granted to employees, directors or consultants. Theexercise price of ISOs granted to employees who at the time of grant own stock representing more than 10% of the voting power of all classes of ourcommon stock may not be less than 110% of the fair market value per share of our common stock on the date of grant, and the exercise price of ISOsgranted to any other employees may not be less than 100% of the fair market value per share of our common stock on the date of grant. The exerciseprice of NQSOs to employees, directors or consultants may not be less than the par value of our common stock. Our board, or the committeeadministering the 2007 Plan, had the authority to establish the vesting and other terms of the options. Restricted Stock Awards. The 2007 Plan provides that we may issue restricted stock awards. Each restricted stock award will be governed by arestricted stock purchase agreement. Generally, we have the right to repurchase the unvested restricted shares of our common stock upon thetermination of the purchaser's status as an employee, director or consultant for any reason, and the vested shares upon a termination of employmentfor cause or following termination of employment for any reason, violation of any noncompetition or solicitation obligation. In general, therepurchase price for unvested shares is the original price paid by the purchaser and for vested shares is fair market value. Most of the unvested sharesof restricted stock will become automatically vested upon consummation of this offering. Our right to repurchase vested shares and, in certaincircumstances, unvested shares will terminate upon consummation of this offering.

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Table of ContentsAdditional Narrative Disclosure

401(k) Plan

We adopted our 401(k) plan for employees in 2007. The 401(k) plan is intended to qualify under Section 401(k) of the Internal Revenue ServiceCode of 1986, as amended, so that contributions to the 401(k) plan by employees or by us, and the investment earnings thereon, are not taxable to theemployees until withdrawn from the 401(k) plan, and so that contributions by us, if any, will be deductible by us when made. Under the 401(k) plan,employees may elect to reduce their current compensation by up to the statutorily prescribed annual limit and to have the amount of such reductioncontributed to the 401(k) plan. The 401(k) plan permits us to make contributions up to the limits allowed by law on behalf of all eligible employees.

IPO Bonuses

The table below sets forth information concerning IPO- related bonuses that will be received by certain of our directors and officers inconnection with this offering:

Name Position

IPO-Related

Bonuses(1)Howard Glickberg Director and Vice Chairman of Development $1,840,000(2)Herbert Ruetsch Chief Executive Officer $ 678,792Nathalie Augustin Senior Vice President- General Counsel and

Secretary $ 150,000Kevin McDonnell Senior Vice President- Chief Operating

Officer $ 220,440Brian Riesenburger Senior Vice President- Chief Merchandising

Officer $ 678,792Charles Farfaglia Vice President- Human Resources $ 220,440Steven Jenkins Vice President- Specialty Products $ 678,792Peter Romano Vice President- Produce $ 678,792John Rossi Vice President- Deli & Bakery $ 678,792Paul Weiner Vice President- Organic Groceries $ 678,792Daniel Glickberg Former Director and Vice President $ 145,000Randi Glickberg Vice President $ 647,266

(1)Assumes an initial public offering price of $11.00 per share, which is the midpoint of the price range set forth on the cover page of thisprospectus. Certain of these bonuses are based on the net proceeds we receive in this offering or the valuation of us based on this offeringand therefore will increase if the initial offering price is above $11.00 per share or will decrease if the initial public offering price is below$11.00 per share.

(2)Does not include IPO- related bonuses to be paid to Mr. Glickberg's sister and adult son.

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PRINCIPAL AND SELLING STOCKHOLDERS The following table sets forth information regarding the beneficial ownership of our common stock as of March 31, 2013, after giving effect tothe Exchange, and the anticipated beneficial ownership percentages immediately following this offering, by:

each person or group who is known by us to own beneficially more than 5% of our outstanding shares of common stock;

each of our NEOs;

each of our directors;

all of our executive officers and directors as a group; and

other selling stockholders.

For further information regarding material transactions between us and certain of our stockholders or their affiliates, see "Certain Relationshipsand Related Party Transactions." Each stockholder's percentage ownership before this offering is based on 12,403,976 shares of our Class A common stock outstanding as ofMarch 31, 2013, as adjusted to give effect to the stock split but not the exchange of shares of preferred stock (and accrued but unpaid dividendsthereon not paid in cash with a portion of the proceeds of this offering) for shares of Class B common stock. Each stockholder's percentage ownershipafter this offering is based on 41,238,260 shares of our common stock outstanding immediately after the completion of this offering, after givingeffect to the exchange of preferred stock for shares of Class B common stock effective upon consummation of this offering, but excludes restrictedstock units and options granted under such our 2013 Long- Term Incentive Plan. See "Executive Compensation- Equity Compensation Plans- 2013Long- Term Incentive Plan- Initial Awards." Certain of our stockholders have granted the underwriters an option to purchase up to an aggregate of2,047,500 additional shares of our Class A common stock to cover over- allotments, if any, and the table below assumes no exercise of that option. Each of the selling stockholders other than Daniel Glickberg is one of our senior officers. In connection with being allowed to sell the shares setforth below, each of these individuals agreed that he would not, during any six month period for a two year period beginning six months followingthe closing of the offering being made hereby, sell, transfer or otherwise dispose of shares of our Class A common stock representing more than thelesser of (i) ten percent of the shares that he owns and (ii) shares having a value, based on the sale price, of $750,000. Mr. Glickberg is a formerdirector and vice president and the son of Mr. Howard Glickberg, our Vice Chairman of Development. See "Management- Director Compensation." Beneficial ownership for the purposes of the following table is determined in accordance with the rules and regulations of the SEC. These rulesgenerally provide that a person is the beneficial owner of securities if such person has or shares the power to vote or direct the voting thereof, or todispose or direct the disposition thereof or has the right to acquire such powers within 60 days. Except as disclosed in the footnotes to this table andsubject to applicable community property laws, we believe that each stockholder identified in the table possesses sole voting and investment powerover all shares of common stock shown as beneficially owned by the stockholder. Unless otherwise indicated in the

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Table of Contentstable or footnotes below, the address for each beneficial owner is c/o Fairway Group Holdings Corp., 2284 12th Avenue, New York, New York10027.

Shares of Series APreferred Stock

BeneficiallyOwned Prior tothe Exchange

Shares of Series BPreferred Stock

BeneficiallyOwned Prior tothe Exchange

Shares of Class ACommon Stock

BeneficiallyOwned Prior to

this Offering

Shares of Class ACommon Stock

BeneficiallyOwned Afterthis Offering

Shares of Class BCommon Stock

BeneficiallyOwned After this

Offering

Sharesbeing

Sold inthis

Offering

Percentageof Total

Voting PowerAfter this

Offering(1)

Number Percent Number Percent Number Percent Number Percent Number Percent5%Stockholders:FundsmanagedbyaffiliatesofSterlingInvestmentPartners L.P.(2)40,121 93.2% 50,278 78.5% 10,081,588 71.5% -(3) 10,927,077(3)(4) 39.8% 13,080,655 84.6% 77.6%(4)DanielGlickberg 232 - - 963,218(5) 7.8 136,364(6) 860,430(5)(6) 3.3% - - *NamedExecutiveOfficersandDirectors:HerbertRuetsch - - - - 230,280 1.9 27,273(8) 203,007 * - - *HowardGlickberg 1,362 3.2 6,369.49 9.9 87,630(7) * -(8) 87,630(7)(8) * 1,122,516 7.3 6.2WilliamE.Sanford - - - - 72,096 * - 72,096 * - - *CharlesW.Santoro 40,121(9) 93.2 50,278(9) 78.5 10,081,588(10) 71.5 -(3) 10,927,077(4)(10) 39.8 13,080,655(10) 84.6 77.6(3)(4)WilliamSelden 40,121(9) 93.2 50,278(9) 78.5 10,081,588(10) 71.5 -(3) 10,927,077(4)(10) 39.8 13,080,655(10) 84.6 77.6(3)(4)MichaelBarr - - - - - * - - - - - -StephenKey(13) - - - - - * - - - - - -FaridSuleman(14) - - - - - * - - - - - -Allcurrentdirectorsandexecutiveofficersas agroup(16 persons) 41,715(9) 96.9% 56,647.49(9) 88.5% 11,107,414(10)(11)78.3% 81,819(3)(8) 11,871,084(4)(8)(11)43.1% 14,203,171(12) 91.8% 84.3%(4)OtherSellingStockholdersStevenJenkins - - - - 230,280 1.9% 27,273 203,007 * - - *BrianRiesenberger - - - - 230,280 1.9 27,273 203,007 * - - *PeterRomano - - - - 230,280 1.9 27,273 203,007 * - - *JohnRossi - - - - 230,280 1.9 27,273 203,007 * - - *PaulWeiner - - - - 115,733 * 13,707 102,026 * - - *CSEquityIII LLC - - 750 1.2 124,982 1.0 -(15) 124,982 * 108,609 * *JoannaGlickberg 154 * - - 381,706(16) 3.1 -(17) 381,706(16) * 22,284 - *RandiGlickberg 154 * - - 120,950(16) 1.0 -(18) 120,950(16) * 22,284 - *HarlemLineHoldingsLLC 91 * 250 * 51,345(19) * -(20) 51,345(19) * 49,901 * *

HaroldSeybert 944 2.2 6,369.49 9.9 99,013(21) * -(22) 99,013(21) * 1,064,471 6.9 5.9JerrySeybert - - - - 212,256 1.7 -(23) 212,256 * - - *RayVenezia - - - - 230,280 1.9 -(24) 230,280 * - - *

*Less than 1%.

(1)Percentage of total voting power represents voting power with respect to all shares of our Class A and Class B common stock, as a single class. The holdersof our Class B common stock are entitled to ten votes per share, and holders of our Class A common stock are entitled to one vote per share. For moreinformation about the voting rights of our Class A and Class B common stock, see "Description of Capital Stock- Common Stock." Does not include theshares of Class A common stock issuable upon the exercise of outstanding warrants.

(2)Represents:

6,940.5 shares of Series A preferred stock, 17,500 shares of Series B preferred stock, 2,917,399 shares of Class A common stock and warrants topurchase 295,856 shares of Class A common stock held directly by Sterling Investment Partners, L.P. ("Fund I") prior to this offering, and2,917,399 shares of Class A common stock, 3,537,512 shares of Class B common stock and warrants to purchase 295,856 shares of Class A

common stock held directly by Fund I after this offering;

97 shares of Series A preferred stock, 244 shares of Series B preferred stock, 40,673 shares of Class A common stock and warrants to purchase4,150 shares of Class A common stock held directly by Sterling Investment Partners Side- By- Side, L.P. ("SBS I") prior to this offering, and40,673 shares of Class A common stock, 49,356 shares of Class B common stock and warrants to purchase 4,150 shares of Class A common

stock held directly by SBS I after this offering;

32,488.5 shares of Series A preferred stock, 31,942 shares of Series B preferred stock, 5,324,909 shares of Class A common stock and warrants topurchase 1,374,449 shares of Class A common stock held directly by Sterling Investment Partners II, L.P. ("Fund II") prior to this offering, and5,324,909 shares of Class A common stock, 9,322,046 shares of Class B common stock and warrants to purchase 1,374,449 shares of Class A

common stock held directly by Fund II after this offering; and

595 shares of Series A preferred stock, 592 shares of Series B preferred stock, 98,658 shares of Class A common stock and warrants to purchase25,494 shares of Class A common stock held directly by Sterling Investment Partners Side- By- Side II, L.P. ("SBS II" and together with Fund I,SBS I and Fund II, the "Sterling Funds") prior to this offering, and 98,658 shares of Class A common stock, 171,741 shares of Class B commonstock and warrants to purchase 25,494 shares of Class A common stock held directly by SBS II after this offering.

Messrs. Santoro and Selden are managing members of the general partner of each of the Sterling Funds. Each of Fund I, SBS I, Fund II and SBS II expresslydisclaim beneficial ownership of any securities in which they do not have a pecuniary interest. The address of each of the Sterling Funds is c/o SterlingInvestment Partners, 285 Riverside Avenue, Suite 300, Westport, CT, 06880.

(3)Each of Fund I, SBSI, Fund II and SBS II has granted the underwriters an option to purchase up to 514,732 shares, 7,181 shares, 1,221,598 shares and 22,561shares, respectively, of Class A common stock. If this option is exercised in full, the Sterling Funds in aggregate will own 9,161,005 shares of Class Acommon stock, or approximately 33.4% of the outstanding Class A common stock, and their percentage of total voting power after this offering will be74.6%.

(4)Includes 845,489 shares of Class A common stock owned by Daniel Glickberg over which Fund II owns an irrevocable proxy pursuant to a voting agreementbetween Mr. Glickberg and Fund II.

(5)Includes warrants to purchase 14,941 shares of Class A common stock.

(6)Mr. Glickberg has granted to Fund II an irrevocable proxy to vote his shares as described in note 4 above.

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(7)Consists of warrants to purchase 87,630 shares of Class A common stock. Does not include shares of common stock or warrants to purchase shares ofcommon stock owned by Mr. Glickberg's sister, son or daughter.

(8)Mr. Glickberg has granted the underwriters an option to purchase up to 93,072 shares of Class A common stock (87,630 of which will come from exercise ofthe warrant and the remainder from conversion of his shares of Class B common stock).

(9)Includes of 40,121 shares of Series A preferred stock and 50,278 shares of Series B preferred stock beneficially owned by the Sterling Funds. As a memberof the general partner of each Sterling Fund, each of Messrs. Santoro and Selden has shared voting and investment power with respect to, and therefore maybe deemed to be the beneficial owner of, the shares beneficially owned by the Sterling Funds. Each of Messrs. Santoro and Selden disclaims beneficialownership of the shares beneficially owned by the Sterling Funds, other than the shares attributable to his limited and general partnership interest therein.

(10)Includes 8,381,639 shares of Class A common stock and warrants to purchase 1,699,949 shares of Class A common stock beneficially owned by the SterlingFunds and after the offering 845,489 shares of Class A common stock owned by Daniel Glickberg that Fund II has the right to vote. As a member of thegeneral partner of each Sterling Fund, each of Messrs. Santoro and Selden has shared voting and investment power with respect to, and therefore may bedeemed to be the beneficial owner of, the shares beneficially owned by the Sterling Funds. Each of Messrs. Santoro and Selden disclaims beneficialownership of the shares beneficially owned by the Sterling Funds, other than the shares attributable to his limited and general partnership interest therein. Seenoted 2 above.

(11)Includes warrants to purchase 1,787,579 shares of Class A common stock.

(12)Includes 13,080,655 shares of Class B common stock beneficially owned by the Sterling Funds. As a member of the general partner of each Sterling Fund,each of Messrs. Santoro and Selden has shared voting and investment power with respect to, and therefore may be deemed to be the beneficial owner of, theshares beneficially owned by the Sterling Funds. Each of Messrs. Santoro and Selden disclaims beneficial ownership of the shares beneficially owned by theSterling Funds, other than the shares attributable to his limited and general partnership interest therein.

(13)Mr. Key has a less than 1% capital commitment to each of SBS I and SBS II.

(14)Mr. Suleman has a less than 1% capital commitment to SBS II.

(15)This entity has granted the underwriters an option to purchase up to 17,811 shares of Class A common stock.


(17)This individual has granted the underwriters an option to purchase up to 30,804 shares of Class A common stock.



(20)This entity has granted the underwriters an option to purchase up to 7,166 shares of Class A common stock.

(21)Consists of warrants to purchase shares of Class A common stock.

(22)This individual has granted the underwriters an option to purchase up to 88,713 shares of Class A common stock (all of which will come from exercise of thewarrant).



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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS Our board of directors currently is primarily responsible for developing and implementing processes and controls to obtain information from ourdirectors, executive officers and significant stockholders regarding relatedperson transactions and then determining, based on the facts andcircumstances, whether we or a related person has a direct or indirect material interest in these transactions. Following this offering, our auditcommittee will be responsible for the review, approval and ratification of "relatedperson transactions" between us and any related person. UnderSEC rules, a related person is a director, executive officer, nominee for director or beneficial holder of more than of 5% of any class of our votingsecurities since the beginning of the last fiscal year or an immediate family member of any of the foregoing. In the course of its review and approvalor ratification of a relatedperson transaction, the audit committee will consider:

the nature of the related person's interest in the transaction;

the material terms of the transaction, including the amount involved and type of transaction;

the importance of the transaction to the related person and to our company;

whether the transaction would impair the judgment of a director or executive officer to act in our best interest and the best interestof our stockholders; and

any other matters the audit committee deems appropriate.

Any member of the audit committee who is a related person with respect to a transaction under review will not be able to participate in thedeliberations or vote on the approval or ratification of the transaction. However, such a director may be counted in determining the presence of aquorum at a meeting of the committee that considers the transaction. Since March 29, 2010 through the date of this prospectus, there has not been, and there is not currently proposed, any transaction or series ofsimilar transactions to which we were or will be a party in which the amount involved exceeded or will exceed $120,000 and in which any relatedperson had or will have a direct or indirect material interest, other than compensation agreements and other arrangements which are described under"Executive Compensation," the transactions contemplated by the Exchange and the transactions described below.Transactions with Howard Glickberg

Real Estate Leases

Howard Glickberg, one of our directors and executive officers, owns a one- third interest in entities which lease to us the premises at which aportion of our Broadway store is located, the premises at which our Harlem store, Harlem bakery and Harlem warehouse are located and the premisesat which the parking lot for our Harlem store is located. The remainder of these entities is owned by Mr. Glickberg's former business partners (the"Former Partners"). Each lease commenced on January 18, 2007 and terminates on January 31, 2032, with two five- year renewal options. Each leaseprovides that the base rent is to be reset to fair market rent based upon the highest and best retail use of the premises (without reference to the lease),as of February 1, 2012, 2019, 2024 and 2029 and, if the renewal options are exercised, 2034 and 2039, subject to a cap on the amount of the increasein the base rent of (i) 150% of the first lease year annual base rent for the fair market adjustment as of February 1, 2012 and (ii) 200% of the sixthlease year annual base rent for the fair market adjustment as of February 1, 2017, and no cap thereafter, and further, subject to the condition thatregardless of the determination of fair market rent, it cannot be less than the annual base rent for the immediately preceding year. In all other years theannual base rent is to be increased by an amount equal to the percentage increase in the consumer price index, subject to an annual 5% cap. Annualbase rent payable under these leases during the lease years ended January 31, 2011 and 2012 aggregated

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Table of Contents$2.52 million and $2.55 million, respectively. During fiscal 2010, fiscal 2011 and fiscal 2012 and the thirty- nine weeks ended December 30, 2012,rental payments (excluding maintenance and taxes that we are obligated to pay) under these leases aggregated $2,519,755, $2,525,583, $2,569,403and $3,322,875, respectively. The leases for these premises provide that if we and the landlord are unable to agree upon the fair market rent, it will bedetermined by "baseball" style arbitration, where we propose a fair market rent for each property and the landlord proposes a fair market rent for eachproperty and a neutral arbitrator chooses either our proposal or the landlord's proposal. Based on Mr. Glickberg's ownership interest in these entitiesand before giving effect to any expenses, Mr. Glickberg is entitled to $839,918, $841,861, $856,468 and $1,107,514 of the amounts that we paid tothese entities in fiscal 2010, fiscal 2011, fiscal 2012 and the thirty- nine weeks ended December 30, 2012, respectively. In December 2012 we agreedwith the landlords of the Harlem properties and a portion of the Broadway store to a reset of the annual base rent for these properties that willincrease our base rent for these properties by an aggregate of approximately $1.8 million for fiscal 2013. As a result of this increase, we have paid thelandlords an aggregate of $1,647,503, representing the additional rent due for the period from February 1, 2012 through December 30, 2012, of whichMr. Glickberg's share, based on his ownership and before giving effect to any expenses, is $549,168. Mr. Glickberg also owns a 16.67% interest in the landlord for the premises where our Red Hook store is located. The Former Partners own anadditional 33.33% interest in the landlord. The initial term of the lease commenced on May 1, 2006 (with rent payments commencing onNovember 1, 2006) and expired October 31, 2011. We exercised the first of our four five- year renewal options and the current expiration date for thelease is October 31, 2016. Upon any exercise of a renewal option, the annual base rent is to be reset to fair market rent based upon the highest andbest retail use of the premises. Annual base rent payable under this lease during the lease years ended October 31, 2010 and 2011 aggregated$850,000 and $863,063, respectively. During fiscal 2010, fiscal 2011 and fiscal 2012 and the thirty- nine weeks ended December 30, 2012, rentalpayments (excluding taxes that we are obligated to pay) under the lease were $1,461,595, $1,421,151, $1,421,151 and $1,047,643, respectively. As aresult of our exercise of our first renewal option, the annual base rent must be reset to fair market value as of November 1, 2011. We and the landlordare currently in discussions regarding the reset of the base rent to fair market rent. If we and the landlord cannot agree upon the fair market rent, itwill be determined by arbitration. We cannot predict the outcome of any arbitration; however, if the arbitrator chooses an amount closer to theamount proposed by our landlord, it could have an adverse effect on our results of operations and gross margin. Based on Mr. Glickberg's ownershipin this entity and before giving effect to any expenses, Mr. Glickberg is entitled to $243,599, $236,859, $236,859 and $174,642 of the amounts thatwe paid to this entity in fiscal 2010, fiscal 2011, fiscal 2012 and the thirty- nine weeks ended December 30, 2012, respectively. Mr. Glickberg also owns a 16.67% interest in the owner of a co- generation plant from which the Red Hook store purchases electricity,heated/chilled water, hot and cold potable water and sewer services. The Former Partners own an additional 33.33% interest in the owner of the co-generation plant. There is a disagreement between the parties regarding the applicable methodology to be used to calculate utility billings. We believethat the owner of the co- generation plant has overcharged us for utilities since our initial occupancy of the premises in December 2005. SinceNovember 2008, we have not fully paid the utility invoices, but instead remitted lesser amounts based on the methodology that we believe representsthe parties' original intentions with respect to the utility charge calculations. We believe that we will be successful in negotiating an amicableresolution of the outstanding utility issues between the parties. We also believe that the resolution of these issues will not have a material adverseeffect on our financial condition and results of operations. We paid this entity $933,152, $1,018,458, $913,653 and $596,824 in fiscal 2010, fiscal2011, fiscal 2012 and the thirty- nine weeks ended December 30, 2012, respectively. Based on Mr. Glickberg's ownership in this entity and beforegiving effect to any expenses, Mr. Glickberg is entitled to $155,525, $169,743, $152,276 and $99,491 of the

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Table of Contentsamounts that we paid this entity in fiscal 2010, fiscal 2011, fiscal 2012 and the thirty- nine weeks ended December 30, 2012, respectively. Until July 2012, Mr. Ruetsch, our chief executive officer, performed certain financial and management functions for the entities that lease theseproperties to us, for which he received $25,000 annually.

Subordinated Notes

In January 2007, we issued to entities in which Mr. Glickberg had a one- third interest subordinated promissory notes in an aggregate principalamount of $22.0 million. The notes bore interest at a rate of 10% per annum, which rate was increased to 12% in April 2010, with the additional twopercent deferred and payable at maturity, and were due January 18, 2015. The largest aggregate outstanding amount of these notes was $22.5 million,which included approximately $500,000 of deferred interest, at May 2, 2011, when we repaid these notes with borrowings under our 2011 seniorcredit facility. In May 2011 we sold to Mr. Glickberg a subordinated promissory note in the aggregate principal amount of $7.3 million. This notebore interest at a rate of 12% per annum, of which 10% was paid in cash and 2% was deferred and payable at maturity, and was due March 3, 2018.At December 30, 2012, the aggregate outstanding principal amount of this note is approximately $7.3 million, which excludes deferred interest ofapproximately $240,000. The accrued deferred interest is classified as other long- term liabilities in our financial statements. In March 2013, werepaid this note, including all accrued deferred interest, in full.

Employment Agreement

See "Executive Compensation- Employment Agreements" for information regarding our employment agreement with Mr. Howard Glickberg.Pursuant to the employment agreement, Mr. Glickberg is entitled to transaction related bonuses in connection with certain debt and equity financings.In fiscal 2011 and fiscal 2012 and the thirty- nine weeks ended December 30, 2012, we paid to Mr. Glickberg transaction related bonuses of$630,000, $383,484 and $300,000, respectively. In connection with our entry into our new credit facility in February 2013, we paid Mr. Glickberg atransaction related bonus of $330,750 pursuant to his employment agreement. See "Executive Compensation- Additional Narrative Disclosure- IPO Bonuses" for information regarding payments to the son and sister ofMr. Glickberg upon consummation of this offering. See "Management- Director Compensation" for information regarding our former employmentarrangements with Mr. Glickberg's son.

Signage

We have the right to use the "LED" above our Harlem store, which sign is owned by 2328 On Twelfth, LLC, which is 1/3 owned byMr. Glickberg, our vice chairman of development and a director, with the remainder owned by the Former Partners. Although we do not pay for useof the sign, we pay a third party the costs and expenses of operating the sign, primarily electricity and maintenance. We paid $30,866, $32,332,$33,625 and $22,305 in fiscal 2010, fiscal 2011 and fiscal 2012 and the thirty- nine weeks ended December 30, 2012, respectively, with respect toelectricity and maintenance services for the LED sign. We understand that Mr. Glickberg does not have an economic interest in the entity to whichwe make these payments; however, he could be deemed to be receiving a benefit from these payments because otherwise the owner of the sign wouldneed to make such payments.Management Agreement with Sterling Advisers We are a party to a management agreement with Sterling Advisers, an affiliate of Sterling Investment Partners. Messrs. Santoro and Selden, twoof our directors, are managing members of, and

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Table of ContentsMr. Barr, one of our directors is a principal of, Sterling Advisers. Pursuant to the agreement, Sterling Advisers agreed to consult with our board ofdirectors and management on business and financial matters, including:

developing and implementing corporate strategy;

budgeting future corporate investments;

developing acquisition and divestiture strategies; and

debt and equity financings.

Under the terms of the management agreement, we agreed to pay Sterling Advisers an annual fee of $1,258,584, which fee would be increasedby $250,000 once our trailing twelve months earnings before interest, taxes, depreciation and amortization ("EBITDA") on a pro forma basis givingeffect to any new store openings (commencing with the Stamford, CT store) and acquisitions consummated during the period exceeds $35 million,and increased by an additional $250,000 for each additional $5 million of trailing twelve months' EBITDA. The fee would also increase on a pro ratabasis if funds affiliated with Sterling Advisers provided us with additional equity capital. The agreement provides that the annual fee will besuspended to the extent making such payments would violate our senior credit facility. In case payment of the annual fee is suspended, the annualfees payable to Sterling Advisers will accrue without interest until the event which caused the suspension is cured or waived, at which time we willresume paying the annual fee and the accrued fee will be paid to Sterling Advisers. Sterling Advisers is also entitled to specified fees in connectionwith certain merger and acquisition and financing transactions, including the offering being made hereby. We are also required to reimburse SterlingAdvisers for its reasonable travel and other direct out- of- pocket expenses. The agreement provides for an initial five year term (ending October 2015) and will automatically renew for successive oneyear terms as longas the current stockholders own at least 20% of our outstanding common stock. Pursuant to the agreement, we paid Sterling Advisers monitoring and transaction fees of $3,920,717, $6,186,340, $3,293,737 and $4,631,573 infiscal 2010, fiscal 2011 and fiscal 2012 and the thirty- nine weeks ended December 30, 2012, respectively. We paid Sterling Advisers a fee of$2,205,000 in connection with our entry into our new senior credit facility in February 2013 pursuant to this agreement. The management agreement will terminate in connection with the closing of this offering upon our payment of a negotiated fee of $9.2 millionto Sterling Advisers.Registration Rights Agreement We have entered into a Registration Rights Agreement with Sterling Investment Partners, Howard Glickberg, Harold Seybert, Herbert Ruetsch,Ray Venezia, Brian Riesenburger, Peter Romano, John Rossi, Steven Jenkins, Paul Weiner, Jerry Seybert, Will Sneddon, Randi Glickberg, TomHoover, Daniel Glickberg and Joanna Glickberg, who we refer to collectively as the "Stockholders." Sterling Investment Partners may at any time require that we register their shares under the Securities Act. Upon the request for a demandregistration, we must notify the other Stockholders party to the Registration Rights Agreement of the request and give them the opportunity to requestthat their shares be included in the registration. We call the right to require us to register shares a "demand registration right" and the resulting registration a "demand registration." SterlingInvestment Partners may request up to two long- form registrations of Registrable Securities (as defined in the Registration Rights Agreement) onForm S- 1. In addition, the Stockholders may request an unlimited number of short- form registrations of

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Table of ContentsRegistrable Securities on Form S- 3 after we have qualified for the use of Form S- 3. Demand registrations will be short- form registrations wheneverwe are permitted to use Form S- 3. The Stockholders can request to participate in registrations of any of our securities for sale by us or by a thirdparty other than in an initialpublic offering, in a demand registration or in a registration on a Form S- 4 or Form S- 8 or similar or successor forms. We call this right a"piggyback right" and the resulting registration a "piggyback registration." The registration rights outlined above are subject to conditions and limitations, including (i) the right of the underwriters to limit the number ofshares to be included in a registration statement, and, with respect to demand registrations by Sterling Investment Partners, the right of SterlingInvestment Partners to withdraw the registration statement. With respect to both demand registrations and piggyback registrations, if the offering is an underwritten offering, the Stockholder's right toinclude its Registrable Securities in such registration will be conditioned upon such stockholder's participation in the underwritten offering andentering into an underwriting agreement with the underwriters. If the Stockholder does not agree with the terms of the underwriting, it may withdrawits Registrable Securities from the registration. We are not required to effect a demand registration within six months after the effective date of a previous demand registration. We may alsodelay for a reasonable period not to exceed 120 days the filing of a registration statement for a demand registration if our board of directorsdetermines that the filing of the registration statement would require disclosure of information not otherwise then required to be disclosed and thatsuch disclosure would adversely affect any material business opportunity, transaction or negotiation then contemplated by us. The underwriters in anydemand registration requested by Sterling Investment Partners will be selected by Sterling Investment Partners and must be reasonably acceptable tous. Other than underwriting discounts and commissions, we will pay all registration expenses in connection with a registration, including theexpense of a single special counsel to the holders for each registration.Equity Awards and Employment Agreements We have granted stock options or restricted stock units to our executive officers and our directors. For a description of these equity awards, see"Executive Compensation- Equity Compensation Plans- 2013 Long- Term Incentive Plan- Initial Awards" and "Management- DirectorCompensation." We have entered into employment agreements with Edward C. Arditte, Nathalie Augustin, Aaron J. Fleishaker, Howard Glickberg, KevinMcDonnell, Brian Riesenburger, Peter Romano, Herbert Ruetsch, Larry Santoro and William Sanford. Pursuant to these employment agreements,Messrs. Glickberg, McDonnell Riesenburger, Romano and Ruetsch and Ms. Augustin will receive a bonus upon consummation of this offering. Formore information regarding these arrangements, see "Propectus Summary," "Management- Director Compensation" and "Executive Compensation-Employment Agreements."Employment Arrangements With Immediate Family Members of Our Executive Officers and Directors Larry Santoro, our Senior Vice President- Chief Administrative Officer, is the brother of Charles W. Santoro, our Executive Chairman. Duringfiscal 2011 and 2012, Mr. L. Santoro served as a consultant and received consulting fees (including bonuses) aggregating $80,000 and $322,475,respectively. See "Executive Compensation- Employment Agreements." Mr. Daniel Glickberg, formerly one of our vice presidents and a director, is the son of Howard Glickberg, our vice chairman of development anda director. During fiscal 2010, 2011 and 2012,

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Table of ContentsMr. Daniel Glickberg received total compensation (including bonus and perquisites) aggregating $259,158, $336,210 and $283,723, respectively. See"Management- Director Compensation." Ms. Randi Glickberg, one of our vice presidents, is the sister of Howard Glickberg, our vice chairman of development and a director. Duringfiscal 2010, 2011 and 2012, Ms. Randi Glickberg received total compensation (including bonus and perquisites) aggregating $360,021, $383,019 and$346,848, respectively. During fiscal 2012, we employed a son and a daughter of Herbert Ruetsch, our chief executive officer, the daughter and mother of HowardGlickberg, our vice chairman of development, two brothers of Brian Riesenburger, our senior vice president- store operations, and a son of PeterRomano, our vice president- produce. Mr. Ruetsch's son and daughter received annual salary, bonus and perquisites of $84,630 and $12,260,respectively, in fiscal 2012, $88,561 and $11,260, respectively, in fiscal 2011 and $60,200 and $8,870, respectively, in fiscal 2010. Mr. Glickberg'sdaughter and mother received total compensation, consisting only of base salary, of $12,298 and $10,400, respectively, in fiscal 2012, $15,158 and$10,600, respectively, in fiscal 2011 and $14,872 and $10,400, respectively, in fiscal 2010. Mr. Riesenburger's brothers, one of whom no longerworks for us, received annual salary, bonus and perquisites of $225,971 and $639, respectively, in fiscal 2012, $222,893 and $40,559, respectively, infiscal 2011 and $195,874 and $1,500, respectively, in fiscal 2010. Mr. Romano's son received annual salary, bonus and perquisites of $140,604 infiscal 2012, $132,876 in fiscal 2011 and $113,711 in fiscal 2010.Transactions with Former Director and Executive Officer One of the Former Partners, Harold Seybert, who owns approximately 10% of the outstanding shares of series B preferred stock, served as adirector and executive officer from January 2007 through April 2009. He received compensation of $92,308 in fiscal 2010. In addition, in connectionwith his ceasing to be an employee in April 2009, we agreed to pay him $1,670,000, which amount was paid in August 2012. This Former Partner is aone- third owner of the entities that lease to us the premises at which a portion of our Broadway store is located, the premises at which our Harlemstore, Harlem bakery and Harlem warehouse are located and the premises at which the parking lot for our Harlem store is located lease, a one- sixthowner of the landlord for the premises where our Red Hook store is located and a one- sixth owner of the owner of a co- generation plant from whichthe Red Hook store purchases electricity, heated/chilled water, hot and cold potable water and sewer services, as more fully described above under "-Transactions with Howard Glickberg- Real Estate Leases." Based on his ownership in these entities, this individual is entitled to the same amounts asMr. Glickberg is entitled as set forth above.Distribution of Option to Purchase Stamford Store We currently have an option to purchase our Stamford store, which we currently lease, at a specified purchase price at any time beforeFebruary 1, 2016. We have determined that the fair market value of the property is below the specified purchase price and that we would not exercisethe option to purchase and therefore will distribute the entity that holds the option to our preferred stockholders immediately prior to the closing ofthe offering being made hereby. Because of their ownership of preferred stock, Sterling Investment Partners will control the entity that holds theoption, which will become the landlord for our Stamford store if the option is exercised.

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DESCRIPTION OF CERTAIN INDEBTEDNESSSenior Credit Facility In February 2013, we and our wholly- owned subsidiary Fairway Group Acquisition Company, as the borrower, entered into a senior securedcredit facility consisting of a $275 million term loan (the "Term Facility"), and a $40 million revolving credit facility, which includes a $40 millionletter of credit subfacility (the "Revolving Facility" and together with the Term Facility, the "Credit Facility") with the Term Facility maturing inAugust 2018 and the Revolving Facility maturing in August 2017. We used the proceeds from the Term Facility to repay the $264.5 million ofoutstanding borrowings (including accrued interest) under our prior senior credit facility, pay fees and expenses and provide us with $3.5 million torepay our outstanding subordinated note. Affiliates of certain of the underwriters participate as lenders under the Credit Facility, and Credit SuisseAG, an affiliate of Credit Suisse Securities (USA) LLC, acts as administrative agent and collateral agent. Credit Suisse Securities (USA) LLC,Merrill Lynch, Pierce Fenner & Smith Incorporated and Jefferies Finance LLC, an affiliate of Jefferies LLC, acted as joint bookrunners and joint leadarrangers of the Credit Facility, Bank of America, N.A., an affiliate of Merrill Lynch, Pierce, Fenner & Smith Incorporated, acted as syndicationagent and Jefferies Finance LLC acted as documentation agent. Borrowings under the Credit Facility bear interest, at our option, at (i) adjusted LIBOR (subject to a 1.25% floor) plus 5.50% or (ii) an alternatebase rate plus 4.50%. The 5.50% and 4.50% margins will each be reduced by 50 basis points at any time following completion of the offering beingmade hereby when our public corporate family rating from Moody's Investor Services, Inc. is B2 or higher and our public corporate rating fromStandard & Poor's Rating Service is B or higher, in each case with a stable outlook, and as long certain events of default have not occurred. Inaddition, there is a fee payable quarterly in an amount equal to 1% per annum of the undrawn portion of the Revolving Facility, calculated based on a360- day year. Interest is payable quarterly in the case of base rate loans and on maturity dates or every three months, whichever is shorter, in the caseof adjusted LIBOR loans. All of the borrower's obligations under the Credit Facility are unconditionally guaranteed (the "Guarantees") by us and each of our direct andindirect subsidiaries (other than the borrower and any future unrestricted subsidiaries as we may designate, at our discretion, from time to time) (the"Guarantors"). Additionally, the Credit Facility and the Guarantees are secured by a first- priority perfected security interest in substantially allpresent and future assets of the borrower and each Guarantor, including accounts receivable, equipment, inventory, general intangibles, leases,intellectual property, investment property and intercompany notes among Guarantors. Mandatory prepayments under the Credit Facility are required with (i) 50% of adjusted excess cash flow (which percentage will decrease to 25%upon achievement and maintenance of a leverage ratio of less than 5.0:1.0, and to 0% upon achievement and maintenance of a leverage ratio of lessthan 4.0:1.0); (ii) 100% of the net cash proceeds of assets sales or other dispositions of property by us and our restricted subsidiaries (subject tocertain exceptions and reinvestment provisions); and (iii) 100% of the net cash proceeds of issuances, offerings or placements of debt obligations(subject to certain exceptions). In addition, we would have been required to repay $7.7 million of the outstanding term loan if we had not repaid infull our outstanding subordinated note by that date on May 15, 2013. The Credit Facility contains customary affirmative covenants, including (i) maintenance of legal existence and compliance with laws andregulations; (ii) delivery of consolidated financial statements and other information; (iii) maintenance of properties in good working order;(iv) payment of taxes; (v) delivery of notices of defaults, litigation, ERISA events and material adverse changes; (vi) maintenance of adequateinsurance; and (vii) inspection of books and records.

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Table of Contents The Credit Facility also contains customary negative covenants, including restrictions on (i) the incurrence of additional debt; (ii) liens and sale-leaseback transactions; (iii) loans and investments; (iv) guarantees and hedging agreements; (v) the sale, transfer or disposition of assets andbusinesses; (vi) dividends on, and redemptions of, equity interests and other restricted payments, including dividends and distributions to the issuerby its subsidiaries (although the Credit Facility permits us to use the proceeds of this offering to pay accrued but unpaid dividends on our outstandingpreferred stock); (vii) transactions with affiliates; (viii) changes in the business conducted by us; (ix) payment or amendment of subordinated debtand organizational documents; and (x) maximum capital expenditures. We are also required to comply with the following financial covenants: (i) amaximum total leverage ratio and (ii) a minimum cash interest coverage ratio. Events of default under the Credit Facility include:

failure to pay principal, interest, fees or other amounts under the Credit Facility when due, taking into account any applicablegrace period;

any representation or warranty proving to have been incorrect in any material respect when made;

failure to perform or observe covenants or other terms of the Credit Facility subject to certain grace periods;

a cross- default and cross- acceleration with certain other debt;

bankruptcy events;

a change in control, which includes any person other than Sterling Investment Partners owning, directly or indirectly, beneficiallyor of record, shares representing more than 35% of the voting power of our outstanding common stock or a majority of ourdirectors being persons who were not nominated by the board or appointed by directors so nominated;

certain defaults under ERISA; and

the invalidity or impairment of any security interest.

The foregoing is a brief summary of the material terms of the Credit Facility, and is qualified in its entirety by reference to the Credit Facilityfiled as an exhibit to the registration statement relating to this prospectus. See "Where You Can Find More Information."Subordinated Note In May 2011, we sold to Mr. Howard Glickberg, our vice chairman of development and a director, a subordinated promissory note in theaggregate principal amount of $7.3 million. This note bore interest at a rate of 12% per annum, of which 10% was paid in cash and 2% was deferreduntil maturity, and is due March 3, 2018. In March 2013, we repaid this note, including all accrued deferred interest, in full. See "CertainRelationships and Related Party Transactions- Transactions with Howard Glickberg- Subordinated Notes."

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DESCRIPTION OF CAPITAL STOCK Upon the completion of our initial public offering, our authorized capital stock will consist of 150,000,000 shares of Class A common stock,$0.00001 par value per share, 31,000,000 shares of Class B common stock, $0.001 par value per share, and 5,000,000 shares of undesignatedpreferred stock, $0.001 par value per share. A description of the material terms and provisions of our amended and restated certificate ofincorporation and amended and restated bylaws that will be in effect at the closing our initial public offering and affecting the rights of holders of ourcapital stock is set forth below. The description is intended as a summary, and is qualified in its entirety by reference to the form of our amended andrestated certificate of incorporation and the form of our amended and restated bylaws to be adopted in connection with our initial public offering thatwill be filed with the registration statement relating to this prospectus. After giving effect to the reclassification of our outstanding common stock, including shares of common stock issuable upon exercise of ouroutstanding warrants, into shares of Class A common stock and the exchange of the shares of our outstanding preferred stock (including accrued butunpaid dividends thereon that are not paid in cash with a portion of the proceeds of this offering) for shares of Class B common stock in connectionwith our initial public offering, there were outstanding 12,403,976 shares of our Class A common stock held by approximately 59 stockholders,15,470,720 shares of our Class B common stock held by 10 stockholders, and warrants to purchase 1,930,822 shares of Class A common stock.Common Stock

Dividend Rights

Subject to preferences that may apply to shares of preferred stock outstanding at the time, the holders of outstanding shares of our common stockare entitled to receive dividends out of funds legally available if our board of directors, in its discretion, determines to issue dividends and only thenat the times and in the amounts that our board of directors may determine. See "Dividend Policy" for more information.

Voting Rights

The holders of our Class B common stock are entitled to ten votes per share, and holders of our Class A common stock are entitled to one voteper share. The holders of our Class A common stock and Class B common stock vote together as a single class, unless otherwise required by law.Delaware law could require either holders of our Class A common stock or our Class B common stock to vote separately as a single class in thefollowing circumstances:

if we were to seek to amend our certificate of incorporation to increase the authorized number of shares of a class of stock, or toincrease or decrease the par value of a class of stock, then that class would be required to vote separately to approve the proposedamendment; and

if we were to seek to amend our certificate of incorporation in a manner that alters or changes the powers, preferences or specialrights of a class of stock in a manner that affected its holders adversely, then that class would be required to vote separately toapprove the proposed amendment.

Stockholders do not have the ability to cumulate votes for the election of directors. Our amended and restated certificate of incorporation andamended and restated bylaws that will be in effect at the closing of our initial public offering will provide for a classified board of directors consistingof three classes, each serving staggered three- year terms.

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No Preemptive or Similar Rights

Our common stock is not entitled to preemptive rights and is not subject to conversion, redemption or sinking fund provisions, except for theconversion rights of the Class B common stock discussed below under "- Conversion."

Right to Receive Liquidation Distributions

Upon our dissolution, liquidation or windingup, the assets legally available for distribution to our stockholders are distributable ratably amongthe holders of our common stock, subject to prior satisfaction of all outstanding debt and liabilities and the preferential rights and payment ofliquidation preferences, if any, on any outstanding shares of preferred stock.

Conversion

The outstanding shares of Class B common stock are convertible at any time as follows: (1) at the option of the holder, a share of Class Bcommon stock may be converted at any time into one share of Class A common stock or (2) upon the election of the holders of a majority of the thenoutstanding shares of Class B common stock, all outstanding shares of Class B common stock may be converted into shares of Class A commonstock. In addition, each share of Class B common stock will convert automatically into one share of Class A common stock upon any transfer,whether or not for value, which occurs after the closing of our initial public offering, except for certain transfers described in our amended andrestated certificate of incorporation, including transfers to family members, trusts solely for the benefit of the stockholder or their family members,and partnerships, corporations, and other entities exclusively owned by the stockholder or their family members and transfers by Sterling InvestmentPartners to the members of the general partners of its funds. Once converted or transferred and converted into Class A common stock, the Class Bcommon stock will not be reissued. In addition, upon the date on which Sterling Investment Partners and its permitted transferees no longer own anyshares of Class B common stock all outstanding shares of Class A common stock and Class B common stock shall convert automatically into a singleclass of common stock.Preferred Stock Upon the closing of our initial public offering, no shares of preferred stock will be outstanding, but we will be authorized, subject to limitationsprescribed by Delaware law, to issue preferred stock in one or more series, to establish from time to time the number of shares to be included in eachseries and to fix the designation, powers, preferences and rights of the shares of each series and any of its qualifications, limitations or restrictions.Our board of directors also can increase or decrease the number of shares of any series, but not below the number of shares of that series thenoutstanding, without any further vote or action by our stockholders. Our board of directors may authorize the issuance of preferred stock with votingor conversion rights that could adversely affect the voting power or other rights of the holders of the common stock. The issuance of preferred stock,while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect ofdelaying, deferring or preventing a change in control of our company and may adversely affect the market price of our Class A common stock and thevoting and other rights of the holders of common stock. We have no current plan to issue any shares of preferred stock.Warrants As of December 30, 2012, warrants to purchase up to 1,930,822 shares of our Class A common stock, at an exercise price of $0.00008 per share,were outstanding. The warrants were issued on March 26, 2009 in connection with the sale of shares of our Series A preferred stock and areexercisable at any time on or before March 26, 2016, or the consummation of a liquidation event, as

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Table of Contentsdefined in the warrants. Any warrants that have not been exercised in full before the last day of the exercise period will be automatically exercised,without further action on the part of the holder, on and as of that date.Registration Rights See "Certain Relationships and Related Party Transactions- Registration Rights Agreement."Anti- Takeover Provisions So long as the outstanding shares of our Class B common stock represent a majority of the combined voting power of common stock, SterlingInvestment Partners will effectively control all matters submitted to our stockholders for a vote, as well as the overall management and direction ofour company, which will have the effect of delaying, deferring or discouraging another person from acquiring control of our company. After such time as the shares of our Class B common stock no longer represent a majority of the combined voting power of our common stock,the provisions of Delaware law, our amended and restated certificate of incorporation and our amended and restated bylaws may have the effect ofdelaying, deferring or discouraging another person from acquiring control of our company.

Delaware Law

Upon the closing of our initial public offering, we will be governed by the provisions of Section 203 of the Delaware General Corporation Lawregulating corporate takeovers. This section prevents some Delaware corporations from engaging, under some circumstances, in a businesscombination, which includes a merger or sale of at least 10% of the corporation's assets with any interested stockholder, meaning a stockholder who,together with affiliates and associates, owns or, within three years prior to the determination of interested stockholder status, did own 15% or more ofthe corporation's outstanding voting stock, unless:

the transaction is approved by the board of directors prior to the time that the interested stockholder became an interestedstockholder;

upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interestedstockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced,excluding stock owned by directors who are also officers of the corporation; or

subsequent to such time that the stockholder became an interested stockholder the business combination is approved by the boardof directors and authorized at an annual or special meeting of stockholders by at least two- thirds of the outstanding voting stockwhich is not owned by the interested stockholder.

A Delaware corporation may "opt out" of these provisions with an express provision in its original certificate of incorporation or an expressprovision in its certificate of incorporation or bylaws resulting from a stockholders' amendment approved by at least a majority of the outstandingvoting shares. We have not opted out of these provisions. As a result, mergers or other takeover or change in control attempts of us may bediscouraged or prevented.

Amended and Restated Certificate of Incorporation and Bylaw Provisions

Our amended and restated certificate of incorporation and our amended and restated bylaws will include a number of provisions that may havethe effect of deterring hostile takeovers or delaying or preventing changes in control of our company, even after such time as the shares of ourClass B

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Table of Contentscommon stock no longer represent a majority of the combined voting power of our common stock, including the following:

Dual Class Stock. As described above in "- Common Stock- Voting Rights," our amended and restated certificate ofincorporation provides for a dual class common stock structure, which provides Sterling Investment Partners with the ability tocontrol the outcome of matters requiring stockholder approval, even if they own significantly less than a majority of the shares ofour outstanding Class A and Class B common stock, including the election of directors and significant corporate transactions,such as a merger or other sale of our company or its assets.

Supermajority Approvals. Our amended and restated certificate of incorporation and amended and restated bylaws provide thatwhile shares of Class B common stock are outstanding, they can be amended with the approval of a majority of the combinedvote of our thenoutstanding shares of Class A and Class B common stock. However, when we no longer have outstanding sharesof our Class B common stock, certain amendments to our amended and restated certificate of incorporation or amended andrestated bylaws by stockholders will require the approval of two- thirds of the combined vote of our thenoutstanding shares ofcommon stock. This will have the effect of making it more difficult to amend our certificate of incorporation or bylaws to removeor modify certain provisions.

Board of Directors Vacancies. Our amended and restated certificate of incorporation and amended and restated bylaws providethat stockholders may fill vacant directorships. When we no longer have outstanding shares of our Class B common stock, ouramended and restated certificate of incorporation and amended and restated bylaws authorize only our board of directors to fillvacant directorships. In addition, the number of directors constituting our board of directors is set only by resolution adopted by amajority vote of our entire board of directors. These provisions restricting the filling of vacancies will prevent a stockholder fromincreasing the size of our board of directors and gaining control of our board of directors by filling the resulting vacancies with itsown nominees.

Classified Board. Our board of directors will be classified into three classes of directors each of which will hold office for athree- year term. In addition, thereafter, directors may only be removed from the board of directors for cause. The existence of aclassified board could delay a successful tender offeror from obtaining majority control of our board of directors, and the prospectof that delay might deter a potential offeror.

Stockholder Action; Special Meeting of Stockholders. Our amended and restated certificate of incorporation provides thatstockholders will be able to take action by written consent. When we no longer have outstanding shares of our Class B commonstock, our stockholders will no longer be able to take action by written consent, and will only be able to take action at annual orspecial meetings of our stockholders. Stockholders will not be permitted to cumulate their votes for the election of directors. Ouramended and restated bylaws further provide that special meetings of our stockholders may be called only by a majority of ourboard of directors or the chairman of our board of directors.

Advance Notice Requirements for Stockholder Proposals and Director Nominations. Our amended and restated bylaws provideadvance notice procedures for stockholders seeking to bring business before our annual meeting of stockholders, or to nominatecandidates for election as directors at any meeting of stockholders. Our amended and restated bylaws also specify certainrequirements regarding the form and content of a stockholder's notice. These provisions may preclude our stockholders frombringing matters before our annual meeting of stockholders or from making nominations for directors at our meetings ofstockholders.

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Issuance of Undesignated Preferred Stock. Our board of directors has the authority, without further action by the stockholders, toissue up to 5,000,000 shares of undesignated preferred stock with rights and preferences, including voting rights, designated fromtime to time by the board of directors. The existence of authorized but unissued shares of preferred stock enables our board ofdirectors to render more difficult or to discourage an attempt to obtain control of us by means of a merger, tender offer, proxycontest or otherwise.

Choice of Forum Our amended and restated certificate of incorporation will provide that the Court of Chancery of the State of Delaware will be the exclusiveforum for any derivative action or proceeding brought on our behalf; any action asserting a breach of fiduciary duty; any action asserting a claimagainst us arising pursuant to the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended andrestated bylaws; or any action asserting a claim against us that is governed by the internal affairs doctrine. The enforceability of similar choice offorum provisions in other companies' certificates of incorporation has been challenged in legal proceedings, and it is possible that a court could findthese types of provisions to be inapplicable or unenforceable.Listing We have applied to list our common stock on the NASDAQ Global Market under the symbol "FWM".Transfer Agent and Registrar The transfer agent and registrar for our common stock is Computershare Trust Company, N.A.

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SHARES ELIGIBLE FOR FUTURE SALE Prior to this offering, there has been no public market for our Class A common stock. Future sales of substantial amounts of our Class Acommon stock in the public market, or the perception that such sales may occur, could adversely affect the prevailing market price of our Class Acommon stock. We cannot predict the effect, if any, that future sales of shares, or the availability of shares for future sales, will have on the marketprice of our stock prevailing from time to time.Sale of Restricted Shares Upon completion of this offering, we will have 27,767,540 shares of Class A common stock and 15,470,720 shares of Class B common stockoutstanding. Of these shares of common stock, the 13,650,000 shares of Class A common stock being sold in this offering, plus any shares sold uponexercise of the underwriters' option to purchase additional shares, will be freely tradable without restriction under the Securities Act, except for anysuch shares held or acquired by an "affiliate" of ours, as that term is defined in Rule 144 promulgated under the Securities Act, which shares will besubject to the volume limitations and other restrictions of Rule 144 described below, and any shares purchased by any of our existing stockholderspursuant to the reserved share program who are subject to lock- up agreements, which shares will be subject to the lock- up agreements describedbelow. The 12,117,540 shares of Class A common stock and 15,470,720 shares of Class B common stock held by our existing stockholders uponcompletion of this offering will be "restricted securities," as that phrase is defined in Rule 144, and may be resold only after registration under theSecurities Act or pursuant to an exemption from such registration, including, among others, the exemptions provided by Rule 144 and 701 under theSecurities Act, which rules are summarized below. These remaining shares of common stock held by our existing stockholders upon completion ofthis offering will be available for sale in the public market after the expiration of the lock- up agreements described in "Underwriting," taking intoaccount the provisions of Rules 144 and 701 under the Securities Act.Rule 144 In general, under Rule 144 as currently in effect, persons who became the beneficial owner of shares of our common stock prior to thecompletion of this offering may sell their shares upon the earlier of (1) the expiration of a six- month holding period, if we have been subject to thereporting requirements of the Exchange Act for at least 90 days prior to the date of the sale and have filed all reports required thereunder, or (2) theexpiration of a oneyear holding period. We believe that holders who acquired their common stock in connection with the Exchange will bepermitted to "tack" the holding period of their preferred stock to the holding period of their common stock for purposes of establishing these six-month or oneyear holding periods. At the expiration of the six- month holding period, assuming we have been subject to the Exchange Act reporting requirements for at least90 days and have filed all reports required thereunder, a person who was not one of our affiliates at any time during the three months preceding a salewould be entitled to sell an unlimited number of shares of our common stock, and a person who was one of our affiliates at any time during the threemonths preceding a sale would be entitled to sell, within any three- month period, a number of shares of common stock that does not exceed thegreater of either of the following:

1% of the number of shares of our common stock then outstanding, which will equal approximately 412,383 shares immediatelyafter this offering, or

the average weekly trading volume of our common stock on the NASDAQ Global Market, the exchange where we have appliedto list our Class A common stock, during the four calendar weeks preceding the filing of a notice on Form 144 with respect to thesale.

At the expiration of the oneyear holding period, a person who was not one of our affiliates at any time during the three months preceding a salewould be entitled to sell an unlimited number of shares

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Table of Contentsof our common stock without restriction. A person who was one of our affiliates at any time during the three months preceding a sale would remainsubject to the volume restrictions described above. Sales under Rule 144 by our affiliates are also subject to manner of sale provisions and notice requirements and to the availability of currentpublic information about us.Rule 701 In general, under Rule 701, any of our employees, directors, officers, consultants or advisors who purchased shares from us in connection with acompensatory stock or option plan or other written agreement before the effective date of this offering, or who purchased shares from us after thatdate upon the exercise of options granted before that date, are eligible to resell such shares in reliance upon Rule 144 beginning 90 days after the dateof this prospectus. If such person is not an affiliate, the sale may be made subject only to the manner- of- sale restrictions of Rule 144. If such aperson is an affiliate, the sale may be made under Rule 144 without compliance with its oneyear minimum holding period, but subject to the otherRule 144 restrictions.Registration Rights As described above in "Certain Relationships and Related Party Transactions- Registration Rights Agreement," following the completion of thisoffering, subject to the 180- day lock- up period described below, holders of an aggregate of 28,970,969 shares (including 1,930,822 shares issuableupon exercise of outstanding warrants) will be entitled, subject to certain exceptions, to certain rights with respect to the registration under theSecurities Act of the shares of common stock held by them. By exercising their registration rights and causing a large number of shares to beregistered and sold in the public market, these holders could cause the price of the Class A common stock to fall. In addition, any demand to includesuch shares in our registration statements could have a material adverse effect on our ability to raise needed capital. We have not granted holders ofour securities any registration rights other than pursuant to the Registration Rights Agreement.Stock Plans We intend to file one or more registration statements on Form S- 8 under the Securities Act to register shares of our common stock issued orreserved for issuance under our 2007 Equity Compensation Plan and 2013 Long- Term Incentive Plan. The first such registration statement isexpected to be filed soon after the date of this prospectus and will automatically become effective upon filing with the SEC. Accordingly, sharesregistered under such registration statement will be available for sale in the open market following the effective date, unless such shares are subject tovesting restrictions with us, Rule 144 restrictions applicable to our affiliates or the lock- up restrictions described below.Lock- Up Agreements We, each of our directors and executive officers and substantially all stockholders have agreed that, without the prior written consent of CreditSuisse Securities (USA) LLC, we and they will not (subject to certain exceptions), during the period ending 180 days after the date of this prospectus(subject to certain extensions):

offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant anyoption, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of common stockor any other securities convertible into or exercisable or exchangeable for common stock; or

enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences ofownership of the common stock;

whether any transaction described above is to be settled by delivery of shares of our common stock or such other securities, in cash or otherwise. Foradditional information, see "Underwriting."

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MATERIAL U.S. FEDERAL INCOME AND ESTATETAX CONSIDERATIONS TO NON- U.S. HOLDERS

The following is a summary of the material U.S. federal income and estate tax consequences of the purchase, ownership and disposition of ourClass A common stock to a non- U.S. holder that purchases shares of our Class A common stock in this offering. This summary applies only to a non-U.S. holder that holds our Class A common stock as a capital asset, within the meaning of Section 1221 of the U.S. Internal Revenue Code of 1986,as amended (the "Code"). For purposes of this summary, a "non- U.S. holder" means any beneficial owner of our Class A common stock other than:

a citizen or individual resident of the United States, as defined for U.S. federal income tax purposes;

a corporation or other entity treated as a corporation for U.S. federal income tax purposes created or organized in the UnitedStates or under the laws of the United States or any political subdivision thereof;

an estate whose income is subject to U.S. federal income tax regardless of its source;

a trust if it (1) is subject to the primary supervision of a court within the United States and one or more United States persons(within the meaning of Section 7701(a)(30) of the Code) have the authority to control all substantial decisions of the trust or(2) has a valid election in place to be treated as a U.S. person for U.S. federal income tax purposes; or

a partnership.

In the case of a holder that is classified as a partnership for U.S. federal income tax purposes, the tax treatment of a partner in such partnershipgenerally will depend upon the status of the partner and the activities of the partner and the partnership. If you are a partner in a partnership holdingour common stock, then you should consult your own tax advisor. This summary is based upon the provisions of the Code, the regulations promulgated thereunder and administrative and judicial interpretationsthereof, all as of the date hereof. Those authorities may be changed, perhaps retroactively, so as to result in U.S. federal income tax consequencesdifferent from those summarized below. We cannot assure you that a change in law, possibly with retroactive application, will not alter significantlythe tax considerations that we describe in this summary. We have not sought and do not plan to seek any ruling from the U.S. Internal RevenueService, or the "IRS," with respect to statements made and the conclusions reached in the following summary, and there can be no assurance that theIRS or a court will agree with our statements and conclusions. This summary does not address all aspects of U.S. federal income taxes that may be relevant to non- U.S. holders in light of their personalcircumstances, and does not address federal taxes, other than the U.S. federal income tax, and the U.S. federal estate tax or non- U.S., state or localtax considerations. Special rules, not discussed here, may apply to certain non- U.S. holders, including:

former citizens or residents of the U.S.;

brokers or dealers in securities;

persons who hold our common stock as a position in a "straddle," "conversion transaction" or other risk reduction transaction;

persons who have engaged in swaps or other derivative transactions with respect to our common stock;

controlled foreign corporations, passive foreign investment companies, or corporations that accumulate earnings to avoid U.S.federal income tax;

tax- exempt organizations;

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banks, insurance companies, or other financial institutions; and

investors in passthrough entities that are subject to special treatment under the Code.

Such non- U.S. holders should consult their own tax advisors to determine the U.S. federal, state, local and other tax consequences that may berelevant to them.

If you are considering the purchase of our Class A common stock, you should consult your own tax advisor concerning the particularU.S. federal income tax consequences to you of the purchase, ownership and disposition of our Class A common stock, as well as theconsequences to you arising under U.S. tax laws other than the federal income tax law or under the laws of any other taxing jurisdiction.Dividends Any distribution of cash or property (other than certain distributions of stock) with respect to our common stock (and certain redemptions thatare treated as distributions with respect to common stock) will be treated as a dividend for U.S. federal income tax purposes to the extent paid fromour current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Dividends paid to you generally will besubject to withholding of U.S. federal income tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty. However,dividends that are effectively connected with the conduct of a trade or business by you within the U.S. and, where a tax treaty applies, which aregenerally attributable to a U.S. permanent establishment, are not subject to the withholding tax, but instead are subject to U.S. federal income tax on anet income basis at applicable graduated individual or corporate rates. Certain certification and disclosure requirements including delivery of aproperly executed IRS Form W- 8ECI must be satisfied for effectively connected income to be exempt from withholding. Any such effectivelyconnected dividends received by a foreign corporation may be subject to an additional "branch profits tax" at a 30% rate or such lower rate as may bespecified by an applicable income tax treaty. If the amount of a distribution paid on our common stock exceeds our current and accumulated earnings and profits, such excess will beallocated ratably among each share of common stock with respect to which the distribution is paid and treated first as a tax- free return of capital tothe extent of your adjusted tax basis in each such share, and thereafter as capital gain from a sale or other disposition of such share of common stockthat is taxed to you as described below under the heading "Gain on Disposition of Class A Common Stock." Your adjusted tax basis is generally thepurchase price of such shares, reduced by the amount of any such tax- free returns of capital. If you wish to claim the benefit of an applicable treaty rate to avoid or reduce withholding of U.S. federal income tax for non- effectivelyconnected dividends, then you must (a) provide the withholding agent with a properly completed IRS Form W- 8BEN (or other applicable form) andcertify under penalties of perjury that you are not a U.S. person and are eligible for treaty benefits, or (b) if our common stock is held through certainforeign intermediaries, satisfy the relevant certification requirements of applicable U.S. Treasury regulations. Special certification and otherrequirements apply to certain non- U.S. holders that act as intermediaries (including partnerships). If you are eligible for a reduced rate of U.S. federal income tax pursuant to an income tax treaty, then you may obtain a refund or credit of anyexcess amounts withheld by filing timely an appropriate claim with the IRS.

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Table of ContentsGain on Disposition of Class A Common Stock You generally will not be subject to U.S. federal income tax with respect to gain realized on the sale or other taxable disposition of our commonstock, unless:

the gain is effectively connected with a trade or business you conduct in the U.S., and, in cases in which certain tax treaties apply,is attributable to a U.S. permanent establishment;

if you are an individual, you are present in the U.S. for 183 days or more in the taxable year of the sale or other taxabledisposition, and you have a "tax home" (as defined in the Code) in the U.S.; or

we are or have been during a specified testing period a "U.S. real property holding corporation" for U.S. federal income taxpurposes, and certain other conditions are met.

Generally, we will be a "U.S. real property holding corporation" if the fair market value of our U.S. real property interests equals or exceeds50% of the sum of the fair market values of our worldwide real property interests and other assets used or held for use in a trade or business, all asdetermined under applicable U.S. Treasury regulations. We believe that we have not been and are not, and we do not anticipate becoming, a "U.S.real property holding corporation" for U.S. federal income tax purposes. Even if we are treated as a "U.S. real property holding corporation," gainrealized by you on a disposition of our common stock will not be subject to U.S. federal income tax so long as (1) you owned, directly, indirectly andconstructively, no more than 5% of our common stock at all times within the shorter of (i) the five- year period preceding the disposition or (ii) yourholding period and (2) our common stock is regularly traded on an established securities market (as determined under the Code). There can be noassurance that our Class A common stock will continue to qualify as regularly traded on an established securities market. If you are an individual described in the first bullet point above, you will be subject to tax on the net gain derived from the sale under regulargraduated U.S. federal income tax rates. Such gains from the sale of shares that have been held for more than 12 months may be taxed at reducedrates. If you are an individual described in the second bullet point above, you will be subject to a flat 30% tax on the gain derived from the sale,which may be offset by U.S. source capital losses (even though you generally are not considered a resident of the U.S.) but may not be offset by anycapital loss carryovers. If you are a foreign corporation described in the first bullet point above, you will be subject to tax on your gain under regulargraduated U.S. federal income tax rates and, in addition, may be subject to the branch profits tax equal to 30% of your effectively connected earningsand profits or at such lower rate as may be specified by an applicable income tax treaty.Information Reporting and Backup Withholding Tax We must report annually to the IRS and to you the amount of dividends paid to you and the amount of tax, if any, withheld with respect to suchdividends. The IRS may make this information available to the tax authorities in the country in which you are resident. In addition, you may be subject to information reporting requirements and backup withholding tax (currently at a rate of 28%) with respect todividends paid on, and the proceeds of disposition of, shares of our common stock, unless, generally, you certify under penalties of perjury (usuallyon IRS Form W- 8BEN) that you are not a U.S. person or you otherwise establish an exemption. Additional rules relating to information reportingrequirements and backup withholding tax with respect to payments of the proceeds from the disposition of shares of our common stock are asfollows:

If the proceeds are paid to or through the U.S. office of a broker, the proceeds generally will be subject to backup withholding taxand information reporting, unless you certify under penalties of perjury (usually on IRS Form W- 8BEN) that you are not a U.S.person or you otherwise establish an exemption.

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If the proceeds are paid to or through a non- U.S. office of a broker that is not a U.S. person and is not a foreign person withcertain specified U.S. connections, or a "U.S.- related person," information reporting and backup withholding tax generally willnot apply.

If the proceeds are paid to or through a non- U.S. office of a broker that is a U.S. person or a U.S.- related person, the proceedsgenerally will be subject to information reporting (but not to backup withholding tax), unless you certify under penalties ofperjury (usually on IRS Form W- 8BEN) that you are not a U.S. person or you otherwise establish an exemption.

Any amounts withheld under the backup withholding tax rules may be allowed as a refund or a credit against your U.S. federal income taxliability, provided the required information is timely furnished by you to the IRS.Federal Estate Tax Common stock owned or treated as owned by an individual who is not a citizen or resident (as defined for U.S. federal estate tax purposes) ofthe United States at the time of his or her death will be included in the individual's gross estate for U.S. federal estate tax purposes and therefore maybe subject to U.S. federal estate tax unless an applicable treaty provides otherwise.Foreign Account Tax Compliance Act Under the Foreign Account Tax Compliance Act, or FATCA, a 30% withholding tax will generally apply to dividends on, or gross proceedsfrom the sale or other disposition of, common stock paid to a foreign financial institution unless the foreign financial institution (i) enters into anagreement with the U.S. Treasury to, among other things, undertake to identify accounts held by certain U.S. persons or U.S.- owned foreign entities,annually report certain information about such accounts, and withhold 30% on payments to account holders whose actions prevent it from complyingwith these reporting and other requirements or (ii) is resident in a country that has entered into an intergovernmental agreement with the United Statesin relation to such withholding and information reporting and the financial entity complies with related information reporting requirements of suchcountry. A foreign financial institution generally is a foreign entity that (i) accepts deposits in the ordinary course of a banking or similar business,(ii) as a substantial portion of its business, holds financial assets for the benefit of one or more other persons, or (iii) is an investment entity that, ingeneral, primarily conducts as a business on behalf of customers trading in certain financial instruments, individual or collective portfoliomanagement or otherwise investing, administering, or managing funds, money or certain financial assets on behalf of other persons. In addition,FATCA generally imposes a 30% withholding tax on the same types of payments to a foreign non- financial entity unless the entity certifies that itdoes not have any substantial U.S. owners or furnishes identifying information regarding each substantial U.S. owner. In either case, such paymentswould include U.S.- source dividends and the gross proceeds from the sale or other disposition of stock that can produce U.S.- source dividends. Byits terms, FATCA generally applies to payments of dividends on, or gross proceeds from the sale or disposition of, common stock made afterDecember 31, 2012. However, the IRS has issued guidance that defers the application of FATCA's withholding obligations to payments of dividendsmade on or after January 1, 2014, and payments of gross proceeds made on or after January 1, 2017. On January 17, 2013, the IRS and Treasury Department released final Treasury regulations that provide detailed guidance regarding thereporting, withholding and other obligations under FATCA. Investors should consult their tax advisors regarding the possible impact of the FATCArules on their investment in our common stock, including, without limitation, the process and deadlines for meeting the applicable requirements toprevent the imposition of the 30% withholding tax under FATCA.

THE SUMMARY OF MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES ABOVE IS INCLUDED FOR GENERALINFORMATION PURPOSES ONLY. POTENTIAL PURCHASERS OF OUR CLASS A COMMON STOCK ARE URGED TO CONSULTTHEIR OWN TAX ADVISORS TO DETERMINE THE U.S. FEDERAL, STATE, LOCAL AND NON- U.S. TAX CONSIDERATIONS OFPURCHASING, OWNING AND DISPOSING OF OUR CLASS A COMMON STOCK.

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UNDERWRITING Under the terms and subject to the conditions contained in an underwriting agreement dated [ ], 2013, we and the selling stockholders haveagreed to sell to the underwriters named below, for whom Credit Suisse Securities (USA) LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated,Jefferies LLC and William Blair & Company, L.L.C. are acting as representatives, the following respective numbers of shares of Class A commonstock:

UnderwriterNumber of

SharesCredit Suisse Securities (USA) LLCMerrill Lynch, Pierce, Fenner & Smith IncorporatedJefferies LLCWilliam Blair & Company, L.L.C. BB&T Capital Markets, a division of BB&T Securities, LLCGuggenheim Securities, LLCOppenheimer & Co. Inc.Wolfe Trahan SecuritiesMorgan Joseph TriArtisan LLC

Total 13,650,000

The underwriting agreement provides that the underwriters are obligated to purchase all the shares of Class A common stock in the offering ifany are purchased, other than those shares covered by the over- allotment option described below. The underwriting agreement also provides that ifan underwriter defaults the purchase commitments of non- defaulting underwriters may be increased or the offering may be terminated. Certain of our stockholders have granted to the underwriters a 30- day option to purchase on a pro rata basis up to 2,047,500 additional shares ofClass A common stock at the initial public offering price less the underwriting discounts and commissions. The option may be exercised only tocover any over- allotments of Class A common stock. The underwriters propose to offer the shares of Class A common stock initially at the public offering price on the cover page of this prospectusand to selling group members at that price less a selling concession of $[ ] per share. After the initial public offering, the representatives maychange the public offering price and concession. The following table summarizes the compensation and estimated expenses we and the selling stockholders will pay:

Per Share TotalWithout

Over-allotment

WithOver-

allotment

WithoutOver-

allotment

WithOver-

allotmentUnderwriting Discounts and Commissions paid by us $ $ $ $Expenses payable by us $ $ $ $Underwriting Discounts and Commissions paid by the selling stockholders $ $ $ $ The underwriters have informed us that they do not expect sales to accounts over which the underwriters have discretionary authority to exceed5% of the shares of common stock being offered.

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Table of Contents We have agreed that we will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, or file with the Securities andExchange Commission a registration statement under the Securities Act relating to, any shares of our common stock or securities convertible into orexchangeable or exercisable for any shares of our common stock, or publicly disclose the intention to make any offer, sale, pledge, disposition orfiling, without the prior written consent of Credit Suisse Securities (USA) LLC for a period of 180 days after the date of this prospectus, provided thisshall not apply to offers, sales and issuances of up to 5% of our Class A common stock outstanding after giving effect to the consummation of theoffering contemplated hereby and the issuance of shares of Class B common stock in exchange for outstanding preferred shares (along with theautomatic conversion of a portion of such shares into shares of Class A common stock), as consideration or partial consideration for acquisitions ofbusinesses, in connection with the formation of joint ventures or to a lessor, provided that such Class A common stock issued is subject to the termsof an agreement limiting its disposition on or prior to such issuance. Our officers and directors and substantially all our stockholders, including the selling stockholders, have agreed that they will not offer, sell,contract to sell, pledge or otherwise dispose of, directly or indirectly, any shares of our common stock or securities convertible into or exchangeableor exercisable for any shares of our common stock, enter into a transaction that would have the same effect, or enter into any swap, hedge or otherarrangement that transfers, in whole or in part, any of the economic consequences of ownership of our common stock, whether any of thesetransactions are to be settled by delivery of our common stock or other securities, in cash or otherwise, or publicly disclose the intention to make anyoffer, sale, pledge or disposition, or to enter into any transaction, swap, hedge or other arrangement, without, in each case, the prior written consent ofCredit Suisse Securities (USA) LLC for a period of 180 days after the date of this prospectus. We and the selling stockholders have agreed to indemnify the underwriters against liabilities under the Securities Act, or contribute to paymentsthat the underwriters may be required to make in that respect. We have applied to list the shares of Class A common stock on the NASDAQ Global Market under the symbol "FWM". In connection with the offering, the underwriters may engage in stabilizing transactions, over- allotment transactions, syndicate coveringtransactions and penalty bids in accordance with Regulation M under the Exchange Act.

Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specifiedmaximum.

Over- allotment involves sales by the underwriters of shares in excess of the number of shares the underwriters are obligated topurchase, which creates a syndicate short position. The short position may be either a covered short position or a naked shortposition. In a covered short position, the number of shares over- allotted by the underwriters is not greater than the number ofshares that they may purchase in the over- allotment option. In a naked short position, the number of shares involved is greaterthan the number of shares in the over- allotment option. The underwriters may close out any covered short position by eitherexercising their over- allotment option and/or purchasing shares in the open market.

Syndicate covering transactions involve purchases of the common stock in the open market after the distribution has beencompleted in order to cover syndicate short positions. In determining the source of shares to close out the short position, theunderwriters will consider, among other things, the price of shares available for purchase in the open market as compared to theprice at which they may purchase shares through the over- allotment option. If the underwriters sell more shares than could becovered by the over- allotment option, a naked short position, the position

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can only be closed out by buying shares in the open market. A naked short position is more likely to be created if the underwritersare concerned that there could be downward pressure on the price of the shares in the open market after pricing that couldadversely affect investors who purchase in the offering.

Penalty bids permit the representatives to reclaim a selling concession from a syndicate member when the common stockoriginally sold by the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate shortpositions.

These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price ofour Class A common stock or preventing or retarding a decline in the market price of the Class A common stock. As a result, the price of our Class Acommon stock may be higher than the price that might otherwise exist in the open market. These transactions may be effected on the NASDAQGlobal Market or otherwise and, if commenced, may be discontinued at any time. A prospectus in electronic format will be made available on the web sites maintained by one or more of the underwriters, or selling groupmembers, if any, participating in this offering and one or more of the underwriters participating in this offering may distribute prospectuseselectronically. The representatives may agree to allocate a number of shares to underwriters and selling group members for sale to their onlinebrokerage account holders. Internet distributions will be allocated by the underwriters and selling group members that will make internet distributionson the same basis as other allocations.Reserved Share Program At our request, the underwriters have reserved for sale, at the initial public offering price, up to 682,500 of the shares offered by this prospectusfor sale to some of our directors, officers, employees and related persons. If these persons purchase reserved shares it will reduce the number ofshares available for sale to the general public. Any reserved shares that are not so purchased will be offered by the underwriters to the general publicon the same terms as the other shares offered by this prospectus.Relationships with the Underwriters The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securitiestrading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging,financing and brokerage activities. Certain of the underwriters and their respective affiliates have, from time to time, performed, and may in the futureperform, various financial advisory and investment banking services for us, for which they received or will receive customary fees and expenses. Inparticular, under our Senior Credit Facility, Credit Suisse AG, an affiliate of Credit Suisse Securities (USA) LLC, acts as administrative agent,collateral agent and a lender, Bank of America, N.A., an affiliate of Merrill Lynch, Pierce, Fenner & Smith Incorporated, acted as syndication agentand a lender and Jefferies Finance LLC, an affiliate of Jefferies LLC, acted as documentation agent and a lender. In the ordinary course of theirvarious business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt andequity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of theircustomers and such investment and securities activities may involve securities and/or instruments of the issuer. The underwriters and their respectiveaffiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities orinstruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments. Suchinvestment and securities activities may involve securities and instruments of the issuer.

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Table of ContentsForeign Selling Restrictions

Notice to Prospective Investors in the European Economic Area

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a "Relevant MemberState"), with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the "RelevantImplementation Date"), no offer of shares of our Class A common stock may be made to the public in that Relevant Member State other than:

A.to any legal entity which is a qualified investor as defined in the Prospectus Directive;

B.to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive,150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under theProspectus Directive, subject to obtaining the prior consent of the representatives; or

C.in any other circumstances falling within Article 3(2) of the Prospectus Directive,

provided that no such offer of shares of our Class A common stock shall require us or the representatives to publish a prospectus pursuantto Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.

Each person in a Relevant Member State who initially acquires any shares of our Class A common stock or to whom any offer is made will bedeemed to have represented, acknowledged and agreed that (A) it is a "qualified investor" within the meaning of the law in that Relevant MemberState implementing Article 2(1)(e) of the Prospectus Directive, and (B) in the case of any shares of our Class A common stock acquired by it as afinancial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, the shares of our Class A common stock acquired by it in theoffering have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant MemberState other than "qualified investors" as defined in the Prospectus Directive, or in circumstances in which the prior consent of the representatives hasbeen given to the offer or resale. In the case of any shares of our Class A common stock being offered to a financial intermediary as that term is usedin Article 3(2) of the Prospectus Directive, each such financial intermediary will be deemed to have represented, acknowledged and agreed that theshares of our Class A common stock acquired by it in the offer have not been acquired on a non- discretionary basis on behalf of, nor have they beenacquired with a view to their offer or resale to, persons in circumstances which may give rise to an offer of any shares of our Class A common stockto the public other than their offer or resale in a Relevant Member State to qualified investors as so defined or in circumstances in which the priorconsent of the representatives has been obtained to each such proposed offer or resale. We, the representatives and their affiliates will rely upon the truth and accuracy of the foregoing representation, acknowledgement andagreement. This prospectus has been prepared on the basis that any offer of shares of our Class A common stock in any Relevant Member State will bemade pursuant to an exemption under the Prospectus Directive from the requirement to publish a prospectus for offers of such shares. Accordinglyany person making or intending to make an offer in that Relevant Member State of shares of our Class A common stock which are the subject of theoffering contemplated in this prospectus may only do so in circumstances in which no obligation arises for us or any of the underwriters to publish aprospectus pursuant to Article 3 of the Prospectus Directive in relation to such offer. Neither we nor the underwriters have authorized, nor do theyauthorize, the making of any offer of shares of our Class A common stock in circumstances in which an obligation arises for us or the underwriters topublish a prospectus for such offer. For the purpose of the above provisions, the expression "an offer to the public" in relation to any shares of our Class A common stock in anyRelevant Member State means the communication in any

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Table of Contentsform and by any means of sufficient information on the terms of the offer and the shares of our Class A common stock to be offered so as to enablean investor to decide to purchase or subscribe such shares, as the same may be varied in the Relevant Member State by any measure implementing theProspectus Directive in the Relevant Member State and the expression "Prospectus Directive" means Directive 2003/71/EC (including the 2010 PDAmending Directive, to the extent implemented in the Relevant Member States) and includes any relevant implementing measure in the RelevantMember State and the expression "2010 PD Amending Directive" means Directive 2010/73/EU.

Notice to Prospective Investors in the United Kingdom

In addition, in the United Kingdom, this document is being distributed only to, and is directed only at, and any offer subsequently made mayonly be directed at persons who are "qualified investors" (as defined in the Prospectus Directive) (i) who have professional experience in mattersrelating to investments falling within Article 19 (5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended(the "Order") and/or (ii) who are high net worth companies (or persons to whom it may otherwise be lawfully communicated) falling withinArticle 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons"). This document must not be acted on or reliedon in the United Kingdom by persons who are not relevant persons. In the United Kingdom, any investment or investment activity to which thisdocument relates is only available to, and will be engaged in with, relevant persons.

Notice to Prospective Investors in Switzerland

The shares of our Class A common stock may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange ("SIX")or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosurestandards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectusesunder art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither thisdocument nor any other offering or marketing material relating to the shares of our Class A common stock or the offering may be publicly distributedor otherwise made publicly available in Switzerland. Neither this document nor any other offering or marketing material relating to the offering, Fairway, the shares of our Class A common stockhave been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer ofshares of our Class A common stock will not be supervised by, the Swiss Financial Market Supervisory Authority (FINMA), and the offer of sharesof our Class A common stock has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes ("CISA"). Theinvestor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of shares of ourClass A common stock.

Notice to Prospective Investors in the Dubai International Financial Centre

This prospectus relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority ("DFSA").This prospectus is intended for distribution only to persons of a type specified in the Offered Securities Rules of the DFSA. It must not be deliveredto, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers.The DFSA has not approved this prospectus nor taken steps to verify the information set forth herein and has no responsibility for the prospectus. Theshares of our Class A common stock to which this prospectus relates may be illiquid and/or subject to restrictions on their resale. Prospectivepurchasers of the shares of our Class A common stock offered should conduct their own due diligence on such shares. If you do not understand thecontents of this prospectus you should consult an authorized financial advisor.

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LEGAL MATTERS The validity of the shares of Class A common stock offered by this prospectus will be passed upon for us by Fulbright & Jaworski L.L.P., NewYork, New York. The underwriters have been represented by Shearman & Sterling LLP, New York, New York.

EXPERTS The consolidated financial statements of Fairway Group Holdings Corp. as of April 1, 2012 and April 3, 2011 and for each of the three fiscalyears in the period ended April 1, 2012, included in this prospectus and registration statement have been so included in reliance upon the report ofGrant Thornton LLP, independent registered public accounting firm, upon the authority of said firm as experts in accounting and auditing. The summary of the market research conducted for us by Buxton Company contained in "Prospectus Summary- Our Growth Strategy","Management's Discussion and Analysis of Financial Condition and Results of Operations- Outlook" and "Business- Our Growth Strategy" and"Business- Our Market" has been reviewed by Buxton Company, which has confirmed to us that those sections accurately describe the marketinformation contained therein as indicated in the consent of Buxton Company filed as an exhibit to the registration statement on Form S- 1 under theSecurities Act of which this prospectus is a part.

WHERE YOU CAN FIND MORE INFORMATION We have filed with the SEC a registration statement on Form S- 1 under the Securities Act that registers the shares of our Class A common stockto be sold in this offering. The registration statement, including the attached exhibits, contains additional relevant information about us and ourClass A common stock. The rules and regulations of the SEC allow us to omit from this document certain information included in the registrationstatement. You may read and copy the reports and other information we file with the SEC at the SEC's Public Reference Room at 100 F Street, N.E.,Room 1580, Washington, D.C. 20549. You may also obtain copies of this information by mail from the public reference section of the SEC, 100 FStreet, N.E., Washington, D.C. 20549, at prescribed rates. You may obtain information regarding the operation of the public reference room bycalling 1- 800- SEC- 0330. The SEC also maintains a website that contains reports, proxy statements and other information about issuers, like us,who file electronically with the SEC. The address of that website is http://www.sec.gov. This reference to the SEC's website is an inactive textualreference only and is not a hyperlink. Upon completion of this offering, we will become subject to the reporting, proxy and information requirements of the Exchange Act, and as aresult will be required to file periodic reports, proxy statements and other information with the SEC. These periodic reports, proxy statements andother information will be available for inspection and copying at the SEC's public reference room and the website of the SEC referred to above, aswell as on our website, without charge, at http://www.fairwaymarket.com. This reference to our website is an inactive textual reference only and isnot a hyperlink. The contents of our website are not part of this prospectus, and you should not consider the contents of our website in making aninvestment decision with respect to our common stock. We intend to furnish our stockholders with annual reports containing audited financial statements and make available to our stockholdersquarterly reports for the first three quarters of each fiscal year containing unaudited interim financial information.

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TABLE OF CONTENTSPage

Report of Independent Registered Public Accounting Firm F- 2Consolidated Financial StatementsConsolidated Balance Sheets

F- 3Consolidated Statements of Operations

F- 4Consolidated Statements of Changes in Redeemable Preferred Stock and Stockholders' Deficit

F- 5Consolidated Statements of Cash Flows

F- 6Notes to Consolidated Financial Statements

F- 7 - 39

F- 1

Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and StockholdersFairway Group Holdings Corp.

We have audited the accompanying consolidated balance sheets of Fairway Group Holdings Corp. (a Delaware corporation) and subsidiaries(the "Company") as of April 1, 2012 and April 3, 2011, and the related consolidated statements of operations, changes in redeemable preferred stockand stockholders' deficit, and cash flows for each of the three fiscal years in the period ended April 1, 2012. These consolidated financial statementsare the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based onour audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit includedconsideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but notfor the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express nosuch opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statementpresentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of FairwayGroup Holdings Corp. and subsidiaries as of April 1, 2012 and April 3, 2011, and the results of their operations and their cash flows for each of thethree fiscal years in the period ended April 1, 2012, in conformity with accounting principles generally accepted in the United States of America.GRANT THORNTON LLPMelville, New YorkJune 1, 2012 (except for Note 18, as to which the date is March 28, 2013) The foregoing auditor's report is in the form that will be signed upon the consummation of the transaction described in Note 18 to theconsolidated financial statements./s/ GRANT THORNTON LLPMelville, New YorkJune 1, 2012

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FAIRWAY GROUP HOLDINGS CORP. AND SUBSIDIARIESConsolidated Balance Sheets

(In thousands, except share and per share amounts)April 3,

2011April 1,

2012December 30,

2012(unaudited)

ASSETSCURRENT ASSETSCash and cash equivalents $ 58,067 $ 30,172 $ 29,172Accounts receivable, net 2,751 2,282 3,456Merchandise inventories 18,727 19,960 24,062Insurance claims receivable - - 5,472Income taxes receivable 557 709 825Prepaid rent 1,628 2,533 3,347Deferred financing fees 1,056 1,183 1,416Prepaid expenses and other 1,647 2,062 5,514Deferred income taxes 1,227 1,657 1,751

Total current assets 85,660 60,558 75,015

PROPERTY AND EQUIPMENT, NET 66,586 93,937 120,352GOODWILL 95,412 95,412 95,412INTANGIBLE ASSETS, NET 27,722 26,008 25,734DEFERRED INCOME TAXES 20,570 28,837 2,280OTHER ASSETS 17,715 16,838 20,385

Total assets $ 313,665 $ 321,590 $ 339,178

LIABILITIES, REDEEMABLEPREFERRED STOCK ANDSTOCKHOLDERS' DEFICITCURRENT LIABILITIESCurrent portion of long- term debt $ 15,438 $ 2,000 $ 2,600Accounts payable 22,344 26,016 38,174Accrued expenses and other 12,907 14,841 18,132

Total current liabilities 50,689 42,857 58,906NONCURRENT LIABILITIESLong- term debt, net of current maturities(inclusive of amounts due to related partiesof $21,021, $7,333 and $7,333 at April 3,2011, April 1, 2012 and December 30,2012, respectively) 178,859 201,552 252,027Other long- term liabilities 8,984 14,122 21,282

Total liabilities 238,532 258,531 332,215

COMMITMENTS ANDCONTINGENCIESREDEEMABLE PREFERRED STOCKSeries A Preferred Stock, $0.001 par valueper share, 52,982 shares authorized and43,058 shares issued and outstanding(inclusive of cumulative deemed dividendsof $9,873, $17,805 and $25,752 at April 3,2011, April 1, 2012 and December 30,2012, respectively) 65,848 73,780 81,727Series B Preferred Stock, $0.001 par valueper share, 64,018 shares authorized,64,016.98 issued and outstanding (inclusiveof cumulative deemed dividends of$49,830, $66,626 and $80,789 at April 3,2011, April 1, 2012 and December 30,2012, respectively) 113,847 130,643 144,806

Total redeemable preferred stock 179,695 204,423 226,533

STOCKHOLDERS' DEFICITClass A common stock, $0.00001 par valueper share, 150,000,000 shares authorized,12,267,711, 12,506,833 and 12,506,833shares issued and outstanding at April 3,2011, April 1, 2012 and December 30,2012, respectively - - -Class B common stock, $0.001 par valueper share, 31,000,000 shares authorized, noshares issued and outstanding at April 3,

- - -

2011, April 1, 2012 and December 30,2012Accumulated deficit (104,562) (141,364) (219,570)

Total stockholders' deficit (104,562) (141,364) (219,570)

Total liabilities, redeemable preferred stockand stockholders' deficit $ 313,665 $ 321,590 $ 339,178

The accompanying notes are an integral part of these financial statements.F- 3

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FAIRWAY GROUP HOLDINGS CORP. AND SUBSIDIARIESConsolidated Statements of Operations

(In thousands, except share and per share amounts)Fiscal Years Ended Thirty- Nine Weeks Ended

March 28,2010

April 3,2011

April 1,2012 January 1, 2012

December 30,2012

(unaudited) (unaudited)Net sales $ 401,167 $ 485,712 $ 554,858 $ 404,527 $ 482,539Cost of sales andoccupancy costs(exclusive ofdepreciation andamortization) 271,599 326,207 368,728 269,641 326,808

Gross profit 129,568 159,505 186,130 134,886 155,731Direct storeexpenses 85,840 109,867 132,446 97,659 111,362General andadministrativeexpenses 34,676 40,038 44,331 30,598 39,746Store openingcosts 3,949 10,006 12,688 11,181 19,349

Income (loss)from operations 5,103 (406) (3,335) (4,552) (14,726)Businessinterruptioninsurancerecoveries - - - - 2,500Interest expense,net (13,787) (19,111) (16,918) (12,370) (17,439)Loss on earlyextinguishment ofdebt 2,837 13,931 - - -

Loss beforeincome taxes (11,521) (33,448) (20,253) (16,922) (29,665)Income tax benefit(provision) 4,426 14,860 8,304 6,940 (26,514)

Net loss (7,095) (18,588) (11,949) (9,982) (56,179)Preferred stockdividends (16,655) (20,433) (24,728) (18,536) (22,110)

Net lossattributable tocommonstockholders $ (23,750) $ (39,021) $ (36,677) $ (28,518) $ (78,289)

Basic and dilutednet loss percommon share $ (1.95) $ (3.22) $ (3.01) $ (2.33) $ (6.35)

Weighted averagecommon sharesoutstanding 12,190,001 12,122,114 12,188,582 12,245,221 12,324,213


Table of ContentsFAIRWAY GROUP HOLDINGS CORP. AND SUBSIDIARIES

Consolidated Statements of Changes in Redeemable Preferred Stock and Stockholders' Deficit(In thousands, except share amounts)

REDEEMABLE PREFERRED STOCK STOCKHOLDERS' DEFICIT

Series APreferred Stock

Series BPreferred Stock Common Stock Additional

Paid- inCapital

AccumulatedDeficitShares Amount Shares Amount Total Shares Amount Total

Balance atMarch 29,2009 20,620 $34,098 64,016.98 $86,632 $120,730 12,174,864 $- $ - $(41,792) $(41,792)Issuanceofcommonstock - - - - - 30,475 - - - -Issuanceofpreferredstock, netof issuancecosts 9,650 9,409 - - 9,409 - - - - -Deemeddividendsonpreferredstock - 3,914 - 12,741 16,655 - - - (16,655) (16,655)Purchaseof treasurystock - - - - - (61,305) - - - -Net loss - - - - - - - - (7,095) (7,095)

Balance atMarch 28,2010 30,270 47,421 64,016.98 99,373 146,794 12,144,034 - - (65,542) (65,542)Issuanceofcommonstock - - - - - 129,725 - 1 - 1Issuanceofpreferredstock, netof issuancecosts 12,788 12,468 - - 12,468 - - - - -Deemeddividendsonpreferredstock 5,959 - 14,474 20,433 - - (1) (20,432) (20,433)Purchaseof treasurystock - - - - - (6,048) - - - -Net loss - - - - - - - - (18,588) (18,588)

Balance atApril 3,2011 43,058 65,848 64,016.98 113,847 179,695 12,267,711 - - (104,562) (104,562)Issuanceofcommonstock - - - - - 288,214 - 3 - 3Purchaseof treasurystock - - - - - (49,092) - - - -Non- cashstockcompensationexpense - - - - - - - 437 - 437

Deemeddividendsonpreferredstock - 7,932 - 16,796 24,728 - - (440) (24,288) (24,728)Unamortizeddiscountrelated toprepaymentof relatedparty debt,net ofincometaxes - - - - - - - - (565) (565)Net loss - - - - - - - - (11,949) (11,949)

Balance atApril 1,2012 43,058 $73,780 64,016.98 $130,643 $204,423 12,506,833 $- $ - $(141,364) $(141,364)

Non- cashstockcompensationexpense - - - - - - - 83 - 83Deemeddividendsonpreferredstock - 7,947 - 14,163 22,110 - - (83) (22,027) (22,110)Net loss - - - - - - - - (56,179) (56,179)

Balance atDecember 30,2012(unaudited) 43,058 $81,727 64,016.98 $144,806 $226,533 $12,506,833 $- $ - $(219,570) $(219,570)


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FAIRWAY GROUP HOLDINGS CORP. AND SUBSIDIARIESConsolidated Statements of Cash Flows

(In thousands)Fiscal Years Ended Thirty- Nine Weeks Ended

March 28,2010

April 3,2011

April 1,2012

January 1,2012

December 30,2012

(unaudited) (unaudited)CASH FLOWSFROMOPERATINGACTIVITIESNet loss $ (7,095) $ (18,588) $ (11,949) $ (9,982) $ (56,179)Adjustments toreconcile net loss tonet cash provided by(used in) operatingactivitiesLoss on earlyextinguishment ofdebt 2,837 13,931 - - -Deferred incometaxes (4,930) (14,578) (8,304) (6,974) 26,463Deferred rent - 5,317 6,196 7,159 7,498Depreciation andamortization ofproperty andequipment 8,942 13,277 17,177 12,319 15,389Amortization ofintangibles 981 1,000 1,714 1,385 274Amortization ofdiscount on termloans andsubordinated notes 448 660 339 241 943Amortization ofdeferred financingfees 758 1,654 1,108 812 978Amortization ofprepaid rent 311 311 311 233 237Non- cash stockcompensationexpense - - 437 329 83Changes in operatingassets and liabilitiesAccounts receivable (541) (1,632) 469 670 (1,174)Merchandiseinventories (2,067) (4,049) (1,233) (2,447) (6,185)Insurance claimsreceivable - - - - (5,472)Prepaid expenses andother (7) (2,381) (1,604) (3,146) 864Other assets (1,539) (2,428) (398) (364) (2,081)Accounts payable 1,486 3,654 3,672 6,961 12,158Accrued expensesand other (1,105) (2,915) 2,572 3,454 2,712Other long- termliabilities 1,420 (230) (1,690) (1,690) 240

Net cash (used in)provided byoperating activities (101) (6,997) 8,817 8,960 (3,252)

CASH FLOWSFROM INVESTINGACTIVITIESCapital expenditures (21,658) (27,797) (44,528) (35,591) (45,199)

Net cash used ininvesting activities (21,658) (27,797) (44,528) (35,591) (45,199)

CASH FLOWSFROM FINANCINGACTIVITIESProceeds from long-term debt, net ofissuance costs 95,224 173,535 31,688 31,688 48,601Payments on long-term debt (76,095) (115,738) (23,875) (23,374) (1,150)Proceeds fromissuance of commonstock - 1 3 - -Proceeds fromissuance of preferredstock, net of issuancecosts 9,409 12,468 - - -

Net cash provided byfinancing activities 28,538 70,266 7,816 8,314 47,451

Net increase(decrease) in cashand cash equivalents 6,779 35,472 (27,895) (18,317) (1,000)Cash and cashequivalents-beginning of fiscalperiod 15,816 22,595 58,067 58,067 30,172

Cash and cashequivalents- end offiscal period $ 22,595 $ 58,067 $ 30,172 $ 39,750 $ 29,172

Cash paid during thefiscal period forInterest $ 13,781 $ 16,106 $ 16,403 $ 10,826 $ 12,929

Income taxes $ 30 $ 442 $ 193 $ 167 $ 175


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FAIRWAY GROUP HOLDINGS CORP. AND SUBSIDIARIESNotes to Consolidated Financial Statements

Fiscal Years Ended March 28, 2010, April 3, 2011 and April 1, 2012Thirty- Nine Weeks Ended January 1, 2012 and December 30, 2012 (Unaudited)

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESDescription of Business and Organization Fairway Group Holdings Corp. was incorporated in the State of Delaware on September 29, 2006 and is majority owned by investment fundsmanaged by Sterling Investment Partners L.P. and affiliates (collectively, "Sterling"). Fairway Group Holdings Corp. and subsidiaries (the "Company" or "Fairway") operates in the retail food industry, selling fresh, natural andorganic products, prepared foods and hard to find specialty and gourmet offerings along with a full assortment of conventional groceries. TheCompany operates two stores on the West Side of Manhattan, NY, a store in Plainview, Long Island, a store in Brooklyn, NY (constituting theacquired four retail food store operations); a store in Paramus, NJ which opened in March 2009, a store on the Upper East Side of Manhattan whichopened in July 2011, a store in Douglaston, Queens which opened in November 2011, a store in Woodland Park, NJ which opened in June 2012, astore in Westbury, NY which opened in August 2012 and a store in the Kips Bay neighborhood in midtown Manhattan, NY, which opened inDecember 2012. The Company opened a grocery retail store and a wine and spirits store in Pelham Manor, NY in April 2010 and May 2010,respectively, and a grocery retail store and wine and spirits store in Stamford, CT in November 2010 and December 2010, respectively. In January 2007, the Company purchased substantially all of the assets and assumed substantially all of the liabilities of the aforementionedacquired four retail food store operations. The consideration paid for the acquisition consisted of $97.4 million in cash, $2.4 million paidapproximately two years from the date of the acquisition, 10% subordinated promissory notes in the aggregate principal amount of $22 million,recorded by the Company at fair value of $20 million, 19.9% of the issued and outstanding common and preferred stock of the Company having avalue of approximately $12.7 million and transaction costs of approximately $7.2 million. The Company has determined that it has one reportable segment. Substantially all of the Company's revenue comes from the sale of items at itsretail food stores.Principles of Consolidation The consolidated financial statements include the accounts of Fairway Group Holdings Corp. and its wholly- owned subsidiaries. All materialintercompany accounts and transactions have been eliminated in consolidation.Unaudited Interim Financial Statements The accompanying interim consolidated balance sheet as of December 30, 2012, and the related consolidated statements of operations and cashflows for the thirty- nine weeks ended January 1, 2012 and December 30, 2012 and the related consolidated statement of changes in redeemablepreferred stock and stockholders' deficit for the thirteen weeks ended December 30, 2012 and the related footnote disclosures are unaudited. Theseunaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in theUnited States of America ("GAAP"). In management's opinion, the unaudited interim consolidated financial statements have been prepared on thesame basis as the audited financial statements and include all adjustments,

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FAIRWAY GROUP HOLDINGS CORP. AND SUBSIDIARIESNotes to Consolidated Financial Statements (Continued)


1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)which include only normal recurring adjustments, necessary for the fair presentation of the balance sheet as of December 30, 2012 and the relatedconsolidated results of operations and the cash flows for the thirty- nine weeks ended January 1, 2012 and December 30, 2012. The results for thethirty- nine weeks ended December 30, 2012 are not necessarily indicative of the results expected for the full fiscal year.Fiscal Year The Company has selected a fiscal year ending on the Sunday closest to March 31. These financial statements are presented for the fiscal yearsended March 28, 2010 (52 weeks), April 3, 2011 (53 weeks) and April 1, 2012 (52 weeks).Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents.Cash and cash equivalents include cash on hand, cash on deposit with banks and receipts from credit and debit card sales transactions which settlewithin a few days of year end. The amount of credit and debit card sales transactions included within cash and cash equivalents as of April 3, 2011,April 1, 2012 and December 30, 2012 was approximately $5.8 million, $6.9 million and $7.1 million, respectively.Merchandise Inventories Perishable inventories are stated at the lower of cost (first in, first out) or market. Non- perishable inventories are stated at the lower of cost ormarket with cost determined under the retail method, which approximates average cost. Under the retail method, the valuation of inventories at costand resulting gross margins are determined by applying a cost- to- retail ratio for various groupings of similar items to the retail value of inventories.Inherent in the retail inventory method calculations are certain management judgments and estimates, including shrinkage, which could impact theending inventory valuation at cost as well as the resulting gross margins.Vendor Allowances The Company recognizes vendor allowances including merchandise cost adjustments and merchandise volume related rebate allowances as areduction of cost of sales during the fiscal years when earned.Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are composed primarily of vendor rebates from the purchase of goods and are stated at historical cost. Included in accountsreceivable are amounts due from employees totaling approximately $103,000, $152,000 and $145,000 at April 3, 2011, April 1, 2012 andDecember 30, 2012, respectively. Management evaluates accounts receivable to estimate the amount of accounts receivable that will not be collectedin the future and records the appropriate provision. The provision for doubtful accounts is recorded as a charge to operating expense and reducesaccounts receivable. The

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1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)estimated allowance for doubtful accounts is based primarily on management's evaluation of the aging of accounts receivable balances, the financialcondition of its vendors and historical trends. The Company writes off accounts receivable balances when deemed to be uncollectible. Actual collections of vendor rebates could differ frommanagement's estimates due to changes in future economic, industry or vendors' financial conditions. At April 3, 2011, April 1, 2012 andDecember 30, 2012, the allowance for doubtful accounts approximated $218,000, $562,000 and $160,000, respectively. During the thirty- nine weeksended December 30, 2012, the Company wrote- off $611,000 of doubtful accounts receivable balances.Property and Equipment Additions to property and equipment are stated at cost. Renewals and improvements that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs areexpensed as incurred. Depreciation is computed under the straight- line method over the estimated useful lives of the assets. Upon retirement or disposition of property and equipment, the applicable cost and accumulated depreciation are removed from the accounts andany resulting gains or losses are included in the results of operations. The estimated useful lives of property and equipment are as follows:Equipment 3- 7 yearsFurniture and fixtures 5 yearsLeasehold improvements The shorter of 10 years or the remaining term of the leaseGoodwill and Other Intangibles Assets The Company accounts for goodwill and other intangible assets in accordance with Financial Accounting Standards Board ("FASB")Accounting Standards Codification ("ASC") Topic No. 350- Intangibles- Goodwill and Other. Accordingly, goodwill and identifiable intangibleassets with indefinite lives are not amortized, but instead are subject to annual testing for impairment. Goodwill is tested for impairment on an annual basis or between annual tests if an event occurs or circumstances change that would reduce thefair value below its carrying amount. The Company performs this test at the end of each fiscal year. The Company is required to perform a secondstep if there is an indication that the goodwill may be impaired. In this step, the Company compares the implied fair value of goodwill with thecarrying amount of goodwill. The implied fair value of goodwill is determined by allocating the fair value of the assets (recognized andunrecognized) and liabilities of the Company in a manner similar to a purchase price allocation. The residual fair value after this allocation is theimplied fair value of goodwill. Based on this annual impairment analysis, there was no impairment of goodwill as of March 28, 2010, April 3, 2011and April 1, 2012.

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1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) The Company tests intangible assets that are not subject to amortization for impairment annually or whenever events or changes incircumstances indicate that the carrying value may not be recoverable. The Company tests indefinite- lived assets using a two- step approach. Thefirst step is to determine if the fair value of the asset exceeds the carrying value. The second step measures the amount of impairment, if applicable.The Company uses an undiscounted cash flow analysis to complete the first step in the process. The amount of the impairment loss, if any, ismeasured as the difference between the net book value of the asset and its estimated fair value. There was no impairment as of March 28, 2010,April 3, 2011 and April 1, 2012. As of December 30, 2012, there were no indicators of impairment of goodwill and other intangible assets. To estimate the fair value of the Company, the Company considered an income approach and a market approach. The income approach is basedon a discounted cash flow analysis ("DCF") and calculates the fair value by estimating the after- tax cash flows attributable to the Company and thendiscounting the after- tax cash flows to a present value using a risk- adjusted discount rate. Assumptions used in the DCF require the exercise ofsignificant judgment, including judgment about appropriate discount rates and terminal values, growth rates, and the amount and timing of expectedfuture cash flows. The forecasted cash flows are based on current plans and for years beyond that plan, the estimates are based on assumed growthrates. The Company believes the assumptions are consistent with the plans and estimates used to manage the business. The discount rates, which areintended to reflect the risks inherent in future cash flow projections, used in the DCF are based on estimates of the weightedaverage cost of capital("WACC") of a market participant. Such estimates are derived from the Company's analysis of peer companies and considers the industry weightedaverage return on debt and equity from a market participant perspective. The Company believes the assumptions used to determine the fair value arereasonable. If different assumptions were used, particularly with respect to forecasted cash flows or WACCs, different estimates of fair value mayresult and there could be the potential that an impairment charge could result. Actual operating results and the related cash flows of the Companycould differ from the estimated operating results and related cash flows. The recoverability of goodwill may be impacted if estimated future operatingcash flows are not achieved. A market approach values a business by considering the prices at which shares of capital stock of reasonably comparable companies are tradingin the public market or the transaction price at which similar companies have been acquired. If comparable companies are not available, the marketapproach is not used. Relative weights are then given to the results of each of these approaches, based on the facts and circumstances of the business being valued.The use of multiple approaches (e.g. income and market approaches) is considered preferable to a single method. In the Company's case, 80% wasweighted to the income approach because it generally provides a reliable estimate of value for an ongoing business which has a reliable forecast ofoperations, and 20% was weighted to the market approach. The income approach closely parallels investors' consideration of the future benefitsderived from ownership of an asset.

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1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)Impairment of Long- Lived Assets ASC 360, "Impairment of Long- Lived Assets" requires that long- lived assets other than goodwill and other non- amortizable intangibles bereviewed for impairment whenever events such as unplanned negative cash flow or other adverse changes in circumstances indicate that the carryingamount of the asset may not be recoverable. The carrying amount of a long- lived asset is not recoverable if it exceeds the sum of the undiscountedcash flows expected to result from the use and eventual disposition of the asset. If the carrying amount of a long- lived asset is not recoverable and isgreater than its fair value, the asset is impaired and an impairment loss must be recognized. The Company has concluded that the carrying amounts of its long- lived assets were recoverable as of April 3, 2011 and April 1, 2012. As ofDecember 30, 2012, there were no events or circumstances indicating that the carrying amount of long- lived assets may not be recoverable.Deferred Rent The Company leases stores, storage and production facilities and an administrative office under operating leases. These lease agreementsgenerally include rent escalation clauses and rent holidays. The Company recognizes scheduled rent increases and rent holidays on a straight- linebasis over the term of the respective leases.Revenue Recognition Revenue is recognized at point of sale which is the time of sale. All discounts provided to customers by the Company are recorded as reductionsof sales at the time of sale. Net sales exclude sales taxes.Cost of Sales and Occupancy Costs Cost of sales includes the cost of merchandise inventories sold during the year (net of discounts and allowances), distribution and foodpreparation costs and shipping and handling costs. The Company receives various rebates from third party vendors in the form of purchase or salesvolume discounts. Purchase volume discounts are calculated based on actual purchase volumes and are recognized as a reduction of cost of saleswhen the related merchandise is sold. Occupancy costs include store rental costs and property taxes.Direct Store Expenses Direct store expenses consist of store- level expenses such as salaries and benefit costs for the store work force, supplies, store depreciation andstore- specific marketing costs. Store- level labor costs are generally the largest component of direct store expenses.General and Administrative Expenses General and administrative expenses consist primarily of non- store specific employee costs, corporate and marketing expenses, managementfees, depreciation and amortization expense as well as other expenses associated with corporate headquarters, and expenses for accounting,information systems, legal, business development, human resources, purchasing and other administrative departments.

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1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)Store Opening Costs Store opening costs include rent expense incurred during construction of new stores and costs related to new location openings, including costsassociated with hiring and training personnel, supplies and other miscellaneous costs. Rent expense is recognized upon taking possession of a storesite, which generally ranges from three to six months before the opening of a store, although in some situations, the possession period can exceedtwelve months. Store opening costs are expensed as incurred.Income Taxes Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which thosetemporary differences are expected to reverse. Deferred tax assets and liabilities are adjusted to reflect changes in tax laws or rates in the period thatincludes the enactment date. The Company may recognize the tax benefit from an uncertain tax position if it is more likely than not that the taxposition will be sustained by the taxing authorities based on technical merits of the position. The tax benefits recognized in the financial statementsfrom such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. Significantaccounting judgment is required in determining the provision for income taxes and related accruals, deferred tax assets and liabilities. The Companybelieves that its tax positions are consistent with applicable tax law, but certain positions may be challenged by taxing authorities. In the ordinarycourse of business, there are transactions and calculations where the ultimate tax outcome is uncertain. In addition, the Company is subject to periodicaudits and examinations by the Internal Revenue Service ("IRS") and other state and local taxing authorities. Although management believes that theestimates are reasonable, actual results could differ from these estimates. The Company does not have any material uncertain tax positions for the fiscal years ended March 28, 2010, April 3, 2011 and April 1, 2012 andfor the thirty- nine weeks ended December 30, 2012.Advertising Advertising and display costs are expensed as incurred and approximated $3.6 million, $4.7 million and $6.5 million for the fiscal years endedMarch 28, 2010, April 3, 2011 and April 1, 2012, respectively. Advertising and display costs approximated $5.9 million and $5.4 million for thethirty- nine weeks ended January 1, 2012 and December 30, 2012, respectively.Concentrations of Credit Risks The Company's customers are consumers located primarily in the New York metropolitan area who purchase products at the Company's stores.Financial instruments which potentially subject the Company to concentrations of credit risk consist of accounts receivable. As of April 3, 2011,April 1, 2012 and December 30, 2012, there were no significant concentrations of accounts receivable or related credit risk. The Company maintains cash balances at financial institutions. Accounts at U.S. financial institutions are insured by the Federal DepositInsurance Corporation up to $250,000. At April 3, 2011,

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1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)April 1, 2012 and December 30, 2012, the balances exceeding this insurable limit approximated $51.8 million, $27.1 million and $28.1 million,respectively.Fair Value of Financial Instruments Effective April 2, 2012, the Company adopted Accounting Standards Update (ASU) 2011- 04, "Fair Value Measurement (Topic 820):Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP" ("ASU 2011- 04"), which establishescommon requirements for measuring fair value and related disclosures in accordance with GAAP. The adoption of ASU No. 2011- 04, whichprimarily consists of clarification and wording changes to existing fair value measurement and disclosure requirements, did not have an impact on theCompany's consolidated financial statements. The Company applies the FASB guidance for "Fair Value Measurements." Under this standard, fair value is defined as the price that would bereceived to sell an asset or paid to transfer a liability (i.e., the "exit price") in an orderly transaction between market participants at the measurementdate. In determining fair value, the Company uses various valuation approaches. The hierarchy of those valuation approaches is broken down intothree levels based on the reliability of inputs as follows:

Level 1 - Inputs that are quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at themeasurement date. An active market for the asset or liability is a market in which transactions for the asset or liability occur withsufficient frequency and volume to provide pricing information on an ongoing basis. The valuation under this approach does not entail asignificant degree of judgment.

Level 2 - Inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly.Level 2 inputs include: quoted prices for similar assets or liabilities in active markets, inputs other than quoted prices that areobservable for the asset or liability (e.g., interest rates and yield curves observable at commonly quoted intervals or current market) andcontractual prices for the underlying financial instrument, as well as other relevant economic measures.

Level 3 - Inputs that are unobservable for the asset or liability. Unobservable inputs are used to measure fair value to the extent that observableinputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at themeasurement date.

The Company's non- financial assets measured at fair value on a non- recurring basis include goodwill and intangible assets. To measure fairvalue for such assets, the Company uses techniques including discounted expected future cash flows ("DCF") (Level 3 input). A discounted cash flowanalysis calculates the fair value by estimating the after- tax cash flows attributable to a reporting unit or asset and then discounting the after- tax cashflows to a present value using a risk- adjusted discount rate. Assumptions used in the DCF require the exercise of significant judgment, includingjudgment about appropriate discount rates and terminal values, growth rates and the amount and timing of expected future cash flows.

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1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) The carrying amount of the Company's interest rate cap agreement is measured at fair value, on a recurring basis, using a standard valuationmodel that incorporates inputs other than quoted prices that are observable. The Company's interest rate cap agreement was classified as Level 2 as ofApril 3, 2011, April 1, 2012 and December 30, 2012. The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate their fair valuedue to short term maturities as of April 3, 2011, April 1, 2012 and December 30, 2012. The long- term debt (Note 8- Long- Term Debt) approximatedfair value as of April 3, 2011, April 1, 2012 and December 30, 2012, because it has variable interest rates which reflect market changes to interestrates and contain variable risk premiums based on current market conditions.Deferred Financing Fees The Company incurred approximately $6.0 million, $724,000 and $2.7 million of deferred financing fees in the fiscal years ended April 3, 2011and April 1, 2012 and the thirty- nine weeks ended December 30, 2012, respectively, in conjunction with the debt refinancing discussed in Note 8.These costs are being deferred and amortized using the effective interest method over the life of the related debt instrument.Net Loss Per Common Share Basic and diluted net loss per common share is calculated by dividing net loss attributable to common stockholders by the weighted averagecommon shares outstanding for the fiscal year. Diluted net loss per common share is calculated by dividing net loss attributable to commonstockholders by the weighted average common shares outstanding for the fiscal year plus the effect of any potential common shares that have beenissued if these additional shares were dilutive. For all periods presented, basic and diluted net loss per common share are the same, as any additionalcommon stock equivalents would be anti- dilutive. For the fiscal year ended March 28, 2010, there were 1,961,297 additional potentially dilutive shares of common stock which include 1,930,822outstanding warrants and 30,475 restricted stock awards not vested. For the fiscal year ended April 3, 2011, there were 1,993,669 additional potentially dilutive shares of common stock which include 1,930,822outstanding warrants and 62,847 restricted stock awards not vested. For the fiscal year ended April 1, 2012, there were 2,115,924 additional potentially dilutive shares of common stock which include 1,930,822outstanding warrants and 185,102 restricted stock awards not vested. For the thirty- nine weeks ended January 1, 2012, there were 2,083,315 additional potentially dilutive shares of common stock which include1,930,822 outstanding warrants and 152,493 restricted stock awards not vested.

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1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) For the thirty- nine weeks ended December 30, 2012, there were 2,083,315 additional potentially dilutive shares of common stock which include1,930,822 outstanding warrants and 152,493 restricted stock awards not vested.Stock- Based Compensation The Company measures and recognizes stock- based compensation expense for all equity- based payment awards made to employees usingestimated fair values. The fair value of the award that is ultimately expected to vest is recognized as compensation expense over the requisite serviceperiod. For awards with a change of control condition, an evaluation is made at the grant date and future periods as to the likelihood of the conditionbeing met. Compensation expense is adjusted in future periods for subsequent changes in the expected outcome of the change of control conditionsuntil the vesting date. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ fromthose estimates.Insurance Recoveries Insurance recoveries related to impairment losses recorded and other recoverable expenses are recognized up to the amount of the related loss orexpense in the period that recoveries are deemed probable. Insurance recoveries under business interruption coverage and insurance gains in excess ofamounts written off related to impaired merchandise inventories and property and equipment are recognized when they are realizable and allcontingencies have been resolved. The evaluation of insurance recoveries requires estimates and judgments about future results which affect reportedamounts and certain disclosures. Actual results could differ from those estimates.Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect thereported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, as well as revenueand expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include net realizable value ofmerchandise inventories, valuation of long- lived assets (including goodwill and intangible assets), useful lives associated with amortization anddepreciation of intangible assets, property and equipment, and valuation of deferred tax assets.Reclassifications Certain reclassifications have been made to the prior fiscal years' amounts to conform to the current fiscal year's presentation.Derivative Instruments The Company utilizes derivative financial instruments to hedge its exposure to changes in interest rates. The Company does not use financialinstruments or derivatives for any trading or other speculative purposes. Hedge effectiveness is measured by comparing the change in fair value of the

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1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)hedged item to the change in fair value of the derivative instrument. The effective portion of the gain or loss of the hedge is recorded as othercomprehensive income (loss) in the periods presented, if applicable. Any ineffective portion of the hedge, as well as amounts not included in theassessment of effectiveness, is recorded in the consolidated statements of operations under the caption "interest expense." The Company has notapplied hedge accounting on its interest rate cap agreement.Recently Issued Accounting Pronouncements In September 2011, the FASB issued Accounting Standards Update ("ASU") No. 2011- 08- Intangibles- Goodwill and Other (ASC TopicNo. 350)- Testing Goodwill for Impairment. The ASU simplifies how entities test for goodwill impairment. The ASU permits an entity to first assessthe qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basisfor determining if performing the two- step goodwill impairment test, as defined, is necessary. The ASU is effective for annual goodwill impairmenttests performed for fiscal years beginning after December 15, 2011. The Company does not believe that the adoption of this ASU will have a materialimpact on its consolidated financial statements. The Company adopted this ASU effective April 2, 2012. In September 2011, the FASB issued an amendment related to multiemployer pension plans. This amendment increases the quantitative andqualitative disclosures about an employer's participation in individually significant multiemployer plans that offer pension and other postretirementbenefits. The guidance is effective for fiscal years ended after December 15, 2011. The Company has adopted the guidance and modified thedisclosures surrounding its participation in multiemployer plans in Note 12- Multiemployer Plan and Employee Benefit Plan. Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have amaterial effect on its accompanying consolidated financial statements.2. PROPERTY AND EQUIPMENT, NET Property and equipment consist of the following (in thousands):

April 3,2011

April 1,2012

December 30,2012

Leasehold improvements $ 51,790 $ 77,838 $ 100,085Machinery and equipment 21,427 30,052 35,800Computer equipment 16,228 23,081 31,498Furniture and fixtures 6,913 8,771 11,722Transportation equipment 115 233 305Construction in process 5,141 6,167 232

Total property and equipment 101,614 146,142 179,642Less accumulated depreciation 35,028 52,205 59,290

Property and equipment, net $ 66,586 $ 93,937 $ 120,352

Depreciation expense for property and equipment included in direct store expenses for the fiscal years ended March 28, 2010, April 3, 2011 andApril 1, 2012 was approximately $6.7 million, $10.0 million and $13.2 million, respectively.

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2. PROPERTY AND EQUIPMENT, NET (Continued) Depreciation expense for property and equipment included in general and administrative expenses for the fiscal years ended March 28, 2010,April 3, 2011 and April 1, 2012 was approximately $2.2 million, $3.3 million and $4.0 million, respectively. Depreciation expense for property and equipment included in direct store expenses for the thirty- nine weeks ended January 1, 2012 andDecember 30, 2012 was approximately $9.4 million and $12.3 million, respectively. Depreciation expense for property and equipment included in general and administrative expenses for the thirty- nine weeks ended January 1,2012 and December 30, 2012 was approximately $2.9 million and $3.1 million, respectively.3. PREPAID EXPENSES AND OTHER Prepaid expenses and other consist of the following (in thousands):

April 3,2011

April 1,2012

December 30,2012

Deferred initial public offering costs $ - $ - $ 1,813Prepaid advisory fee to related party (Note 11) 377 627 1,754Prepaid insurance 508 608 967Other 762 827 980

$ 1,647 $ 2,062 $ 5,514

The Company has deferred initial public offering costs, consisting of legal and accounting fees and printing costs, totaling approximately$1.8 million as of December 30, 2012 in anticipation of its initial public offering.4. OTHER ASSETS Other assets consist of the following (in thousands):

April 3,2011

April 1,2012

December 30,2012

Prepaid rent, net $ 8,553 $ 8,242 $ 7,963Deferred financing fees, net 4,847 4,314 5,785Long- term deposits 3,848 3,915 6,105Other 467 367 532

$17,715 $16,838 $ 20,385

The prepaid rent, net balance represents the unamortized noncurrent portion of a $10.2 million payment made in January 2007 to the lessor ofone of the Company's stores to extend the lease on that store through 2039 and is being amortized on a straight- line basis over the remaining term ofthe lease. Amortization of $311,000 was recorded in each of the fiscal years ended March 28, 2010, April 3, 2011

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4. OTHER ASSETS (Continued)and April 1, 2012, respectively. Amortization for the thirty- nine weeks ended January 1, 2012 and December 30, 2012 was $233,000 and $237,000,respectively.5. INTANGIBLE ASSETS, NET The Company's intangible assets consist of the following (in thousands):

April 3, 2011Gross

CarryingAmount

AccumulatedAmortization

NetCarrying

Value

WeightedAverage

Useful LifeIntangible assets:Trade name $23,600 $ - $ 23,600 indefiniteFavorable leases 7,370 3,668 3,702 12.6Non- compete agreement 890 470 420 8

$31,860 $ 4,138 $ 27,722

April 1, 2012Gross

CarryingAmount


NetCarrying

Value

WeightedAverage

Useful LifeIntangible assets:Trade name $23,600 $ - $ 23,600 indefiniteFavorable leases 7,370 5,270 2,100 12.6Non- compete agreement 890 582 308 8

$31,860 $ 5,852 $ 26,008

December 30, 2012Gross

CarryingAmount


NetCarrying

Value

WeightedAverage

Useful LifeIntangible assets:Trade name $23,600 $ - $ 23,600 indefiniteFavorable leases 3,018 1,111 1,907 19Non- compete agreement 890 663 227 8

$27,508 $ 1,774 $ 25,734

Amortization of intangible assets with finite lives amounted to approximately $981,000, $1.0 million and $1.7 million during the fiscal yearsended March 28, 2010, April 3, 2011 and April 1, 2012, respectively. Amortization of intangible assets with finite lives amounted to approximately$736,000 and $274,000 during the thirty- nine weeks ended January 1, 2012 and December 30, 2012, respectively.

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5. INTANGIBLE ASSETS, NET (Continued) The following is a schedule of the future amortization of the finite lived intangible assets as of December 30, 2012 for the fiscal years ending (inthousands):March 31, 2013 $ 71March 30, 2014 283March 29, 2015 266April 3, 2016 174April 2, 2017 174Thereafter 1,166

$2,134

6. ACCRUED EXPENSES AND OTHER Accrued expenses and other consist of the following (in thousands):

April 3,2011

April 1,2012

December 30,2012

Accrued compensation $ 7,239 $ 7,391 $ 5,936Accrued interest 1,172 584 2,850Accrued initial public offering costs - - 1,200Accrued advertising 87 301 1,244Accrued utilities 392 362 1,191Fair market rent accrual - 869 795Settlement liability - 1,690 -Current portion of deferred rent 719 84 661Accrued interest to related parties (Note 11) 462 133 183Other accrued expenses 2,836 3,427 4,072

$12,907 $14,841 $ 18,132

Settlement liability relates to an employee termination agreement with a related party entered into during the fiscal year ended March 28, 2010.This amount was classified as a long- term liability at April 3, 2011.7. OTHER LONG- TERM LIABILITIES Other long- term liabilities consist of the following (in thousands):

April 3,2011

April 1,2012

December 30,2012

Deferred rent $ 7,294 $14,122 $ 21,042Settlement liability 1,690 - -Accrued interest to related parties (Note 11) - - 240

$ 8,984 $14,122 $ 21,282

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8. LONG- TERM DEBT A summary of long- term debt is as follows (in thousands):

April 3,2011

April 1,2012

December 30,2012

Credit facility, net ofunamortized discount of$1,724 at April 3, 2011,$1,906 at April 1, 2012 and$12,056 at December 30, 2012 $ 173,276 $ 196,219 $ 247,294Subordinated promissorynotes payable to relatedparties, net of unamortizeddiscount of $979 at April 3,2011 21,021 7,333 7,333

Total 194,297 203,552 254,627Less current maturities 15,438 2,000 2,600

Long- term debt, net of currentmaturities $ 178,859 $ 201,552 $ 252,027

2012 Senior Credit Facility In August 2012, Fairway Group Holdings Corp. and its wholly- owned subsidiary, Fairway Group Acquisition Company, as the borrower,entered into a senior secured credit facility consisting of a $260 million term loan (the "2012 Term Facility") and a $40 million revolving creditfacility, which includes a $40 million letter of credit subfacility (the "2012 Revolving Facility" and together with the 2012 Term Facility, the "2012Senior Credit Facility") with the 2012 Term Facility maturing in August 2018 and the 2012 Revolving Facility maturing in August 2017. TheCompany used the net proceeds from the 2012 Term Facility to finance growth. Borrowings under the 2012 Senior Credit Facility bear interest, at the option of the Company, at (i) adjusted LIBOR (subject to a 1.5% floor)plus 6.75% or (ii) an alternate base rate plus 5.75%. In addition, there is a fee payable quarterly in an amount equal to 1% per annum of the undrawnportion of the 2012 Revolving Facility, calculated based on a 360- day year. Interest is payable quarterly in the case of base rate loans and on thematurity dates or every three months, whichever is shorter, in the case of adjusted LIBOR loans. The 6.57% and 5.75% margins will each be reducedby 50 basis points at any time following completion of the Company's initial public offering when the Company's corporate family rating fromMoody's Investor Services Inc. is B2 or higher and the Company's corporate rating from Standard & Poor's Rating Service is B or higher, in each casewith a stable outlook, and as long as certain events of default have not occurred. All of the borrower's obligations under the 2012 Senior Credit Facility are unconditionally guaranteed (the "Guarantees") by Fairway GroupHoldings Corp. and subsidiaries (other than the borrower and any future unrestricted subsidiaries as the Company may designate, at its discretion,from time to time) (the "Guarantors"). Additionally, the 2012 Senior Credit Facility and the Guarantees are secured by a first- priority perfectedsecurity interest in substantially all present and future assets of the borrower and each Guarantor, including accounts receivable, property andequipment, merchandise inventories, general intangibles, leases, intellectual property, investment property and intercompany notes amongGuarantors.

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8. LONG- TERM DEBT (Continued) Mandatory prepayments under the 2012 Senior Credit Facility are required with: (i) 50% of adjusted excess cash flow (which percentage shallbe reduced to 25% upon achievement and maintenance of a leverage ratio of less than 5.0:1.0, and to 0% upon achievement and maintenance of aleverage ratio of less than 4.0:1.0); (ii) 100% of the net cash proceeds of asset sales or other dispositions of property by the Company and certain ofits subsidiaries (subject to certain exceptions and reinvestment provisions); and (iii) 100% of the net cash proceeds of issuances, offerings orplacements of debt obligations (subject to certain exceptions). The 2012 Senior Credit Facility contains negative covenants, including restrictions on: (i) the incurrence of additional debt; (ii) liens and sale-leaseback transactions; (iii) loans and investments; (iv) guarantees and hedging agreements; (v) the sale, transfer or disposition of assets andbusinesses; (vi) dividends on, and redemptions of, equity interests and other restricted payments, including dividends and distributions to theCompany by its subsidiaries; (vii) transactions with affiliates; (viii) changes in the business conducted by the Company; (ix) payment or amendmentof subordinated debt and organizational documents; and (x) maximum capital expenditures. The Company is also required to comply with thefollowing financial covenants: (i) a maximum total leverage ratio and (ii) a minimum cash interest coverage ratio. The Company was in compliance with all applicable affirmative, negative and financial covenants of the 2012 Senior Credit Facility atDecember 30, 2012. The 2012 Senior Credit Facility resulted in the Company capitalizing new deferred financing fees of approximately $2.1 million, to be amortizedover the life of the loan on the effective interest method. These costs included administrative fees, advisory fees, title fees, and legal and accountingfees. The Company reviewed the terms of the 2012 Senior Credit Facility and ascertained that the conditions have been met, pursuant to the FASB'sguidance, to treat the transaction as a debt modification. In connection with the modification of the 2011 Senior Credit Facility as described below,(i) the unamortized original issue discount of approximately $1.8 million relating to the 2011 Senior Credit Facility and (ii) debt placement fees ofapproximately $7.2 million and new original issue discount of approximately $3.9 million in connection with the 2012 Senior Credit Facility arecollectively reflected as original issue discount, to be amortized over the life of the loan on the effective interest method. In addition, approximately$2.8 million of debt related expenses to third parties, pertaining to the 2012 Senior Credit Facility, have been expensed as incurred in "General andadministrative expenses" for the thirty- nine week period ending December 30, 2012. At December 30, 2012, the Company had $24.1 million of availability under the 2012 Revolving Facility, all of which was available for lettersof credit. At December 30, 2012, the Company had $15.9 million of letters of credit outstanding.2011 Senior Credit Facility In March 2011, Fairway Group Holdings Corp. and its wholly- owned subsidiary, Fairway Group Acquisition Company, as the borrower,entered into a senior secured credit facility consisting of a

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8. LONG- TERM DEBT (Continued)$175 million term loan, which was increased to $200 million in December 2011 (the "2011 Term Facility") and a $25 million revolving creditfacility, which includes a $15 million letter of credit subfacility (the "2011 Revolving Facility" and together with the Term Facility, the "2011Senior Credit Facility") with the 2011 Term Facility maturing in March 2017 and the 2011 Revolving Facility maturing in March 2016. TheCompany used the proceeds from the 2011 Term Facility to repay its existing senior debt, the subordinated notes issued in connection with theacquisition of the four Fairway stores in 2007 and to finance growth. Borrowings under the 2011 Senior Credit Facility bear interest, at the option ofthe Company, at (i) adjusted LIBOR (subject to a 1.5% floor) plus 6% or (ii) an alternate base rate plus 5%. In addition, there is a fee payablequarterly in an amount equal to 1% per annum of the undrawn portion of the 2011 Revolving Facility, calculated based on a 360- day year. Interest ispayable quarterly in the case of base rate loans and on the maturity dates or every three months, whichever is shorter, in the case of adjusted LIBORloans. All of the borrower's obligations under the 2011 Senior Credit Facility are unconditionally guaranteed (the "Guarantees") by Fairway GroupHoldings Corp. and subsidiaries (other than the borrower and any future unrestricted subsidiaries as the Company may designate, at its discretion,from time to time) (the "Guarantors"). Additionally, the 2011 Senior Credit Facility and the Guarantees are secured by a first- priority perfectedsecurity interest in substantially all present and future assets of the borrower and each Guarantor, including accounts receivable, property andequipment, merchandise inventories, general intangibles, leases, intellectual property, investment property and intercompany notes amongGuarantors. Mandatory prepayments under the 2011 Senior Credit Facility are required with: (i) 50% of adjusted excess cash flow (which percentage shallbe reduced to 25% upon achievement and maintenance of a leverage ratio of less than 2.5:1.0, and to 0% upon achievement and maintenance of aleverage ratio of less than 2.0:1.0); (ii) 100% of the net cash proceeds of asset sales or other dispositions of property by the Company and certain ofits subsidiaries (subject to certain exceptions and reinvestment provisions); and (iii) 100% of the net cash proceeds of issuances, offerings orplacements of debt obligations (subject to certain exceptions). The 2011 Senior Credit Facility contains negative covenants, including restrictions on: (i) the incurrence of additional debt; (ii) liens and sale-leaseback transactions; (iii) loans and investments; (iv) guarantees and hedging agreements; (v) the sale, transfer or disposition of assets andbusinesses; (vi) dividends on, and redemptions of, equity interests and other restricted payments; (vii) transactions with affiliates; (viii) changes in thebusiness conducted by the Company; (ix) payment or amendment of subordinated debt and organizational documents; and (x) maximum capitalexpenditures. The Company is also required to comply with the following financial covenants: (i) a maximum total leverage ratio and (ii) a minimumcash interest coverage ratio. On July 25, 2012, the Company's $25 million revolving credit facility was increased to $35 million. The financial covenants of the 2011 Senior Credit Facility commenced with the reporting period ending July 3, 2011. The Company was incompliance with all applicable affirmative, negative and financial covenants of the 2011 Senior Credit Facility at April 1, 2012.

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8. LONG- TERM DEBT (Continued) The 2011 Senior Credit Facility resulted in the Company capitalizing deferred financing fees of approximately $6.0 million and $563,000 duringthe fiscal years ended April 3, 2011 and April 1, 2012, respectively, to be amortized over the life of the loan on the effective interest method. Thesecosts included administrative fees, advisory fees, title fees, and legal and accounting fees. In connection with the early termination of the 2009 Senior Credit Facility as described below, the Company recorded a loss of approximately$13.9 million on the early extinguishment of debt during the fiscal year ended April 3, 2011. The loss included the write off of unamortized deferredfinancing fees of approximately $6.1 million and the unamortized discount of approximately $2.6 million, and the expensing of debt placement feesmade in connection with the 2011 Senior Credit Facility of approximately $5.2 million. At April 1, 2012, the Company had $15.1 million of availability under the 2011 Revolving Facility, of which $5.1 million was available forletters of credit. At April 1, 2012, the Company had $9.9 million of letters of credit outstanding.2009 Senior Credit Facility In December 2009, Fairway Group Holdings Corp. and its wholly- owned subsidiary, Fairway Group Acquisition Company, as the borrower,entered into a senior secured credit facility consisting of a $105 million term loan, which was increased to $115 million in November 2010 (the "2009Term Facility") and a $9 million revolving credit facility, which included a $8 million letter of credit subfacility (the "2009 Revolving Facility" andtogether with the 2009 Term Facility, the "2009 Senior Credit Facility") with the 2009 Term Facility maturing in October 2014 and the 2009Revolving Facility maturing in April 2014. The Company used the proceeds from the 2009 Term Facility to repay existing senior debt and to financegrowth. Borrowings under the 2009 Senior Credit Facility bore interest, at the option of the Company, at (i) adjusted LIBOR (subject to a 1.5% floor)plus 6% or (ii) an alternate base rate plus 5%. In addition, there was a fee payable quarterly in an amount equal to 1% per annum of the undrawnportion of the 2009 Revolving Facility, calculated based on a 360- day year. Interest was payable quarterly in the case of base rate loans and on thematurity dates or every three months, whichever was shorter, in the case of adjusted LIBOR loans. All of the borrower's obligations under the 2009 Senior Credit Facility were unconditionally guaranteed by Fairway Group Holdings Corp. andits subsidiaries and secured by a first- priority perfected security interest in substantially all present and future assets of the borrower and eachGuarantor, including accounts receivable, property and equipment, merchandise inventories, general intangibles, leases, intellectual property,investment property and intercompany notes among Guarantors. The 2009 Senior Credit Facility resulted in the Company capitalizing deferred financing fees of approximately $7.7 million to be amortized overthe life of the loan on the effective interest method. These costs included administrative fees, advisory fees, title fees, and legal and accounting fees.

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8. LONG- TERM DEBT (Continued) In connection with the early termination of the Company's then existing senior debt, the Company recorded a loss of approximately $2.8 millionon the early extinguishment of debt during the fiscal year ended March 28, 2010. The loss included a prepayment penalty fee of approximately$1.5 million, and the write off of the unamortized deferred financing fees of approximately $1.3 million. All outstanding balances of the 2009 Senior Credit Facility were fully paid at the closing of the 2011 Senior Credit Facility on March 3, 2011.Subordinated Promissory Notes Payable to Related Parties On January 18, 2007, the Company entered into two subordinated promissory notes which were amended on January 10, 2010 and April 1, 2010(the "Notes") for a total of $22 million with two corporations owned by two preferred stockholders of the Company and a third person (collectively,the owners of the four retail food store operations acquired by the Company in January 2007). The Notes were subordinated to the Company's seniordebt and bore 10% interest per annum through March 31, 2010 and 12% interest per annum from April 1, 2010. The interest accrued equal to 10% ofthe principal amount was payable in cash on the last day of each quarter commencing from March 31, 2007. The interest accrued equal to 2% of theprincipal amount was payable on the Notes' maturity date. The outstanding principal balance of the Notes and accrued, unpaid interest was payableon the maturity date of January 18, 2015. In January 2007, the fair market value of these Notes was determined to be approximately $20 million, net of a discount of approximately$2.0 million, by using a discount rate yielding an interest rate of return of 13%. The amortization of the discount approximated $248,000, $263,000and $21,000 during the fiscal years ended March 28, 2010, April 3, 2011 and April 1, 2012, respectively, and is reflected in the consolidatedstatements of operations as interest expense. The amortization of the discount approximated $21,000 and $0 during the thirty- nine weeks endedJanuary 1, 2012 and December 30, 2012, respectively. As of April 3, 2011, the amount due to these related parties was approximately $22.5 million, including accrued interest of $462,000. On May 3,2011, the Company prepaid, in full, the principal balance and accrued interest on the Notes, amounting to approximately $22 million and $700,000,respectively. Consequently, the unamortized discount of the Notes as of May 3, 2011 approximating $958,000 was reversed directly throughaccumulated deficit (net of income taxes) in fiscal 2012 as the debt between related entities emanated from a capital transaction. On May 13, 2011, for consideration received of approximately $7.3 million, the Company issued a subordinated promissory note to its thenchief executive officer at the time who was one of the individuals that owned the entities to which the Notes had been issued. The note issubordinated to the 2011 Senior Credit Facility and carries 12% interest per annum. The interest equal to 10% of the principal amount is payable onthe last day of each quarter commencing June 30, 2011. The interest equal to 2% of the principal amount shall be paid on the note's maturity date.The outstanding principal balance of the note and accrued, unpaid interest is payable on March 3, 2018. At April 1, 2012 and December 30, 2012, theamount due to this related party was approximately $7.5 million and $7.8 million, including accrued interest of $133,000 and $423,000, respectively.

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8. LONG- TERM DEBT (Continued) The following is the summary of the aggregate principal annual maturities of the Company's long- term debt as of April 1, 2012 andDecember 30, 2012 (in thousands):

As ofApril 1,

2012

As ofDecember 30,

2012Fiscal Year EndingMarch 31, 2013 $ 2,000 $ 650March 30, 2014 2,000 2,600March 29, 2015 2,000 2,600April 3, 2016 2,000 2,600April 2, 2017 190,125 2,600Thereafter 7,333 255,633

Total $205,458 $ 266,683

Interest Rate Cap Agreement In accordance with the terms of the 2011 Senior Credit Facility and the 2009 Senior Credit Facility, the Company was required no later than the180th day after the closing date of each of the agreements, and for a minimum of two years thereafter, to enter into agreements reasonably acceptableto the administrative agent that result in at least 50% of the aggregate principal amount of its funded long- term indebtedness being effectively subjectto a fixed or maximum interest rate acceptable to the administrative agent. On June 14, 2010, the Company entered into an agreement with the administrative agent to cap the LIBOR interest on $50.1 million of theoutstanding term loan. The LIBOR interest rate was capped at 5% for the period June 4, 2010 through June 14, 2011, and is capped at 4% fromJune 14, 2011 through June 14, 2012. The Company paid a fee of $118,000 for this agreement. On July 19, 2011, the Company entered into an agreement with the administrative agent to cap the LIBOR interest rate at 4% on a portion of theoutstanding term loan. The notional amount of the agreement is $70 million for the period July 19, 2011 through June 14, 2012, and $120 millionfrom June 14, 2012 through July 19, 2013. The Company paid a fee of $98,000 for this agreement.9. REDEEMABLE PREFERRED STOCK The Series A and B Preferred Stock is classified as redeemable preferred stock at April 3, 2011, April 1, 2012 and December 30, 2012 since theshares are redeemable at the option of the Board of Directors (the "Board") which is controlled by the holders of the preferred stock.Series B Preferred Stock In January 2007, the Company issued 64,016.98 shares of Series B Preferred Stock and received net proceeds of approximately $51.2 million netof issuance costs. In addition, approximately

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9. REDEEMABLE PREFERRED STOCK (Continued)$12.7 million was considered the fair value of the preferred stock issued to the sellers as part of the consideration paid for the four retail food storeoperations acquired by the Company in January 2007. The Series B Preferred Stock is nonvoting and is entitled to receive dividends payable in cash at an annual rate of $140 per share from the dateof issuance (January 18, 2007) of such shares. All dividends with respect to Series B Preferred Stock (i) accrue on a daily basis, (ii) are cumulative,whether or not earned or declared, (iii) are compounded quarterly from the date of issuance of such shares and (iv) are payable when declared by theBoard. In addition, the Series B Preferred Stock is redeemable at the option of a majority of the Board at a price of $1,000 per share plus all accruedand unpaid dividends (the "Series B Liquidation Value"), whether or not declared. Upon a liquidation event, each share of a Series B Preferred Stockis entitled to receive an amount equal to the Series B Liquidation Value before any payments can be made in respect of the Common Stock. TheCompany may not redeem any shares of Series B Preferred Stock until it has redeemed all outstanding shares of Series A Preferred Stock (other thanthose shares that are not being redeemed at the request of the holder). At April 3, 2011, April 1, 2012 and December 30, 2012, the Series B PreferredStock cumulative deemed dividends were approximately $49.8 million, $66.6 million and $80.8 million, respectively. At April 3, 2011, April 1, 2012and December 30, 2012, the total liquidation preference, including dividends, was approximately $113.8 million, $130.6 million and $144.8 million,respectively.Series A Preferred Stock On March 26, 2009, the Company issued 20,620 shares of Series A Preferred Stock, par value $0.001 per share, together with 2,162,881detachable warrants to purchase up to 2,162,881 shares of the Company's Common Stock, par value $0.001 per share, at an exercise price of$0.00008 per share, in consideration for cash proceeds of $16.6 million net of issuance costs of approximately $4.0 million. On October 29, 2009, the Company issued 9,650 shares of Series A Preferred Stock to existing stockholders in consideration for cash proceedsof approximately $9.4 million, net of issuance costs of $241,000. In October and December 2010, the Company issued a total of 12,788 shares of Series A Preferred Stock in consideration for cash proceeds ofapproximately $12.5 million, net of issuance costs of $321,000. The Series A Preferred Stockholders are entitled to receive dividends at an annual rate of $150 per share from the date of issuance of suchshares. All dividends with respect to Series A Preferred Stock (i) accrue on a daily basis until paid, (ii) are cumulative, whether or not earned ordeclared, (iii) are compounded quarterly from the date of issuance of such shares and (iv) are payable when declared by the Board. In addition, theSeries A Preferred Stock is redeemable at the option of a majority of the Board at a price of $1,300 per share plus all accrued and unpaid dividends(the "Series A Liquidation Value"), whether or not declared. Upon a liquidation event, each share of a Series A Preferred Stock is entitled to receivean amount equal to the Series A Liquidation Value before any payments can be made with respect to the Series B Preferred Stock or the CommonStock. At April 3, 2011, April 1, 2012 and December 30, 2012, the Series A Preferred Stock cumulative deemed dividends were approximately$9.9 million, $17.8 million and $25.8 million, respectively. At

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9. REDEEMABLE PREFERRED STOCK (Continued)April 3, 2011, April 1, 2012 and December 30, 2012, the total liquidation preference, including dividends, was approximately $65.8 million,$73.8 million and $81.7 million, respectively. The warrants are exercisable at any time on or before March 26, 2016, or the consummation of a liquidation event, as defined. Any warrants thathave not been exercised in full before the last day of the exercise period shall be automatically exercised, without further action on the part of theholder, on and as of that date. There were no warrants issued or exercised during the fiscal years ended March 28, 2010, April 3, 2011 and April 1,2012 or during the thirty- nine weeks ended December 30, 2012. On February 9, 2010, certain stockholders surrendered warrants to purchase an aggregate of 232,178 shares of common stock to the Companyfor no consideration and the Board increased the number of shares available for issuance pursuant to the Company's 2007 Equity Compensation Planby that number of shares. As of April 3, 2011, April 1, 2012 and December 30, 2012, there were 1,930,822 warrants outstanding.10. EQUITY COMPENSATION PLAN AND COMMON STOCK Effective January 2007, the Board adopted an Equity Compensation Plan (the "Plan") to provide the Company's employees, certain consultantsand advisors who perform services for the Company and non- employee members of the Board with an opportunity to receive grants of options topurchase shares of the Company's Common Stock and grant restricted shares of the Company's Common Stock. The Plan is administered by the Board or a committee appointed by the Board. The Board may grant incentive stock options, non- qualifiedstock options or any combination of these two and make restricted stock awards. Incentive stock options may be granted only to employees of theCompany and nonqualified stock options and restricted stock shares may be granted to employees, non- employee directors and advisors. The term of any option shall not exceed ten years from the date of grant. However, an incentive stock option that is granted to an employee who,at the time of grant, owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company, may not have aterm that exceeds five years from the date of grant. As of April 3, 2011, April 1, 2012 and December 30, 2012, 1,595,599, 1,834,721 and 1,834,721 restricted shares have been issued pursuant tothe Plan. The shares vest over a period of four to five years. The Company reserves the right to refuse the transfer of such shares until such conditionshave been fulfilled with respect to such transfers. During the fiscal year ended April 3, 2011, 129,725 shares were issued and 6,048 shares wererepurchased for $0.01 per share. During the fiscal year ended April 1, 2012, the Company granted 288,214 restricted shares and repurchased 37,115shares for $0.01 per share. During the fiscal year ended April 1, 2012 and the thirty- nine weeks ended January 1, 2012 and December 30, 2012, theCompany charged to operations approximately $437,000, $329,000 and $83,000, respectively, for non- cash stock based compensation expense. Thefair value of the restricted shares granted was approximately $22,000, $272,000, $1.0 million, $521,000 and $0 for the fiscal years ended March 28,2010, April 3, 2011 and April 1, 2012 and the thirty- nine weeks ended January 1, 2012 and December 30, 2012, respectively.

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10. EQUITY COMPENSATION PLAN AND COMMON STOCK (Continued) As of December 30, 2012, there was $647,000 of unrecognized compensation expense related to the unvested stock- based compensation awardsgranted under the Plan. The compensation expense is expected to be recognized over a weighted average period of 3.25 years. The status of the Company's unvested restricted stock grants for the fiscal years ended March 28, 2010, April 3, 2011 and April 1, 2012 and thethirty- nine weeks ended December 30, 2012 is summarized as follows:

Shares

WeightedAverageGrant

Date FairValue

Balance at March 29, 2009 - $ -Granted 30,475 0.71

Balance at March 28, 2010 30,475 0.71Granted 129,725 2.10Vested (97,353) 2.02

Balance at April 3, 2011 62,847 1.56Granted 288,214 3.57Vested (138,567) 2.77Forfeited (27,392) 0.71

Balance at April 1, 2012 185,102 4.99Vested (32,609) 2.77

Outstanding unvested awards at December 30, 2012 (unaudited) 152,493 $ 4.62

As of December 30, 2012, no options have been granted under the Plan.11. RELATED PARTY TRANSACTIONSOperating Leases The Company leases part of its Broadway/West Side of Manhattan store facility from an entity which is owned by the former owners of theCompany, two of whom own preferred stock and one of whom is a director and executive officer. This lease terminates on January 31, 2032. Rentexpense on this lease approximated $1.3 million, $1.4 million and $1.5 million for the fiscal years ended March 28, 2010, April 3, 2011 and April 1,2012, respectively. Included within accrued expenses and other at April 3, 2011 and April 1, 2012 is approximately $0 and $208,000, respectively,due under this lease. Rent expense on this lease approximated $976,000 and $1.5 million for the thirty- nine weeks ended January 1, 2012 andDecember 30, 2012, respectively. The Company leases its Brooklyn, NY store facility from an entity which is 16.67% owned by an individual who is a Company director andexecutive officer. This lease will terminate on October 31, 2016, subject to three 5- year renewal options in favor of the Company. This entity ownsthe building where the Brooklyn store is located. Rent expense on this lease approximated $1.6 million, $1.9 million and $2.0 million for the fiscalyears ended March 28, 2010, April 3, 2011 and April 1, 2012,

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11. RELATED PARTY TRANSACTIONS (Continued)respectively. Included within accrued expenses and other at April 3, 2011 and April 1, 2012 is approximately $0 and $592,000, respectively, dueunder this lease. Rent expense on this lease approximated $1.1 million and $1.4 million for the thirty- nine weeks ended January 1, 2012 andDecember 30, 2012, respectively. Included within accrued expenses and other at December 30, 2012 is approximately $489,000 due under this lease. The Company leases its Harlem/West Side of Manhattan store facility from an entity which is owned by the former owners of the Company, twoof whom own preferred stock and one of whom is a director and executive officer. This lease will terminate on January 31, 2032 unless extended byagreement of the members. Rent expense on this lease approximated $770,000, $884,000 and $857,000 for the fiscal years ended March 28, 2010,April 3, 2011 and April 1, 2012, respectively. Included within accrued expenses and other at April 3, 2011 and April 1, 2012 is approximately $0 and$69,000, respectively, due under this lease. Rent expense on this lease approximated $647,000 and $1.4 million for the thirty- nine weeks endedJanuary 1, 2012 and December 30, 2012, respectively. The Company leases the property that houses the production bakery and the cheese and dried fruits and nuts warehouses from an entity which isowned by the former owners of the Company, two of whom own preferred stock and one of whom is a director and executive officer, which holdsreal estate adjacent to the Harlem/West Side of Manhattan store facility. This lease will terminate on January 31, 2032. The Company also rents thespace used as the store's parking lot from this entity. Rent expense on this lease approximated $144,000, $193,000 and $475,000 for the fiscal yearsended March 28, 2010, April 3, 2011 and April 1, 2012, respectively. Rent expense on this lease approximated $293,000 and $375,000 for the thirty-nine weeks ended January 1, 2012 and December 30, 2012, respectively. The rent expense was recorded as part of direct store expenses and general and administrative expenses in the consolidated statements ofoperations. In December 2012, the Company agreed with the landlords of the Harlem properties and a portion of the Broadway store to a reset of the annualbase rent for these properties that will increase the Company's base rent for these properties by an aggregate of $1.8 million for fiscal 2013. As aresult of this increase, the Company has paid the landlords an aggregate of $1.6 million, representing the additional rent due for the periodFebruary 1, 2012 through December 30, 2012, of which Mr. Glickberg's share, based upon his ownership and before giving effect to any expenses, isapproximately $550,000. In addition, the Company is in the process of negotiating with the landlord of the Red Hook store for a reset of the annualbase rent for this property. The Company estimates that the reset will increase the Company's annual base rent for this property by approximately$419,000. As a result of this increase, the Company estimates that it will owe the landlord an aggregate of $489,000, representing additional rent duefrom November 1, 2011 through December 30, 2012, a fourteen month period, as a result of such reset, of which Mr. Glickberg's share, based on hisownership and before giving effect to any expenses is $81,000. The Company has accrued for the effect of such anticipated adjustments as additionalrent expense during the fiscal year ended April 1, 2012 and the thirty- nine weeks ended December 30, 2012.

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11. RELATED PARTY TRANSACTIONS (Continued)Utility Services The Company obtains utility services for its Brooklyn, NY store facility from an entity which is 16.67% owned by an individual who is aCompany director and executive officer. Payments made for these services approximated $1.0 million, $1.1 million, $993,000, $743,000 and$597,000 for the fiscal years ended March 28, 2010, April 3, 2011 and April 1, 2012 and the thirty- nine weeks ended January 1, 2012 andDecember 30, 2012, respectively, and were recorded as direct store expenses in the consolidated statements of operations (Note 14- Commitmentsand Contingencies).Management Agreement Pursuant to a management agreement, Sterling Investment Partners Advisers, LLC ("Sterling Advisers"), an affiliate of the Company'scontrolling stockholders, provided to the Company management and advisory services, including developing and implementing corporate strategy,budgeting future corporate investments, developing acquisition and divestiture strategies and debt and equity financings. Pursuant to the managementagreement, the Company pays to Sterling Advisers an annual management advisory fee (the "advisory fee"). The advisory fee is subject to increasesbased on the incremental percentage increase in Sterling's future total investment and the Company achieving specified thresholds, as defined.Pursuant to the management agreement, Sterling Advisers is also entitled to specified fees in connection with certain merger and acquisition andfinancing transactions. The advisory fee amounted to approximately $1.2 million, $1.6 million, $2.6 million, $1.5 million and $2.6 million in the fiscal years endedMarch 28, 2010, April 3, 2011 and April 1, 2012 and the thirty- nine weeks ended January 1, 2012 and December 30, 2012, respectively, and arerecorded as part of general and administrative expenses in the consolidated statements of operations. As a result of the debt financings in December 2009, March 2011, December 2011 and August 2012, further described in Note 8, the Companypaid Sterling Advisers debt financing fees of approximately $2.7 million, $4.0 million, $500,000 and $2.0 million, respectively. The current andnoncurrent unamortized portions of the debt financing fees are capitalized and classified as deferred financing fees and other assets, respectively. As a result of the equity financings in October 2009 and October 2010, the Company paid Sterling Advisers equity financing fees ofapproximately $241,000 and $321,000, respectively. These costs were netted against the proceeds of the preferred stock issuances as furtherdescribed in Note 9- Redeemable Preferred Stock.12. MULTIEMPLOYER PLAN AND EMPLOYEE BENEFIT PLAN The Company contributes to a multiemployer defined benefit pension plan under the terms of a collective- bargaining agreement that coverscertain of its union- represented employees. The risks of participating in this multiemployer plan are different from single- employer plans. Assetscontributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers. If aparticipating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers.Additionally, if the

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12. MULTIEMPLOYER PLAN AND EMPLOYEE BENEFIT PLAN (Continued)Company chooses to stop participating in its multiemployer plan, it will be required to pay this plan an amount based on the underfunded status of theplan, referred to as a withdrawal liability. The Company's participation in this plan for the plan years ended December 31, 2010, 2011 and 2012 is outlined in the table below. The"EIN/Pension Plan Number" column provides the Employer Identification Number ("EIN") and the three- digit plan number, if applicable. The mostrecent Pension Protection Act ("PPA") zone status available as of January 1, 2011 and 2012 is indicated below. The zone status is based oninformation that the Company received from the plan and is certified by the plan's actuary. Among other factors, plans in the red zone are generallyless than 65 percent funded, plans in the yellow zone are less than 80 percent funded, and plans in the green zone are at least 80 percent funded. The"FIP/RP Status Pending/Implemented" column indicates plans for which a financial improvement plan ("FIP") or a rehabilitation plan ("RP") is eitherpending or has been implemented. In addition to regular plan contributions, the Company may be subject to a surcharge if the plan is in the red zone.The "Surcharge Imposed" column indicates whether a surcharge has been imposed on contributions to the plan. The last column lists the expirationdate of the collective- bargaining agreement to which the plan is subject and any minimum funding requirements. There have been no significantchanges that affect the comparability of total employer contributions for fiscal years 2010, 2011 and 2012.

PensionProtection

Act Zone Status (In thousands)Company Contributions Expiration

Date ofCollective

BargainingAgreement

January 1,EIN/PensionPlan

Number

FIP/RPStatus

PendingFiscal2010

Fiscal2011

Fiscal2012

SurchargeImposed

Pension Fund 2011 2012

Local 1500 Fund23-

7176372/001 Yellow Yellow Implemented $1,400 $1,800 $2,300 No March 2014 At the date the Company's audited financial statements were issued, the Form 5500 for the plan year ended December 31, 2012 was notavailable. Additionally, for each of the plan years ending December 31, 2009, 2010 and 2011, the Company contributed more than 5% of the totalcontributions to the pension plan. The Company also offers a noncontributory, defined contribution 401(k) profit sharing plan to all of its nonunion employees. Employeesbecome eligible when they attain both age 18 and complete one half year of service. Employee contributions are based on annual salary with acontribution rate ranging up to 15%. Employer contributions can range up to 3% of an employee's annual salary, as determined by management, on adiscretionary basis. The Company did not make employer contributions to the plan for the fiscal years 2010, 2011 and 2012 or the thirty- nine weeksended January 1, 2012 or December 30, 2012.

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13. INCOME TAXES The components of the benefit from income taxes for the fiscal years ended March 28, 2010, April 3, 2011 and April 1, 2012 and the thirty- nineweeks ended January 1, 2012 and December 30, 2012 are as follows (in thousands):


Ended

March 28,2010

April 3,2011

April 1,2012

January 1,2012

December30

2012(Unaudited) (Unaudited)

Current income tax provision (benefit)Federal $ 114 $ - $ - $ - $ -State and city 390 (283) (1) (1) 51

504 (283) (1) (1) 51

Deferred income tax (benefit)Federal (3,156) (10,046) (5,557) (4,644) 17,662State and city (1,774) (4,531) (2,746) (2,295) 8,801

(4,930) (14,577) (8,303) (6,939) 26,463

Income tax (benefit) provision $ (4,426) $(14,860) $(8,304) $ (6,940) $ 26,514

The reconciliation of the U.S. statutory rate with the Company's effective tax rate for the fiscal years ended March 28, 2010, April 3, 2011 andApril 1, 2012 and the thirty- nine weeks ended January 1, 2012 and December 30, 2012 is summarized as follows:


Ended

March 28,2010

April 3,2011

April 1,2012

January 1,2012

December30

2012(Unaudited) (Unaudited)

Federal statutory rate 34.0% 34.0% 34.0% 34.0% 34.0%Effect of:State income taxes (net of federal tax benefit) 7.9 9.5 8.9 9.0 8.5Permanent differences (2.9) 0.4 (1.4) (1.4) (0.4)Valuation allowance - - - - (131.5)Other (0.9) 0.4 (0.6) (0.6) -

Effective rate 38.1% 44.3% 40.9% 41.0% (89.4)%

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13. INCOME TAXES (Continued) The tax effects of the temporary differences which give rise to the deferred tax assets and liabilities are as follows (in thousands):

April 3,2011

April 1,2012

December 30,2012

(Unaudited)CURRENT DEFERRED TAX ASSETSProvision for bad debts $ - $ 242 $ 282Accrued compensation 287 367 355Inventory capitalization 940 1,048 1,114

Total current deferred tax assets 1,227 1,657 1,751

NONCURRENT DEFERRED TAX ASSETSFavorable leases 677 1,153 1,565Non- compete agreements 94 116 135Sales tax reserve - 44 44Interest- discount 191 557 507Debt issuance costs 2,463 1,841 4,135Deferred rent 2,920 5,602 8,647Tax credits 762 901 858Charitable contributions 575 625 851Accrued severance 724 728 132Depreciation - 1,491 1,814Other - 189 227Net operating losses 27,644 34,339 44,242

Total noncurrent deferred tax assets 36,050 47,586 63,157

37,277 49,243 64,908Less: Valuation allowance - - (39,000)

Total deferred tax assets 37,277 49,243 25,908

NONCURRENT DEFERRED TAX LIABILITIESGoodwill (11,589) (14,386) (16,780)Trade names (2,867) (3,558) (4,151)Prepaid rent (648) (805) (946)Depreciation (376) - -

Total deferred tax liabilities (15,480) (18,749) (21,877)

Net deferred tax asset (liability) $ 21,797 $ 30,494 $ 4,031

Income tax expense for the thirty- nine week periods presented is recognized based on the Company's estimated annual effective tax rate whichis based upon the tax rate expected for the full fiscal year applied to the pre- tax income of the interim period.

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13. INCOME TAXES (Continued) At April 1, 2012, the Company had available U.S. federal net operating losses of approximately $79.7 million. These federal net operating losscarry forwards expire at various times beginning in calendar year 2027 through fiscal 2032. In addition, the Company has various state net operatinglosses that expire in varying amounts through fiscal year 2032. The Company expects to incur additional net operating losses through fiscal 2014before generating future taxable income. These cumulative net operating losses are primarily attributable to the Company's expansion including thebuilding of new stores, increased production and corporate overhead and associated costs of capital. The Company has net deferred tax assets of approximately $30.5 million as of April 1, 2012, the most significant of which is the deferred taxasset for net operating losses of $34.3 million. In assessing the realizability of the deferred tax assets, management considers whether it is more likelythan not that some portion or the entire deferred tax asset will be realized. Ultimately, the realization of the deferred tax asset is dependent upon thegeneration of sufficient taxable income in those periods in which temporary differences become deductible and net operating loss carry forwards canbe utilized. The Company has evaluated both positive and negative evidence, including the historical levels of taxable income, scheduled reversals oftemporary differences, tax planning strategies, targeted number of new store openings and forecasts of the Company's future operational performanceand taxable income, adjusted by varying probability factors, in making a determination as to whether it is more likely than not that all or some portionof the deferred tax assets will be realized. The Company also considered cumulative losses as well as the impact of its expansion in assessing its corepretax earnings. Assumptions regarding future taxable income require significant analysis and judgment. This analysis includes financial forecasts based on thehistorical performance of the business, targeted number of new store openings and measurement of the year in which taxable income from existingstores exceeds the future costs and losses incurred from new store openings. Based on this analysis, as of April 1, 2012, the Company was projectingthat it will generate future taxable income beginning in fiscal 2015 and will utilize all prior years' net operating losses by no later than fiscal 2018.Accordingly, the Company had concluded that no valuation allowance was required. The Company's projections of taxable income at April 1, 2012, indicated that the Company would generate sufficient taxable income by fiscal2018 such that all deferred tax assets would be realized. Any projections of future taxable income are inherently subject to change for variousreasons. During the thirteen week period ended December 30, 2012, the Company revised its forecast of taxable income through 2018, and nowbelieves it is not "more likely than not" that all of its deferred tax assets will be realized by the end of fiscal year 2018. Accordingly, the Company hasrecorded a partial valuation allowance of approximately $39.0 million against deferred tax assets during the thirty- nine weeks ended December 30,2012. This partial valuation allowance reflects the Company's consideration of new evidence, both positive and negative, pertaining to projectingtaxable income giving appropriate weight to future uncertainties involving economic conditions, the competitive environment, Company- specificissues and other risk factors. As a result of such uncertainties, the Company believed it prudent to reduce the projected sales and taxable incomegrowth in the latter years of its projections.

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13. INCOME TAXES (Continued) At December 30, 2012, the Company estimates it had available U.S. federal net operating losses in excess of $100 million and these netoperating losses will be available for the Company to use through approximately 2032 against future taxable income. The Company files U.S. federal and various state corporate income tax returns. The IRS concluded a review of the Company's federal incometax return for the fiscal year ended March 29, 2009. The IRS made no changes to the tax return. The Company has not been notified of any otherfederal or state income tax examination. The Company's federal and state income tax returns for tax years 2007 and afterwards remain subject toexamination due to net operating losses generated in those years.14. COMMITMENTS AND CONTINGENCIESOperating Leases The Company occupies premises pursuant to non- cancelable lease agreements, including the lease agreements with related parties as describedin Note 11, whom were assigned to the Company as of January 18, 2007. The leases expire through 2039. Rent under these agreements, except forcertain lease years when the rent is determined by arbitration, increases annually by either 50% of the percentage increase in the consumer price indexor by the percentage increase in the consumer price index of up to 5%. The aggregate minimum rental commitments under all operating leases as of April 1, 2012 and December 30, 2012 are as follows for the fiscalyears ending (in thousands):

As ofApril 1,

2012

As ofDecember 30,

2012March 31, 2013 $ 19,745 $ 6,060March 30, 2014 20,501 27,483March 29, 2015 20,718 28,569April 3, 2016 20,876 28,726April 2, 2017 21,128 28,185Thereafter 352,930 452,830

Total $ 455,898 $ 571,853

Rent expense for the fiscal years ended March 28, 2010, April 3, 2011 and April 1, 2012 approximated $10.2 million, $16.7 million and$23.1 million, respectively. Rent expense for the thirty- nine weeks ended January 1, 2012 and December 30, 2012 approximated $16.4 million and$22.4 million, respectively. As of April 1, 2012 and December 30, 2012, the Company is contractually committed for construction contracts related tothe building and opening of new stores for approximately $7.3 million and $1.3 million, respectively.

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14. COMMITMENTS AND CONTINGENCIES (Continued)Employment Agreements The employment agreements with certain of the Company's management employees include, among others, various noncompetition provisions,salary and benefits continuation and severance payments. The future minimum cash payments under the terms of those agreements as of April 1, 2012 are as follows for the fiscal years ending (inthousands):March 31, 2013 $ 4,275March 30, 2014 4,290March 29, 2015 3,053April 3, 2016 1,150April 2, 2017 958

Total $13,726

The employment agreement with one of the Company's executives provides that in the event of a qualifying sale, as defined, of the Companyduring the initial term of the employment agreement, and if such executive is working full- time for the Company, the agreement which otherwisewould expire in January 2015 if the Company or the executive officer elects not to renew, will be automatically extended until January 2017. If theexecutive is then working for the Company but does not have an employment agreement, he will receive a three- year employment agreementcommencing on the date of the qualifying sale. In either case, the executive may retire at any time after 12 months from the closing of such qualifyingsale and take a lump- sum severance payment equal to the balance due for the remaining employment term, as extended. The liability created underthese circumstances would be approximately $3.3 million at current compensation levels and cannot exceed $5.5 million in the aggregate for theexecutive.Other Contingencies The Company obtains its utility services for the Brooklyn, NY store from an entity which is 16.67% owned by an individual who is a Companydirector and executive officer. The Company believes that the entity has overcharged for utilities since its initial occupancy of the premises. SinceNovember 2008, the Company has taken deductions from the utility invoices based on the methodology that the Company believes represents theparties' original intentions with respect to the utility calculations. The Company believes that it will be successful in negotiating an amicableresolution of this matter between the parties. The Company also believes that the resolution of this matter will not have a material adverse effect onits financial condition and results of operations. The Company, from time to time, is and may be subject to legal proceedings and claims which arise in the ordinary course of its business. TheCompany has not accrued any amounts in connection with the uncertainties discussed above as the Company has determined that losses from theseuncertainties are not probable. For all matters, including unasserted claims, where a loss is reasonably possible, the aggregate range of estimatedlosses is not material to the financial position, results of operations, liquidity or cash flows of the Company.

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15. INSURANCE CLAIMS AND RECOVERIES RELATED TO HURRICANE SANDY The Company's store located in Red Hook, Brooklyn, New York ("Red Hook") sustained substantial damages from the effects of HurricaneSandy on October 29, 2012, which resulted in its temporary closing. Red Hook is expected to reopen for business during the fourth quarter of fiscal2013. The Company also sustained property and equipment damages and losses on merchandise inventories at certain other stores resulting from thisstorm. As a result of these damages, the Company has written off approximately $2.1 million of unsalable merchandise inventories andapproximately $3.4 million of impaired property and equipment. The Company's insurance policies provide for $45 million of flood insurance forproperty and casualty damage and business interruption. The Company has submitted claims to its insurance carriers of approximately $20 million forlosses sustained from this storm, including estimated business interruption losses on Red Hook of approximately $2 million per month. The Companycontinues to evaluate its estimates of storm- related losses and in the future may make adjustments to its claim. In November and December 2012, the Company received advances totaling $5.5 million in partial settlement of its insurance claims. Theinsurance carriers have designated $2.5 million of these advances as non- refundable reimbursement for business interruption losses sustained at RedHook, which has been recorded as business interruption insurance recoveries in the consolidated statement of operations for the thirty- nine weeksended December 30, 2012. Additionally, the Company has recorded approximately $3.0 million for reimbursable ongoing business expenses andremediation costs incurred in connection with Red Hook as a reduction in general and administrative expenses in the consolidated statement ofoperations for the thirty- nine weeks ended December 30, 2012 as the realization of the claim for loss recovery has been deemed to be probable.16. SUBSEQUENT EVENTS Subsequent events have been evaluated through June 1, 2012 which is the date the audited financial statements were available to be issued.17. SUBSEQUENT EVENTS (UNAUDITED) In February 2013, Fairway Group Holdings Corp. and its wholly- owned subsidiary, Fairway Group Acquisition Company, as the borrower,entered into a senior secured credit facility consisting of a $275 million term loan (the "2013 Term Facility") and a $40 million revolving creditfacility, which includes a $40 million letter of credit subfacility (the "2013 Revolving Facility" and together with the 2013 Term Facility, the "2013Senior Credit Facility") with the 2013 Term Facility maturing in August 2018 and the 2013 Revolving Facility maturing in August 2017. TheCompany used the proceeds from the 2013 Term Facility to repay the $264.5 million of outstanding borrowings (including accrued interest) under the2012 Senior Credit Facility, pay fees and expenses and provide it with $3.5 million to repay its outstanding subordinated note. Borrowings under the 2013 Senior Credit Facility bear interest, at the option of the Company, at (i) adjusted LIBOR (subject to a 1.25% floor)plus 5.50% or (ii) an alternate base rate plus 4.50%. In addition, there is a fee payable quarterly in an amount equal to 1% per annum of the undrawnportion of the 2013 Revolving Facility, calculated based on a 360- day year. Interest is payable quarterly in the case of base rate loans and on thematurity dates or every three months, whichever is shorter, in the

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17. SUBSEQUENT EVENTS (UNAUDITED) (Continued)case of adjusted LIBOR loans. The 5.50% and 4.50% margins will each be reduced by 50 basis points at any time following completion of theCompany's initial public offering when the Company's corporate family rating from Moody's Investor Services Inc. is B2 or higher and theCompany's corporate rating from Standard & Poors Rating Service is B or higher, in each case with a stable outlook, and as long as certain events ofdefault have not occurred. All of the borrower's obligations under the 2013 Senior Credit Facility are unconditionally guaranteed (the "Guarantees") by Fairway GroupHoldings Corp. and subsidiaries (other than the borrower and any future unrestricted subsidiaries as the Company may designate, at its discretion,from time to time) (the "Guarantors"). Additionally, the 2013 Senior Credit Facility and the Guarantees are secured by a first- priority perfectedsecurity interest in substantially all present and future assets of the borrower and each Guarantor, including accounts receivable, property andequipment, merchandise inventories, general intangibles, leases, intellectual property, investment property and intercompany notes amongGuarantors. Mandatory prepayments under the 2013 Senior Credit Facility are required with: (i) 50% of adjusted excess cash flow (which percentage shallbe reduced to 25% upon achievement and maintenance of a leverage ratio of less than 5.0:1.0, and to 0% upon achievement and maintenance of aleverage ratio of less than 4.0:1.0); (ii) 100% of the net cash proceeds of asset sales or other dispositions of property by the Company and certain ofits subsidiaries (subject to certain exceptions and reinvestment provisions); and (iii) 100% of the net cash proceeds of issuances, offerings orplacements of debt obligations (subject to certain exceptions). In addition, the Company must repay $7.7 million of the outstanding term loan if it hasnot repaid in full its outstanding subordinated note by May 15, 2013. The 2013 Senior Credit Facility contains negative covenants, including restrictions on: (i) the incurrence of additional debt; (ii) liens and sale-leaseback transactions; (iii) loans and investments; (iv) guarantees and hedging agreements; (v) the sale, transfer or disposition of assets andbusinesses; (vi) dividends on, and redemptions of, equity interests and other restricted payments, including dividends and distributions to theCompany by its subsidiaries; (vii) transactions with affiliates; (viii) changes in the business conducted by the Company; (ix) payment or amendmentof subordinated debt and organizational documents; and (x) maximum capital expenditures. The Company is also required to comply with thefollowing financial covenants: (i) a maximum total leverage ratio and (ii) a minimum cash interest coverage ratio. The financial covenants of the 2013 Senior Credit Facility will commence with the reporting period ending March 31, 2013. On March 6, 2013, the Company repaid its outstanding subordinated promissory note in the aggregate principal amount of $7.3 million, togetherwith all accrued interest aggregating $400,000. In March 2013, the Company entered into a separation agreement in connection with an executive stepping down as a director and officer topursue other opportunities. Pursuant to the separation agreement, the Company agreed, among other things, to pay him severance through January2015 of $325,000, pay him a bonus of between $60,000 and $75,000 for the fiscal year ending March 31, 2013 and continue certain of his benefits fora specified period of time. The Company also repurchased

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17. SUBSEQUENT EVENTS (UNAUDITED) (Continued)129,963 shares of his Class A common stock for a purchase price of $1.5 million and agreed to allow him to sell $1.5 million of shares of Class Acommon stock in the Company's initial public offering. This individual agreed that he would not compete with the Company for a period of five yearsanywhere on the East Coast. For our interim consolidated financial statements as of December 30, 2012, and for the thirty- nine weeks then ended, we have evaluatedsubsequent events through February 26, 2013, which is the date the financial statements were available to be issued.18. TRANSACTION TO BE CONSUMMATED PRIOR TO, OR SIMULTANEOUSLY WITH, THE EFFECTIVE DATE OF THEREGISTRATION STATEMENT On March 28, 2013, the Board of Directors approved, subject to the successful completion of the Company's initial public offering, anamendment and restatement of the Company's certificate of incorporation to increase the number of shares the Company is authorized to issue to150,000,000 shares of Class A common stock, 31,000,000 shares of Class B common stock and 5,000,000 shares of preferred stock. The amendmentand restatement of the certificate of incorporation will effect an internal recapitalization pursuant to which the Company will effect a 118.58- for- onestock split on its outstanding common stock and reclassify its outstanding common stock into shares of Class A common stock. Accordingly, all common share and per share amounts in these financial statements and the notes thereto have been adjusted to reflect the118.58- for- one stock split as though it had occurred at the beginning of the initial period presented.

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PART IIINFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution. The following table sets forth the various expenses, other than underwriting discounts and commissions, payable by the registrant in connectionwith the sale of common stock being registered. All of the amounts shown are estimated except the SEC registration fee, the Financial IndustryRegulatory Authority, or FINRA, filing fee and the NASDAQ Global Market listing fee.

Amount tobe

PaidSEC registration fee $ 22,424FINRA filing fee 28,756NASDAQ Global Market listing fee 150,000Printing and engraving expenses 700,000Legal fees and expenses 1,635,000Accounting fees and expenses 900,000Blue sky fees and expenses 5,000Transfer agent and registrar fees 25,000Investor relations 200,000Consultants 300,000Miscellaneous fees and expenses 273,820

Total $4,240,000

Item 14. Indemnification of Directors and Officers. Section 102(b)(7) of the Delaware General Corporation Law (the "DGCL") allows a corporation to provide in its certificate of incorporation thata director of the corporation will not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as adirector, except where the director breached the duty of loyalty, failed to act in good faith, engaged in intentional misconduct or knowingly violated alaw, authorized the payment of a dividend or approved a stock repurchase in violation of Delaware corporate law or obtained an improper personalbenefit. Our amended and restated certificate of incorporation will provide for this limitation of liability. Section 145 of the DGCL ("Section 145") provides that a Delaware corporation may indemnify any person who was, is or is threatened to bemade, party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than anaction by or in the right of such corporation), by reason of the fact that such person is or was an officer, director, employee or agent of suchcorporation or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. Theindemnity may include expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred bysuch person in connection with such action, suit or proceeding, provided such person acted in good faith and in a manner he reasonably believed to bein or not opposed to the corporation's best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe that hisor her conduct was illegal. A Delaware corporation may indemnify any persons who are, were or are threatened to be made a party to any threatened,pending or completed action or suit by or in the right of the corporation by reason of the fact that such person is or was a director, officer, employeeor agent of another corporation or enterprise. The indemnity may include expenses (including attorneys' fees) actually and reasonably incurred bysuch person in connection with the defense or settlement of such action or suit, provided such person acted in good faith and in a manner hereasonably believed to be in or not opposed to the corporation's best interests, provided that no

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Table of Contentsindemnification is permitted without judicial approval if the officer, director, employee or agent is adjudged to be liable to the corporation. Where anofficer or director is successful on the merits or otherwise in the defense of any action referred to above, the corporation must indemnify him againstthe expenses which such officer or director has actually and reasonably incurred. Section 145 further authorizes a corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer,employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of anothercorporation or enterprise, against any liability asserted against him and incurred by him in any such capacity, or arising out of his or her status assuch, whether or not the corporation would otherwise have the power to indemnify him under Section 145. Our amended and restated certificate of incorporation will provide that to the fullest extent permitted by the DGCL, none of our directors shallbe liable to our company or our stockholders for monetary damages arising from a breach of fiduciary duty owed to our company or our stockholders.In addition, our amended and restated bylaws will provide that we must indemnify our directors and officers to the fullest extent authorized by theDGCL and must also pay expenses incurred in defending any such proceeding in advance of its final disposition upon delivery of an undertaking, byor on behalf of an indemnified person, to repay all amounts so advanced if it should be determined ultimately that such person is not entitled to beindemnified under this section or otherwise. Prior to the completion of this offering, we expect to enter into indemnity agreements with each of our directors and executive officers in whichwe will agree to indemnify, defend and hold harmless, and also advance expenses as incurred, to the fullest extent permitted under applicable law,from damage arising from the fact that such person is or was an officer or director of our company or our subsidiaries. The indemnification rights set forth above shall not be exclusive of any other right which an indemnified person may have or hereafter acquireunder any statute, provision of our amended and restated certificate of incorporation, our amended and restated bylaws, agreement, vote ofstockholders or disinterested directors or otherwise. We expect to maintain standard policies of insurance that provide coverage (1) to our directors and officers against loss rising from claims madeby reason of breach of duty or other wrongful act and (2) to us with respect to indemnification payments that we may make to such directors andofficers.The proposed form of Underwriting Agreement to be filed as Exhibit 1.1 to this Registration Statement provides for indemnification of ourdirectors and officers by the underwriters against certain liabilities.Item 15. Recent Sales of Unregistered Securities.

In the three years preceding the filing of this registration statement, the registrant has issued the following securities that were not registeredunder the Securities Act: In October 2009 we issued 9,650 shares of our Series A preferred stock and received proceeds of approximately $9.4 million net of issuancecosts of approximately $241,000. In October 2010 we issued 12,788 shares of our Series A preferred stock and received net proceeds ofapproximately $12.5 million net of issuance costs of approximately $320,000. The offers, sales and issuances of these securities were deemed to beexempt from registration under the Securities Act in reliance upon the exemption provided by Section 4(2) of the Securities Act because the offers,sales and issuances were transactions not involving any public offering, and all recipients of these securities were accredited investors within themeaning of Rule 501 of Regulation D of the Securities Act.

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Table of Contents During fiscal 2010, 2011 and 2012 we issued an aggregate of 448,414 shares of restricted stock pursuant to our 2007 Equity Compensation Planat a purchase price of $0.01 per share. The offers, sales and issuances of these securities were deemed to be exempt from registration under theSecurities Act in reliance upon the exemption provided by Rule 701 of the Securities Act, as the offers, sales and issuances of the securities weretransactions under compensatory benefit plans as provided under Rule 701.Item 16. Exhibits and Financial Statement Schedules.

(a)Exhibits.

The information required by this item is set forth on the exhibit index that follows the signature page of this registration statement.

(b)Financial statement schedules.

All financial statement schedules are omitted because they are inapplicable, not required or the information is indicated elsewhere in theconsolidated financial statements or the notes thereto.Item 17. Undertakings.

The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement, certificates insuch denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling personsof the registrant pursuant to the provisions referenced in Item 14 of this registration statement, or otherwise, the registrant has been advised that in theopinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore,unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred orpaid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by suchdirector, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel thematter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it isagainst public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The undersigned registrant hereby undertakes that:

1. For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectusfiled as part of this registration statement in reliance upon Rule 430A and contained in the form of prospectus filed by the registrantpursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time itwas declared effective. 2. For the purpose of determining any liability under the Securities Act of 1933, each post- effective amendment that contains aform of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of suchsecurities at the time shall be deemed to be the initial bona fide offering thereof. 3. For the purpose of determining liability under the Securities Act of 1933 to any purchaser, if the registrant is subject toRule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registrationstatements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be

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part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement madein a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemedincorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with atime of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectusthat was part of the registration statement or made in any such document immediately prior to such date of first use. 4. For the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initialdistribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrantpursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities areoffered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to thepurchaser and will be considered to offer or sell such securities to such purchaser:

(i)any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filedpursuant to Rule 424;

(ii)any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used orreferred to by the undersigned registrant;

(iii)the portion of any other free writing prospectus relating to the offering containing material information about theundersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

(iv)any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

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SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this amendment no. 2 to registrationstatement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on April 4, 2013.

FAIRWAY GROUP HOLDINGS CORP.

By: /s/ HERBERT RUETSCH

Herbert RuetschChief Executive Officer

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POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, as amended, this amendment no. 2 to registration statement has been signed by thefollowing persons in the capacities and on the dates indicated.

Signature Title Date

/s/ HERBERT RUETSCH

Herbert Ruetsch

Chief Executive Officer(Principal Executive Officer) April 4, 2013

/s/ EDWARD ARDITTE

Edward Arditte

Chief Financial Officer(Principal Financial Officer) April 4, 2013

/s/ LINDA M. SILUK

Linda M. Siluk

Vice President, Finance andChief Accounting Officer

(Principal Accounting Officer)April 4, 2013

*

Charles W. SantoroExecutive Chairman of the Board April 4, 2013

/s/ HOWARD GLICKBERG

Howard GlickbergDirector April 4, 2013

*

William SeldenDirector April 4, 2013

*

Michael BarrDirector April 4, 2013

*

Stephen KeyDirector April 4, 2013

*

Farid SulemanDirector April 4, 2013

The undersigned, by signing his name hereto, does sign and execute this amendment no. 2 to this registration statement pursuant to the power ofattorney executed by the above- named persons and previously filed with the Securities and Exchange Commission on behalf of such persons./s/ WILLIAM SANFORD

William Sanford, as Attorney- In- FactII- 6

Table of Contents

EXHIBIT INDEXExhibit

No. Description1.1* Form of Underwriting Agreement.

3.1 Amended and Restated Certificate of Incorporation.

3.2 Bylaws.

3.3* Form of Second Amended and Restated Certificate of Incorporation ofRegistrant, to be in effect at the closing of Registrant's initial public offering.

3.4* Form of Amended and Restated Bylaws of Registrant, to be in effect at theclosing of Registrant's initial public offering.

4.1 Specimen common stock certificate.

4.2 Form of warrant issued March 26, 2009.

5.1* Opinion of Fulbright & Jaworski L.L.P.

10.1 Credit Agreement, dated as of August 17, 2012, among Fairway GroupAcquisition Company, as Borrower, Fairway Group Holdings Corp., theLenders party thereto, and Credit Suisse AG, as Administrative Agent and asCollateral Agent.

10.2 Subordinated Promissory Note, dated as of May 13, 2011, made by FairwayGroup Acquisition Company in favor of Howard Glickberg.

10.3 Subordination Agreement, dated as of May 13, 2011, among HowardGlickberg, Fairway Group Acquisition Company, all other Obligors (as definedtherein); and Credit Suisse AG, as administrative agent and collateral agent forthe lenders from time to time parties to the Credit Agreement (as definedtherein).

10.4 Fairway Group Holdings Corp. 2007 Equity Compensation Plan, as amended.

10.5 Amended and Restated Employment Agreement, made as of December 29,2011, by and between Fairway Group Holdings Corp. and Howard Glickberg.

10.6 Amended and Restated Junior Partner Employment Agreement, made as ofJanuary 1, 2011, by and between Fairway Group Holdings Corp. and HerbRuetsch.

10.7 Amended and Restated Junior Partner Employment Agreement, made as ofJanuary 1, 2011, by and between Fairway Group Holdings Corp. and BrianRiesenburger.

10.8 Amended and Restated Employment Agreement, made as of September 15,2011, by and between Fairway Group Holdings Corp. and Aaron J. Fleishaker.

10.9 Amended and Restated Junior Partner Employment Agreement, made as ofJanuary 1, 2011, by and between Fairway Group Holdings Corp. and PeterRomano.

10.10* Amended and Restated Employment Agreement, made as of March 28, 2013,by and between Fairway Group Holdings Corp. and Nathalie Augustin.

10.11 Amended and Restated Employment Agreement, made as of July 31, 2007, asamended, by and between Fairway Group Holdings Corp. and KevinMcDonnell.

10.12 Employment Agreement, made as of March 28, 2013, by and between FairwayGroup Holdings Corp. and William E. Sanford.

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Table of ContentsExhibit

No. Description10.13 Employment Agreement, made as of January 18, 2007, by and between Fairway Group Holdings Corp. and Daniel Glickberg.

10.14 Employment Agreement, made as of March 28, 2013, by and between Fairway Group Holdings Corp. and Larry Santoro.

10.15 Employment Agreement, made as of March 28, 2013, by and between Fairway Group Holdings Corp. and Linda Siluk.

10.16 Stockholders' Agreement, dated as of January 18, 2007, by and among Fairway Group Holdings Corp. and the stockholders party thereto.

10.17 Registration Rights Agreement, dated as of January 18, 2007, by and among Fairway Group Holdings Corp. and the stockholders partythereto.

10.18**Amended and Restated Management Agreement, dated as of October 25, 2010, by and among Sterling Investment Partners Advisers, LLC,Fairway Group Holdings Corp. and Fairway Group Acquisition Company.

10.19 Form of Indemnification Agreement.

10.20 Fairway Group Holdings Corp. 2013 Long- Term Incentive Plan.

10.21 Employment Agreement, made as of December 3, 2012, by and between Fairway Group Holdings Corp. and Edward C. Arditte.

10.22 Credit Agreement, dated as of February 14, 2013, among Fairway Group Acquisition Company, as Borrower, Fairway GroupHoldings Corp., the Lenders party thereto, and Credit Suisse AG, as Administrative Agent and Collateral Agent.

10.23 Voting Agreement, dated as of March 28, 2013, among Fairway Group Holdings Corp., Daniel Glickberg and Sterling InvestmentPartners II, L.P.

21.1 Subsidiaries of Fairway Group Holdings Corp.

23.1* Consent of Fulbright & Jaworski L.L.P. (included in Exhibit 5.1).

23.2 Consent of Grant Thornton LLP.

23.3 Consent of Buxton Company.

24.1 Power of Attorney (on signature page).

99.1 Confidential Draft Registration Statement submitted August 2, 2012.

*To be filed by amendment.

Previously filed.

**Confidential treatment requested; confidential portions have been omitted and filed separately with the Securities and ExchangeCommission, as required by Rule 406(b).

II- 8

Exhibit 4.1

THIS CERTIFIES THAT is the owner of CUSIP DATED COUNTERSIGNED AND REGISTERED:COMPUTERSHARE TRUST COMPANY, N.A. TRANSFER AGENT AND REGISTRAR, FULLY- PAID ANDNON- ASSESSABLE SHARES OF CLASS A COMMON STOCK OF Fairway Group Holdings Corp. (hereinaftercalled the "Corporation"), transferable on the books of the Corporation in person or by duly authorized attorney, uponsurrender of this Certificate properly endorsed. This Certificate and the shares represented hereby, are issued and shallbe held subject to all of the provisions of the Certificate of Incorporation, as amended, and the By- Laws, as amended,of the Company (copies of which are on file with the Corporation and with the Transfer Agent), to all of which eachholder, by acceptance hereof, assents. This Certificate is not valid unless countersigned and registered by the TransferAgent and Registrar. Witness the facsimile seal of the Corporation and the facsimile signatures of its duly authorizedofficers. CLASS A COMMON STOCK PAR VALUE $0.00001 CLASS A COMMON STOCK THIS CERTIFICATEIS TRANSFERABLE IN CANTON, MA AND NEW YORK, NY SEE REVERSE FOR CERTAIN DEFINITIONSCertificate Number Shares . FAIRWAY GROUP HOLDINGS CORP. INCORPORATED UNDER THE LAWS OFTHE STATE OF DELAWARE Chief Executive Officer Senior Vice President, General Counsel & Secretary ByAUTHORIZED SIGNATURE 2006 DELAWARE FAIRWAY GROUP HOLDINGS CORP.ZQ|CERT#|COY|CLS|RGSTRY|ACCT#|TRANSTYPE|RUN#|TRANS# 30603D 10 9 DD- MMM- YYYY * *000000* * * * * * * * * * * * * * * * * * * * * 000000* * * * * * * * * * * * * * * * * * * * * 000000* * * * * * * * * ** * * * * * * * * * * 000000* * * * * * * * * * * * * * * * * * * * * 000000* * * * * * * * * * * * * * ** Mr. AlexanderDavid Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander DavidSample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample**** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr.Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. AlexanderDavid Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander DavidSample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample**** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr.Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. AlexanderDavid Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander DavidSample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample**** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr.Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. AlexanderDavid Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander DavidSample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample**** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr.Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Sample**** Mr. Sample**000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**S***ZERO HUNDRED THOUSAND ZERO HUNDRED AND ZERO*** MR. SAMPLE & MRS. SAMPLE & MR.SAMPLE & MRS. SAMPLE ZQ00000000 Certificate Numbers 1234567890/1234567890 1234567890/12345678901234567890/1234567890 1234567890/1234567890 1234567890/1234567890 1234567890/1234567890 TotalTransaction Num/No. 123456 Denom. 123456 Total 1234567 MR A SAMPLE DESIGNATION (IF ANY) ADD 1ADD 2 ADD 3 ADD 4 PO BOX 43004, Providence, RI 02940- 3004 CUSIP XXXXXX XX X Holder IDXXXXXXXXXX Insurance Value 1,000,000.00 Number of Shares 123456 DTC 12345678 123456789012345

The IRS requires that we report the cost basis of certain shares acquired after January 1, 2011. If your shares werecovered by the legislation and you have sold or transferred the shares and requested a specific cost basiscalculation method, we have processed as requested. If you did not specify a cost basis calculation method, wehave defaulted to the first in, first out (FIFO) method. Please visit our website or consult your tax advisor if youneed additional information about cost basis. If you do not keep in contact with us or do not have any activity inyour account for the time periods specified by state law, your property could become subject to state unclaimedproperty laws and transferred to the appropriate state. For value received,____________________________hereby sell, assign and transfer unto____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________Shares_______________________________________________________________________________________________________________________Attorney Dated: __________________________________________20__________________ Signature:____________________________________________________________ Signature:____________________________________________________________ Notice: The signature to thisassignment must correspond with the name as written upon the face of the certificate, in every particular, withoutalteration or enlargement, or any change whatever. PLEASE INSERT SOCIAL SECURITY OR OTHERIDENTIFYING NUMBER OF ASSIGNEE (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS,INCLUDING POSTAL ZIP CODE, OF ASSIGNEE) of the Class A Common Stock represented by the withinCertificate, and do hereby irrevocably constitute and appoint to transfer the said stock on the books of the within-named Corporation with full power of substitution in the premises. . FAIRWAY GROUP HOLDINGS CORP.THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH SHAREHOLDER WHO SOREQUESTS, A SUMMARY OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE,PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OF THECORPORATION AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCHPREFERENCES AND RIGHTS, AND THE VARIATIONS IN RIGHTS, PREFERENCES AND LIMITATIONSDETERMINED FOR EACH SERIES, WHICH ARE FIXED BY THE CERTIFICATE OF INCORPORATIONOF THE CORPORATION, AS AMENDED, AND THE RESOLUTIONS OF THE BOARD OF DIRECTORSOF THE CORPORATION, AND THE AUTHORITY OF THE BOARD OF DIRECTORS TO DETERMINEVARIATIONS FOR FUTURE SERIES. SUCH REQUEST MAY BE MADE TO THE OFFICE OF THESECRETARY OF THE CORPORATION OR TO THE TRANSFER AGENT. THE BOARD OF DIRECTORSMAY REQUIRE THE OWNER OF A LOST OR DESTROYED STOCK CERTIFICATE, OR HIS LEGALREPRESENTATIVES, TO GIVE THE CORPORATION A BOND TO INDEMNIFY IT AND ITS TRANSFERAGENTS AND REGISTRARS AGAINST ANY CLAIM THAT MAY BE MADE AGAINST THEM ONACCOUNT OF THE ALLEGED LOSS OR DESTRUCTION OF ANY SUCH CERTIFICATE. Signature(s)Guaranteed: Medallion Guarantee Stamp THE SIGNATURE(S) SHOULD BE GUARANTEED BY ANELIGIBLE GUARANTOR INSTITUTION (Banks, Stockbrokers, Savings and Loan Associations and Credit

Unions) WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM,PURSUANT TO S.E.C. RULE 17Ad- 15. The following abbreviations, when used in the inscription on the face ofthis certificate, shall be construed as though they were written out in full according to applicable laws orregulations: TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian (Cust) (Minor) TEN ENT - astenants by the entireties under Uniform Gifts to Minors Act (State) JT TEN - as joint tenants with right ofsurvivorship UNIF TRF MIN ACT - Custodian (until age ) and not as tenants in common (Cust) under UniformTransfers to Minors Act (Minor) (State) Additional abbreviations may also be used though not in the above list.

Exhibit 10.11

EMPLOYMENT AGREEMENT

AGREEMENT (this "Agreement") made as of July 31, 2007, and amended as of April 1, 2009, by and between Fairway Group Holdings Corp., aDelaware corporation with an office at 2284 12th Avenue, New York, New York 10027 (the "Company"), and Kevin McDonnell, an individualresiding at 48 Chester Hill Road, Warwick, NY 10990 (the "Executive").

W I T N E S S E T H:

WHEREAS, the Company and its subsidiaries (collectively, the "Fairway Group") desire that Executive be employed to serve in an executivecapacity with the Fairway Group, and Executive desires to be so employed by the Fairway Group, upon the terms and subject to the conditions hereinset forth, effective as of the time of the Closing.

NOW, THEREFORE, in consideration of the premises and of the mutual promises, representations and covenants herein contained, the parties heretoagree as follows:

1. EMPLOYMENT.

The Company hereby employs Executive and Executive hereby accepts such employment, subject to the terms and conditions herein set forth. Executive shall hold the office of Chief Merchandising Officer of the Fairway Group reporting to the Chief Operating Officer of the Company orother executive designated by the Company from time to time (the "Supervisory Executive").

2. TERM.

The term of employment under this Agreement shall begin on the date hereof and shall continue until December 31, 2009, subject to prior terminationin accordance with the terms hereof (the "Initial Term"). Upon expiration of the Initial Term, Executive will continue as an "at will" employee untileither party shall have given at least thirty (30) days prior written notice to the other party of termination of employment (the Initial Term and anyperiod during which Executive is employed hereunder collectively, the "Employment Term").

3. COMPENSATION.

(a) As compensation for the employment services to be rendered by Executive hereunder, including all services as an officer or directorof any member of the Fairway Group, the Company agrees to pay, or cause to be paid, to Executive, and Executive agrees to accept, payable in equalinstallments in accordance with Company practice, an initial annual salary of $270,000, retroactive to January 1, 2009 (the "Annual Salary"). Afternine (9) months from the date of this agreement the Company will review Executive's Annual Salary hereunder, which may be adjusted by the Boardof Directors in its sole discretion. Any adjustment to the Annual Salary after such review shall not be reduced below the initial Annual Salaryamount. For any remaining period of employment the Executive's annual salary shall be determined by the Board of Directors of the Company (the"Board of Directors") in its sole discretion, but shall not in any year be reduced below the rate for the previous year.

(b) During each year of the Employment Term, Executive shall be eligible for an annual performance bonus, as may be determined bythe Board of Directors from time to time in its sole

discretion. Such bonus will be targeted at $50,000 and will be based upon, among other things, the Executive's performance and the Company'sfinancial performance.

(c) Executive shall be entitled to a one time signing bonus of $10,000, which amount shall be paid immediately following the first fullmonth of the Employment Term unless Executive voluntarily terminates his employment with the Company or Executive's employment is terminatedby the Company for "justifiable cause" (as defined below) prior to the end of such period.

(d) If there is a Sale of the Company (as defined in the Stockholders' Agreement, dated as of January 18, 2007, between the Companyand the other parties thereto) or consummation of the Company's initial public offering pursuant to an effective registration statement under theSecurities Act of 1933, as amended, (hereinafter, a "Liquidity Bonus Event") then Executive will be entitled to receive a bonus equal to the vestedportion of the Liquidity Bonus (as defined below), provided that, after giving effect to the payment of the Liquidity Bonus, funds managed bySterling Investment Partners ("Sterling") achieve at least a 30% internal rate of return, compounded annually, and 3.0x their investment in theMeasurement Shares (as defined below). Notwithstanding the proviso contained in the immediately preceding sentence, if the internal rate of returnand the return thresholds would not be met if the Liquidity Bonus hereunder is paid in full, but will be met if the Liquidity Bonus is only partiallypaid, then Executive shall be deemed to have waived that portion of his Liquidity Bonus such that, after giving effect to the waiver, such thresholdsare met, and Executive shall be entitled to the non- waived portion of his bonus in accordance with the terms hereof.

For purposes hereof:

the "Liquidity Bonus" shall be equal to the quotient arrived at by dividing (x) 0.10% of the purchase price paid by the buyer, after deducting allindebtedness (including the preferred stock liquidation value) and expenses that the sellers are obligated to pay in the sale and deducting all amountsplaced in escrow for indemnification and working capital adjustments (provided that, upon release of such amounts from escrow to sellers, suchamounts shall then be treated as purchase price), by (y) one (1) minus the aggregate (fully diluted, as converted) equity ownership interest (stated as apercentage) in the Company that is then held by the Stockholders and Junior Partners (as such terms are defined in the Asset Purchase Agreement,dated as of October 31, 2006, among the Company and the other parties thereto) and each of their successors and assignees. For purposes hereof, theforegoing ownership interest shall be calculated as that percentage arrived at by comparing (x) the aggregate shareholdings of all suchaforementioned persons to (y) the aggregate issued and outstanding shares of capital stock, of the Company, in each instance on a fully diluted, asconverted basis; and

"Measurement Shares" shall mean those shares of the Company's capital stock purchased by Sterling prior to the date of the Liquidity Bonus Event. In computing the internal rate of return of Sterling with respect to the Measurement Shares, no amounts received pursuant to any managementagreement, and no transaction fee paid to Sterling or any of its affiliates (including any transaction fee received in connection with the transactionscontemplated by the Liquidity Bonus Event), shall be deemed received by Sterling in respect of the Measurement Shares. Any computation ofinternal rate of return shall be computed from the initial investment on January 18, 2007.

Twenty- five percent (25%) of the Liquidity Bonus will become vested on each of August 6th, 2008, 2009, 2010 and 2011, provided that Executive isemployed by the Company on such date and provided further that the vested Liquidity Bonus will only cease to be vested if Executive's employmentis terminated by the Company for "justifiable cause" (as defined below) or Executive violates his

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obligations under Section 9 hereof, in each case prior to the occurrence of a Liquidity Bonus Event. For the avoidance of doubt, if Executive'semployment is terminated by the Company without "justifiable cause" or by reason of death or disability, or Executive voluntarily terminates hisemployment but does not violate his obligations under Section 9, that portion of the Liquidity Bonus that is vested on the date of termination ofemployment shall remain vested. Any unvested portion of the Liquidity Bonus will terminate effective upon Executives termination of employment,regardless of whether the decision to terminate is the Company's or Executive's.

(e) The Liquidity Bonus, if any, shall be paid within ten (10) days following the occurrence of the Liquidity Bonus Event, unless thepayment will cause a default (with or without notice or with or without the passage of time or both) under the Fairway Group's credit arrangements,in which case the payment shall be deferred until the payment shall no longer cause a default under such arrangements.

4. EXPENSES.

The Company shall pay or reimburse Executive, upon presentment of suitable vouchers, for all reasonable business and travel expenses which may beincurred or paid by Executive in connection with his employment hereunder in accordance with Company policy as established from time to time bythe Board of Directors. Executive shall comply with such restrictions and shall keep such records as the Company may reasonably deem necessary tomeet the requirements of the Internal Revenue Code of 1986, as amended from time to time (the "Code"), and regulations promulgated thereunder.

5. OTHER BENEFITS.

Executive shall be entitled to four weeks paid vacation for each full year of employment during the Employment Term and to participate in suchbenefit plans and arrangements and receive other benefits on terms consistent with other officers of the Company at the same level as Executive(including any short- and long- term disability insurance, hospital, major medical insurance and group life insurance plans in accordance with theterms of such plans), all as determined from time to time by the Board of Directors (the "Benefit Plans"). Executive shall be entitled to medicalbenefits coverage to begin on the date hereof, or if not administratively feasible, to reimbursement of Executive's COBRA payments from the datehereof until Executive's medical benefits coverage under the Company's Benefit Plans is effective. The Company shall provide a car allowance of$5,000 per year, payable in equal installments at the same time Executive receives his salary. Executive shall not be entitled to rollover or otherwiseaccumulate unused vacation days without the prior consent of the Board of Directors, including at least one designee of the funds managed bySterling Investment Partners ("Sterling").

6. DUTIES.

(a) Executive shall perform such reasonable duties and functions as the Supervisory Executive may lawfully assign to him, andExecutive shall comply in the performance of his duties with the policies of the Company and the Board of Directors, and be subject to the directionof the Chief Operating Officer and the Supervisory Executive of the Company and the Board of Directors.

(b) During the Employment Term, Executive shall devote all of his business time and attention, reasonable vacation time and absencesfor sickness excepted, to the business of the Company, as necessary to fulfill his duties; provided, however, that Executive may engage in otheractivities so long as such activities do not unreasonably interfere with Executive's performance of his duties hereunder and do not violate Section 9hereof. Executive shall perform the duties assigned to him with fidelity and to the best of his ability.

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(c) Nothing contained in this Section 6 or elsewhere in this Agreement shall be construed to prevent Executive from investing or tradingin non- competing investments as he sees fit for his own account, including real estate, stocks, bonds, securities, commodities or other forms ofinvestments.

7. TERMINATION OF EMPLOYMENT; EFFECT OF TERMINATION.

(a) Executive's employment hereunder shall terminate upon the first to occur of the following:

(i) upon thirty (30) days' prior written notice to Executive upon the determination by the Board of Directors that Executive'semployment shall be terminated for any reason which would not constitute "justifiable cause";

(ii) upon written notice to Executive upon the determination by the Board of Directors that there is justifiable cause for suchtermination;

(iii) automatically upon the death of Executive;

(iv) in accordance with the terms of subsection (e) hereof upon the "disability" (as defined below) of Executive; or

(v) upon thirty (30) days' prior written notice by Executive to the Company of Executive's voluntary termination of employment.

(b) For the purposes of this Agreement:

(i) The term "disability" shall mean the inability of Executive, due to illness, accident or any other physical or mental incapacity,substantially to perform the material functions of his duties, with or without reasonable accommodation, for a period of three (3) months (whether ornot consecutive) in any twelve (12) month period during the Employment Term, as reasonably determined by the Board of Directors, in good faith,after examination of Executive by an independent physician.

(ii) The term "justifiable cause" shall mean (A) Executive's repeated failure or refusal to attempt to perform his duties pursuant to thisAgreement where such failure shall not have ceased or been remedied within fifteen (15) days following written warning from the Company;(B) Executive's breach of this Agreement where such breach is material and shall not have ceased or been remedied within fifteen (15) days followingwritten warning from the Company; provided that nothing in this clause (B) shall require prior notice and a right to cure under any other clause of thisdefinition, (C) Executive's performance of any act or his failure to act, which constitutes a crime or offense involving money or property of theFairway Group or a felony in the jurisdiction involved; (D) Executive's performance of any act or his failure to act which constitutes, in thereasonable good faith determination of the Board of Directors made after giving the Executive an opportunity to confront the charges before theBoard of Directors, dishonesty, malfeasance or a breach of a fiduciary trust, including without limitation misappropriation of funds or amisrepresentation (other than as a result of a good faith mistake by Executive) of the Company's financial performance, operating results or financialcondition to the Board of Directors or any executive officer; (E) any intentional unauthorized disclosure by Executive to any person, firm orcorporation other than the members of the Fairway Group and their respective directors, managers, officers and employees, of any confidentialinformation or trade secret of the Fairway Group; (F) any attempt by Executive to secure any personal profit

4

(other than through his ownership of equity in the Company) in connection with the business of the Fairway Group (for example, without limitation,using Fairway Group assets to pursue other interests, diverting any business opportunity belonging to the Fairway Group to himself or to a thirdparty, insider trading or taking bribes or kickbacks); (G) Executive's engagement in a fraudulent act; (H) Executive's engagement in conduct oractivities materially damaging to the property, business or reputation of the Fairway Group, as determined in reasonable good faith by the Board ofDirectors; (I) Executive's unlawful use of controlled substances; (J) any act or omission by Executive involving malfeasance or negligence in theperformance of Executive's duties to the material detriment of the Fairway Group, as determined in reasonable good faith by the Board of Directorsmade after giving the Executive an opportunity to confront the charges before the Board of Directors; or (K) the entry of any order of a court thatremains in effect and is not discharged for a period of at least sixty (60) days, which enjoins or otherwise limits or restricts the performance byExecutive under this Agreement, relating to any contract, agreement or commitment made by or applicable to Executive in favor of any formeremployer or any other person.

(c) Upon termination of Executive's employment by the Company for justifiable cause or by Executive, Executive shall not be entitledto any amounts or benefits hereunder other than such portion of Executive's Annual Salary and reimbursement of expenses pursuant to Section 4hereof as has been accrued through the date of his termination of employment.

(d) If Executive should die during the Employment Term, this Agreement shall terminate immediately. In such event, the estate ofExecutive shall thereupon be entitled to receive such portion of Executive's Annual Salary as has been accrued through the date of his death, theamount of any bonus, if any, which has been accrued through the date of his death and reimbursement of expenses pursuant to Section 4.

(e) Upon a finding by the Board of Directors of Executive's disability in accordance with Section 7(b) hereof (the "DisabilityDetermination"), the Company shall have the right to terminate Executive's employment. Any termination pursuant to this subsection (e) shall beeffective on the date thirty (30) days after which Executive shall have received written notice of the Company's election to terminate. In such event,Executive shall thereupon be entitled to receive such portion of Executive's Annual Salary as has been accrued through the date of the DisabilityDetermination, the amount of any bonus, if any, which has been accrued through the date on which Executive became disabled and reimbursement ofexpenses pursuant to Section 4.

(f) Notwithstanding any provision to the contrary contained herein, in the event that Executive's employment is terminated:

(i) during the Initial Term by the Company without justifiable cause (other than due to death or disability), the Company shall payExecutive for a period equal to the longer of (i) the remainder of the Employment Term and (ii) twelve (12) months, a monthly payment (subject toapplicable tax withholding) equal to one- twelfth of his then Annual Salary, which amounts shall be in lieu of any and all other payments due andowing to Executive under the terms of this Agreement (other than any payments constituting reimbursement of expenses pursuant to Section 4hereof); or

(ii) after the Initial Term by the Company without justifiable cause (other than due to death or disability), the Company shall payExecutive for a period equal to twelve (12) months a monthly payment (subject to applicable tax withholding) equal to one- twelfth of his thenAnnual Salary, which amounts shall be in lieu of any and all other payments due and owing to Executive

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under the terms of this Agreement (other than any payments constituting reimbursement of expenses pursuant to Section 4 hereof).

The period during which payments are made pursuant to this Section 7(f) is hereinafter referred to as the "Severance Period." The payments madepursuant to this Section 7(f) are collectively hereinafter referred to as the "Severance Payments." The Company's obligation to make the SeverancePayments shall be conditional upon (1) Executive executing a general release in favor of the Fairway Group and its current and former stockholders,directors, officers and employees (which release shall not waive Executive's rights to all Severance Payments hereunder, including Executive's rightto enforce payment of such Severance Payments), and (2) Executive's compliance with his obligations under Sections 9, 10, 11 and 12 hereof.

(g) Upon Executive's termination of his employment hereunder, this Agreement (other than Sections 4, 7(g), 9, 10, 11, 12, 15 and 21,which shall survive in accordance with their terms) shall terminate. In such event, Executive shall be entitled to receive such portion of Executive'sAnnual Salary as has been accrued to date. Executive shall be entitled to reimbursement of expenses pursuant to Section 4 hereof.

(h) Upon the Company giving notice of termination pursuant to Section 7(a)(i) or (ii) or Executive giving notice of termination pursuantto Section 7(a)(v), the Company may require that Executive immediately leave the Company's premises, but such requirement shall not affect theeffective date of termination of employment.

8. REPRESENTATIONS AND AGREEMENTS OF EXECUTIVE.

(a) Executive represents and warrants that, notwithstanding an agreement he has previously entered into with the Great Atlantic &Pacific Tea Company, Inc., he is free to enter into this Agreement and to perform the duties required hereunder, and that there are no employmentcontracts or understandings, restrictive covenants or other restrictions, whether written or oral, preventing the performance of his duties hereunder.

(b) Executive agrees to submit to a medical examination and to cooperate and supply such other information and documents as may bereasonably required by any insurance company in connection with the Company's obtaining life insurance on the life of Executive, and any other typeof insurance or fringe benefit as the Company shall determine from time to time to obtain.

9. NON- COMPETITION.

(a) In view of the unique and valuable services expected to be rendered by Executive to the Company, Executive's knowledge of thetrade secrets and other proprietary information relating to the business of the Company and in consideration of the compensation to be receivedhereunder, the consideration to be received under Section 3(c) hereof, and Executive's ownership interest in the Company, Executive agrees thatduring the period of his employment by the Company and the greater of (i) one year following his employment with the Company or (ii) theSeverance Period (the "Non- Competition Period"), Executive shall not, whether for compensation or without compensation, directly or indirectly, asan owner, principal, partner, member, shareholder, independent contractor, consultant, joint venturer, investor, licensor, lender or in any othercapacity whatsoever, alone, or in association with any other person, carry on, be engaged or take part in, or render services (other than services whichare generally offered to third parties) or advice to, own, share in the earnings of, invest in the stocks, bonds or other securities of, or otherwisebecome financially interested in, any entity engaged in the retail grocery and food services business and related services anywhere in the followingstates: New York, New Jersey,

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Connecticut, Massachusetts, Maine, Vermont, New Hampshire, Rhode Island, Pennsylvania, Maryland, Delaware, Virginia and the District ofColumbia. The record or beneficial ownership by Executive of up to one percent (1%) of the shares of any corporation whose shares are publiclytraded on a national securities exchange or in the over- the- counter market shall not of itself constitute a breach hereunder. In addition, Executiveshall not, directly or indirectly, during the Non- Competition Period, request or cause any suppliers or customers with whom the Company has abusiness relationship to cancel or terminate any such business relationship with any member of the Fairway Group or solicit, interfere with, enticefrom or hire from any member of the Fairway Group any employee (or former employee) of any member of the Fairway Group. If the Companybreaches its obligation to make the Severance Payments or to comply with its obligations under Section 4 hereof, and such breach is not cured withinthirty (30) days after written notice of such breach is provided to the Company by Executive, Executive shall be released from his obligations underthis Section 9. If Executive does not comply with his obligations under this Section 9 (other than in the circumstances described in the precedingsentence), then notwithstanding anything herein to the contrary, the Company shall not be obligated to pay Executive any remaining portion of theSeverance Payments.

(b) If any portion of the restrictions set forth in this Section 9 should, for any reason whatsoever, be declared invalid by a court ofcompetent jurisdiction, the validity or enforceability of the remainder of such restrictions shall not thereby be adversely affected.

(c) Executive acknowledges that the provisions of this Section 9 were a material inducement to the Company to enter into thisAgreement and employ Executive. Executive further acknowledges that the territorial and time limitations set forth in this Section 9 are reasonableand properly required for the adequate protection of the business of the Fairway Group. Executive hereby waives, to the extent permitted by law, anyand all right to contest the validity of this Section 9 on the ground of breadth of its geographic or product and service coverage or length of term. Inthe event any such territorial or time limitation is deemed to be unreasonable by a court of competent jurisdiction, Executive agrees to the reductionof the territorial or time limitation to the area or period which such court shall deem reasonable.

(d) The existence of any claim or cause of action by Executive against the Company or any other member of the Fairway Group shallnot constitute a defense to the enforcement by the Fairway Group of the foregoing restrictive covenants, but such claim or cause of action shall belitigated separately.

10. INVENTIONS AND DISCOVERIES.

(a) Executive shall promptly and fully disclose to the Company, with all necessary detail for a complete understanding of the same, alldevelopments, know- how, discoveries, inventions, improvements, concepts, ideas, writings, formulae, processes and methods (whethercopyrightable, patentable or otherwise) made, received, conceived, developed, acquired or written during working hours, or otherwise, by Executive(whether or not at the request or upon the suggestion of the Company) during the Employment Term, solely or jointly with others, using the FairwayGroup's resources, or relating to any current or proposed business or activities of the Fairway Group known to him as a consequence of hisemployment or the rendering of services hereunder (collectively, the "Subject Matter").

(b) Executive hereby assigns and transfers, and agrees to assign and transfer, to the Company all his rights, title and interest in and to theSubject Matter, and Executive further agrees to deliver to the Company any and all drawings, notes, specifications and data relating to the SubjectMatter, and to execute, acknowledge and deliver all such further papers, including applications for trademarks, copyrights or patents, as may benecessary to obtain trademarks, copyrights and patents for any thereof in any and all countries and to vest title thereto in the Company. Executiveshall assist the Company in

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obtaining such trademarks, copyrights or patents during the term of this Agreement, and any time thereafter on reasonable notice and at mutuallyconvenient times, and Executive agrees to testify in any prosecution or litigation involving any of the Subject Matter; provided, however, thatfollowing termination of employment Executive shall be reasonably compensated for his time and reimbursed his reasonable out- of- pocket expensesincurred in rendering such assistance or giving or preparing to give such testimony if it is required after the Non- Competition Period.

11. NON- DISCLOSURE OF CONFIDENTIAL INFORMATION.

(a) Executive shall not, during the term of this Agreement, or at any time following expiration or termination of this Agreement, directlyor indirectly, disclose or permit to be known (other than as is required in the regular course of his duties (including without limitation disclosures tothe Company's advisors and consultants) or as is required by law (in which case Executive shall give the Company prior written notice of suchrequired disclosure) or with the prior written consent of the Company's Board of Directors, to any person, firm or corporation, any confidentialinformation acquired by him during the course of, or as an incident to, his employment hereunder, relating to the Fairway Group, any client of theFairway Group, or any corporation, partnership or other entity owned or controlled, directly or indirectly, by any of the foregoing, or in which any ofthe foregoing has a beneficial interest, including, but not limited to, the business affairs of each of the foregoing. Such confidential information shallinclude, but shall not be limited to, proprietary technology, trade secrets, patented processes, research and development data, know- how, marketstudies and forecasts, competitive analyses, pricing policies, employee lists, personnel policies, the substance of agreements with customers, suppliersand others, marketing or dealership arrangements, servicing and training programs and arrangements, customer lists and any other documentsembodying such confidential information. This confidentiality obligation shall not apply to any confidential information which becomes publiclyavailable from sources unrelated to the Fairway Group.

(b) All information and documents relating to the Fairway Group as hereinabove described (or other business affairs) shall be theexclusive property of the Fairway Group, and Executive shall use commercially reasonable best efforts to prevent any publication or disclosurethereof. Upon termination of Executive's employment with the Company, all documents, records, reports, writings and other similar documentscontaining confidential information, including copies thereof, then in Executive's possession or control shall be returned and left with the Company.

12. SPECIFIC PERFORMANCE.

Executive agrees that if he breaches, or threatens to commit a breach of, any of the provisions of Sections 9, 10 or 11 (the "Restrictive Covenants"),the Company shall have, in addition to, and not in lieu of, any other rights and remedies available to the Company under law and in equity, the rightto injunctive relief and/or to have the Restrictive Covenants specifically enforced by a court of competent jurisdiction, without the posting of anybond or other security, it being agreed that any breach or threatened breach of the Restrictive Covenants would cause irreparable injury to the FairwayGroup and that money damages would not provide an adequate remedy to the Company. Notwithstanding the foregoing, nothing herein shallconstitute a waiver by Executive of his right to contest whether a breach or threatened breach of any Restrictive Covenant has occurred.

13. AMENDMENT OR ALTERATION.

No amendment or alteration of the terms of this Agreement shall be valid unless made in writing and signed by both of the parties hereto.

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14. GOVERNING LAW.

This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made and to beperformed therein.

15. SEVERABILITY.

The holding of any provision of this Agreement to be invalid or unenforceable by a court of competent jurisdiction shall not affect any otherprovision of this Agreement, which shall remain in full force and effect.

16. WITHHOLDING.

The Company may deduct and withhold from the payments to be made to Executive hereunder any amounts required to be deducted and withheld bythe Company under the provisions of any applicable statute, law, regulation or ordinance now or hereafter enacted.

17. NOTICES.

Any notices required or permitted to be given hereunder shall be sufficient if in writing, and if delivered by hand or courier, or sent by certified mail,return receipt requested, to the addresses set forth above or such other address as either party may from time to time designate in writing to the other,and shall be deemed given as of the date of the delivery or at the expiration of three days in the event of a mailing.

18. COUNTERPARTS AND FACSIMILE SIGNATURES.

This Agreement may be signed in counterparts with the same effect as if the signatures to each counterpart were upon a single instrument, and allsuch counterparts together shall be deemed an original of this Agreement. For purposes of this Agreement, a facsimile copy of a party's signatureshall be sufficient to bind such party.

19. WAIVER OR BREACH.

It is agreed that a waiver by either party of a breach of any provision of this Agreement shall not operate, or be construed, as a waiver of anysubsequent breach by that same party.

20. ENTIRE AGREEMENT AND BINDING EFFECT.

This Agreement contains the entire agreement of the parties with respect to the subject matter hereof, supersedes all prior and contemporaneousagreements, both written and oral, between the parties with respect to the subject matter hereof, and may be modified only by a written instrumentsigned by each of the parties hereto. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective legalrepresentatives, heirs, distributors, successors and assigns; provided, however, that Executive shall not be entitled to assign or delegate any of hisrights or obligations hereunder without the prior written consent of the Company. It is intended that Sections 9, 10, 11, 12 and 21 benefit each of theCompany and each other member of the Fairway Group, each of which is entitled to enforce the provisions of Sections 9, 10, 11, 12 and 21.

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21. ARBITRATION.

(a) The parties hereto agree that all claims between them (other than those seeking specific performance or other equitable relief)resulting from this Agreement, any certificate, schedule, exhibit or other document delivered pursuant hereto, and the transactions contemplatedhereby, shall be settled by arbitration as set forth in this Section 21. The parties hereto acknowledge that they have had the opportunity to consultwith counsel regarding this Section 21, that they fully understand its terms, content and effect, and that they voluntarily and knowingly agree to theterms of this Section 21 and to arbitration of all claims between them (other than those seeking specific performance or other equitable relief).

(b) Any dispute between the parties arising out of or in any way related to this Agreement or any other agreement in any way arising outof or related to this Agreement, shall be resolved exclusively by arbitration before a single independent arbitrator chosen by the American ArbitrationAssociation ("AAA") and conducted under the AAA's Commercial Arbitration Rules, it being the intention of the parties that no possible disputebetween them be litigated in a court and that any and all possible disputes between them be arbitrated except as provided in Section 12. Thearbitration proceeding will take place in the City of New York, State of New York. The arbitrator must have the following minimum qualifications:he or she must (a) be admitted to the New York Bar for at least 20 years, and (b) be a corporate litigation partner in a law firm with at least 300lawyers. To the extent permitted by the AAA's rules, the arbitrator shall be required (a) to apply the Federal Rules of Evidence, and (b) render adecision strictly in accordance with the laws of the State of New York. For the purposes of this Section 21, the term "parties" shall be interpreted asbroadly as possible so as to grant any and all affiliates, subsidiaries, officers, directors, employees, attorneys, professionals, shareholders, members,general partners, limited partners, general partnerships, limited partnerships, limited liability companies, persons or any other forms of businessentities in any way affiliated or connected with the Company ("Related Third Parties") the absolute and unequivocal right to demand arbitration inany dispute with Executive that would be governed by this Section 21 if it were a dispute solely between the Company and Executive. Moreover,Executive hereby unequivocally waives any claim that he should not be required to arbitrate a dispute with any Related Third Party because suchparty is not a signatory to this Agreement, and instead acknowledges that any and all Related Third Parties are express third party beneficiaries of thisSection 21. Any arbitration commenced pursuant to this Section 21 shall be consolidated with any other pending arbitration arising out of or in anyway related to this Agreement or any agreement related to this Agreement. The decision of the arbitrator shall be final and binding upon the parties. The arbitrator shall render his award not later than thirty (30) days after the conclusion of the hearing. The decision and award shall be in writing,and counterpart copies shall be delivered to each of the parties. In rendering an award, the arbitrator shall have no power to modify any of theprovisions of this Agreement, and the jurisdiction of the arbitrator is expressly limited accordingly.

(c) Judgment may be entered on the award of the arbitrator and may be enforced in any competent court having jurisdiction; provided,however, that no motion to confirm any arbitration award shall be made for ten days after such award. In the event that the losing party pays the fullamount of the award within that ten day period, no motion for confirmation shall be made, and the arbitrator's award shall remain confidential. Absent a motion to confirm or vacate an arbitrator's award, the fact and details of the arbitration proceeding pursuant to this Section 21 shall remainstrictly confidential.

22. SURVIVAL.

Except as otherwise expressly provided herein, the termination of Executive's employment hereunder or the expiration of this Agreement shall notaffect the enforceability of Sections 9, 10, 11, 12 and 21 hereof.

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23. FURTHER ASSURANCES.

The parties agree to execute and deliver all such further documents, agreements and instruments and take such other and further action as may benecessary or appropriate to carry out the purposes and intent of this Agreement.

24. CONSTRUCTION OF AGREEMENT.

No provision of this Agreement or any related document shall be construed against or interpreted to the disadvantage of any party hereto by any courtor other governmental or judicial authority by reason of such party having or being deemed to have structured or drafted such provision.

25. HEADINGS.

The Section headings appearing in this Agreement are for the purposes of easy reference and shall not be considered a part of this Agreement or inany way modify, demand or affect its provisions.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written.


By: /s/ Herb RuetschName: Herb RuetschTitle: Chief Executive Officer

/s/ Kevin McDonnellKevin McDonnell

Exhibit 10.12


AGREEMENT (this "Agreement") made as of March 28, 2013 (the "Effective Date"), by and between Fairway Group Holdings Corp., a Delawarecorporation with an office at 2284 12th Avenue, New York, New York 10027 (the "Company"), and William Sanford, 666 Greenwich Street, Apt.214, New York, NY 10014 (the "Executive").

WITNESSETH:

WHEREAS, Executive is presently the President of the Company and each subsidiary of the Company (collectively with any entity that hereafterbecomes a subsidiary of the Company, the "Fairway Group");


1. EMPLOYMENT.

The Company hereby employs Executive and Executive hereby accepts such employment, subject to the terms and conditions herein set forth. Executive shall hold the office of President of the Fairway Group reporting to the Chief Executive Officer of the Company (the "CEO").

2. TERM.

The term of employment under this Agreement shall begin on the Effective Date and shall continue until March 31, 2014, subject to prior terminationin accordance with the terms hereof (the "Initial Term"). The Initial Term shall be automatically extended for successive additional periods of one(1) year (each such oneyear period, an "Additional Term"), unless either party shall have given written notice to the other party of non- extension atleast sixty (60) days prior to the end of the Initial Term or the then applicable Additional Term (any period during which Executive is employedhereunder collectively, the "Employment Term").

3. COMPENSATION.

(a) As compensation for the employment services to be rendered by Executive hereunder, including all services as an officer or director of anymember of the Fairway Group, the Company agrees to pay, or cause to be paid, to Executive, and Executive agrees to accept, payable in equalinstallments in accordance with Company payroll practices then in existence, an initial annual salary of $415,000 (the "Annual Salary"). Executive'sAnnual Salary for any year following the Initial Term shall be determined by the Board of Directors of the Company (the "Board of Directors") in itssole discretion, but shall not in any year be reduced below the rate for the previous year.

(b) During each fiscal year of the Employment Term, Executive shall be eligible for an annual performance bonus, if any, as may bedetermined by the Board of Directors from time to time in its sole discretion. Such bonus will be targeted at fifty percent (50%) of Annual Salary andwill be based upon, among other things, the Executive's performance and the Company's financial performance.

The payment by the Company to the Executive of such bonus shall be made no later than fifteen (15) days after delivery of the Company's auditedconsolidated financial statements to its lenders;

provided, however, that Executive shall not be entitled to such bonus if either (i) Executive has failed to comply with the Company's Code ofBusiness Conduct and Ethics and other written policies (including without limitation reporting policies as set forth from time to time in the FairwayGroup's organizational chart) established by the Board of Directors (collectively, the "Code of Conduct"), as determined in reasonable good faith bythe Board of Directors, and either (x) such failure to comply is, or could reasonably be expected to be, in the reasonable determination of the Board ofDirectors, harmful or damaging to the Fairway Group's business, reputation, employees or customers or (y) Executive has previously failed to complywith such policy and was notified in writing of such failure, or (ii) the Fairway Group is not operating in substantially full compliance with all fire,safety, building and other codes; and provided further that if there is existing an event of default (or event which, with notice, the passage of time orboth, would constitute an event of default) under the Fairway Group's credit facilities, or the payment of such bonus would cause an event of default(or event which, with notice, the passage of time or both, would constitute an event of default) under the Fairway Group's credit facilities, thenpayment of such bonus shall be postponed until such time as any existing event of default (or event which, with notice, the passage of time or both,would constitute an event of default) under the Fairway Group's credit facilities is cured, and such bonus shall be paid at such time, without interest.

4. EXPENSES.

The Company shall pay or reimburse Executive, upon presentment of suitable vouchers, for all reasonable business and travel expenses which may beincurred or paid by Executive in connection with his employment hereunder in accordance with Company policy as established from time to time bythe Board of Directors. Executive shall comply with such restrictions and shall keep such records as the Company may reasonably deem necessary to

meet the requirements of the Internal Revenue Code of 1986, as amended from time to time (the "Code"), and regulations promulgated thereunder.

5. OTHER BENEFITS.

Executive shall be entitled to four weeks paid vacation for each full year of employment during the Employment Term (the timing of vacations to besubject to the reasonable approval of the CEO) and to participate in such benefit plans and arrangements and receive other benefits on termsconsistent with other officers of the Company at the same level as Executive (including short- and long- term disability insurance, 401(k) plan,hospital, major medical insurance and group life insurance plans in accordance with the terms of such plans), all as determined from time to time bythe Board of Directors (the "Benefit Plans"). The Company shall provide a car allowance of $384.61 per week payable in equal installments at thesame time Executive receives his salary. Executive shall not be entitled to rollover or otherwise accumulate unused vacation days from year- to- yearwithout the prior consent of the Board of Directors.

6. DUTIES.

(a) Executive shall perform such reasonable duties and functions as the CEO or Supervisory Executive, as applicable, may lawfully assign tohim and as are typically performed by executives in his position, and Executive shall comply in the performance of his duties with the policies of theFairway Group and the Board of Directors, and be subject to the direction of the CEO or Supervisory Executive, as applicable, and the Board ofDirectors.

(b) During the Employment Term, Executive shall devote all of his business time and attention, reasonable vacation time and absences forsickness excepted, to the business of the Fairway Group, as necessary to fulfill his duties; provided, however, that Executive may engage in otheractivities so long as such activities do not unreasonably interfere with Executive's performance of his duties hereunder and do not violate Section 9hereof. Executive shall perform the duties assigned to him with

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fidelity and to the best of his ability and in compliance in all material respects with the Company's Code of Conduct.

(c) Nothing contained in this Section 6 or elsewhere in this Agreement shall be construed to prevent Executive from investing or trading innon- competing investments as he sees fit for his own account, including real estate, stocks, bonds, securities, commodities or other forms ofinvestments.



(i) upon thirty (30) days' prior written notice to Executive upon the determination by the Board of Directors that Executive's employment shallbe terminated for any reason which would not constitute "justifiable cause";

(ii) upon written notice to Executive upon the determination by the Board of Directors that there is justifiable cause for such termination;

(iii) automatically and without notice upon the death of Executive;



Upon the Company giving notice of termination pursuant to Section 7(a)(i) or (ii), or Executive giving notice of termination pursuant toSection 7(a)(v), the Company may require that Executive immediately leave the Company's premises, but such requirement shall not affect theeffective date of termination of employment.


(i) The term "Change in Control" shall mean the occurrence of any of the following:

(x) one person (or more than one person acting as a group), other than Sterling Investment Partners or its affiliates, acquires ownership of stock of theCompany that, together with the stock held by such person or group, constitutes more than 50% of the total voting power of the stock of theCompany;

(y) a majority of the members of the Board of Directors are replaced during any twelve- month period by directors whose appointment or election isnot endorsed by a majority of the Board of Directors before the date of appointment or election; or

(z) the sale of all or substantially all of the Company's assets.

Notwithstanding the foregoing, a Change in Control shall not occur unless such transaction constitutes a change in the ownership of the Company, achange in effective control of the Company, or a change in the ownership of a substantial portion of the Company's assets under Section 409A of theCode.

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(ii) The term "disability" shall mean the inability of Executive, due to illness, accident or any other physical or mental incapacity, to performthe essential functions of his duties, with or without reasonable accommodation, for a period of three (3) months (whether or not consecutive) in anytwelve (12) month period during the Employment Term, as reasonably determined by the Board of Directors.

(iii) The term "justifiable cause" shall mean (A) Executive's repeated failure (other than temporarily while physically or mentally incapacitated)or refusal to attempt to perform his duties pursuant to this Agreement; (B) Executive's material breach of this Agreement; (C) Executive'sperformance of any act or his failure to act which constitutes a crime or offense involving money or property of the Fairway Group or a felony in thejurisdiction involved; (D) Executive's performance of any act or his failure to act which constitutes a breach of a fiduciary trust, including withoutlimitation misappropriation of funds or a misrepresentation (other than as a result of a good faith mistake by Executive) of the Company's financialperformance, operating results or financial condition to the Board of Directors or any executive officer; (E) any intentional unauthorized disclosureby Executive to any person, firm or corporation other than the members of the Fairway Group and their respective directors, managers, officers andemployees, of any confidential information or trade secret of the Fairway Group; (F) any attempt by Executive to secure any personal profit (otherthan through his compensation and ownership of equity in the Company) in connection with the business of the Fairway Group (for example, withoutlimitation, using Fairway Group assets to pursue other interests, diverting any business opportunity belonging to the Fairway Group to himself or to athird party, insider trading or taking bribes or kickbacks); (G) Executive's engagement in conduct or activities materially damaging to the property,business or reputation of the Fairway Group (including any fraudulent act); (H) Executive's unlawful use of controlled substances that, in the goodfaith judgment of the Board, impairs Executive's ability to effectively perform his duties hereunder or while on the Company's premises; (I) any act oromission by Executive involving malfeasance or negligence in the performance of Executive's duties that is materially adverse to the Fairway Group;(J) Executive's failure to comply in all material respects with the Fairway Group's policies, including without limitation, the Code of Conduct; or(K) the entry of any order of a court that remains in effect and is not discharged for a period of at least sixty (60) days, which enjoins or otherwiselimits or restricts the performance by Executive under this Agreement, relating to any noncompetition, employment or similar contract, agreementor commitment made by or applicable to Executive in favor of any former employer or any other person; provided, however, that with respect toclauses (A), (B) and (D) through (K) above, the Company cannot terminate the Executive's employment for justifiable cause unless the Board ofDirectors has provided the Executive with written notice of the circumstances providing grounds for justifiable cause and an opportunity to confrontthe charges (with counsel) before the Board of Directors.

(c) Upon any termination of Executive's employment by the Company for justifiable cause, or voluntarily by Executive (including Executiveelecting not to renew this Agreement), Executive shall not be entitled to any amounts or benefits hereunder other than such portion of Executive'sAnnual Salary, reimbursement of expenses pursuant to Section 4 hereof as has been accrued through the date of his termination of employment andother amounts or benefits required by law or pursuant to the terms of the Benefit Plans.

(d) If Executive should die during the Employment Term, this Agreement shall terminate immediately. In such event, the estate of Executiveshall thereupon be entitled to receive (i) such portion of Executive's Annual Salary as has been accrued through the date of his death, (ii) any accruedannual bonus for a prior fiscal year which remains unpaid as of the date of death and a pro rata portion of any bonus that Executive would have beenentitled to receive pursuant to Section 3(b) in the fiscal year in

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which Executive died (based on the number of days Executive was alive during such fiscal year), payable when and if such bonus would otherwisehave been payable had Executive's employment not been terminated by reason of Executive's death and (iii) reimbursement of expenses pursuant toSection 4. Executive's estate also shall be entitled to any amounts or benefits required by law or payable under the terms of the Benefit Plans.

(e) Upon a finding by the Board of Directors of Executive's disability in accordance with Section 7(b) hereof, the Company shall have the rightto terminate Executive's employment. Any termination pursuant to this subsection (e) shall be effective on the date thirty (30) days after whichExecutive shall have received written notice of the Company's election to terminate. In such event, Executive shall thereupon be entitled to receive(i) such portion of Executive's Annual Salary as has been accrued through the date of the termination of employment, (ii) any accrued annual bonusfor a prior fiscal year which remains unpaid as of the date of termination and a pro rata portion of any bonus that Executive would have been entitledto receive pursuant to Section 3(b) in the fiscal year in which Executive became disabled (based on the number of days during such fiscal year thatthis Agreement was in effect), payable when and if such bonus would otherwise have been payable had Executive's employment not been terminatedby reason of Executive's disability and (iii) reimbursement of expenses pursuant to Section 4. Executive shall also be entitled to any amounts orbenefits required by law or payable under the terms of the Benefit Plans.

(f) Notwithstanding any provision to the contrary contained herein:

(i) in the event that Executive's employment is terminated during the Employment Term by the Company without justifiable cause (other than due todeath or disability), the Company shall (1) continue to pay Executive his then current Annual Salary (subject to applicable tax withholding), payablein equal installments in accordance with the Company's payroll practices then in existence, for a period of one year from the date of termination (twoyears if such termination occurs within one year following a Change in Control of the Company) and (2) pay Executive's COBRA continuation healthcoverage premiums (less the normal weekly contribution rate being paid by Executive at the time of termination, the payment of which shall beExecutive's responsibility) during the Severance Period, which amounts in (1) and (2) above shall be in lieu of any and all other payments due andowing to Executive under the terms of this Agreement (other than any payments constituting reimbursement of expenses pursuant to Section 4 hereof,any payments or benefits required by law or payable under the terms of the Benefit Plans and the accrued annual bonus for a prior fiscal year and prorata portion of the bonus, if any, referred to in the penultimate paragraph of this Section 7(f)); or

(ii) in the event the Company timely elects not to renew this Agreement for any Additional Term, the Company shall (1) continue to pay Executivehis then current Annual Salary (subject to applicable tax withholding), payable in equal installments in accordance with the Company's payrollpractices then in existence, for a period of one year from the date the Company notifies Executive that it does not intend to renew this Agreement, and(2) pay Executive's COBRA continuation health coverage premiums (less the normal weekly contribution rate being paid by Executive at the time oftermination, the payment of which shall be Executive's responsibility) during the Severance Period, which amounts in (1) and (2) above shall be inlieu of any and all other payments due and owing to Executive under the terms of this Agreement (other than any payments constitutingreimbursement of expenses pursuant to Section 4 hereof, any payments or benefits required by law or payable under the terms of the Benefit Plansand the accrued annual bonus for a prior fiscal year which remains unpaid as of the date of termination and pro rata portion of the bonus, if any,referred to in the penultimate paragraph of this Section 7(f)).

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The period during which payments are made pursuant to clauses (i)(1) or (ii)(1) of this Section 7(f) is hereinafter referred to as the "SeverancePeriod." The payments made pursuant to clauses (i) and (ii) of this Section 7(f) are collectively hereinafter referred to as the "Severance Payments." The Company's obligation to make the Severance Payments shall be conditional upon (1) Executive executing and delivering to the Company within30 days after the date of his termination of employment (or, if sooner, by December 31 of the year of such termination, or such later date as isrequired by applicable law) a release (that is no longer subject to revocation under applicable law) in substantially the form of Exhibit A hereto, and(2) Executive's compliance with his obligations under Sections 9, 10, 11 and 12 hereof. Notwithstanding anything to the contrary contained herein,the first Severance Payment shall be made on the sixtieth (60th) day following Executive's "separation from service" (as defined in section 409A ofthe Code) and shall include payment of all amounts that otherwise would be due prior thereto.

In the event the Executive is entitled to receive Severance Payments pursuant to this Section 7(f), Executive shall also be entitled to the accruedannual bonus for a prior fiscal year which remains unpaid as of the date of termination and a pro rata portion (based on the number of days duringsuch fiscal year that this Executive was employed) of any bonus Executive would have been entitled to receive pursuant to Section 3(b) in the fiscalyear in which Executive's employment was terminated, payable when and if such bonus would otherwise have been payable had Executive'semployment not been terminated.

If the Company determines that it cannot provide the COBRA payments pursuant to this Section 7(f) without violating applicable law (including,without limitation, Section 2716 of the Public Health Service Act) or without subjecting the Executive to taxation on group health benefits, theCompany will, in lieu thereof, provide to the Executive during the remainder of the Severance Period, a taxable monthly payment in an amount equalto the estimated cost of providing such benefits, calculated in good faith as of the time of commencement of such payments.

(g) Upon Executive's termination of his employment hereunder, Executive shall be entitled to receive such portion of Executive's AnnualSalary as has been accrued to date. Executive shall be entitled to reimbursement of expenses pursuant to Section 4 hereof and any payments orbenefits required by law or payable under the terms of the Benefit Plans.

(h) Any termination of employment hereunder shall include termination from all applicable board and officer positions with any member of theFairway Group.


(a) Executive represents and warrants that he is free to enter into this Agreement and to perform the duties required hereunder, and that thereare no employment contracts or understandings, restrictive covenants or other restrictions, whether written or oral, preventing the performance of hisduties hereunder.



(a) In view of the unique and valuable services expected to be rendered by Executive to the Fairway Group, Executive's knowledge of the tradesecrets and other proprietary information relating to

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the business of the Fairway Group and in consideration of the compensation to be received hereunder, and Executive's ownership interest in theCompany, Executive agrees that during the period of his employment by the Company and the greater of (i) one year following his employment withthe Company or (ii) the Severance Period (the "Non- Competition Period"), Executive shall not, whether for compensation or without compensation,directly or indirectly, as an owner, principal, partner, member, shareholder, independent contractor, consultant, joint venturer, investor, licensor,lender or in any other capacity whatsoever, alone, or in association with any other person, carry on, be engaged or take part in, or render services(other than services which are generally offered to third parties) or provide advice to, own, share in the earnings of, invest in the stocks, bonds orother securities of, or otherwise become financially interested in, any entity engaged in the retail grocery and food services business and relatedservices anywhere in the northeastern United States and in any other state into which the Board of Directors has, to the knowledge of the Executive,discussed the possibility of expanding the Fairway Group's operations. The record or beneficial ownership by Executive of up to one percent (1%) ofthe shares of any corporation whose shares are publicly traded on a national securities exchange or in the over- the- counter market shall not of itselfconstitute a breach hereunder. In addition, Executive shall not, directly or indirectly, during the Non- Competition Period, request or cause anysuppliers or customers with whom the Fairway Group has a business relationship to cancel or terminate any such business relationship with anymember of the Fairway Group or solicit, interfere with, entice from or hire from any member of the Fairway Group any employee (or formeremployee) of any member of the Fairway Group. If the Company breaches its obligation to make the Severance Payments (other than in thecircumstances described in the next sentence) or to comply with its obligations under Section 4 hereof, and such breach is not cured within thirty (30)days after written notice of such breach is provided to the Company by Executive, then in addition to any other remedies available to the Executive,Executive shall be released from his obligations under this Section 9. If Executive does not comply with his obligations under this Section 9 (otherthan in the circumstances described in the preceding sentence), then notwithstanding anything herein to the contrary, the Company shall not beobligated to pay Executive any remaining portion of the Severance Payments.

(b) During the Non- Competition Period:

(i) Executive shall not make any oral or written statements, either directly or through other persons or entities, which are disparaging to anymember of the Fairway Group or any of its affiliates, management, officers, directors, services, products, operations or other matters relating to theFairway Group's businesses; and

(ii) The Fairway Group, through its officers and directors, shall not make any oral or written statements, either directly or through other personsor entities, which are disparaging to Executive.

Notwithstanding the foregoing provisions of this Section 9(b), it shall not be a violation of this Section 9(b) for Executive or the Fairway Group to(i) make truthful statements when required by order of a court or other body having jurisdiction, any governmental investigation or inquiry by agovernmental entity, subpoena, court order, compulsory legal process, or as otherwise may be required by law, (ii) make traditional competitivestatements in the course of promoting a competing business (except in violation of Section 9, 10 or 11 hereof), (iii) disclose that Executive is nolonger employed by the Company, (iv) rebut inaccurate statements made by the other party or (v) for either party to make truthful statements toenforce his or its rights under this Agreement.

(c) If any portion of the restrictions set forth in this Section 9 should, for any reason whatsoever, be declared invalid by a court of competentjurisdiction, the validity or enforceability of the remainder of such restrictions shall not thereby be adversely affected.

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(d) Executive acknowledges that the provisions of this Section 9 were a material inducement to the Company to enter into this Agreement andto employ Executive. Executive further acknowledges that the territorial and time limitations set forth in this Section 9 are reasonable and properlyrequired for the adequate protection of the business of the Fairway Group. Executive hereby waives, to the extent permitted by law, any and all rightto contest the validity of this Section 9 on the ground of breadth of its geographic or product and service coverage or length of term. In the event anysuch territorial or time limitation is deemed to be unreasonable by a court of competent jurisdiction, Executive agrees to the reduction of the territorialor time limitation to the area or period which such court shall deem reasonable.

(e) The existence of any claim or cause of action by Executive against the Company or any other member of the Fairway Group shall notconstitute a defense to the enforcement by the Fairway Group of the foregoing restrictive covenants, but such claim or cause of action shall belitigated separately.


(a) Executive shall promptly and fully disclose to the Fairway Group, with all necessary detail for a complete understanding of the same, alldevelopments, know- how, discoveries, inventions, improvements, concepts, ideas, writings, formulae, processes and methods (whethercopyrightable, patentable or otherwise) made, received, conceived, developed, acquired or written during working hours, or otherwise, by Executive(whether or not at the request or upon the suggestion of the Fairway Group) during the Employment Term, solely or jointly with others, using theFairway Group's resources, or relating to any current or proposed business or activities of the Fairway Group known to him as a consequence of hisemployment or the rendering of services hereunder (collectively, the "Subject Matter").

(b) Executive hereby assigns and transfers, and agrees to assign and transfer, to the Fairway Group all his rights, title and interest in and to theSubject Matter, and Executive further agrees to deliver to the Fairway Group any and all drawings, notes, specifications and data relating to theSubject Matter, and to execute, acknowledge and deliver all such further papers, including applications for trademarks, copyrights or patents, as maybe necessary to obtain trademarks, copyrights and patents for any thereof in any and all countries and to vest title thereto in the Fairway Group. Executive shall assist the Fairway Group in obtaining such trademarks, copyrights or patents during the term of this Agreement, and any time

thereafter on reasonable notice and at mutually convenient times, and Executive agrees to testify in any prosecution or litigation involving any of theSubject Matter; provided, however, that following termination of employment Executive shall be reasonably compensated for his time andreimbursed his reasonable out- of- pocket expenses incurred in rendering such assistance or giving or preparing to give such testimony if it is requiredafter the Non- Competition Period.


(a) Executive shall not, during the term of this Agreement, or at any time following expiration or termination of this Agreement, directly orindirectly, disclose or permit to be known (other than as is required in the regular course of his duties (including without limitation disclosures to theFairway Group's advisors and consultants) or as is required by law (in which case Executive shall give the Company prior written notice of suchrequired disclosure) or with the prior written consent of the Company's CEO, to any person, firm or corporation, any confidential informationacquired by him during the course of, or as an incident to, his employment hereunder, relating to the Fairway Group, any client, vendor or customerof the Fairway Group, or any corporation, partnership or other entity owned or controlled, directly or indirectly, by any of the foregoing, or in whichany of the foregoing has a beneficial interest, including, but not limited to, the business affairs of each of the foregoing. Such

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confidential information shall include, but shall not be limited to, proprietary technology, trade secrets, patented processes, research and developmentdata, know- how, market studies and forecasts, competitive analyses, pricing policies, employee lists, personnel policies, the substance of agreementswith customers, suppliers, landlords and others, marketing or dealership arrangements, servicing and training programs and arrangements, customerlists and any other documents embodying such confidential information. This confidentiality obligation shall not apply to any confidentialinformation which becomes publicly available from sources unrelated to the Fairway Group.

(b) All information and documents relating to the Fairway Group as hereinabove described (or other business affairs) shall be the exclusiveproperty of the Fairway Group, and Executive shall use commercially reasonable best efforts to prevent any publication or disclosure thereof. Upontermination of Executive's employment with the Company, all documents, records, reports, writings and other similar documents containingconfidential information, including copies thereof, then in Executive's possession or control shall be returned and left with the Company.


Executive agrees that if he breaches, or threatens to commit a breach of, any of the provisions of Sections 9, 10 or 11 (the "Restrictive Covenants"),the Fairway Group shall have, in addition to, and not in lieu of, any other rights and remedies available to the Fairway Group under law and in equity,the right to injunctive relief and/or to have the Restrictive Covenants specifically enforced by a court of competent jurisdiction, without the posting ofany bond or other security, it being agreed that any breach or threatened breach of the Restrictive Covenants would cause irreparable injury to theFairway Group and that money damages would not provide an adequate remedy to the Company. Notwithstanding the foregoing, nothing hereinshall constitute a waiver by Executive of his right to contest whether a breach or threatened breach of any Restrictive Covenant has occurred.



14. GOVERNING LAW.


15. CHOICE OF FORUM; WAIVER OF JURY TRIAL

Executive agrees that any dispute between Executive and the Fairway Group shall be resolved exclusively in the United States District Court for theSouthern District of New York or the applicable state court located in New York County, New York and Executive consents to personal jurisdictionin said courts. EACH OF THE COMPANY AND EXECUTIVE HEREBY IRREVOCABLY WAIVES ITS RIGHT TO A JURY TRIAL INCONNECTION WITH ANY ACTION, PROCEEDING OR CLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANYTRANSACTION CONTEMPLATED HEREBY.

16. SEVERABILITY.

The holding of any provision of this Agreement to be invalid or unenforceable by a court of competent jurisdiction shall not affect any otherprovision of this Agreement, which shall remain in full

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force and effect.

17. WITHHOLDING.


18. NOTICES.

Any notices required or permitted to be given hereunder shall be sufficient if in writing, and if delivered by hand or courier, or sent by certified mail,return receipt requested, to the address set forth above in the case of the Company and Executive's address as set forth in the Company's records, orsuch other address as either party may from time to time designate in writing to the other, and shall be deemed given as of the date of the delivery orat the expiration of three days in the event of a mailing.







22. SURVIVAL.

Except as otherwise expressly provided herein, the termination of Executive's employment hereunder or the expiration of this Agreement shall notaffect the enforceability of Sections 4, 7, 9, 10, 11, 12, 15, 21, 22 and 23 hereof.

23. 280G; SECTION 409A COMPLIANCE.

Prior to any initial public offering of the Company's capital stock, to the extent that any payments or benefits provided to Executive in this Agreementor otherwise constitute "parachute payments" within the meaning of Section 280G of the Code, and, but for this Section 23, would subject Executiveto the

10

excise tax imposed by Section 4999 of the Code, the Executive may, at his option, waive his right to retain such payments and/or other benefits unlesssuch payments and other benefits are approved by the stockholders of the Company in a manner that satisfies the stockholder approval requirementsof Section 280G(b)(5)(B) of the Code and the Treasury Regulations promulgated thereunder (a "280G Vote"), and (ii) the Company shall submit theExecutive's right to retain such payments and other benefits to a 280G Vote. The Executive acknowledges and agrees that the stockholders of theCompany are not obligated to approve such payments following any waiver by the Executive of his right to receive such payments.

If Executive is a "specified employee" within the meaning of Treasury Regulation Section 1.409A- 1(i) as of the date of the Executive's separationfrom service, then Executive shall not be entitled to any Severance Payments or other benefits pursuant to Section 7 of this Agreement until theearlier of (a) the date which is six months after the date of Executive's separation from service or (ii) the date of Executive's death. This paragraphshall only apply if, and to the extent, required in order to comply with Section 409A of the Code. Any amounts otherwise payable to Executive uponor in the six- month period following Executive's separation from service that are not so paid by reason of this paragraph shall be paid to Executive(or Executive's estate, as the case may be) as soon as practicable (and in all events within twenty days) after the expiration of such six- month periodor (if applicable, the date of Executive's death), and any remaining payments due to the Executive under this Agreement shall be paid as otherwiseprovided herein.

For the purposes of this Agreement, a "termination of employment" or words of like import shall mean a "separation from service" within themeaning of Section 409A of the Code and the regulations issued thereunder. Any taxable reimbursements pursuant to Section 4 shall be paid toExecutive on or before the last day of Executive's taxable year following the taxable year in which the related expense was incurred. Reimbursementspursuant to Section 4 are not subject to liquidation or exchange for another benefit and the amount of such benefits that Executive receives in onetaxable year shall not affect the amount of such reimbursements or benefits that Executive may receive in any other taxable year. Each of thepayments that may be made under this Agreement following Executive's termination of employment shall be deemed to be a separate payment forpurposes of applying Section 409A.

It is intended that any amounts payable under this Agreement and the Company's and Executive's exercise of any authority or discretion hereundershall comply with, and avoid the imputation of any tax, penalty or interest under Section 409A of the Code. This Agreement shall be construed andinterpreted consistent with that intent. Notwithstanding the foregoing, Executive shall bear the cost of any failure to comply with Section 409A of theCode, unless and except to the extent that such tax, penalty or interest is incurred by reason of the Company's willful breach of the provisions of thisAgreement, and the Company shall have no obligation to pay or reimburse Executive for the payment of any amount of tax, penalty or interestincurred pursuant to Section 409A of the Code.

No severance payment described in Section 7(f) hereof shall be paid later than the last day of the second taxable year of the Executive following thetaxable year of the Executive's "separation from service."

24. FURTHER ASSURANCES.


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26. HEADINGS.





/s/ William SanfordWilliam Sanford

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EXHIBIT A

FORM OF RELEASE

In exchange for the payments and benefits set forth in the Employment Agreement between Fairway Group Holdings Corp. (the "Company") and medated , 2013 (the "Agreement"), and to be provided following the Effective Date (as defined below) of this Release and subject to the termsof the Agreement, and my execution (without revocation) and delivery of this Release:

1. (a) On behalf of myself, my agents, assignees, attorneys, heirs, executors and administrators, I hereby release the Company and its predecessors,successors and assigns, their current and former parents, affiliates, subsidiaries, divisions and joint ventures (collectively, the "Fairway Group"), andall of their current and former officers, directors, employees, and agents, in their capacity as Fairway Group representatives (individually andcollectively, "Releasees") from any and all controversies, claims, demands, promises, actions, suits, grievances, proceedings, complaints, charges,liabilities, damages, debts, taxes, allowances, and remedies of any type, including but not limited to those arising out of my employment with theFairway Group (individually and collectively, "Claims") that I may have by reason of any matter, cause, act or omission. This release applies toClaims that I know about and those I may not know about occurring at any time on or before the date of execution of this Release.

(b) This Release includes a release of all rights and Claims under, as amended, Title VII of the Civil Rights Act of 1964, the Age Discrimination inEmployment Act of 1967, the Rehabilitation Act of 1973, the Civil Rights Acts of 1866 and 1991, the Americans with Disabilities Act of 1990, theEmployee Retirement Income Security Act of 1974, the Equal Pay Act of 1963, the Family and Medical Leave Act of 1993, the Fair Labor StandardsAct of 1938, the Older Workers Benefit Protection Act of 1990, the Occupational Safety and Health Act of 1970, the Worker Adjustment andRetraining Notification Act of 1989, the Sarbanes- Oxley Act of 2002, the New York State Human Rights Act, and the New York City Human RightsAct, as well as any other federal, state, or local statute, regulation, or common law regarding employment, employment discrimination, termination,retaliation, equal opportunity, or wage and hour. I specifically understand that I am releasing Claims based on age, race, color, sex, sexual orientationor preference, marital status, religion, national origin, citizenship, veteran status, disability and other legally protected categories.

(c) This Release also includes a release of any Claims for breach of contract, any tortious act or other civil wrong, attorneys' fees, and allcompensation and benefit claims including without limitation Claims concerning salary, bonus, and any award(s), grant(s), or purchase(s) under anyequity and incentive compensation plan or program.

(d) In addition, I am waiving my right to pursue any Claims against the Company and Releasees under any applicable dispute resolution procedure,including any arbitration policy.

I acknowledge that this Release is intended to include, without limitation, all Claims known or unknown that I have or may have against theCompany and Releasees through the Effective Date of this Release. Notwithstanding anything herein, I expressly reserve and do not release pursuantto this Release (and the definition of "Claims" will not include) (i) my rights with respect to the enforcement of the right to receive the payments(including without limitation the Severance Payments (as such term is defined in the Agreement) and benefits specified in the Agreement, (iii) anyrights or interest under any Benefit Plan (as such term is defined in the Agreement), (iii)

any right to indemnification pursuant to the Company's Certificate of Incorporation and By- Laws and any indemnification agreement as in effect onthe date hereof, or the protections of the Company's directors and officers liability insurance, in each case, to the same extent provided to otherofficers of the Company at the same level as me, (iv) any right to purchase shares of the Company's stock after the date hereof under any stock optionor restricted stock agreement between me and the Company, or (v) my rights as a stockholder of the Company.

2. I acknowledge that I have had at least 21(1) calendar days from the date of my termination of employment with the Company (the "TerminationDate") to consider the terms of this Release, that I have been advised to consult with an attorney regarding the terms of this Release prior to executingit, that I have consulted with my attorney, that I fully understand all of the terms and conditions of this Release, that I understand that nothingcontained herein contains a waiver of claims arising after the date of execution of this Release, and I am entering into this Release knowingly,voluntarily and of my own free will. I further understand that my failure to sign this Release and return such signed Release to the Company, 228412th Avenue, New York, New York 10027 (attention: General Counsel) by 5:00 pm on the 22nd(2) day after the Termination Date will render meineligible for the payments and benefits described herein and in the Agreement.

3. I understand that once I sign and return this Release to the Company, I have 7 calendar days to revoke it. I may do so by delivering to theCompany, 2284 12th Avenue, New York, New York 10027 (attention: General Counsel) written notice of my revocation within the 7- day revocationperiod (the "Revocation Period"). This Release will become effective on the 8th day after I sign and return it to the Company ("Effective Date")provided that I have not revoked it during the Revocation Period.

YOU ARE HEREBY ADVISED BY THE COMPANY TO CONSULT WITH AN ATTORNEY BEFORE SIGNING THIS RELEASE.

I HAVE READ THIS RELEASE AND UNDERSTAND ALL OF ITS TERMS. I SIGN AND ENTER THIS RELEASE KNOWINGLY ANDVOLUNTARILY, WITH FULL KNOWLEDGE OF WHAT IT MEANS.

By:

Date:

(1) Change to 45 days in the case of a group termination under the ADEA(2) If 21 days changed to 45 days, change to 46th.

Exhibit 10.14


AGREEMENT (this "Agreement") made as of March 28, 2013 (the "Effective Date"), by and between Fairway Group Holdings Corp., a Delawarecorporation with an office at 2284 12th Avenue, New York, New York 10027 (the "Company"), and Larry Santoro, 20 Church Street, Greenwich, CT06830 (the "Executive").

WITNESSETH:

WHEREAS, Executive is presently the Senior Vice President and Chief Administrative Officer of the Company and each subsidiary of the Company(collectively with any entity that hereafter becomes a subsidiary of the Company, the "Fairway Group");


1. EMPLOYMENT.

The Company hereby employs Executive and Executive hereby accepts such employment, subject to the terms and conditions herein set forth. Executive shall hold the office of Senior Vice President and Chief Administrative Officer of the Fairway Group reporting to the President of theCompany and the Chief Executive Officer of the Company (the "CEO") or such other executive designated by the Company from time to time (the"Supervisory Executive").

2. TERM.


3. COMPENSATION.

(a) As compensation for the employment services to be rendered by Executive hereunder, including all services as an officer or directorof any member of the Fairway Group, the Company agrees to pay, or cause to be paid, to Executive, and Executive agrees to accept, payable in equalinstallments in accordance with Company payroll practices then in existence, an initial annual salary of $290,000 (the "Annual Salary"). Executive'sAnnual Salary for any year following the Initial Term shall be determined by the Board of Directors of the Company (the "Board of Directors") in itssole discretion, but shall not in any year be reduced below the rate for the previous year.


The payment by the Company to the Executive of such bonus shall be made no later than fifteen (15) days after delivery of the Company's auditedconsolidated financial statements to its lenders; provided, however, that Executive shall not be entitled to such bonus if either (i) Executive has failedto comply with the Company's Code of Business Conduct and Ethics and other written policies (including without limitation reporting policies as setforth from time to time in the Fairway Group's organizational chart) established by the Board of Directors (collectively, the "Code of Conduct"), asdetermined in reasonable good faith by the Board of Directors, and either (x) such failure to comply is, or could reasonably be expected to be, in thereasonable determination of the Board of Directors, harmful or damaging to the Fairway Group's business, reputation, employees or customers or(y) Executive has previously failed to comply with such policy and was notified in writing of such failure, or (ii) the Fairway Group is not operatingin substantially full compliance with all fire, safety, building and other codes; and provided further that if there is existing an event of default (orevent which, with notice, the passage of time or both, would constitute an event of default) under the Fairway Group's credit facilities, or the paymentof such bonus would cause an event of default (or event which, with notice, the passage of time or both, would constitute an event of default) underthe Fairway Group's credit facilities, then payment of such bonus shall be postponed until such time as any existing event of default (or event which,with notice, the passage of time or both, would constitute an event of default) under the Fairway Group's credit facilities is cured, and such bonusshall be paid at such time, without interest.

4. EXPENSES.

The Company shall pay or reimburse Executive, upon presentment of suitable vouchers, for all reasonable business and travel expenses which may beincurred or paid by Executive in connection with his employment hereunder in accordance with Company policy as established from time to time bythe Board of Directors. Executive shall comply with such restrictions and shall keep such records as the Company may reasonably deem necessary tomeet the requirements of the Internal Revenue Code of 1986, as amended from time to time (the "Code"), and regulations promulgated thereunder.

5. OTHER BENEFITS.

Executive shall be entitled to four weeks paid vacation for each full year of employment during the Employment Term (the timing of vacations to besubject to the reasonable approval of the CEO) and to participate in such benefit plans and arrangements and receive other benefits on termsconsistent with other officers of the Company at the same level as Executive (including short- and long- term disability insurance, 401(k) plan,hospital, major medical insurance and group life insurance plans in accordance with the terms of such plans), all as determined from time to time bythe Board of Directors (the "Benefit Plans"). Executive shall not be entitled to rollover or otherwise accumulate unused vacation days from year- to-year without the prior consent of the Board of Directors.

6. DUTIES.

(a) Executive shall perform such reasonable duties and functions as the President, CEO or Supervisory Executive, as applicable, maylawfully assign to him and as are typically performed by executives in his position, and Executive shall comply in the performance of his duties withthe policies of the Fairway Group and the Board of Directors, and be subject to the direction of the President, CEO or Supervisory Executive, asapplicable, and the Board of Directors.

(b) During the Employment Term, Executive shall devote all of his business time and attention, reasonable vacation time and absencesfor sickness excepted, to the business of the Fairway Group, as necessary to fulfill his duties; provided, however, that Executive may engage in otheractivities so long as such activities do not unreasonably interfere with Executive's performance of his duties

2

hereunder and do not violate Section 9 hereof. Executive shall perform the duties assigned to him with fidelity and to the best of his ability and incompliance in all material respects with the Company's Code of Conduct.

(c) Nothing contained in this Section 6 or elsewhere in this Agreement shall be construed to prevent Executive from investing or tradingin non- competing investments as he sees fit for his own account, including real estate, stocks, bonds, securities, commodities or other forms ofinvestments.














Notwithstanding the foregoing, a Change in Control shall not occur unless such transaction constitutes a change in the ownership of the Company, achange in effective control of the Company, or a change in the ownership of a substantial portion of the Company's assets under

3

Section 409A of the Code.

(ii) The term "disability" shall mean the inability of Executive, due to illness, accident or any other physical or mental incapacity, toperform the essential functions of his duties, with or without reasonable accommodation, for a period of three (3) months (whether or notconsecutive) in any twelve (12) month period during the Employment Term, as reasonably determined by the Board of Directors.

(iii) The term "justifiable cause" shall mean (A) Executive's repeated failure (other than temporarily while physically or mentallyincapacitated) or refusal to attempt to perform his duties pursuant to this Agreement; (B) Executive's material breach of this Agreement;(C) Executive's performance of any act or his failure to act which constitutes a crime or offense involving money or property of the Fairway Group ora felony in the jurisdiction involved; (D) Executive's performance of any act or his failure to act which constitutes a breach of a fiduciary trust,including without limitation misappropriation of funds or a misrepresentation (other than as a result of a good faith mistake by Executive) of theCompany's financial performance, operating results or financial condition to the Board of Directors or any executive officer; (E) any intentionalunauthorized disclosure by Executive to any person, firm or corporation other than the members of the Fairway Group and their respective directors,managers, officers and employees, of any confidential information or trade secret of the Fairway Group; (F) any attempt by Executive to secure anypersonal profit (other than through his compensation and ownership of equity in the Company) in connection with the business of the Fairway Group(for example, without limitation, using Fairway Group assets to pursue other interests, diverting any business opportunity belonging to the FairwayGroup to himself or to a third party, insider trading or taking bribes or kickbacks); (G) Executive's engagement in conduct or activities materiallydamaging to the property, business or reputation of the Fairway Group (including any fraudulent act); (H) Executive's unlawful use of controlledsubstances that, in the good faith judgment of the Board, impairs Executive's ability to effectively perform his duties hereunder or while on theCompany's premises; (I) any act or omission by Executive involving malfeasance or negligence in the performance of Executive's duties that ismaterially adverse to the Fairway Group; (J) Executive's failure to comply in all material respects with the Fairway Group's policies, includingwithout limitation, the Code of Conduct; or (K) the entry of any order of a court that remains in effect and is not discharged for a period of at leastsixty (60) days, which enjoins or otherwise limits or restricts the performance by Executive under this Agreement, relating to any noncompetition,employment or similar contract, agreement or commitment made by or applicable to Executive in favor of any former employer or any other person;provided, however, that with respect to clauses (A), (B) and (D) through (K) above, the Company cannot terminate the Executive's employment forjustifiable cause unless the Board of Directors has provided the Executive with written notice of the circumstances providing grounds for justifiablecause and an opportunity to confront the charges (with counsel) before the Board of Directors.

(c) Upon any termination of Executive's employment by the Company for justifiable cause, or voluntarily by Executive (includingExecutive electing not to renew this Agreement), Executive shall not be entitled to any amounts or benefits hereunder other than such portion ofExecutive's Annual Salary, reimbursement of expenses pursuant to Section 4 hereof as has been accrued through the date of his termination ofemployment and other amounts or benefits required by law or pursuant to the terms of the Benefit Plans.

(d) If Executive should die during the Employment Term, this Agreement shall terminate immediately. In such event, the estate ofExecutive shall thereupon be entitled to receive (i) such portion of Executive's Annual Salary as has been accrued through the date of his death,(ii) any accrued annual

4

bonus for a prior fiscal year which remains unpaid as of the date of death and a pro rata portion of any bonus that Executive would have been entitledto receive pursuant to Section 3(b) in the fiscal year in which Executive died (based on the number of days Executive was alive during such fiscalyear), payable when and if such bonus would otherwise have been payable had Executive's employment not been terminated by reason of Executive'sdeath and (iii) reimbursement of expenses pursuant to Section 4. Executive's estate also shall be entitled to any amounts or benefits required by lawor payable under the terms of the Benefit Plans.

(e) Upon a finding by the Board of Directors of Executive's disability in accordance with Section 7(b) hereof, the Company shall havethe right to terminate Executive's employment. Any termination pursuant to this subsection (e) shall be effective on the date thirty (30) days afterwhich Executive shall have received written notice of the Company's election to terminate. In such event, Executive shall thereupon be entitled toreceive (i) such portion of Executive's Annual Salary as has been accrued through the date of the termination of employment, (ii) any accrued annualbonus for a prior fiscal year which remains unpaid as of the date of termination and a pro rata portion of any bonus that Executive would have beenentitled to receive pursuant to Section 3(b) in the fiscal year in which Executive became disabled (based on the number of days during such fiscalyear that this Agreement was in effect), payable when and if such bonus would otherwise have been payable had Executive's employment not beenterminated by reason of Executive's disability and (iii) reimbursement of expenses pursuant to Section 4. Executive shall also be entitled to anyamounts or benefits required by law or payable under the terms of the Benefit Plans.


(i) in the event that Executive's employment is terminated during the Employment Term by the Company without justifiable cause (other than due todeath or disability), the Company shall (1) continue to pay Executive his then current Annual Salary (subject to applicable tax withholding), payablein equal installments in accordance with the Company's payroll practices then in existence, for a period of one year from the date of termination (twoyears if such termination occurs within one year following a Change in Control of the Company) and (2) pay Executive's COBRA continuation healthcoverage premiums (less the normal weekly contribution rate being paid by Executive at the time of termination, the payment of which shall beExecutive's responsibility) during the Severance Period, which amounts in (1) and (2) above shall be in lieu of any and all other payments due andowing to Executive under the terms of this Agreement (other than any payments constituting reimbursement of expenses pursuant to Section 4 hereof,any payments or benefits required by law or payable under the terms of the Benefit Plans and the accrued annual bonus for a prior fiscal year and prorata portion of the bonus, if any, referred to in the penultimate paragraph of this Section 7(f)); or

(ii) in the event the Company timely elects not to renew this Agreement for any Additional Term, the Company shall (1) continue to pay Executivehis then current Annual Salary (subject to applicable tax withholding), payable in equal installments in accordance with the Company's payrollpractices then in existence, for a period of one year from the date the Company notifies Executive that it does not intend to renew this Agreement, and(2) pay Executive's COBRA continuation health coverage premiums (less the normal weekly contribution rate being paid by Executive at the time oftermination, the payment of which shall be Executive's responsibility) during the Severance Period, which amounts in (1) and (2) above shall be inlieu of any and all other payments due and owing to Executive under the terms of this Agreement (other than any payments constitutingreimbursement of expenses pursuant to Section 4 hereof, any payments or benefits required by law or payable under the terms of the Benefit Plansand the accrued annual bonus for a prior fiscal year which remains unpaid as of the date of

5

termination and pro rata portion of the bonus, if any, referred to in the penultimate paragraph of this Section 7(f)).




(g) Upon Executive's termination of his employment hereunder, Executive shall be entitled to receive such portion of Executive'sAnnual Salary as has been accrued to date. Executive shall be entitled to reimbursement of expenses pursuant to Section 4 hereof and any paymentsor benefits required by law or payable under the terms of the Benefit Plans.

(h) Any termination of employment hereunder shall include termination from all applicable board and officer positions with anymember of the Fairway Group.


(a) Executive represents and warrants that he is free to enter into this Agreement and to perform the duties required hereunder, and thatthere are no employment contracts or understandings, restrictive covenants or other restrictions, whether written or oral, preventing the performanceof his duties hereunder.


6


(a) In view of the unique and valuable services expected to be rendered by Executive to the Fairway Group, Executive's knowledge ofthe trade secrets and other proprietary information relating to the business of the Fairway Group and in consideration of the compensation to bereceived hereunder, and Executive's ownership interest in the Company, Executive agrees that during the period of his employment by the Companyand the greater of (i) one year following his employment with the Company or (ii) the Severance Period (the "Non- Competition Period"), Executiveshall not, whether for compensation or without compensation, directly or indirectly, as an owner, principal, partner, member, shareholder,independent contractor, consultant, joint venturer, investor, licensor, lender or in any other capacity whatsoever, alone, or in association with anyother person, carry on, be engaged or take part in, or render services (other than services which are generally offered to third parties) or provideadvice to, own, share in the earnings of, invest in the stocks, bonds or other securities of, or otherwise become financially interested in, any entityengaged in the retail grocery and food services business and related services anywhere in the northeastern United States and in any other state intowhich the Board of Directors has, to the knowledge of the Executive, discussed the possibility of expanding the Fairway Group's operations. Therecord or beneficial ownership by Executive of up to one percent (1%) of the shares of any corporation whose shares are publicly traded on a nationalsecurities exchange or in the over- the- counter market shall not of itself constitute a breach hereunder. In addition, Executive shall not, directly orindirectly, during the Non- Competition Period, request or cause any suppliers or customers with whom the Fairway Group has a businessrelationship to cancel or terminate any such business relationship with any member of the Fairway Group or solicit, interfere with, entice from or hirefrom any member of the Fairway Group any employee (or former employee) of any member of the Fairway Group. If the Company breaches itsobligation to make the Severance Payments (other than in the circumstances described in the next sentence) or to comply with its obligations underSection 4 hereof, and such breach is not cured within thirty (30) days after written notice of such breach is provided to the Company by Executive,then in addition to any other remedies available to the Executive, Executive shall be released from his obligations under this Section 9. If Executivedoes not comply with his obligations under this Section 9 (other than in the circumstances described in the preceding sentence), then notwithstandinganything herein to the contrary, the Company shall not be obligated to pay Executive any remaining portion of the Severance Payments.


(i) Executive shall not make any oral or written statements, either directly or through other persons or entities, which are disparagingto any member of the Fairway Group or any of its affiliates, management, officers, directors, services, products, operations or other matters relating tothe Fairway Group's businesses; and

(ii) The Fairway Group, through its officers and directors, shall not make any oral or written statements, either directly or through otherpersons or entities, which are disparaging to Executive.


7

(c) If any portion of the restrictions set forth in this Section 9 should, for any reason whatsoever, be declared invalid by a court ofcompetent jurisdiction, the validity or enforceability of the remainder of such restrictions shall not thereby be adversely affected.

(d) Executive acknowledges that the provisions of this Section 9 were a material inducement to the Company to enter into thisAgreement and to employ Executive. Executive further acknowledges that the territorial and time limitations set forth in this Section 9 are reasonableand properly required for the adequate protection of the business of the Fairway Group. Executive hereby waives, to the extent permitted by law, anyand all right to contest the validity of this Section 9 on the ground of breadth of its geographic or product and service coverage or length of term. Inthe event any such territorial or time limitation is deemed to be unreasonable by a court of competent jurisdiction, Executive agrees to the reductionof the territorial or time limitation to the area or period which such court shall deem reasonable.

(e) The existence of any claim or cause of action by Executive against the Company or any other member of the Fairway Group shallnot constitute a defense to the enforcement by the Fairway Group of the foregoing restrictive covenants, but such claim or cause of action shall belitigated separately.


(a) Executive shall promptly and fully disclose to the Fairway Group, with all necessary detail for a complete understanding of thesame, all developments, know- how, discoveries, inventions, improvements, concepts, ideas, writings, formulae, processes and methods (whethercopyrightable, patentable or otherwise) made, received, conceived, developed, acquired or written during working hours, or otherwise, by Executive(whether or not at the request or upon the suggestion of the Fairway Group) during the Employment Term, solely or jointly with others, using theFairway Group's resources, or relating to any current or proposed business or activities of the Fairway Group known to him as a consequence of hisemployment or the rendering of services hereunder (collectively, the "Subject Matter").

(b) Executive hereby assigns and transfers, and agrees to assign and transfer, to the Fairway Group all his rights, title and interest in andto the Subject Matter, and Executive further agrees to deliver to the Fairway Group any and all drawings, notes, specifications and data relating to theSubject Matter, and to execute, acknowledge and deliver all such further papers, including applications for trademarks, copyrights or patents, as maybe necessary to obtain trademarks, copyrights and patents for any thereof in any and all countries and to vest title thereto in the Fairway Group. Executive shall assist the Fairway Group in obtaining such trademarks, copyrights or patents during the term of this Agreement, and any timethereafter on reasonable notice and at mutually convenient times, and Executive agrees to testify in any prosecution or litigation involving any of theSubject Matter; provided, however, that following termination of employment Executive shall be reasonably compensated for his time andreimbursed his reasonable out- of- pocket expenses incurred in rendering such assistance or giving or preparing to give such testimony if it is requiredafter the Non- Competition Period.


(a) Executive shall not, during the term of this Agreement, or at any time following expiration or termination of this Agreement, directlyor indirectly, disclose or permit to be known (other than as is required in the regular course of his duties (including without limitation disclosures tothe Fairway Group's advisors and consultants) or as is required by law (in which case Executive shall give the Company prior written notice of suchrequired disclosure) or with the prior written consent of the Company's President, to any person, firm or corporation, any confidential informationacquired by him

8

during the course of, or as an incident to, his employment hereunder, relating to the Fairway Group, any client, vendor or customer of the FairwayGroup, or any corporation, partnership or other entity owned or controlled, directly or indirectly, by any of the foregoing, or in which any of theforegoing has a beneficial interest, including, but not limited to, the business affairs of each of the foregoing. Such confidential information shallinclude, but shall not be limited to, proprietary technology, trade secrets, patented processes, research and development data, know- how, marketstudies and forecasts, competitive analyses, pricing policies, employee lists, personnel policies, the substance of agreements with customers,suppliers, landlords and others, marketing or dealership arrangements, servicing and training programs and arrangements, customer lists and anyother documents embodying such confidential information. This confidentiality obligation shall not apply to any confidential information whichbecomes publicly available from sources unrelated to the Fairway Group.






14. GOVERNING LAW.




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16. SEVERABILITY.


17. WITHHOLDING.


18. NOTICES.








22. SURVIVAL.


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Prior to any initial public offering of the Company's capital stock, to the extent that any payments or benefits provided to Executive in this Agreementor otherwise constitute "parachute payments" within the meaning of Section 280G of the Code, and, but for this Section 23, would subject Executiveto the excise tax imposed by Section 4999 of the Code, the Executive may, at his option, waive his right to retain such payments and/or other benefitsunless such payments and other benefits are approved by the stockholders of the Company in a manner that satisfies the stockholder approvalrequirements of Section 280G(b)(5)(B) of the Code and the Treasury Regulations promulgated thereunder (a "280G Vote"), and (ii) the Companyshall submit the Executive's right to retain such payments and other benefits to a 280G Vote. The Executive acknowledges and agrees that thestockholders of the Company are not obligated to approve such payments following any waiver by the Executive of his right to receive suchpayments.



It is intended that any amounts payable under this Agreement and the Company's and Executive's exercise of any authority or discretion hereundershall comply with, and avoid the imputation of any tax, penalty or interest under Section 409A of the Code. This Agreement shall be construed andinterpreted consistent with that intent. Notwithstanding the foregoing, Executive shall bear the cost of any failure to comply with Section 409A of theCode, unless and except to the extent that such tax, penalty or interest is incurred by reason of the Company's willful breach of the provisions of thisAgreement, and the Company shall have no obligation to pay or reimburse Executive for the payment of any amount of tax, penalty or interestincurred pursuant to Section 409A of the Code.


24 FURTHER ASSURANCES.

The parties agree to execute and deliver all such further documents, agreements and instruments

11

and take such other and further action as may be necessary or appropriate to carry out the purposes and intent of this Agreement.



26. HEADINGS.





/s/ Larry SantoroLarry Santoro

12

EXHIBIT A

FORM OF RELEASE












By:

Date:


Exhibit 10.15

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

AGREEMENT (this "Agreement") made as of March 28, 2013 (the "Effective Date"), by and between Fairway Group Holdings Corp., a Delawarecorporation with an office at 2284 12th Avenue, New York, New York 10027 (the "Company"), and Linda Siluk, 93 Sherwood Street, Clifton, NJ07013 (the "Executive").

WITNESSETH:

WHEREAS, Executive is presently the Vice President of Finance and Chief Accounting Officer of the Company and each subsidiary of the Company(collectively with any entity that hereafter becomes a subsidiary of the Company, the "Fairway Group");

WHEREAS, the Company and Executive are parties to an employment agreement dated as of September 15, 2009, as amended (the "PriorAgreement");

WHEREAS, the Company and Executive desire to amend and restate the terms of the Prior Agreement; and

WHEREAS, this Agreement shall supercede and completely replace the Prior Agreement as of the date hereof.


1. EMPLOYMENT.

The Company hereby employs Executive and Executive hereby accepts such employment, subject to the terms and conditions herein set forth. Executive shall hold the office of Vice President of Finance and Chief Accounting Officer of the Fairway Group reporting to the President and ChiefFinancial Officer of the Company (the "CFO") or such other executive designated by the Company from time to time (the "Supervisory Executive").

2. TERM.


3. COMPENSATION.

(a) As compensation for the employment services to be rendered by Executive hereunder, including all services as an officer or directorof any member of the Fairway Group, the Company agrees to pay, or cause to be paid, to Executive, and Executive agrees to accept, payable in equalinstallments in accordance with Company payroll practices then in existence, an initial annual salary of $290,000 (the "Annual Salary"). Executive'sAnnual Salary for any year following the Initial Term shall be determined

by the Board of Directors of the Company (the "Board of Directors") in its sole discretion, but shall not in any year be reduced below the rate for theprevious year.


The payment by the Company to the Executive of such bonus shall be made no later than fifteen (15) days after delivery of the Company's auditedconsolidated financial statements to its lenders; provided, however, that Executive shall not be entitled to such bonus if either (i) Executive has failedto comply with the Company's Code of Business Conduct and Ethics and other written policies (including without limitation reporting policies as setforth from time to time in the Fairway Group's organizational chart) established by the Board of Directors (collectively, the "Code of Conduct"), asdetermined in reasonable good faith by the Board of Directors, and either (x) such failure to comply is, or could reasonably be expected to be, in thereasonable determination of the Board of Directors, harmful or damaging to the Fairway Group's business, reputation, employees or customers or(y) Executive has previously failed to comply with such policy and was notified in writing of such failure, or (ii) the Fairway Group is not operatingin substantially full compliance with all fire, safety, building and other codes; and provided further that if there is existing an event of default (orevent which, with notice, the passage of time or both, would constitute an event of default) under the Fairway Group's credit facilities, or the payment

of such bonus would cause an event of default (or event which, with notice, the passage of time or both, would constitute an event of default) underthe Fairway Group's credit facilities, then payment of such bonus shall be postponed until such time as any existing event of default (or event which,with notice, the passage of time or both, would constitute an event of default) under the Fairway Group's credit facilities is cured, and such bonusshall be paid at such time, without interest.

4. EXPENSES.

The Company shall pay or reimburse Executive, upon presentment of suitable vouchers, for all reasonable business and travel expenses which may beincurred or paid by Executive in connection with her employment hereunder in accordance with Company policy as established from time to time bythe Board of Directors. Executive shall comply with such restrictions and shall keep such records as the Company may reasonably deem necessary tomeet the requirements of the Internal Revenue Code of 1986, as amended from time to time (the "Code"), and regulations promulgated thereunder.

5. OTHER BENEFITS.

Executive shall be entitled to four weeks paid vacation for each full year of employment during the Employment Term (the timing of vacations to besubject to the reasonable approval of the CFO) and to participate in such benefit plans and arrangements and receive other benefits on termsconsistent with other officers of the Company at the same level as Executive (including short- and long- term disability insurance, 401(k) plan,hospital, major medical insurance and group life insurance plans in accordance with the terms of such plans), all as determined from time to time bythe Board of Directors (the "Benefit Plans"). The Company shall provide a car and/or food allowance of $138.46 per week payable in equalinstallments at the same time Executive receives her salary. Executive shall not be entitled to rollover or otherwise accumulate unused vacation daysfrom year- to- year without the prior consent of the Board of Directors.

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6. DUTIES.

(a) Executive shall perform such reasonable duties and functions as the CFO or Supervisory Executive, as applicable, may lawfullyassign to her and as are typically performed by executives in her position, and Executive shall comply in the performance of her duties with thepolicies of the Fairway Group and the Board of Directors, and be subject to the direction of the CFO or Supervisory Executive, as applicable, and theBoard of Directors.

(b) During the Employment Term, Executive shall devote all of her business time and attention, reasonable vacation time and absencesfor sickness excepted, to the business of the Fairway Group, as necessary to fulfill her duties; provided, however, that Executive may engage in otheractivities so long as such activities do not unreasonably interfere with Executive's performance of her duties hereunder and do not violate Section 9hereof. Executive shall perform the duties assigned to him with fidelity and to the best of her ability and in compliance in all material respects withthe Company's Code of Conduct.

(c) Nothing contained in this Section 6 or elsewhere in this Agreement shall be construed to prevent Executive from investing or tradingin non- competing investments as she sees fit for her own account, including real estate, stocks, bonds, securities, commodities or other forms ofinvestments.











(x) one person (or more than one person acting as a group), other than Sterling Investment Partners or its affiliates, acquires ownership of stock ofthe Company that,

3

together with the stock held by such person or group, constitutes more than 50% of the total voting power of the stock of the Company;




(ii) The term "disability" shall mean the inability of Executive, due to illness, accident or any other physical or mental incapacity, toperform the essential functions of her duties, with or without reasonable accommodation, for a period of three (3) months (whether or notconsecutive) in any twelve (12) month period during the Employment Term, as reasonably determined by the Board of Directors.

(iii) The term "justifiable cause" shall mean (A) Executive's repeated failure (other than temporarily while physically or mentallyincapacitated) or refusal to attempt to perform her duties pursuant to this Agreement; (B) Executive's material breach of this Agreement;(C) Executive's performance of any act or her failure to act which constitutes a crime or offense involving money or property of the Fairway Group ora felony in the jurisdiction involved; (D) Executive's performance of any act or her failure to act which constitutes a breach of a fiduciary trust,including without limitation misappropriation of funds or a misrepresentation (other than as a result of a good faith mistake by Executive) of theCompany's financial performance, operating results or financial condition to the Board of Directors or any executive officer; (E) any intentionalunauthorized disclosure by Executive to any person, firm or corporation other than the members of the Fairway Group and their respective directors,managers, officers and employees, of any confidential information or trade secret of the Fairway Group; (F) any attempt by Executive to secure anypersonal profit (other than through her compensation and ownership of equity in the Company) in connection with the business of the Fairway Group(for example, without limitation, using Fairway Group assets to pursue other interests, diverting any business opportunity belonging to the FairwayGroup to himself or to a third party, insider trading or taking bribes or kickbacks); (G) Executive's engagement in conduct or activities materiallydamaging to the property, business or reputation of the Fairway Group (including any fraudulent act); (H) Executive's unlawful use of controlledsubstances that, in the good faith judgment of the Board, impairs Executive's ability to effectively perform her duties hereunder or while on theCompany's premises; (I) any act or omission by Executive involving malfeasance or negligence in the performance of Executive's duties that ismaterially adverse to the Fairway Group; (J) Executive's failure to comply in all material respects with the Fairway Group's policies, includingwithout limitation, the Code of Conduct; or (K) the entry of any order of a court that remains in effect and is not discharged for a period of at leastsixty (60) days, which enjoins or otherwise limits or restricts the performance by Executive under this Agreement, relating to any noncompetition,employment or similar contract, agreement or commitment made by or applicable to Executive in favor of any former employer or any other person;provided, however, that with respect to clauses (A), (B) and (D) through (K) above, the Company cannot terminate the Executive's employment forjustifiable cause unless the Board of Directors has provided the Executive with written notice of the circumstances providing grounds for justifiablecause and an

4

opportunity to confront the charges (with counsel) before the Board of Directors.

(c) Upon any termination of Executive's employment by the Company for justifiable cause, or voluntarily by Executive (includingExecutive electing not to renew this Agreement), Executive shall not be entitled to any amounts or benefits hereunder other than such portion ofExecutive's Annual Salary, reimbursement of expenses pursuant to Section 4 hereof as has been accrued through the date of her termination ofemployment and other amounts or benefits required by law or pursuant to the terms of the Benefit Plans.

(d) If Executive should die during the Employment Term, this Agreement shall terminate immediately. In such event, the estate ofExecutive shall thereupon be entitled to receive (i) such portion of Executive's Annual Salary as has been accrued through the date of her death,(ii) any accrued annual bonus for a prior fiscal year which remains unpaid as of the date of death and a pro rata portion of any bonus that Executivewould have been entitled to receive pursuant to Section 3(b) in the fiscal year in which Executive died (based on the number of days Executive wasalive during such fiscal year), payable when and if such bonus would otherwise have been payable had Executive's employment not been terminatedby reason of Executive's death and (iii) reimbursement of expenses pursuant to Section 4. Executive's estate also shall be entitled to any amounts orbenefits required by law or payable under the terms of the Benefit Plans.

(e) Upon a finding by the Board of Directors of Executive's disability in accordance with Section 7(b) hereof, the Company shall havethe right to terminate Executive's employment. Any termination pursuant to this subsection (e) shall be effective on the date thirty (30) days afterwhich Executive shall have received written notice of the Company's election to terminate. In such event, Executive shall thereupon be entitled toreceive (i) such portion of Executive's Annual Salary as has been accrued through the date of the termination of employment, (ii) any accrued annualbonus for a prior fiscal year which remains unpaid as of the date of termination and a pro rata portion of any bonus that Executive would have beenentitled to receive pursuant to Section 3(b) in the fiscal year in which Executive became disabled (based on the number of days during such fiscalyear that this Agreement was in effect), payable when and if such bonus would otherwise have been payable had Executive's employment not beenterminated by reason of Executive's disability and (iii) reimbursement of expenses pursuant to Section 4. Executive shall also be entitled to anyamounts or benefits required by law or payable under the terms of the Benefit Plans.


(i) in the event that Executive's employment is terminated during the Employment Term by the Company without justifiable cause (other than due todeath or disability), the Company shall (1) continue to pay Executive her then current Annual Salary (subject to applicable tax withholding), payablein equal installments in accordance with the Company's payroll practices then in existence, for a period of one year from the date of termination (twoyears if such termination occurs within one year following a Change in Control of the Company) and (2) pay Executive's COBRA continuation healthcoverage premiums (less the normal weekly contribution rate being paid by Executive at the time of termination, the payment of which shall beExecutive's responsibility) during the Severance Period, which amounts in (1) and (2) above shall be in lieu of any and all other payments due andowing to Executive under the terms of this Agreement (other than any payments constituting reimbursement of expenses pursuant to Section 4 hereof,any payments or benefits required by law or payable under the terms of the Benefit Plans and the accrued annual bonus for a prior fiscal year and prorata portion of the bonus, if any, referred to in the penultimate paragraph of this Section 7(f)); or

5

(ii) in the event the Company timely elects not to renew this Agreement for any Additional Term, the Company shall (1) continue to pay Executiveher then current Annual Salary (subject to applicable tax withholding), payable in equal installments in accordance with the Company's payrollpractices then in existence, for a period of one year from the date the Company notifies Executive that it does not intend to renew this Agreement, and(2) pay Executive's COBRA continuation health coverage premiums (less the normal weekly contribution rate being paid by Executive at the time oftermination, the payment of which shall be Executive's responsibility) during the Severance Period, which amounts in (1) and (2) above shall be inlieu of any and all other payments due and owing to Executive under the terms of this Agreement (other than any payments constitutingreimbursement of expenses pursuant to Section 4 hereof, any payments or benefits required by law or payable under the terms of the Benefit Plansand the accrued annual bonus for a prior fiscal year which remains unpaid as of the date of termination and pro rata portion of the bonus, if any,referred to in the penultimate paragraph of this Section 7(f)).

The period during which payments are made pursuant to clauses (i)(1) or (ii)(1) of this Section 7(f) is hereinafter referred to as the "SeverancePeriod." The payments made pursuant to clauses (i) and (ii) of this Section 7(f) are collectively hereinafter referred to as the "Severance Payments." The Company's obligation to make the Severance Payments shall be conditional upon (1) Executive executing and delivering to the Company within30 days after the date of her termination of employment (or, if sooner, by December 31 of the year of such termination, or such later date as isrequired by applicable law) a release (that is no longer subject to revocation under applicable law) in substantially the form of Exhibit A hereto, and(2) Executive's compliance with her obligations under Sections 9, 10, 11 and 12 hereof. Notwithstanding anything to the contrary contained herein,the first Severance Payment shall be made on the sixtieth (60th) day following Executive's "separation from service" (as defined in section 409A ofthe Code) and shall include payment of all amounts that otherwise would be due prior thereto.



(g) Upon Executive's termination of her employment hereunder, Executive shall be entitled to receive such portion of Executive'sAnnual Salary as has been accrued to date. Executive shall be entitled to reimbursement of expenses pursuant to Section 4 hereof and any paymentsor benefits required by law or payable under the terms of the Benefit Plans.

(h) Any termination of employment hereunder shall include termination from all applicable board and officer positions with anymember of the Fairway Group.

6


(a) Executive represents and warrants that she is free to enter into this Agreement and to perform the duties required hereunder, and thatthere are no employment contracts or understandings, restrictive covenants or other restrictions, whether written or oral, preventing the performanceof her duties hereunder.



(a) In view of the unique and valuable services expected to be rendered by Executive to the Fairway Group, Executive's knowledge ofthe trade secrets and other proprietary information relating to the business of the Fairway Group and in consideration of the compensation to bereceived hereunder, and Executive's ownership interest in the Company, Executive agrees that during the period of her employment by the Companyand the greater of (i) one year following her employment with the Company or (ii) the Severance Period (the "Non- Competition Period"), Executiveshall not, whether for compensation or without compensation, directly or indirectly, as an owner, principal, partner, member, shareholder,independent contractor, consultant, joint venturer, investor, licensor, lender or in any other capacity whatsoever, alone, or in association with anyother person, carry on, be engaged or take part in, or render services (other than services which are generally offered to third parties) or provideadvice to, own, share in the earnings of, invest in the stocks, bonds or other securities of, or otherwise become financially interested in, any entityengaged in the retail grocery and food services business and related services anywhere in the northeastern United States and in any other state intowhich the Board of Directors has, to the knowledge of the Executive, discussed the possibility of expanding the Fairway Group's operations. Therecord or beneficial ownership by Executive of up to one percent (1%) of the shares of any corporation whose shares are publicly traded on a nationalsecurities exchange or in the over- the- counter market shall not of itself constitute a breach hereunder. In addition, Executive shall not, directly orindirectly, during the Non- Competition Period, request or cause any suppliers or customers with whom the Fairway Group has a businessrelationship to cancel or terminate any such business relationship with any member of the Fairway Group or solicit, interfere with, entice from or hirefrom any member of the Fairway Group any employee (or former employee) of any member of the Fairway Group. If the Company breaches itsobligation to make the Severance Payments (other than in the circumstances described in the next sentence) or to comply with its obligations underSection 4 hereof, and such breach is not cured within thirty (30) days after written notice of such breach is provided to the Company by Executive,then in addition to any other remedies available to the Executive, Executive shall be released from her obligations under this Section 9. If Executivedoes not comply with her obligations under this Section 9 (other than in the circumstances described in the preceding sentence), then notwithstandinganything herein to the contrary, the Company shall not be obligated to pay Executive any remaining portion of the Severance Payments.


(i) Executive shall not make any oral or written statements, either directly or through other persons or entities, which are disparagingto any member of the Fairway Group or any of its affiliates, management, officers, directors, services, products, operations or other matters relating tothe Fairway Group's businesses; and

7

(ii) The Fairway Group, through its officers and directors, shall not make any oral or written statements, either directly or through otherpersons or entities, which are disparaging to Executive.

Notwithstanding the foregoing provisions of this Section 9(b), it shall not be a violation of this Section 9(b) for Executive or the Fairway Group to(i) make truthful statements when required by order of a court or other body having jurisdiction, any governmental investigation or inquiry by agovernmental entity, subpoena, court order, compulsory legal process, or as otherwise may be required by law, (ii) make traditional competitivestatements in the course of promoting a competing business (except in violation of Section 9, 10 or 11 hereof), (iii) disclose that Executive is nolonger employed by the Company, (iv) rebut inaccurate statements made by the other party or (v) for either party to make truthful statements toenforce her or its rights under this Agreement.

(c) If any portion of the restrictions set forth in this Section 9 should, for any reason whatsoever, be declared invalid by a court ofcompetent jurisdiction, the validity or enforceability of the remainder of such restrictions shall not thereby be adversely affected.

(d) Executive acknowledges that the provisions of this Section 9 were a material inducement to the Company to enter into thisAgreement and to employ Executive. Executive further acknowledges that the territorial and time limitations set forth in this Section 9 are reasonableand properly required for the adequate protection of the business of the Fairway Group. Executive hereby waives, to the extent permitted by law, anyand all right to contest the validity of this Section 9 on the ground of breadth of its geographic or product and service coverage or length of term. Inthe event any such territorial or time limitation is deemed to be unreasonable by a court of competent jurisdiction, Executive agrees to the reductionof the territorial or time limitation to the area or period which such court shall deem reasonable.

(e) The existence of any claim or cause of action by Executive against the Company or any other member of the Fairway Group shallnot constitute a defense to the enforcement by the Fairway Group of the foregoing restrictive covenants, but such claim or cause of action shall be

litigated separately.


(a) Executive shall promptly and fully disclose to the Fairway Group, with all necessary detail for a complete understanding of thesame, all developments, know- how, discoveries, inventions, improvements, concepts, ideas, writings, formulae, processes and methods (whethercopyrightable, patentable or otherwise) made, received, conceived, developed, acquired or written during working hours, or otherwise, by Executive(whether or not at the request or upon the suggestion of the Fairway Group) during the Employment Term, solely or jointly with others, using theFairway Group's resources, or relating to any current or proposed business or activities of the Fairway Group known to him as a consequence of heremployment or the rendering of services hereunder (collectively, the "Subject Matter").

(b) Executive hereby assigns and transfers, and agrees to assign and transfer, to the Fairway Group all her rights, title and interest in andto the Subject Matter, and Executive further agrees to deliver to the Fairway Group any and all drawings, notes, specifications and data relating to theSubject Matter, and to execute, acknowledge and deliver all such further papers, including applications for trademarks, copyrights or patents, as maybe necessary to obtain trademarks, copyrights and patents for any thereof in any and all countries and to vest title thereto in the Fairway Group. Executive shall assist the Fairway Group in obtaining such trademarks, copyrights or patents during the term of this Agreement, and any timethereafter on reasonable notice and at mutually convenient times, and Executive agrees to testify in

8

any prosecution or litigation involving any of the Subject Matter; provided, however, that following termination of employment Executive shall bereasonably compensated for her time and reimbursed her reasonable out- of- pocket expenses incurred in rendering such assistance or giving orpreparing to give such testimony if it is required after the Non- Competition Period.


(a) Executive shall not, during the term of this Agreement, or at any time following expiration or termination of this Agreement, directlyor indirectly, disclose or permit to be known (other than as is required in the regular course of her duties (including without limitation disclosures tothe Fairway Group's advisors and consultants) or as is required by law (in which case Executive shall give the Company prior written notice of suchrequired disclosure) or with the prior written consent of the Company's President, to any person, firm or corporation, any confidential informationacquired by him during the course of, or as an incident to, her employment hereunder, relating to the Fairway Group, any client, vendor or customerof the Fairway Group, or any corporation, partnership or other entity owned or controlled, directly or indirectly, by any of the foregoing, or in whichany of the foregoing has a beneficial interest, including, but not limited to, the business affairs of each of the foregoing. Such confidentialinformation shall include, but shall not be limited to, proprietary technology, trade secrets, patented processes, research and development data, know-how, market studies and forecasts, competitive analyses, pricing policies, employee lists, personnel policies, the substance of agreements withcustomers, suppliers, landlords and others, marketing or dealership arrangements, servicing and training programs and arrangements, customer listsand any other documents embodying such confidential information. This confidentiality obligation shall not apply to any confidential informationwhich becomes publicly available from sources unrelated to the Fairway Group.



Executive agrees that if she breaches, or threatens to commit a breach of, any of the provisions of Sections 9, 10 or 11 (the "Restrictive Covenants"),the Fairway Group shall have, in addition to, and not in lieu of, any other rights and remedies available to the Fairway Group under law and in equity,the right to injunctive relief and/or to have the Restrictive Covenants specifically enforced by a court of competent jurisdiction, without the posting ofany bond or other security, it being agreed that any breach or threatened breach of the Restrictive Covenants would cause irreparable injury to theFairway Group and that money damages would not provide an adequate remedy to the Company. Notwithstanding the foregoing, nothing hereinshall constitute a waiver by Executive of her right to contest whether a breach or threatened breach of any Restrictive Covenant has occurred.



9

14. GOVERNING LAW.




16. SEVERABILITY.


17. WITHHOLDING.


18. NOTICES.







This Agreement contains the entire agreement of the parties with respect to the subject matter hereof, supersedes all prior and contemporaneousagreements, both written and oral, between the parties

10

with respect to the subject matter hereof, and may be modified only by a written instrument signed by each of the parties hereto. This Agreementshall be binding upon and inure to the benefit of the parties hereto and their respective legal representatives, heirs, distributors, successors andassigns; provided, however, that Executive shall not be entitled to assign or delegate any of her rights or obligations hereunder without the priorwritten consent of the Company. It is intended that Sections 9, 10, 11, 12 and 15 benefit each of the Company and each other member of the FairwayGroup, each of which is entitled to enforce the provisions of Sections 9, 10, 11, 12 and 15.

22. SURVIVAL.



Prior to any initial public offering of the Company's capital stock, to the extent that any payments or benefits provided to Executive in this Agreementor otherwise constitute "parachute payments" within the meaning of Section 280G of the Code, and, but for this Section 23, would subject Executiveto the excise tax imposed by Section 4999 of the Code, the Executive may, at her option, waive her right to retain such payments and/or other benefitsunless such payments and other benefits are approved by the stockholders of the Company in a manner that satisfies the stockholder approvalrequirements of Section 280G(b)(5)(B) of the Code and the Treasury Regulations promulgated thereunder (a "280G Vote"), and (ii) the Companyshall submit the Executive's right to retain such payments and other benefits to a 280G Vote. The Executive acknowledges and agrees that thestockholders of the Company are not obligated to approve such payments following any waiver by the Executive of her right to receive suchpayments.



It is intended that any amounts payable under this Agreement and the Company's and Executive's exercise of any authority or discretion hereundershall comply with, and avoid the imputation of any tax,

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penalty or interest under Section 409A of the Code. This Agreement shall be construed and interpreted consistent with that intent. Notwithstandingthe foregoing, Executive shall bear the cost of any failure to comply with Section 409A of the Code, unless and except to the extent that such tax,penalty or interest is incurred by reason of the Company's willful breach of the provisions of this Agreement, and the Company shall have noobligation to pay or reimburse Executive for the payment of any amount of tax, penalty or interest incurred pursuant to Section 409A of the Code.






26. HEADINGS.





/s/ Linda SilukLinda Siluk

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EXHIBIT A

FORM OF RELEASE












By:

Date:


Exhibit 10.18

AMENDED AND RESTATEDMANAGEMENT AGREEMENT

AMENDED AND RESTATED MANAGEMENT AGREEMENT (this "Agreement"), dated as of October 25, 2010, by and among SterlingInvestment Partners Advisers, LLC, a Delaware limited liability company ("Sterling"), Fairway Group Holdings Corp., a Delaware corporation("Parent"), and Fairway Group Acquisition Company, a Delaware corporation ("Sub") and wholly- owned subsidiary of Parent (collectively withParent, the "Company").

BACKGROUND:

The Company is currently receiving financial and management consulting services from Sterling, and thereby obtaining the benefit of the experienceof Sterling in business and financial management generally and its knowledge of the Company's financial affairs in particular, pursuant to the termsof that certain Management Agreement, dated as of January 18, 2007, as amended as of March 26, 2009 and September 30, 2009 (the "PriorManagement Agreement"). The Company and Sterling desire to amend and restate the terms of the Prior Agreement to set forth the terms pursuant towhich Sterling will continue to provide financial and management consulting services to the Company. This Agreement shall supersede andcompletely replace the Prior Agreement as of the date hereof.

NOW, THEREFORE, in consideration of the foregoing premises and the respective agreements hereinafter set forth and the mutual benefits to bederived herefrom, Sterling and the Company hereby agree as follows:

TERMS:

1. Engagement. The Company hereby engages Sterling as a financial and management consultant, and Sterling hereby agrees toprovide financial and management consulting services to the Company, all on the terms and subject to the conditions set forth below.

2. Services of Sterling. Sterling hereby agrees during the term of this engagement to consult with the Parent's Board of Directors (the"Board") and management of the Company in such manner and on such business and financial matters as may be reasonably requested from time totime by the Board, including but not limited to:

(i) developing and implementing corporate strategy;

(ii) budgeting future corporate investments;

(iii) developing acquisition and divestiture strategies; and

(iv) subsequent debt and equity financings

In addition to the business and financial consulting services set forth above, officers and employees of Sterling will be available to serve on theBoard, without additional compensation, and will devote such time and attention to the Company's affairs as Sterling determines reasonablynecessary to accomplish the purposes of this Agreement.

3. Personnel. Sterling shall provide and devote to the performance of this Agreement such members, partners, employees and agentsof Sterling as Sterling shall deem appropriate in its reasonable discretion for the furnishing of the services required hereby.

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4. Compensation.

(a) The Company agrees to pay to Sterling as compensation for services to be rendered by Sterling hereunder a fee equal to $1,258,584per year (as adjusted from time to time the "Annual Fee"), payable semi- annually in advance, in two equal installments of $629,292 on the first dayof January and July of each year. In the event the Company's trailing twelve months earnings before interest, taxes, depreciation and amortization("EBITDA") on a pro forma basis giving effect to any new store openings (commencing with the Stamford, CT store) and acquisitions consummatedduring the period exceeds $35 million, then the Annual Fee shall be increased by $250,000, and thereafter shall be increased by an additional$250,000 for each additional $5 million of trailing twelve months' EBITDA. For purposes of the preceding sentence, EBITDA shall be computed inaccordance with the definition of EBITDA in the Company's senior credit facility, except the computation (i) shall be on a pro forma basis givingeffect to any acquisition consummated during the period being measured, (ii) with respect to new store openings shall be the greater of $[***] oractual EBITDA for such new store (excluding pre- opening and start- up costs), and for purposes of this Section 4(a) a new store opening shall bedeemed to have occurred when meaningful construction on a new store has commenced, (iii) shall add back all unusual and non- recurring expenses,

including any severance costs, consistent with management's presentation of "Management EBITDA" in the monthly financial statements presentedto the board of directors and (iv) shall be determined based on the audited financial statements of Parent. Any increase in the Annual Fee pursuant tothe second preceding sentence shall be retroactive to the beginning of the calendar year. In the event any fund affiliated with Sterling InvestmentPartners purchases (by payment in immediately available funds) additional equity securities (including securities convertible into or exercisable orexchangeable for equity securities) of Parent after the date hereof, then in each case the Annual Fee payable by the Company to Sterling pursuant tothis Section 4(a) shall be increased by a percentage equal to the percentage increase in the equity investment of the funds affiliated with SterlingInvestment Partners (based on the actual purchase price for such equity). Any increase in the Annual Fee pursuant to the preceding sentence shall beretroactive to the beginning of the calendar year. For purposes hereof, a fund shall be "affiliated" with Sterling Investment Partners if one or more ofMessrs. Macey, Newhouse, Santoro or Selden play an active role in managing such fund. Notwithstanding the foregoing, in the event the Companyis prohibited by its then existing senior credit agreement from paying all or any portion of the Annual Fee, such Annual Fee (or portion thereof whichcannot be paid) shall be deemed fully earned and non- refundable on the date payment is due, but payment thereof shall be deferred until theCompany is again permitted to pay such fee (or a portion thereof), at which time the accrued but unpaid Annual Fee shall be paid (with interest at therate of 12% per annum from the due date to the payment date) to Sterling.

(b) The Company shall reimburse Sterling for such reasonable travel expenses and other direct out- of- pocket expenses as may beincurred by Sterling and its employees in connection with the rendering of services hereunder. The Company will, within 30 days after receipt ofproperly documented (i.e., third party receipts) expense reports, reimburse Sterling for such expenses.

(c) In the event that Sterling assists the Company in any equity or debt financing for the Company (other than in a transaction thatresults in a Sale of the Company (as defined below)), whether public or private, the Company will pay Sterling a fee of (i) [***] percent ([***]%) ofthe gross proceeds received by the Company in any equity financing (the "Equity Financing Fee") and (ii) [***] percent ([***]%) of the grossproceeds of any debt financing (the "Debt Financing Fee"). For purposes hereof, (i) any offering of debt securities which is convertible into orexchangeable for equity securities shall be considered an equity financing and (ii) with respect to any offering consisting of a combination of debt andequity securities, the proceeds shall be allocated among the debt and equity securities sold based on the fair market value thereof, and the Companyshall pay to Sterling the Equity Financing Fee with

[***] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidentialtreatment has been requested with respect to the omitted portion.

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respect to the gross proceeds allocated to the equity securities sold and the Debt Financing Fee with respect to the gross proceeds allocated to the debtsecurities sold.

For purposes of this Section 4(c), any amendment to any credit agreement to which the Company or any of its subsidiaries is a party that constitutes amajor revision or major restructuring of such credit agreement shall be deemed a debt financing and Sterling shall be entitled to a Debt Financing Feein connection with any such amendment (such fee being referred to as an "Amendment Debt Financing Fee"), and for purposes of computing theamount of the Amendment Debt Financing Fee, the gross proceeds shall be equal to the amount of debt then outstanding under such credit agreementplus the amount of any undrawn commitments thereunder (ignoring for this purpose any borrowing base, availability or other similar limitations onborrowing under such commitments). Notwithstanding anything to the contrary in this Agreement, any Amendment Debt Financing Fee earnedpursuant to this Section 4(c) in connection with any amendment to any credit agreement to which the Company or any of its subsidiaries is a partyshall be earned upon the effectiveness of such amendment but, unless such Amendment Debt Financing Fee is paid on such effective date from theproceeds of the concurrent issuance and sale of Equity Interests (as such term is defined in that certain Credit Agreement, dated as of December 11,2009, among Sub, as Borrower, Parent, the Lenders party thereto and Credit Suisse AG, as Administrative Agent and Collateral Agent (the "ExistingCredit Agreement")), other than Disqualified Stock (as such term is defined in the Existing Credit Agreement), that are in excess of the amount ofEquity Interests required to be sold in order to meet Borrower's obligations under any such amendment to the credit agreement(s) then in effect, suchAmendment Debt Financing Fee shall not be paid until the earliest to occur of (i) the consent of the requisite lenders under any creditagreement(s) then in effect to such payment, (ii) the payment in full in cash of all outstanding obligations under such credit agreement(s) and thetermination of all commitments to lend thereunder and (iii) the occurrence of a Liquidation Event (as such term is defined in the certificate ofincorporation of Parent as then in effect) as long as all outstanding obligations under such credit agreement(s) are paid in full in cash and allcommitments to lend thereunder are terminated in connection with such Liquidation Event.

(d) In the event that Sterling assists the Company in any acquisition, the Company will pay Sterling a fee of [***] percent ([***]%) ofthe transaction value ("Transaction Value") of the acquisition.

(e) In the event that Sterling assists the Company in any Sale of the Company, Sterling shall be entitled to a fee equal to not less than[***] percent ([***]%) of the Transaction Value of the sale. For purposes hereof, "Sale of the Company" means one or more of the followingeffected in a single transaction or series of transactions, whether or not related, with one or more Independent Third Parties: (i) the sale of all orsubstantially all of the Parent's assets (including the shares of the Parent's subsidiaries) or the assets of the Parent's subsidiaries, on a consolidatedbasis; (ii) the sale of all of the issued and outstanding securities of the Parent; or (iii) the merger or consolidation of the Parent or substantially all ofits subsidiaries with one or more of Independent Third Parties (as defined below) in a transaction in which such Independent Third Party(ies)thereafter control, directly or indirectly, the business and affairs of the Parent or the subsidiaries party to such transaction, and "Independent ThirdParty" means any person (including any affiliated group of persons) that, immediately prior to the contemplated transaction, owns less than 5% of theParent's equity securities on a fully- diluted basis (a "5% Owner"), that is not controlling, controlled by or under common control with any such 5%Owner and who is not the spouse of or of common ancestry (by birth or adoption) with any such 5% Owner or a trust for the benefit of such 5%Owner and/or such other persons.

(f) In the event that Sterling assists the Company in its initial public offering of securities to the public pursuant to a registrationstatement filed with and declared effective by the Securities and Exchange Commission, Sterling shall be entitled to a fee equal to not less than [***]


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percent ([***]%) of the Enterprise Value of the Company on the closing date of the offering. For the purposes hereof, the term "Enterprise Value"shall mean the sum of (i) the value of the Company's common stock on a fully- diluted basis, with the common stock of the Company being valued atthe initial price to the public in the offering, (ii) the liquidation value of any preferred stock of the Company that remains outstanding immediatelyfollowing the closing of the offering and (iii) all indebtedness of the Company that remains outstanding immediately following the closing of theoffering, net of the Company's cash on hand immediately following the closing of the offering after giving effect to the use of proceeds of theoffering to redeem preferred stock and repay indebtedness. The fee due Sterling pursuant to this Section 4(f) shall be paid on the closing date of theinitial public offering.

(g) All fees payable hereunder shall be deemed fully earned and non- refundable in whole or in part on the date when payment is due.

(h) Sterling acknowledges that payments to it by the Company pursuant to this Agreement may be subject to the provisions of any creditagreement to which the Company is a party from time to time.

5. Term. This Agreement shall commence on the date hereof and shall continue in effect for an initial term of five years andthereafter shall be automatically renewed for successive oneyear terms as long as the stockholders of Parent on the date hereof (other thanstockholders who are employees of the Company or one of its affiliates) own at least 20% of the outstanding Common Stock of Parent (excludingCommon Stock owned by stockholders who are employees of the Company or one of its affiliates); provided, however, that this Agreement (otherthan as provided in the last sentence of this Section 5) shall automatically be terminated prior to the initial term hereof in connection with a Sale ofthe Company upon payment in full of all amounts (the "Remaining Term Amount") that would have been paid to Sterling during the remaining termof the Agreement. No termination of this Agreement, whether pursuant to this paragraph or otherwise, shall affect the Company's obligations withrespect to the fees, costs and expenses incurred by Sterling in rendering services hereunder and not reimbursed by the Company as of the effectivedate of such termination or the Company's obligations under Section 6.

6. Indemnification. Parent and Sub, jointly and severally, agree to indemnify and hold harmless Sterling, its members, affiliates,employees and agents against and from any and all loss, liability, suits, claims, costs, damages and expenses (including attorneys' fees) arising fromtheir performance hereunder, except as a result of their gross negligence or intentional wrongdoing.

7. Sterling an Independent Contractor. Sterling and the Company agree that Sterling shall perform services hereunder as anindependent contractor, retaining control over and responsibility for its own operations and personnel. Neither Sterling nor its members, affiliates,employees and agents shall be considered employees or agents of the Company nor shall any of them have authority to contract in the name of orbind the Company, except as expressly agreed to in writing by the Company. This Agreement in no way limits the ability of Sterling to engage inany other activities.

8. Confidential Information. Sterling acknowledges that the information, observations and data obtained by it and its agents andemployees during the course of its performance under this Agreement concerning the business plans and financial data of the Company (the"Confidential Data") are the Company's valuable, special and unique assets. Therefore, it agrees that it will not, nor will it permit any of its agents oremployees to, disclose to any unauthorized person any of the Confidential Data obtained by it during the course of Sterling's performance under thisAgreement without the Company's prior written consent, unless and to the extent that (i) the Confidential Data becomes generally known to andavailable for use by the public otherwise than as a result of its acts or omissions to act or (ii) such disclosure is required by any statute, rule,regulation or law or any judicial or administrative body having


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jurisdiction. Nothing in this section shall preclude the Sterling funds from disclosing Confidential Data to its limited partners pursuant to its standardprocedures for disclosure of confidential information to its limited partners.

9. Notice. Any notice, report or payment required or permitted to be given or made under this Agreement by one party to the othershall be deemed to have been duly given or made when delivered, if personally delivered, when transmitted, if sent by confirmed facsimiletransmission, or, if mailed, when mailed by registered or certified mail, return receipt requested, postage prepaid, to the party at the followingaddresses (or at such other address as shall be given in writing by one party to the other):

If to Sterling: Sterling Investment Partners Advisers LLC285 Riverside AvenueWestport, Connecticut 06880Attention: Charles Santoro

If to the Company: Fairway Group Holdings Corp.2284 12th AvenueNew York, New York 10027Attention: Chairman of the Board

10. Entire Agreement; Modification. This Agreement (a) contains the complete and entire understanding and agreement of the Companyand Sterling with respect to the subject matter hereof; (b) supersedes all prior and contemporaneous understandings, conditions and agreements, oralor written, express or implied, respecting the engagement of Sterling in connection with the subject matter hereof, including without limitation thePrior Management Agreement; and (c) may not be modified except by an instrument in writing executed by the Company and Sterling.

11. Waiver and Breach. The waiver by either party of a breach of any provision of this Agreement by the other party shall be effectiveonly if made in writing and shall not operate or be construed as a waiver of any subsequent breach of that provision or any other provision hereof.

12. Assignment. Neither the Company nor Sterling may assign its rights or obligations under this Agreement without the express writtenconsent of the other.

13. Successors. This Agreement and all the obligations and benefits hereunder shall inure to the successors and permitted assigns of theparties.

14. Governing Law. This Agreement shall be deemed to be a contract made under, and is to be governed and construed in accordancewith, the laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State ofDelaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

15. Counterparts. This Agreement may be executed and delivered by each party hereto in separate counterparts, each of which when soexecuted and delivered shall be deemed an original and both of which taken together shall constitute one and the same agreement.

16. No Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event anambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto, and nopresumption or burden of

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proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, Parent, Sub and Sterling have caused this Agreement to be duly executed and delivered on the date and year first abovewritten.


By: /s/ Howard GlickbergIts: Chief Executive Officer

FAIRWAY GROUP ACQUISITION COMPANY

By: /s/ Howard GlickbergIts: Chief Executive Officer

STERLING INVESTMENT PARTNERS ADVISERS LLC

By: /s/ Charles SantoroIts: Managing Member

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Exhibit 10.20

FAIRWAY GROUP HOLDINGS CORP.2013 LONG- TERM INCENTIVE PLAN

ARTICLE 1

GENERAL

1.1 Purpose. The purpose of the Plan is to provide a flexible vehicle for offering equity- based and other incentive compensationopportunities designed to attract, motivate and retain eligible employees, directors and other persons whose contributions are expected to beimportant to the success of the Company and its Subsidiaries.

1.2 Eligibility. Awards may be granted under the plan to any present or future director, officer or employee of, and any consultant oradviser to, the Company or any of its Subsidiaries. ISOs may be granted only to employees of the Company or a Subsidiary.

1.3 Types of Awards. Awards made under the Plan may consist of Options and Stock Appreciation Rights granted under Article 5,Restricted Stock and Restricted Stock Unit Awards granted under Article 6, Performance Share and Performance Compensation Awards grantedunder Article 7, other stock- based Awards granted under Section 8.1, and cash incentive Awards granted under Section 8.2.

ARTICLE 2

DEFINITIONS

As used herein, the following terms shall have the meanings set forth below.

2.1 "Award" means an award made to a Participant under the Plan.

2.2 "Award Agreement" means a written or electronic agreement between the Company and a Participant setting forth the terms andconditions of an Award, which shall be substantially in a form approved by the Committee from time to time and which need not be the same for allParticipants.

2.3 "Beneficiary" means a person or entity (including, without limitation, a trust or estate) designated in writing by a Participant tosucceed to the Participant's Awards under the Plan, subject to the provisions hereof and of the applicable Award Agreement, upon the Participant'sdeath. A Participant may designate a Beneficiary by delivering a written beneficiary designation to the Committee (or its designee) in such form andin such manner as the Committee (or its designee) may prescribe. Each Beneficiary designation duly filed with the Committee (or its designee) willhave the effect of superseding and revoking any prior Beneficiary designation. If a Participant does not designate a Beneficiary, or if no designatedBeneficiary survives the Participant, then the Participant's estate will be deemed to be his or her Beneficiary.

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2.4 Board" means the Board of Directors of the Company.

2.5 "Cause" means, with respect to any Participant and unless otherwise specified in a Participant's Award Agreement, (a) if there is anemployment or other services agreement between the Participant and the Company or a Subsidiary that defines the term "cause" (or a term of likeimport), the Participant's engaging in conduct that constitutes "cause" (or a term of like import) within the meaning of that agreement, or (b) if there isno employment or service agreement between the Participant and the Company or a Subsidiary that defines the term "cause" (or a term of likeimport), (1) the Participant's repeated failure (other than temporarily while physically or mentally incapacitated) or refusal to attempt to perform theduties of his or her employment or other service if such failure or refusal shall not have ceased or been remedied within fifteen days following writtenwarning from the Company or a Subsidiary; (2) the Participant's performance of any act or the Participant's failure to act which constitutes a crime oroffense involving money or property of the Company or a Subsidiary or a felony in the jurisdiction involved; (3) the Participant's performance of anyact or failure to act which constitutes a breach of a fiduciary trust, including without limitation misappropriation of funds or a materialmisrepresentation (other than as a result of a good faith mistake by the Participant) of the Company's financial performance, operating results orfinancial condition to the Board of Directors or any officer; (4) any material unauthorized disclosure by the Participant to any person of anyconfidential information or trade secret of the Company and its Subsidiaries; (5) any attempt by the Participant to secure personal profit (other thanthrough the Participant's compensation and ownership of equity in the Company) in connection with the business of the Company or any Subsidiary(for example, without limitation, using the Company's or a Subsidiary's assets to pursue other interests, diverting any business opportunity belongingto the Company or a Subsidiary to or for the benefit of the Participant or a third party, insider trading or taking bribes or kickbacks); (6) theParticipant's engaging in conduct or activities materially damaging to the property, business or reputation of the Company or a Subsidiary, includingany fraudulent act; (7) the Participant's unlawful use of controlled substances while performing services for or on the premises of the Company or a

Subsidiary or which materially interferes with the ability of the Participant to perform the duties of his or her employment or other services; (8) anyact or omission by the Participant involving gross malfeasance or gross negligence in the performance of the Participant's duties to the materialdetriment of the Company or a Subsidiary; (9) the Participant's failure to comply in all material respects with the policies of the Company or aSubsidiary, including without limitation, the Company's Code of Business Conduct and Ethics and, as applicable, insider trading policies and otherwritten policies (including without limitation reporting policies as set forth from time to time in the Company's organizational chart) established bythe Board of Directors; or (10) the entry of any order of a court that remains in effect and is not discharged for a period of at least sixty (60) days,which enjoins or otherwise limits or restricts the performance by the Participant of the duties of his or her employment or other service for theCompany or a Subsidiary relating to any noncompetition, non- solicitation or similar contract, agreement or covenant made by or applicable to theParticipant in favor of any former employer or any other person; in each of such cases described in (1) through (10), as determined by the Board orthe Committee acting in its discretion.

2.6 "Code" means the Internal Revenue Code of 1986, as amended.

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2.7 "Committee" means the Compensation Committee of the Board, unless and except to the extent otherwise required by Section 3.4with respect to certain Awards.

2.8 "Company" means Fairway Group Holdings Corp., a Delaware corporation, and any successor thereto.

2.9 "Company Sale Event" means the occurrence of any of the following events:

(a) any "person" as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than (i) the Company, (ii) a subsidiary ofthe Company, (iii) any trustee or other fiduciary holding securities under any employee benefit plan of the Company, (iv) any corporation owned,directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, or(v) any entity controlled, directly or indirectly, by private investment funds managed by an affiliate of Sterling Investment Partners Advisers, LLC),is or becomes, including pursuant to a tender or exchange offer for shares of common stock pursuant to which purchases are made, the "beneficialowner" (as defined in Rule l3d- 3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of thecombined voting power of the Company's then outstanding securities, other than an acquisition directly from the Company;

(b) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any othercorporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to suchmerger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entityor any parent thereof) more than 50% of the combined voting power of the securities of the Company or such surviving entity or any parent thereofoutstanding immediately after such merger or consolidation; or

(c) there is consummated a plan of complete liquidation or dissolution of the Company or there is consummated the sale or dispositionby the Company of all or substantially all of the Company's assets, in one transaction or a series of related transactions, other than a sale ordisposition by the Company of all or substantially all of the Company's assets to an entity, (i) more than 50% of the combined voting power of thevoting securities of which is owned by stockholders of the Company in substantially the same proportion as their ownership of the Companyimmediately prior to such sale, or (ii) controlled, directly or indirectly, by private investment funds managed by an affiliate of Sterling InvestmentPartners Advisers, LLC.

2.10 "Disability" means, (a) with respect to ISOs, the Participant's total and permanent disability as defined in Section 22(e)(3) of the Code,and (b) with respect to other Awards, the Participant's inability to engage in any substantial gainful activity by reason of a physical or mental illnessor injury that is expected to result in death or to last for one year or more, as determined by a duly licensed physician designated by the Company.

2.11 "Exchange Act" means the Securities Exchange Act of 1934, as amended.

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2.12 "Exercise Price" means, with respect to an Option, the price at which a holder may purchase the Shares covered by the Option and,with respect to an SAR, the baseline price of the Shares covered by the SAR.

2.13 "Fair Market Value" means, as of any relevant date, the value of the Company's Shares determined as follows: (a) if the Shares are notadmitted to trading on a national securities exchange on such date, the value determined by the Committee acting in its discretion in accordance withthe requirements of applicable tax law, or (b) if the Shares are admitted to trading on a national securities exchange on such date, (1) the closing priceper Share on such date on the principal securities exchange on which the Shares are traded or, if no Shares are traded on that date, the closing priceper Share on the next preceding date on which Shares are traded, or (2) the value determined under such other method or convention as theCommittee, acting in a consistent manner in accordance with the Plan and applicable tax law, may prescribe. Notwithstanding the foregoing, the FairMarket Value per Share on the date of the initial public offering of Shares shall be deemed to be the initial public offering price.

2.14 "Incentive Cash Award" means an Award described in Section 8.2.

2.15 "Incentive Stock Option" or "ISO" means an Option that qualifies as an "incentive stock option" within the meaning of Section 422 ofthe Code.

2.16 "Option" means an option to purchase Shares granted pursuant to Section 5.1.

2.17 "Participant" means any person who has been selected to receive an Award under the Plan or who holds an outstanding Award underthe Plan.

2.18 "Performance- Based Exemption" means the performance- based compensation exemption from the compensation deductionlimitations imposed by Section 162(m) of the Code, as set forth in Section 162(m)(4)(C) of the Code.

2.19 "Performance Factors" means any of the factors that may be used for Awards intended to qualify for the Performance- BasedExemption, all of which are listed in Section 9.3(b).

2.20 "Performance Share" means a notional Share represented by a performance share awarded to a Participant pursuant to Article 7.

2.21 "Performance Unit" means a cash- based award made to a Participant pursuant to Article 7.

2.22 "Plan" means the long- term incentive plan set forth herein, as it now exists or is hereafter amended.

2.23 "Restricted Stock" means Shares issued in the name of a Participant, subject to applicable transfer restrictions, and vesting and otherconditions, pursuant to Section 6.1.

2.24 "Restricted Stock Unit" or "RSU" means a contingent right to receive Shares in the future that is granted pursuant to Section 6.1.

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2.25 "Shares" means shares of the Company's Class A common stock, par value $0.00001 per share.

2.26 "Stock Appreciation Right" or "SAR" means a right to receive appreciation in the value of Shares granted pursuant to Section 5.2.

2.27 "Subsidiary" means (a) a corporation or other entity in an unbroken chain of corporations or other entities at least 50% of the totalvalue or voting power of the equity securities of which is owned by the Company or by any other corporation or other entity in the chain, and (b) anyother corporation or entity in which the Company has a 20% controlling interest, directly or indirectly, as may be designated by the Committeepursuant to the criteria set forth in Section 1.409A- 1(b)(5)(iii)(E) of the Treasury regulations.

2.28 "Ten Percent (10%) Stockholder" means a person who, at the time an Option is granted, directly or by attribution owns more than tenpercent (10%) of the total combined voting power of all classes of stock of the Company or of any Subsidiary of the Company.

ARTICLE 3

ADMINISTRATION

3.1 General. Except as otherwise determined by the Board in its discretion, the Plan shall be administered by the Committee.

3.2 Authority of the Committee. Subject to the provisions of the Plan, the Committee, acting in its discretion, may select the persons towhom Awards will be made, prescribe the terms and conditions of each Award and make amendments thereto, construe, interpret and apply theprovisions of the Plan and of any Award Agreement, and make any and all determinations and take any and all other actions as it deems necessary ordesirable in order to carry out the terms of the Plan. The Committee shall have full power and authority to carry out its responsibilities and functionsunder the Plan. The Committee may obtain at the Company's expense such advice, guidance and other assistance from outside compensationconsultants and other professional advisers as it deems appropriate.

3.3 Delegation of Authority. Subject to the requirements of applicable law, the Committee may delegate to any person or subcommittee(who may, but need not be members of the Committee) such Plan- related functions within the scope of its responsibility, power and authority as itdeems appropriate. Without limiting the foregoing, the Committee may delegate any of its responsibilities and authority hereunder to a subcommitteecomposed of one or more executive officers of the Company, and may delegate administrative duties to such person or persons (who may but neednot be officers of the Company) as the Committee deems appropriate. The Committee may not delegate its authority with respect to (a) non-ministerial actions with respect to individuals who are subject to the reporting requirements of Section 16(a) of the Exchange Act; (b) non- ministerialactions with respect to Awards that are intended to qualify for the Performance- Based Exemption; and (c) certifying the satisfaction of performancegoals and other material terms attributable to Awards intended to qualify for the Performance- Based Exemption.

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3.4 Section 162(m) of the Code and Section 16 of the Exchange Act. In the case of an Award that is intended to qualify for thePerformance- Based Exemption, the Committee shall include at least two persons who are "outside directors" (as defined under Section 162(m) of theCode) and at least two (or a majority if more than two then serve on the Committee) of such "outside directors" shall approve the grant of such Awardand timely determine (as applicable) the performance period and any performance goals upon which the amount earned, vesting or settlement of theAward is to be subject and, at the expiration of the applicable performance period, determine and certify in writing the extent to which suchperformance goals have been achieved and the extent to which the Award is thereby earned. Awards granted to Participants who are subject toSection 16 of the Exchange Act must be approved by two or more "non- employee directors" (as defined in the regulations promulgated underSection 16 of the Exchange Act). Subject to compliance with the Treasury regulations under Section 162(m) of the Code, with respect to Participantswhose compensation is subject to Section 162(m) of the Code, the Committee may adjust the performance goals to account for changes in law andaccounting and to make such adjustments as the Committee deems necessary or appropriate to reflect the impact of extraordinary or unusual items,events or circumstances to avoid windfalls or hardships, including without limitation (a) restructurings, discontinued operations, extraordinary items,and other unusual or non- recurring charges, (b) an event either not directly related to the operations of the Company or not within the reasonablecontrol of the Company's management, or (c) a change in accounting standards required by generally accepted accounting principles.

3.5 Decisions Binding. Any determination made by the Committee in the exercise of its authority with respect to the Plan or any Awardshall be made in the Committee's sole discretion, and all such determinations shall be final, conclusive, and binding on all persons.

3.6 Indemnification. The Company shall indemnify and hold harmless each member of the Committee and the Board and any employeeor director of the Company or any Subsidiary to whom any duty or power relating to the administration of the Plan or any Award is delegated fromand against any loss, cost, liability (including any sum paid in settlement of a claim with the approval of the Board), damage and expense (includingreasonable legal and other expenses incident thereto) arising out of or incurred in connection with the Plan, unless and except to the extentattributable to such person's fraud or willful misconduct.

ARTICLE 4

SHARES SUBJECT TO THE PLAN; INDIVIDUAL AWARD LIMITS

4.1 Shares Issuable under the Plan. Subject to Section 4.3, up to 5,472,136 Shares shall be available for grant and issuance pursuant toAwards made under the Plan (whether for ISOs or other forms of Award), of which 608,015 Shares may only be issued in the form of Options (ISOsor otherwise) having an Exercise Price per Share that is at least 120% of the Fair Market Value per Share on the date the Option is granted. For thispurpose, Shares subject to Awards and Shares issued pursuant to an Award will again be available for grant and issuance in pursuant to subsequentAwards to the extent such Shares are (a) covered by the unexercised portion of an Option or SAR that is forfeited or otherwise terminated or canceledfor any reason other than exercise,; (b) forfeited or repurchased by the Company at the original purchase price, or (c) subject to an Award that issettled in cash or that otherwise terminates without such Shares

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being issued. Shares that are used or withheld to pay the exercise price of an Award or to satisfy the tax withholding obligations associated with thevesting or settlement of an Award will be available for future grant and issuance under the Plan. Shares issued under the Plan may be eitherauthorized and unissued Shares, or authorized and issued Shares held in the Company's treasury, or any combination of the foregoing.

4.2 Individual Award Limitations. No more than 1,000,000 Shares may be issued pursuant to Awards granted in a single calendar year toany individual Participant. No Participant may earn a Cash Incentive Award under Section 8.2 in any calendar year in excess of $5,000,000. For thispurpose, a Cash Incentive Award is deemed to have been earned (if at all) in the calendar year with or within which ends the applicable performanceperiod, even if the amount so earned is not determined or payable until after end of that performance period.

4.3 Adjustments for Capital Changes. In the event of a split- up, spin- off, stock dividend, recapitalization, consolidation of shares orsimilar capital change, the Committee shall make such adjustments to the number and class of shares that may be issued under the Plan pursuant toSection 4.1, the number and class of Shares that may only be issued as premium priced Options pursuant to Section 4.1, the number and class ofShares that may be issued pursuant to annual Awards granted to any Participant pursuant to Section 4.2, and the number, class and/or purchase orbase price of Shares subject to outstanding Awards, as the Committee, in its discretion, deems appropriate or equitable in order to prevent unduedilution or enlargement of the benefits available under the Plan and of the rights of Participants or to otherwise comport with the intent and purposesof the Plan; provided that the number of Shares subject to any Award shall always be a whole number. Any determination or adjustment made by theCommittee under this Section shall be binding and conclusive on all persons.

ARTICLE 5

STOCK OPTIONS; STOCK APPRECIATION RIGHTS

5.1 Grant of Company Stock Options. The Committee may grant Options to Participants upon such vesting and other terms andconditions as the Committee, acting in its discretion in accordance with the Plan, may determine, either at the time an Option is granted or, if theholder's rights are not adversely affected, at any subsequent time. Each Option will be deemed NOT to be an Incentive Stock Option unless andexcept to the extent that, at the time the Option is granted, the Committee specifically designates such Option as an Incentive Stock Option. If anOption is designated as an Incentive Stock Option and if part or all of the Option does not qualify as an Incentive Stock Option, then the Option, orthe portion of the Option that does not so qualify will nevertheless remain outstanding and will be characterized as a non- ISO.

5.2 Grant of Stock Appreciation Rights. The Committee may grant stock appreciation rights ("SARs") to Participants, either alone or inconnection with the grant of an Option, upon such vesting and other terms and conditions as the Committee, acting in its discretion in accordancewith the Plan, may determine, either at the time the SARs are granted or, if a Participant's rights are not adversely affected, at any subsequent time.Upon exercise, the holder of an SAR shall be entitled to receive cash and/or a number of whole Shares (as determined by the Committee) having afair market value equal to the product of X and Y, where-

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X = the number of whole Shares as to which the SAR is being exercised, and

Y = the excess of (i) the Fair Market Value per Share on the date of exercise over (ii) the Exercise Price per Share covered by the SAR.

5.3 Exercise Price. The Committee shall determine the Exercise Price per Share under each Option and each SAR, provided that (a) theExercise Price per Share shall be at least equal to the Fair Market Value per Share on the date the Option or SAR is granted; (b) in the case of an ISOgranted to a Ten Percent (10%) Stockholder, the Exercise Price per Share shall be at least equal to 110% of the Fair Market Value per Share on thedate the ISO is granted; and (c) the Exercise Price payable for Shares which, under Section 4.1, may only be issued pursuant to premium- pricedOptions shall be at least 120% of the Fair Market Value of the Shares on the date the Option is granted.

5.4 Re- Pricing Prohibited. Options and SARs granted under the Plan may not be re- priced without the approval of the Company'sstockholders. In no event may an Option or SAR be re- priced if such re- pricing would cause the Option or SAR to be covered by Section 409A ofthe Code.

5.5 Exercise Period of Options and SARs. The Committee may establish such vesting, forfeiture, expiration and other conditions as itdeems appropriate (on a grant- by- grant basis) with respect to the exercisability of an Option or SAR; provided, however, that, unless soonerterminated in accordance with its terms, each Option and each SAR shall automatically expire on the tenth anniversary of the date the Option or SARis granted (or, in the case of an ISO granted to a Ten Percent (10%) Stockholder, on the fifth anniversary of the date the ISO is granted).

5.6 Exercise of Options. A Participant may exercise an outstanding Option that is vested and exercisable by transmitting to the Secretaryof the Company (or another person designated by the Company for this purpose) a written notice identifying the Option that is being exercised andspecifying the number of whole Shares to be purchased pursuant to such exercise, together with payment in full of the aggregate Exercise Pricepayable for such Shares and any applicable withholding taxes. The Exercise Price shall be paid in cash or by check or by any other means that theCommittee may expressly permit, including, without limitation, (a) by the Participant's surrender of previously- owned Shares, or by the Company'swithholding Shares that otherwise would be issued if the Exercise Price had been paid in cash, in each case having a Fair Market Value on the datethe Option is exercised equal to the Exercise Price, (b) by payment to the Company pursuant to a broker- assisted cashless exercise programestablished and made available by the Company in connection with the Plan, (c) by any other method of payment that is permitted by applicable law,or (d) by any combination of the foregoing. Applicable withholding taxes shall be payable in cash or by any other method that may be permitted bythe Committee in accordance with Section 12.2.

5.7 Exercise of SARs. A Participant may exercise an outstanding SAR that is vested and exercisable by transmitting to the Secretary ofthe Company (or another person designated by the Company for this purpose) a written notice identifying the SAR that is being exercised andspecifying the number of whole Shares for which the SAR is being exercised, together with

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payment in full of the withholding taxes due in connection with the exercise, unless and except to the extent that other arrangements satisfactory tothe Company have been made for such payment.

5.8 Termination of Employment or Service. Unless otherwise determined by the Committee at grant, or thereafter if no rights of theParticipant are thereby reduced, the following rules apply with regard to outstanding Options and SARs held by a Participant at the time of his or hertermination of employment or other service with the Company and its Subsidiaries:

(a) If the Participant's employment or service is terminated for any reason other than for Cause or due to the Participant's death orDisability, then the Participant may exercise such outstanding Options and/or SARs, to the extent then vested and exercisable, within ninety (90) daysafter the date of such termination of employment or other service, but in any event no later than the expiration date thereof. Any such vested Optionsand SARs that are not exercised before the end of such 90- day (or other) period shall terminate and shall thereafter be of no further force or effect.Any unvested Options and SARs outstanding at the time of the Participant's termination of employment or other service will thereupon be canceledand of no further force or effect.

(b) If the Participant's employment or other service is terminated because of the Participant's death or Disability, the Participant or hislegal representative or Beneficiary, as the case may be, may exercise such outstanding Options and/or SARs, to the extent then vested andexercisable, within twelve (12) months after the date of such termination of employment or other service, but in any event no later than the expirationdate thereof. Any such vested Options and SARs that are not exercised before the end of such 12- month or other period shall terminate and thereafterbe of no further force or effect. Any unvested Options and SARs outstanding at the time of the Participant's termination of employment or otherservice will be thereupon be canceled and of no further force or effect.

(c) If the Participant's employment or other service is terminated by the Company or a Subsidiary for Cause (or at a time when groundsfor a termination for Cause exist), then, notwithstanding anything to the contrary contained herein, such outstanding Options and/or SARs (whetheror not otherwise exercisable) shall immediately terminate and cease to be exercisable.

5.9 Rights as a Stockholder. A Participant shall have no rights to vote or receive dividends or any other rights of a stockholder withrespect to any Shares covered by an Option or SAR unless and until such Option or SAR is validly exercised and such Shares are issued to theParticipant (either in certificated or book entry form). The Company will issue such Shares promptly after the exercise of the Option or SAR (to theextent an SAR is settled in Shares) is completed.

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ARTICLE 6

RESTRICTED STOCK AND RESTRICTED STOCK UNIT AWARDS

6.1 Grant of Restricted Stock and RSU Awards. The Committee may grant Restricted Stock Awards and/or Restricted Stock UnitAwards (RSUs) to any Participant. Under a Restricted Stock Award, the Company issues Shares to the Participant when the Award is made and theShares are subject to such vesting and other terms and conditions as the Committee may prescribe. Under a Restricted Stock Unit Award, theParticipant receives RSUs representing the right to receive Shares in the future if the vesting and other terms and conditions imposed by theCommittee are satisfied. The vesting and other terms and conditions applicable to the Shares covered by a Restricted Stock Award or the RSUscovered by a Restricted Stock Unit Award (including, but not limited to, conditions and restrictions tied to the achievement of specified performanceobjectives and/or the completion of one or more specified periods of future service) will be determined by the Committee when it grants the Awardand will be set forth in the applicable Award Agreement. The Committee may thereafter modify or waive such terms and conditions if theParticipant's rights are not adversely affected thereby and if the modification or waiver does not cause the Award to be subject to taxes and interestpayments under Section 409A of the Code.

6.2 Minimum Purchase Price for Shares. Unless the Committee, acting in accordance with applicable law, determines otherwise, thepurchase price payable for Shares issued pursuant to a Restricted Stock Award or a Restricted Stock Unit Award must be at least equal to the parvalue of the Shares. Unless the Committee determines otherwise, a Participant shall forfeit unvested Shares of Restricted Stock or unvested RSUs ifand when the applicable vesting conditions can no longer be satisfied. In the case of Shares that are forfeited under a Restricted Stock Award, theCompany will pay to the affected Participant an amount equal to the purchase price, if any, previously paid by the Participant for such Shares.

6.3 Restricted Shares. Shares issued pursuant to a Restricted Stock Award may be evidenced by book entries on the Company's stocktransfer records pending satisfaction of the applicable vesting conditions. If a stock certificate for restricted Shares is issued, the certificate will bearan appropriate legend to reflect the nature of the conditions and restrictions applicable to the Shares. The Committee may cause the Company toretain physical possession of any such stock certificate and may require a Participant to deliver a stock power to the Company, endorsed in blank, inorder to facilitate the transfer back to the Company of restricted Shares that are forfeited. Notwithstanding the foregoing, if a Participant forfeitsShares covered by a Restricted Stock Award, the Shares that are forfeited shall automatically be cancelled on the books and records of the Companywhether or not the Participant returns a certificate for such Shares or otherwise fails or refuses to execute documents or take other action requested bythe Company in connection with the cancellation of the forfeited Shares. Except to the extent otherwise provided under the Plan or the AwardAgreement, a Participant who holds unvested Shares pursuant to a Restricted Stock Award shall have all of the rights of a stockholder with respect tosaid Shares, including the right to vote the Shares and the right to receive dividends thereon (subject to any mandatory reinvestment, forfeiturecondition or other requirements as the Committee may prescribe).

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6.4 Shares Covered by RSU Awards. No Shares will be issued pursuant to an RSU Award (and no payment will be made in settlement ofan RSU Award for cash or property other than Shares) unless and until the applicable vesting and other conditions have been fully satisfied. Theholder of an RSU Award shall have no rights as a stockholder with respect to Shares covered by the Award unless and until the Award vests (inwhole or in part) and the Shares covered by the vested RSUs are issued. The Committee may, however, provide that a Participant who holds RSUswill be entitled to receive dividend equivalents (in the form of cash or Shares) equal to the dividends that would have been payable with respect to theShares covered by the RSUs if such Shares were outstanding, upon such terms and subject to such vesting and other conditions as the Committee mayprescribe, including, without limitation, conditions that may be required in order to avoid the imposition of taxes and interest under Section 409A ofthe Code with respect to the settlement of such dividend equivalents.

6.5 Non- Transferability. No Restricted Stock Award or RSU Award, and no Shares covered by a Restricted Stock Award or RSU Awardmay be sold, assigned, transferred, disposed of, pledged or otherwise hypothecated other than to the Company or its designee in accordance with theterms of the Award or the Plan, and any attempt to do so shall be null and void and, unless the Committee determines otherwise, shall result in theimmediate forfeiture of the Award or the Shares, as the case may be.

6.6 Termination of Service Before Vesting; Forfeiture. Unless otherwise specified in the Award Agreement or otherwise subsequentlydetermined by the Committee, unvested Shares held pursuant to a Restricted Stock Award and unvested RSUs held under an RSU Award shall beforfeited and canceled upon the termination of a Participant's employment or other service with the Company and its Subsidiaries. If unvested Sharesissued pursuant to a Restricted Stock Award are forfeited, any certificate representing such Shares or book entry for such Shares will be canceled onthe books and records of the Company. Such cancellation shall not affect any right the Participant may have pursuant to the terms of the Award torecover the purchase price previously paid for the unvested Shares from the Company.

6.7 Timing Requirements for Settlement of RSUs. Unless otherwise specified in the applicable Award Agreement or otherwisedetermined by the Committee, RSUs shall be settled in the form of Shares or cash (as determined by the Committee) as soon as practicable after theRSUs become vested but in no event later than the 15th day of the third month following the calendar year in which the vesting of such RSUs occurs.Notwithstanding the foregoing, the original terms of an RSU Award may expressly provide that settlement of vested RSUs covered by the Award willbe deferred until a later date or the occurrence of a subsequent event, provided that the deferral election(s) and designated settlement date(s) orevent(s) applicable to the Award, as well as the Award Agreement itself, satisfy the election, distribution timing and documentation requirements ofSection 409A of the Code.

6.8 Issuance of Unrestricted Shares. A Participant who holds Shares that become vested under a Restricted Stock Award or who holdsRSUs that become vested (to the extent the vested RSUs are settled in Shares) will be entitled to receive Shares (in certificated or book entry form)free and clear of conditions and restrictions (except as may be imposed in accordance with the terms of the Award or a stockholder or similaragreement, or in order to comply with applicable law), subject, however, to the payment or satisfaction of applicable withholding taxes.

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ARTICLE 7

PERFORMANCE UNITS AND PERFORMANCE SHARES

7.1 Grant Performance Units and Performance Shares. The Committee may grant Performance Units and Performance Shares to sucheligible persons, in such amounts, at such time or times and upon such terms and conditions as the Committee shall determine.

7.2 Value of Performance Units and Performance Shares. Each Performance Unit shall have an initial value that is established by theCommittee at the time of grant. Each Performance Share shall have an initial value equal to the Fair Market Value of a Share on the date of grant. TheCommittee shall establish performance goals that, depending on whether and the extent to which they are met, shall determine the number and valueof Performance Units or Performance Shares earned with respect to the applicable performance period.

7.3 Earned Performance Units/Shares. After the applicable performance period has ended, the holder of a Performance Unit orPerformance Share shall be entitled to receive a payout with respect to the number and value of the Performance Units or Performance Shares, if any,earned by the Participant for the performance period, determined by the Committee on the basis of the extent to which the corresponding performancegoals have been achieved.

7.4 Payout of Earned Performance Units/Shares. Unless the Committee determines otherwise, payment of the value of earnedPerformance Units and/or earned Performance Shares shall be made in a single lump sum following the close of the applicable performance period.Subject to the terms of the Plan, the Committee, in its discretion, may direct that such payment be made in the form of cash, Shares (based upon theirFair Market Value on the last day of the performance period), or a combination thereof. Any such Shares shall be subject to any restrictions or furtherconditions deemed appropriate by the Committee. The payout of earned Performance Units and earned Performance Shares shall be made byMarch 15 of the year following the year in which they become vested; provided, however, that the Committee may permit a different method andtime of payment that will either be exempt from or comply with the applicable provisions of Section 409A of the Code.

7.5 Termination of Service Before Vesting; Forfeiture. Unless otherwise specified in the Award Agreement or otherwise subsequentlydetermined by the Committee, unearned and/or unvested Performance Unit and Performance Share Awards shall be forfeited and canceled upon thetermination of a Participant's employment or other service with the Company and its Subsidiaries.

ARTICLE 8

OTHER FORMS OF AWARD

8.1 Other Share- Based Awards. Subject to applicable law, the Committee, acting in its discretion, may grant such other forms of Awarddenominated or payable in, valued in whole or in part by reference to, or otherwise based upon or related to, Company Shares, including, withoutlimitation, stock bonus Awards, dividend equivalent Awards (either alone or in

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conjunction with other Awards), purchase rights for Shares, and Share- based Awards designed to comply with or take advantage of applicable lawsoutside of the United States. Each such Share- Based Award will be made upon such vesting, performance and other terms and conditions as theCommittee, acting in its discretion, may determine. If and when a Share- Based Award granted under this Section becomes payable, payment may bemade in the form of cash, whole Shares or a combination of cash and whole Shares (as determined by the Committee), with a payment in Sharesbeing based upon their Fair Market Value on the applicable payment date(s).

8.2 Cash Incentive Awards. The Committee may make annual and/or long- term Cash Incentive Awards pursuant to which a Participantmay earn the right to receive a cash payment that is conditioned upon the achievement of specified performance goals established by the Committeeand communicated to the Participant within 90 days after the beginning of the applicable performance period or before 25% of the applicableperformance period has elapsed, and may contain such other terms and conditions as the Committee deems appropriate. A Cash Incentive Awardearned by a Participant under the Plan will be payable in the form of a single sum cash payment at or as soon as practicable after the expiration of theapplicable performance period or the satisfaction of the applicable performance vesting conditions, but in no event later than the 15th day of the thirdmonth of the year following the calendar year in which such performance period ends or such performance vesting conditions are satisfied.Notwithstanding the foregoing, the Committee may require or permit the deferred payment and/or installment payout of all or part of any such CashIncentive Award if (and only if) the Award is exempt from Section 409A of the Code or, if not so exempt, complies with the applicable terms andconditions of Section 409A of the Code.

8.3 Termination of Service Before Vesting; Forfeiture. Unless otherwise specified in the Award Agreement or otherwise subsequentlydetermined by the Committee, unearned and/or unvested Share- Based Awards under Section 8.1 or Cash Incentive Awards under Section 8.2 shallbe forfeited and canceled upon the termination of a Participant's employment or other service with the Company and its Subsidiaries.

ARTICLE 9

PERFORMANCE BASED COMPENSATION AWARDS

9.1 General. The Committee may determine and impose performance conditions on or with respect to an Award, including, withoutlimitation, conditions relating to the grant, exercise, vesting, amount, and settlement of the Award and, in so doing, may use such business criteria andother measures of performance as it deems appropriate, and may exercise its discretion to reduce, increase or accelerate the amounts payable underany Award subject to performance conditions, except as limited under Section 9.1 with respect to Awards intended to qualify for the Performance-Based Exemption (from Section 162(m) of the Code).

9.2 Performance- Based Exemption. If the Committee intends that an Award should qualify for the Performance- Based Exemption(other than Options and SARs which otherwise qualify as "performance- based compensation" for purposes of Section 162(m) of the Code), the grant,exercise, vesting, amount and/or settlement of such Award shall be contingent upon achievement of one or more pre- established, objectiveperformance goals, which shall be

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prescribed in writing by the Committee not later than 90 days after the commencement of the applicable performance period and in any event beforecompletion of 25% of such performance period in accordance with the requirements of Section 162(m). Such performance goals may be based on anyone or more of the Performance Factors listed in Section 9.3. The targeted level or levels of performance with respect to such performance factorsmay be established at such levels and in such terms as the Committee may determine, including, without limitation, in absolute terms or relative toperformance in prior periods. All determinations by the Committee as to the establishment of performance goals, the amount or number of Shares thatmay be earned, the level of actual achievement required as a condition of earning the Award, and the value of any final Performance Award shall berecorded in writing. Specifically, the Committee shall certify in writing, in a manner conforming to applicable regulations under Section 162(m) ofthe Code, prior to settlement of each such Award, the extent to which the applicable performance goal(s) and other material terms of the Award uponwhich settlement of the was conditioned, have been satisfied.

9.3 Performance Factors. Any one or more of the following Performance Factors may be used by the Committee in establishingperformance goals for Awards intended to qualify for the Performance- Based Exemption: (a) net earnings or net income (before or after taxes);(b) basic or diluted earnings per share (before or after taxes); (c) pre- or after- tax income (before or after allocation of corporate overhead andbonus); (d) operating income (before or after taxes); (e) revenue, net revenue, net revenue growth or product revenue growth; (f) gross profit or grossprofit growth; (g) net operating profit (before or after taxes); (h) earnings, including earnings before or after taxes, interest, depreciation and/oramortization; (i) return measures (including, but not limited to, return on assets, net assets, capital, total capital, tangible capital, invested capital,equity, sales, or total stockholder return); (j) cash flow (including, but not limited to, operating cash flow, free cash flow, cash flow return on capital,cash flow return on investment, and cash flow per share (before or after dividends); (k) margins, gross or operating margins, or cash margins;(l) share price (including, but not limited to, growth measures and total stockholder return); (m) expense or cost targets; (n) objective measures ofcustomer satisfaction; (o) working capital targets; (p) measures of economic value added, or economic value- added models or equivalent metrics;(q) inventory control; (r) net sales; (s) debt targets; (t) stockholder equity; or (u) implementation, completion or attainment of measurable objectiveswith respect to new store openings, acquisitions and divestitures, and recruiting and maintaining personnel.

9.4 Performance Goals. In establishing performance goals with respect to an Award intended to qualify for the Performance Exemption,the applicable Performance Factors may be determined solely by reference to the Company's performance and/or the performance of any one or moreSubsidiaries, divisions, business segments or business units of the Company and its Subsidiaries, and may be based upon comparisons of any of theindicators of performance relative to other companies (or subsidiaries, divisions, business segments or business units of other companies). If and tothe extent permitted by Section 162(m) of the Code and the regulations thereunder, in the case of an Award intended to qualify for the Performance-Based Exemption, the Committee may also provide for the exclusion of items of income, gain, loss or expense related to an event or occurrencewhich the Committee determines should appropriately be excluded, including (A) restructurings, discontinued operations, extraordinary items, andother unusual or non- recurring charges, (B) an event either not directly related to the operations of the Company or not within the reasonable controlof the Company's management, or (C) the

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cumulative effects of tax or accounting changes in accordance with U.S. generally accepted accounting principles.

9.5 Discretion. The Committee shall have the authority, in its discretion, to reduce the formula amount otherwise payable pursuant to anAward that is intended to qualify for the Performance- Based Exemption, but may not increase the amount that would otherwise be payable under anysuch Award.

9.6 Certification. No amount shall be paid pursuant to an Award intended to qualify for the Performance- Based Exemption unless anduntil the Committee certifies in writing the extent of achievement of the applicable performance goal(s) and the corresponding amount that is earnedby the Participant under such Award. For this purpose, a written certification may be in the form of approved minutes of the Committee meeting atwhich the certification is made or a Written Consent signed by all of the members of the Committee. No such written certification is required,however, in the case of an Award that is based solely on an increase in the value of a Share from the date such Award was made.

ARTICLE 10

COMPANY SALE EVENTS

10.1 Effect of a Company Sale Event. If a Company Sale Event occurs, then, except as otherwise specifically provided by the applicableAward Agreement (or any other applicable agreement approved by the Committee and made by the Company or a Subsidiary with the Participant towhom an Award was granted) and except as may otherwise be determined by the Board, acting in its sole discretion, each Award outstanding underthe Plan immediately prior to the Company Sale Event will be either assumed and converted in accordance with subsection (a) below or terminated inaccordance with subsection (b) below.

(a) Adjustment and Conversion of Outstanding Awards. The parties to a Company Sale Event may agree that any Share- based Awardoutstanding under the Plan immediately prior to the Company Sale Event shall, at the effective time of the Company Sale Event, be assumed andconverted on an economically equivalent basis into a similar form of award with respect to shares of common stock of the successor or acquiringcompany (or a parent company thereof). If an Option or SAR is assumed, the number of shares and Exercise Price shall be adjusted in accordancewith the principles set forth in Sections 1.424- 1(a)(5) and 1.409A- 1(b)(5)(v)(D) of the Treasury regulations. If an Award other than an Option orSAR is assumed, the number of shares covered by the assumed Award will be a whole number that reflects the exchange ratio or value of thetransaction consideration applicable to the holders of Shares in connection with the Company Sale Event. An assumed or converted Award, as soadjusted, will be subject to substantially the same vesting and other terms and conditions as applied to the Award being assumed or converted,provided, however, that, unless the Committee determines otherwise, in the case of a performance- based Award, any performance goals applicable tothe Award will be deemed to have been satisfied immediately prior to the consummation of the Company Sale Event to the maximum extentspecified in connection with the Award. Notwithstanding the foregoing, if, within two years

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following a Company Sale Event, a Participant's employment or other service is terminated by the Company or a successor or acquiring company (orany of its or their affiliates) without Cause, then any outstanding assumed Awards held by such terminated Participant shall immediately becomefully vested and exercisable or payable, as the case may be.

(b) Termination of Award. An Award outstanding under the Plan immediately prior to a Company Sale Event that is not assumedpursuant to the subsection (a) above will be terminated at the effective time of the Company Sale Event. Unless the Committee determines otherwise,if the terminated Award is a Restricted Stock Award, then the unvested Shares covered by the Award immediately prior to the effective time of theCompany Sale Event will become fully vested and will participate in the Company Sale Event on the same basis as other outstanding Shares. If theterminated Award is in a form other than a Restricted Stock Award, then the holder of the terminated Award will be entitled to receive at the effectivetime of the Company Sale Event a single sum payment (or a series of payments if some or all of the transaction payments to Company stockholdersare subject to earn- out or other contingencies) equal to the transaction value of the Shares covered by the outstanding Award or, in the case of anOption or SAR, an amount equal to the excess, if any, of the transaction value of the underlying Shares over the aggregate Exercise Price for suchShares, in each case determined as if the Award became fully vested immediately prior to the Company Sale Event. No consideration will be payablein respect of the termination of an Option or SAR with an Exercise Price per Share that is more than the transaction value per Share. The amountpayable with respect to the termination of an outstanding Award pursuant to this section will be paid in cash, unless the parties to the Company SaleEvent agree that some or all of such amount will be payable in the form of freely tradable shares of common stock of the successor or acquiringcompany (or a parent company).

10.2 No Fractional Shares. In the event of an adjustment in the number of shares covered by any Award pursuant to the provisions hereof,any fractional shares resulting from such adjustment shall be disregarded, and each converted Award shall cover only the number of full sharesresulting from the adjustment.

10.3 Section 409A. Notwithstanding anything to the contrary contained herein or in an Award Agreement, if a provision of the Plan or anAward Agreement would cause an acceleration of the payment of deferred compensation that is subject to Section 409A of the Code to be made uponthe occurrence of a Company Sale Event, then such payment shall not be made unless such Company Sale Event constitutes a "change in ownership,""change in effective control" or "change in ownership of a substantial portion of the Company's assets" within the meaning of Section 409A of theCode. Any payment that would have been made except for the application of the preceding sentence shall be made in accordance with the payment orsettlement schedule that would have applied under the Award in the absence of a Company Sale Event, determined without regard to any futureservice or performance conditions that otherwise would have applied.

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ARTICLE 11

AMENDMENT AND TERMINATION

11.1 Amendment and Termination of the Plan. The Board, acting in its sole discretion, may amend the Plan at any time and from time totime and may terminate the Plan at any time; provided, however, that any such amendment shall be subject to approval by the Company'sstockholders if and to the extent such approval is necessary in order to satisfy the requirements of applicable law and/or listing rules.

11.2 Outstanding Awards. Except as provided in Article 10, no amendment of an Award Agreement, and no termination, amendment ormodification of the Plan shall cause any then outstanding Award to be forfeited or altered in a material way that adversely affects a Participant'srights, unless the Participant consents thereto.

ARTICLE 12

TAX WITHHOLDING; SECTION 409A

12.1 Tax Withholding. As a condition of the exercise of any Award, the payment of cash or delivery of Shares pursuant to any Award, thelapse of restrictions or forfeiture conditions applicable to any Award or the settlement of any Award, or in connection with any other event that givesrise to a tax withholding obligation under applicable law on the part of the Company or an affiliate relating to an Award, the Committee shall requirethe Participant to remit to the Company or a Subsidiary an amount sufficient to satisfy such obligation. Whenever a cash payment is made pursuant toa Participant pursuant to an Award, the amount of such payment will be net of the amount of any corresponding tax withholding obligation.

12.2 Share Withholding. The Committee, in its sole discretion and pursuant to applicable law and such procedures as it may specify fromtime to time, may require or permit a Participant to satisfy a tax withholding obligation relating to an Award (in whole or in part) by (a) paying cash,(b) having the Company withhold cash or Shares that would otherwise be paid, issued or released pursuant to the Award, (c) delivering to theCompany other Shares owned by the Participant, (d) by such other means as the Committee may determine, or (e) by any combination of the above.The amount of a Participant's withholding tax obligation that is satisfied in Shares (whether previously- owned or withheld from the Shares thatwould otherwise be issued or released) shall be based upon the Fair Market Value of the Shares on the date such Shares are delivered or withheld. Inno event may Shares be used to satisfy more than the minimum amount of a Participant's tax withholding obligation.

12.3 Section 409A Compliance. It is intended that Awards made under the Plan, including any deferred payment or settlement terms andconditions shall be structured, applied and interpreted in a manner that is exempt from or in compliance with Section 409A of the Code. Withoutlimiting the generality of the preceding sentence, if a Participant becomes entitled to payments (cash or Shares) under an Award on account of the"termination of the Participant's employment or other service" or words of like import, and if such payments constitute "deferred compensation"within the meaning of Section 409A of the Code, then (a) such termination of

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employment or service will not be deemed to have occurred unless and until the Participant incurs a "separation from service" within the meaning ofSection 409A of the Code and the regulations issued thereunder, and (b) to the extent required by Section 409A of the Code, if the Participant is a"specified employee" within the meaning of Section 409A at the time of his or her separation from service, then such payment shall be delayed untilthe first business day after the expiration of six months following the date of the such separation from service or, if earlier, the date of theParticipant's death. On the delayed payment date, the Participant (or the Participant's Estate) will be entitled to receive a lump sum payment ordistribution of the payments that would otherwise would have been made during the period that such payments are delayed. Notwithstanding theforegoing, each Participant shall be solely responsible, and the Company shall have no liability to the Participant or otherwise, for or with respect toany taxes, acceleration of taxes, interest or penalties arising under Section 409A of the Code.

ARTICLE 13

MISCELLANEOUS

13.1 Non- Transferability. Except as otherwise specifically permitted by the Plan or the applicable Award Agreement, no Award shall beassignable or transferable except upon the Participant's death to his or her Beneficiary, and, during a Participant's lifetime, an Option or SAR may beexercised only by the Participant or the Participant's guardian or legal representative. Notwithstanding the foregoing, subject to the consent of theCommittee (which it may grant, condition or deny in its sole discretion for any or no reason), a Participant may make an inter vivos transfer of anOption (other than an ISO) or an SAR to any "family member" (within the meaning of Item A(1)(a)(5) of the General Instructions to SEC Form S- 8or a successor), including, without limitation, to one or more trusts, partnerships, limited liability companies and other entities which qualify asfamily members, provided that such transfer is not a transfer for value or is a transfer for value that the Committee determines is for estate planningpurposes.

13.2 Successors. All obligations of the Company with respect to Awards granted under the Plan shall be binding on any successor to theCompany, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all orsubstantially all of the business and/or assets of the Company.

13.3 Legal Construction. If any provision of the Plan shall be held illegal or invalid for any reason, such illegality or invalidity shall notaffect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

13.4 Requirements of Law. The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules,and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

13.5 Uniformity Not Required. The provisions of the Award Agreements need not be uniform among all Awards, among all Awards of thesame type, among all Awards granted to the same Participant, or among all Awards granted at the same time.

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13.6 Limitation of Rights. The Plan shall not interfere with or limit in any way the right of the Company or of any Subsidiary to terminateany person's employment or other service at any time, and the Plan shall not confer upon any person the right to continue in the employ or otherservice of the Company or any Subsidiary. No employee, director or other person shall have any right to be selected to receive an Award or, havingbeen so selected, to be selected to receive a future Award.

13.7 Decisions and Determinations Final. All decisions and determinations made by the Board pursuant to the provisions hereof and, exceptto the extent rights or powers under the Plan are reserved specifically to the discretion of the Board, all decisions and determinations of theCommittee, shall be final, binding and conclusive on all persons.

13.8 Governing Law. The Plan and all Award Agreements shall be construed in accordance with and governed by the laws of the State ofDelaware (without regard to the legislative or judicial conflict of laws rules of any state).

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Exhibit 10.21


AGREEMENT (this "Agreement") made as of December 3, 2012 (the "Effective Date"), by and between Fairway Group Holdings Corp., a Delawarecorporation with an office at 2284 12th Avenue, New York, New York 10027 (the "Company"), and Edward C. Arditte, 115 Windward Lane, Bristol,Rhode Island 02809 (the "Executive").

WITNESSETH:

WHEREAS, the Company and its subsidiaries (collectively, the "Fairway Group") desire that Executive be employed to serve in an executivecapacity with the Fairway Group, and Executive desires to be so employed by the Fairway Group, upon the terms and subject to the conditions setforth herein.


1. EMPLOYMENT.

The Company hereby employs Executive and Executive hereby accepts such employment, subject to the terms and conditions herein set forth. Executive shall hold the office of Executive Vice President - Chief Financial Officer of the Fairway Group reporting to the Chief Executive Officer ofthe Company or such other executive designated by the Company from time to time (the "Supervisory Executive").

2. TERM.

The term of employment under this Agreement began on the Effective Date and shall continue until December 31, 2013, subject to prior terminationin accordance with the terms hereof (the "Initial Term"). The Initial Term shall be automatically extended for successive additional periods of one(1) year (each such oneyear period, an "Additional Term"), unless either party shall have given written notice to the other party of non- extension atleast sixty (60) days prior to the end of the Initial Term or the then applicable Additional Term (any period during which Executive is employedhereunder collectively, the "Employment Term").

3. COMPENSATION.

(a) As compensation for the employment services to be rendered by Executive hereunder, including all services as an officer or director of anymember of the Fairway Group, the Company agrees to pay, or cause to be paid, to Executive, and Executive agrees to accept, payable in equalinstallments in accordance with Company payroll practices then in existence, an initial annual salary of $350,000 (the "Annual Salary"). Executive'sAnnual Salary for any year following the Initial Term shall be determined by the Board of Directors of the Company (the "Board of Directors") in itssole discretion, but shall not in any year be reduced below the rate for the previous year.


The payment by the Company to the Executive of such bonus shall be made no later than fifteen (15) days after delivery of the Company's auditedconsolidated financial statements to its lenders; provided, however, that Executive shall not be entitled to such bonus if either (i) Executive has failedto comply with the Company's Code of Business Conduct and Ethics and other written policies (including, without limitation, reporting policies as setforth from time to time in the Fairway Group's organizational chart) established by the Board of Directors (collectively, the "Code of Conduct"), asdetermined in reasonable good faith by the Board of Directors, and either (x) such failure to comply is, or could reasonably be expected to be, in thereasonable determination of the Board of Directors, harmful or damaging to the Fairway Group's business, reputation, employees or customers or(y) Executive has previously failed to comply with such policy and was notified in writing of such failure, or (ii) the Fairway Group is not operatingin substantially full compliance with all fire, safety, building and other codes; and provided further that if there is existing an event of default (orevent which, with notice, the passage of time or both, would constitute an event of default) under the Fairway Group's credit facilities, or the paymentof such bonus would cause an event of default (or event which, with notice, the passage of time or both, would constitute an event of default) underthe Fairway Group's credit facilities, then payment of such bonus shall be postponed until such time as any existing event of default (or event which,with notice, the passage of time or both, would constitute an event of default) under the Fairway Group's credit facilities is cured, and such bonusshall be paid at such time, without interest.

(c) The Company shall recommend to the Compensation Committee of the Board of Directors that Executive be granted (a) restricted stockunits representing 0.30% (30 basis points) of the shares to be available under the Company's 2013 Long- Term Incentive Plan (excluding shares thatare available for grant of options that have an exercise price in excess of fair market value on the date of grant); and (b) options to purchase shares ofthe Company's common stock representing .10% (10 basis points) of the shares to be available for the grant of options having an exercise price in

excess of fair market value on the date of grant.

4. EXPENSES.

The Company shall pay or reimburse Executive, upon presentment of suitable vouchers, for all reasonable relocation and temporary living expensesup to $25,000 which may be incurred or paid by Executive in connection with his employment hereunder in accordance with Company policy asestablished from time to time by the Board of Directors. The reimbursement of such relocation and temporary living expenses shall be "grossed up"to reflect all relevant federal, state and local taxes. The Company shall also pay or reimburse Executive, upon presentment of suitable vouchers, forall reasonable business expenses which may be incurred or paid by Executive in connection with his employment hereunder in accordance withCompany policy as established from time to time by the Board of Directors. Executive shall comply with such restrictions and shall keep suchrecords as the Company may reasonably deem necessary to meet the requirements of the Internal Revenue Code of 1986, as amended from time totime (the "Code"), and regulations promulgated thereunder.

5. OTHER BENEFITS.

Executive shall be entitled to four (4) weeks paid vacation for each full year of employment during the Employment Term (the timing of vacations tobe subject to the reasonable approval of the Chief Executive Officer) and to participate in such benefit plans and arrangements and receive otherbenefits on terms consistent with other officers of the Company at the same level as Executive (including short- and long- term disability insurance,401(k) plan, hospital, major medical insurance, dental and group life insurance plans in accordance with the terms of such plans), all as determinedfrom time to time by the Board of Directors (the "Benefit Plans"). Executive shall not be entitled to rollover or otherwise accumulate unusedvacation days from year- to- year without the prior consent of the Board of

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Directors. The Company agrees to reimburse Executive for medical insurance premiums from his date of employment until the date that he is eligiblefor the Company- provided medical insurance coverage. For calendar year 2013 only, the Company also agrees to reimburse Executive, uponpresentment of suitable receipts, for his rent expense (up to $3,750 per month), his parking expense (up to $500 per month) and any brokerageexpenses (up to $6,000) incurred by Executive in connection with Executive's relocation to New York.

6. DUTIES.

(a) Executive shall perform such reasonable duties and functions as the Chief Executive Officer or Supervisory Executive, as applicable, maylawfully assign to him and as are typically performed by executives in his position, and Executive shall comply in the performance of his duties withthe policies of the Fairway Group and the Board of Directors, and be subject to the direction of the Supervisory Executive and the Board of Directors.

(b) During the Employment Term, Executive shall devote all of his business time and attention, reasonable vacation time and absences forsickness excepted, to the business of the Fairway Group, as necessary to fulfill his duties; provided, however, that Executive may engage in otheractivities so long as such activities do not unreasonably interfere with Executive's performance of his duties hereunder and do not violate Section 9hereof. Executive shall perform the duties assigned to him with fidelity and to the best of his ability and in compliance in all material respects withthe Company's Code of Conduct.

(c) Nothing contained in this Section 6 or elsewhere in this Agreement shall be construed to prevent Executive from investing or trading innon- competing investments as he sees fit for his own account, including real estate, stocks, bonds, securities, commodities or other forms ofinvestments.



(i) upon thirty (30) days' prior written notice to Executive upon the determination by the Board of Directors that Executive's employment shallbe terminated for any reason which would not constitute "justifiable cause";

(ii) upon written notice to Executive upon the determination by the Board of Directors that there is justifiable cause for such termination;





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(ii) The term "disability" shall mean the inability of Executive, due to illness, accident or any other physical or mental incapacity, to performthe essential functions of his duties, with or without reasonable accommodation, for a period of three (3) months (whether or not consecutive) in anytwelve (12) month period during the Employment Term, as reasonably determined by the Board of Directors.

(iii) The term "justifiable cause" shall mean (A) Executive's repeated failure (other than temporarily while physically or mentally incapacitated)or refusal to attempt to perform his duties pursuant to this Agreement; (B) Executive's material breach of this Agreement; (C) Executive'sperformance of any act or his failure to act which constitutes a crime or offense involving money or property of the Fairway Group or a felony in thejurisdiction involved; (D) Executive's performance of any act or his failure to act which constitutes a breach of a fiduciary trust, including withoutlimitation misappropriation of funds or a misrepresentation (other than as a result of a good faith mistake by Executive) of the Company's financialperformance, operating results or financial condition to the Board of Directors or any executive officer; (E) any intentional unauthorized disclosureby Executive to any person, firm or corporation other than the members of the Fairway Group and their respective directors, managers, officers andemployees, of any confidential information or trade secret of the Fairway Group; (F) any attempt by Executive to secure any personal profit (otherthan through his compensation and ownership of equity in the Company) in connection with the business of the Fairway Group (for example, withoutlimitation, using Fairway Group assets to pursue other interests, diverting any business opportunity belonging to the Fairway Group to himself or to athird party, insider trading or taking bribes or kickbacks); (G) Executive's engagement in conduct or activities materially damaging to the property,business or reputation of the Fairway Group (including any fraudulent act); (H) Executive's unlawful use of controlled substances that, in the goodfaith judgment of the Board, impairs Executive's ability to effectively perform his duties hereunder or while on the Company's premises; (I) any act oromission by Executive involving malfeasance or negligence in the performance of Executive's duties that is materially adverse to the Fairway Group;(J) Executive's failure to comply in all material respects with the Fairway Group's policies, including without limitation, the Code of Conduct; or(K) the entry of any order of a court that remains in effect and is not discharged for a period of at least sixty (60) days, which enjoins or

4

otherwise limits or restricts the performance by Executive under this Agreement, relating to any noncompetition, employment or similar contract,agreement or commitment made by or applicable to Executive in favor of any former employer or any other person; provided, however, that withrespect to clauses (A), (B) and (D) through (K) above, the Company cannot terminate the Executive's employment for justifiable cause unless theBoard of Directors has provided the Executive with written notice of the circumstances providing grounds for justifiable cause and an opportunity toconfront the charges (with counsel) before the Board of Directors.

(c) Upon any termination of Executive's employment by the Company for justifiable cause, or voluntarily by Executive (including Executiveelecting not to renew this Agreement), Executive shall not be entitled to any amounts or benefits hereunder other than such portion of Executive'sAnnual Salary, reimbursement of expenses pursuant to Section 4 hereof as has been accrued through the date of his termination of employment andother amounts or benefits required by law or pursuant to the terms of the Benefit Plans.

(d) If Executive should die during the Employment Term, this Agreement shall terminate immediately. In such event, the estate of Executiveshall thereupon be entitled to receive (i) such portion of Executive's Annual Salary as has been accrued through the date of his death, (ii) any accruedannual bonus for a prior fiscal year which remains unpaid as of the date of death and a pro rata portion of any bonus that Executive would have beenentitled to receive pursuant to Section 3(b) in the fiscal year in which Executive died (based on the number of days Executive was alive during suchfiscal year), payable when and if such bonus would otherwise have been payable had Executive's employment not been terminated by reason ofExecutive's death and (iii) reimbursement of expenses pursuant to Section 4. Executive's estate also shall be entitled to any amounts or benefitsrequired by law or payable under the terms of the Benefit Plans.

(e) Upon a finding by the Board of Directors of Executive's disability in accordance with Section 7(b) hereof, the Company shall have the rightto terminate Executive's employment. Any termination pursuant to this subsection (e) shall be effective on the date thirty (30) days after whichExecutive shall have received written notice of the Company's election to terminate. In such event, Executive shall thereupon be entitled to receive(i) such portion of Executive's Annual Salary as has been accrued through the date of the termination of employment, (ii) any accrued annual bonusfor a prior fiscal year which remains unpaid as of the date of termination and a pro rata portion of any bonus that Executive would have been entitledto receive pursuant to Section 3(b) in the fiscal year in which Executive became disabled (based on the number of days during such fiscal year thatthis Agreement was in effect), payable when and if such bonus would otherwise have been payable had Executive's employment not been terminatedby reason of Executive's disability and (iii) reimbursement of expenses pursuant to Section 4. Executive shall also be entitled to any amounts orbenefits required by law or payable under the terms of the Benefit Plans.


(i) in the event that Executive's employment is terminated during the Employment Term by the Company without justifiable cause (other than due todeath or disability), the Company shall (1) continue to pay Executive his then current Annual Salary (subject to applicable tax withholding), payablein equal installments in accordance with the Company's payroll practices then in existence, for a period of one year from the date of termination (twoyears if such termination occurs within one year following a Change in Control of the Company) and (2) pay Executive's COBRA continuation healthcoverage premiums (less the normal weekly contribution rate being paid by Executive at the time of termination, the payment of which shall beExecutive's responsibility) during the Severance Period, which amounts in (1) and (2) above

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shall be in lieu of any and all other payments due and owing to Executive under the terms of this Agreement (other than any payments constitutingreimbursement of expenses pursuant to Section 4 hereof, any payments or benefits required by law or payable under the terms of the Benefit Plansand the accrued annual bonus for a prior fiscal year and pro rata portion of the bonus, if any, referred to in the penultimate paragraph of thisSection 7(f)); or

(ii) in the event the Company timely elects not to renew this Agreement for any Additional Term, the Company shall (1) continue to pay Executivehis then current Annual Salary (subject to applicable tax withholding), payable in equal installments in accordance with the Company's payrollpractices then in existence, for a period of one year from the date the Company notifies Executive that it does not intend to renew this Agreement, and(2) pay Executive's COBRA continuation health coverage premiums (less the normal weekly contribution rate being paid by Executive at the time oftermination, the payment of which shall be Executive's responsibility) during the Severance Period, which amounts in (1) and (2) above shall be inlieu of any and all other payments due and owing to Executive under the terms of this Agreement (other than any payments constitutingreimbursement of expenses pursuant to Section 4 hereof, any payments or benefits required by law or payable under the terms of the Benefit Plansand the accrued annual bonus for a prior fiscal year which remains unpaid as of the date of termination and pro rata portion of the bonus, if any,referred to in the penultimate paragraph of this Section 7(f)).




(g) Upon Executive's termination of his employment hereunder, Executive shall be entitled to receive such portion of Executive's AnnualSalary as has been accrued to date. Executive shall be entitled to reimbursement of expenses pursuant to Section 4 hereof and any payments orbenefits required by law or payable under the terms of the Benefit Plans.

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(h) Any termination of employment hereunder shall include termination from all applicable board and officer positions with any member of theFairway Group.


(a) Executive represents and warrants that he is free to enter into this Agreement and to perform the duties required hereunder, and that thereare no employment contracts or understandings, restrictive covenants or other restrictions, whether written or oral, preventing the performance of hisduties hereunder.



(a) In view of the unique and valuable services expected to be rendered by Executive to the Fairway Group, Executive's knowledge of the tradesecrets and other proprietary information relating to the business of the Fairway Group and in consideration of the compensation to be receivedhereunder, and Executive's ownership interest in the Company, Executive agrees that during the period of his employment by the Company and thegreater of (i) one year following his employment with the Company or (ii) the Severance Period (the "Non- Competition Period"), Executive shallnot, whether for compensation or without compensation, directly or indirectly, as an owner, principal, partner, member, shareholder, independentcontractor, consultant, joint venturer, investor, licensor, lender or in any other capacity whatsoever, alone, or in association with any other person,carry on, be engaged or take part in, or render services (other than services which are generally offered to third parties) or provide advice to, own,share in the earnings of, invest in the stocks, bonds or other securities of, or otherwise become financially interested in, any entity engaged in theretail grocery and food services business and related services anywhere in the northeastern United States and in any other state into which the Boardof Directors has, to the knowledge of the Executive, discussed the possibility of expanding the Fairway Group's operations. The record or beneficialownership by Executive of up to one percent (1%) of the shares of any corporation whose shares are publicly traded on a national securities exchangeor in the over- the- counter market shall not of itself constitute a breach hereunder. In addition, Executive shall not, directly or indirectly, during theNon- Competition Period, request or cause any suppliers or customers with whom the Fairway Group has a business relationship to cancel orterminate any such business relationship with any member of the Fairway Group or solicit, interfere with, entice from or hire from any member of theFairway Group any employee (or former employee) of any member of the Fairway Group. If the Company breaches its obligation to make theSeverance Payments (other than in the circumstances described in the next sentence) or to comply with its obligations under Section 4 hereof, andsuch breach is not cured within thirty (30) days after written notice of such breach is provided to the Company by Executive, then in addition to anyother remedies available to the Executive, Executive shall be released from his obligations under this Section 9. If Executive does not comply withhis obligations under this Section 9 (other than in the circumstances described in the preceding sentence), then notwithstanding anything herein to thecontrary, the Company shall not be obligated to pay Executive any remaining portion of the Severance Payments.


(i) Executive shall not make any oral or written statements, either directly or through other persons or entities, which are disparaging to anymember of the Fairway Group or

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any of its affiliates, management, officers, directors, services, products, operations or other matters relating to the Fairway Group's businesses; and

(ii) The Fairway Group, through its officers and directors, shall not make any oral or written statements, either directly or through other personsor entities, which are disparaging to Executive.


(c) If any portion of the restrictions set forth in this Section 9 should, for any reason whatsoever, be declared invalid by a court of competentjurisdiction, the validity or enforceability of the remainder of such restrictions shall not thereby be adversely affected.

(d) Executive acknowledges that the provisions of this Section 9 were a material inducement to the Company to enter into this Agreement andto employ Executive. Executive further acknowledges that the territorial and time limitations set forth in this Section 9 are reasonable and properlyrequired for the adequate protection of the business of the Fairway Group. Executive hereby waives, to the extent permitted by law, any and all rightto contest the validity of this Section 9 on the ground of breadth of its geographic or product and service coverage or length of term. In the event anysuch territorial or time limitation is deemed to be unreasonable by a court of competent jurisdiction, Executive agrees to the reduction of the territorialor time limitation to the area or period which such court shall deem reasonable.

(e) The existence of any claim or cause of action by Executive against the Company or any other member of the Fairway Group shall notconstitute a defense to the enforcement by the Fairway Group of the foregoing restrictive covenants, but such claim or cause of action shall belitigated separately.


(a) Executive shall promptly and fully disclose to the Fairway Group, with all necessary detail for a complete understanding of the same, alldevelopments, know- how, discoveries, inventions, improvements, concepts, ideas, writings, formulae, processes and methods (whethercopyrightable, patentable or otherwise) made, received, conceived, developed, acquired or written during working hours, or otherwise, by Executive(whether or not at the request or upon the suggestion of the Fairway Group) during the Employment Term, solely or jointly with others, using theFairway Group's resources, or relating to any current or proposed business or activities of the Fairway Group known to him as a consequence of hisemployment or the rendering of services hereunder (collectively, the "Subject Matter").

(b) Executive hereby assigns and transfers, and agrees to assign and transfer, to the Fairway Group all his rights, title and interest in and to theSubject Matter, and Executive further agrees to deliver to the Fairway Group any and all drawings, notes, specifications and data relating to theSubject Matter, and to execute, acknowledge and deliver all such further papers, including applications for trademarks, copyrights or patents, as maybe necessary to obtain trademarks, copyrights and patents for any thereof in

8

any and all countries and to vest title thereto in the Fairway Group. Executive shall assist the Fairway Group in obtaining such trademarks,copyrights or patents during the term of this Agreement, and any time thereafter on reasonable notice and at mutually convenient times, andExecutive agrees to testify in any prosecution or litigation involving any of the Subject Matter; provided, however, that following termination ofemployment Executive shall be reasonably compensated for his time and reimbursed his reasonable out- of- pocket expenses incurred in renderingsuch assistance or giving or preparing to give such testimony if it is required after the Non- Competition Period.


(a) Executive shall not, during the term of this Agreement, or at any time following expiration or termination of this Agreement, directly orindirectly, disclose or permit to be known (other than as is required in the regular course of his duties (including without limitation disclosures to theFairway Group's advisors and consultants) or as is required by law (in which case Executive shall give the Company prior written notice of suchrequired disclosure) or with the prior written consent of the Company's President, to any person, firm or corporation, any confidential informationacquired by him during the course of, or as an incident to, his employment hereunder, relating to the Fairway Group, any client, vendor or customerof the Fairway Group, or any corporation, partnership or other entity owned or controlled, directly or indirectly, by any of the foregoing, or in whichany of the foregoing has a beneficial interest, including, but not limited to, the business affairs of each of the foregoing. Such confidentialinformation shall include, but shall not be limited to, proprietary technology, trade secrets, patented processes, research and development data, know-how, market studies and forecasts, competitive analyses, pricing policies, employee lists, personnel policies, the substance of agreements withcustomers, suppliers, landlords and others, marketing or dealership arrangements, servicing and training programs and arrangements, customer listsand any other documents embodying such confidential information. This confidentiality obligation shall not apply to any confidential informationwhich becomes publicly available from sources unrelated to the Fairway Group.

(b) All information and documents relating to the Fairway Group as hereinabove described (or other business affairs) shall be the exclusiveproperty of the Fairway Group, and Executive shall use commercially reasonable best efforts to prevent any publication or disclosure thereof. Upontermination of Executive's employment with the Company, all documents, records, reports, writings and other similar documents containing

confidential information, including copies thereof, then in Executive's possession or control shall be returned and left with the Company.





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14. GOVERNING LAW.




16. SEVERABILITY.


17. WITHHOLDING.


18. NOTICES.







This Agreement contains the entire agreement of the parties with respect to the subject matter hereof, supersedes all prior and contemporaneousagreements, both written and oral, between the parties

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with respect to the subject matter hereof, and may be modified only by a written instrument signed by each of the parties hereto. This Agreementshall be binding upon and inure to the benefit of the parties hereto and their respective legal representatives, heirs, distributors, successors andassigns; provided, however, that Executive shall not be entitled to assign or delegate any of his rights or obligations hereunder without the priorwritten consent of the Company. It is intended that Sections 9, 10, 11, 12 and 15 benefit each of the Company and each other member of the FairwayGroup, each of which is entitled to enforce the provisions of Sections 9, 10, 11, 12 and 15.

22. SURVIVAL.



Prior to any initial public offering of the Company's capital stock, to the extent that any payments or benefits provided to Executive in this Agreementor otherwise constitute "parachute payments" within the meaning of Section 280G of the Code, and, but for this Section 23, would subject Executiveto the excise tax imposed by Section 4999 of the Code, the Executive may, at his option, waive his right to retain such payments and/or other benefitsunless such payments and other benefits are approved by the stockholders of the Company in a manner that satisfies the stockholder approvalrequirements of Section 280G(b)(5)(B) of the Code and the Treasury Regulations promulgated thereunder (a "280G Vote"), and (ii) the Companyshall submit the Executive's right to retain such payments and other benefits to a 280G Vote. The Executive acknowledges and agrees that thestockholders of the Company are not obligated to approve such payments following any waiver by the Executive of his right to receive suchpayments.



It is intended that any amounts payable under this Agreement and the Company's and Executive's exercise of any authority or discretion hereundershall comply with, and avoid the imputation of any tax,

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penalty or interest under Section 409A of the Code. This Agreement shall be construed and interpreted consistent with that intent. Notwithstandingthe foregoing, Executive shall bear the cost of any failure to comply with Section 409A of the Code, unless and except to the extent that such tax,penalty or interest is incurred by reason of the Company's willful breach of the provisions of this Agreement, and the Company shall have noobligation to pay or reimburse Executive for the payment of any amount of tax, penalty or interest incurred pursuant to Section 409A of the Code.


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26. HEADINGS.




By: /s/ Herbert RuetschName: Herbert RuetschTitle: Chief Executive Officer

/s/ Edward C. ArditteEdward C. Arditte

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EXHIBIT A

FORM OF RELEASE












By:

Date:


Exhibit 10.23

EXECUTION VERSION

VOTING AGREEMENT

This Voting Agreement (the "Agreement") is made as of the 28th day of March, 2013, by and among Fairway Group Holdings Corp., a Delawarecorporation (the "Company"), Daniel Glickberg (the "Stockholder") and Sterling Investment Partners II, L.P. (the "Proxyholder").

RECITALS

The Stockholder owns shares of Preferred Stock and Common Stock of the Company. This Agreement, among other things, requires the Stockholderto vote all such shares of Preferred Stock and Common Stock and all shares of capital stock of the Company which such Stockholder currently ownsor hereafter acquires or as to which he otherwise exercises voting or dispositive authority (together all such shares referred to in this sentence and anysecurities of the Company issued with respect to, upon conversion of, or in exchange or substitution of such shares, and any other voting securities ofthe Company subsequently acquired by the Stockholder, the "Shares") in the manner set forth herein. This agreement is being entered into inconnection with that certain Separation Agreement, dated as of March 28, 2013, between the Company and the Stockholder, and for other good andvaluable consideration, the sufficiency of which is hereby acknowledged and agreed.

AGREEMENT

The parties agree as follows:

1. Voting for the Election of Directors. At each annual meeting of the stockholders of the Company, or at any meeting of the stockholders of theCompany at which members of the Board of Directors of the Company are to be elected, or whenever members of the Board of Directors are to beelected by written consent, the Stockholder agrees to vote (in person, by proxy or by action by written consent, as applicable) with respect to allShares so as to elect the members of the Board of Directors designated in writing by the Proxyholder. At any meeting of the stockholders of theCompany at which members of the Board of Directors of the Company are to be removed, or whenever members of the Board of Directors are to beremoved by written consent, the Stockholder agrees to vote or act with respect to his Shares so as to remove any director designated in writing byProxyholder. Notwithstanding the foregoing or anything to the contrary contained herein, to the extent that Stockholder and Proxyholder are bothparties to the Stockholders' Agreement between the Company and certain stockholders of the Company, dated as of January 17, 2007, as amendedfrom time to time (the "Stockholders' Agreement"), Stockholder agrees to continue to be bound by the Stockholders' Agreement and, to the extentthat any provisions of this Agreement conflict with the provisions of the Stockholders' Agreement regarding the election or removal of directors (the"Director Provisions"), the Director Provisions (including without limitation any proxies given with respect thereto) shall govern the election andremoval of directors under this Agreement. Proxyholder agrees to continue to be bound by the Stockholders' Agreement and shall vote (to the extentProxyholder holds a proxy) and otherwise act with respect to any Shares as and if required under the Stockholders' Agreement.

2. Voting Agreement On All Matters. Stockholder hereby agrees with respect to all Shares:

(a) In the event that the Proxyholder instructs (or otherwise requests) that Stockholder vote in favor of any Acquisition (an "Approved Sale"),any Certificate Amendment and/or any Other Matter, then the Stockholder shall (i) after receiving proper notice of any meeting of stockholders of theCompany to vote on the approval of an Approved Sale, a Certificate Amendment and/or Other Matter (or, if no notice is required or such notice isproperly waived, after notice from the Proxyholder is given), be present, in person or by proxy, as a holder of Shares at all such meetings and becounted for the purposes of determining the presence of a quorum at such meetings and (ii) vote (in person, by proxy or by action by written consent,as applicable) all Shares as to which the Stockholder has beneficial ownership or as to which he otherwise exercises voting or dispositive authority(A) in favor of such Approved Sale or Certificate Amendment, (B) in the case of an Approved Sale, in opposition to any and all other

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Acquisitions for which a vote is taken while an Approved Sale is still pending that would reasonably be expected to delay or impair the ability of theCompany to consummate such Approved Sale, and (C) in the case of an Other Matter, in the manner directed by the Proxyholder. Notwithstandingthe foregoing, in the case of an Approved Sale, the Stockholder shall not be required to assume personal liability greater than the liability assumed bythe Proxyholder that continues after the transaction closing for breach of representations, warranties or other obligations except (x) to the extent of theconsideration received in the transaction or (y) for liability attributable to fraud or willful misconduct on the part of the Stockholder. The Stockholdershall refrain from exercising any dissenters' rights, appraisal rights or similar rights under applicable law at any time in connection with suchApproved Sale. If the Approved Sale is structured as a sale of the stock of the Company, then the Stockholder hereby agrees to sell and shall sell allof his Shares on the terms and conditions approved by the Proxyholder. Subject to applicable laws, the Stockholder shall take all necessary anddesirable actions approved by the Proxyholder in connection with the consummation of the Approved Sale, including the execution of suchagreements and such instruments and other actions reasonably necessary to (i) provide the representations, warranties, indemnities, covenants,conditions, escrow agreements and other provisions and agreements relating to such Approved Sale, and (ii) effectuate the allocation and distributionof the aggregate consideration upon consummation of the Approved Sale.

(b) In the event that the Proxyholder instructs (or otherwise requests) that Stockholder vote against any Acquisition (a "Rejected Sale"), anyCertificate Amendment and/or any Other Matter, then the Stockholder shall (i) after receiving proper notice of any meeting of stockholders of theCompany to vote on the Rejected Sale, such Certificate Amendment and/or Other Matter (or, if no notice is required or such notice is properlywaived, after notice from the Proxyholder is given), be present, in person or by proxy, as a holder of Shares at all such meetings and be counted forthe purposes of determining the presence of a quorum at such meetings and (ii) vote (in person, by proxy or by action by written consent, asapplicable) all Shares as to which the Stockholder has beneficial ownership or as to which he otherwise exercises voting or dispositive authority(A) against such Rejected Sale or Certificate Amendment, and (B) in the case of an Other Matter, in the manner directed by the Proxyholder. If theRejected Sale is structured as a sale of the stock of the Company, then the Stockholder shall not sell any of his Shares unless permitted to sell inwriting by the Proxyholder.

(c) Stockholder agrees that, unless Proxyholder provides explicit written instruction to vote Stockholder's Shares under this Agreement orProxyholder provides explicit written notice that Stockholder shall be permitted by Proxyholder to vote in a manner other than as Proxyholderinstructs, Stockholder shall abstain from voting any of his Shares (in person, by proxy or by action by written consent, as applicable) on all matters.

(d) In the event of any Transfer by the Stockholder, (i) the Stockholder shall inform the Company and the Proxyholder of such Transfer and(ii) unless such Transfer is a sale into the public market, the pledgee, transferee or donee shall furnish the Proxyholder and the Company with awritten agreement to be bound by the provisions of this Agreement. Such Transfer shall not be valid unless and until the Company and theProxyholder receive such written agreement. In the event of any Transfer by the Stockholder, the Stockholder shall inform the Company and theProxyholder of such Transfer no less than five (5) business days prior to such Transfer. Such pledgee, transferee or donee shall be treated as a"Stockholder" for purposes of this Agreement. For avoidance of doubt, unless such Transfer is a sale into the public market the Company shall notpermit the Transfer of any of the Shares on its books or issue new certificates representing any such Shares unless and until the person(s) to whomsuch Shares are to be transferred shall have executed the written agreement referred to in this Section 2 and any additional agreement required underany other applicable agreements between the parties hereto.

For purposes of this Section 2:

"Acquisition" shall mean any (i) event that results in a liquidation, dissolution or winding up, or is deemed to be a liquidation, dissolution or windingup of the Company, under the Company's Amended and Restated Certificate of Incorporation, as the same may be amended from time to time (the"Certificate"), (ii) Sale of the Company (as that term is defined in the Stockholders' Agreement) or (iii) reorganization, consolidation, merger, stocksale or asset sale of the Company.

"Certificate Amendment" shall mean any amendment of the Certificate.

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"Other Matter" shall mean any matter, action, ratification or other event other than an Acquisition or Certificate Amendment for which approval ofthe holders of the Company's stock is sought (either by vote or written consent) or upon which such holders are otherwise entitled to vote or consent.

"Transfer" shall mean and include any sale, assignment, encumbrance, hypothecation, pledge, conveyance in trust, gift, transfer by bequest, devise ordescent, or other transfer or disposition of any kind, including, but not limited to, transfers to receivers, levying creditors, trustees or receivers inbankruptcy proceedings or general assignees for the benefit of creditors, whether voluntary or by operation of law, directly or indirectly, of any of theShares.

3. Irrevocable Proxy and Power of Attorney. To secure the Stockholder's obligations to vote the Shares in accordance with this Agreement andto comply with the other terms hereof, the Stockholder hereby appoints the Proxyholder, or his designees, as such Stockholder's true and lawful proxyand attorney, with the power to act alone and with full power of substitution, to vote or act by written consent with respect to all of such Stockholder'sShares in accordance with the provisions set forth in this Agreement, and to execute all appropriate instruments consistent with this Agreement onbehalf of such Stockholder. The proxy and power granted by the Stockholder pursuant to this Section are coupled with an interest and are given tosecure the performance of such party's duties under this Agreement. Each such proxy and power will be irrevocable for the term hereof. The proxyand power, so long as any party hereto is an individual, will survive the death, incompetency and disability of such party or any other individualholder of the Shares and, so long as any party hereto is an entity, will survive the merger, consolidation, conversion or reorganization of such party orany other entity holding any Shares.

4. Additional Representations, Covenants and Agreements.

4.1 No Revocation. The voting agreements contained herein are coupled with an interest and may not be revoked during the term of thisAgreement.

4.2 Legends. The Company shall cause each certificate representing shares of the Company's capital stock held by the Stockholder or anyassignee of the Stockholder to bear the following legend:

"THE SHARES EVIDENCED HEREBY ARE SUBJECT TO A VOTING AGREEMENT BY AND AMONG THE COMPANY, THE HOLDEROF THE SHARES EVIDENCED HEREBY AND THE PROXYHOLDER (A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY)WHICH INCLUDES PROVISIONS POTENTIALLY RESTRICTING THE HOLDER'S RIGHT TO VOTE OR TRANSFER HIS OR ITS ENTIREINTEREST IN THE SHARES EVIDENCED HEREBY, AND BY ACCEPTING ANY INTEREST IN SUCH SHARES THE PERSONACCEPTING SUCH INTEREST SHALL BE DEEMED TO AGREE TO AND SHALL BECOME BOUND BY ALL THE PROVISIONS OF SAIDVOTING AGREEMENT."

4.3 Stock Splits, Dividends, Etc. In the event of any issuance of Shares of the Company's voting securities hereafter to any of the partieshereto (including, without limitation, in connection with any stock split, stock dividend, recapitalization, reorganization, or the like), such shares shallautomatically become subject to this Agreement and shall be endorsed with the legend set forth in Section 4.2.

4.4 Specific Enforcement. It is agreed and understood that monetary damages would not adequately compensate an injured party for thebreach of this Agreement by any party, that this Agreement shall be specifically enforceable, and that any breach or threatened breach of thisAgreement shall be the proper subject of a temporary or permanent injunction or restraining order. Further, each party hereto waives any claim ordefense that there is an adequate remedy at law for such breach or threatened breach.

4.5 Securities Rules and Regulations. The Stockholder agrees and understands that the Stockholder, the Company and/or the Proxyholdermay become subject to the registration and/or reporting requirements, rules and regulations of the Exchange Act of 1934, as amended, the SecuritiesAct of 1933, as amended, and/or any state and federal securities laws (collectively, the "Securities Laws"). Stockholder agrees to use his best effortsto comply with the Securities Laws and to assist Proxyholder in complying with the Securities Laws in a timely and prompt

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manner. Such compliance may include, for example and without limiting the foregoing, the filing and updating and maintaining of Form 13G and/orForm 13D under the Exchange Act of 1934, as amended.

4.6 Proxyholder's Liability. The Proxyholder shall not be liable for any error of judgment nor for any act done or omitted, nor for any mistakeof fact or law nor for anything which the Proxyholder may do or refrain from doing in good faith, nor shall the Proxyholder have any accountabilityhereunder, except for his own bad faith, gross negligence or willful misconduct. Furthermore, upon any judicial or other inquiry or investigation ofor concerning the Proxyholder's acts pursuant to his rights and powers as Proxyholder, such acts shall be deemed reasonable and in the best interestsof the Stockholders unless proved to the contrary by clear and convincing evidence.

5. Termination.

5.1 Termination Events. This Agreement shall terminate upon the earlier of:

(a) The liquidation, dissolution or winding up of the business operations of the Company;

(b) The execution by the Company of a general assignment for the benefit of creditors or the appointment of a receiver or trustee to take possession ofthe property and assets of the Company;

(c) In the sole discretion of the Proxyholder, with the express written consent of the Proxyholder (which he shall be under no obligation to provide);or

(d) The Stockholder no longer owning any Shares.

5.2 Removal of Legend. At any time after the termination of this Agreement in accordance with Section 5.1, any holder of a stock certificatelegended pursuant to this Agreement may surrender such certificate to the Company for removal of the legend, and the Company will duly reissue anew certificate without the legend. The Company and the Proxyholder agree that upon a sale by the Stockholder of any Shares into the publicmarket, the Company will reissue a new certificate in the name of the purchaser without the legend.

6. Miscellaneous.

6.1 Successors and Assigns. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respectivesuccessors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the partieshereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except asexpressly provided in this Agreement. Except for an assignment by the Company by operation of law or in connection with an Acquisition (whichshall be permitted with only the written consent and notice of the Company), this Agreement may not be assigned by the parties without the writtenconsent of the Proxyholder, the Company and the Stockholder, except that the Proxyholder may assign this Agreement to any of its affiliates(including without limitation one or more members of its general partner).

6.2 Amendments and Waivers. Any term hereof may be amended or waived only with the written consent of the Stockholder and theProxyholder, except where such amendment or waiver shall materially negatively alter the rights or obligations of the Company hereunder, in whichcase any such amendment or waiver shall also require the written consent of the Company. Any amendment or waiver effected in accordance withthis Section 6.2 shall be binding upon the Company, the Proxyholder and the Stockholder, and each of their respective successors and assigns.

6.3 Notices. Notwithstanding anything to the contrary contained herein, any notice required or permitted by this Agreement shall be in writingand shall be deemed sufficient and received on the earlier of (a) the date of delivery, when delivered personally, by overnight mail, courier or sent byelectronic mail (e- mail), telegram or fax, or (b) forty- eight (48) hours after being deposited in the U.S. mail, as certified or registered mail, withpostage prepaid, and addressed to the party to be notified at such party's address or fax number as set forth on the

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signature page hereto, or as subsequently modified by written notice. Any electronic mail (e- mail) communication shall be deemed to be "inwriting" for purposes of this Agreement.

6.4 Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree torenegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for suchprovision, then (a) such provision shall be excluded from this Agreement, (b) the balance of the Agreement shall be interpreted as if such provisionwere so excluded and (c) the balance of the Agreement shall be enforceable in accordance with its terms.

6.5 Governing Law; Jurisdiction; Venue. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of theparties hereto shall be governed, construed and interpreted in accordance with the laws of the State of Delaware, without giving effect to principles ofconflicts of law. In addition, each of the parties hereto (a) consents to submit itself to the exclusive personal jurisdiction of the Court of Chancery orother courts of the State of Delaware in the event any dispute arises out of this Agreement or any of the transactions contemplated by this Agreement,(b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from such court, (c) agrees that itwill not bring any action relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than the Court ofChancery or other courts of the State of Delaware and (d) to the fullest extent permitted by law, consents to service being made through the noticeprocedures set forth in Section 6.3. Each party hereto hereby agrees that, to the fullest extent permitted by law, service of any process, summons,notice or document by U.S. registered mail to the respective addresses set forth in Section 6.3 shall be effective service of process for any suit orproceeding in connection with this Agreement or the transactions contemplated hereby.

6.6 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of whichtogether shall constitute one instrument.

6.7 Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered inconstruing or interpreting this Agreement.

6.8 Counsel to the Stockholder. Stockholder represents to the Company and Proxyholder that he had been represented by Thompson HineLLP in connection with this Agreement.

[Signature Page(s) Follow(s)]

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The parties hereto have executed this Voting Agreement as of the date first written above.


BY: /s/ Herb RuetschName: Herb RuetschTitle: Chief Executive OfficerAddress: 2284 12th Avenue

New York, New York 10027

STERLING INVESTMENT PARTNERS II, L.P.BY: STERLING INVESTMENT PARTNERS MANAGEMENT II, L.P.,

ITS GENERAL PARTNERBY: STERLING INVESTMENT PARTNERS MANAGEMENT II, LLC,

ITS GENERAL PARTNER

BY: /s/ Charles SantoroName: Charles SantoroTitle: Managing Partner, Sterling Investment PartnersAddress: 285 Riverside Avenue

Westport, CT 06880

/s/ Daniel GlickbergDANIEL GLICKBERGAddress: 220 East 72nd Street

Apt. 25 ENew York, NY 10021

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Exhibit 23.2 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have issued our report dated June 1, 2012 (except for Note 18, as to which the date is March 28, 2013), which will be signed uponconsummation of the transaction described in Note 18 to the consolidated financial statements, with respect to the consolidated financial statementsof Fairway Group Holdings Corp. and Subsidiaries contained in the Registration Statement and Prospectus. We consent to the use of theaforementioned report in the Registration Statement and Prospectus, and to the use of our name as it appears under the caption "Experts."/s/ GRANT THORNTON LLPMelville, New YorkApril 4, 2013

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Exhibit 23.2CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Fairway Group Holdings Corp - Form S-1A(Apr-04-2013)

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