The MerchanT

Chinatown, NY

In the South of the city, we find the THE MERCHANT hotel at 396 Broadway.

Merchant Hospitality Group will launch a new hotel in Chinatown, New York. This brand will bring you into the past and show you innovations of the future together under one roof.

MERCHANT: a new Hotel the vibrant Chinatown district of New York City.

A 10-story brick-and-limestone building from 1899, designed by William Birkmire, architect of the Mexican National Opera House.

It runs for a full 175 feet along Walker Street and faces onto Cortlandt Alley, a place that echoes with past eras and is described as one of the last pre-war streetscapes still to be found downtown.

MERCHANT ARRIVAL

The car moves through the teaming Chinese wet market and glides past the New Museum, arriving at the front door of a massive brick façade with French style bronzed windows and doors that lead you from the frenetic exterior into a beautiful cloister with clean bright spaces that inspire your every sense. This is a serene moment in your life…

MERCHANT SERVICE

From the room that you have requested to your favorite afternoon snack that was prepared for your arrival. You know what you want and the Merchant knows how to make it easy for you to have it. Your sense of comfort and well being is anticipated and is always thought of. If it’s your private jogging partner every morning or the turning down process only after you have left for dinner, it’s all about You… At long last.

This is the library, conservatory, coffee and tea room all in one… like home.LOBBY LOUNGE

MERCHANTthe Shanghai

MERCHANTthe Shanghai

beer & duck house

The kitchen of Burger Baby serves a world-class selection of

burgers, rotisserie and grill items and entree salads that are

sure to please even the most discerning palettes. The menu is

ingredient driven, utilizing the absolute best available, fresh and

organic ingredients that are hand-selected from regional sources.

The price points enhance the experience with remarkable value –

this is your place.

While the burgers are the headliners, the menu mix, the energy

and scene keep you coming back for more. Burger Baby is all

about attitude: a vibrant environment with a positive, uplifting

feel. Any time of day - breakfast, lunch, dinner or late night - you

can count on Burger Baby to deliver or serve up what you want,

what you love and what you crave…

burger baby

ROOFTOP BEER GARDEN

a new concept delivering sexy food.

BURGER BABY BEER GARDEN

Retail with a twist

Up to the Rooms

Whether you’re staying at Merchant House or Merchant Hotel you will experience our new sense of comfort, just like home.

Merchant House delivers design and innovation, making you want to come back to your home away from home.

The home larder on every other floor offers Merchant branded culinary surprises which make for easy home cooking.

“I leave my hotel feeling energized, loved and comforted… a new sense of power for adventure in this great city.”

HOSPITALITY GROUP

MerchanT

Merchant - a new feeling in hospitality

We design, develop and operate irresistible and profitable hotel, food and beverage concepts.

Our culture delivers the promise of creating valuethrough DESIGN, SERVICE & FOOD every time.

We honor our social and environmental responsibilities.

Our mission

Wasted Space, Las Vegas, NVThe Smith, New York, NY

Voyeur, Hollywood, CA

Fatty Crab, New York, NY

Wild Knight, Phoenix, AZ

Peacock Alley, New York, NYBull & Bear, New York, NY

Dream Hotel, New York, NY

AMAN-I-KHAS, Rajasthan, India

Amangalla, Sri Lanka

Hard Rock Hotel & Casino, Las Vegas, NV

Porto Vivo, Long Island, NY

Diamond Mills Inn, Saugerties, NY

Certified Angus Beef, Wooster, OH

Honey Baked Foods, Holland, OH

AKA, Central Park, Times Square, UN, Sutton Place, NY

AKA, Philadelphia, PAa. kitchen restaurant, Philadelphia, PA

AKA, Washington DC

Baros Island, Maldives

Waldorf=Astoria Hotel, New York, NY

Sense Spa at The Carlyle, New York, NY

The Harrison, New York, NY

Delphine, Hollywood, CA

Mercato di Vetro, Hollywood, CA

Voyeur, Hollywood, CA

Aquila, Costa Rica

Greystone Manor, Hollywood, CA

The Vault, New York, NY

Magnolia Bakery, New York, NY

Red Cat, New York, NY

Social Hollywood, Hollywood, CATown Hall Restaurant, San Francisco, CA

Night Hotel, New York, NY

Over the last 25 years the members of the Merchant Hospitality team have managed and helped build memorable brands

The Team

Mark Zeff

Design & Branding

Based in New York City, Mark Zeff is an international, full-service design-consulting firm. Following its

philosophy of natural fusion, Mark Zeff blends interior and environmental design and brand development to

create experiences that inspire and stimulate the senses.

Mark Zeff, founder and president of Mark Zeff approaches each project, from luxury yachts to the development

of global brands and revolutionary hospitality ventures, with a holistic design methodology that embodies its

natural fusion philosophy. With innovation as its bedrock, Mark Zeff delivers cutting edge design with an eye

for elegance and style.

Over the last 25 years, Mark Zeff has evolved from a residential design firm into one of the nation’s leading

multi-disciplinary boutique design agencies. Zeff believes the attention to detail given to its private residential

clients is essential to its success and is a characteristic the firm has maintained through its evolution.

Mark Zeff began his career in the United States working with private clients throughout the world including

Hilary Swank and Gabriel Bryne among others. The strength and range of the firm’s residential projects laid the

groundwork for its expansion into commercial design and branding.

The firm is involved with a number of mixed-use development and master planning projects including its work

with Morgans Hotel Group on the re-design and expansion of the Hard Rock Hotel & Casino in Las Vegas. The

design company completed its first project in Hong Kong for Another Department/Emperor Group, a concept

store, Brother & Sister in Kowloon and in development is a 200-room hotel in the center of Hong Kong that will

have two restaurants and a rooftop spa. Mark Zeff has also set the standard for luxury spas with the concepts

and interiors for the Cornelia Spa on Fifth Avenue and Sense, a Rosewood Spa at The Carlyle Hotel, both

located in New York City.

Mark Zeff is counted among the Top-200 Interior Design Giants and the top 75 Hospitality Giants in Interior

Design magazine. Mark Zeff is an award wining firm whose many accolades include: The Hospitality Design

Award for Best Hotel/Day Spa, Gold Key Award for Excellence in Hospitality Design, Best of The Year by

Interior Design, How International Design Award for Environmental Graphics, and Print magazine’s Design

Annual Award and Creativity + Commerce.

Design & Branding

Chief Financial Officer

Randy Cook

Chief Financial Officer

For the past 10 years Mr. Cook was part of the Executive Committee at Korman Communities working in different

roles during the 100 year-old company’s rapid growth and brand development phase. Since 2006, Mr. Cook

served as the Chief Operating Officer of the $1.5 billion Korman portfolio which owns and operates Class-A

residential real estate as well the luxury extended-stay hotel brand AKA. In his most recent role Mr. Cook was

responsible for the launching of the first luxury extended-stay hotel brand in the United States. Despite a

challenging financial environment in the late 2000’s, Mr. Cook was able to lead the AKA brand to successful

financial results, which allowed for the continued development and expansion of the AKA brand. Under Mr.

Cook’s leadership, the AKA brand grew to 9 locations including Manhattan (4), Washington DC (2), Philadelphia,

Los Angeles and London.

As a new, ground-up brand Mr. Cook was responsible for designing and implementing all operating systems,

personnel decisions and business strategies for the AKA brand. This includes establishing service standards,

reservations systems, standard operating procedures for all departments, food & beverage outlets, revenue

management systems as well as marketing and branding platforms. Mr. Cook provided key leadership to AKA’s

500+ employees to collectively execute a brand mission with great pride and passion.

AKA’s highly innovative concept has won major acclaim over the past several years including Inc. Magazine’s Best

Extended Stay, Detail’s Magazine #1 High-End Extended Stay as well as praise from the New York Times, Wall

Street Journal and Conde Nast Traveller.

Prior to the launching of the AKA brand, Mr. Cook served as Korman’s Executive Vice President primarily working

on real estate transactions during the Company’s very active period from 2003 to 2007. This included new

property acquisition modeling, dispositions, portfolio forecasting, benchmarking and tax structuring.

Before joining Korman Communities in 2002 Mr. Cook spent five years in the Real Estate Assurance Practice at

PricewaterhouseCoopers. Mr. Cook’s clients included investors and operators of all property types of real estate

including hotels, apartments, shopping centers, office buildings and industrial parks.

Mr. Cook graduated from the University of Pennsylvania in 1997 with a B.A. in International Relations and a

minor in Economics. While at the University, Mr. Cook studied business at The Wharton School as well as at the

Warsaw School of Economics in Warsaw, Poland.

Jonathan BlitzHead of Operations

Began his career in hospitality with the prestigious Aman Resorts. At the age of 22 he was appointed the youngest ever Manager of an Aman Resort by the Chairman, Adrian Zecha and the Director of Operations, Andrew Thomson. In this capacity, Jonathan Blitz developed Aman-i-Khas, the group’s first ever resort in Rajasthan, India which he subsequently ran successfully for a number of years.

Under his leadership Aman-i-Khas was awarded numerous prestigious accolades such as:

• Gallivanter’s Guide. The 2007 Awards for Excellence: Best Resort in India and the Indian Ocean - No. 2

• Tatler: Top Ten Spas. UK 2004

• Zagat Survey. Top International Hotels, Resorts & Spas Listed for Rajasthan, India: Notable Newcomers - No. 1. USA 2006

• Travel & Leisure. Top 25 Romantic Getaways. Top 10 Spas. 2004

• Conde Nast Traveler.100 Best New Hotels in the World 2004: Hot List -No. 1. 2004

In 2004, Jonathan was nominated as one of the top 5 General Managers in the World by Gallivanter’s Guide.

Jonathan’s abilities were recognized by Adrian Zecha and in addition to his Management role at Aman-i-Khas he was given further responsibility and assigned special projects for Aman Resorts. He was made Manager of The Manor Hotel In Delhi; a boutique hotel under the Management of Aman Resorts. He also created Tented Resorts India Pvt. Ltd. for Aman Resorts for which he traveled around North and Central India, located, negotiated and secured 6 sites for development of future Aman Resorts. Jonathan was sent to the Kingdom of Bhutan to create a concept for a luxury lodge- which would be added to the existing Amankora collection. In 2007 Jonathan was sent to rehabilitate Amanwella which was a struggling Aman Resort in war-torn Sri Lanka.

In 2010 Jonathan left Aman Resorts to assume leadership of Baros Maldives, an award winning luxury resort in The Maldives. Built in 1973, Baros Maldives is the third oldest resort in the Maldives and a member of SLH.

Under his leadership Baros Maldives was awarded numerous prestigious accolades such as:

Head of Operations

• TripadvisorTravelers Choice 2011. · Top 10 Best Luxury Resorts Worldwide: Ranked 10th in the Top 10. · Best Luxury Resort Asia: Ranked 2nd in the Top 10. · Best for Romance (Asia): Ranked 2nd in the Top 10.

• World Travel Awards 2011 Indian Ocean’s Leading Hotel

• World Travel Awards 2010 Indian Ocean’s Leading Hotel

• World Travel Awards 2010 Indian Ocean’s Leading Villa

• TripadvisorTravelers Choice 2010: · Best Luxury Resort Asia: Ranked 5th in the Top 10 Hospitality Industry

Jonathan’s core values are to lead his team through diligence, interpersonal skills, standards and innovation, leading them and therefore the business that he is running towards success and growth. His passion is the creation of unique, quality ‘once in a lifetime’ guest experiences. In his opinion these can turn a good holiday into an unforgettable holiday which he thinks is of paramount importance in the high end leisure segment of the Hospitality Industry.

John Doherty

Chef & Menu Engineer

After 30 extraordinary and fulfilling years at The Waldorf=Astoria, Executive Chef John Doherty leaves to fulfill

his dream of entrepreneurship. Doherty says “the desire to create innovative menu and food concepts, develop

exciting restaurant brands, and write additional books, is so powerful, that I must pursue my vision”.

Doherty has aligned with Designer Mark Zeff to create exciting restaurant concepts in New York. Their mission is

to “design and develop irresistible products and restaurant concepts & experiences that deliver on the promise

every time.” Doherty will balance his time between developing and opening restaurants, products, and expanding

the scope of his Leadership speaking engagements. He recently developed and opened Porto-Vivo Restaurant in

Huntington, The Astor Room in Astoria and the Diamond Mills Inn in Saugerties N.Y. to rave reviews among other

projects and is the Quality Ambassador and Consulting Chef for Certified Angus Beef.

Perhaps it was prophesy when the graduating class of 1978 at the Culinary Institute of America voted John

Doherty as student most likely to succeed, because by the time Doherty turned 27, he was named Executive

Chef at The Waldorf=Astoria. The year was 1985 and Doherty became the youngest person ever named to

the position of Executive Chef in the New York landmark’s notable history. After more than 23 years after his

appointment to the post, the passionate, affable culinary leader holds the distinction of having cooked for more

presidents, royalty and heads-of-state than any other chef in the country. While holding the reigns of New York’s

famed kitchen, Doherty elevated the quality of food to a level that positioned The Waldorf as one of New York’s

dining hot spots. Doherty released The Waldorf=Astoria Cookbook in 2006, featuring over 120 recipes.

“The challenge of this job has inspired me to grow personally and professionally. I have loved every minute of

leading this inspired team of individuals through every special event, over the top request.”

Beyond cooking technique and creativity, Doherty’s admirable leadership abilities were the key to the success of

The Waldorf’s culinary operations, which garner more than $100 million in annual sales and are responsible for

cuisine at some of the country’s loftiest galas, events and fundraisers; 24-hour room service; and three distinct,

successful restaurants, Peacock Alley, Bull and Bear Steakhouse, and Oscar’s Cafe.

Doherty’s Chef’s Table has been the focus of the PBS show, At The Chef’s Table and Doherty has appeared

in numerous Travel Channel, A&E and Food Network programs. Other television appearances include The

Today Show, CBS, CW11 and numerous appearances on regional affiliates. He is a frequent guest speaker at

national culinary and hospitality colleges and industry events. He is an advisory board member to New York’s

City Harvest, and the Culinary Institute of America. He has been awarded an honorary Doctorate degree from

Johnson & Wales, an honorary Masters degree from the Culinary Institute of America and a Leadership award

from Niagara University as well as Food Arts Magazines’ Silver Spoon Award.

Chef & Menu Engineer

Paul Clark

International Merchant Consultant

Paul is a qualified chartered accountant who has more than 25 years experience in hospitality, travel and

transport, and hotel and resort companies. His expertise spans all areas of operations, sales, marketing and

finance.

In 1984 he joined Trusthouse Forte Hotels and was promoted to Director of Finance for North America. He then

moved back to the UK to take up the role of Financial Controller for the Virgin Voyager Group which included

Virgin Atlantic Airways. Paul left Virgin to become MD of Odyssey Resorts International, a chain of all inclusive

resorts in the Caribbean, Mexico and Africa.

He then joined Sea Containers Ltd which also owned Orient Express Hotels as Commercial Director, a post he

held for many years. He was then invited back to Virgin by Richard Branson to lead a start up Virgin Hotels

venture.

Paul provides consulting and management services, more latterly as CEO of DeVere Hotels, and worked with,

amongst others, Marco Pierre White on developing new restaurant and hotel opportunities in the licensed

retail arena. Together the two re-launched Wheeler’s of St James, a famous restaurant in London. Paul led the

financing and roll out of a portfolio of branded boutique hotel/restaurants under the Wheelers brand; eight

boutique hotel sites were acquired in eighteen months through LBO’s.

Paul brings unparalleled sector, strategic and P&L experience to the Merchant Team, having had a successful

track record with a number of well known and significant businesses and a number of non executive directorships

in the hotel and leisure sector, both internationally and in the UK.

International Merchant Consultant

WHY

Successful experience matters. Creating a new concept of living with hospitality.

The Merchant team is comprised of three partners combining over 75 years of exceptional proven patterns of success in designing and launching new, innovative, and sustainable concepts comprised of hotels, restaurants, clubs and spas. The team possesses an outstanding track record that has resulted in numerous operations that have achieved iconic status. This team’s expertise is in launching new businesses that create tremendous excitement, interest and press that invariably culminates in massive guest traffic.

We recognize that the key to long-term success lies in guest retention; as such, Merchant has mastered day-to-day operations by instituting a focused and systematic approach that positively and powerfully reaches every guest, everyday.

“Warm, engaging hospitality is at Merchant’s

very core. We understand that caring,

professional service, high quality food, and

excellence in property management are all

non-negotiable.”

Process of Operations

Scope of Services

Merchant Hospitality Group, LLC (“Merchant Hospitality”) proposes to manage the property (the “Project”) on behalf of TBD LLC (“Owner”) with the following scope of services:

1. PRE-OPENING SERVICES

Merchant Hospitality will provide Pre-Opening Services from the date of closing through the opening of the building to include:

• Establishing a pre-opening budget.• Pre-marketing activities.• Interviewing and hiring all team members with staggered start dates as appropriate based on the ramp-up of business.• Construction and design consultation to ensure end product is appropriate to accomplish the operating/ financial goals of the Project.• IT infrastructure consulting (cable, internet, WiFi, phone systems, etc.) to ensure the proper IT infrastructure is designed for the Project.• Sales – immediately begin building awareness of the Project within established sales network as well as targeted market segments and prospective clients within Zone 1 of the Project.

2. BuSINESS STRATEGY

Merchant Hospitality would develop the general business strategy to maximize cash flow and value for the Project. These services include the following:

• Market Assessment - completing a comprehensive market assessment to define the targeted market segments and the depth and price point that can realistically be achieved within each market segment. • Sales & Marketing Strategy – developing a comprehensive Sales & Marketing strategy designed to create maximum exposure and qualified sales opportunities for the Project.• Operations Team – identifying the operations team that will be necessary to accomplish the financial goals of the Project (management, sales, maintenance, housekeeping, etc.).• Five Year Proforma – developing a five year pro-forma to set short and long term financial goals for the Project.• Exit Strategy – ensuring overall business strategy is in line with ultimate exit strategy in order to maximize value at the time of disposition.

3. OPERATIONS MANAGEMENT

Merchant Hospitality will manage the day-to-day operations of the Project through a well-trained and highly skilled on-site team. These services include the following:

• Operations Team – recruit, hire and train the necessary personnel to successfully operate all aspects of the Project and achieve desired financial goals.• Personnel – on an on-going basis approving all hiring decisions to continually ensure the consistency and quality of all site-level personnel.• Revenue Management – overseeing pricing strategy and all pricing decisions designed to maximize revenues for the Project. • Annual Budget – preparing and submitting to Owner for approval the annual operating budget.

• Business Licenses – obtaining all relevant business licenses for the operations of the project.• Real Estate Tax Appeals – overseeing appeal process and working with attorneys to significantly lower real estate taxes at the project (particularly important given the additional revenue generated by the furnished apartment model and the potential this has to significantly increase the assessed value of the Project).

4. SALES STRATEGY & MANAGEMENT

Merchant Hospitality will be responsible for creating a sales machine what will drive qualified business to the Project to maximize sales opportunities and revenue. These services will include the following:

• Sales Team – recruiting, hiring and training a sales team that will successfully target and close business within the budgeted rate range while achieving targeted occupancy levels. The sales team will include experienced sales associates with direct sales experience relevant to the Project who will bring a book a business in addition to the industry knowledge necessary to quickly uncover key contacts within the Projects targeted market segments and key demographics.• Outreach Sales Effort – managing an outreach sales strategy using techniques proven to be successful in establishing a large, diversified client base in new markets. • Sales Partnerships – working established partner relationships (brokers, travel agencies, relocation companies, production companies, etc.) to immediately build a sales funnel for the Project.• Inbound Traffic – using established and highly effect techniques to drive maximum qualified in-bound traffic to the property by casting a wide net through strategic website, PR, internet and print advertising campaigns.

5. EMPLOYEES & BENEFITS ADMINISTRATION

Merchant Hospitality will employ all site-level personnel necessary to operate the project. These employees will be treated as leased employees and Owner will reimburse Merchant Hospitality for all costs and expenses associated with leased employees. Merchant Hospitality will be responsible for administering all employee benefits necessary to attract and retain quality personnel in order to successfully operate the Project.

6. FINANCIAL REPORTING & ACCOuNTING SYSTEMS

Merchant Hospitality will be responsible for all financial reporting for the project. These responsibilities include the following:

• Monthly financial reporting to Owner to include the following information:• Income Statement• Balance Sheet and detailed Trial Balance• Actual/Budget Variance Report• Operations Recap• Bank Reconciliations• Accounts Receivable & Accounts Payable Statements• General Ledgers• Capital Improvement Summary• Payroll Summary• Rent Roll• Rate & Occupancy Trend Reports

Merchant Hospitality will be responsible for establishing all necessary accounting systems necessary to operate the project.

• Accounting systems to be provided by Merchant Hospitality include:• G/L, Expense & Financial Reporting Module • Residential Module (specialized to serviced apartments)• Payroll Accounting System

7. ACCOuNTING & PAYROLL SERVICES

Merchant Hospitality will provide basic accounting and payroll oversight services including the following:

• Preparing of all monthly financial reports.• Establishing all internal control procedures and monitoring key financial functions to ensure they adhere to established protocol.• If required, working with outside auditors to satisfy annual audit requirements.• Engaging tax professionals to prepare annual tax return and issue K-1 to partners.

8. INSuRANCE

Merchant Hospitality will be responsible, if requested by Owner, for obtaining all necessary insurance for the Project including Property & Liability, Excess Umbrella Coverage and Workers Compensation insurance on behalf of Owner.

9. MARKETING & BRANDING

Merchant Hospitality will be responsible for establishing and executing an annual marketing budget and marketing plan in addition to establishing and promoting a brand designed to maximize exposure of the Project within the targeted market segments and key demographic. The Marking & Branding will include the following services:

• Budget – establish approved annual marketing budget with Owner.• Website – creating and maintaining a website designed to drive relevant traffic to the project.• Search Engine Optimization (SEO) Management – selecting an SEO vendor and working with the vendor to continually improve natural search rankings relevant to the business strategy of the Project.• Public Relations – if approved in annual marketing budget, working with public relations firm to gain exposure for the Project within targeted market segments and key resident demographic.• Marketing Collateral – working with vendor to create all necessary marketing collateral for the project (brochures, photography, etc.).• Internet & Print Advertising – working with selected vendor to purchase and place all necessary advertising for the project.• Brand – establishing and promoting a brand designed to maximize exposure of the Project to the targeted market segments and key resident demographic.

F&B Process

PHASE 1Inception through Construction, approx. 24 weeks out

• Food and Beverage Concept designs• New Space Analysis • Analyze front of the house space • Analyze rear of house • Analyze engineering of Kitchen • Develop Pro Forma and Market Feasibility Studies• Pre-Opening Budget • Evaluation of operational needs through construction• Develop and implement PR program• Wage Scale Analysis • Staffing Guide created• Assessment of Computer and POS needs• Manage Critical Path

PHASE 2Pre-Opening and Opening (16 weeks out to opening)

• Finalize Purchasing of kitchen/bar small wares• Management Hiring• A customized strategic plan will be developed to implement a system that will realize results to: a. Drive and maximize profitability b. Control operational costs c. Run an efficient operation d. Develop consistency in the product and the operation• Operating Standards creation• Hourly Hiring• Staff Training• Concept implementation• Pre-Opening events• Evaluation of staff• Ongoing Training• Evaluating standards implementation

PHASE 3Post Opening (Fully Operational)• Customer Service Evaluation• Employee Evaluation / Quality of Service analysis • Front of House • Service personnel • Management• On going Training• Monthly reviews of Operation and P&L• Asset Management for owners• Observe Operation and businesses • Total Operation Analysis • Analysis of Sales processes and costs of sales • Food Cost • Labor costs • Identify any new procedures and/or equipment needed • Standards Analysis • Sales Analysis • Analyze accounting procedures and processes • Purchasing analysis

Design Process

Our dedicated interior design team will create, manage and oversee all aspects of the project. For each facet of the project we will progress through the following phases:

1. RESEARCH – We will execute all necessary research in order to develop and create a unique and proprietary design concept for the project. MZ team will collaborate with Landmark and Expediter to get building permits in an expeditious manner.

2. CONCEPT / SCHEMATIC DESIGN –We will develop schematic designs for presentation to the client. Throughout the Schematic Design, style elements, program, overall design concept and layout will be addressed.

3. DESIGN DEVELOPMENT – We will take the approved Schematic Design concept and develop it into a fully inclusive design with all necessary detail in order to communicate the comprehensive design intent. The Design Development phase will result in a pragmatically correct design program addressing all project needs.

4. MATERIAL & VENDOR RESOuRCING – Inherent to our design process is the resourcing of new and innovative materials. The design team collects all pertinent material samples, specifications and vendors to properly develop the specification package. We will secure vendor timelines and availability for manufacturing custom pieces, reserves stock items for eventual purchasing and document lead times on goods and services.

5. FF&E & IF SPECIFICATION DEVELOPMENT – All FF&E (Furniture, Fixtures and Equipment) and IF (Interior Finishes) specifications will be developed into a cohesive set of schedules which are incorporated into all drawings as necessary. The completion of this phase will result in two comprehensive specification books, one for interior finishes, and one for FF&E. These specifications books document every item specified in the project and correspond to schedules and drawing sets. Specifications include detailed product information, photos, drawings, sources, dimensions, and quantities where relevant. These specifications books with drawings provide a comprehensive package for the bidding process and purchasing for all specified materials in the project.

6. BuDGET DEVELOPMENT – We will develop (if needed by client) a comprehensive budget outlining all designed items. This package will be developed in conjunction with vendors and contractors. MZ team will develop a balanced bid package to be presented to client so as to choose contractor and move forward.

7. OSE SPECIFICATIONS DEVELOPMENT – Will be specified and chosen to fit the brand by others.

8. MODEL ROOMS – A FF&E Program and Interior Design Construction Documents will be created for the Model Room mock-ups with the capability to be extended and deployed for Base Building.

9. VE PHASE- As needed we will participate in the value engineering phase with fabricators, vendors, GC and subcontractors to maintain original design intent.

10. PRODuCTION DRAWINGS & CONSTRuCTION DOCuMENTS – The client must retain an Architect of Record to create all construction documents that will / might be required for the Project. However, we will develop all production and construction documents necessary to communicate the design intent of all interior components for the project, including custom millwork and furniture.

11. COORDINATION WITH CONSuLTANTS – As needed, we will provide all necessary design documents to all consultants. We will work with all consultants to ensure design integrity and that no design elements are lost in translation between disciplines.

12. CONSTRuCTION ADMINISTRATION (for Interior Design related issues only) – We shall provide construction administration between the client and the contractor for design related issues. Project conference calls will be held on a weekly basis. Discussions include design constructability, coordination with disciplines and consultants, and limited FF&E progress. Site visits are required during construction to resolve field conditions and general construction items, as well as FF&E purchasing and fabrication.

Branding Process

Our dedicated branding and identity team will collaborate directly with the Client to establish and develop an effective brand and identity strategy. Based on this strategy, a plan of action is established including an overall project timeline. The brand/project manager will coordinate and manage all aspects of the project from conception through delivery of materials and hand-over of brand guidelines to Client. For every brand and communication initiative, the branding team will apply the following the phases to ensure a timely and successful result:

1. IMMERSION - RESEARCHMARKZEFF will conduct all necessary research to understand current brand perception and brand audience. From this research the branding team is able to gain a better understanding of the brand in its entirety and will be better able to address necessary changes and challenges. During this phase, design inspiration and materials are collected. Mood boards and other inspirational elements are created to help better understand and define the vision of the brand. A one- or two- day brand stewardship session may be called to identify mission, vision and positioning of the brand. As a result, a unique and proprietary brand language is established.

2. SCHEMATIC DESIGN - CONCEPT DEVELOPMENTThroughout this phase MARKZEFF works in collaboration with the Client to define brand style and design elements. Schematic design includes the creation of three concepts and necessary variations which are presented to the Client for feedback and approval. When necessary, third party scopes are established and defined. These include but are not limited to: image licensing, original illustration, copy writing and web programming. MARKZEFF provides Art Direction and quality assurance for all third party materials and content.

3. DESIGN DEVELOPMENT - DETAIL DESIGNFollowing the approval and finalization of concept development, all design details are addressed and applied to a final layout. Once the layout(s) have been approved, the design is prepared for Pre-Production and a mechanical is produced.

4. MATERIAL & VENDOR RESOuRCING (Part of Production Management)It is inherent to our design process to explore and resource new and innovative materials, production techniques and concepts. All materials are collected, reviewed and tested by the branding team. Vendors are researched and an active dialogue begins to ensure both quality and competitiveness within the market.

5. PRODuCTION SPECIFICATION (Part of Production Management)All materials and specifications are finalized and submitted to the Client for approval. Once approved, the details are entered into a design specification sheet and a package is created and submitted to approved Third Parties and Vendors. Included in this package is: Specification Sheet, Purchase Order and Files. Brand identity guidelines and style guides are created for hand over to client.

6. BuDGET DEVELOPMENT (Part of Production Management)A final budget is created and issued to the Client and Vendors for final review and approval. Included in this budget: fulfillment, handling and delivery and, when necessary, storage of materials.

7. PRE-PRODuCTION (Mechanical Creation)Mechanicals (files, mechanical/specification sheet and/or detailed story board) are issued. If contracted for production management, MARKZEFF delivers this package directly to the third party and will oversee production. If MARKZEFF does not manage production, package is delivered to Client.

8. PRODuCTION MANAGEMENT – Implementation/ End Product Quality AssuranceMARKZEFF actively works will all vendors from the hand-over of Production Package through delivery of all materials to Client. The branding teams works with selected vendors to prepare and review color proofs, blue prints and ink draw-downs to ensure accurate and quality design results. MARKZEFF is present at press checks, on-site installations and film sets when material is being created.

Value

Merchants patterns of success and leadership with world-class hotels, spas & fitness, and restaurants cover the full spectrum of design, concept development, opening, turnarounds and day to day operations.

The team has developed its powerful bandwidth of skills with hotel companies such as The Hampshire Group, Rosewood Hotels, Waldorf=Astoria, Ian Schrager Hotels and Morgan’s Hotel Group, to name a few.

Merchant is comprised of industry veterans and experts in all hospitality disciplines: profit engineering, culinary development, operations, business growth, strategic planning, and multi-unit international rollouts.

The tenured team possesses outstanding operational expertise in control systems and world-class processes which encompass quality controls, human resources, leadership development, staff training and education. This group is also passionate about inventory controls, costs and expenses and facility maintenance. We bring a powerful budgeting and report of operations process into place, producing weekly P&L, cash flow and balance sheet statements.

From idea development to realization, Merchant is focused on profit. We recognize that profit is the direct result of the right product at the right time. We value consistency in delivering excellence in environment, product and services. Ultimately, the guest’s experience is paramount.

The team dynamic is unique, mastering all disciplines from design to finance. This creates complete integration of administration and leadership for hotels, restaurants and spa & fitness, consequently producing excellence in business performance.

Merchant fully aligns with the mission, objectives and values of developers and hotel ownership, doing this enables both parties to work together and create powerful, sustainable restaurant and hospitality brands.

Merchant delivers substantial and sustainable profit platforms.

PROFORMA

Projected financial statement Number In Season Off Season Room Nights Year 1 % of Year 2 % of Year 3 % of Year 4 % of Year 5 % of Year 6 % of Year 7 % of Year 8 % of Year 9 % of Year 10 % of Year 11 % of

Description Of Rooms ADR ADR Available Projected Sales Projected Sales Projected Sales Projected Sales Projected Sales Projected Sales Projected Sales Projected Sales Projected Sales Projected Sales Projected Sales

Revenue: Memo information:Occupancy % 86.0% 86.0% 86.0% 86.0% 86.0% 86.0% 86.0% 86.0% 86.0% 86.0%Revenue growth rate 0.0% 0.0% 0.0% 0.0% 0.0% 3.0% 0.0% 0.0% 0.0%Revenue growth rate rooms 7%Revenue Growth rate F&B 5%

Rooms:Suite 8 550 550 2,920 - 1,381,160 1,381,160 1,381,160 1,381,160 1,381,160 1,381,160 1,422,595 1,381,160 1,381,160 1,381,160 King rooms 74 375 375 27,010 - 8,710,725 8,710,725 8,710,725 8,710,725 8,710,725 8,710,725 8,972,047 8,710,725 8,710,725 8,710,725 Room rentals - 25.5% 10,091,885 24.7% 10,091,885 22.8% 10,851,489 22.3% 11,734,750 22.8% 12,774,538 23.3% 14,016,507 24.0% 15,991,756 25.4% 17,399,802 26.0% 19,788,010 27.4% 22,936,102 29.3%Food and Beverage Roof Bar 15.2% 6,000,000 14.7% 6,600,000 14.9% 7,260,000 14.9% 7,623,000 14.8% 8,004,150 14.6% 8,404,358 14.4% 8,824,575 14.0% 9,265,804 13.9% 9,729,094 13.5% 10,215,549 13.1%Food and Beverage 2nd Floor Lounge/ Events 20.2% 8,000,000 19.6% 8,800,000 19.9% 9,680,000 19.9% 10,164,000 19.7% 10,672,200 19.4% 11,205,810 19.2% 11,766,101 18.7% 12,354,406 18.5% 12,972,126 18.0% 13,620,732 17.4%Food and Beverage Restaurant 25.3% 10,000,000 24.5% 11,000,000 24.9% 12,100,000 24.9% 12,705,000 24.6% 13,340,250 24.3% 14,007,263 23.9% 14,707,626 23.4% 15,443,007 23.1% 16,215,157 22.5% 17,025,915 21.8%Food and Beverage Café & Bar 7.6% 3,000,000 7.3% 3,300,000 7.5% 3,630,000 7.5% 3,811,500 7.4% 4,002,075 7.3% 4,202,179 7.2% 4,412,288 7.0% 4,632,902 6.9% 4,864,547 6.7% 5,107,775 6.5%Spa 3.7% 2,754,180 6.7% 3,226,644 7.3% 3,756,795 7.7% 4,153,908 8.1% 4,642,933 8.5% 5,141,163 8.8% 5,616,862 8.9% 6,151,945 9.2% 6,845,301 9.5% 7,539,850 9.6%Airport transfers 2.3% 919,800 2.3% 1,011,780 1,112,958 1,168,606 1,227,036 1,288,388 1,352,807 1,420,448 1,491,470 1,566,044 Excursion revenue 0.3% 106,400 0.3% 154,764 0.4% 199,904 0.4% 216,025 0.4% 232,146 0.4% 232,146 0.4% 216,025 0.3% 232,146 0.3% 216,025 0.3% 232,146 0.3%Total revenue - 100.0% 40,872,265 100.0% 44,185,073 100.0% 48,591,146 100.0% 51,576,789 100.0% 54,895,328 100.0% 58,497,813 100.0% 62,888,040 100.0% 66,900,459 100.0% 72,121,730 100.0% 78,244,113 100.0%

Memo - revenue growth 8.1% 10.0% 6.1% 6.4% 6.6% 7.5% 6.4% 7.8% 8.5%

Departmental gross profit: Rooms - 70.0% 7,064,320 70.0% 7,064,320 70.0% 7,596,042 70.0% 8,214,325 70.0% 8,942,177 70.0% 9,811,555 70.0% 11,194,229 70.0% 12,179,861 70.0% 13,851,607 70.0% 16,055,272 70.0%Food and Beverage Roof Bar - 65.0% 4,200,000 65.0% 4,290,000 65.0% 4,719,000 65.0% 4,954,950 65.0% 5,202,698 65.0% 5,462,832 65.0% 5,735,974 65.0% 6,022,773 65.0% 6,323,911 65.0% 6,640,107 65.0%Food and Beverage 2nd Floor Lounge/ Events - 65.0% 5,200,000 65.0% 5,720,000 65.0% 6,292,000 65.0% 6,606,600 65.0% 6,936,930 65.0% 7,283,777 65.0% 7,647,965 65.0% 8,030,364 65.0% 8,431,882 65.0% 8,853,476 65.0%Food and Beverage Restaurant - 65.0% 6,500,000 65.0% 7,150,000 65.0% 7,865,000 65.0% 8,258,250 65.0% 8,671,163 65.0% 9,104,721 65.0% 9,559,957 65.0% 10,037,954 65.0% 10,539,852 65.0% 11,066,845 65.0%Food and Beverage Café & Bar - 65.0% 1,950,000 65.0% 1,320,000 40.0% 1,452,000 40.0% 1,524,600 40.0% 1,600,830 40.0% 1,680,872 40.0% 1,764,915 40.0% 1,853,161 40.0% 1,945,819 40.0% 2,043,110 40.0%Spa 50.0% 1,964,004 50.0% 2,359,950 60.0% 2,815,337 66.0% 3,150,671 70.0% 3,571,524 73.0% 3,998,402 75.0% 4,406,425 70.0% 4,870,707 73.0% 5,475,088 70.0% 6,083,107 73.0%Airport Transfer - 45.0% 459,900 45.0% 505,890 45.0% 556,479 45.0% 584,303 45.0% 613,518 45.0% 644,194 45.0% 676,404 45.0% 710,224 45.0% 745,735 45.0% 783,022 45.0%Excursion Revenue - 50.0% 53,200 50.0% 77,382 50.0% 99,952 50.0% 108,012 50.0% 116,073 50.0% 116,073 50.0% 108,012 50.0% 116,073 50.0% 108,012 50.0% 116,073 50.0%Gross profit - 64.5% 27,391,424 67.0% 28,487,542 64.5% 31,395,810 64.6% 33,401,711 64.8% 35,654,912 65.0% 38,102,425 65.1% 41,093,881 65.3% 43,821,117 65.5% 47,421,907 65.8% 51,641,011 66.0%

Occupancy costs:Payroll and Related expenses 8.4% 3,348,876 8.2% 3,516,320 8.0% 3,692,136 7.6% 3,876,743 7.5% 4,070,580 7.4% 4,274,109 7.3% 4,487,814 7.1% 4,712,205 7.0% 4,947,815 6.9% 5,195,206 6.6%Real Estate Taxes 230,902 23.0% 237,829 23.0% 244,963 0.6% 252,321 0.5% 259,882 0.5% 426,158 0.8% 592,434 1.0% 758,710 1.2% 924,986 1.4% 1,091,262 1.5% 1,257,538 1.6%Property Insurance 66,300 0.2% 66,300 0.2% 68,289 0.2% 70,338 0.1% 72,448 0.1% 74,621 0.1% 76,860 0.1% 79,166 0.1% 81,541 0.1% 83,987 0.1% 86,506 0.1%Repairs and Maintenance - 0.6% 252,297 0.6% 252,297 0.6% 271,287 0.6% 293,369 0.6% 319,363 0.6% 350,413 0.6% 399,794 0.6% 434,995 0.7% 494,700 0.7% 573,403 0.7%Water and Sewer 12,000 25,000 61,200 63,036 64,927 66,875 68,881 70,948 73,076 75,268 77,526 Gas amd Electric 18,000 0.1% 30,736 0.1% 31,658 0.1% 32,608 0.1% 33,586 0.1% 34,594 0.1% 35,632 0.1% 36,701 0.1% 37,802 0.1% 38,936 0.1% 40,104 0.1%Heat - 74,879 74,879 0.2% 77,125 0.2% 79,439 0.2% 81,822 0.1% 84,277 0.1% 86,805 0.1% 89,409 0.1% 92,092 0.1% 94,854 0.1%Linen and Amenities - - 44,780 0.1% 46,123 0.1% 47,507 0.1% 48,932 0.1% 50,400 0.1% 51,912 0.1% 53,470 0.1% 55,074 0.1% 56,726 0.1%Occupancy costs 327,202 10.1% 4,035,917 9.9% 4,294,386 9.7% 4,504,974 9.3% 4,727,900 9.2% 5,122,945 9.3% 5,533,005 9.5% 5,971,850 9.5% 6,407,484 9.6% 6,879,134 9.5% 7,381,863 9.4%

Other operating expenses: Administrative & general 30,000 0.5% 201,838 0.5% 201,838 0.5% 217,030 0.4% 234,695 0.5% 255,491 0.5% 280,330 0.5% 319,835 0.5% 347,996 0.5% 395,760 0.5% 458,722 0.6% Marketing - 0.0% - 0.0% 1,325,552 3.0% 1,457,734 3.0% 1,031,536 2.0% 1,097,907 2.0% 1,169,956 2.0% 1,257,761 2.0% 1,338,009 2.0% 1,442,435 2.0% 1,564,882 2.0% Insurance 33,105 0.1% 33,105 0.1% 33,105 0.1% 33,105 0.1% 33,105 0.1% 33,105 0.1% 33,105 0.1% 34,098 0.1% 34,098 0.1% 34,098 0.0% 34,098 0.0% Travel agent commissions - 1.8% 706,432 1.7% 706,432 1.6% 759,604 1.6% 821,433 1.6% 894,218 1.6% 981,155 1.7% 1,119,423 1.8% 1,217,986 1.8% 1,385,161 1.9% 1,605,527 2.1%Other operating expenses 63,105 2.4% 941,375 2.3% 2,266,927 5.1% 2,467,473 5.1% 2,120,768 4.1% 2,280,720 4.2% 2,464,547 4.2% 2,731,117 4.3% 2,938,089 4.4% 3,257,454 4.5% 3,663,230 4.7%

Consolidated EBITDA (390,307) 52.0% 22,414,132 54.8% 21,926,229 49.6% 24,423,363 50.3% 26,553,043 51.5% 28,251,246 51.5% 30,104,873 51.5% 32,390,914 51.5% 34,475,543 51.5% 37,285,318 51.7% 40,595,919 51.9%Replacement reserve - 1.5% 613,084 1.5% 662,776 1.5% 728,867 1.5% 773,652 1.5% 823,430 1.5% 877,467 1.5% 943,321 1.5% 1,003,507 1.5% 1,081,826 1.5% 1,173,662 1.5%Tax 14.0% 14.0% 14.0% 14.0% 14.0% 14.0% 14.0% 14.0% 14.0% 14.0% 14.0%Depreciation (39,031) 10.0% 2,241,413 10.0% 2,192,623 10.0% 2,442,336 10.0% 2,655,304 10.0% 2,825,125 10.0% 3,010,487 10.0% 3,239,091 10.0% 3,447,554 10.0% 3,728,532 10.0% 4,059,592 10.0%

Sub total (351,276) 45.3% 19,559,635 47.9% 19,070,830 43.2% 21,252,159 43.7% 23,124,087 44.8% 24,602,692 44.8% 26,216,918 44.8% 28,208,502 44.9% 30,024,482 44.9% 32,474,961 45.0% 35,362,665 45.2%

Management Fee - 2,191,314 2,279,003 0 2,511,665 0 2,672,137 0 2,852,393 0 3,048,194 0 3,287,511 0 3,505,689 0 3,793,753 0 4,131,281 0

Net operating income (351,276) 17,368,321 16,791,826 18,740,494 20,451,950 21,750,299 23,168,724 24,920,992 26,518,793 28,681,208 31,231,384

Net Distributable Proceeds Calculation:

Net Operating Income 17,368,321 16,791,826 18,740,494 20,451,950 21,750,299 23,168,724 24,920,992 26,518,793 28,681,208 31,231,384 Depreciation 2,241,413 2,192,623 2,442,336 2,655,304 2,825,125 3,010,487 3,239,091 3,447,554 3,728,532 4,059,592 Total Distributable Cash Flow 19,609,734 18,984,449 21,182,831 23,107,254 24,575,424 26,179,211 28,160,083 29,966,347 32,409,740 35,290,976 26,179,211

Company funds carried forward 20% 3,921,947 3,796,890 4,236,566 4,621,451 4,915,085 5,235,842 5,632,017 5,993,269 6,481,948 7,058,195 Captial available to return to Investors 80% 15,687,787 15,187,559 16,946,265 18,485,803 19,660,339 20,943,369 22,528,067 23,973,078 25,927,792 28,232,781 cumulative return 19,609,734 34,797,293 51,743,558 70,229,361 89,889,700 110,833,069 133,361,136 157,334,213 183,262,005 211,494,786 Investment 65,000,000 65,000,000 65,000,000 65,000,000 65,000,000 65,000,000 65,000,000 65,000,000 65,000,000 65,000,000

ROI % 26.72% 25.83% 28.83% 31.46% 33.46% 35.64% 38.34% 40.80% 44.12% 48.05%

Beg Bal 84,387,623 74,606,969 64,641,897 52,220,566 37,390,202 421,459 7.81 2,191,442 1,333,786 2,191,442 1,333,786 Return (15,687,787) (15,187,559) (16,946,265) (18,485,803) (19,660,339) (1,535,089) ####### (1,011,057) (1,005,692) (1,011,057) (1,005,692) Interest 5,907,134 5,222,488 4,524,933 3,655,440 2,617,314 29,502 153,401 93,365 153,401 93,365 Ending Bal 74,606,969 64,641,897 52,220,566 37,390,202 20,347,177 (1,084,128) 1,333,786 421,459 1,333,786 421,459

133,638,903 106,911,122 21,956,810

Cumulative total to Investor 128,867,932

Total cumulative NOICumulative ROI to InvestorCumulative interest to Investor

9/13/201210:45 AM 396 Broadway Proforma_09_13_12

Hotel Project Budget

Keys: 84

GSF 63000

Description Ft² Total FF&E Ft² Price/Key $/Ft² Total Cost

Floor

Roof Top Roof Top Bar and Restaurant 5,000 $750,000 $8,929 $150 $750,000

Floor 10 Guest rooms 5,000 $1,000,000 $11,905 $200 $1,000,000

Floor 9 Guest rooms 5,000 $1,000,000 $11,905 $200 $1,000,000

Floor 8 Guest rooms 5,000 $1,000,000 $11,905 $200 $1,000,000

Floor 7 Guest rooms 5,000 $1,000,000 $11,905 $200 $1,000,000

Floor 6 Guest rooms 5,000 $1,000,000 $11,905 $200 $1,000,000

Floor 5 Guest rooms 5,000 $1,000,000 $11,905 $200 $1,000,000

Floor 4 Guest rooms 5,000 $1,000,000 $11,905 $200 $1,000,000

Floor 3 Guest rooms 5,000 $1,000,000 $11,905 $200 $1,000,000

Floor 2 Lounge and event space 5,000 $1,150,000 $13,690 $230 $1,150,000

Ground Floor Lobby, Restaurant, Bar/ Café 3,000 $1,200,000 $14,286 $400 $1,200,000

Basement Restaurant, Kitchen 5,000 $2,000,000 $23,810 $400 $2,000,000

Sub Basement Back of House 5,000 $750,000 $8,929 $150 $750,000

5,000,000 63,000 $224,405 $18,850,000

$400

$150

$200

$200

$200

$200

$200

$230

$400

Cost/ Ft²

$150

$200

$200

$200

Page 1 of 1

Purchase of building 33,000,000.00 Project total 47,786,500.00 Cash reserve 1,211,797.50 Sales and Marketing 2,389,325.00

Sub Total 84,387,622.50 Grand total 84,387,622.50

PAYROLL BUDGET Total Salaries Head Count: 166

Monthly Annually

1 Front Office Manager 3,000.00 36,000.00 1 Assistant Front Office Manager 2,000.00 24,000.00 2 Reservations/ Operator 2,400.00 28,800.00 6 Guest Assistant 7,200.00 86,400.00 6 Personal Assistant 7,200.00 86,400.00 4 Doorman 4,800.00 57,600.00 4 Porter 4,800.00 57,600.00

Sub total 31,400.00 376,800.00

1 Food and Beverage Manager 7,000.00 84,000.00 1 Assistant F&B Manager 3,000.00 36,000.00 4 Outlet Host 5,200.00 62,400.00

25 Waiter 30,000.00 360,000.00 12 Runner 12,000.00 144,000.00 10 Bartender 12,000.00 144,000.00

Sub total 69,200.00 830,400.00

1 Executive Chef 7,000.00 84,000.00 2 Sous Chef 11,000.00 132,000.00 1 Pastry Chef 1,800.00 21,600.00

10 Line Cook 15,000.00 180,000.00 10 Prep Cook 13,500.00 162,000.00

8 Kitchen others 12,000.00 144,000.00 6 Dishwashers 6,600.00 79,200.00 6 Kitchen Porter 6,600.00 79,200.00

Sub total 73,500.00 882,000.00

Housekeeping1 Executive Housekeeper 5,000.00 60,000.00 1 Assistant Housekeeper 2,500.00 30,000.00 3 HK supervisor 2,200.00 26,400.00 2 Laundry coordinator 1,800.00 21,600.00

14 Chamber maid 2,800.00 33,600.00 6 Public area cleaner 1,200.00 14,400.00

Sub total 15,500.00 186,000.00

Spa(see Spa Proforma)

1 Spa Manager1 Head therapist4 Therapist

Sub total

POMEC1 Engineer 2,500.00 30,000.00 1 Technician 1,500.00 18,000.00

Sub total 4,000.00 48,000.00

HR

1 HR Manager 4,000.00 48,000.00 1 HR Assistant 1,800.00 21,600.00

Sub total 5,800.00 69,600.00

A&G

1 General Manager 10,000.00 120,000.00 1 Executive Assistant Manager 4,500.00 54,000.00 1 Financial Controller 5,000.00 60,000.00 1 Assistant Chief Accountant 2,500.00 30,000.00 1 IT Supervisor 2,800.00 33,600.00 2 Storekeeper 2,400.00 28,800.00 1 Clerk 1,000.00 12,000.00

Sub total 28,200.00 338,400.00 166

Sub total 227,600.00 2,731,200.00 Related expenses 51,473.01 617,676.07 TOTAL 279,073.01 3,348,876.07

Payroll taxes & benefits 629,609.83 65.44%

FICA/Medicare 7.65% of gross payroll 208,936.80 FICA/Medicare on tips 7.65% of 15% of sales 208,936.80 FUTA 0.80% up to 7K per EE per year 9,464.00 SUI 4.03% up to 8.5K per EE per year 57,890.95 MCTMT 0.34% of gross payroll 9,286.08 Worker's comp 2.10% of gross payroll 57,355.20 Disability insurance 60 per EE 10,140.00 Health Insurance 400 10 12 67,600.00

Total 629,609.83

Union provision $136,560Total with Union $766,170

Spa Pro Forma

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 86% 86% 86% 86% 86% 86% 86% 86% 86% 86% 24,528 24,528 24,528 24,528 24,528 24,528 24,528 24,528 24,528 24,528 36,792 36,792 36,792 36,792 36,792 36,792 36,792 36,792 36,792 36,792 20% 22% 25% 25% 26% 26% 26% 27% 27% 27% 20% 25% 27% 29% 30% 32% 32% 30% 32% 32% 20 22 24 27 29 32 35 39 43 47 10 11 12 13 15 16 18 19 21 24 $150.00 $157.50 $165.38 $173.64 $182.33 $191.44 $201.01 $211.07 $221.62 $232.70 $50.00 $52.00 $54.00 $56.00 $58.00 $60.00 $60.00 $58.00 $60.00 $60.00 $15.00 $15.50 $16.00 $16.50 $17.00 $17.50 $18.00 $18.50 $19.00 $19.50 $11.00 $11.22 $11.44 $11.67 $11.91 $12.14 $12.39 $12.64 $12.89 $13.15

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 5 Year 6 Year 7 $1,103,760 $1,274,843 $1,521,119 $1,597,175 $1,744,115 $1,831,321 $1,922,887 $2,096,687 $2,201,521 $2,311,597 $367,920 $478,296 $536,427 $597,502 $640,181 $706,406 $706,406 $640,181 $706,406 $706,406 $1,095,000 $1,264,725 $1,460,757 $1,687,175 $1,948,687 $2,250,733 $2,599,597 $3,002,535 $3,467,927 $4,005,456 $187,500 $208,780 $238,491 $272,056 $309,950 $352,702 $387,972 $412,543 $469,446 $516,391

$2,754,180 $3,226,644 $3,756,795 $4,153,908 $4,642,933 $5,141,163 $5,616,862 $6,151,945 $6,845,301 $7,539,850 $219,876 $249,926 $288,496 $312,086 $344,315 $373,146 $404,970 $446,950 $486,059 $529,364 $121,092 $148,250 $164,231 $181,261 $195,051 $214,379 $225,949 $229,340 $252,578 $267,915

$340,968 $398,176 $452,727 $493,347 $539,367 $587,525 $630,918 $676,291 $738,637 $797,279 $2,413,212 $2,828,468 $3,304,068 $3,660,562 $4,103,566 $4,553,637 $4,985,944 $5,475,655 $6,106,664 $6,742,571

344,208.00 $361,418 $379,489 $398,464 $418,387 $439,306 $461,272 $484,335 $508,552 $533,980 $2,500 $2,550 $2,601 $2,653 $2,706 $2,760 $2,815 $2,872 $2,929 $2,988 $2,500 $2,550 $2,601 $2,653 $2,706 $2,760 $2,815 $2,872 $2,929 $2,988 $3,000 $3,060 $3,121 $3,184 $3,247 $3,312 $3,378 $3,446 $3,515 $3,585 $3,200 $3,264 $3,329 $3,396 $3,464 $3,533 $3,604 $3,676 $3,749 $3,824 $2,500 $2,550 $2,601 $2,653 $2,706 $2,760 $2,815 $2,872 $2,929 $2,988

$3,000 $3,060 $3,121 $3,184 $3,247 $3,312 $3,378 $3,446 $3,515 $3,585

$800 $816 $832 $849 $866 $883 $901 $919 $937 $956

$105,000 $107,100 $109,242 $111,427 $113,655 $115,928 $118,247 $120,612 $123,024 $125,485

$449,208 $468,518 $488,731 $509,891 $532,042 $555,235 $579,519 $604,947 $631,576 $659,464

$1,964,004 $2,359,950 $2,815,337 $3,150,671 $3,571,524 $3,998,402 $4,406,425 $4,870,707 $5,475,088 $6,083,107

Spa Payroll assumptions

1 Spa Manager Hourly $ Monthly Comission Annually1 Head Therapist 5500 660008 Therapists 12 1152 1536 322561 Receptionist 7.5 5760 11616 208512

10 960 2160 3744013372 15312 344208

Assumptions

· Substantial Leadership Team – dynamic proven patterns of success · Exceptional Business Model – sustainable, innovative, exceptional · Extraordinary Market Opportunity – timely and timeless concepts · Perfect Timing – extraordinary value unexpected at these prices point · Design – an environment that moves you

Great Design, game changing F&B and

excellence in operations are the three main

drivers which result in higher revenue.

Conclusion

NEW YORK

HOSPITALITY GROUP

MerchanT

© 2012 MERCHANT HOSPITALITY GROUP

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