Food Service Operations Agrmt With Mobedshahi

FOOD SERVICE OPERATIONS AGREEMENT


This FOOD SERVICE OPERATIONS AGREEMENT ("Agreement") is made and entered into this 21 day of November, 1991 ("Effective Date") by and between MOBEDSHAHI HOTEL GROUP, INC., a California corporation ("MHG"), and IL FORNAIO (AMERICA) CORPORATION, a California corporation ("Restaurant").


RECITALS


A. Pursuant to the terms of that certain Hotel Operating Agreement, MHG has agreed to assist in the management, operation and promotion of that certain hotel located in the City of San Jose, California, commonly known as the Hotel St. Claire ("Hotel") .


B. Pursuant to the terms of that certain Restaurant Lease dated currently herewith (the "Restaurant Lease"), Il Fornaio has leased certain space in the Hotel for purposes of operating a first-class restaurant therein.


C. MHG now desires to retain the services of Il Fornaio for purposes of providing food and beverage services to guests and patrons of the Hotel, and Il Fornaio desires to provide such services to MHG, all upon the terms and conditions set forth hereinbelow.


NOW, THEREFORE, in consideration of the mutual covenants and promises set forth hereinbelow, the parties hereto agree as follows:


1. Definitions. For purposes of this Agreement, the
following terms shall have the meanings set forth
hereinbelow:


(a) "Banquet Areas" shall mean the Grand Ballroom, Meeting Facilities and Spartan Room.


(b) "Consultants" shall collectively refer to two (2) qualified and experienced restaurant and hotel consultants, one of which shall be selected by MHG (in its sole discretion) and one of which shall be selected by Restaurant (in its sole discretion).


(c) "Courtyard Area" shall mean the area of the ground floor of the Hotel designated as the "Courtyard Area" on the Site Plan.


(d) "Food Service Areas" shall mean the Courtyard Area, Lounge Area, and Banquet Areas.


(e) "Grand Ballroom" shall mean the area of ground floor of the Hotel designated as the "Grand Ballroom" on the Site Plan.


(f) "Gross Revenues" shall mean the gross selling price of all food, beverages, goods and services sold in connection with


-1- 2 the services to be provided by Il Fornaio under this Agreement, whether for cash or on credit (whether collected or not), together with all tips and gratuities received in connection with such services.


(g) "Hotel" shall mean that certain hotel located in the City of San Jose, California, commonly known as the Hotel St. Claire.


(h) "Lounge Area" shall mean the area of the ground floor of the Hotel designated as the "Lounge Area" on the Site Plan.


(i) "Major Renovation" shall mean any alteration, rehabilitation or replacement of any furniture, fixtures, equipment, and leasehold improvements costing in the aggregate more than Two Hundred Fifty Thousand Dollars ($250,000) during any 12-month period, which costs are, in accordance with generally accepted accounting principles, regarded as an expenditure for a "capital" item. The aforesaid costs shall include architectural, design and other professional fees incurred in connection with any such Renovation. A Major Renovation shall not include any of the initial renovation work of the Hotel carried out by Owner pursuant to the Ground Lease described in (k) below.


(i) "Meeting Facilities" shall mean the areas of the second floor of the Hotel designated as the "Meeting Facilities" on the Site Plan.


(k) "Owner" shall mean Hotel St. Claire Partners L.P., a California limited partnership, as tenant under that certain Ground Lease for the Hotel by and between the Redevelopment Agency of the City of San Jose, as landlord, and Owner, as tenant.


(1) "Required Service Date" shall mean the Commencement Date of the Restaurant Lease, as defined therein.


(m) "Restaurant Premises" shall mean the premises leased by Owner to Il Fornaio under the Restaurant Lease.


(n) "Site Plan" shall mean that certain site plan for the ground, second and top floors of the Hotel, a copy of which Site Plan is attached hereto as Exhibit "A."


(o) "Spartan Room" shall mean the area of the second floor of the Hotel designated as the "Spartan Room" on the Site Plan.


2. Food and Beverage Services.


(a) General. Commencing on the Required Service Date and continuing throughout the term of this Agreement, Il Fornaio shall have the sole and exclusive right to provide all food and beverage services to all guest rooms of the Hotel and to the Food


-2- 3 Service Areas, all upon the terms and conditions set forth hereinbelow.


(b) Room Service. Commencing on the Required Service Date and continuing throughout the term of this Agreement, Il Fornaio shall provide all food and beverage services required in connection with room service to all guest rooms of the Hotel, including, without limitation, the design and preparation of a menu reasonably acceptable to MHG, receiving and processing all orders from the guest rooms of the Hotel, purchasing and preparing all food and beverages ordered by such guests, delivering all food and beverages to the appropriate guest rooms, and picking-up all trays, plates and utensils from the guest rooms or hallways. Such food and beverage services shall include breakfast, lunch and dinner daily, and shall be provided on a twenty-four (24) hour basis. Services provided between 12:00 a.m. and 6:00 a.m. may be based upon a limited selection menu reasonably acceptable to MHG. For purposes of the preceding sentence, "limited selection" shall mean food and beverage items which (i) are delivered by employees of MHG, (ii) do not require a chef or cooking during the hours of 12:00 a.m. to 6:00 a.m., and (iii) are prepared and, if necessary, reheated in facilities located in the second floor food staging area. Il Fornaio shall also have the right to stock a mini-bar in each guest room of the Hotel for purposes of selling food and beverage items to guests of the Hotel, and all such sales shall be considered as "room service" to be provided by Il Fornaio under this Agreement.


(c) Food Service Areas. Commencing on the Required Service Date and continuing throughout the term of this Agreement, Il Fornaio shall provide all food and beverage services required in connection with the use and operation of the Food Service Areas, which services shall include, without limitation, the design and preparation of a menu or menus acceptable to MHG, receiving and processing all orders from the Food Service Areas, preparing and delivering all food and beverages to the Food Service Areas, and picking-up all trays, plates and utensils from the Food Service Areas. Food and beverage services to the Banquet Areas shall also be subject to Section 3 below.


(d) Licenses and Permits. Prior to the Required Service Date, Il Fornaio shall obtain all licenses and permits required to conduct the food and beverage services described hereinabove, including, without limitation, all food and liquor licenses. MHG agrees to reasonably cooperate with Il Fornaio in obtaining such licenses and permits in connection with the sale of alcoholic beverages to guests and patrons of the Hotel.


3. Banquet Areas. The following shall apply to the use and operation of the Banquet Areas:


(a) Scheduling. Commencing on the Required Service Date and continuing through the term of this Agreement, MHG shall, at six month intervals, provide a Banquet Area schedule to Il Fornaio,


-3- 4 which schedule shall set forth dates (during the applicable six (6) month period) for which MHG has reserved for itself the right to schedule uses of the Banquet Areas. In determining which dates MHG intends to reserve on any schedule, MHG shall utilize its reasonable discretion based upon then current conditions impacting the hotel and banquet business in Downtown San Jose. During a period covered by any such schedule, if any dates reserved by MHG on such schedule are not booked with actual events at least forty-five (45) days prior to such date, then such date shall be available for scheduling by either Il Fornaio or MHG. Subject to the schedule provided by MHG, Il Fornaio shall provide services in connection with the scheduling of events in the Banquet Areas of the Hotel. In scheduling events for the Banquet Areas, Il Fornaio's staff shall coordinate with the staff of MHG to attempt to maximize the revenues of the Hotel and of the food and beverage operations conducted therein.


(b) Duties. As to any and all events in the Banquet Areas (whether scheduled by Il Fornaio or MHG), Il Fornaio shall, pursuant to its obligations in Section 2(c) above, provide for the preparation, service, cleanup and billing for all food and beverage provided in connection with such events. For all events in the Banquet Areas (whether scheduled by Il Fornaio or MHG), MHG shall provide for the set up of tables, chairs and other necessary furnishings and equipment, and shall provide for the break down of all such items following such events, which break down shall include the cleanup of the Banquet Areas following removal of Il Fornaio's food and beverage dishes, utensils, trays, and related services items.


4. Maintenance and Repair Services. Commencing on the Required Service Date and continuing throughout the term of this Agreement, Il Fornaio shall maintain and repair the Food Service Areas and the public restrooms located on the second floor of the Hotel in a first-class condition, reasonable wear and tear excepted. In the event that Il Fornaio fails to maintain and repair the Food Service Areas and/or such public restrooms in such condition, MHG shall have the right to maintain and repair the same and, upon written demand by MHG, Il Fornaio shall reimburse MHG for ninety percent (90%) all costs and expenses incurred in connection therewith. The cost of such maintenance and repair services shall, during the term of this Agreement, be paid for by MHG, as to ten percent (10%), and by Il Fornaio, as to ninety percent (90%).


5. Refurbishment. If, during the initial term of the Restaurant Lease, any renovation is required to be made to the Food Service Areas in order to maintain said areas in a first-class condition, the cost thereof shall be paid for by MHG, as to ...