Common use of Modification of Applicable System Clause in Contracts

Modification of Applicable System. (i) Starwood may from time to time change, add to or remove parts of the Applicable System (including the Standards and Policies) to respond to market trends, customer demands, economic conditions, technological advances and Applicable Law or for other reasons, and Vistana, at its expense, shall implement or comply with such modifications to the extent applicable to the Licensed Business and with appropriate modifications to reflect appropriate differences between hotel service levels and service levels applicable to the Licensed Business. Starwood shall provide Vistana with notice of any modifications to the Applicable System, in a manner consistent with the manner in which such notice is given to substantially all of the Branded Starwood Lodging Facilities or a category thereof in which the affected Licensed Vacation Ownership Properties would be included if they were Branded Starwood Lodging Facilities; provided, however, that if Vistana, in good faith, objects to the applicability of such modifications to the Licensed Business, it shall promptly notify Starwood thereof and the parties shall discuss the matter in good faith and attempt to resolve such dispute. If the parties cannot resolve such dispute within fifteen (15) Business Days, either party may refer such dispute for Expert resolution pursuant to Section 22.6. (ii) Starwood may grant a variance or exemption from any Standards and Policies based on any conditions that Starwood in its sole discretion deems to be of importance to the operation of a particular Licensed Vacation Ownership Property or category of property, including the characteristics of a particular location or circumstance, differences from the Branded Starwood Lodging Facilities, business potential or Applicable Law. Except for those variances designated as “permanent variances” by agreement of Starwood and Vistana which require the agreement of both parties to revoke (including the list of “permanent variances” provided by Starwood to Vistana prior to the Effective Date), Starwood shall have no obligation to grant to Vistana the same or similar variance or exemption then-granted or previously granted to Vistana or any Starwood Lodging Facility. Vistana shall have no recourse against Starwood due to any variance or exemption granted to any Starwood Lodging Facility. (iii) For the avoidance of doubt, where a modification to the Applicable System would require Vistana to increase the maintenance fee assessment at any Licensed Vacation Ownership Property, then the implementation of such modification may be delayed until the next annual maintenance fee budget process at such Licensed Vacation Ownership Property; provided that an assessment that significantly increases the annual maintenance fee may need to be phased over multiple years to the extent reasonable under the circumstances, giving consideration to the amount to be collected; provided, however, that where the change is reasonably required to (a) comply with any Applicable Law, (b) avoid or minimize any risk of injury to individuals or damage to the applicable Licensed Vacation Ownership Property, or (c) avoid or minimize any risk to Starwood and its Affiliates of criminal or civil liability, Vistana shall be required to make or cause to be made such changes as soon as reasonably required by Starwood. Where implementation of any modification is delayed or takes place in phases as contemplated by this Section 7.1C(iii), Vistana shall comply with Starwood’s reasonable directions as to the priority that should be given to the implementation of such modifications. (iv) Vistana may, at the annual meeting between the parties described in Section 11.C, propose modifications to the Applicable System that would not impose an unreasonable burden or cost on Starwood or any of its Affiliates. Starwood shall determine whether or not to make such modifications and have the modifications become part of the Applicable System.