Common use of Transient Rentals of Vacation Ownership Units Clause in Contracts

Transient Rentals of Vacation Ownership Units. A. Subject to Section 9.3, Vistana shall have the right, acting reasonably and in good faith, to engage in the transient rental of inventory of Licensed Vacation Ownership Units and Licensed Unbranded Vacation Ownership Units that: (i) are held for development and sale and owned by Vistana, its Affiliates or a Property Owners’ Association; (ii) are controlled by Vistana or its Affiliates as a result of Owner participation in programmatic elements of Licensed Vacation Ownership Interests and Licensed Unbranded Vacation Ownership Interests (e.g., exchange, banking, borrowing, Brand Loyalty Program trade, and similar programs); or (iii) are controlled by Vistana or its Affiliates or a Property Owners’ Association as a result of Owner default (e.g., maintenance fee defaults or financing defaults) pending foreclosure or cure in the ordinary course of business; in each case provided that (a) such transient rental would not violate any then-existing Permitted Territorial Restriction, and (b) Vistana does not list, promote, rent or sell any Licensed Vacation Ownership Unit or Licensed Unbranded Vacation Ownership Unit inventory for transient rental that is controlled or owned by Vistana or its Affiliates through any distribution channels of a Business Competitor; provided, however, that, for the purposes hereof, any distribution channels included within Starwood’s channel standards or otherwise approved by Starwood (including as set forth in Section 8.4 and as otherwise used by Vistana prior to the Effective Date) shall not be deemed distribution channels of a Business Competitor for the purposes of this Section 8.2A. B. With respect to New Properties, Starwood will evaluate the territorial or other contractual or legal restrictions applicable to Starwood or any of its Affiliates in connection with the Property Approval Request process for New Properties described in Section 5.2. If Starwood determines that any transient rental activity would violate any then-existing Permitted Territorial Restriction, then Starwood shall so notify Vistana, and Vistana shall not be permitted to engage in such transient rental activity to the extent such transient rental activity would violate such Permitted Territorial Restriction and for so long as such restriction remains in effect. C. If any transient rental activity of Licensed Vacation Ownership Units or Licensed Unbranded Vacation Ownership Units is materially greater than the transient activity (i) projected by Vistana as of the Effective Date with respect to any Licensed Vacation Ownership Properties under development as of the Effective Date, (ii) subsequently approved pursuant to Section 5.2, or (iii) occurring prior to the Effective Date, as applicable, in any such case as a result of: (a) a material change in Vistana’s sales and marketing activities at the relevant Licensed Vacation Ownership Property such that a significant number of Licensed Vacation Ownership Units or Licensed Unbranded Vacation Ownership Units which were intended or proposed to be promoted for sale are, instead, held and used for transient rental purposes on a sustained basis, or (b) any action by Vistana intended to materially alter how Licensed Vacation Ownership Units or Licensed Unbranded Vacation Ownership Units at such Licensed Vacation Ownership Property are used by the respective Owners so as to induce a substantial increase in inventory for transient rental on a sustained basis, such that it has become so prevalent that such Licensed Vacation Ownership Property’s operations are more consistent with a Hotel than a Vacation Ownership Property (in either case, “Prevalent Transient Rental Activity”), then Starwood shall so notify Vistana of such Prevalent Transient Rental Activity, and Vistana and Starwood shall meet within thirty (30) days of Starwood’s notice to discuss the nature of the concern and agree in good faith what, if any, corrective action should be taken to reduce the Prevalent Transient Rental Activity. If the parties cannot agree upon any corrective action within thirty (30) days after such meeting, or the agreed upon corrective action does not resolve such Prevalent Transient Rental Activity within the time period agreed by Starwood and Vistana, then, (x) upon written agreement between the parties, the fees payable by Vistana under this Agreement shall be adjusted to compensate Starwood for the Prevalent Transient Rental Activity, or (y) upon Starwood’s written notice, Vistana shall, at its expense, promptly take such actions as Starwood reasonably requires, which may include (1) reducing the Prevalent Transient Rental Activity at the relevant Licensed Vacation Ownership Property; provided that no such action would reasonably have an adverse effect on (A) Vistana’s ability to utilize the Licensed Vacation Ownership Units or Licensed Unbranded Vacation Ownership Units for preview stays for marketing purposes or (B) an Owner’s ability to occupy as a result of its interests therein, or to exchange through an approved Exchange Program its rights to use, the Licensed Vacation Ownership Units or Licensed Unbranded Vacation Ownership Units or (2) Deflagging the relevant Licensed Vacation Ownership Property pursuant to Section 20.1.