The agreement was approved by both companies' boards of directors.

The companies formed a strategic alliance in October 1997, when Sunburst Hospitality, one of the country's leading hotel ownership and management companies, separated from Choice Hotels, the world's second largest hotel franchisor, in a tax-free spin-off.

The strategic alliance contemplated that all of the hotels which Sunburst developed would be licensed under one of Choice Hotels' seven franchise brands.

Under the terms of the new agreement, Choice will retain ownership of the MainStay Suites brand and Sunburst will commit to develop a total of 25 MainStay Suites hotels by October 2001.

The company previously had agreed to develop 15 MainStay Suites properties, all of which are either open, under construction or in development. This new agreement results in a settlement of current amounts outstanding between the two parties.

"We are pleased that our strategic alliance with Sunburst has been strengthened by this agreement, demonstrating our commitment to the extended stay segment and to excellent franchise relations with our largest development partner," said Charles A. Ledsinger, Jr.,
president and chief executive officer of Choice Hotels. "Sunburst has been an integral part of the successful launching of the MainStay Suites brand."

"This agreement further demonstrates our mutual commitment to offer a quality, high value extended-stay product that provides business travelers and families with home-like lodging in desirable locations," said Donald J. Landry, vice chairman and chief executive officer of Sunburst Hospitality. "It also underscores our belief that this lodging segment continues to hold great promise for the future."

In a related development, Sunburst has re-apppointed Stewart Bainum, Jr., to its board as Chairman, and his father, Stewart Bainum, has resigned from Sunburst's Board. "I am pleased that Choice and Sunburst have resolved outstanding issues and strengthened their
strategic alliance agreement. This is a win-win result for these companies," said Stewart Bainum, Jr.

Choice Hotels International franchises more than 4,000 hotels open and under development in 33 countries and marketed under the brand names Comfort, Quality, Clarion, Sleep Inn, Econo Lodge, Rodeway Inn and MainStay Suites.

Sunburst Hospitality Corp., is a leading independent hotel owner/operator with 96 hotels in 27 states across the United States. Sunburst is also the number one owner/developer of MainStay Suites mid-priced, extended stay hotels.