Document:

<PAGE>

                      SECOND OMNIBUS AMENDMENT AGREEMENT

          THIS SECOND OMNIBUS AMENDMENT AGREEMENT (this "Agreement") is made
this 29th day of February, 2000 by and between CHOICE HOTELS INTERNATIONAL,
INC., a Delaware corporation ("Choice"), and SUNBURST HOSPITALITY CORPORATION, a
Delaware corporation ("Sunburst").

          WHEREAS, in connection with the spin-off of Choice by Sunburst (the
"Spin-off"), Choice and Sunburst entered into a Strategic Alliance Agreement
(the "Strategic Alliance Agreement") dated October 15, 1997 pursuant to which,
among other things, the parameters of the operating relationship between Choice
and Sunburst with regard to matters of mutual interest are set forth;

          WHEREAS, in connection with the Spin-off, Choice and Sunburst also
entered into a Noncompetition Agreement dated October 15, 1997 (the
"Noncompetition Agreement");

          WHEREAS, in connection with the Spin-off, Choice and Sunburst entered
into a Distribution Agreement dated October 15, 1997 pursuant to which, among
other things, Choice agreed to loan to Sunburst $115,000,000 which was evidenced
by a subordinated note (the "Term Note") with an aggregate principal amount of
$115,000,000 and a maturity date of five years;

          WHEREAS, the Strategic Alliance Agreement contains a form of
Franchising Agreement (the "Franchising Agreement") as Exhibit A to be entered
                                                       ---------
into by and between Choice and Sunburst whenever Choice is to brand any hotel or
lodging property of any kind that Sunburst develops or acquires and intends to
franchise during the term of the Strategic Alliance Agreement;

          WHEREAS, Choice and Sunburst have entered into numerous franchising
agreements substantially in the form of the Franchising Agreement;

          WHEREAS, Choice and Sunburst entered into an Omnibus Amendment
Agreement (the "First Omnibus Amendment Agreement" and, together with this
Agreement, the Strategic Alliance
<PAGE>

                                      -2-

Agreement, the Noncompetition Agreement, the Term Note and the franchising
agreements entered into between Franchising and Realco prior to, on or after the
date hereof, the "Transaction Documents") dated December 28, 1998, pursuant to
which, among other things, Choice and Sunburst agreed to amend the Strategic
Alliance Agreement, the Term Note and the aforementioned franchising agreements;

          WHEREAS, Choice and Sunburst desire to further amend the Strategic
Alliance Agreement, the aforementioned franchising agreements and the Term Note;
and

          WHEREAS, Choice and Sunburst desire to terminate the Noncompetition
Agreement;

          NOW, THEREFORE, Choice and Sunburst agree as follows:

                                  ARTICLE ONE

                  AMENDMENTS TO STRATEGIC ALLIANCE AGREEMENT
                          AND FRANCHISING AGREEMENTS

          Section 1.1.   Definitions.  Any capitalized term used within this
                         -----------
Article One and not defined within this Agreement, will have the meaning
ascribed to such term in the Strategic Alliance Agreement.

          Section 1.2.   Term.  Section 2.1 of the Strategic Alliance Agreement
                         ----
is hereby amended and restated as follows:

          This Agreement shall go into effect on the date of the Distribution
     (the "Effective Date") and shall continue in force until October 15, 2002
     (the "Expiration Date"), except for Section 7.2 and Sections 1.6 and 1.7 of
     the Second Omnibus Amendment Agreement which shall survive so long as any
     franchising agreements between Realco and Franchising are in effect. This
     Agreement may be renewed upon the mutual consent of the Parties.
<PAGE>

                                      -3-

          Section 1.3.   Elimination of Right to First Refusal in Strategic
                         --------------------------------------------------
Alliance Agreement.  The Strategic Alliance Agreement is hereby amended such
------------------
that Sections 3.2, 3.3, 3.4, 3.5 and 3.6 are deleted in their entirety and the
following new Section 3.2 is hereby inserted as follows:

          3.2  Until the Expiration Date, Realco shall give Franchising written
     notice at least fourteen days prior to executing a franchise application
     with a third party with respect to the franchising of a hotel or lodging
     property. Such written notice shall include a summary term sheet of the
     proposed arrangement with the third party. Franchising shall have the
     opportunity to present Realco with a plan to brand the hotel or lodging
     property with one of its brands provided that Realco shall have no
     obligation to enter into an agreement with Franchising to use any of its
     brands on the hotel or lodging property.

          Section 1.4.   Development.  Section 4 of the Strategic Alliance
                         -----------
Agreement is hereby amended and restated in its entirety as follows:

          4.   Development
               -----------

          4.1.  Realco and Franchising are currently in the midst of a program
     under which Realco has developed the twenty-one MainStay Suite Hotels
     listed on Appendix I to the Second Omnibus Amendment Agreement and which
               ----------
     are franchised by Franchising. Realco agrees that it will continue to
     develop at least four additional MainStay Suite Hotels so that it will have
     opened and continue to operate no fewer than a total of twenty-five
     MainStay Suite Hotels prior to the Expiration Date (the "MainStay Quota").
     For purposes of Sections 4.1 and 4.2, the following shall be included in
     the MainStay Quota notwithstanding Realco's transfer of such hotels prior
     to the Expiration Date:

          (a)  The three MainStay Suites properties (the "Put Call Properties")
     which are subject to a Put Call Agreement between Realco and Franchising;
<PAGE>

                                      -4-

          (b)  The two MainStay Suites properties identified in Appendix III to
                                                                ------------
     the Second Omnibus Amendment Agreement; and

          (c)  Any MainStay Suite property sold, transferred or conveyed by
     Realco if such property is relicensed by the new owner or transferee as a
     MainStay Suites under market terms acceptable to Franchising.

          4.2.  Until the MainStay Suite Hotels subject to the MainStay Quota
     are Developed(as defined below), expenditures by Realco (or any of its
     subsidiaries or affiliates) of cash or other assets, or agreements,
     understandings or commitments for the same (whether binding, contingent,
     conditional or otherwise), in connection with or related to the development
     of any hotel or lodging property other than a MainStay Suite Hotel,
     including without limitation, by way of acquisition of any property or any
     capital stock (but excluding a stock for stock acquisition or merger) or
     assets of any person or entity that directly or indirectly owns, operates
     or manages a hotel or lodging property (collectively, "Hotels
     Expenditures") shall not exceed the aggregate amount spent by Realco in
     connection with or related to the development of MainStay Suite Hotels
     (collectively, "MainStay Expenditures"). The ratio of Hotel Expenditures to
     MainStay Expenditures shall be measured on a bi-annual, cumulative
     aggregate basis. Within thirty days after the end of such bi-annual period,
     Realco will deliver to Franchising a statement detailing (i) all Hotel
     Expenditures made by Realco during such period, (ii) all MainStay
     Expenditures made by Realco during such period, and (iii) outstanding
     agreements, understandings and commitments for the same. "Developed" shall
     mean either: (i) that, on or before April 15, 2001, three of the remaining
     four MainStay Suites to be built to satisfy the MainStay Quota are open and
     operating and the fourth has commenced construction; or (ii), if the
     conditions of clause (i) are not satisfied, then all four of the remain-
<PAGE>

                                      -5-

     ing MainStay Suites to be built to satisfy the MainStay Quota are open and
     operating.

          Section 1.5.   Dispute and MainStay Brand Issues Resolution.  The
                         --------------------------------------------
Strategic Alliance Agreement is hereby amended by retitling Section 7 as
"Dispute and Brand Issue Resolution" and amending and restating Sections 7.1 and
7.2 in their entitety as follows:

          7.1.  Realco and Franchising agree to use their commercially
     reasonable best efforts to address the brand issues identified on Appendix
                                                                       --------
     II to the Second Omnibus Amendment Agreement within the time frames set
     --
     forth therein. Realco and Franchising agree to use their commercially
     reasonable best efforts to have their respective designated representatives
     meet once every two weeks for six months from February 15, 2000 to discuss
     ongoing matters with respect to the MainStay Suite Hotel brand. At the end
     of the initial six month period, either party may require such bi-weekly
     meetings to continue for an additional six month period and then once a
     month for the following year. The representatives shall be the Executive
     Vice President, Franchise Operations and the Senior Vice President,
     Marketing for Franchising and the Chief Executive Officer for Realco.

          7.2.  Arbitration.  Notwithstanding anything contained in the
                -----------
     Transaction Documents to the contrary, any claim arising out of or related
     to any of the Transaction Documents, which has not been resolved by mutual
     agreement of the parties after a written notice of the claim by the
     complaining party to the other party and a forty-five (45) day negotiation
     period in which the Parties try to resolve the claim, shall be finally
     settled by arbitration. Such arbitration shall be conducted in Bethesda,
     Maryland in accordance with the Commercial Rules of the American
     Arbitration Association then in effect, as modified or supplemented herein,
     or as the parties mutually agree otherwise. Notwithstanding the rules of
     the arbitral body, the Parties hereto agree (a) that any arbitration shall
     be presided over by a single arbitrator, who shall have been ad-
<PAGE>

                                      -6-

     mitted to the practice of law, and be in good standing or on retirement
     status in any of the fifty United States or the District of Columbia and
     have experience in hotel franchise matters, (b) that the arbitrator shall
     base his decision on the facts as presented into evidence, and (c) that the
     arbitrator shall prepare a written memorandum of decision setting forth the
     findings of fact and conclusions of law. The arbitrator shall be selected
     by the Parties. If they cannot agree on such selection within a thirty (30)
     day period, they shall ask the American Arbitration Association to appoint
     an arbitrator. The decision of the arbitrator shall be final, and judgment
     may be entered upon it in accordance with the applicable law in any court
     having jurisdiction. Any claim for relief made pursuant to this Agreement
     shall be made within one (1) year from the date upon which the claim arose.
     All costs of the arbitration shall be borne by the Party determined to be
     the losing Party by the arbitrator. For purposes of determining the
     prevailing and losing Party, the arbitrator may consider offers of
     settlement by either Party, or both of them. The Circuit Court of
     Montgomery County, Maryland shall have exclusive jurisdiction to enforce
     this arbitration provision, for injunctive relief in and of arbitration and
     for enforcement of any arbitration award.

          Section 1.6.   Liquidated Damages Provision in Franchising Agreements.
                         ------------------------------------------------------
Notwithstanding Section 3.1 of the Strategic Alliance Agreement and with
reference to Section 1.3 of the First Omnibus Amendment Agreement, as long as
Sunburst has not defaulted under the Term Note:

          (a) Notwithstanding the terms of any and all franchising agreements
     entered into prior to, on or after the date hereof by and between Choice
     and Sunburst (or any of their respective predecessors or affiliates)
     related to the twenty-five MainStay Suite Hotels subject to the MainStay
     Quota, Sunburst agrees that it shall not reflag any such MainStay Suite
     Hotel, through a sale or otherwise (except as provided in the Put Call
     Agreement), or seek termination of any such franchising agreement or fail
     to
<PAGE>

                                      -7-

     enter into a franchising agreement for any such hotels or allow any other
     brand to be flagged to any such hotel prior to October 15, 2002;
     provided, however, Sunburst may: (i) reflag, or permit the reflagging of,
     --------  --------
     up to two of the properties so identified on Appendix III to the Second
                                                  ------------
     Omnibus Amendment Agreement during such three year period or thereafter;
     and (ii) sell, transfer or convey any such MainStay Suites hotel if such
     property is relicensed by the new owner or transferee as a MainStay Suites
     under market terms acceptable to Choice. Upon an event specified in clause
     (i) or (ii) of the preceding sentence, Choice shall terminate the
     respective franchise agreements and waive any claim for damages against
     Sunburst caused by such reflagging, sale, transfer or termination including
     the obligation to pay liquidated damages. After October 15, 2002, Sunburst
     may reflag, or permit the reflagging of, any MainStay Suite Hotels and
     terminate any such franchising agreement and Choice shall waive any claim
     against Sunburst for damages caused by such reflagging or termination,
     including liquidated damages, if (x) Sunburst gives thirty days prior
     written notice to Choice and (y) Sunburst pays Choice $100,000 as a
     termination fee for each MainStay Suites Hotel, other than the two
     properties referred to in clause (i) above, that is to be reflagged or for
     which the franchising agreement is to be terminated. Choice and Sunburst
     acknowledge that if any or all of the Put Call Properties are transferred
     pursuant to the Put Call Agreement, that Choice shall terminate the
     respective franchise agreements and shall waive any claim against Sunburst
     for damages, including liquidated damages. Choice and Sunburst agree that
     irreparable damage would occur in the event any of the provisions of this
     Section 1.6(a) were not performed in accordance with the terms hereof and
     that Choice's remedy at law for any breach of Sunburst's obligations
     hereunder would be inadequate. Sunburst agrees and consents that temporary
     and permanent injunctive relief may be granted in any proceeding which may
     be brought to enforce any provision hereof without the necessity of proof
     of actual damage.
<PAGE>

                                      -8-

          (b)  Choice and Sunburst acknowledge that the reference in Section 1.3
     of the First Omnibus Amendment Agreement to the liquidated damages
     provision applicable to Sleep Inn franchise agreements is intended as a
     termination fee such that Sunburst has the right at any time on or after
     February 29, 2000 to terminate any such Sleep Inn franchise agreements upon
     payment to Choice of $100,000 per agreement and Choice shall waive any
     claim against Sunburst for damages caused by such termination, including
     liquidated damages.

          (c)  Choice and Sunburst acknowledge that pursuant to Section 1.3 of
     the First Omnibus Amendment Agreement, if Sunburst reflags a hotel or
     lodging property that is neither a Sleep Inn nor MainStay Suite Hotel and
     that hotel or lodging property is not sold by Sunburst within three years
     from the date it was flagged with a non-Choice brand, then on such third
     anniversary Sunburst shall pay Choice $100,000 in liquidated damages for
     each such reflagged hotel or lodging property and Choice shall waive any
     claim against Sunburst for damages caused by such reflagging, including
     liquidated damages.

          Section 1.7.   Franchise Fee Credits.  Notwithstanding anything
                         ---------------------
contained in any MainStay Suites franchising agreements entered into prior to,
on or after the date hereof by and between Choice and Sunburst (or any of their
respective predecessors or affiliates) Section 4 of each franchising agreement
is hereby amended to add new subsections as follows:

          (h)  On the date hereof Franchising shall establish an account to
     serve as a mechanism for administering the Shortfall Balance, as defined in
     and pursuant to this Section 4. The initial amount credited to the
     Shortfall Balance on the date hereof shall be $2,142,887 (the "Shortfall
     Amount"), which represents the amount by which an agreed upon target
     Cumulative EBITDA for the MainStay Suites hotels subject to the MainStay
     Quota (excluding the Put Call Properties) for the period from October 1,
     1996 through December 31, 1999 exceeds the actual Cumulative EBITDA for
     such period.
<PAGE>

                                      -9-

          (i)  For each year beginning January 1, 2001 until the Shortfall
     Freeze Date (as defined below), the Shortfall Balance shall be adjusted (an
     "Adjustment") by 50% of the amount, if any, by which the Target Cumulative
     EBITDA (as set forth on Appendix IV) for the preceding year exceeds the
                             -----------
     actual Cumulative EBITDA for the MainStay Suites Hotels subject to the
     MainStay Quota (exclusive of the Put Call Properties) for such year as
     finally determined pursuant to clause (j) below. Each year, on or prior to
     February 15 of such year, Realco shall determine the actual Cumulative
     EBITDA for the preceding year in a manner consistent with the calculation
     of the Target Cumulative EBITDA and whether an Adjustment is warranted and
     shall deliver written notice thereof to Franchising together with the
     monthly operating statements for each applicable hotel. From and after the
     earlier of February 28, 2010 and the first year in which no Adjustment is
     required pursuant to this clause (h) (the "Shortfall Freeze Date"), no
     further Adjustments shall be determined pursuant to this paragraph and the
     Shortfall Balance shall thereafter never be increased.

          (j)  The Shortfall Balance, if any, shall be applied by Realco as a
     credit against royalty, reservation and marketing fees ("Fees") payable to
     Franchising as follows:

               (1)  First, to Fees payable pursuant to the franchise agreements
                    related to the MainStay Suites Hotels subject to the
                    MainStay Quota for each month prior to the tenth anniversary
                    of the date of each such franchise agreement. The Fee credit
                    shall be applied no later than the fifteenth day of each
                    month against Fees payable as of the last day of the
                    preceding month; and

               (2)  Second, to Fees payable pursuant to franchise agreements for
                    MainStay Suite Hotels other
<PAGE>

                                      -10-

                    than those referred to in (i)(1) above or for any brand
                    developed by Franchising after the date hereof. The Fee
                    credit shall be applied no later than the fifteenth day of
                    each month against Fees payable as of the last day of the
                    preceding month.

     The Shortfall Balance shall immediately be reduced by the amounts used as
     Fee credits pursuant to this section. Any remainder of the Shortfall
     Balance shall carry forward until used.

          (k)  Franchising or its representatives shall have the right to review
     and audit the books and records of Realco for the purposes of determining
     the Shortfall Amount and the Fees payable in any particular month. If
     Franchising agrees with the Shortfall Amount determined by Realco, then
     that amount shall be deemed finally determined. In the event Franchising
     disagrees with the Shortfall Amount or the Fees payable as determined by
     Realco, then Franchising shall so notify Realco in writing within 10 days
     of receipt of notice from Realco of the Shortfall Amount. If Franchising
     and Realco are unable to agree in good faith by the tenth day of any month,
     then Franchising shall, within 10 days from its delivery of the notice to
     Realco, retain a firm of independent accountants to determine the Shortfall
     Amount and/or the Fees payable. The accountant shall deliver its
     determination no later than the last day of such month. The cost of such
     accountants shall be borne by Franchising unless the accountant's
     determination of the Shortfall Amount and/or Fees payable deviates by 5% or
     more from the amount determined by Realco, in which case Realco shall bear
     the cost. If Franchising and Realco agree with the accountants
     determination of the Shortfall Amount and/or the Fees payable, then that
     amount shall be deemed finally determined. If Franchising or Realco
     disagree with the accountants determination, then the parties shall settle
     the disagreement and the Shortfall Amount and/or the Fees payable shall be
     finally determined in accordance with the dispute resolution mechanism set
     forth in the Strategic Alliance Agreement, as amended. Realco agrees that
     it shall cooperate with
<PAGE>

                                      -11-

     Franchising and the accountant and provide them reasonable access to its
     books records and employees in connection with their review of the
     Shortfall Amount and/or the Fees payable.

          Section 1.8.   Elimination of Right to First Refusal in Franchising
                         ----------------------------------------------------
Agreements.  Notwithstanding anything contained in any franchising agreements
----------
entered into prior to, on or after the date hereof by and between Choice and
Sunburst (or any of their respective predecessors or affiliates), the provision
regarding the right of first refusal contained in each franchising agreement is
hereby deleted in its entirety.

                                  ARTICLE TWO

                            AMENDMENTS TO TERM NOTE

          Section 2.1.   Definitions.  Any defined term used within this Article
                         -----------
Two and not defined within this Agreement shall have the meaning ascribed to
such term in the Term Note (as amended).

          Section 2.2.   Asset Sale Proceeds.  Section 1.6 of the Term Note is
                         -------------------
hereby amended by deleting the section in its entirety and replacing it with the
following:

          Within fourteen (14) calendar days after the consummation of an Asset
     Sale involving the Put Call Properties, the Payor will pay to the Payee by
     wire transfer to the bank account designated by the Payee such aggregate
     principal amount of this Note as equals one hundred percent (100%) of the
     Asset Sale Proceeds.

          Section 2.3.   Event of Default.  Section 2 of the Term Note is hereby
                         ----------------
amended by adding the following after paragraph 2(e):

          (f)  A Change of Control of the Payor. For purposes of this paragraph,
a "Change of Control" shall mean:
<PAGE>

                                      -12-

          1.  Any "person" as such term is used in Sections 13(d) and 14(d) of
     the Securities Exchange Act of 1934, as amended (other than (i) the Payor,
     (ii) any trustee or other fiduciary holding securities under an employee
     benefit plan of the Payor, (iii) any corporations owned, directly or
     indirectly, by the stockholders of the Payor in substantially the same
     proportions as their ownership of stock of the Payor, or(iv) Stewart
     Bainum, his wife, their lineal descendants and their spouses (so long as
     they remain spouses) and the estate of any of the foregoing persons, and
     any partnership, trust, corporation or other entity to the extent shares of
     common stock (or their equivalent) are considered to be beneficially owned
     by any of the persons or estates referred to in the foregoing provisions of
     this subsection or any transferee thereof) becomes the "beneficial owner"
     (as defined in Rule 13d-3 under the Exchange Act)), directly or indirectly,
     of securities of the Payor representing 20% or more of the combined voting
     power of the Payor's then outstanding voting securities.

          2.  Individuals constituting the Board of Directors of the Payor on
     the date of this Agreement and the successors of such individuals
     ("Continuing Directors") cease to constitute a majority of the Board. For
     this purpose, a director shall be a successor if and only if he or she was
     nominated by a Board (or a Nominating Committee thereof) on which
     individuals constituting the Board on February 29, 2000 and their
     successors (determined by prior application of this sentence) constituted a
     majority;

          3.  The stockholders of the Payor approve a plan of merger or
     consolidation ("Combination") with any other corporation or legal person,
     other than a Combination which would result in stockholders of the Payor
     immediately prior to the Combination owning, immediately thereafter, more
     than sixty-five percent (65%) of the combined voting power of either the
     surviving entity or the entity owning directly or indirectly all of the
     common stock, or its equivalent, of the surviving entity; provided, how-
<PAGE>

                                      -13-

     ever, that if stockholder approval is not required for such Combination,
     the Change in Control shall occur upon the consummation of such
     Combination;

          4.  The Payor or an affiliate of the Payor engages in a "Rule 13e-3
     transaction" as defined in the Securities and Exchange Act of 1934, as
     amended.

          5.  The stockholders of the Payor approve a plan of liquidation of the
     Payor or an agreement for the sale or disposition (including through a
     sale/leaseback) by the Payor of more than 50% of the Payor's stock and/or
     assets, or accept a tender offer for more than 50% of the Payor's stock (or
     any transaction having a similar effect); provided, however, that if
     stockholder approval is not required for such transaction, the Change in
     Control shall occur upon consummation of such transaction.

          Section 2 shall be further amended by adding the following paragraph
immediately preceding the last paragraph of Section 2:

          If an Event of Default specified in Section 2(f) shall have occurred
     and be continuing, Payee may, at its option, by written notice to Payor and
     to Chase, declare the entire principal amount of this Note and the interest
     accrued thereon to be due and payable.

          Section 2.4.   Representation of Payor.   Section 6 of the Term Note
                         -----------------------
is amended by adding the following new provision:

          6.10.  Representation and Warranty of Payor.  The Payor hereby
                 ------------------------------------
     represents and warrants that the Lenders have consented to and approved the
     amendments to the Note contained in the Omnibus Amendment Agreement dated
     December 28, 1998 (as amended herein) and the Second Omnibus Amendment
     Agreement dated February 29, 2000. The Payor further represents and
     warrants that the Lenders have waived any default or event of default under
     the Credit Agreement or any other Senior Debt Document that may arise as a
     result
<PAGE>

                                      -14-

     of any payment under this Note in accordance with its terms, including
     without limitation pursuant to Section 1.6 hereof.

          Section 2.5.  Covenant of Payor.  Section 3.2 of the Term Note is
                        -----------------
amended by adding the following new provision:

          Payor further covenants and agrees that for so long as any
     indebtedness evidenced by this Note remains outstanding, Payor will not,
     without the written consent of Payee, enter into any agreement that
     restricts or prohibits any payment by Payor to Payee under the terms of
     this Note.

                                 ARTICLE THREE

                           NONCOMPETITION AGREEMENT

          Section 3.1.   Termination.  The Noncompetition Agreement is hereby
                         -----------
terminated and shall from and after the date hereof be of no further force or
effect.

                                 ARTICLE FOUR

                           MISCELLANEOUS PROVISIONS

          Section 4.1.   Conflicts.  In the event of any conflict between the
                         ---------
terms of this Agreement and the terms of the Strategic Alliance Agreement, any
franchising agreement entered into by and between Choice and Sunburst referred
to in this Agreement, the Term Note, the Noncompetition Agreement, the First
Omnibus Amendment Agreement and any other documents related thereto and executed
by one or more parties hereto in connection with any of the aforementioned
agreements, the terms and provisions of this Agreement shall control.

          Section 4.2.   Agreements Remain in Effect.  The Strategic Alliance
                         ---------------------------
Agreement, any franchising agreement en-
<PAGE>

                                      -15-

tered into by and between Choice and Sunburst referred to in this Agreement, the
First Omnibus Amendment Agreement and the Term Note shall remain fully effective
and are changed only as specifically provided herein and shall bind the parties
to each in all respects as originally contemplated.

          Section 4.3.   Counterparts.  This Agreement may be executed in one or
                         ------------
more counterparts, all of which taken together shall constitute one instrument.

          Section 4.4.   Board Approval.  This Agreement has been approved by
                         --------------
the Board of Directors of both Choice and Sunburst.

          IN WITNESS WHEREOF, intending to be legally bound hereby, the parties
hereto have executed this Agreement as of the day and year first written above.

CHOICE HOTELS INTERNATIONAL, INC.

 /s/ Joseph M. Squeri
---------------------------------------
Name:  Joseph M. Squeri
Title: Senior Vice President and Chief
       Financial Officer

SUNBURST HOSPITALITY CORPORATION

 /s/ Donald J. Landry
---------------------------------------
Name:  Donald J. Landry
Title: CEO<PAGE>

                                                                   EXHIBIT 10.24

February 3, 2000

Mr. Tom Baxter
219 Ravenscliff Road
St. David's, PA  19087

Dear Tom,

This is an historic day for Audible. I am extremely pleased to offer you the
position of Chief Executive Officer here at Audible, Inc., and to ask you to
join me in this great adventure. Everyone you've met here is deeply impressed
with your good humor, talent, creativity, your estimable credentials, your
record of success, and with your obvious passion for our cultural vision and
business potential. I am exceedingly confidant that you will take Audible to the
next level as we help create a new business ategory and help launch a new
medium.

Here is a summary of our employment offer, with details following:

o  You will become Chief Executive Officer, President, and a member of the Board
   of Directors -- and report to the Board of Directors.
o  You will be paid $250,000/year as a base salary with an annual bonus target
   of 50%, paid quarterly against your objectives.
o  You will receive 100,000 restricted shares of Audible @ $5 below the market
   price.
o  Subject to the conditions described below, you will be granted options to
   purchase 1,500,000 shares of Audible's common stock at a strike price equal
   to the closing price of ADBL on NASDAQ on the day before you commence work at
   Audible.
o  You will be enrolled in the company's various benefits programs.
o  You will agree to commence work part time no later than the week of February
   15th and full time by the end of the month.
o  This offer is good until 5PM Tuesday, February 8th.

Here are the details:

Stock Options: The common stock options granted to you (subject to approval of
the Board of Directors) will be pegged to an exercise price equal to the closing
price of ADBL on NASDAQ on the day before you commence work at Audible.

Vesting Schedule: A significant number of options will be Incentive Stock
Options (ISO's). This, up to the level at which the number of options exceed the
ISO limitation, in which case the remaining portion of the options will have to
be issued as Non-qualified Options. In any event, 12% of these options will vest
six months after you commence
<PAGE>

employment, and 2% will vest each month thereafter. You will have at least five
years to exercise these options.

Restricted Stock:  Your restricted shares, issued at $5 below the closing price
of ADBL on NASDAQ the day before you commence work at Audible, will begin
vesting immediately at rate of 4.16% per month. The purchase price of the shares
is payable in cash, by promissory note, or by a combination of both. Assuming
you remain an employee of the Company until all your restricted shares are fully
vested in two years, the company will provide a one-time bonus equal to the
accrued interest on the note.

Accelerated Vesting:  Our option agreement provides for automatic vesting of
50% of unvested options and shares in the event of a sale or merger of the
company prior to full vesting. It also provides that, at the time of the
transaction, additional accelerated vesting can be approved by the Board.

Quarterly Bonus:  We believe in a strong, results-oriented company culture and
to emphasize that, we have a performance-based, cash compensation plan for
senior managers. Every quarter you will propose, for approval by the
compensation of the Board of Directors, a set of measurable objectives for the
company. At the end of the quarter, and based on accomplishments against those
objectives and approval by the Board's compensation committee, you will be paid
a bonus.

Benefits:  The Company has a standard health plan and will cover 100% of your
premium and 50% of your dependents' premiums. The time-off policy is 15 days of
paid leave per year (sick, mental health, or vacation time) and paid holiday
days. There is also a dental plan. I realize that you will be taking a family
trip in March for a week, and we have also reached an understanding concerning
your time on site in Wayne. You have said that your normal workweek in Wayne
will run from Monday morning to Thursday night, with "virtual" management
persisting by phone and email thereafter. We will discuss payments - or a
payment allowance - for your apartment near our offices, and you can decide the
nature of this payment in light of your own analysis of our overall expenses.

The company will also pay 25% of your annual membership at a health club of your
choice, reasonably approved by Audible. The company also has a 401(k) plan,
which is 100% employee-funded and voluntary.

Non-Disclosure Agreement: All employees are required to execute the attached
non-disclosure agreement, a standard aspect of our hiring process. A copy is
attached.

That's it. I'm sure you know that this is a huge step for Audible - and for me.
Audible has already defined one of my most exhilarating experiences, and I've
been lucky enough to have had a few. As I have pledged verbally, this imminent
association means that I will stand ready to assist and continue to serve the
cause. I want you to know that aside the significant economic value your
leadership will create, I look forward to this association on a personal plane.
<PAGE>

Please countersign this letter and fax a copy back to Audible at our private fax
number -- 973-890-0178 (to my attention). I will then immediately fax back a
          ------------
signed executed copy of this agreement. I will be on the road Monday and Tuesday
(command performance with the President of Sanyo in LA). Back on the redeye on
Tuesday night.

ONWARD!

/s/ Donald Katz
-------------------------
Donald Katz
Chairman, Founder, and Acting CEO
Audible, Inc.

So agreed:

/s/ Thomas G. Baxter
-------------------------
Thomas G. Baxter

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