Office Sublease

OFFICE SUBLEASE



 
                                                                   Exhibit 99.08

                                OFFICE SUBLEASE

                                by and between

                        Choice Hotels Franchising, Inc.
                         a Delaware corporation (to be
                  renamed Choice Hotels International, Inc.)


                                  "Subtenant"

                                      and

                       Choice Hotels International, Inc.
                         a Delaware corporation (to be
                   renamed Sunburst Hospitality Corporation)


                                  "Sublessor"

                                      at

                     10720, 10750, and 10770 Columbia Pike
                            Silver Spring, MD 20901

 
                                OFFICE SUBLEASE


This Sublease is entered into this 15th day of October 1997, by and between
Choice Hotels International, Inc., a Delaware corporation (to be renamed
Sunburst Hospitality Corporation) ("Sublessor") and Choice Hotels Franchising
Inc., a Delaware corporation (to be renamed Choice Hotels International, Inc.)
("Subtenant").

                                   RECITALS
                                   --------

     WHEREAS, Sublessor entered into a lease agreement with Manor Care, Inc.
("Manor Care") for certain office space located at 10720, 10750 and 10770
Columbia Pike, Silver Spring, Maryland 20901 (the "Property") a copy which is
attached hereto and made a part of this Sublease as Exhibit "A", and referred to
as the Master Lease.

     WHEREAS, Sublessor is implementing a restructuring of itself in which,
among other things, it will is distribute to its shareholders all of the common
stock of Subtenant, pursuant to a Distribution Agreement dated as of October
1997, between Sublessor and Subtenant as a result of which Sublessor and
Subtenant will be separate publicly traded corporations.

     WHEREAS, Sublessor and Subtenant occupy office space together in the
Property, pursuant to the Master Lease, and desire to provide in this Sublease
for the continuing occupancy by Subtenant, after said stock distribution, of
certain office premises.

     WHEREAS, Sublessor and Subtenant each have determined that the rental and
other terms and conditions of this Sublease are commercially reasonable, based
upon market conditions in the Silver Spring, Maryland area.

     WHEREAS, Sublessor desires to sublease to Subtenant and Subtenant desires
to sublease from Sublessor a portion of the Property consisting of 74,074
rentable square feet in 10750 Columbia Pike and 23,203 rentable square feet in
10770 Columbia Pike (the "Demised Premises").

     WHEREAS, the parties desire to enter into this Sublease defining their
respective rights, duties, and liabilities relating to the Demised Premises.

     NOW, THEREFORE, WITNESSETH, in consideration of the mutual promises and
covenants contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and SUBJECT ENTIRELY
TO THE TERMS, DEFINITIONS, AND CONDITIONS OF THE MASTER LEASE, unless
hereinafter specifically altered, Sublandlord and Subtenant hereby agree as
follows:

     1.   LEASE OF PREMISES: Sublessor hereby leases to Subtenant and Subtenant
          ------------------                                                   
          hereby leases from Sublessor the Demised Premises subject to terms and

 
          conditions of this Sublease.

     2.   PROVISIONS CONSTITUTING SUBLEASE: This Sublease is subject to all the
          ---------------------------------                                    
          terms and conditions of the Master Lease, except as set forth in this
          Sublease.  Subtenant shall assume and perform for the benefit of
          Sublessor and Manor Care the non-monetary obligations of Sublessor as
          lessee in the Master Lease, to the extent the terms and conditions are
          applicable to the Demised Premises (including without limitation,
          insurance requirements), and pay rent as set forth in Section Four of
          this Sublease.  All defined terms in this Sublease shall have the same
          meaning as set forth in the Master Lease, except as set forth therein.
          Neither Sublessor or Subtenant shall commit or permit to be committed
          on the Demised Premises any act or omission that shall violate any
          term or condition of the Master Lease or breach the terms of the
          Master Lease or cause the Master Lease to be terminated.

     3.   LEASE TERM AND POSSESSION: The term of the Sublease shall commence on
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          October 15, 1997 and shall terminate on April 30, 1999.  Subtenant
          shall be given possession of the Demised Premises immediately upon
          execution of this Sublease.

     4.   RENT: Subtenant shall pay its proportionate share (as calculated
          -----                                                           
          below) of the Annual Base Rent (as defined in the Master Lease) in
          equal monthly installments in advance, without demand, deduction,
          counterclaim or offset, and without relief from valuation and
          appraisement laws or any other deduction for any reason whatsoever, on
          or before the first day of each and every calendar month during the
          term of this Sublease; provided, however, that if the Commencement
          Date shall be on a day other than the first day of the calendar month
          or the expiration date shall be a day other than the last day of the
          calendar month, the monthly rental installment for such first or last
          fractional month shall be prorated on the basis of the number of days
          during the month this Sublease was in effect in relation to the total
          number of days in such month.

          Subtenant's proportionate share of the Annual Base Rent shall be
          determined by dividing the total rentable square feet for which
          Sublessor is responsible under the Master Lease by the total rentable
          square feet occupied by Subtenant and multiplying the resulting
          quotient by the Annual Base Rent.  Subtenant shall pay its
          proportionate share directly to Manor Care.

     5.   USE: The Premises shall be used for general office uses and for no
          ---                                                               
          other purposes without the prior, express, written consent of
          Sublessor and Manor Care.

     6.   ASSIGNMENT AND SUBLETTING: Subtenant will not assign this Sublease or
          --------------------------                                           
          further sublet all or any part of the Demised Premises without the
          prior written consent of Sublessor (and the consent of the Manor Care,
          if required under the terms of the Master Lease), which consent may be
          withheld in Sublessor's sole and unfettered discretion.

 
     7.   INDEMNIFICATION: Subtenant agrees to defend, indemnify, and hold
          ----------------                                                
          Sublessor and Manor Care harmless from and against any and all claims
          arising or alleged to arise as a result of the occupancy or use of the
          Demised Premises, including common areas and other areas appurtenant
          to the Demised Premises, by Subtenant, its employees, agents,
          contractors or subcontractors.

          Sublessor agrees to defend, indemnify, and hold Subtenant harmless
          from and against any and all claims arising or alleged to arise from
          any act or omission of sublessor, its employees, agents, contractors,
          or subcontractors.

     8.   ADDITIONAL RENT: Subtenant shall pay to Manor Care all charges for
          ----------------                                                  
          additional rent or operating expenses attributable to the Demises
          Premises as specified in the Master Lease. Payment shall be made in
          advance on the first day of each calendar month of the term of this
          Sublease without deduction, offset, prior notice, or demand in lawful
          money of the United States.

     9.   ATTORNMENT: If the Master Lease terminates Subtenant will, if
          -----------                                                  
          requested, by Manor Care  attorn to and recognize Manor Care as
          Sublessor, provided that Manor Care shall have no liability or
          responsibility for any defaults of Sublessor under this Sublease.
          Sublessor hereby transfers to Manor Care all of its interest in the
          Sublease, effective upon an event of default of Sublessor.

     10.  NOTICES: All notices, demands, or other writings in this Sublease
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          provided to be given or made or sent, or which may be given or made or
          sent, by either party to the other, shall be deemed to have been fully
          given or made or sent when made in writing and hand delivered or
          deposited in the United States mail, registered and postage prepaid,
          and addressed as follows:

          TO SUBLESSOR:  10770 Columbia Pike
                         2nd Floor
                         Silver Spring, MD 20901
                         Attn: General Counsel

          TO SUBTENANT:  10750 Columbia Pike
                         Silver Spring, MD 20901
                         Attn: General Counsel

          TO LESSOR UNDER MASTER LEASE AGREEMENT:

                         Manor Care, Inc.
                         11555 Darnestown Road
                         Gaithersburg, MD 20878
                         Attn: General Counsel (Re: Real Estate)

          The address to which any notice, demand, other writing may be given or
          made or 

 
          sent to any party as above-provided may be changed by written notice
          given by the party as above-provided.

     11.  GOVERNING LAWS: It is agreed that this Sublease shall be governed by,
          ---------------                                                      
          construed, and enforced in accordance with the laws of the State of
          Maryland.

     12.  ENTIRE AGREEMENT: This Sublease shall constitute the entire agreement
          -----------------                                                    
          between the parties.  Any prior understanding or representation of any
          kind preceding the date of this Sublease shall not be binding upon
          either party except to the extent incorporated in this Sublease. This
          Sublease may not be modified except by a written instrument duly
          executed by the Sublessor, Subtenant and Manor Care.

     13.  ATTACHMENTS: The following Attachments are attached hereto and made a
          ------------                                                         
          part hereof.

          Exhibit A:  Master Lease
          Exhibit B:  Rules and Regulations

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
properly executed and sealed the day and year first above written.

ATTEST:                         SUBLESSOR

                                CHOICE HOTELS INTERNATIONAL, INC.
                                (To be renamed SUNBURST HOSPITALITY
                                CORPORATION)


/s/ Pamela Williams             By: /s/ Michael J. DeSantis
----------------------------        ---------------------------------

                                Title:  Senior Vice President
                                       ------------------------------

 
ATTEST:                         SUBTENANT:

                                CHOICE HOTELS FRANCHISING, INC.
                                (to be renamed CHOICE HOTELS
                                INTERNATIONAL, INC.)


 /s/ Pamela Williams            By: /s/ Michael J. DeSantis
---------------------------         ---------------------------------
 
                                Title:  Senior Vice President
                                       ------------------------------ 

Manor Care, Inc., lessor of the above Demised Premises held by tenant under the
Master Lease executed on November 1, 1996, hereby consents to the above
Sublease.

ATTEST:                         MANOR CARE, INC.

 /s/ Leo H. Phillips, Jr.       By:  /s/ James H. Rempe
---------------------------         ---------------------------------

                                Name:  James H. Rempe
                                      -------------------------------

                                Title:  Senior Vice President
                                       ------------------------------

Dated: October 15, 1997
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