Purchase And Sale Agreement

Contract


                                                                   Exhibit 10.22


                           PURCHASE AND SALE AGREEMENT

        THIS PURCHASE AND SALE AGREEMENT (this "Agreement"),  dated as of August
12,  1999,  is  between  Strategic  Hotel  Capital   Incorporated,   a  Delaware
corporation  ("SHCI"),  and  Security  Capital  Group  Incorporated,  a Maryland
corporation ("Security Capital").

        WHEREAS,  Security  Capital is the  beneficial  owner of (i)  19,166,667
shares of common stock,  $0.01 par value per share (the "SHCI Stock"),  of SHCI,
(ii)  $125,000,000  original  principal amount of 7.5% Convertible  Subordinated
Debentures  due 2017 of SHCI  (the  "7.5%  Debentures")  and  (iii)  $50,000,000
original principal amount of 6.5% Convertible  Subordinated  Debentures due 2008
of SHCI (the "6.5%  Debentures"  and,  together  with the 7.5%  Debentures,  the
"Debentures"; and the SHCI Stock and the Debentures are collectively referred to
as the "Securities"); and

        WHEREAS,  Security  Capital desires to sell and SHCI desires to purchase
the Securities subject to the terms described herein.

        NOW,  THEREFORE,  in  consideration  of the  premises  and of the mutual
covenants,  agreements and warranties herein  contained,  and for other good and
valuable  consideration,   the  receipt  and  sufficiency  of  which  is  hereby
acknowledged, the parties hereto agree as follows:

        1.  PURCHASE AND SALE.  Subject to the terms and  conditions  herein set
forth,  SHCI  agrees to  purchase  and  Security  Capital  agrees to sell on the
Closing  Date (as  hereinafter  defined) the  Securities,  free and clear of all
liens, encumbrances,  claims and security interests, for the applicable Purchase
Price (as hereinafter  defined).  The Purchase Price shall be allocated first to
accrued  and  unpaid  interest  (including  Deferred  Interest  under  the  7.5%
Debentures) and principal on the Debentures and the balance to the SHCI Stock.


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        2.  EARNEST  MONEY;  DEPOSIT.  Concurrently  with the  execution of this
Agreement,  SHCI has deposited  $10,000,000  with First American Title Insurance
Company,  as escrow  agent (the "Escrow  Agent").  Such  amount,  together  with
interest thereon (the "Earnest Money") shall be held and disbursed by the Escrow
Agent in accordance with the Escrow  Agreement of even date herewith among SHCI,
Security Capital and the Escrow Agent (the "Escrow Agreement").  On September 8,
1999,  the Escrow Agent shall,  in  accordance  with the Escrow  Agreement,  pay
$10,000,000  of the Earnest Money to Security  Capital and shall pay the balance
of the  Earnest  Money to SHCI.  In the event  that the  Closing  shall not have
occurred on September 8, 1999,  SHCI shall pay to Security  Capital by 5:00 p.m.
EST on September 8, 1999 an additional amount equal to $10,000,000. In the event
that the  Closing  shall not have  occurred on or before  October 8, 1999,  SHCI
shall pay to Security  Capital by 5:00 p.m. EST on October 8, 1999 an additional
amount  equal to  $10,000,000.  In the  event  that the  Closing  shall not have
occurred on or before  November 8, 1999,  SHCI shall pay to Security  Capital by
5:00 p.m. EST on November 8, 1999 an  additional  amount  equal to  $10,000,000.
Each of the amounts to be paid by SHCI to Security Capital hereunder,  including
the portion of the Earnest Money paid to Security  Capital,  is referred to as a
"Deposit"  and  shall be  non-refundable  and  creditable  by SHCI  towards  the
Purchase  Price.  Each Deposit shall be paid by SHCI to Security  Capital on the
applicable  date by wire transfer of immediately  available funds to the account
specified by Security  Capital.  For the purposes of this Section 2, the Closing
shall be deemed not to have occurred on any specified date unless a Federal Wire
Transfer Reference Number shall have been received by SHCI by no later than 2:00
p.m. EST on such date.  If the Closing  shall fail to occur for any reason other
than the  failure of  Security  Capital to perform  its  obligations  under this
Agreement,  Security  Capital  shall be  entitled  to retain the  Deposit and to
pursue any and all remedies  available at law or in equity, it being agreed that
the retention of the Deposit does not represent liquidated damages and that such
amount shall be offset against any recovery by Security Capital. SHCI shall have
no right to  terminate  this  Agreement or to receive any  reimbursement  of the
Deposit  unless  Security  Capital shall fail to perform any of its  obligations
under  this  Agreement.  SHCI  will be  responsible  for and shall pay all taxes
relating  to  earnings on the  Earnest  Money for the period  during  which such
amounts are held in escrow pursuant to the terms of the Escrow Agreement.

        3. RELEASE.  Subject to the terms and conditions  herein set forth, SHCI
hereby  consents to the  execution  and  delivery  by  Security  Capital of this
Agreement  and waives any right of first offer or right of first  refusal it may
have with respect to the Securities to be sold pursuant to this Agreement.

        4. LLC CONVERSION.  The parties acknowledge that SHCI intends to convert
into a limited  liability company (the "LLC  Conversion").  SHCI agrees that the
LLC Conversion (whether such conversion is accomplished through a merger of SHCI
into  a  limited  liability  company  subsidiary  or  otherwise)  shall  not  be
consummated prior to the Closing hereunder.

        5. REPRESENTATIONS  AND WARRANTIES OF SHCI. SHCI hereby  represents and
warrants to Security Capital as follows:

           (a) DUE ORGANIZATION. SHCI is duly organized, validly existing and in
     good standing under the laws of the State of Delaware.


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           (b)  AUTHORIZATION. SHCI has the  requisite  power to enter into this
     Agreement and the Transaction Documents (as hereafter defined) and to carry
     out its  obligations  hereunder  and  thereunder.  This  Agreement  and the
     Transaction  Documents  have been duly  authorized,  and this Agreement has
     been  duly  executed  and  delivered  by SHCI and  constitutes  a valid and
     binding agreement  enforceable in accordance with its terms, and at Closing
     to the extent the SHCI Note is issued,  the  Transaction  Documents will be
     duly executed and delivered by SHCI and will  constitute  valid and binding
     agreements  enforceable  in accordance  with their terms,  except,  in each
     case,  to the extent  that  enforceability  may be  limited  by  applicable
     bankruptcy,   insolvency,   reorganization  or  other  laws  affecting  the
     enforcement  of  creditors'   rights  generally  or  by  general  equitable
     principles.  Subject to receiving the consent of the required lenders under
     the Credit  Agreement,  dated as of  September  26, 1997,  among SHCI,  SHC
     Funding  Incorporated and the lending  institutions named therein,  neither
     the execution and delivery of this Agreement or the Transaction  Documents,
     the consummation of the transactions  contemplated  hereby or thereby,  nor
     compliance  with the terms,  conditions or provisions of this  Agreement or
     the  Transaction  Documents  will  be a  violation  of any  of  the  terms,
     conditions or provisions of SHCI's  Certificate of  Incorporation or bylaws
     or of any  material  agreement  or  instrument  to  which  it or one of its
     subsidiaries is a party or by which it or one of its subsidiaries or its or
     their material properties may be bound, or constitute a default or create a
     right of termination or acceleration thereunder.

           (c) FINANCIAL  STATEMENTS. The consolidated  financial  statements of
     SHCI as at and for the period ending June 30, 1999 previously  delivered to
     Security  Capital are true,  complete and correct in all material  respects
     and fairly  present the  financial  condition  and results of operations of
     SHCI and its consolidated subsidiaries at such date and for such period.

        6. REPRESENTATIONS AND WARRANTIES OF SECURITY CAPITAL.  Security Capital
hereby represents and warrants to SHCI as follows:

           (a) DUE  ORGANIZATION. Security  Capital is duly  organized,  validly
     existing and in good standing under the laws of the State of Maryland.

           (b) AUTHORIZATION.  Security Capital has the requisite power to enter
     into  this  Agreement  and to carry  out its  obligations  hereunder.  This
     Agreement  has been duly  authorized,  executed  and  delivered by Security
     Capital and constitutes a valid and binding  agreement of Security  Capital
     enforceable  in  accordance  with its  terms,  except  to the  extent  that
     enforceability  may  be  limited  by  applicable  bankruptcy,   insolvency,
     reorganization or other laws affecting the enforcement of creditors' rights
     generally or by general  equitable  principles.  Neither the  execution and
     delivery of this Agreement,  consummation of the transactions  contemplated
     hereby,  nor  compliance  with the terms,  conditions or provisions of this
     Agreement,  will  be a  violation  of  any  of  the  terms,  conditions  or
     provisions  of Security  Capital's  charter or bylaws;  or of any  material
     agreement  or  instrument  to  which  Security   Capital  (or  one  of  its
     subsidiaries)  is a  party  or by  which  Security  Capital  (or one of its
     subsidiaries) or any of its (or their) material properties may be bound, or
     constitute  a default  or  create a right of  termination  or  acceleration
     thereunder.

           (c)  TITLE. Security  Capital,  directly  or  through a wholly  owned
     subsidiary,  owns the SHCI Stock and the Debentures,  in each case free and
     clear of all  liens,  encumbrances,  claims  and  security  interests,  but
     subject to the Shareholders' Agreement among SHCI, Security Capital and the
     other parties  identified  therein and other agreements between the parties
     imposing  obligations  on Security  Capital or one of its  subsidiaries  in
     respect of the Securities.

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           (d)  ACCESS TO INFORMATION. Security Capital  has been supplied with
     and has reviewed the most recent financial information of SHCI, and has had
     access  to such  information  as it deems  relevant  to  entering  into the
     Agreement and has had the  opportunity  to inquire of management of SHCI as
     to any of such information.

        7.  EXCLUSIVITY.  Prior to the Closing,  Security Capital shall not, and
shall ensure that its subsidiaries and  representatives  shall not,  directly or
indirectly,  solicit,  initiate or  encourage,  inquiries or proposals  from, or
provide any  confidential  information  to, or participate in any discussions or
negotiations  with,  any  person  (other  than  SHCI  and  its  representatives)
concerning any sale or other  disposition of any interest in SHCI (including the
Securities).  Security  Capital will promptly advise SHCI of, and communicate to
SHCI the terms and  conditions of (and the identity of the person  making),  any
such inquiry or proposal  received on or prior to the Closing.  Security Capital
has  previously  delivered  to SHCI a list of all  persons  with whom it has had
contacts of the nature described above.

        8. PUBLIC ANNOUNCEMENTS. The parties hereto will consult with each other
before issuing, and provide each other with the reasonable opportunity to review
and comment upon,  any press release or otherwise  making any public  statements
with respect to the transactions  contemplated by this Agreement,  and shall not
issue any such  press  release or make any such  public  statement  without  the
reasonable  consent of the other party,  except as may be required by applicable
law, by court process or by obligations  pursuant to any listing  agreement with
any national securities exchange or transaction  reporting system so long as the
other party is notified  promptly by the disclosing  party of such press release
or public  statement.  The parties  agree that the initial  press  release to be
issued with respect to the  transactions  contemplated  by this  Agreement  upon
execution of this  Agreement will be in the form agreed to by the parties hereto
prior to the execution of this Agreement.

        9.  CLOSING.  The purchase and sale of the  Securities  (the  "Closing")
shall  occur at 9:00 a.m.  (Central  time) on  September  8, 1999 or such  other
business  day on or prior  to  December  8,  1999 as SHCI  may,  in its sole and
absolute discretion,  determine with one business day's prior notice to Security
Capital  (such date being the "Closing  Date").  The Closing shall take place at
the  offices of SHCI at 77 West Wacker  Drive,  Suite  4600,  Chicago,  Illinois
60601, at which time the parties shall make the deliveries  described  below. At
the Closing,  in addition to any other documents  required to be delivered under
this Agreement, the parties hereto shall deliver the documents described below:

               (a)  DELIVERIES  BY SHCI.  At the Closing,  SHCI shall deliver or
        cause to be delivered the following to Security Capital:

                    (1) In  the  event   that   the  Closing  Date is  prior  to
               December 8, 1999, either:


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                              (i) the  amount  set  forth on  Schedule  I as the
                       purchase  price (the  "Purchase  Price")  for the Closing
                       Date by wire transfer of immediately  available  funds to
                       the  account  specified  by  Security  Capital,  less the
                       aggregate  amount of the Deposit  previously paid by SHCI
                       to Security Capital pursuant to Section 2 hereof; or

                              (ii) provided that SHCI and its subsidiaries shall
                       have  complied  with  each and every  covenant  contained
                       (directly  or by  incorporation)  in the  SHCI  Note  (as
                       hereafter  defined)  and that no Event of  Default  shall
                       have occurred thereunder,  all determined as if such SHCI
                       Note had been  executed  and  delivered  on,  and been in
                       effect  at all  times  since  the  date  hereof,  and not
                       otherwise, each of the following:

                                      (A) a promissory note in the amount of the
                              Purchase Price for the Closing Date from SHCI made
                              to the order of Security Capital, which promissory
                              note shall be in substantially the form of EXHIBIT
                              A attached hereto (the "SHCI Note");

                                      (B) a  pledge  agreement  in the  form  of
                              EXHIBIT B attached hereto (the "Pledge  Agreement"
                              and, together with the SHCI Note, the "Transaction
                              Documents"),  pursuant to which SHCI shall grant a
                              security  interest in the SHCI Treasury  Stock (as
                              hereafter defined) to Security Capital as security
                              for amounts owing under the SHCI Note;

                                      (C)   a   certificate   or    certificates
                              representing  the  19,166,667  treasury  shares of
                              SHCI  Stock  sold  by  Security  Capital  to  SHCI
                              hereunder,   which   certificates  shall  be  duly
                              endorsed in blank or  accompanied by duly executed
                              stock  powers  to  be  held  by  Security  Capital
                              pursuant  to  the  Pledge   Agreement  (the  "SHCI
                              Treasury Stock");

                                      (D) an opinion of Mayer, Brown & Platt, in
                              form  and  substance  reasonably  satisfactory  to
                              Security Capital, to the effect that the SHCI Note
                              has  been   duly   authorized   and   issued   and
                              constitutes the binding and enforceable obligation
                              (subject to customary  exceptions)  of SHCI and as
                              to  the  due  authorization,  binding  effect  and
                              enforceability  (subject to customary  exceptions)
                              of the Pledge Agreement; and


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                                      (E) financial  statements for SHCI and its
                              consolidated  subsidiaries  as  at,  and  for  the
                              period  ending as of, the most  recent  month end,
                              demonstrating  and accompanied by a certificate of
                              the Chief Financial Officer of SHCI in appropriate
                              form, dated as of the Closing Date, certifying to,
                              compliance with the covenants  contained (directly
                              or by  incorporation) in the SHCI Note and that no
                              Event of Default shall have occurred thereunder as
                              aforesaid in this clause  (ii),  and to the truth,
                              completeness,    correctness   and   fairness   of
                              presentation of such financial statements;

                    (2)  In  the event  that the Closing  Date is on December 8,
               1999,  the amount set forth on Schedule I as the  Purchase  Price
               for such Closing Date by wire transfer of  immediately  available
               funds to the  account  specified  by Security  Capital,  less the
               aggregate  amount  of the  Deposit  previously  paid  by  SHCI to
               Security Capital pursuant to Section 2 hereof:

                    (3)  a   certificate,   dated   the   Closing  Date,  of  an
               executive officer of SHCI,  certifying that, as of such date, the
               representations  and  warranties of SHCI are  accurate,  true and
               correct  with the same force and effect as though  made on and as
               of such date; and

                    (4)  a   certificate   of    SHCI's   secretary   certifying
               resolutions  of the board of  directors  of SHCI  approving  this
               Agreement and the transactions contemplated hereby (together with
               an incumbency and signature  certificate regarding the officer(s)
               signing on behalf of SHCI).

               (b)  DELIVERIES  BY SECURITY  CAPITAL.  At the Closing,  Security
        Capital shall deliver or cause to be delivered the following to SHCI:

                    (1)  a   certificate   or   certificates   representing  the
               19,166,667 shares of SHCI Stock, which certificates shall be duly
               endorsed in blank or accompanied by duly executed stock powers;

                    (2)  originally  executed  7.5%  Debentures in the aggregate
               principal  amounts of  $125,000,000,  which  debentures  shall be
               accompanied   by  duly  executed   instruments  of  transfer  and
               assignment;

                    (3)  originally  executed  6.5%  Debentures in the aggregate
               principal  amounts  of  $50,000,000,  which  debentures  shall be
               accompanied   by  duly  executed   instruments  of  transfer  and
               assignment;

                    (4)  the  resignations  of  William  D.  Sanders,  C. Ronald
               Blankenship  and Thomas B. Allin from SHCI's  board of  directors
               and any other position such persons may hold with SHCI;

                    (5)  a   certificate,   dated   the   Closing  Date,  of  an
               executive  officer of Security  Capital,  certifying  that, as of
               such date, the representations and warranties of Security Capital
               are accurate,  true and correct with the same force and effect as
               though made on and as of such date;

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                    (6)  a  certificate  of Security Capital's secretary (and of
               the secretary of the record owner of the  Securities)  certifying
               resolutions of the board of directors of Security Capital (and of
               such record owner)  approving this Agreement and the transactions
               contemplated  hereby  (together  with an incumbency and signature
               certificate   regarding  the  officer(s)  signing  on  behalf  of
               Security Capital or such record owner); and;

                    (7)  such  documents  and instruments as SHCI may reasonably
               request in connection with the LLC Conversion.

        10. CONDITIONS TO THE OBLIGATIONS OF SHCI. The obligations of SHCI under
this  Agreement  are  subject  to the  fulfillment  of  each  of  the  following
conditions:

            (a)  PERFORMANCE.  Security   Capital   shall   have  performed  and
        complied  in all  material  respects  with  all  agreements,  covenants,
        obligations and conditions required by this Agreement to be performed or
        complied with by it (it being agreed that any lien,  encumbrance,  claim
        or security  interest on the  Securities  (other  than as  described  in
        Section 6(c)) shall be deemed material for these purposes).

            (b) INJUNCTIONS.  No  preliminary or  permanent  injunction or other
        final order by any United States  federal or state court shall have been
        issued which prevents the consummation of the transactions  contemplated
        hereby.

        11. CONDITIONS TO THE OBLIGATIONS OF SECURITY  CAPITAL.  The obligations
of Security  Capital under this Agreement are subject to the fulfillment of each
of the following conditions:

            (a)  PERFORMANCE.  SHCI  shall  have  performed  and complied in all
        material  respects  with  all  agreements,  covenants,  obligations  and
        conditions  required by this  Agreement to be performed or complied with
        by it.

            (b)  INJUNCTIONS.  No  preliminary or  permanent injunction or other
        final order by any United States  federal or state court shall have been
        issued which prevents the consummation of the transactions  contemplated
        hereby.

        12. SURVIVAL.  The  representations  and warranties of the parties shall
survive the Closing for a period of six months from the Closing Date.

        13. INDEMNIFICATION.


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               (a) Each party (the "Indemnifying Party") agrees to indemnify the
        other party, and each of their affiliates and their respective officers,
        directors,  employees, agents and representatives (each, an "Indemnified
        Party" and together the "Indemnified  Parties")  against,  and agrees to
        hold each of them harmless from, any and all liabilities, losses, costs,
        claims, damages, penalties and expenses (including,  without limitation,
        reasonable  attorneys' fees and expenses and costs of investigation  and
        litigation)  ("Losses")  incurred  or  suffered  by them  relating to or
        arising out of or in connection  with any breach of or any inaccuracy in
        any  representation  or warranty made by the Indemnifying  Party in this
        Agreement  or any document  delivered  by it at the Closing  pursuant to
        Section 9 hereof.

               (b) As soon as is reasonably  practicable after becoming aware of
        a claim for  indemnification  under this Agreement the Indemnified Party
        shall promptly give notice to the  Indemnifying  Party of such claim and
        the amount the Indemnified  Party will be entitled to receive  hereunder
        from  the  Indemnifying   Party;   provided  that  the  failure  of  the
        Indemnified  Party to give notice  shall not  relieve  the  Indemnifying
        Party of its  obligations  hereunder  except to the extent (if any) that
        the  Indemnifying  Party  shall  have been  prejudiced  thereby.  If the
        Indemnifying  Party does not  object in writing to such  indemnification
        claim  within  30  calendar  days  of  receiving  notice  thereof,   the
        Indemnified  Party  shall  be  entitled  to  recover  promptly  from the
        Indemnifying Party the amount of such claim (but such recovery shall not
        limit  the  amount  of  any  additional  indemnification  to  which  the
        Indemnified  Party may be entitled  pursuant to this Agreement),  and no
        later  objection by the  Indemnifying  Party shall be permitted.  If the
        Indemnifying Party agrees that it has an indemnification  obligation but
        objects  that  it  is  obligated  to  pay  only  a  lesser  amount,  the
        Indemnified  Party shall  nevertheless  be entitled to recover  promptly
        from the Indemnifying Party the lesser amount,  without prejudice to the
        Indemnified Party's claim for the difference.

               (c) After receiving a claim as set forth above,  the Indemnifying
        Party may, at its own  expense,  (i)  participate  in the defense of any
        claim,   suit,  action  or  proceeding  and  (ii)  upon  notice  to  the
        Indemnified  Party  and  the  Indemnifying  Party's  delivering  to  the
        Indemnified  Party a written  agreement  that the  Indemnified  Party is
        entitled to  indemnification  for all Losses  arising out of such claim,
        suit,  action or  proceeding,  assume  the  defense  thereof;  provided,
        however,  that  (x)  the  Indemnifying  Party's  counsel  is  reasonably
        satisfactory to the Indemnified  Party, and (y) the  Indemnifying  Party
        shall thereafter consult with the Indemnified Party upon the Indemnified
        Party's  reasonable request for such consultation from time to time with
        respect to such claim,  suit, action or proceeding.  If the Indemnifying
        Party assumes such defense,  the Indemnified  Party shall have the right
        (but not the duty) to participate  in the defense  thereof and to employ
        counsel,  at its own expense,  separate from the counsel employed by the
        Indemnifying  Party.  If,  however,  the  Indemnified  Party  reasonably
        determines  in its  judgment  that  representation  by the  Indemnifying
        Party's counsel of both the Indemnifying Party and the Indemnified Party
        would  present  such  counsel  with a conflict  of  interest,  then such
        Indemnified  Party may employ separate counsel to represent or defend it
        in any such claim, action, suit or proceeding and the Indemnifying Party
        shall  pay the  reasonable  fees  and  disbursements  of  such  separate
        counsel.  Whether  or not the  Indemnifying  Party  chooses to defend or
        prosecute any such claim, suit, action or proceeding, all of the parties
        hereto shall cooperate in the defense or prosecution thereof.


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               (d) Notwithstanding  anything in this Section 13 to the contrary,
        neither the Indemnifying Party nor the Indemnified Party shall,  without
        the  written  consent of the other,  settle or  compromise  any claim or
        permit a default or consent to entry of any judgment unless the claimant
        and such party provide to such other party an  unqualified  release from
        all liability in respect of such claim.  Notwithstanding  the foregoing,
        if a settlement offer solely for money damages is made by the applicable
        third  party  claimant,   and  the   Indemnifying   Party  notifies  the
        Indemnified Party in writing of the Indemnifying  Party's willingness to
        accept the settlement offer and pay the amount called for by such offer,
        and the Indemnified Party declines to accept such offer, the Indemnified
        Party may continue to contest such claim,  free of any  participation by
        the Indemnifying  Party,  and the amount of any ultimate  liability with
        respect to such claim that the  Indemnifying  Party has an obligation to
        pay  hereunder  shall be  limited to the lesser of (i) the amount of the
        settlement  offer that the Indemnified  Party declined to accept or (ii)
        the  aggregate  Losses of the  Indemnified  Party  with  respect to such
        claim.  If the  Indemnifying  Party makes any payment on any claim,  the
        Indemnifying  Party shall be subrogated,  to the extent of such payment,
        to all rights and  remedies of the  Indemnified  Party to any  insurance
        benefits or other claims of the  Indemnified  Party with respect to such
        claim.

               (e) In the event  that the  Indemnifying  Party does not elect to
        assume the defense of any claim,  suit,  action or proceeding,  then any
        failure  of the  Indemnified  Party to defend or to  participate  in the
        defense of any such claim,  suit,  action or  proceeding or to cause the
        same to be  done,  shall  not  relieve  the  Indemnifying  Party  of its
        obligations hereunder.

        14. RELEASE AND WAIVER.  Effective upon the Closing of the  transactions
contemplated   hereby,  each  party  irrevocably  waives,   releases,   remises,
quitclaims,   discharges  and  covenants  not  to  sue  the  other  party,   its
predecessors,  subsidiaries, parents, and affiliates, and their respective past,
present, and future officers,  directors,  partners, members, agents, employees,
attorneys,  and each of them  regarding  any and all  rights,  claims,  demands,
liabilities,   benefits,  grievances  or  causes  of  action  that  it  and  its
successors,  assigns and  affiliates  may have  against the other party and such
persons  which have  resulted  from the  relationship  between the parties on or
prior to the Closing Date.

        15. TERMINATION OF SERVICE CONTRACTS. Each of the parties agrees that it
will take such actions as reasonably  necessary to cause any  agreement  between
SHCI and Security Capital and/or their respective  subsidiaries to be terminable
by SHCI on thirty (30) days' notice without any cost or penalty to SHCI.

        16.  SUCCESSORS AND ASSIGNS.  This Agreement  shall be binding upon, and
inure to the benefit of, the parties hereto and their respective heirs, personal
representatives, successors, assigns and affiliates.

4741664.1 90199 1440C 98504582
                                       9


        17. NOTICES.  Any notice or other  communication  provided for herein or
given  hereunder  to a party  hereto  shall be in writing  and shall be given by
delivery, by telex, telecopier or by mail (registered or certified mail, postage
prepaid, return receipt requested) to the respective parties as follows:

        If to SHCI:

               Strategic Hotel Capital Incorporated
               77 West Wacker Drive, Suite 4600
               Chicago, Illinois 60601
               Attention:     Patricia A. Needham
               Facsimile:     (312) 658-5799

               with a copy to:

               Mayer, Brown & Platt
               190 South LaSalle Street
               Chicago, Illinois 60603
               Attention:     Michael T. Blair
               Facsimile:     (312) 701-7711

        If to Security Capital:

               Security Capital Group Incorporated
               125 Lincoln Avenue
               Santa Fe, New Mexico 87501
               Attention:     Jeffrey A. Klopf
               Facsimile:     (505) 988-8920

               with a copy to:

               Wachtell, Lipton, Rosen & Katz
               51 West 52nd Street
               New York, New York 10019
               Attention:     Adam O. Emmerich
                              Robin Panovka
               Facsimile:     (212) 403-2000

or to such  other address with respect to a party as such party shall notify the
other in writing.

        18.  WAIVER.  No party may waive any of the terms or  conditions of this
Agreement except by a duly signed writing referring to the specific provision to
be waived.

        19. ENTIRE AGREEMENT.  This Agreement  constitutes the entire agreement,
and supersedes all other prior agreements and  understandings,  both written and
oral, among the parties hereto and their affiliates.

4741664.1 90199 1440C 98504582
                                       10


        20.  EXPENSES.  Except as otherwise expressly contemplated herein to the
contrary,  regardless  of  whether  the  transactions  contemplated  hereby  are
consummated,  each party hereto shall pay its own expenses incident to preparing
for,  entering into and carrying out this Agreement and the  consummation of the
transactions contemplated hereby.

        21.  CAPTIONS.  The  Section  and  Paragraph  captions  herein  are  for
convenience  of reference  only, do not  constitute  part of this  Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.

        22.  COUNTERPARTS.  This  Agreement  may be  executed  in  one  or  more
counterparts,  each of which shall be deemed an original  but all of which shall
constitute one and the same instrument.

        23.  GOVERNING LAW. This  Agreement  shall be governed by, and construed
and enforced in accordance with, the laws of the State of Delaware.

        24.  NO PRESUMPTION  AGAINST  DRAFTER.  Each of the  parties  hereto has
jointly  participated in the negotiation and drafting of this Agreement.  In the
event of an ambiguity  or a question of intent or  interpretation  arises,  this
Agreement shall be construed as if drafted jointly by each of the parties hereto
and no presumptions or burdens of proof shall arise favoring any party by virtue
of the authorship of any of the provisions of this Agreement.

                                    * * * * *







4741664.1 90199 1440C 98504582
                                       11



        IN WITNESS WHEREOF,  the parties hereto have caused this Agreement to be
executed and delivered as of the day and year first executed.

                                             STRATEGIC HOTEL CAPITAL
                                             INCORPORATED


                                             ___________________________________
                                             By:      /S/ LAURENCE S. GELLER
                                                     Laurence S. Geller
                                                     Chief Executive Officer






                                             SECURITY CAPITAL GROUP INCORPORATED



                                             ___________________________________
                                             By:      /S/ C. RONALD BLANKENSHIP
                                                     C. Ronald Blankenship
                                                     Vice Chairman











4741664.1 90199 1440C 98504582
                                       12


                                   SCHEDULE I

                                 PURCHASE PRICE
- ----------------------------------------------------------------------------- --------------------- CLOSING DATE PURCHASE PRICE - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- September 8, 1999......................................................... $329,322,222 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- September 9, 1999......................................................... 329,386,389 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- September 10, 1999........................................................ 329,450,556 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- September 13, 1999........................................................ 329,643,056 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- September 14, 1999........................................................ 329,707,222 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- September 15, 1999........................................................ 329,771,389 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- September 16, 1999........................................................ 329,835,556 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- September 17, 1999........................................................ 329,899,722 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- September 20, 1999........................................................ 330,092,222 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- September 21, 1999........................................................ 330,156,389 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- September 22, 1999........................................................ 330,220,556 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- September 23, 1999........................................................ 330,284,722 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- September 24, 1999........................................................ 330,348,889 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- September 27, 1999........................................................ 330,541,389 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- September 28, 1999........................................................ 330,605,556 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- September 29, 1999........................................................ 330,669,722 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- September 30, 1999........................................................ 330,733,889 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- October 1, 1999........................................................... 330,798,056 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- October 4, 1999........................................................... 330,990,556 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- October 5, 1999........................................................... 331,054,722 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- October 6, 1999........................................................... 331,118,889 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- October 7, 1999........................................................... 331,183,056 - ----------------------------------------------------------------------------- ---------------------
4741664.90199 1409C 98504582 I-1
- ----------------------------------------------------------------------------- --------------------- CLOSING DATE PURCHASE PRICE - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- October 8, 1999........................................................... 331,247,222 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- October 12, 1999.......................................................... 331,528,667 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- October 13, 1999.......................................................... 331,599,028 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- October 14, 1999.......................................................... 331,669,389 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- October 15, 1999.......................................................... 331,739,750 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- October 18, 1999.......................................................... 331,950,833 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- October 19, 1999.......................................................... 332,021,194 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- October 20, 1999.......................................................... 332,091,556 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- October 21, 1999.......................................................... 332,161,917 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- October 22, 1999.......................................................... 332,232,278 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- October 25, 1999.......................................................... 332,443,361 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- October 26, 1999.......................................................... 332,513,722 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- October 27, 1999.......................................................... 332,584,083 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- October 28, 1999.......................................................... 332,654,444 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- October 29, 1999.......................................................... 332,724,806 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- November 1, 1999.......................................................... 332,935,889 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- November 2, 1999.......................................................... 333,006,250 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- November 3, 1999.......................................................... 333,076,611 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- November 4, 1999.......................................................... 333,146,972 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- November 5, 1999.......................................................... 333,217,333 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- November 8, 1999.......................................................... 333,428,417 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- November 9, 1999.......................................................... 333,504,417 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- November 10, 1999......................................................... 333,580,417 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- November 11, 1999......................................................... 333,656,417 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- ---------------------
4741664.90199 1409C 98504582 I-2
- ----------------------------------------------------------------------------- --------------------- CLOSING DATE PURCHASE PRICE - ----------------------------------------------------------------------------- --------------------- November 12, 1999......................................................... 333,732,417 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- November 15, 1999......................................................... 333,960,417 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- November 16, 1999......................................................... 334,036,417 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- November 17, 1999......................................................... 334,112,417 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- November 18, 1999......................................................... 334,188,417 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- November 19, 1999......................................................... 334,264,417 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- November 22, 1999......................................................... 334,492,417 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- November 23, 1999......................................................... 334,568,417 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- November 24, 1999......................................................... 334,644,417 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- November 26, 1999......................................................... 334,796,417 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- November 29, 1999......................................................... 335,024,417 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- November 30, 1999......................................................... 335,100,417 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- December 1, 1999.......................................................... 335,176,417 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- December 2, 1999.......................................................... 335,252,417 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- December 3, 1999.......................................................... 335,328,417 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- December 6, 1999.......................................................... 335,556,417 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- December 7, 1999.......................................................... 335,632,417 - ----------------------------------------------------------------------------- --------------------- - ----------------------------------------------------------------------------- --------------------- December 8, 1999.......................................................... 335,708,417 - ----------------------------------------------------------------------------- ---------------------
4741664.90199 1409C 98504582 I-3 ESCROW AGREEMENT THIS AGREEMENT is entered into as of August 12, 1999, among Strategic Hotel Capital Incorporated, a Delaware corporation ("SHCI"), Security Capital Group Incorporated, a Maryland corporation ("Security Capital"), and First American Title Insurance Company, as escrow agent (the "Escrow Agent"). WHEREAS, pursuant to a Purchase and Sale Agreement of even date herewith (the "Purchase Agreement"), SHCI has agreed to purchase from Security Capital certain securities of SHCI owned by Security Capital; WHEREAS, pursuant to the Purchase Agreement, SHCI and Security Capital have agreed to appoint the Escrow Agent to hold the $10,000,000, plus applicable interest thereon (the "Earnest Money") to be deposited by SHCI under the Purchase Agreement; and WHEREAS, the Escrow Agent has agreed to act as escrow agent in connection with the foregoing. NOW, THEREFORE, it is agreed as follows: 1. For a period commencing on the date hereof and terminating as provided herein, the Escrow Agent shall act as escrow agent and agrees to receive and disburse the Earnest Money in accordance herewith. 2. The Earnest Money shall be deposited in an escrow account to be established hereunder for this purpose by the Escrow Agent. The Escrow Agent shall invest such funds deposited with it in short term bank time or demand deposits, short term certificates of deposit (including certificates of deposit or demand deposits of the Escrow Agent), short term United States government securities or other short term United States government guaranteed money instruments or other investments as may be directed by SHCI; provided, however, that such investments shall be made in a manner permitting necessary funds to be available for transfer within two business days after notice as provided herein and in no event later than 9:00 a.m. (Central time) on September 8, 1999. 3. At 9:00 a.m. (Central time) on September 8, 1999, the Escrow Agent shall pay $10,000,000 of the Earnest Money to Security Capital by wire transfer of immediately available funds to the account designated by Security Capital and shall pay the balance of the Earnest Money to SHCI by wire transfer of immediately available funds to the account designated by SHCI. 4732668.5 90199 1434C 98504582 -1- 4. SHCI and Security Capital agree that in the event of any controversy regarding the Earnest Money, unless mutual written instructions are received by the Escrow Agent directing the Earnest Money's disposition, the Escrow Agent shall not take any action, but instead shall await the disposition of any proceeding relating to the Earnest Money or, at the Escrow Agent's option, the Escrow Agent may interplead all parties and deposit the Earnest Money with a court of competent jurisdiction in which event the Escrow Agent may recover all of its court costs and reasonable attorneys' fees. SHCI or Security Capital, whichever loses in any such interpleader action, shall be solely obligated to pay such costs and fees of the Escrow Agent, as well as the reasonable attorneys' fees of the prevailing party in accordance with the other provisions of this Agreement. 5. The parties acknowledge that the Escrow Agent is acting solely as a stakeholder at their request and for their convenience, that the Escrow Agent shall not be deemed to be the agent of either of the parties, and that the Escrow Agent shall not be liable to either of the parties for any action or omission on its part taken or made in good faith, and not in disregard of this Agreement, but shall be liable for its negligent acts and for any loss, cost or expense incurred by SHCI or Security Capital resulting from the Escrow Agent's mistake of law respecting the Escrow Agent's scope or nature of its duties. SHCI and Security Capital shall jointly and severally indemnify and hold the Escrow Agent harmless from and against all costs, claims and expenses, including reasonable attorneys' fees, incurred in connection with the performance of the Escrow Agent's duties hereunder, except with respect to actions or omissions taken or made by the Escrow Agent in bad faith, in disregard of this Agreement or involving negligence on the part of the Escrow Agent. 6. Except as expressly provided herein to the contrary, the escrow fee charged by the Escrow Agent for holding the Earnest Money shall be shared equally by SHCI and Security Capital. The Escrow Agent, for services rendered under this Agreement, shall receive a fee, according to the standard fee schedule of the Escrow Agent for such escrow funds. 7. It is understood and agreed, further, that the Escrow Agent shall be protected in acting upon any notice, request, certificate, approval, consent or other paper believed by it to be genuine, signed by the proper party or parties and in accordance with the terms of this Agreement. 8. Any notice or other communication provided for herein or given hereunder to a party hereto shall be in writing and shall be given by delivery, by telex, telecopier or by mail (registered or certified mail, postage prepaid, return receipt requested) to the respective parties as follows: 4732668.5 90199 1434C 98504582 -2- If to SHCI: Strategic Hotel Capital Incorporated 77 West Wacker Drive, Suite 4600 Chicago, Illinois 60601 Attention: Patricia A. Needham Facsimile: (312) 658-5799 with a copy to: Mayer, Brown & Platt 190 South LaSalle Street Chicago, Illinois 60603 Attention: Michael T. Blair Facsimile: (312) 701-7711 If to Security Capital: Security Capital Group Incorporated 125 Lincoln Avenue Santa Fe, New Mexico 87501 Attention: Jeffrey A. Klopf Facsimile: (505) 988-8920 with a copy to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Attention: Adam O. Emmerich Robin Panovka Facsimile: (212) 403-2000 Escrow Agent: First American Title Insurance Company 30 North LaSalle Street, Suite 310 Chicago, Illinois 60602 Attention: Jim McIntosh Facsimile: (312) 553-0480 or to such other address with respect to a party as such party shall notify the other in writing. 4732668.5 90199 1434C 98504582 -3- 9. Nothing in this Agreement is intended to or shall confer upon anyone other than the parties hereto any legal or equitable right, remedy or claim. This Agreement shall be construed in accordance with the laws of the State of Illinois and may be modified only in writing. 10. This Agreement may be executed by the several parties hereto in separate counterparts, each of which shall be deemed to be an original and all of which taken together shall constitute one and the same instrument. 11. SHCI will be responsible for and shall pay all taxes relating to earnings on the Earnest Money for the period during which such amounts are held in escrow pursuant to the terms of this Agreement. * * * * * 4732668.5 90199 1434C 98504582 -4- IN WITNESS WHEREOF, the parties hereto have executed this Agreement, as of the date first above written by their respective duly authorized officers. FIRST AMERICAN TITLE INSURANCE COMPANY ___________________________________________ By: /s/ Philip N. Webb Name: Philip N. Webb Title: Vice President STRATEGIC HOTEL CAPITAL INCORPORATED ____________________________________________ By: /s/ Laurence S. Geller Laurence S. Geller Chief Executive Officer SECURITY CAPITAL GROUP INCORPORATED ___________________________________________ By: /s/ C.Ronald Blankenship C. Ronald Blankenship Vice Chairman