Exhibit 10.3

SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT

AND ESCROW INSTRUCTIONS

THIS SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS
(“Amendment”) is made by and between the entities executing on behalf of the
various selling entities listed on the signature page hereto (collectively,
“Seller”) and INNKEEPERS USA LIMITED PARTNERSHIP, a Virginia limited partnership
(“Purchaser”) as of this 7th day of August, 2006.

WHEREAS, Seller and Purchaser entered into that certain Purchase and Sale
Agreement and Escrow Instructions dated as of July 21, 2006 (the “Original
Agreement”);

WHEREAS, as of August 4, 2006, Seller and Purchase amended the Original
Agreement with a First Amendment to Purchase and Sale Agreement and Escrow
Instructions (the Original Agreement, as so amended, the “Agreement”); and

WHEREAS, Seller and Purchaser desire to further amend the Agreement pursuant to
the terms hereof.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Purchaser and Seller agree as follows:

1. Defined Terms. All capitalized terms used in this Amendment, unless otherwise
defined herein, shall have the meanings given such terms in the Agreement.

2. Indemnity Agreement. The following subsection is hereby added to Section 5.2
of the Agreement:

“(s) An Indemnity Agreement in the form attached hereto as Exhibit “M”.

3. Conflict. In the event of a conflict between terms and conditions of this
Amendment and the terms and conditions of the Agreement, the terms and
conditions of this Amendment shall control.

4. No Further Modification. Except as set forth in this Amendment, all other
terms and provisions of the Agreement shall be and remain unmodified and in full
force and effect.

5. Facsimile/Electronic Signature Counterparts. This Amendment may be executed
in facsimile or electronic pdf format counterparts, each facsimile or pdf
signature shall be deemed an original, and all such facsimile or pdf signature
counterparts, when taken together, shall constitute one agreement.

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IN WITNESS WHEREOF, Purchaser and Seller have executed this Second Amendment as
of the date set forth above.

 

SELLER: RLJ ONTARIO HOTEL, LP, a Delaware limited partnership By:   RLJ Ontario
Hotel General Partner, LLC, a Delaware limited liability company   By:  

/s/ Thomas J. Baltimore, Jr.

   

Thomas J. Baltimore, Jr.

President

RLJ ONTARIO HOTEL - LESSEE, L.P., a Delaware limited partnership By:   RLJ
Ontario Hotel Lessee General Partner, LLC, a Delaware limited liability company
  By:  

/s/ Thomas J. Baltimore, Jr.

    Thomas J. Baltimore, Jr.     President RLJ ANAHEIM SUITES HOTEL, L.P., a
Delaware limited partnership By:   RLJ Anaheim Suites Hotel General Partner,
LLC, a Delaware limited liability company   By:  

/s/ Thomas J. Baltimore, Jr.

   

Thomas J. Baltimore, Jr.

President

[Signatures continued on next page.]

 

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RLJ ANAHEIM SUITES HOTEL LESSEE, L.P., a

Delaware limited partnership

By:   RLJ Anaheim Suites Hotel Lessee General Partner, LLC, a Delaware limited
liability company   By:  

/s/ Thomas J. Baltimore, Jr.

   

Thomas J. Baltimore, Jr.

President

RLJ ANAHEIM HOTEL, L.P., a Delaware limited partnership By:   RLJ Anaheim Hotel
General Partner, LLC, a Delaware limited liability company   By:  

/s/ Thomas J. Baltimore, Jr.

   

Thomas J. Baltimore, Jr.

President

RLJ ANAHEIM HOTEL LESSEE, L.P., a Delaware limited liability company By:   RLJ
Anaheim Hotel Lessee General Partner, LLC, a Delaware limited liability company
  By:  

/s/ Thomas J. Baltimore, Jr.

   

Thomas J. Baltimore, Jr.

President

[Signatures continued on next page.]

 

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RLJ SAN DIEGO - MISSION VALLEY HOTEL,

L.P., a Delaware limited partnership

By:   RLJ San Diego – Mission Valley Hotel General Partner, LLC, a Delaware
limited liability company   By:  

/s/ Thomas J. Baltimore, Jr.

   

Thomas J. Baltimore, Jr.

President

RLJ SAN DIEGO - MISSION VALLEY HOTEL LESSEE, L.P., a Delaware limited
partnership By:   RLJ San Diego – Mission Valley Hotel Lessee General Partner,
LLC, a Delaware limited liability company   By:  

/s/ Thomas J. Baltimore, Jr.

   

Thomas J. Baltimore, Jr.

President

PURCHASER: INNKEEPERS USA LIMITED PARTNERSHIP, a Virginia limited partnership,
BY:   Innkeepers Financial corporation, a Virginia corporation, Sole General
Partner   By:  

/s/ Mark A. Murphy

  Name:   Mark A. Murphy   Title:   Vice President

 

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EXHIBIT “M”

INDEMNITY AGREEMENT

THIS INDEMNITY AGREEMENT (“Agreement”) is made and entered into this      day of
                    , by and between RLJ ANAHEIM HOTEL, L.P. a Delaware limited
partnership and Anaheim Hotel Lessee, L.P. a Delaware limited partnership
(“Owners”) and RLJ Urban Lodging Fund, L.P. and RLJ Urban Lodging Fund (PF #1),
L.P. (collectively “Indemnitor”), and INNKEEPERS USA LIMITED PARTNERSHIP
(“Indemnitee”).

R E C I T A L S

A. Indemnitor is constituted by four entities, (i) two of which are certain of
the Sellers under that certain Purchase and Sale Agreement and Escrow
Instructions (the “Purchase Agreement”) by and between Indemnitor and other
parties as Sellers thereunder and Indemnitee as Purchaser thereunder, dated
July 21, 2006 regarding the sale of certain parcels of property as described in
the Purchase Agreement, which include, in particular, that certain property
described on Exhibit A attached hereto and incorporated herein by reference (the
“Property”) and (ii) two others of which are entities which are the indirect
parents of those Sellers.

B. It has been disclosed by Indemnitor to Indemnitee that the Property, among
other properties, is the subject of, and Indemnitor, among others, is named as a
defendant in, that certain action filed in the Superior Court of the State of
California, County of Orange, Case No. 04CC12195, captioned RD Golf Center
Company, LLC, Plaintiff vs. Garden Grove Sanitary District, et al (the
“Action”).

C. As a condition to Closing under the Purchase Agreement, Indemnitor has agreed
to indemnify and defend Indemnitee against claims and damages resulting from the
Action

AGREEMENT

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
are hereby acknowledged, Indemnitor and Indemnitee agree as follows.

1. Indemnification. Indemnitor covenants and agrees, at its sole cost and
expense, to protect, defend, indemnify, release and hold Indemnitee, as well as
its directors, officers, shareholders, partners, members, employees, agents,
affiliates, subsidiaries, participants, and the successors and assigns of any
and all of the foregoing (collectively, the “Indemnified Parties”) harmless from
and against any and all Losses (defined below) incurred by any Indemnified
Parties and directly or indirectly arising out of or in any way relating to the
Action (the “Indemnified Matters”). The term “Losses” means (i) any actual
out-of-pocket losses, damages, costs, expenses, or fees, including reasonable
attorneys’ fees and expenses, (ii) the reasonable fees and expenses of any
consultants or other experts whose services may be

 

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necessary or desirable for the resolution of any of the Indemnified Matters and
(iii) any actual loss incurred by reason of a diminution in value of the
Property resulting from any loss of the right to use any portion of the
Property. Upon demand and subject to the terms of this Agreement, Indemnitor
shall pay or, if such Losses have already been incurred by the Indemnified
Parties, upon presentation of evidence of payment of such Losses, reimburse the
Indemnified Parties for any Losses.

2. Duty to Defend/Expenses and Costs. Indemnitor shall continue, or cause
qualified third-parties, e.g. Indemnitor’s title company, to defend Indemnitor
and, to the extent any of them are joined in the Action, the Indemnified Parties
against any of the Indemnified Matters. Upon written request by any Indemnified
Party, Indemnitor shall defend same (if requested by any Indemnified Party, in
the name of the Indemnified Party) against any of the Indemnified Matters by
attorneys and other professionals reasonably approved by the Indemnified
Parties. Notwithstanding the foregoing, any Indemnified Parties may, in their
sole and absolute discretion and at their sole cost and expense (unless
Indemnitor has failed to defend the Indemnified Parties against any of the
Indemnified Matters, in which event such cost and expense shall be borne by the
Indemnitor), engage their own attorneys and other professionals to defend or
assist them, and, at the option of Indemnified Parties, their attorneys shall
participate in the resolution of any of the Indemnified Matters, it being agreed
that no compromise or settlement of the Indemnified Matters shall be entered
into without Indemnitee’s consent, which consent shall not be unreasonably
withheld, conditioned or delayed.

3. Representations and Warranties of Indemnitor. Indemnitor, and each of them
individually, represents and warrants that:

a. it has the full power and authority to execute and deliver this Agreement and
to perform its obligations hereunder; the execution, delivery and performance of
this Agreement by Indemnitor has been duly and validly authorized; and all
requisite action has been taken by Indemnitor to make this Agreement valid and
binding upon Indemnitor, enforceable in accordance with its terms, except as
such enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors’ rights
generally, and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law);

b. its execution of, and compliance with, this Agreement will not result in the
breach of any term or provision of the charter, by-laws, partnership or trust
agreement, or other governing instrument of Indemnitor or result in the breach
of any term or provision of, or conflict with or constitute a default under, any
agreement or other instrument to which Indemnitor or the Property is subject, or
result in the violation of any law, rule, regulation, order, judgment or decree
to which Indemnitor is subject;

c. to the best of Indemnitor’s knowledge, there is no action, suit, proceeding
or investigation pending or threatened against it which, either in any one
instance or in the aggregate, may result in any material adverse change in the
business, operations, financial condition, properties or assets of Indemnitor,
or in any material impairment of the right or ability of Indemnitor to carry on
its business substantially as now conducted,

 

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or in any material liability on the part of Indemnitor, or which would draw into
question the validity of this Agreement or of any action taken or to be taken in
connection with the obligations of Indemnitor contemplated herein, or which
would be likely to impair materially the ability of Indemnitor to perform under
the terms of this Agreement;

d. it does not believe, nor does it have any reason or cause to believe, that it
cannot perform each and every covenant contained in this Agreement;

e. to the best of Indemnitor’s knowledge, no approval, authorization, order,
license or consent of, or registration or filing with, any governmental
authority or other person, and no approval, authorization or consent of any
other party is required in connection with this Agreement; and

f. this Agreement constitutes a valid, legal and binding obligation of
Indemnitor, enforceable against it in accordance with the terms hereof, except
as such enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors’ rights
generally, and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

4. No Waiver. No delay by any Indemnified Party in exercising any right, power
or privilege under this Agreement shall operate as a waiver of any such
privilege, power or right.

5. Notice of Legal Actions. Each Indemnified Party hereto shall, within five
(5) business days of receipt thereof, give written notice to the Indemnitor any
legal action brought against such party or related to the Property, with respect
to which Indemnitor may have any obligation under this Agreement.

6. Notices. Any notices required or permitted to be given hereunder shall be
given in writing and shall be delivered (a) in person, (b) by certified mail,
postage prepaid, return receipt requested, (c) by facsimile with confirmation of
receipt, or (d) by a commercial overnight courier that guarantees next day
delivery and provides a receipt, and such notices shall be addressed as follows:

 

To Indemnitee:    Innkeepers USA Limited Partnership    c/o Mark Murphy, Esq.,
General Counsel    Innkeepers USA Trust    340 Royal Poinciana Way, Suite 306   
Palm Beach, FL 33480    Fax No.: (561) 835-0457

 

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with a copy to:   

Allen Matkins Leck Gamble Mallory & Natsis LLP

1901 Avenue of the Stars, Suite 1800

Los Angeles, California 90067

Attention: Peter J. Roth, Esq.

Fax No.: (310) 788-2410

To Indemnitor:   

c/o RLJ Urban Lodging Fund, L.P.

Attention: Thomas J. Baltimore, Jr.

3 Bethesda Metro Center, Suite 1000

Bethesda, Maryland 20814

Fax No.: (301) 280-7777

With copy to:   

Gerard Leval, Esq.

Arent Fox, PLLC

1050 Connecticut Avenue, N.W.

Washington, D.C. 20036-5339

Fax No.: (202) 857-6395

7. Survival. The obligations and liabilities of Indemnitor under this Agreement
shall fully survive indefinitely until the Action is dismissed with prejudice
and all appeal periods have expired, provided, however, that any claims made or
asserted prior to the expiration of such time periods shall survive beyond such
time periods.

8. Duplicate Counterparts. This Agreement may be executed in any number of
duplicate originals and each duplicate original shall be deemed to be an
original. This Agreement may be executed in several counterparts, each of which
counterparts shall be deemed an original instrument and all of which together
shall constitute a single Agreement. The failure of any party hereto to execute
this Agreement, or any counterpart hereof, shall not relieve the other
signatories from their obligations hereunder.

9. Attorneys Fees. In the event of any action or suit by a party hereto against
the other by reason of any breach of any covenants, agreements or provisions of
this Agreement, then in that event, the prevailing party shall be entitled to
recover all costs and expenses of the action or suit, including, but not limited
to reasonable attorneys’ fees.

10. Successors. This Agreement shall be binding upon and inure to the benefit of
the successors and assigns of the parties hereto.

11 . Governing Law. The parties acknowledge that this Agreement shall be
governed by and interpreted under and construed and enforce in accordance with
the laws of the State of California.

 

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IN WITNESS WHEREOF all the parties have executed this Agreement as of the date
first above-written.

 

Indemnitor:

RLJ ANAHEIM HOTEL, L.P.,

a Delaware limited partnership

By:   RLJ Anaheim Hotel General Partner, LLC, a Delaware limited liability
company   By:  

 

   

Thomas J. Baltimore, Jr.

President

RLJ ANAHEIM HOTEL LESSEE, L.P.,

a Delaware limited liability company

By:   RLJ Anaheim Hotel Lessee General Partner, LLC, a Delaware limited
liability company   By:  

 

   

Thomas J. Baltimore, Jr.

President

RLJ URBAN LODGING FUND, L.P., By:  

 

 

Thomas J. Baltimore, Jr.

President

RLJ URBAN LODGING FUND (PF#1), L.P., By:  

 

 

Thomas J. Baltimore, Jr.

President

[Signatures continued on next page.]

 

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Indemnitee:

INNKEEPERS USA LIMITED PARTNERSHIP, a

Virginia limited partnership

By:   Innkeepers Financial Corporation, a Virginia corporation, Sole General
Partner   By:  

 

  Name:  

 

  Title:  

 

 

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EXHIBIT A