SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS

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.

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

[Signatures continued on next page.]

-2-

[Signatures continued on next page.]

-3-

-4-

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 expens