Exhibit 10.116

AMENDMENT NO. 3 TO

EMPLOYMENT AGREEMENT

This AMENDMENT NO. 3 TO EMPLOYMENT AGREEMENT (“Amendment”) is entered into as of
December 17, 2008, by and among James E. Mead (the “Executive”) and Strategic
Hotels & Resorts, Inc. a Maryland corporation (“SHRI”) and Strategic Hotel
Funding, L.L.C., a Delaware limited liability company (together with SHRI, the
“Company”).

WITNESSETH THAT:

WHEREAS, the Executive and the Company are parties to that certain Employment
Agreement, dated as of November 29, 2004 and Amendment No. 1 thereto dated as of
February 13, 2008 and Amendment No. 2 dated as of November 14, 2008 (the
“Employment Agreement”); and

WHEREAS, the parties desire to make an amendment to the Employment Agreement;

NOW, THEREFORE, the Executive and the Company hereto agree that the Employment
Agreement shall be amended as follows:

1. Certain Definitions. Capitalized terms used in this Amendment without
definition shall have the meanings set forth in the Employment Agreement.

2. Constructive Termination. Section 5(d)(i) is deleted in its entirety and the
following is substituted therefore:

the Company materially reduces Executive’s Base Salary or Target Bonus
opportunity or the Company otherwise materially breaches this Agreement;

3. Date of Termination. A new subsection 5(f) Date of Termination of Employment
is added to the Agreement as follows:

Notwithstanding anything contained in this Agreement to the contrary, the date
on which a “separation from service” pursuant to section 409A of the Internal
Revenue Code of 1986, as amended (“Section 409A”) (“Separation from Service”)
occurs shall be the termination of employment date for purposes of determining
the timing of payments and benefits under this Agreement to the extent necessary
to have such payments and benefits under this Agreement be exempt from the
requirements of Section 409A or comply with the requirements of Section 409A.

4. Release. The following sentences are added at the end of Section 6(b)(iv)
Release:

To the extent that any such payments or benefits under this Agreement are
intended to be exempt from Section 409A as a short-term deferral pursuant to
Treasury Regulations §1.409A-1(b)(4) or any successor thereto, such release
required for such payment or benefit must be provided no later than March 7th of
the calendar year following the

 

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calendar year of the Executive’s Separation from Service and the Company shall
make such payments on the day following the date the release becomes effective
and irrevocable. Subject to Section 4(h), to the extent that Executive is
required to execute and deliver a release to receive a payment or benefit that
constitutes a “deferral of compensation” subject to Section 409A (after taking
into account to the maximum extent possible any applicable exemptions) (“409A
Payment”), such 409A Payment will be provided upon the 30th day following
Executive’s Separation from Service provided the release in the form mutually
agreed upon between Executive and the Company or in the form set forth as
Exhibit A has been executed, delivered, effective and irrevocable prior to such
time. If a release is required for a 409A Payment and such release is not
executed, delivered, effective and irrevocable by the 30th day following
Executive’s Separation from Service, such 409A Payment shall not be provided to
the Executive to the extent that providing such 409A Payment would cause such
409A Payment to fail to comply with Section 409A. Should this Section 6(b)(iv)
result in the delay of benefits under this Agreement, any such benefit shall be
made available to the Executive by the Company during such delay period at
Executive’s expense. On the first day any such benefits may be made without
incurring additional tax pursuant to Section 409A, the Company shall provide
such benefits as provided for in this Agreement as well reimbursement of the
amount Executive paid for benefits pursuant to the preceding sentence.

5. Mitigation and Offset. The last sentence of Section 8(c) Mitigation and
Set-Off is hereby stricken in its entirety and replaced with the following:

However, to the extent permitted by Section 409A, the Company shall be entitled
to set off against amounts payable to Executive under this Agreement any amounts
owed to the Company by Executive.

6. Section 409A Compliance. A new Section 9 Section 409A Compliance is added to
the Agreement as follows:

Section 409A Compliance. All payments pursuant to this Agreement shall be
subject to the provisions of this Section 9. Notwithstanding anything herein to
the contrary, this Agreement is intended to be interpreted and operated to the
fullest extent possible so that the payments and benefits under this Agreement
either shall be exempt from the requirements of Section 409A or shall comply
with the requirements of such provision; provided however that the preceding
statement is not intended to transfer to the Company any liability for or with
respect to any taxes, penalties or interest which may be imposed upon the
Executive pursuant to Section 409A.

(a) Timing of Severance Payments. To the extent that any payment or benefit
pursuant to this Agreement constitutes a 409A Payment treated as payable upon
Separation from Service, then, if on the date of the Executive’s Separation from
Service, the Executive is a Specified Employee, then to the extent required for
Executive not to incur additional taxes pursuant to Section 409A, no such 409A
Payment shall be made to the Executive earlier than the earlier of (i) six
(6) months after the Executive’s Separation from Service; or (ii) the date of
his death.

 

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Should this Section 9(a) result in the delay of benefits, any such benefit shall
be made available to the Executive by the Company during such delay period at
Executive’s expense. Should this Section 9(a) result in a delay of payments or
benefits to Executive, on the first day any such payments or benefits may be
made without incurring additional tax pursuant to Section 409A (the “409A
Payment Date”), the Company shall make such payments and provide such benefits
as provided for in this Agreement, provided that any amounts that would have
been payable earlier but for the application of this Section 9(a) as well as
reimbursement of the amount Executive paid for benefits pursuant to the
preceding sentence, shall be paid in lump-sum on the 409A Payment Date. For
purposes of this Section 9(a), the term “Specified Employee” shall have the
meaning set forth in Section 409A, as determined in accordance with the
methodology established by the Company. For purposes of determining whether a
Separation from Service has occurred for purposes of Section 409A, a Separation
from Service is deemed to include a reasonably anticipated permanent reduction
in the level of services performed by the Executive to less than fifty (50%) of
the average level of services performed by the Executive during the immediately
preceding 12-month period.

(b) Reimbursements. For purposes of complying with Section 409A and without
extending the payment timing otherwise provided in this Agreement, taxable
reimbursements under this Agreement, subject to the following sentence and to
the extent required to comply with Section 409A, will be made no later than the
end of the calendar year following the calendar year the expense was incurred.
To the extent required to comply with Section 409A, any taxable reimbursements
and any in-kind benefit under this Agreement will be subject to the following:
(a) payment of such reimbursements or in-kind benefits during one calendar year
will not affect the amount of such reimbursement or in-kind benefits provided
during any other calendar year (other than for medical reimbursement
arrangements as excepted under Treasury Regulations §1.409A-3(i)(1)(iv)(B)
solely because the arrangement provides for a limit on the amount of expenses
that may be reimbursed under such arrangement over some or all of the period the
arrangement remains in effect); (b) such right to reimbursement or in-kind
benefits is not subject to liquidation or exchange for another form of
compensation to the Executive and (c) the right to reimbursements under this
Agreement will be in effect for the lesser of the time specified in this
Agreement or ten years plus the lifetime of the Executive. Any taxable
reimbursements or in-kind benefits shall be treated as not subject to
Section 409A to the maximum extent provided by Treasury Regulations
§1.409A-1(b)(9)(v) or otherwise under Section 409A.

(c) No Acceleration; Separate Payments. No 409A Payment payable under this
Agreement shall be subject to acceleration or to any change in the specified
time or method of payment, except as otherwise provided under this Agreement and
consistent with Section 409A. If under this Agreement, a 409A Payment is to be
paid in two or more installments, for purposes of Section 409A, each installment
shall be treated as a separate payment.

 

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(d) Cooperation. If the Executive or Company determines that any provision of
this Agreement is or might be inconsistent with the requirements of
Section 409A, the parties shall attempt in good faith to agree on such
amendments to this Agreement as may be necessary or appropriate to avoid
subjecting Executive to the imposition of any additional tax under Section 409A
without changing the basic economic terms of this Agreement. This Section 9 is
not intended to impose any restrictions on payments or benefits to Executive
other than those otherwise set forth in this Agreement or required for Executive
not to incur additional tax under Section 409A and shall be interpreted and
operated accordingly. The Company to the extent reasonably requested by
Executive shall modify this Agreement to effectuate the intention set forth in
the preceding sentence.

7. Miscellaneous.

(a) Effect of Amendment. Unless expressly amended by this Amendment, all other
provisions of the Employment Agreement shall remain in legal force and effect.

(b) Governing Law. This Amendment shall be governed by and be construed in
accordance with the laws of the State of Delaware without regard to its conflict
of laws principles.

(c) Counterparts. This Amendment may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which shall constitute one
and the same instrument.

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
date first above stated.

 

STRATEGIC HOTELS & RESORTS, INC. By:  

/s/ Paula C. Maggio

Name:  

Paula Maggio

Title:  

SVP General Counsel

STRATEGIC HOTEL FUNDING, L.L.C. By:  

/s/ Paula C. Maggio

Name:  

Paula Maggio

Title:  

SVP General Counsel

JAMES E. MEAD By:  

/s/ James Mead

Name:  

James Mead

Title:  

Executive Vice President

 

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