Exhibit_10.5 


SOTHEBY’S


RESTRICTED STOCK UNIT PLAN


(As Amended and
Restated Effective As Of February 1, 2009)






SOTHEBY’S RESTRICTED
STOCK UNIT PLAN


(As Amended and
Restated Effective As Of February 1, 2009)


TABLE OF CONTENTS


	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
Page


	
 

	
 

	
 

	
 

	



	
ARTICLE 1

	
 

	
BACKGROUND, AMENDMENT PURPOSE AND TERM

	
1

	
 


	
 

	
 

	
 

	
 

	
 


	
 

	
1.1

	
 

	
Establishment of Original Plan and
 Amendment and Restatement of Plan

	
1

	
 


	
 

	
1.2

	
 

	
Addition of Restricted Stock Units

	
1

	
 


	
 

	
1.3

	
 

	
Purpose of Plan

	
1

	
 


	
 

	
1.4

	
 

	
Adoption and Term

	
1

	
 


	
 

	
 

	
 

	
 

	
 


	
ARTICLE 2

	
 

	
DEFINITIONS

	
1

	
 


	
 

	
 

	
 

	
 

	
 


	
ARTICLE 3

	
 

	
ADMINISTRATION

	
6

	
 


	
 

	
 

	
 

	
 

	
 


	
 

	
3.1

	
 

	
Administration

	
6

	
 


	
 

	
3.2

	
 

	
Expenses of Administration

	
6

	
 


	
 

	
3.3

	
 

	
Indemnification

	
6

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
ARTICLE 4

	
 

	
SHARES OF COMMON STOCK SUBJECT TO THE PLAN

	
7

	
 


	
 

	
 

	
 

	
 

	
 


	
 

	
4.1

	
 

	
Shares Subject to the Plan

	
7

	
 


	
 

	
4.2

	
 

	
Restricted Stock and Restricted
 Stock Units Subject to Forfeited or Terminated
 Awards or Withholding Tax

	
7

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
ARTICLE 5

	
 

	
PARTICIPATION

	
8

	
 


	
 

	
 

	
 

	
 

	
 


	
ARTICLE 6

	
 

	
RESTRICTED STOCK AND RESTRICTED STOCK UNITS

	
8

	
 


	
 

	
 

	
 

	
 

	
 


	
 

	
6.1

	
 

	
Grant of Restricted Stock and Restricted Stock
Units

	
8

	
 


	
 

	
6.2

	
 

	
Establishment of Performance
 Criteria and Restrictions

	
8

	
 


	
 

	
6.3

	
 

	
Transfer of Shares

	
9

	
 


	
 

	
6.4

	
 

	
Voting and Dividend Rights

	
9

	
 


	
 

	
6.5

	
 

	
Restricted Stock Entitlements Awarded
 Prior to February 1, 2009

	
9

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
ARTICLE 7

	
 

	
TERMS AND CONDITIONS OF RESTRICTED STOCK

	
10

	
 


	
 

	
 

	
 

	
 

	
 


	
 

	
7.1

	
 

	
Award Agreements

	
10

	
 





i






	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
7.2

	
 

	
Plan Provisions Control Terms

	
10

	
 


	
 

	
7.3

	
 

	
Time Vesting

	
10

	
 


	
 

	
7.4

	
 

	
Acceleration of Vesting

	
11

	
 


	
 

	
7.5

	
 

	
Taxes and Withholding

	
11

	
 


	
 

	
7.6

	
 

	
Surrender of Restricted Stock and
 Restricted Stock Units

	
12

	
 


	
 

	
7.7

	
 

	
Incorporation by Reference of
 Articles of Incorporation

	
12

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
ARTICLE 8

	
 

	
AMENDMENT AND TERMINATION OF THE PLAN; REORGANIZATIONS AND
RECAPITALIZATIONS OF THE CORPORATION

	
12

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
8.1

	
 

	
Amendment of the Plan

	
12

	
 


	
 

	
8.2

	
 

	
Termination of the Plan

	
12

	
 


	
 

	
8.3

	
 

	
Reorganizations and Recapitalizations
 of the Corporation

	
12

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
ARTICLE 9

	
 

	
COMPLIANCE WITH
 OTHER LAWS AND REGULATIONS

	
13

	
 


	
 

	
 

	
 

	
 

	
 


	
 

	
9.1

	
 

	
Registration or Qualification of
 Securities

	
13

	
 


	
 

	
9.2

	
 

	
Representation

	
14

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
ARTICLE 10

	
 

	
RESTRICTIONS ON
 TRANSFER

	
14

	
 


	
 

	
 

	
 

	
 

	
 


	
ARTICLE 11

	
 

	
GENERAL PROVISIONS

	
14

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
11.1

	
 

	
No Right to Continued Employment

	
14

	
 


	
 

	
11.2

	
 

	
Beneficiaries or Representatives of
 a Participant

	
15

	
 


	
 

	
11.3

	
 

	
Elimination of Fractional Shares

	
15

	
 


	
 

	
11.4

	
 

	
Inspection of Records

	
15

	
 


	
 

	
11.5

	
 

	
Word Meanings

	
15

	
 


	
 

	
11.6

	
 

	
Section Titles

	
15

	
 


	
 

	
11.7

	
 

	
Severability

	
15

	
 


	
 

	
11.8

	
 

	
Compliance with Section 16(b) of the
 Securities Exchange Act

	
15

	
 


	
 

	
11.9

	
 

	
Compliance with Code Section 162(m)

	
16

	
 


	
 

	
11.10

	
 

	
Strict Construction

	
16

	
 


	
 

	
11.11

	
 

	
Choice of Law

	
16

	
 


	
 

	
 

	
 

	
 

	
 


	
ARTICLE 12

	
 

	
FRENCH SUB PLAN; FOR INDIVIDUALS WHO ARE FRENCH RESIDENT TAXPAYERS
 AND/OR SUBJECT TO THE FRENCH SOCIAL SECURITY SCHEME IN FRANCE

	
16

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
12.1

	
 

	
Definitions

	
16

	
 


	
 

	
12.2

	
 

	
Eligibility

	
17

	
 


	
 

	
12.3

	
 

	
Limitation on Grants under the French Sub-Plan

	
17

	
 





ii






	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
12.4

	
 

	
Vesting Periods

	
17

	
 


	
 

	
12.5

	
 

	
Holding Periods

	
17

	
 


	
 

	
12.6

	
 

	
Restrictions on Sale-Black Out Periods

	
17

	
 


	
 

	
12.7

	
 

	
Restrictions on Transfer

	
18

	
 


	
 

	
12.8

	
 

	
Other
 Compliance with French Law

	
18

	
 





iii







SOTHEBY’S RESTRICTED STOCK UNIT PLAN


(As Amended and Restated Effective As Of February 1, 2009)


Article 1
Background, Amendment, Purpose and Term


          1.1 Establishment of Original Plan and Amendment and Restatement of
Plan. The Sotheby’s Holdings, Inc. 2003 Restricted Stock Plan (the “Plan”) was originally established effective May 1, 2003. The Plan was
amended and restated in 2006 in connection with the 2005 recapitalization of Sotheby’s Holdings, Inc. and its subsequent reincorporation in the State of
Delaware. The Plan was then adopted by Sotheby’s, a Delaware corporation, as the successor to Sotheby’s Holdings Inc.


          1.2 Addition of Restricted Stock Units. The Plan is hereby
amended and restated effective as of February 1, 2009 to add Restricted Stock Units as compensatory awards to Employees under the Plan. The award of Restricted
 Stock Units in lieu of Restricted Stock offers certain tax advantages and flexibility to Participants. The Corporation contemplates that all awards granted
under the Plan on or after February 1, 2009 will be in the form of Restricted Stock Units rather than Restricted Stock. Notwithstanding the preceding sentence,
 the Corporation retains the authority to make Restricted Stock Awards in its discretion. In addition, all Restricted Stock Awards made prior to February 1,
 2009 will continue to retain their character as Restricted Stock and continue to be subject to Plan provisions and tax-treatment applicable to Awards of
Restricted Stock.


          1.3 Purpose of Plan. The purpose of the Plan is to promote the
 interests of the Corporation and its shareholders by providing certain Employees of the Corporation with additional incentives to continue and increase their
 efforts with respect to achieving success in the business of the Corporation and its Subsidiaries and attracting and retaining the best available personnel to
 participate in the ongoing business operations of the Corporation and its Subsidiaries.


          1.4 Adoption and Term. The Plan has been approved by the Board of
 Directors of the Corporation. The Plan will remain in effect until terminated or abandoned by action of the Board of Directors.


Article 2
Definitions


          In the Plan, whenever the context so indicates, the singular or plural
 number, and the masculine, feminine or neuter gender shall each be deemed to include the other, the terms “he,” “his,” and “him”
 shall refer to a Participant, and the capitalized terms shall have the following meanings:


1






          2.1 “Articles of Incorporation” means the Articles of
 Incorporation of the Corporation, or other similar document of any successor to the Corporation, as the same may be amended from time to time.


          2.2 “Award” means individually or collectively, a grant
 of Restricted Stock or Restricted Stock Units under this Plan.


          2.3 “Award Agreement” means an agreement entered into
 by each Participant and the Corporation, setting forth the terms and provisions applicable to Awards granted to Participants under the Plan.


          2.4 “Beneficiary” means (i) an individual, trust, or
estate, who or which, by will or by operation of the laws of descent and distribution, succeeds to the rights and obligations of a Participant under the Plan
 upon the Participant’s death; or (ii) an individual who, as a result of designation by a Participant, succeeds to the rights and obligations of such
Participant under the Plan and the Award Agreement upon such Participant’s death.


          2.5 “Board of Directors” means the Board of
Directors of the Corporation.


          2.6 “Business Day” means any
Day on which
the New York Stock Exchange s open for trading.


          2.7 “Change in Control” means
the date upon
which: (i) any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) (a “Person”), shall become, directly or indirectly, the
beneficial owner (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of Common Stock of the Corporation enabling such Person to elect
a majority of the members of the Board of Directors of the Corporation; or (ii)
the individuals who constitute the Board (the “Incumbent Board”) cease for any
reason within any period of 12 consecutive months to constitute at least a
majority of the members of the Board; provided, however, that any individual
becoming a director whose election, or nomination for election by the
Corporation’s shareholders, was approved by a vote of at least a majority of
the directors then compromising the Incumbent Board shall be considered as
though the individual were a member of the Incumbent Board.


          2.8 “Code” means the Internal
Revenue Code
of 1986, as amended from time to time (or any corresponding provisions of
succeeding law).


          2.9 “Common Stock” means
Corporation, par
value $0.01 per share.


          2.10 “Compensation Committee”
or “Committee” means the Compensation
Committee established by the Board of Directors, or such other committee as the
Board may establish and assign the responsibility of administering this Plan.


2







          2.11
“Confidential Information” means, with respect to the Corporation and its
Subsidiaries, any confidential information regarding the financial situation
and particular needs of the Corporation and its Subsidiaries as well as of, or
relating to, their customers and clients (including, without limitation,
consignors, buyers and principals), the identity of such Persons, client lists,
documents and information regarding the Corporation’s and any Subsidiary’s
sales data, marketing, operational and appraisal techniques, contracts,
pricing, costs and profits, and any other information maintained as proprietary
or as trade secrets or as confidential.


          2.12
“Corporation” means
Sotheby’s, a Delaware corporation, and any successor in interest to the
business of the Corporation that has, by agreement, adopted the Plan.


          2.13
“Date of Grant”, with respect to an Award, means the date on which the Compensation
Committee grants such Award pursuant to the Plan.


          2.14
“Day” means
each calendar day, including Saturdays, Sundays, and legal holidays; provided,
however, that if the Day on which a period of time for consent or approval or
other action ends is not a Business Day, such period shall end on the next
Business Day.


          2.15
“Disability” or “Disabled” means, with respect to an Employee, a physical or
mental condition resulting from any medically determinable physical or mental
impairment that renders such Employee incapable of engaging in any substantial
gainful employment and that can be expected to result in death or that has
lasted or can be expected to last for a continuous period of not less than
three hundred sixty-five (365) Days. The Disability of an Employee and the date
upon which an Employee ceases to be employed by reason of Disability shall be
determined by the Compensation Committee in accordance with uniform principles
consistently applied, upon the basis of such evidence as the Compensation
Committee deems necessary and desirable, and its good faith determination shall
be conclusive for all purposes of this Plan and the relevant Award Agreement.


          2.16
“Employee” means
an individual who is and continues to be employed (within the meaning of
section 3401 of the Code and the regulations promulgated thereunder) by the
Corporation or a Subsidiary (while a corporation continues to be a Subsidiary)
including officers (whether or not they may also be directors) of the
Corporation or a Subsidiary. An Employee shall cease to be an Employee upon the
voluntary or involuntary termination of his employment with the Corporation or
a Subsidiary for any reason, including death, Disability, Retirement, or with
or without cause. Whether an authorized leave of absence, or an absence due to
military or government service, Disability, or any other reason, constitutes a
cessation of employment shall be determined by the Compensation Committee, in
its sole discretion.


          2.17
“Exchange Act” means the Securities Exchange Act of 1934, as amended.


3






          2.18 “Fair Market Value”
means the value of
each share of Restricted Stock, determined for a particular date as follows:


	
 

	
 


	
 

	
          (a) if the
 Common Stock is listed or admitted for trading on any United States national
 securities exchange, the value of each share of Restricted Stock shall be the
 closing price per share of Common Stock on such exchange (or, if listed on
 more than one United States exchange, the principal said exchange) on the
 relevant Valuation Date hereunder;


	
 

	
 


	
 

	
          (b) if
 paragraph (a) is not applicable, the value of each share of Restricted Stock
 shall be the fair market value as determined by the Committee, in good faith
 and in accordance with uniform principles consistently applied, on the last
 day of the relevant Fiscal Year immediately preceding the relevant date
 hereunder, or such other date as the Committee shall select.


	
 

	
 


	
 

	
          (c) for
 purposes of determining taxation of the Restricted Stock issued to U.K.
 employees, the definition of Fair Market Value may be adjusted as required by
 the Shares Valuation Division of the U.K. Inland Revenue.





          The
Fair Market Value of a Restricted Stock Unit means the Fair Market Value (as
defined in (a), (b) or (c) above) of the underlying shares of Common Stock
subject to the Restricted Stock Unit.


          2.19 “Fiscal Year” means the
fiscal year of
the Corporation.


          2.20 “Fractional Share” means
a portion of,
or less than the whole of, a share of Common Stock.


          2.21 “Participant” means an
Employee who
has an outstanding Award granted under this Plan.


          2.22 “Period of Restriction”
means the
period during which the transfer of shares of Common Stock subject to a
Restricted Stock Award or a Restricted Stock Unit Award is subject to a
substantial risk of forfeiture or limited in some way (based on the passage of
time, the achievement of performance goals, or upon the occurrence of other
events as determined by the Compensation Committee, in its discretion) as
provided in Section 6.2 or 7.3.


          2.23 “Person” or
“Persons” means an
individual, a partnership (general or limited), corporation, joint venture,
business trust, cooperative, association, or other form of business
organization, whether or not regarded as a legal entity under applicable law, a
trust (inter vivos or testamentary), an estate of a deceased, insane, or
incompetent person, a quasi-governmental entity, a government or any agency,
authority, political subdivision, or other instrumentality thereof, or any
other entity.


4






          2.24 “Plan” means the
Sotheby’s Restricted Stock Unit Plan as amended and restated effective as of
February 1, 2009, as such plan may be amended from time to time.


          2.25
“Reporting Person” means any and all Employees subject to Section 16 of
the Exchange Act.


          2.26
“Restricted Stock, Restricted Stock Entitlements and Restricted Stock Units”


	
 

	
 


	
 

	
          (a)
 “Restricted Stock” means those shares of Common Stock made the subject
 of any Restricted Stock Award granted pursuant to the Plan.


	
 

	
 


	
 

	
          (b)
 “Restricted Stock Entitlements” means an award of
 Restricted Stock Entitlements rather than Restricted Stock granted to certain
 non-U.S. employees prior to February 1, 2009 for tax reasons pursuant to
 Section 6.5. Effective for awards granted on or after February 1, 2009,
 Restricted Stock Entitlements are referred to as Restricted Stock Unit
 Awards.


	
 

	
 


	
 

	
          (c)
 “Restricted Stock Unit” means an Award of a
 hypothetical share of Common Stock granted to a Participant pursuant to
 Article 6. The Restricted Stock Unit Award represents the right to receive a
 payment upon vesting or other lapse of restrictions of the numbers of shares
 of Common Stock covered by the Award. The value of each Restricted Stock Unit
 is equal to the value of one share of Common Stock on the relevant Valuation
 Date. Restricted Stock Units are settled only in shares of Common Stock and
 not in cash.





          2.27
“Retirement” means the termination of employment by an Employee
after the attainment of the age of sixty-five (65) years or upon such earlier
date as required by local law or as otherwise determined or approved by the
Compensation Committee.


          2.28 “Section
162(m) Subcommittee” shall be a Subcommittee of the Compensation Committee
comprised solely of two or more members of the Board, as determined by the
Board from time to time, each of whom shall be (i) a “non-employee director” as
that term is defined and interpreted pursuant to Rule 16b-3 promulgated under
Section 16 of the Exchange Act and (ii) an “outside director” as that term is
defined and interpreted pursuant to section 162(m) of the Code and the
regulations thereunder. The purpose of the Section 162(m) Subcommittee is to
approve Restricted Stock Awards to “covered employees” (as defined in Code
Section 162(m)) so that the Restricted Stock can qualify as performanced-based
compensation under Code Section 162(m).


          2.29
“Securities Act” means the Securities Act of 1933, as amended.


          2.30
“Subsidiary” means any corporation at least 50% of the total
combined voting power of which is owned by the Corporation or another
Subsidiary.


5






          2.31
“Transfer” means any assignment, sale, transfer, conveyance,
mortgage or other encumbrance, pledge, or other disposition or act of
alienation, whether voluntary or involuntary, or by operation of law.


          2.32
“Valuation Date” means, with respect to an Award of Restricted Stock
or Restricted Stock Units, the Business Day immediately preceding either (a)
the Date of Grant of such Award, (b) the vesting date or (c) other event
applicable to such Award. Whenever reference is made to a Valuation Date, it
shall mean, with respect to the Common Stock, the value at the close of trading
on such Valuation Date, and with respect to any other item, midnight in New
York City, New York at the end of such Valuation Date.


Article 3

Administration


          3.1
Administration. The Plan shall be administered by the Committee in
accordance with this Article 3. Subject to the terms and conditions of the
Plan, the Committee or the Section 162(m) Subcommittee as applicable shall have
the sole discretionary authority:


	
 

	
 

	
 


	
 

	
(a)

	
to authorize the granting of
 Restricted Stock and Restricted Stock Unit Awards;


	
 

	
 

	
 


	
 

	
(b)

	
to select any Reporting Persons
 who are to be granted Restricted Stock or Restricted Stock Units under the
 Plan and to determine, subject to the limitations provided in Section 6.1
 hereof, the number of shares of Restricted Stock to be granted to each
 Reporting Person;


	
 

	
 

	
 


	
 

	
(c)

	
to construe and interpret the
 Plan;


	
 

	
 

	
 


	
 

	
(d)

	
to establish and modify
 administrative rules for the Plan;


	
 

	
 

	
 


	
 

	
(e)

	
to impose such conditions and
 restrictions with respect to the Restricted Stock and Restricted Stock Unit
 Awards, not inconsistent with the terms of the Plan, as it determines appropriate;


	
 

	
 

	
 


	
 

	
(f)

	
to execute or cause to be
 executed Award Agreements; and


	
 

	
 

	
 


	
 

	
(g)

	
generally, to exercise such
 power and perform such other acts in connection with the Plan and the Awards
 and to make all determinations under the Plan as it may deem necessary or
 advisable or as required, provided or contemplated hereunder.





6






          Action
taken or not taken by the Compensation Committee on one or more occasions shall
be without obligation to take or not take such action on any other occasion(s).


          The
Committee may delegate to one or more Persons any of its powers, other than its
power to authorize the granting of Awards, hereinbefore or hereinafter provided
or conferred, or designate one or more Persons to do or perform those matters
to be done or performed by the Compensation Committee, including administration
of the Plan. Notwithstanding the foregoing, the Committee may not delegate a
power if the delegation of such power would cause the Plan to fail to satisfy
the plan administration requirements set forth in Rule 16b-3(c) promulgated
under the Exchange Act or section 162(m) of the Code and the regulations
promulgated thereunder. Any Person or Persons delegated or designated by the
Committee shall be subject to the same obligations and requirements imposed on
the Committee and its members under the Plan.


          3.2 Expenses
of Administration. The Corporation shall pay all costs and expenses of
administering the Plan.


          3.3
Indemnification. The Committee, members of the Committee, and each
Person or Persons designated or delegated by the Committee, and the
shareholders, directors and officers of the Corporation, shall be entitled to
indemnification and reimbursement from the Corporation for any action or any
failure to act in connection with services performed by or on behalf of the
Committee for the benefit of the Corporation to the fullest extent provided or
permitted by the Corporation’s Articles of Incorporation and by any insurance
policy or other agreement intended for the benefit of the Committee as a
committee of the Board of Directors or otherwise, or by any applicable law.


Article 4

Shares of Common Stock Subject to the Plan


          4.1 Shares
Subject to the Plan. The shares of stock to be made the subject of
Restricted Stock and Restricted Stock Unit Awards granted under the Plan shall
be shares of the Corporation’s authorized but unissued or reacquired Common
Stock. Subject to adjustment as provided in Section 8.3 hereof, the aggregate
number of shares of Common Stock that may be issued by the Corporation under
the Plan is 6,500,000 shares of Common Stock. The number of shares of
Restricted Stock to be granted at any time, including the number of shares of
Common Stock underlying Restricted Stock Units, shall not exceed the relevant
number of shares of Common Stock remaining available for issuance under the
Plan.


          4.2
Restricted Stock and Restricted Stock Units Subject to Forfeited or Terminated
Awards or Withholding Tax. In the event that any
Restricted Stock, including shares of Common Stock underlying Restricted Stock
Unit Awards, with respect to an outstanding Award is forfeited, surrendered,
expires or is terminated for any reason before the Period of Restriction has
been satisfied, all shares allocable to the forfeited or


7






terminated
portion of such Award shall again be available for Awards subsequently granted
under the Plan. If a Participant elects or is deemed to have elected to have
shares of stock withheld in satisfaction of tax withholding obligations prior
to April 29, 2013, the withheld shares of stock shall, for purposes of this
Section 4.2, be considered to have been surrendered and shall therefore be
available for Awards subsequently granted under the Plan. Shares of stock
withheld in satisfaction of tax withholding obligations on or after April 29,
2013 shall not be available for Awards subsequently granted under the Plan
unless the surrender and reissuance of these shares is approved by
shareholders, if such approval is then deemed necessary to comply with
applicable rules or regulations.


Article 5

Participation


          Plan
Participants shall be such Employees as the Compensation Committee may select
(who may include officers). In making such selections, the Committee may take
into account the nature of the services rendered by such Employees, their
present and potential contributions to the Corporation’s success, and such
other factors as the Committee in its discretion shall deem relevant.


Article 6

Restricted Stock and Restricted Stock Units


          6.1 Grant of
Restricted Stock and Restricted Stock Units. The Compensation
Committee may cause the Corporation to issue shares of Restricted Stock and to
award Restricted Stock Units under the Plan, subject to such restrictions,
conditions and other terms as the Compensation Committee may determine in
addition to those set forth herein. The maximum aggregate number of shares
which may be granted pursuant to Awards to any one Employee during a
36-consecutive month period shall be limited to 1 million shares. For purposes
of calculating the maximum number of shares of stock granted during a
36-consecutive month period to an Employee who is subject to Code Section
162(m), any shares that are granted and subsequently cancelled or surrendered
during such 36-month period, including shares surrendered or cancelled for tax
withholding purposes, shall continue to be counted against the maximum number
of shares which may be granted to such Employee pursuant to the Plan during
such period. Notwithstanding the foregoing, to the extent an adjustment is made
to the Common Stock to reflect a change in the corporate capitalization of the
Corporation, the additional shares of Restricted Stock or the additional number
of Restricted Stock Units, if any, shall not be counted against the maximum
number of shares which may be granted to the Participant.


          6.2
Establishment of Performance Criteria and Restrictions. Restricted Stock and Restricted
Stock Unit Awards will be subject to time vesting under Section 7.3. The
Compensation Committee may, in its sole discretion, at the time a grant is
made, prescribe restrictions in addition to or other than time vesting,
including the satisfaction of corporate or individual performance objectives,
which shall be applicable to all or any


8







portion of the Award. Corporate or
individual performance criteria include, but are not limited to, designated
levels or changes in total shareholder return, net income, return on equity,
return on assets, EBIDTA, or such other financial measures or performance
criteria as the Committee may select. Such restrictions shall be set forth in
the Participant’s Award Agreement. Each Award may be subject to a different
Period of Restriction as specified in the Award Agreement. Subject to Section
7.4 and except with respect to grants of Restricted Stock or Restricted Stock
Units intended to qualify as performance based compensation for purposes of
Section 162(m) of the Code, the Compensation Committee may, in its sole
discretion, shorten or terminate the Period of Restriction or waive any other
restrictions applicable to all or a portion of such Award.


          6.3
Transfer of Shares. The Corporation will establish procedures regarding the delivery of
share certificates or the transfer of shares in book entry form. None of the
Restricted Stock or the Restricted Stock Units may be sold, transferred,
assigned, pledged or otherwise encumbered or disposed of prior to the date on
which the Restricted Stock or Restricted Stock Unit vests in accordance with
Sections 6.2 and 7.3.


          6.4
Voting and Dividend Rights.


	
 

	
 


	
 

	
          (a) Restricted Stock Awards. Except as otherwise determined by
 the Committee either at the time Restricted Stock is awarded or at any time
 thereafter prior to the lapse of the restrictions, holders of Restricted
 Stock shall have the right to vote such shares and the right to receive any
 dividends with respect to such shares, whether or not the shares of
 Restricted Stock are vested. All distributions, if any, received by an
 Employee with respect to Restricted Stock Units as a result of any stock
 split, stock distributions, combination of shares, or other similar
 transaction shall be subject to the restrictions of the Plan.


	
 

	
 


	
 

	
          (b) Restricted Stock Unit Awards. Except as otherwise determined by
 the Compensation Committee or permitted by applicable law, holders of
 Restricted Stock Units shall not have the right to vote the underlying shares
 of stock subject to a Restricted Stock Unit Award until the Period of
 Restriction has lapsed and the shares have been delivered to the Participant
 as provided in Section 6.3. Participants will have the right to receive
 dividend equivalents with respect to the equivalent number of Restricted
 Stock Units. Such dividend equivalents shall be taxed to the Participant in
 accordance with applicable law. All distributions, if any, received by an
 Employee with respect to Restricted Stock Units as a result of any stock
 split, stock distributions, combination of shares, or other similar
 transaction shall be subject to the restrictions of the Plan.





          6.5 Restricted Stock Entitlements
Awarded Prior to February 1, 2009. Prior to February 1, 2009, the Compensation
Committee caused the Corporation to award Restricted Stock Entitlements in lieu
of Restricted Stock to certain non-U.S. employees where the grant of Restricted
Stock would have resulted in adverse tax consequences to such non-U.S.
employees. Restricted Stock Entitlements entitle holders to call, without
payment, for the relevant number of shares of Common Stock at the applicable
vesting


9






date. Non-U.S. employees who are
awarded Restricted Stock Entitlements are deemed to have called for these
shares of Common Stock that vest on the applicable vesting date determined
under Section 7.3 and as set forth in such Participant’s Restricted Stock
Entitlement Agreement. Restricted Stock Entitlements shall be subject to all of
the same terms and conditions of the Plan as Restricted Stock; provided,
however, that (a) holders of Restricted Stock Entitlements have no voting
rights; and (b) holders of Restricted Stock Entitlements have the right to
receive dividend equivalents rather than actual dividends with respect to
unvested Restricted Stock Entitlements. Accordingly, all references in this
Plan to Restricted Stock also include Restricted Stock Entitlements, if
applicable, with the exceptions noted above. Once the applicable vesting date
has occurred and any other restriction has lapsed, the Restricted Stock
Entitlement is exchanged for an equivalent number of shares of Common Stock.
Restricted Stock Unit Awards, rather than Restricted Stock Entitlements, will
be awarded to all non-U.S. employees on or after February 1,2009.


Article 7

Terms and Conditions of Restricted Stock 

And Restricted Stock Units


          7.1 Award
Agreements. The terms of the Restricted Stock or Restricted Stock
Units granted under the Plan shall be as set forth in a written Award Agreement
in such form as the Committee shall from time to time determine. Each Award
Agreement shall comply with and be subject to the terms and conditions of the
Plan and such other terms and conditions as the Committee may deem appropriate.
No Person shall have any rights under the Plan unless and until the Corporation
and the Participant have executed an Award Agreement setting forth the grant
and the terms and conditions of the Award.


          7.2 Plan
Provisions Control Terms. The terms of the Plan shall govern all
Restricted Stock and Restricted Stock Unit Awards granted under the Plan. In
the event that any provision of an Award Agreement shall conflict with any term
in the Plan as constituted on the Date of Grant, the term in the Plan shall
control.


          7.3 Time
Vesting. Except in the case of the death, Disability, or Retirement
of a Participant, and subject to the provisions of Sections 6.2 and 7.4 hereof,
the Restricted Stock or Restricted Stock Unit granted under the Plan will vest
in accordance with the following schedule:


	
 

	
 

	
 

	
 

	
 


	
Completed Years of Employment 

 From Date of Grant

	
 

	
Cumulative 

 Vesting Percentage


	


	
 

	




	
 


	
 

	
1

	
 

	
25

	
%


	
 

	
2

	
 

	
50

	
%


	
 

	
3

	
 

	
75

	
%


	
 

	
4 or more

	
 

	
100

	
%





10






          In
the event a Participant terminates employment prior to 100% vesting, any shares
of Restricted Stock or Restricted Stock Units which are not vested shall be
forfeited immediately and permanently. However, a Participant shall be 100%
vested in the event he terminates employment by reason of death, Disability, or
Retirement. A Participant shall also be 100% vested on the date of a Change of
Control. Notwithstanding the foregoing, for grants of Restricted Stock or
Restricted Stock Units with performance-based restrictions, the Compensation
Committee, in its sole discretion will determine the extent to which a
Participant is entitled to vesting in the event of his death, Disability,
Retirement or a Change of Control. Subject to Section 7.4, the Compensation
Committee may approve Restricted Stock and Restricted Stock Unit Awards that
provide alternate vesting schedules.


          For
purposes of this Section 7.3, account shall be taken of any adjustments made to
the shares of stock or number of Restricted Stock Units subject to Awards as
described in Section 8.3 hereof after the Date of Grant, such that the number
of shares of Restricted Stock or the number of Restricted Stock Units with
respect to which a Participant is vested shall be redetermined at the time of
an adjustment.


          7.4 Acceleration of
Vesting. Notwithstanding
anything to the contrary in the Plan, including Sections 6.2 and 7.3, the
Compensation Committee, in its discretion, may accelerate, in whole or in part,
the vesting schedule applicable to a grant of Restricted Stock or Restricted
Stock Units; provided, however that no acceleration will result in vesting over
a period of less than three (3) years unless such acceleration is on account of
the Participant’s death, Disability, Retirement, termination of employment or a
Change of Control.


          7.5 Taxes and
Withholding. When a Participant
incurs tax liability in connection with the lapse of a restriction which tax
liability is subject to tax withholding under applicable tax laws, and the
Participant is obligated to pay an amount required to be withheld under
applicable tax laws, the withholding tax obligation will be satisfied by
withholding from shares to be issued upon lapse of such restriction that number
of shares of Common Stock having a Fair Market Value equal to the minimum
amount required to be withheld (but in no event any more than the minimum
amount required to be withheld). To accomplish this withholding requirement,
the Corporation shall sell the number of shares of Common Stock sufficient to
cover the full tax liability, and to the extent any excess amount remains after
satisfying the tax liability, such amount shall be refunded to the Participant.
The Corporation will establish the procedures for selling shares needed to
satisfy the tax withholding liability, which procedures may include selling
shares on the open market or the Corporation’s purchase of such shares or such
other procedures as the Corporation deems desirable. The Participant also has
the option to make payment in cash in lieu of the share withholding described
above pursuant to procedures established by the Corporation. The amount of any
such withholding shall be determined by the Corporation.


11






          7.6 Surrender
of Restricted Stock and Restricted Stock Units. Any Restricted Stock
or Restricted Stock Units granted under the Plan may be surrendered to the
Corporation for cancellation on such terms as the Committee and the Participant
agree.


          7.7 Incorporation
by Reference of Articles of Incorporation. The relevant provisions
of the Articles of Incorporation are hereby incorporated by reference.


Article 8

Amendment and Termination of the Plan; Reorganizations and 

Recapitalizations of the Corporation


          8.1 Amendment
of the Plan. The Compensation Committee may from time to time
suspend or discontinue the Plan or revise or amend the Plan in any respect
whatsoever; provided, however, that to the extent necessary and desirable to comply
with Rule 16b-3 under the Exchange Act and with section 162(m) of the Code (or
any other applicable law or regulation, including the requirements of any stock
exchange on which the Common Stock is listed or quoted), shareholder approval
of any plan amendment shall be obtained in such a manner and to such a degree
as is required by the applicable law or regulation. In the event of a revision
or amendment to the Plan, all outstanding Restricted Stock and Restricted Stock
Units shall be adjusted to be consistent with the terms and provisions of the
Plan, as revised or amended, and in such manner as the Compensation Committee
may deem equitable or as may be required pursuant to applicable law; provided,
however, that except with the written consent of a Participant or as otherwise
specifically provided herein with respect to a replacement plan, no amendment,
suspension, termination or modification of the Plan shall alter or impair the
rights of a Participant under any Award previously granted under the Plan.


          8.2 Termination
of the Plan. The Compensation Committee, with the approval or at the
direction of the Board of Directors, and the Board of Directors shall have the
right and power to terminate the Plan at any time, and no Restricted Stock or
Restricted Stock Units shall be granted under the Plan after the termination of
the Plan. The termination of the Plan shall not have any other effect, and any
outstanding Restricted Stock or Restricted Stock Units shall be subject to the
same terms and conditions as provided in Article 7 hereof, that would have
applied to such Restricted Stock or Restricted Stock Units if the Plan had not
been terminated.


          8.3 Reorganizations
and Recapitalizations of the Corporation.


	
 

	
 


	
 

	
          (a) The existence of
this Plan and
 Restricted Stock or Restricted Stock Units granted hereunder shall not affect
 in any way the right or power of the Corporation or its shareholders to make
 or authorize any or all adjustments, recapitalizations, reorganizations or
 other changes in the Corporation’s capital structure or its business, or any
 merger or consolidation of the Corporation, or any issue of bonds,
 debentures, preferred or prior preference stocks ahead of or





12






	
 

	
 

	
 

	
 

	
 


	
 

	
affecting the shares or the rights thereof, or the
 dissolution or liquidation of the Corporation, or any sale or transfer of all
 or any part of its assets or business, or any other corporate act or
 proceeding, whether of a similar character or otherwise.


	
 

	
 


	
 

	
          (b) Except as
hereinafter provided, the issue by the
 Corporation of shares of stock of any class, or securities convertible into
 shares of stock of any class, for cash or property, or for labor or services,
 either upon direct sale or upon exercise of rights or warrants to subscribe
 therefore, or upon conversion of shares or obligations of the Corporation
 convertible into such shares or other securities, shall not affect, and no
 adjustment by reason thereof shall be made with respect to, the number of
 shares subject to Restricted Stock or Restricted Stock Units granted
 hereunder.


	
 

	
 


	
 

	
          (c)
 The shares
 with respect to which Restricted Stock or Restricted Stock Units may be
 granted hereunder are shares of Common Stock of the Corporation as presently
 constituted, but if, and whenever, prior to the vesting of the Restricted
 Stock or Restricted Stock Units and the delivery by the Corporation of the
 Common Stock, the Corporation shall effect a subdivision or consolidation of
 shares or other capital readjustments, the payment of a stock dividend or
 other increase or reduction of the number of outstanding shares of Common
 Stock, without receiving compensation therefore in money, services or
 property, the number of shares subject to the Plan shall be proportionately
 adjusted, and the number of shares of Restricted Stock or the number of
 Restricted Stock Units granted, as well as the number of shares of Common
 Stock available for future Restricted Stock or Restricted Stock Unit Awards,
 shall be adjusted as follows:


	
 

	
 


	
 

	
 

	
 

	
(i)

	
in the event of an increase in the number of outstanding
 shares, be proportionately increased; and


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(ii)

	
in the event of a reduction in the number of outstanding
 shares, be proportionately reduced.


	
 

	
 

	
 

	
 

	
 


	
 

	
          (d) To the extent that any adjustment
 described in this Section 8.3 relates to securities of the Corporation, such
 adjustments shall be made by the Committee, whose determination shall be
 conclusive and binding on all persons, subject to obtaining the agreement of
 the Corporation’s auditors to such adjustments.





Article 9 

Compliance With Other Laws and Regulations


          9.1 Registration or Qualification of
Securities. The
Plan and the grant of Restricted Stock or Restricted Stock Units under the Plan
shall be subject to all applicable federal and state laws, rules, and
regulations and to such approvals by any government or regulatory agency as may
be required. Each share of Restricted Stock and each Restricted Stock Unit
shall be subject to the requirement that if at any time the


13







Compensation Committee shall determine, in its discretion, that the
listing, registration or qualification of the shares covered thereby under any
securities exchange or under any state or federal law or the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the granting of such Restricted Stock or
Restricted Stock Units, the Restricted Stock or Restricted Stock Units shall
comply with any registration, qualification, consent or approval requirements
as imposed by the Compensation Committee. 


          9.2
Representation. The Compensation Committee may require that any
Person who is granted Restricted Stock or Restricted Stock Units under the Plan
represent and agree in writing that if the shares of Common Stock made subject
to the Restricted Stock or Restricted Stock Units are issuable under an
exemption from registration requirements, the shares will be “restricted”
securities which may be resold only in compliance with the applicable securities
laws, and that such Person is acquiring the shares issued for investment
purposes and not with a view toward distribution. 


Article 10

Restrictions on Transfer


          A
Participant’s rights and interests under the Plan may not be assigned or transferred
other than by will or the laws of descent and distribution, and during the
lifetime of a Participant, only the Participant personally (or the
Participant’s personal representative) may exercise his rights under the Plan.
No purported assignment, pledge or transfer of Restricted Stock or Restricted
Stock Units granted under the Plan, whether voluntary or involuntary, by
operation of law or otherwise, shall vest in the purported transferee or
assignee any interest or right therein whatsoever but immediately upon any such
purported assignment or transfer, or any attempt to make the same, such
Restricted Stock or Restricted Stock Units thereunder shall terminate and
become of no further effect. 


Article 11

General Provisions


          11.1
No Right to Continued Employment. No Employee or any other Person shall have any claim
or right to be issued Restricted Stock or Restricted Stock Units under the
Plan. Neither the adoption and maintenance of the Plan nor the granting of
Restricted Stock or Restricted Stock Units pursuant to the Plan shall be deemed
to constitute a contract of employment between the Corporation and any Employee
or to be a condition of the employment of any Person. The Plan and any
Restricted Stock or Restricted Stock Units granted under the Plan shall not
confer upon any Participant any right with respect to continued employment by
the Corporation, nor shall they interfere in any way with the right of the
Corporation to terminate the employment of any Participant at any time, and for
any reason, with or without cause, it being acknowledged, unless expressly
provided otherwise in writing, that the employment of a Participant is and
continues to be “at will.” 


14  






          11.2
Beneficiaries or Representatives of a Participant. The Compensation Committee’s
determination of death or Disability and of the right of any Person other than
a Participant under the Plan shall be conclusive. The Compensation Committee,
in its discretion, may require from any Person, other than a Participant, such
security and indemnity as the Compensation Committee, in its discretion, deems
necessary or advisable. 


          11.3
Elimination of Fractional Shares. If under any provision of the Plan that requires a
computation of the number of shares of Common Stock the number so computed is
not a whole number of shares of Common Stock, such number of shares of Common
Stock shall be rounded down to the next whole number. 


          11.4
Inspection of Records. Copies of the Plan, records reflecting each
Participant’s Awards, and any other documents and records that a Participant is
entitled by law to inspect shall be open to inspection by the Participant and
his duly authorized representative(s) at the office of the Corporation at any
reasonable business hour. 


          11.5
Word Meanings. The words such as “herein,” “hereinafter,” “hereof,”
and “hereunder” refer to this Plan as a whole and not merely to a subdivision
in which such words appear unless the context othewise requires. 


          11.6
Section Titles. Section titles are for descriptive purposes only and
shall not control or alter the meaning of the Plan as set forth in the text. 


          11.7
Severability. Whenever possible, each provision in the Plan and all Awards granted
under the Plan shall be interpreted in such a manner as to be effective and
valid under applicable law, but if any provision of the Plan or any Award at
any time granted under the Plan shall be held to be prohibited or invalid under
applicable law, then, (i) such provision shall be deemed amended to accomplish
the objectives of the provision as originally written to the fullest extent
permitted by law, and (ii) all other provisions of the Plan and all other
Awards at any time granted under the Plan shall remain in full force and
effect. 


          11.8
Compliance with Section 16(b) of the Securities Exchange Act. With respect to Reporting Persons,
transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act and in all
events the Plan shall be construed in accordance with Rule 16b-3. To the extent
any provision of the Plan or action by the Compensation Committee fails to so
comply, it shall be deemed null and void to the extent permitted by law and
deemed advisable by the Compensation Committee. The Compensation Committee, in
its absolute discretion, may bifurcate the Plan so as to restrict, limit or
condition the use of any provision of the Plan to participants who are officers
or directors of the Corporation, subject to Section 16 of the Exchange Act
without so restricting, limiting or conditioning the Plan with respect to other
participants. 


15






          11.9
Compliance with Code Section 162(m). This Plan is intended to comply
with all applicable provisions of section 162(m) of the Code. To the extent any
provision of the Plan or action by the Compensation Committee fails to so
comply, it shall be deemed null and void to the extent permitted by law and
deemed advisable by the Compensation Committee. 


          11.10
Strict Construction. No rule of strict construction shall be implied
against the Compensation Committee, the Corporation or any other Person in the
interpretation of any of the terms of the Plan, any Award granted under the
Plan or any rule or procedure established by the Compensation Committee. 


          11.11
Choice of Law. All determinations made and actions taken pursuant to the Plan shall be
governed by the internal laws of the State of New York and construed in
accordance therewith. 


Article 12

French Sub-Plan; For Individuals Who are French Resident Taxpayers and/or

Subject to the French Social Security Scheme in France


          All Awards
granted under this Article 12 (also referred to as the “French Sub-Plan”) to an
Employee who is a French resident taxpayer and/or subject to the French social
security scheme in France shall comply with the terms of this French Sub-Plan.
The purpose of the French Sub-Plan is to grant Restricted Stock Units (referred
to as Restricted Stock Entitlements prior to February 1, 2009) to free share
awards of the Corporation’s Common Stock that qualify for favorable income tax
and social security tax treatment under French law. In the event any other
provision of the Plan conflicts with a provision of this Article 12, the
provision in Article 12 shall control with respect to any Award granted under
Article 12. No other Award granted under the Plan shall be subject to the
provisions of this Article 12. 


          12.1
Definitions. The following terms shall have the following meanings for purposes of
this French Sub-Plan: 


	
 

	
 


	
 

	
          (a)
 “Award” means, individually or collectively, a grant of Restricted Stock
 Units (referred to as Restricted Stock Entitlements prior to February 1,
 2009) under this Article 12 to Employees who are French resident taxpayers
 and/or subject to the French social security scheme in France. 


	
 

	
 


	
 

	
          (b)
 “Disability” means a physical or mental condition corresponding to the
 classification in the second or third categories laid down in Article L.
 341-4 of the French Code de la Securite Sociale. 


	
 

	
 


	
 

	
          (c)
 “Holding Period” means a 2 year period following the applicable
 vesting date, during which the Employee may not sell his vested shares of
 Common 





16






	
 

	
 


	
 

	
Stock in order to
 qualify for preferential income tax and social security treatment under
 French law.





          12.2
Eligibility. An Award under the French Sub-Plan may be granted only to an Employee
who is a French resident taxpayer and/or subject to the French social security scheme
in France. 


          12.3
Limitation on Grants under the French Sub-Plan. Awards may not be granted to an
Employee who holds more than 10% of the Corporation’s outstanding shares at the
Date of Grant or an Employee who would hold more than 10% of the Corporation’s
outstanding shares following the Award grant. 


          12.4
Vesting Periods. Except in the case of the death or Disability of the
Employee, each Award granted under the French Sub-Plan shall vest in accordance
with the following schedule: 


	
 

	
 

	
 

	
 

	
 

	
 


	
Completed Years of Employment 

 From Date of Grant

	
 

	
Cumulative 

 Vesting Percentage

	
 


	


	
 

	


	
 


	
 


	
1

	
 

	
 

	
0

	
%

	
 


	
2

	
 

	
 

	
50

	
%

	
 


	
3

	
 

	
 

	
75

	
%

	
 


	
4

	
 or more

	
 

	
100

	
%

	
 





          A
Participant shall be 100% vested in his Restricted Stock Units in the event his
employment is terminated by reason of death or Disability. In the event of
death or Disability, the Holding Period described in Section 12.5 will not
apply but the black out restrictions on sale described in Section 12.6 will
continue to apply. 


          12.5
Holding Periods. Awards granted under the French Sub-Plan shall
include a Holding Period of two (2) years following each vesting date of the
Restricted Stock Units in order to qualify for special tax considerations under
French law. 


          12.6
Restrictions on Sale - Black Out Periods. Following the
expiration of the
Holding Period, Restricted Stock Units may not be sold: 


	
 

	
 


	
 

	
          (a)
 during
 the ten Business Days preceding and following the date on which the
 Corporation’s consolidated accounts, or the annual accounts, are made public;
 and 


	
 

	
 


	
 

	
          (b)
 between
 (i) the date on which the directors and executive officers of the Corporation
 have knowledge of information which, if made public, could have a significant
 impact on the share price of the Common Stock; and (ii) the ten Business Days
 following the date on which this information has been made public. 





17






          12.7
Restrictions on Transfer. Restricted Stock Units may not be transferred,
assigned, pledged or hypothecated in any manner whatsoever. 


          12.8
Other Compliance with French Tax Law. Awards granted under the French
Sub-Plan must also comply with any other requirements set forth by the French
tax administration in effect at the Date of Grant of such Awards. 


          To record
the adoption of the Plan, the Corporation has caused the execution hereof as of
this 11th day of February, 2009. 


	
 

	
 

	
 


	
 

	
SOTHEBY’S
 


	
 

	
a
 Delaware corporation


	
 

	
 

	
 


	
 

	
By:

	
  


	
 

	
 

	



	
 

	
 


	
 

	
Its:
 President and CEO






18