CERTAIN PORTIONS OF THIS  AGREEMENT,
      FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED, HAVE BEEN OMITTED
      AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. SECTIONS
      OF THIS AGREEMENT WHERE PORTIONS HAVE BEEN OMITTED HAVE BEEN IDENTIFIED
IN THE TEXT.


EXHIBIT 10.2


SOTHEBY’S RESTRICTED STOCK UNIT PLAN


PERFORMANCE SHARE UNIT AGREEMENT


          THIS
AGREEMENT, entered into effective as of the 9th day of February, 2010 between
SOTHEBY’S, a Delaware corporation (the “Corporation”), and WILLIAM F. RUPRECHT
(the “Participant”).


WITNESSETH:


          WHEREAS, the Board of Directors of the
Corporation (the “Board”) has established the Sotheby’s Restricted Stock Unit
Plan, as amended (the “Plan”) in order to provide employees of the Corporation
with an opportunity to acquire shares of the Corporation’s Common Stock, as an
inducement to remain in the service of the Corporation or a Subsidiary and to
promote the Participant’s commitment to the success of the Corporation during
such service.


          WHEREAS, Section 6.2 of the Plan provides
that the Corporation may grant Restricted Stock or Restricted Stock Unit Awards
subject to attainment of performance goals (“Performance Share Units” or
“PSUs”), as determined by the Compensation Committee at the time of grant.


          WHEREAS, the Board has determined that it
would be in the best interests of the Corporation and its shareholders to award
Performance Share Units with financial performance objectives which
appropriately address corporate operating and retention objectives, foster a
long term focus on the Company’s business and align management with shareholder
interests.


          WHEREAS,
    the Board has approved the award of 99,503 Performance Share Units to Participant
subject to the execution of this Agreement. 


          NOW, THEREFORE, it is agreed as follows:


          1.          Definitions and Incorporation. The
terms used in this Agreement shall have the meanings given to such terms in the
Plan, unless a term is specifically defined 


1





in the Employment Arrangement, dated March
31, 2006 (as previously amended, the “Arrangement”), between the Corporation
and the Participant in which case the Employment Arrangement language shall
control. The Plan is hereby incorporated in and made an integral part of this Agreement
as if fully set forth herein. In the event of any inconsistency between any
provision of the Plan and any provision of this Agreement, the provision of the
Plan shall prevail unless the Agreement states that it is intended to differ
from the Plan as authorized thereby with respect to a specific issue. The
Participant hereby acknowledges that he or she has received a copy of the Plan
and agrees to comply with the terms and conditions of the Plan and this
Agreement.


          2.          Award
        of Performance Share Units. Pursuant
    to the Plan, the Corporation hereby grants to the Participant effective February
    9, 2010, an award of 99,503 Performance Share Units. If vested, each Performance
Share Unit will be payable in one share of Common Stock of the Corporation.


          3.          Performance Objectives and Vesting. The Performance Share Units will be
eligible for vesting based upon annual achievement of the Corporation’s 2010
pre-tax earnings threshold of $[**]* (the “Annual Target”). Participant
acknowledges and agrees that the Annual Target is extremely confidential and
subject to the provisions of Participant’s confidentiality agreement with the
Corporation.


          (a)          Performance
Share Units Eligible for Vesting Each Year. Pending satisfaction of the
performance requirements, Performance Share Units will vest ratably, 25% each
year, over a four year period as follows:


	
  

 	
  

 	
  

 
	
 Vesting Date

 	
  

 	
 Cumulative Performance 

 Share Units

 Eligible for Vesting

 
	 

 	
  

 	 

 
	
  

 	
  

 	
  

 
	
 March 15, 2011

 	
  

 	
 24,875 PSUs

 
	
  

 	
  

 	
  

 
	
 March 15, 2012

 	
  

 	
 24,876 PSUs

 
	
  

 	
  

 	
  

 
	
 March 15, 2013

 	
  

 	
 24,876 PSUs

 
	
  

 	
  

 	
  

 
	
 March 15, 2014

 	
  

 	
 24,876 PSUs

 


          The
Annual Target will be used to determine the actual Performance Share Unit level
of vesting for each year in the four year vesting period listed above. The
Vesting 


	
  

 	
  

 	
  

 
	 

 	
  

 
	
  

 	
  

 
	
 *

 	
 CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND HAS BEEN FILED
 SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 


2





Date shall also be the payment date. Registration
in the Participant’s name in book entry form of the shares of Common Stock
underlying vested Performance Share Units will occur within ninety (90) days of
the payment date.


          (b)          Vesting Percentage Based on Pre-Tax Earnings Achievement. The annual
vesting calculation will be based on the Corporation’s actual pre-tax earnings
for the calendar year preceding the Vesting Date (the “Performance Period”).
The eligible 


          Performance
Share Units will vest at three possible vesting levels of pre-tax earnings
achievement in accordance with the following schedule:


	
  

 	
  

 	
  

 
	
  

 	

 ·


 	
 100% vesting if
 the Annual Target is achieved or exceeded

 
	
  

 	
 ·


 	
 75% vesting if 2/3
 of the Annual Target is achieved

 
	
  

 	
 ·


 	
 50% vesting if 1/3
 of the Annual Target is achieved.

 


          (c)          Rollover
of Unvested Units and Rollover of Excess Pre-Tax Earnings or Loss. If the
Annual Target is not fully achieved in any of the first three Performance
Periods, the unvested Performance Share Units will rollover to the next year
and, if applicable, each subsequent year in the four year vesting period, on
the following basis: 


          (i)
If the actual pre-tax earnings required for 50% vesting is not achieved, the
pre-tax earnings achieved will be rolled over to the next year (or a subsequent
year in the four year vesting period) and will count towards achievement of the
Annual Target for that year.


          (ii)
If the actual pre-tax earnings for a year exceed any of the vesting levels, any
pre-tax earnings in excess of the applicable vesting level will be rolled over
to the next year (or a subsequent year in the four year vesting period) and
will count towards achievement of the Annual Target for that year. 


          (iii)
If the Corporation incurs a loss (i.e. no actual pre-tax earnings) in any year
of the vesting period, the amount of the loss will carry over to subsequent
years in the vesting period. The amount of the loss will be subtracted from the
actual pre-tax earnings for those years to determine whether the Annual Targets
have been partially or fully achieved. 


          (iv)
To recapture any unvested Performance Share Units in subsequent years, the
pre-tax earnings in those subsequent years (including any rollover pre-tax
earnings or loss) must exceed the Annual Target for the year by the cumulative
shortfall between the pre-tax earnings credited towards vesting and the total
Annual Targets to date (“Cumulative Credited Earnings Shortfall”). The number
of units recaptured shall be determined using the vesting calculation set forth
in Section 3(b) but in no event can a Participant exceed the cumulative
performance share units eligible for vesting in the schedule set forth in
section 3(a).


          (v)
After calculating the 4th vesting period using the forgoing criteria,
the participants will have a further opportunity to recapture all or some of
the unvested units at the end of the 4th Performance Period. This
opportunity will be available if any pre-tax earnings (including any rollover
earnings from prior periods) have not been used to


3






achieve any vesting
level over the 4 Performance Periods (“Excess Earnings”). When this situation
applies, the participant will receive a pro-rated number of units determined as
follows: The total number of remaining unvested units multiplied by a fraction,
the numerator of which shall be the amount of such Excess Earnings and the
denominator of which shall be the Cumulative Credited Earnings Shortfall, if
any.


Please refer to
Exhibit A attached to this Agreement for examples of how this Award may vest as
described in this Section.


          4.          Voting
and Dividend Rights. Except as otherwise determined by the Compensation
Committee or required by applicable law, the Participant shall not have the
right to vote the underlying shares of stock subject to a Performance Share
Unit Award until the Performance Share Units have vested and the shares have
been delivered to the Participant as provided in Section 6.3 of the Plan. The
Participant will have the right to receive dividend equivalents on unvested Performance
Share Units with respect to the equivalent number of shares underlying the
Performance Share Unit Award. Such dividend equivalents will accrue throughout
the vesting period of the Award but will only be paid to the Participant as the
Performance Share Units vest. Dividend equivalents, to the extent they are
accrued and payable, shall be paid no later than ninety (90) days after the
Vesting Date. Such dividend equivalents shall be taxed to the Participant in
accordance with applicable law. All distributions, if any, received by the
Participant with respect to Performance Share Units awarded herein 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 and this
Agreement.


          5.          Termination of Employment-Generally. Except as specifically provided in Sections 6, 7, and
8 below, in the event a Participant separates from service prior to 100%
vesting, the Participant’s rights with respect to Performance Share Units which
are not vested shall be forfeited immediately and permanently. The Participant
shall not be entitled to claim any compensation or indemnification of any kind
whatsoever on the basis of said forfeiture.


          6.          PSU Termination Event With Respect to
Participant. If the performance requirements associated with the Performance Share
Units are achieved in or following the year in which a PSU Termination Event
occurs, the Participant shall vest in the percentage of Performance Share Units
eligible for vesting in accordance with the time vesting and performance
criteria set forth in Section 3 of this Agreement for those remaining vesting
periods, notwithstanding the occurrence of such PSU Termination Event. 


A “PSU Termination
Event” means any of the following:


	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 termination by the Corporation without Cause (as defined
 in the Arrangement);

 


4









	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 termination by Participant for Good Reason (as defined in
 the Arrangement); or 

 
	
  

 	
  

 	
  

 
	
  

 	
 (iii)

 	
 failure of the Corporation on or before December 31, 2010
 to offer to continue Participant’s employment arrangement with the
 Corporation under the terms stated in clause (iii) of the provision titled
 “Termination of Employment- End of Term”
 of the Arrangement.

 



          7.          Retirement
of a Participant, In the event a Participant separates from service due to Retirement
as defined in the Plan, if the performance requirements associated with the
Participant’s Performance Share Units are achieved for the year in which the
Participant retires, the Participant shall vest in the percentage of
Performance Share Units eligible for vesting in accordance with the time
vesting and performance criteria set forth in Section 3 of this Agreement. Any
excess pre-tax earnings for the year of Retirement shall not roll over to a
subsequent year in the vesting period. It is intended that this Section of this
Agreement shall control instead of the automatic vesting in Section 7.3 of the
Plan upon Retirement of the Participant. 


          8.          Death
or Disability of a Participant. In the event a Participant separates from service
due to death or Disability as defined in the Plan, if the performance
requirements associated with the Participant’s Performance Share Units are
achieved in or following the year
in which the Participant retires, the Participant or the Participant’s
beneficiary shall vest, in the percentage of Performance Share Units eligible
for vesting in accordance with the time vesting and performance criteria set
forth in Section 3 of this Agreement for those remaining vesting periods. It is
intended that this Section of this Agreement shall control instead of the
automatic vesting in Section 7.3 of the Plan upon death or Disability of the
Participant. 


          9.          Securities
Law Requirements.

          (a)          Regardless of whether the offering
and sale of the shares of Common Stock under the Plan have been registered
under the United States Securities Act of 1933 (the “Act”) or have been
registered or qualified under the securities laws of any state, the Corporation
may impose restrictions upon the sale, pledge, or other transfer of such shares
(including the placement of appropriate legends on stock certificates) if, in
the judgment of the Corporation and its counsel, such restrictions are
necessary or desirable in order to achieve compliance with the provisions of
the Act, the securities laws of any state, or any other law. In the event that
the sale of such shares under the Plan is not registered under the Act but an
exemption is available which requires an investment representation or other
representation, the Participant shall be required to represent that such shares
are being acquired for investment, and not with a view to the sale or
distribution thereof, and to make such other representations as are deemed
necessary or appropriate by the Corporation and its counsel.


5






          (b)          Stock
certificates evidencing such shares awarded under the Plan pursuant to an
unregistered transaction shall bear the following restrictive legend and such
other restrictive legends as are required or deemed advisable under the provisions
of any applicable law:


	
  

 	
  

 
	
  

 	
  “THE SALE OF
 THE SECURITIES REPRESENTED HEREBY HAS NOT BEEN REGISTERED UNDER THE
 SECURITIES ACT OF 1933 (THE “ACT”). ANY TRANSFER OF SUCH SECURITIES WILL BE
 INVALID UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH
 TRANSFER OR, IN THE OPINION OF COUNSEL FOR THE ISSUER, SUCH REGISTRATION IS
 UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT.”

 


          Any
determination by the Corporation and its counsel in connection with any of the
matters set forth in this paragraph shall be conclusive as to all binding
persons.


          10.          Rights as an Employee. Nothing in the Plan or this Agreement shall be
construed to give the Participant or any person the right to remain in the
employment of the Corporation or a Subsidiary or to affect the right of the
Corporation or Subsidiary to terminate the Participant’s or such other person’s
employment at any time with or without cause, it being acknowledged, unless
expressly provided otherwise in a writing signed by the Participant and the
Corporation, that the Participant’s employment is “at will.”


          11.          Inspection of Records. Copies of the Plan, records reflecting the
Participant’s Performance Share Unit award(s), and any other documents and
records which the Participant is entitled by law to inspect shall be open to
inspection by the Participant and his or her duly authorized representative(s)
at the office of the Corporation at any reasonable business hour.


          12.          Notices. Any notice to the Corporation contemplated by this
Agreement shall be addressed to the attention of the Corporation’s Human
Resource Department at 1334 York Avenue, New York, New York 10021; and any
notice to the Participant shall be addressed to him or her at the address on file
with the Corporation on the date hereof or at such other address as he or she
may hereafter designate in writing.


          13.          Interpretation. The interpretation, construction, performance, and
enforcement of this Agreement and of the Plan shall lie within the sole
discretion of the Committee, and the Committee’s determinations shall be
conclusive and binding on all interested persons.


          14.          Choice of Law. This Agreement, and all rights and obligations
hereunder, shall be governed by the laws of the State of New York.


6






           IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement, in the case of the Corporation by its duly authorized officer, as of
the day and year first above written.


	
  
 	
  
 	
  
 	
  
 	
  
 
	
  
 	
 SOTHEBY’S
 
	
  
 	
  
 	
  
 	
  
 
	
  
 	
 By:
 	
  
 	
   /S/ SUSAN ALEXANDER

	
  
 	
  
 	  
	
  
 	
  
 	
  
 	
  
 
	
  
 	
 Its:
 	
  
 	
 EVP, Worldwide Head of HR
 
	
  
 	
  
 	
  
 	
  
 
	
  
 	
 Dated:
 	
  February 16, 2010
 
	
  
 	
  
 	
  
 
	
  
 	
 By: 
 	
  
 	
 /S/ WILLIAM F.
 RUPRECHT
 
	
  
 	
  
 	
  
 	  
	
  
 	
  
 	
  
 	
      Participant’s
 Signature
 
	
  
 	
  
 
	
  
 	
 Dated: February
 16, 2010
 


7






 SCHEDULE 1


	
  

 	
  

 	
  

 
	
 Employee:

 	
  

 	
 William F.
 Ruprecht

 
	
  

 	
  

 	 

 
	
 Date of Grant:

 	
  

 	
 February 9, 2010

 
	
  

 	
  

 	 

 
	
 Performance Share Units Awarded:

 	
  

 	
 99,503

 
	
  

 	
  

 	 

 
	
 2010 Pre-Tax Earnings Threshold

 	
  

 	
           [**]**

 
	
  

 	
  

 	 

 



 RIGHT TO EXERCISE 



Subject to the terms of the Plan and the
performance requirements and other conditions set forth in this Agreement, the
Performance Share Units awarded subject to this Agreement shall vest as
follows:


	
  

 	
  

 
	
 Cumulative Number of 

 	
  

 
	
 Performance Share Units Vested

 	
 Vesting Date    

 
	
  

 	
  

 
	
 24,875 (25% of
 units)

 	
  (March
 15, 2011)

 
	
  

 	
  

 
	
 49,751 (50% of
 units)

 	
  (March
 15, 2012)

 
	
  

 	
  

 
	
 74,627 (75% of
 units)

 	
  (March
 15, 2013)

 
	
  

 	
  

 
	
 99,503 (100% of
 units)

 	
  (March
 15, 2014)

 



*2010 Pre-Tax Earnings Threshold applies for
each year in the four year vesting schedule listed above.


	
  

 	
  

 	
  

 
	 

 	
  

 
	
  

 	
  

 
	
 **

 	
 CONFIDENTIAL
 INFORMATION HAS BEEN OMITTED AND HAS BEEN FILED SEPARATELY WITH THE
 SECURITIES AND EXCHANGE COMMISSION.

 


8






Hypothetical PSU Award Example





	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Example Award 
 (no. of PSUs)

 	
 Value at $25

 	
 Vesting Levels of 4 Year Award

 
	
  

 	
  

 	
 50%

 	
 75%

 	
 100%

 
	
 4,000

 	
 $100,000

 	
 500

 	
 750

 	
 1,000

 







Hypothetical Annual Target
Pre-Tax Earnings  



	
  

 	
  

 
	
 Annual Target:

 	
 30
 m

 






	
  

 
	
 Hypothetical
 Pre-Tax Earnings



 
	
 1st Vest Date -
 Assumes pre-tax earnings of 15 m
 achieved

 
	
 2nd Vest Date -
 Assumes pre-tax earnings of 45 m achieved

 
	
 3rd Vest Date -
 Assumes pre-tax earnings of 35 m achieved

 
	
 4th Vest Date -
 Assumes pre-tax earnings of 20 m
 achieved

 






	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 1st Vest

 	
 2nd Vest

 	
 3rd Vest

 	
 4th Vest

 	
 Pro-rated Calculation **

 	
 Cumulative Total

 
	
  

 	
 Pre-Tax

 Earnings

 Threshold

 	
 Pre-Tax

 Earnings

 Achieved

 	
 No. of 

 Units

 	
 Pre-Tax

 Earnings

 Threshold

 	
 Pre-Tax

 Earnings Achieved

 	
 No. of 

 Units

 	
 Pre-Tax Earnings Threshold

 	
 Pre-Tax Earnings Achieved

 	
 No. of 

 Units

 	
 Pre-Tax Earnings Threshold

 	
 Pre-Tax Earnings Achieved

 	
 No. of 

 Units

 	
 Pre-Tax Earnings Threshold

 	
 Pre-Tax Earnings Achieved

 	
 No. of 

 Units

 	
 Pre-Tax Earnings Achieved

 	
 No. of Vested Units

 
	
 50% Vesting Level

 	
 10 m

 	
 15 m

 	
 500

 	
 10 m

 	
  

 	
 500

 	
 10 m

 	
  

 	
 500

 	
 10 m

 	
  

 	
500

 	
  

 	
  

 	
  

 	
 115 m

 	
 3,875

 
	
 75% Vesting Level

 	
 20 m

 	
  

 	
 750

 	
 20 m

 	
  

 	
 750

 	
 20 m

 	
  

 	
 750

 	
 20 m

 	
 20 m

 	
 750

 	
  

 	
  

 	
  

 
	
 100% Vesting Level

 	
 30 m

 	
  

 	
 1,000

 	
 30 m

 	
 30 m

 	
 1,000

 	
 30 m

 	
 35 m

 	
 1,000

 	
 30 m

 	
  

 	
 1,000

 	
  

 	
  

 	
  

 
	
 Cumulative
 Credited Earnings Shortfall

 	
  

 	
  

 	
  

 	
 20 m

 	
 15 m

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
10 m

 	
  

 	
  

 
	
 Cumulative
 Unvested Units Rollover

 	
  

 	
  

 	
  

 	
  

 	
  

 	
 500

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
 250

 
	
 Excess Earnings Rollover

 	
  

 	
  

 	
  

 	
  

 	
 5 m

 	
  

 	
  

 	
  

 	
  

 	
  

 	
 5 m

 	
  

 	
  

 	
 5 m

 	
  

 
	
 Pro-rated 4th Vest **

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
 125

 
	
 Pre-Tax
 Earnings Used and Vested Units:

 	
  

 	
 10 m

 	
 500

 	
  

 	
 50 m

 	
 1,500

 	
  

 	
 30 m

 	
 1,000

 	
  

 	
 20 m

 	
 750

 	
  

 	
 5 m

 	
 125

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Cumulative
 Earnings Required for 100% Vestings

 	
 30 m

 	
  

 	
  

 	
 60 m

 	
  

 	
  

 	
 90 m

 	
  

 	
  

 	
 120 m

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Cumulative
 Actual Earnings Achieved

 	
  

 	
 15 m

 	
  

 	
  

 	
 60 m

 	
  

 	
  

 	
 95 m

 	
  

 	
  

 	
 115 m

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 






	
  

 	
  

 
	
  

 	
  

 
	
 **
 4th Vest - Pro-rated Calculation

 	
  

 
	
 Excess Earnings
 Rollover:

 	
 5 m

 
	
 Cumulative
 Credited Earnings Shortfall:

 	
 10 m

 
	
 Earnings Excess (%)

 	
 50%

 
	
  

 	
  

 
	
 Total Unvested
 Units:

 	
 250

 
	
 Additional
Prorated Units Earned: 

 	
 125