Document:

Exhibit

EXHIBIT 10.6

 

SOTHEBY’S
EXECUTIVE SEVERANCE BENEFITS PLAN

Effective February 24, 2016

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TABLE OF CONTENTS
Page
		
	ARTICLE ONE
	FOREWORD                                1

		
	1.01
	Purpose of the Plan                            1

		
	1.02
	Plan Status                                1

		
	ARTICLE TWO
	DEFINITIONS                                1

		
	2.01
	Accounting Firm                                1

		
	2.02
	Administrator                                1

		
	2.03
	Base Salary                                1

		
	2.04
	Bonus Plan                                1

		
	2.05
	Board                                    1

		
	2.06
	Cause                                    2

		
	2.07
	Change in Control                                2

		
	2.08
	Chief Executive Officer                            3

		
	2.09
	CIC Qualifying Termination                        3

		
	2.10
	Code                                    3

		
	2.11
	Corporation                                3

		
	2.12
	Director                                    3

		
	2.13
	Disability                                    3

		
	2.14
	Effective Date                                3

		
	2.15
	Employer                                    3

		
	2.16
	ERISA                                    3

		
	2.17
	Exchange Act                                4

		
	2.18
	Excise Tax                                    4

		
	2.19
	Exempt Person                                4

		
	2.20
	Non-CIC Qualifying Termination                        4

		
	2.21
	Notification Letter                                4

		
	2.22
	Notice of Termination                            4

		
	2.23
	Participant                                    4

		
	2.24
	Payment                                    4

		
	2.25
	Person                                    4

		
	2.26
	Plan                                    4

		
	2.27
	Qualifying Termination                            4

		
	2.28
	Release                                    5

		
	2.29
	Release Consideration Period                        5

		
	2.30
	Release Revocation Period                        5

		
	2.31
	Affirmative Covenants                            5

		
	2.32
	Section 409A                                8

		
	2.33
	Separation from Service                            8

		
	2.34
	Severance Benefits                            9

		
	2.35
	Subsidiary                                    9

		
	2.36
	Target Bonus                                 9

		
	ARTICLE THREE
	ELIGIBILITY AND PARTICIPATION                    9

		
	3.01
	Eligibility on the Effective Date                        9

		
	3.02
	Future Eligibility                                9

		
	3.03
	Exclusive Benefits                                10

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	3.04
	End of Participation                            10

		
	ARTICLE FOUR
	SEVERANCE BENEFITS                            10

		
	4.01
	Release Requirement                            10

		
	4.02
	Non-CIC Qualifying Termination                        10

		
	4.03
	CIC Qualifying Termination                        12

		
	4.04
	409A                                    13

		
	4.05
	Enforcement Costs                            15

4.06          280G..................................................................................    15
		
	ARTICLE FIVE
	AMENDMENT AND TERMINATION                    16

		
	ARTICLE SIX
	MISCELLANEOUS                            17

		
	6.01
	Participant Rights                                17

		
	6.02
	Administrator Authority                            17

		
	6.03
	Claims and Appeals Procedure                        18

		
	6.04
	Reliance on Tables and Reports                        21

		
	6.05
	Expenses                                    21

		
	6.06
	Disputes                                    21

		
	6.07
	Successors                                22

		
	6.08
	Construction                                22

		
	6.09
	References to Other Plans and Programs                23

		
	6.10
	Notices                                    23

		
	6.11
	Service of Legal Process                            23

		
	6.12
	Plan Year                                    23

		
	6.13
	No Duty to Mitigate                            23

		
	6.14
	Withholding of Taxes                            23

		
	6.15
	Governing Law                                23

		
	6.16
	Validity/Severability                            23

		
	6.17
	Miscellaneous                                23

		
	6.18
	Source of Payments                            24

		
	6.19
	Survival of Provisions                            24

		
	APPENDIX A   FORM OF NOTIFICATION LETTER
	25

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ARTICLE ONE 
FOREWORD

1.01     Purpose of the Plan.  The Corporation considers it essential to the best interests of its shareholders - (i) to foster the continued employment of key management personnel in a competitive market; (ii) to provide appropriate protection that facilitates acting in the interest of shareholders in the event of a possible or actual change in control of the Corporation; (iii) to align the Corporation’s severance arrangements with current market practice (in benefits provided and circumstances covered) under a consistent framework; and (iv) to protect the Corporation’s confidential information, trade secrets and relationships with clients.  Accordingly, pursuant to the terms of this Plan, effective February 24, 2016, the Corporation will provide Severance Benefits to an eligible employee in the event of a Qualifying Termination of the eligible employee’s employment.  No benefits will be provided pursuant to this Plan except upon the occurrence of a Qualifying Termination.  Capitalized terms used throughout the Plan have the meanings set forth in Article Two, except as otherwise defined in the Plan or where the context clearly requires otherwise. No provision of this Plan shall exempt the severance benefits provided from “clawback” to the extent required by applicable laws or listing requirements.  

1.02     Plan Status.  The Plan is intended to be a top hat plan for a select group of management or highly compensated executives for purposes of ERISA, so that it is subject only to the administration and enforcement provisions of ERISA.  
ARTICLE TWO
DEFINITIONS

Where the following words and phrases appear in this Plan with initial capital letters, they shall have the meaning set forth below, unless a different meaning is plainly required by the context.
2.01    “Accounting Firm” means a nationally recognized accounting firm, or actuarial, benefits or compensation consulting firm, in each case with experience in performing the calculations regarding the applicability Code Section 280G and of the tax imposed by Code Section 4999, as selected by the Corporation immediately prior to a Change of Control.

2.02     “Administrator” means the Compensation Committee of the Board.  In connection with Participants who are subordinate to the President and Chief Executive Officer, the President and Chief Executive Officer has authority to act on behalf of the Administrator.
  
2.03     “Base Salary” means, with respect to a Participant, the Participant’s annual base salary in effect on the date of the Participant’s Qualifying Termination.
    
2.04     “Bonus Plan” means, with respect to a Participant, the Corporation’s annual incentive plan in which the Participant participates at the time of the Participant’s Qualifying Termination (but only considering the cash portion of awards under the annual incentive plan). 

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

2.06    “Cause” means the following circumstances with respect to a Participant that lead to the Participant’s Separation from Service:

(a)    conviction of, or entering into a plea of either guilty or nolo contendere to, any felony;
(b)    fraud, misappropriation or embezzlement with respect to the  Employer, or any other act in connection with the performance of an Employee’s duties which is materially injurious to the Company;

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(c)    refusal to follow the reasonable and lawful directions of the Board or the Participant’s supervisor; 
(d)    substantial failure to perform the Participant’s duties for the Employer, after the Administrator delivers written demand for substantial performance to the Participant, which demand specifically identifies the manner in which the Administrator believes that the Participant has failed to substantially perform the Participant’s duties and either (i) determines that the failure is not capable of adequate cure, or (ii) provides the Participant with a reasonable period of time to cure such failure (and the Participant does not cure the failure within the period);
(e)    engaging in an act of willful misconduct or gross negligence in connection with the Employer’s business;
(f)    material breach of the Affirmative Covenants; or
(g)    breach of a material Corporation policy or the Corporation’s Code of Business Conduct which reasonably would be expected to result in a material liability to, or have a material adverse effect on the business or financial condition of, the Corporation or the Employer. 
2.07    “Change in Control” means the occurrence of any of the following events:

(a)    any Person, other than an Exempt Person, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, over a period of 12 consecutive months, of securities of the Corporation representing 50% or more of the combined voting power of the Corporation’s then-outstanding securities; 
(b)    the consummation of a merger, consolidation or combination that results in the Corporation’s voting securities representing less than 50% of the combined voting power of the securities of the Corporation or of the surviving entity outstanding immediately after such merger, consolidation or combination; 
(c)    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; or
(d)    the sale or disposition by the Corporation of all or substantially all the Corporation’s assets, other than a sale or disposition to an Exempt Person or a sale or disposition to an entity of which at least 50% of the voting power is represented by voting securities of the Corporation.
In all cases, a “Change in Control” shall occur pursuant to any of clauses (a) - (d) above only if the event also constitutes a change in the effective ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company within the meaning of Treasury Regulation section 1.409A-3(i)(5).  
2.08    “Chief Executive Officer” means the President and Chief Executive Officer of the Corporation.

2.09    “CIC Qualifying Termination” means, with respect to a Participant, the Participant’s Separation from Service initiated by the Employer other than for Cause during the time period commencing on the effective date of a Change in Control and continuing until the earlier of (i) the 24-month anniversary of such date, or (ii) the date of the Participant’s Separation from Service by reason of 

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Disability or the Participant’s death.  In addition, if (x) the Employer initiates the Participant’s Separation from Service without Cause during the six-month period ending on the effective date of a Change in Control (A) at the request of a third party that has taken steps reasonably calculated or intended to effect a Change in Control or (B) otherwise in connection with or anticipation of a Change in Control, then the Participant shall be deemed to incur a CIC Qualifying Termination on the effective date of the Change in Control.

2.10    “Code” means the Internal Revenue Code of 1986, as amended and the proposed, temporary and final regulations promulgated thereunder. Reference to any section or subsection of the Code includes reference to any comparable or succeeding provisions of any legislation that amends, supplements or replaces such section or subsection.

2.11     “Corporation” means Sotheby’s, a Delaware corporation, or its successor or assignee (or both, or more than one of each or both).

2.12    “Director” means a member of the Board of Directors of the Corporation.

2.13     “Disability”  shall mean, with respect to a Participant, the date on which the insurer or administrator under the Employer’s program of long-term disability insurance determines that the Participant is eligible to commence benefits under such insurance.

2.14    “Effective Date” means February 24, 2016.

2.15    “Employer” means the Corporation and each Subsidiary. 

2.16    “ERISA”  means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.  Reference to any section or subsection of ERISA includes reference to any comparable or succeeding provisions of any legislation that amends, supplements or replaces such section or subsection.

2.17    “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the regulations promulgated thereunder.  Reference to any section or subsection of the Exchange Act includes reference to any comparable or succeeding provisions of any legislation that amends, supplements or replaces such section or subsection.

2.18    “Excise Tax” shall mean, collectively, (i) the tax imposed by Code Section 4999 by reason of being “contingent on a change in ownership or control” of the Corporation, within the meaning of Code Section 280G, and (ii) any similar tax imposed by state or local law, and (iii) any interest or penalties with respect to any tax described in subsection (i) or (ii).

2.19    “Exempt Person” means an employee benefit plan of the Employer or a trustee or other administrator or fiduciary holding securities under an employee benefit plan of the Employer.

2.20    “Non-CIC Qualifying Termination” means, with respect to a Participant, the Participant’s Separation from Service initiated by the Employer other than for Cause in the absence of a Change in Control or outside of the time periods specified in Section 2.09 above with respect to a Change in Control.  

2.21    “Notification Letter” means a letter substantially in the form attached hereto as Appendix A by which the Administrator shall provide notice to an executive of his or her participation in the Plan and which the executive must sign to accept participation in the Plan, in lieu of other severance rights, and agree to observe the Affirmative Covenants as a condition of participation in the Plan.

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2.22    “Notice of Termination” means a written notice of termination of employment for Cause or Disability given by the Employer to a Participant in the manner specified in Section 6.10, which states the specific termination provision in the Plan relied upon for the termination, sets forth in reasonable detail the facts and circumstances claimed to provide the basis for termination under the provision so indicated, and specifies the Participant’s date of termination.

2.23    “Participant”  means each individual who has become a Participant under Section 3.01 or Section 3.02, and who has not ceased to be a Participant under Section 3.04.

2.24    “Payment” means any payment or benefit in the nature of compensation (within the meaning of Code Section 280G(b)(2)) received or to be received by a Participant or for the benefit of a Participant, whether payable under the terms of this Plan or any other plan, arrangement or agreement with the Employer or an affiliate of the Employer.

2.25    “Person” means any “person” or “group” as those terms are used in Sections 13(d) and 14(d) of the Exchange Act.

2.26    “Plan” means this Sotheby’s Executive Severance Benefits Plan, as it may be amended from time to time, or any successor plan, program or arrangement thereto.

2.27    “Qualifying Termination” means either a CIC Qualifying Termination or a Non-CIC Qualifying Termination. 

2.28    “Release” means an agreement in which the Participant releases claims in connection with a termination of the Participant’s employment with the Employer and re-affirms the Participant’s obligation to observe the terms of the Affirmative Covenants.  The specific terms of the Release for a Participant shall be based upon the form of release used by the Employer at the time of the termination of employment, but with final terms determined by the Employer in accordance with its discretion on a case-by-case basis.

2.29    “Release Consideration Period” means the period of time specified by the Release, not to exceed forty-five (45) days, during which the affected Participant is permitted to consider whether or not to sign the Release.

2.30    “Release Revocation Period” means the period of time specified by the Release, not to exceed seven (7) days (or such longer period as may be required by applicable law), during which the Participant is permitted to revoke the signed Release.

2.31    “Affirmative Covenants” means, with respect to a Participant, the following:

(a)    Protection of Confidential Information. The Participant agrees that during the course of employment with the Corporation, the Participant has and will come into contact with and learn various forms of confidential information and trade secrets, which are the property of (a) the Corporation and/or (b) any Group Companies (as defined below).  The Participant agrees that the Participant shall not either during the period of his or her employment or at any time thereafter use or disclose to any person or entity, other than the Corporation or as authorized by the Corporation, any “confidential information” as defined in the confidentiality agreement entered into between the Participant and the Corporation (“Confidential Information”) belonging to (a) the Corporation and/or (b) any other Group Company, and that during the Participant’s employment the Participant will continue to comply with all policies and agreements related to maintaining the confidentiality of the Corporation’s confidential information, including but not limited to the Sotheby’s Confidentiality Agreement, which is incorporated herein by reference.  “Group Company” means a subsidiary and any other company which is for the time being a holding 

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company of the Corporation or another subsidiary of any such holding company, (and, if applicable, its predecessors in business) for which the Participant performed services to a material degree or in which the Participant held office at any time during the 12-month period prior to the termination of the Participant’s employment. The Participant agrees that the covenants and agreements given by the Participant in this clause (a) and in each of clauses (b), (c) and (d) (together, the “Covenants”) are given in favor of the Corporation both for itself and as trustee for each Group Company, and that acting in that capacity, the Corporation shall be entitled to enforce the benefit of those clauses for any Group Company.
(b)    Non-Compete Period. The Participant acknowledges and agrees that the Corporation is engaged in a highly competitive business and that by virtue of the Participant’s position and responsibilities with (a) the Corporation and/or (b) any other Group Company and the Participant’s access to the Corporation’s Confidential Information of each of them, engaging in any business which is directly competitive with (a) the Corporation and/or (b) any other Group Companies during the Participant’s employment with the Corporation and during the Restricted Period (as defined below) will cause it great and irreparable harm.  Accordingly, during the Participant’s employment with the Corporation and for eighteen (18) months following the termination of the Participant’s employment with the Corporation (the “Restricted Period”), the Participant agrees that the Participant will not, directly or indirectly, whether on the Participant’s own behalf or on behalf of, or in conjunction with, any firm, company or person or other business entity of any kind, or whether as agent, consultant, director, employee, owner, partner, shareholder or in any other capacity, consult for, become employed by, engaged by or otherwise  provide services to, or solicit or accept any funds, loans or other consideration from (i) Christie’s, Bonhams, Poly Auctions, China Guardian or Phillips or any affiliate or successor of such entities in competition with (a) the Corporation and/or (b) any other Group Company, or (ii) any other business concern that is (or intends to be) in competition with any Restricted Business (including a business formed, acquired or led (in any part) during the Restriction Period by the Participant).  In the Covenants, “Restricted Business” means services of the same type as, similar to or competitive with services supplied by the Corporation at the date of the termination of the Participant’s employment provided that the Participant was involved, directly or indirectly, in the supply of such services at any time during the 24-month period up to and including the date of termination of the Participant’s employment. None of the restrictions in this clause shall prevent the Participant from holding a passive investment by way of shares or other securities of not more than 5% of the total issued share capital of any company, whether or not it is listed or dealt in on a recognized stock exchange, provided the Participant is not actively involved in the management, strategy development or operational execution of the company. 
(c)    Non-Solicitation of Clients. The Participant acknowledges and agrees that solely by reason of employment by the Corporation, the Participant has and will come into contact with a significant number of the Corporation’s clients and customers, and prospective clients and customers, of (a) the Corporation and/or (b) any other Group Company and will have access to Confidential Information regarding their respective company’s clients and customers, prospective clients and customers and related information.   During the Participant’s employment with the Corporation and during the Restricted Period, the Participant agrees that the Participant will not, directly or indirectly or whether on the Participant’s own behalf or on behalf of, or in conjunction with, any firm, company or person or other business entity of any kind, or whether as agent, consultant, director, employee, owner, partner, shareholder or in any other capacity, solicit or entice away or in any manner attempt to persuade any current client or customer, or prospective client or customer, of (a) the Corporation and/or (b) any other Group Company to discontinue or diminish his, her or its relationship or prospective relationship with (a) the Corporation and/or (b) any other Group Company, or otherwise provide business to any person, corporation, partnership or other business entity of any kind other than (a) the Corporation and/or (b) any other Group Company. This restriction shall apply only to those clients or customers, or prospective clients or 

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customers, of (a) the Corporation and/or (b) any other Group Company with whom the Participant had contact or about whom the Participant learned Confidential Information during the two (2) years prior to the termination of the Participant’s employment from the Corporation.
(d)    No Hire or Solicitation of Employees.  The Participant acknowledges and agrees that solely as a result of employment with the Corporation, and in light of the broad responsibilities of such employment which include working with other employees of the Corporation and/or any other Group Company, the Participant has and will come into contact with and acquire Confidential Information regarding their respective employees, and will develop relationships with those employees.  Accordingly, during the Participant’s employment with the Corporation and during the Restricted Period, the Participant agrees that the Participant will not directly or indirectly, whether on the Participant’s own behalf or on behalf of, or in conjunction with, any firm, company or person or other business entity of any kind, or whether as agent, consultant, director, employee, owner, partner, shareholder or in any other capacity, hire or solicit, recruit, induce, entice, influence, or encourage any Restricted Person to leave the Corporation and/or any Group Company  or become hired by another person, company or entity.  In the Covenants, “Restricted Person” means any employee of the Corporation and/or any other Group Company, or any person who has left the employment of the Corporation and/or any other Group Company within the six (6) months preceding the termination of the Participant’s employment who either had access to Confidential Information or who held a manager, director or more senior position and with whom the Participant had had business dealings during the 12 month period up to and including the date of the termination of the Participant’s employment.
(e)    Non-Disparagement. Participant acknowledges and agrees that Participant will not, either during the period of his or her employment or at any time thereafter, disparage (or induce or encourage others to disparage) the Employer or any of its present directors or executive officers with respect to any events relating directly or indirectly to Participant's employment with the Corporation including, without limitation, criticizing the Corporation’s or the Employer’s business strategy.  For the purposes of this Plan and the Release, the term "disparage" means any comments or statements which would adversely affect in any manner the business reputation or relationships of Participant or the Corporation and/or any of its past or present directors, officers, agents, trustees, subsidiaries or affiliates, administrators, attorneys or employees known to Participant, as the case may be.  Nothing in this Plan, including the terms regarding confidentiality and non-disparagement, prohibit Participant from reporting possible violations of federal law or regulation to any governmental agency or entity including but not limited to the Department of Justice, the Securities and Exchange Commission, the Congress, and any Inspector General, or making other disclosures that are protected under the whistleblower provisions of federal law or regulation.  Participant understands that he or she does not need the prior authorization of the Corporation to make any such reports or disclosures and is not required to notify the Corporation that he or she has made such reports or disclosures.
(f)    Remedies.  The Participant also acknowledges and agrees that the Corporation’s remedies at law for a breach of any of the Covenants would be inadequate and, in recognition of this fact, the Participant agrees that, in the event of such a breach, in addition to any remedies at law, the Corporation shall be entitled to obtain (i) equitable relief in the form of specific performance, temporary or permanent injunction or any other equitable remedy which may then be available, and the Participant hereby consents to the issuance thereof forthwith and without bond by any court of competent jurisdiction as set forth herein; and (ii) recovery of all reasonable sums and costs, including attorneys’ fees, incurred by the Corporation to defend or enforce the Covenants.
(g)    Waiver.  The Corporation reserves the right to waive all or any part of the terms and conditions of the Covenants under appropriate circumstances, in its sole discretion.  Any such waiver must be in writing and signed by the Chief Human Resources Officer.  No waiver by 

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the Corporation of any breach of the Covenants shall be a waiver of any preceding or succeeding breach.  No waiver by the Corporation of any right under the Covenants shall be construed as a waiver of any other right.  The Corporation shall not be required to give notice to enforce strict adherence to all terms of the Covenants.
(h)    Miscellaneous.  The Participant agrees that the restrictions in the Covenants are reasonable and necessary for the protection of the Corporation’s legitimate interests.  If at any time there is a final determination in arbitration or temporary or preliminary determination in court pursuant to Section 6.06(f) that the time period, geographic scope, or any other restriction contained in the Covenants is unenforceable against the Participant, the provisions of the Covenants shall not be deemed void but shall be deemed amended to apply as to such maximum time period, geographic scope and to such other maximum extent as the arbitrator may determine or indicate to be enforceable. In the event any provision in the Covenants should be held by an arbitrator or court to be invalid, illegal or unenforceable in any respect, neither party will be required to comply with such provision for so long as the provision is held to be invalid, illegal or unenforceable, but the validity, legality, and enforceability of the remaining provisions contained in the Covenants shall not in any way be affected or impaired by the illegality, invalidity or unenforceability of such provision.  The Covenants together with the Confidentiality Agreement and the Plan constitute a single, integrated written contract expressing the entire agreement of the parties hereto relative to the subject matter hereof and represents the complete understanding between the Corporation and the Participant concerning the subject matter of the Covenants, and no other promises or agreements concerning the subject matter of the Covenants shall be binding unless signed by the Company’s Chief Human Resources Officer and the Participant.  The Covenants supersede and terminate any and all prior agreements or understandings between the parties, whether oral or written, concerning the subject matter of the Covenants.
2.32    “Section 409A” means Section 409A of the Code and the Department of Treasury and Internal Revenue Service guidance thereunder. 

2.33    “Separation from Service” means “separation from service” from the affiliated companies as described under Section 409A(a)(2)(A)(i). A Participant who is both an employee of the affiliated companies and a Director will not have a Separation from Service until he or she has a Separation from Service with respect to both his or her employment and his or her Board membership.  For this purpose, the term “affiliated companies” means the Employer and any affiliate with which any entity comprising the Employer is treated as a single employer under Code Section 414(b) or 414(c).

2.34    “Severance Benefits” means the severance pay and the other benefits payable to a Participant pursuant to Article Four of the Plan.

2.35    “Subsidiary” means any entity in which the Corporation, directly or indirectly, beneficially owns more than fifty percent (50%) of such entity’s equity interest by vote and value.

2.36    “Target Bonus” means, with respect to a Participant, the Participant’s target annual cash incentive under the Bonus Plan for the performance period containing the date of the Participant’s Qualifying Termination.

ARTICLE THREE
ELIGIBILITY AND PARTICIPATION

3.01    Eligibility on the Effective Date.  Eligibility for the Plan is limited to United States-based direct reports to the President and CEO, unless the Compensation Committee of the Board authorizes the eligibility of other executives of the Employer.  In addition, executives described in the prior sentence shall automatically be eligible to participate in the Plan while so described, unless the Compensation 

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Committee of the Board determines otherwise.  Executives who are eligible to participate in the Plan under the prior sentence shall be provided, by the Chief Human Resources Officer (or for the Chief Human Resources Officer, by the Chief Executive Officer) on behalf of the Administrator, notice of eligibility for Plan participation in the form of a Notification Letter and in the manner provided by Section 6.10.  Each such executive will become a Participant in the Plan on the latest of the following dates: (i) February 24, 2016, (ii) the executive’s first day of employment in a position eligible for the Plan, (iii) upon the expiration date (or earlier waiver date) of a pre-existing agreement for severance benefits that the executive has with the Corporation (specifically including, but not limited to, any severance benefit entitlements specified in an offer letter from the Corporation, in an individual severance agreement, and in an individual employment agreement), or (iv) the date that the executive signs a copy of his or her Notification Letter, without altering the Notification Letter, and returns such signed Notification Letter to the Chief Human Resources Officer (or for the Chief Human Resources Officer, to the Chief Executive Officer) on behalf of the Administrator.  The names of each Participant as of the Effective Date and the contemplated commencement dates of their status as Participants (but subject to the Notification Letter requirement) are listed on Appendix B.

3.02    Future Eligibility.  Subject to the first two sentences of Section 3.01, the Administrator may approve additional executives as Participants subsequent to the Effective Date and the Chief Human Resources Officer on behalf of the Administrator will provide notice to each such executive of his or her selection for Plan participation in the form of a Notification Letter and in the manner provided by Section 6.10.  Each such executive will become a Participant once he or she signs a copy of his or her Notification Letter and returns such signed Notification Letter to the Chief Human Resources Officer.  The Chief Human Resources Officer on behalf of the Administrator shall update Appendix B as additional executives become Participants from time to time (or to reflect the removal of executives as Participants in a manner consistent with the terms of the Plan).  

3.03    Exclusive Benefits.  Any Severance Benefits payable to a Participant under this Plan will be paid solely in lieu of, and not in addition to, any severance benefits payable under any offer letter, severance arrangement or other program or agreement on account of the Participant’s termination of employment with the Employer.  A Participant’s acceptance of participation in this Plan pursuant to Section 3.01 above shall be deemed to constitute a waiver by such Participant of all entitlements to severance benefits that the Participant may have under any other plan or arrangement maintained by the Employer (specifically including, but not limited to, the Sotheby’s, Inc. Severance Plan).   

3.04    End of Participation.  An individual shall cease to be a Participant on the date on which the individual ceases to be an employee of the Employer other than by way of a Qualifying Termination.  A Participant may discontinue his or her status as a Participant at any time by a prospectively or immediately effective written document that is delivered to the Administrator in the manner specified in Section 6.10.  Except as provided in the next sentence, the Administrator may, by resolution, discontinue an individual’s status as a Participant; provided, however, that no such discontinuance shall become effective (i) during the one-year period following the date on which advance written notice of such discontinuance is provided to the affected Participant in the manner specified in Section 6.10, or (ii) during the period beginning on the effective date of a Change in Control and ending 24 months after the effective date of such Change in Control.  In the event that an individual incurs a Qualifying Termination while still a Participant, such individual shall remain a Participant until all compensation and benefits required to be provided to the Participant under the terms of the Plan on account of such Qualified Termination have been so provided.

ARTICLE FOUR 
SEVERANCE BENEFITS

4.01    Release Requirement.  A Participant will be eligible for the Severance Benefits described in Section 4.02 or 4.03 below, as applicable, subject to the Release requirement specified in this Section 

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4.01.  Within seven (7) days following the date of the Participant’s Separation from Service, the Corporation shall provide the Participant with a Release.  As a condition of receiving the Severance Benefits described in Section 4.02 or Section 4.03 below, as applicable, the Participant must execute and deliver the Release to the Corporation within the Release Consideration Period, the Release Revocation Period must expire without revocation of the Release by the Participant, and the Participant must comply with the Affirmative Covenants set out in the Release.  In the event the Participant breaches one or more of such Affirmative Covenants, the Participant will forfeit any such Severance Benefits that have not been paid or provided to the Participant and must repay to the Corporation the amount (or equivalent cash value) of any such Severance Benefits that have been paid to the Participant.

4.02    Non-CIC Qualifying Termination.  In the event that a Participant incurs a Non-CIC Qualifying Termination, the Corporation shall pay or provide to the Participant the following benefits, subject to the Release requirement specified in Section 4.01 above.
(a)Severance Pay.  The Corporation shall pay to the Participant an amount equal to one and one-half (1.5) multiplied by the sum of (A) the Participant’s Base Salary, and (B) the Participant’s Target Bonus.  The amount payable under this Section 4.02(a) shall be paid to the Participant in equal installments as salary continuation, pursuant to the Corporation’s standard payroll practices for the payment of base salary to executives, commencing within sixty (60) days following the date of the Participant’s Separation from Service (except as provided in Section 4.04(g) and subject to the requirements of Section 4.04(f)) and continuing for eighteen (18) months after commencement.
   
(b)Pro-Rata Bonus for Year of Termination.  If, on account of the Participant’s Non-CIC Qualifying Termination, the Participant forfeits the Participant’s right to earn a payment under the Bonus Plan for the performance period containing the date of such Non-CIC Qualifying Termination, the Corporation shall pay to the Participant a lump sum cash payment equal to the amount of the annual cash incentive payment to which the Participant would have been entitled under the Bonus Plan for such performance period but for the Participant’s Non-CIC Qualifying Termination, determined on the basis of actual achievement of the performance goals applicable under such plan for such performance period (the “Actual Bonus”), multiplied by a fraction (i) the numerator of which equals the number of days in such performance period during which the Participant was employed by the Employer (rounded up to the next highest number of days in the case of a partial day of employment), and (ii) the denominator of which is the total number of days in such performance period.  This amount shall be paid to the Participant in a lump sum on the later of (x) the date on which the Actual Bonus would have been paid to the Participant under such plan but for the Participant’s termination of employment during such performance period, or (y) within sixty (60) days following the date of the Participant’s Separation from Service (except as provided in Section 4.04(f) and subject to the requirements of Section 4.04(e)).

(c)COBRA Pay.  The Corporation shall pay to the Participant an amount equal to eighteen (18) times the monthly COBRA charge in effect on the date of the Participant’s Separation from Service for the type of Employer-provided group health plan coverage in effect for the Participant (e.g., employee only, family coverage) on the date of the Participant’s Separation from Service.  This amount shall be paid to the Participant in equal installments along with the scheduled severance benefit payments as salary continuation pursuant to the Corporation’s standard payroll practices for the payment of base salary commencing within sixty (60) days following the date of the Participant’s Separation from Service (except as provided in Section 4.04(g) and subject to the requirements of Section 4.04(f)).

(d)Equity and Long-Term Incentives. Any equity or long-term compensation grant or award outstanding to the Participant shall be treated as specified by the terms of the applicable equity or long-term incentive compensation plan under which the grant or award was made and the applicable award agreement.

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4.03    CIC Qualifying Termination.  In the event that a Participant incurs a CIC Qualifying Termination, the Corporation shall pay or provide to the Participant the following benefits, subject to the Release requirement specified in Section 4.01 above.

(a)Severance Pay.  The Corporation shall pay to the Participant an amount equal to two (2) multiplied by the sum of (A) the Participant’s Base Salary, and (B) the Participant’s Target Bonus.  This amount shall be paid to the Participant in a lump sum within sixty (60) days following the date of the Participant’s Separation from Service (except as provided in Sections 4.04(e) and 4.04(g) and subject to the requirements of Section 4.04(f)).

(b)Pro-Rata Target Bonus for Year of Termination.  The Corporation shall pay to the Participant a lump sum cash payment equal to the amount of the target annual cash incentive payment to which the Participant was entitled under the Bonus Plan for such performance period, multiplied by a fraction (i) the numerator of which equals the number of days in such performance period during which the Participant was employed by the Employer (rounded up to the next highest number of days in the case of a partial day of employment), and (ii) the denominator of which is the total number of days in such performance period.  This amount shall be paid to the Participant in a lump sum within sixty (60) days following the date of the Participant’s Separation from Service (except as provided in Section 4.04(f) and subject to the requirements of Section 4.04(e)).  

(c)COBRA Pay.  The Corporation shall pay to the Participant an amount equal to eighteen (18) times the monthly COBRA charge in effect on the date of the Participant’s Separation from Service for the type of Employer-provided group health plan coverage in effect for the Participant (e.g., employee only, family coverage) on the date of the Participant’s Separation from Service.  This amount shall be paid to the Participant in a lump sum within sixty (60) days following the date of the Participant’s Separation from Service (except as provided in Section 4.04(g) and subject to the requirements of Section 4.04(f)). 

(d)Equity and Long-Term Incentives. Any equity or long-term compensation grant or award outstanding to the Participant shall be treated as specified by the terms of the applicable equity or long-term incentive compensation plan under which the grant or award was made and the applicable award agreement.

(e)Only Incremental Amounts Due.  If a Participant becomes entitled to benefits after already receiving benefits for a Qualifying Termination only the net additional benefits (if any) shall be provided.  In particular, it is possible that a Participant will incur a Non-CIC Qualifying Termination prior to the effective date of a Change in Control and become entitled to benefits pursuant to Section 4.02 on account of such termination of employment and that the termination of employment will subsequently become a CIC Qualifying Termination due to the occurrence of a Change in Control subsequent to the date of the employment termination.  In that event, the amounts and benefits to which the Participant will be entitled under this Section 4.03 upon the occurrence of the Change in Control will be the incremental amounts and benefits, if any, that exceed the comparable amounts and benefits to which the Participant became entitled under Section 4.02.  For example, since the COBRA benefit provided to a Participant under Section 4.03(b) is the same as the COBRA benefit provided to a Participant under Section 4.02(b), the Participant would receive only the COBRA subsidy provided under Section 4.02(b); no additional COBRA benefit would be provided to the Participant under Section 4.03(b). 
b). 

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4.04    Section 409A.

(a)To the extent necessary to ensure compliance with Section 409A, the provisions of this Section 4.04 shall govern in all cases over any contrary or conflicting provision in the Plan.  This Section 4.04 is an absolutely superseding provision of this Plan, meaning that it will apply notwithstanding other provisions of this Plan that permit or require payment at an earlier time.

(b)It is the intent of the Corporation that this Plan comply with the requirements of Section 409A with respect to any nonqualified deferred compensation subject to Section 409A.   The Plan shall be interpreted and administered to maximize the exemptions from Section 409A and, to the extent the Plan provides for deferred compensation subject to Section 409A, to comply with Section 409A and to avoid the imposition of tax, interest and/or penalties upon any Participant under Section 409A.
(c)The Corporation does not, however, assume any economic burdens associated with Section 409A. Although the Corporation intends to administer the Plan to prevent taxation under Section 409A, it does not represent or warrant that the Plan complies with any provision of federal, state, local, or non-United States law. The Corporation, the Subsidiaries, and their respective directors, officers, employees and advisers will not be liable to any Participant (or any other individual claiming a benefit through the Participant) for any tax, interest, or penalties the Participant may owe as a result of participation in the Plan.  Neither the Corporation nor the Subsidiaries or affiliates have any obligation to indemnify or otherwise protect any Participant from any obligation to pay taxes under Section 409A.  However, following the occurrence of a Change in Control, the Corporation shall exercise its good faith best efforts to minimize any adverse impact to a Participant with respect to the benefits payable to the Participant under this Plan (for example, by preserving the availability of the Section 409A short-term deferral exemption with respect to such benefits to the extent possible and by avoiding any forfeiture of a Participant’s benefits or any other non-payment of benefits due under this Plan). 

(d)The right to a series of payments under the Plan will be treated as a right to a series of separate payments.  In particular, but not by way of limitation, each installment payment pursuant to Section 4.02(a) is a separate payment.  Each separate payment that is made within 2-1⁄2 months following the end of the year that contains the date of the Participant’s Separation from Service is intended to be exempt from Section 409A as a short-term deferral within the meaning of the final regulations under Section 409A.  Each separate payment that is made later than 2-1⁄2 months following the end of the year that contains the date of the Participant’s Separation from Service is intended to be exempt under the two-times exception of Treasury Reg. § 1.409A-1(b)(9)(iii), up to the limitation on the availability of that exception specified in the regulation and subject to the conditions on the applicability of that exemption.   Then, each separate payment that is made after the two-times exception ceases to be available shall be subject to delay, as necessary, in accordance with Section 4.04(f) below.

(e)It is intended that each lump sum payment made pursuant to Section 4.02(b), 4.03(a), and 4.03(b) shall be exempt from Section 409A as a short-term deferral within the meaning of the final regulations under Section 409A. 

(f)To the extent necessary to comply with Section 409A, in no event may a Participant, directly or indirectly, designate the taxable year of payment.  In particular, to the extent necessary to comply with Section 409A, because any payment to a Participant under this Plan is conditioned upon the Participant’s executing and not revoking a Release, if the designated payment period for such payment begins in one taxable year and ends in the next taxable year, the payment will be made in the later taxable year. 

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(g)To the extent necessary to comply with Section 409A, references in this Plan to “termination of employment” or “terminates employment” (and similar references) shall have the same meaning as Separation from Service, and no payment subject to Section 409A that is payable upon a termination of employment shall be paid unless and until (and not later than applicable in compliance with Section 409A) the Participant incurs a Separation from Service.  In addition, if the Participant is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) at the time of his or her Separation from Service, any nonqualified deferred compensation subject to Section 409A that would otherwise have been payable on account of, and within the first six months following, the Participant’s Separation from Service, and not by reason of another event under Section 409A(a)(2)(A), will become payable on the first business day after six months following the date of the Participant’s Separation from Service or, if earlier, the date of the Participant’s death (or as otherwise dictated by the Participant’s election and the nonqualified deferred compensation plan in accordance with Section 409A, to the extent subject to 409A, or as necessary to avoid a material modification with respect to deferrals that are grandfathered and exempt from 409A).

(h)To the extent that any reimbursement by the Employer to a Participant of eligible expenses under this Plan constitutes a “deferral of compensation” within the meaning of Section 409A (a “Reimbursement”) (i) the Participant must request the Reimbursement (with substantiation of the expense incurred) no later than 30 days following the date on which the Participant incurs the corresponding eligible expense; (ii) subject to any shorter time period provided in any expense reimbursement policy of the Employer or specifically provided otherwise in this Plan, the Employer shall make the Reimbursement to the Participant on or before the last day of the calendar year following the calendar year in which the Participant incurred the eligible expense; (iii) the Participant’s right to Reimbursement shall not be subject to liquidation or exchange for another benefit; (iv) the amount eligible for Reimbursement in one calendar year shall not affect the amount eligible for Reimbursement in any other calendar year; and (v) except as specifically provided otherwise in this Plan, the period during which the Participant may incur expenses that are eligible for Reimbursement is limited to five calendar years following the calendar year in which the Participant’s Separation from Service occurs. 

4.04     Enforcement Costs.  All expenses of a Participant incurred in enforcing the Participant’s rights and/or to recover the Participant’s benefits under this Article Four that are related to a CIC Qualifying Termination, including but not limited to, reasonable attorneys’ fees, court costs, arbitration costs, and other reasonable expenses shall be paid by the Corporation if the Participant prevails on any substantive issue in such proceeding.  The Corporation shall pay or reimburse the Participant for such fees, costs and expenses, promptly upon presentment of appropriate documentation, subject to Section 4.04(g).

4.05    Section 280G.

(e)A Participant shall bear all expense of, and be solely responsible for, any Excise Tax; provided, however, that any Payment that would constitute a “parachute payment” within the meaning of Code Section 280G shall be reduced to the extent necessary so that no portion thereof shall be subject to the Excise Tax but only if, by reason of such reduction, the net after-tax benefit received by the Participant shall exceed the net after-tax benefit that would be received by the Participant if no such reduction was made.
(f)The “net after-tax benefit” shall mean (i) the Payments which the Participant receives or is then entitled to receive from the Employer that would constitute “parachute payments” within the meaning of Code Section 280G, less (ii) the amount of all federal, state and local income and employment taxes payable by the Participant with respect to the foregoing calculated at the highest marginal income tax rate for each year in which the foregoing shall be 

 15

paid to the Participant (based on the rate in effect for such year as set forth in the Code as in effect at the time of the first payment of the foregoing), less (iii) the amount of Excise Tax imposed with respect to the payments and benefits described in (b)(i) above.
(g)All determinations under this Section 4.06 will be made by an Accounting Firm. The Accounting Firm shall be required, in part, to evaluate the extent to which payments are exempt from Section 280G as reasonable compensation for services rendered before or after the Change in Control.  All fees and expenses of the Accounting Firm shall be paid solely by the Corporation.  The Corporation will direct the Accounting Firm to submit any determination it makes under this Section 4.06 and detailed supporting calculations to both the Participant and the Corporation as soon as reasonably practicable following the Change of Control.
(h)If the Accounting Firm determines that one or more reductions are required under this Section 4.06, such Payments shall be reduced in the order that would provide the Participant with the largest amount of after-tax proceeds (with such order, to the extent permitted by Code Section 280G and Section 409A designated by the Participant, or otherwise determined by the Accounting Firm) to the extent necessary so that no portion thereof shall be subject to the Excise Tax, and the Corporation shall pay such reduced amount to the Participant.  The Participant shall at any time have the unilateral right to forfeit any equity award in whole or in part.
(i)As a result of the uncertainty in the application of Code Section 280G at the time that the Accounting Firm makes its determinations under this Section 4.06, it is possible that amounts will have been paid or distributed to the Participant that should not have been paid or distributed (collectively, the “overpayments”), or that additional amounts should be paid or distributed to the Participant (collectively, the “underpayments”).  If the Accounting Firm determines, based on either the assertion of a deficiency by the Internal Revenue Service against the Employer or the Participant, which assertion the Accounting Firm believes has a high probability of success or is otherwise based on controlling precedent or substantial authority, that an overpayment has been made, the Participant must repay the overpayment to the Corporation, without interest; provided, however, that no loan will be deemed to have been made and no amount will be payable by the Participant to the Corporation unless, and then only to the extent that, the deemed loan and payment would either reduce the amount on which the Participant is subject to tax under Code Section 4999 or generate a refund of tax imposed under Code Section 4999.  If the Accounting Firm determines, based upon controlling precedent or substantial authority, that an underpayment has occurred, the Accounting Firm will notify the Participant and the Corporation of that determination, and the Corporation will promptly pay the amount of that underpayment to the Participant without interest.
(j)The parties will provide the Accounting Firm access to and copies of any books, records, and documents in their possession as reasonably requested by the Accounting Firm, and otherwise cooperate with the Accounting Firm in connection with the preparation and issuance of the determinations and calculations contemplated by this Section 4.06.  For purposes of making the calculations required by this Section 4.06, the Accounting Firm may rely on reasonable, good faith interpretations concerning the application of Code Sections 280G and 4999.

ARTICLE FIVE
AMENDMENT AND TERMINATION

Subject to the next sentence, the Administrator shall have the right at any time and from time to time, by instrument in writing, to amend, modify, alter, or terminate the Plan in whole or in part.  Notwithstanding the foregoing or anything in this Plan to the contrary, the Administrator may not amend, modify, alter or terminate this Plan so as to adversely affect payments or benefits then payable, or which could become payable, to a Participant under the Plan, except to the minimum extent required to comply with any applicable law, either (i) during the one-year period following the date on which advance written notice of such amendment, modification, alteration or termination is provided to the affected Participant in 

 16

the manner specified in Section 6.10, or (ii) during the period beginning on the effective date of a Change in Control and ending 24 months after the effective date of such Change in Control.
ARTICLE SIX
MISCELLANEOUS

6.01    Participant Rights.  Except to the extent required or provided for by mandatorily imposed law as in effect and applicable hereto from time to time, neither the establishment of the Plan, nor any modification thereof, nor the payment of any benefits, shall be construed as giving to any Participant or other person any legal or equitable right against the Employer, or any officer or employee thereof, or the Board or the Administrator, except as herein provided; nor shall any Participant have any legal right, title or interest in the assets of the Employer, except in the event and to the extent that benefits may actually be payable to him hereunder.  This Plan shall not constitute a contract of employment nor afford any individual any right to be retained or continued in the employ of the Employer or in any way limit the right of the Employer to discharge any of its employees, with or without cause.  Participants have no right to receive any payments or benefits that the Employer is prohibited by applicable law from making.

6.02     Administrator Authority.
(k)The Administrator will administer the Plan and have the full authority and discretion necessary to accomplish that purpose, including, without limitation, the authority and discretion to:
(i)  resolve all questions relating to the eligibility of Participants;
(ii)  determine the amount of benefits, if any, payable to Participants under the Plan and determine the time and manner in which such benefits are to be paid;
(iii)  engage any administrative, legal, tax, actuarial, accounting, clerical, or other services it deems appropriate in administering the Plan;
(iv)  construe and interpret the Plan, supply omissions from, correct deficiencies in and resolve inconsistencies or ambiguities in the language of the Plan, resolve inconsistencies or ambiguities between the provisions of this document, and adopt rules for the administration of the Plan which are not inconsistent with the terms of the Plan document;
(v)  compile and maintain all records it determines to be necessary, appropriate or convenient in connection with the administration of the Plan; and
(vi)  resolve all questions of fact relating to any matter for which it has administrative responsibility.
(l)The Administrator shall perform all of the duties and may exercise all of the powers and discretion that the Administrator deems necessary or appropriate for the proper administration of the Plan, including, but not limited to, delegation of any of its duties to one or more authorized officers. All references to the authority of the Administrator in this Plan shall be read to include the authority of any party to which the Administrator delegates such authority.
(m)Any failure by the Administrator to apply any provisions of this Plan to any particular situation shall not represent a waiver of the Administrator’s authority to apply such provisions thereafter. Every interpretation, choice, determination or other exercise of any power or discretion given either expressly or by implication to the Administrator shall be final, conclusive and binding upon all parties having or claiming to have an interest under the Plan or otherwise directly or indirectly affected by such action, without restriction, however, on the right of the Administrator to reconsider and re-determine such action.

 17

(n)Any decision rendered by the Administrator and any review of such decision shall be limited to determining whether the decision was so arbitrary and capricious as to be an abuse of discretion. The Administrator may adopt such rules and procedures for the administration of the Plan as are consistent with the terms hereof.
6.03    Claims and Appeals Procedure.
(o)With respect to any claim for benefits which are provided exclusively under this Plan, the claim and any related appeal shall be administered pursuant to subsections (b) through (k) below.  With respect to any claim for benefits which, under the terms of the Plan, are provided under another employee benefit plan or program maintained by an Employer, the Administrator shall determine any claim and any related appeal regarding an individual’s eligibility under the Plan pursuant to subsections (b) through (k) below but the administration of any other claim and any related appeal with respect to such benefits (including the amount of such benefits) shall be subject to the claims and appeals procedure specified in such other employee benefit plan or program.
(p)A Participant or his duly authorized representative (the “claimant”) may make a claim for benefits under the Plan by filing a written claim with the Administrator.  Determinations of each such claim shall be made as described below; provided, however, that the claimant and the Administrator may agree to extended periods of time for making determinations beyond those periods described below.
(q)The Administrator will notify a claimant of its decision regarding his claim within a reasonable period of time, but not later than ninety (90) days following the date on which the claim is filed, unless special circumstances require a longer period for processing of the claim and the claimant is notified in writing of the reasons for an extension of time prior to the end of the initial ninety (90) day period and the date by which the Administrator expects to make the final decision.  In no event will the Administrator be given an extension for processing the claim beyond one hundred eighty (180) days after the date on which the claim is first filed with the Administrator unless otherwise agreed in writing by the claimant and the Administrator.
(r)If a claim is denied, the Administrator will notify the claimant of its decision in writing.  Such notification will be written in a manner calculated to be understood by the claimant and will contain the following information:  the specific reason(s) for the denial; a specific reference to the Plan provision(s) on which the denial is based; a description of additional information necessary for the claimant to perfect his claim, if any, and an explanation of why such material is necessary; and an explanation of the Plan’s claim review procedure and the applicable time limits under such procedure and a statement as to the claimant’s right to bring a civil action under ERISA after all of the Plan’s review procedures have been satisfied.
(s)The claimant shall have sixty (60) days following receipt of the notice of denial to file a written request with the Administrator for a review of the denied claim.  The decision by the Administrator with respect to the review must be given within sixty (60) days after receipt of the request, unless special circumstances require an extension and the claimant is notified in writing of the reasons for an extension of time prior to the end of the initial sixty (60) day period and the date by which the Administrator expects to make the final decision.  In no event will the decision be delayed beyond one hundred twenty (120) days after receipt of the request for review unless otherwise agreed in writing by the claimant and the Administrator.
(t)Every claimant will be provided a reasonable opportunity for a full and fair review of an adverse determination.  A full and fair review means the following:  the claimant will be given the opportunity to submit written comments, documents, records, etc. with regard to the claim, and the review will take into account all information submitted by the claimant, regardless of whether it was reviewed as part of the initial determination; and the claimant will be provided, 

 18

upon request and free of charge, with copies of all documents and information relevant to the claim for benefits.
(u)The Administrator will notify the claimant of its decision regarding an appeal of a denied claim in writing.  The decision will be written in a manner calculated to be understood by the claimant, and will include:  the specific reason(s) for the denial and adverse determination; a reference to the specific Plan provisions on which the denial is based; a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to and copies of all information relevant to the claimant’s claim for benefits; and a statement regarding the claimant’s right to bring a civil action under ERISA.
(v)If the Administrator fails to follow these procedures consistent with the requirements of ERISA with respect to any claim, the claimant will be deemed to have exhausted all administrative remedies under the Plan and will have the right to bring a civil action under ERISA Section 502(a).  This Article XII shall be interpreted such that the claims procedures applicable under the Plan conform to the claims review requirements of Part 5, Title I, of ERISA, and the applicable provisions set forth in Department of Labor regulation section 2560.503-1.
(w)Before filing any claim or action, the employee, former employee, Participant, former Participant, or other individual, person, entity, representative, or group of one or more of the foregoing (collectively, a “Claimant”) must first fully exhaust all of the Claimant’s actual or potential rights under the claims procedures of this Section 6.03, including such rights as the Administrator may choose to provide in connection with novel claims or issues or in particular situations.  For purposes of the prior sentence, any Claimant that has any claim, issue or matter that implicates in whole or in part -
(i)  The interpretation of the Plan,
(ii)  The interpretation of any term or condition of the Plan,
(iii)  The interpretation of the Plan (or any of its terms or conditions) in light of applicable law,
(iv)  Whether the Plan or any term or condition under the Plan has been validly adopted or put into effect, or
(v)  Any claim, issue or matter deemed similar to any of the foregoing by the Administrator,
(or two or more of these) shall not be considered to have satisfied the exhaustion requirement of this Section 6.03(i) unless the Claimant first submits the claim, issue or matter to the Administrator to be processed pursuant to the claims procedures of Section 6.03 or to be otherwise considered by the Administrator, and regardless of whether claims, issues or matters that are not listed above are of greater significance or relevance.  The exhaustion requirement of this Section 6.03(i) shall apply even if the Administrator has not previously defined or established specific claims procedures that directly apply to the submission and consideration of such claim, issue or matter, and in which case the Administrator (upon notice of the claim, issue or matter) shall either promptly establish such claims procedures or shall apply (or act by analogy to) the claims procedures of Section 6.03 that apply to claims for benefits.  Upon review by any court or other tribunal, this exhaustion requirement is intended to be interpreted to require exhaustion in as many circumstances as possible (and any steps necessary to effect this intent should be taken).
(x)Any claim or action that is filed in court against or with respect to the Plan, the Administrator or the Employer must be filed within the applicable time frame that relates to the claim or action, as follows:

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(i)  Claims or actions for Severance Benefits must be filed within two (2) years of the later of the date the Participant received the Severance Pay Benefit or the date of the relevant employee’s Separation from Service.
(ii)  For all other claims or actions, the claim or action must be filed within two (2) years of the date when the Claimant knew or should have known of the actions or events that gave rise to the claim or action.
Any claim or action filed after the applicable time frame stated above will be void.
(y)Any claim or action in connection with the Plan must be filed in the United States District Court for the Southern District of New York.
6.04    Reliance on Tables and Reports.  In administering the Plan, the Administrator is entitled to the extent permitted by law to rely conclusively upon all tables, valuations, certificates, opinions and reports which are furnished by accountants, legal counsel or other experts employed or engaged by the Administrator. The Administrator will be fully protected in respect of any action taken or suffered by the Administrator in good faith reliance upon all such tables, valuations, certificates, reports, opinions or other advice. The Administrator is also entitled to rely upon any data or information furnished by the Employer or by a Participant as to any information pertinent to any calculation or determination to be made under the provisions of the Plan, and, as a condition to payment of any benefit under the Plan the Administrator may request a Participant to furnish such information as it deems necessary or desirable in administering the Plan.

6.05    Expenses.  All Plan administration expenses shall be paid by the Corporation.

6.06    Disputes.  Any and all disputes and controversies arising under or in connection with this Policy, following exhaustion of administrative remedies, shall be exclusively resolved by expedited binding arbitration conducted by a single neutral arbitrator with substantial experience regarding ERISA (the “Arbitrator”) from the Judicial Arbitration and Mediation Services/Endispute, Inc. (“JAMS”), or its successor, pursuant to the JAMS Employment Arbitration Rules and Procedures in effect at the time of the dispute (information available at www.JAMSadr.org), and with the Arbitrator selected as hereinafter provided, and subject to the following provisions of this Section 6.06 (the parties hereby agreeing that, in the event that there is a conflict between the provisions of the applicable rules of JAMS and the provisions of this Plan, the provisions of this Plan shall control).  
(a)    The Arbitrator shall be determined from a list of names of five impartial arbitrators each of whom shall be an attorney experienced in arbitration matters concerning executive employment disputes, supplied by JAMS, and chosen by the Participant and the Company by each in turn striking a name from the list until one name remains (with the Company being the first to strike a name). Such arbitration process shall take place in New York City (the Borough of Manhattan) in the state of New York.  Judgment may be entered on the award of the arbitrator in any court having proper jurisdiction.    
(b)    The arbitration shall be determined based solely on the record established for the appeal described in Section 6.03(f) and (g). The Arbitrator shall not have the power to add to nor modify any of the terms or conditions of this Plan. The Arbitrator’s decision shall not go beyond what is necessary for the interpretation and application of the provision(s) of this Plan in respect of the issue before the Arbitrator, based upon the appeal record. 
(c)    In any such arbitration, the arbitrator will issue a written award/opinion. The judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.  The decision of the arbitrator shall be final and conclusive, and the parties waive the right to trial de novo or appeal.  The Company will pay the arbitrator’s and arbitration fees.  Subject to Section 4.05 in the case of a CIC Qualifying Termination, all other costs and 

 20

expenses of arbitration (including fees and disbursements of counsel) shall be borne by the respective party incurring such costs and expenses, unless the arbitrator shall award costs and expenses to the prevailing party in such arbitration.
(d)    The arbitrator shall have the authority to award any remedy or relief (including equitable remedies and relief) that a court of competent jurisdiction could order or grant.
(e)    The Participant must bring any dispute in arbitration on an individual basis only, and not on a class, collective or representative basis and must waive the right to commence, be a party to, or be an actual or putative class member of any class, collective, or representative action arising out of or relating to the Program (“class action waiver”).  However, if this class action waiver is found to be unenforceable, then any claim on a class, collective, or representative basis shall be filed and adjudicated in a court of competent jurisdiction, and not in arbitration. 
(f)    Notwithstanding this arbitration procedure, the Administrator, the Corporation or a Participant may apply to any court sitting in the County, City and State of New York (i) to enforce this agreement to arbitrate, (ii) to seek injunctive relief so as to maintain the status quo or to enforce the Participant’s Affirmative Covenants until the arbitration award is rendered or the dispute is otherwise resolved, or (iii) to confirm any arbitration award.
6.07    Successors.
(a)This Plan shall bind any successor of or to the Corporation, its assets or its businesses (whether direct or indirect, by purchase, merger, consolidation or otherwise), in the same manner and to the same extent that the Corporation would be obligated under this Plan if no succession had taken place. In the case of any transaction in which a successor would not by the foregoing provision or by operation of law be bound by this Plan, the Corporation shall require such successor expressly and unconditionally to assume and agree to perform the Corporation’s obligations under this Plan, in the same manner and to the same extent that the Corporation would be required to perform if no such succession had taken place.
(b)The Plan shall inure to the benefit of and be binding upon and enforceable by the Corporation and the Participants and their personal and legal representatives, executors, administrators, successors, assigns, heirs, distributees, devisees and legatees.  If a Participant should die after receiving formal notification of employment termination and such notification states that the termination would qualify for benefits under this Plan, Plan benefits shall be paid to the Participant’s beneficiary who is designated by the Participant in a beneficiary designation form specific to this Plan, provided that the Participant’s estate signs a Release similar to the form to be signed by the Participant as a condition of payment of benefits upon the death of the Participant.

6.08    Construction.  In determining the meaning of the Plan, words imparting the masculine gender shall include the feminine and the singular shall include the plural, unless the context requires otherwise.  Unless otherwise stated, references to Sections are references to Sections of this Plan.  Whenever an example is provided or the text uses the term “including” followed by a specific item or items, or there is a passage having similar effect, such passages of the Policy shall be construed as if the phrase “without limitation” followed such example or term (or otherwise applied to such passage in a manner that avoids limits on its breadth of application).

6.09    References to Other Plans and Programs.  Each reference in the Plan to any plan, policy or program, the Plan or document of the Employer or affiliate of the Employer shall include any amendments or successor provisions thereto without the necessity of amending the Plan for such changes.

 21

6.10    Notices.  Notices and all other communications contemplated by this Plan shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid or when sent by express U.S. mail or overnight delivery through a national delivery service (or an international delivery service in the case of an address outside the U.S.) with signature required.  Notice to the Corporation, the Board or the Administrator shall be directed to the attention of the Secretary of the Corporation at the address of the Corporation’s headquarters, and notice to a Participant shall be directed to the Participant as the most recent personal residence on file with the Corporation.

6.11    Service of Legal Process.  Service of legal process may be made upon the Administrator to the attention of to the attention of the Secretary of the Corporation at the address of the Corporation’s headquarters.

6.12    Plan Year.  The records of the Plan shall be maintained on the basis of the Corporation’s fiscal year.

6.13    No Duty to Mitigate.  The Participant shall not be required to mitigate the amount of any payment provided pursuant to this Plan, nor shall the amount of any such payment be reduced by any compensation that the Participant receives from any other source, except as provided in this Plan.

6.14    Withholding of Taxes.  The Employer may withhold from any amount payable or benefit provided under this Plan such Federal, state, local, foreign and other taxes as are required to be withheld pursuant to any applicable law or regulation.

6.15    Governing Law.  Except to the extent that the Plan may be subject to the provisions of ERISA, the Plan will be construed and enforced according to the laws of the State of New York, without giving effect to the conflict of laws principles thereof.

6.16    Validity/Severability.  If any provision of this Plan or the application of any provision to any person or circumstances is held invalid, unenforceable or otherwise illegal, the remainder of this Plan and the application of such provision to any other person or circumstances will not be affected, and the provision so held to be invalid or unenforceable will be reformed to the extent (and only to the extent) necessary to make it enforceable or valid. To the extent any provisions held to be invalid or unenforceable cannot be reformed, such provisions are to be stricken here from and the remainder of this Plan will be binding on the Parties and their successors and assigns as if such invalid or illegal provisions were never included in this Plan from the first instance.

6.17    Miscellaneous.  No waiver by a Participant or the Employer at any time of any breach by the other party of, or compliance with, any condition or provision of this Plan to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the time or at any prior or subsequent time.  No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party that are not expressly set forth in this Plan.

6.18    Source of Payments.  All payments provided under this Plan, other than payments made pursuant to any Employer employee benefit plan which provides otherwise, shall be paid in cash from the general funds of the Corporation, and no special or separate fund shall be required to be established, and no other segregation of assets required to be made, to assure payment.  To the extent that any person acquires a right to receive payments from the Corporation under this Plan, such right shall be no greater than the right of an unsecured creditor of the Corporation.

6.19    Survival of Provisions.  Notwithstanding any other provision of this Plan, the rights and obligations of the Corporation and the Participants under Article Four and Sections 6.03 and 6.06 through 

 22

6.19 will survive any termination or expiration of this Plan or the termination of the Participant’s employment for any reason whatsoever.

APPENDIX A

FORM OF NOTIFICATION LETTER

[EXECUTIVE’S NAME]
[ADDRESS]
[ADDRESS]
[DATE]
		
	Re:  
	Notice of Selection for Participation in Executive Severance Plan

Dear [FIRST NAME]:
Effective February 24, 2016, Sotheby’s (the “Corporation”) adopted an Executive Severance Benefits Plan (the “Plan”) under which an eligible senior executive will become entitled to certain severance benefits in the event of a qualifying termination of employment either in connection with a change in control or outside of a change in control context.  
In the spirit of internal consistency, to ease administration and to protect the Corporation’s confidential information, trade secrets and relationships with clients, the Corporation desires that all of its eligible senior executives participate in a single severance benefits plan. Accordingly, the Corporation asks that you accept participation in the Plan as sufficient consideration provided in exchange for your employment with the Corporation, for satisfying conditions stated below, and for waiving rights under the Sotheby’s, Inc. Severance Plan (the plan generally applicable to Sotheby’s, Inc. employees) and any notice and restrictive covenant agreement with the Corporation.  Your participation in the Plan will begin on the latest of the following dates: (i) February 24, 2016, (ii) your first day of employment in a position eligible for the Plan, (iii) the expiration date (or earlier waiver date) of an existing agreement for severance benefits that you currently have with the Corporation (specifically including, but not limited to, any severance benefit entitlements specified in an offer letter from the Corporation, in an individual severance agreement, and in an individual employment agreement), or (iv) the date that you sign without alteration and return this letter.  
In addition, as a condition to participation in the Plan, you must (i) agree to observe the Affirmative Covenants set out in the Plan, and (ii) agree that in the event you decide to resign from employment with the Corporation, you will provide thirty (30) days’ advance written notice of resignation to the Chief Human Resources Officer.  For your reference, the restricted covenants are set out in the Exhibit to this letter.
Please sign and date this notice on the second page and return the signed and dated notice and completed beneficiary designation form to the Chief Human Resources Officer on behalf of the Compensation Committee of the Corporation’s Board of Directors either by hand or express mail so that it is received at the following address no later than [DATE]:

 23

Compensation Committee
c/o Lisa Nadler
EVP, Chief Human Resources Officer
Sotheby’s 
1334 York Avenue
New York, New York  10021

Very truly yours, 
Sotheby’s 
By:  _____________________________________
       [NAME]

I hereby accept participation in the Sotheby’s Executive Severance Benefits Plan, effective as of the date applicable above, as sufficient consideration provided in exchange for my employment with the Corporation, for satisfying conditions stated below, and for waiving rights under the Sotheby’s, Inc. Severance Plan (the plan generally applicable to Sotheby’s, Inc. employees) and any notice and restrictive covenant agreement with the Corporation.  

As a condition to participation in the Plan, I hereby agree:

(i)  to observe the Affirmative Covenants set out in the Plan; and
		
	(ii)  
	that in the event I decide to resign from employment with the Corporation, I will provide thirty (30) days’ advance written notice of resignation to the Chief Human Resources Officer.

I will also provide a completed beneficiary designation form.

___________________________________            _______________________
[INSERT EXECUTIVE’S NAME]                    Date

Exhibit 
Affirmative Covenants
Protection of Confidential Information

Participant agrees that during the course of employment with the Corporation, Participant has and will come into contact with and learn various forms of confidential information and trade secrets, which are the property of (a) the Corporation and/or (b) any Group Companies (as defined below).  Participant agrees that he/she shall not either during the period of his/her employment or at any time thereafter use or disclose to any person or entity, other than the Corporation or as authorized by the Corporation, any “confidential information” as defined in the confidentiality agreement entered into between Participant and the Corporation (“Confidential Information”) belonging to (a) the Corporation and/or (b) any other Group Company, and that during Participant’s employment Participant will continue to comply with all policies and agreements related to maintaining the confidentiality of the Corporation’s confidential information, including but not limited to the Sotheby’s Confidentiality Agreement, which is incorporated herein by reference.

 24

“Group Company” means a subsidiary and any other company which is for the time being a holding company of the Corporation or another subsidiary of any such holding company, (and, if applicable, its predecessors in business) for which Participant performed services to a material degree or in which Participant held office at any time during the 12-month period prior to the termination of Participant’s employment.

Participant agrees that the covenants and agreements given by Participant in this section and in each of the following sections (together, the “Covenants”) are given in favor of the Corporation both for itself and as trustee for each Group Company, and that acting in that capacity, the Corporation shall be entitled to enforce the benefit of the Covenants for any Group Company.

Non-Compete Period

Participant acknowledges and agrees that the Corporation is engaged in a highly competitive business and that by virtue of Participant’s position and responsibilities with (a) the Corporation and/or (b) any other Group Company and Participant’s access to the Confidential Information of each of them, engaging in any business which is directly competitive with (a) the Corporation and/or (b) any other Group Companies during Participant’s employment with the Corporation and during the Restricted Period (as defined below) will cause it great and irreparable harm.  Accordingly, during Participant’s employment with the Corporation and for eighteen (18) months following the termination of Participant’s employment with the Corporation (the “Restricted Period”), Participant agrees that Participant will not, directly or indirectly, whether on Participant’s own behalf or on behalf of, or in conjunction with, any firm, company or person or other business entity of any kind, or whether as agent, consultant, director, employee, owner, partner, shareholder or in any other capacity, consult for, become employed by, engaged by or otherwise provide services to, or solicit or accept any funds, loans or other consideration from (i) Christie’s, Bonhams, Poly Auctions, China Guardian or Phillips or any affiliate or successor of such entities in competition with (a) the Corporation and/or (b) any other Group Company, or (ii) any other business concern that is (or intends to be) in competition with any Restricted Business including a business formed, acquired or led (in any part) during the Restricted Period by Participant. In the Covenants, “Restricted Business” means services of the same type as, similar to or competitive with services supplied by the Corporation at the date of the termination of Participant’s employment provided that Participant was involved, directly or indirectly, in the supply of such services at any time during the 24-month period up to and including the date of termination of Participant’s employment. None of the restrictions in this clause shall prevent Participant from holding a passive investment by way of shares or other securities of not more than 5% of the total issued share capital of any company, whether or not it is listed or dealt in on a recognized stock exchange, provided Participant is not actively involved in the management, strategy development, or operational execution of the company.

Non-Solicitation of Clients
Participant acknowledges and agrees that solely by reason of employment by the Corporation, Participant has and will come into contact with a significant number of the Corporation’s clients and customers, and prospective clients and customers, of (a) the Corporation and/or (b) any other Group Company and will have access to Confidential Information regarding their respective company’s clients and customers, prospective clients and customers and related information.   During Participant’s employment with the Corporation and during the Restricted Period, Participant agrees that Participant will not, directly or indirectly or whether on Participant’s own behalf or on behalf of, or in conjunction with, any firm, company or person or other business entity of any kind, or whether as agent, consultant, director, employee, owner, partner, shareholder or in any other capacity, solicit or entice away or in any manner attempt to persuade any current client or customer, or prospective client or customer, of (a) the Corporation and/or (b) any other Group Company to discontinue or diminish his, her or its relationship or prospective relationship with (a) the Corporation and/or (b) any other Group Company, or otherwise provide business to any person, corporation, partnership or other business entity of any kind other than (a) the Corporation and/or (b) any other Group Company. This restriction shall apply only to those clients or customers, or prospective clients or customers, of (a) the Corporation and/or (b) any other Group Company with whom Participant had contact 

 25

or about whom Participant learned Confidential Information during the two (2) years prior to the termination of Participant’s employment from the Corporation.

No Hire or Solicitation of Employees
Participant acknowledges and agrees that solely as a result of employment with the Corporation, and in light of the broad responsibilities of such employment which include working with other employees of the Corporation and/or any other Group Company, Participant has and will come into contact with and acquire Confidential Information regarding their respective employees, and will develop relationships with those employees.  Accordingly, during Participant’s employment with the Corporation and during the Restricted Period, Participant agrees that Participant will not directly or indirectly, whether on Participant’s own behalf or on behalf of, or in conjunction with, any firm, company or person or other business entity of any kind, or whether as agent, consultant, director, employee, owner, partner, shareholder or in any other capacity, hire or solicit, recruit, induce, entice, influence, or encourage any Restricted Person to leave the Corporation and/or any Group Company  or become hired by another person, company or entity.  In the Covenants, “Restricted Person” means any employee of the Corporation and/or any other Group Company, or any person who has left the employment of the Corporation and/or any other Group Company within the six (6) months preceding the termination of Participant’s employment who either had access to Confidential Information or who held a manager, director or more senior position and with whom Participant had had business dealings during the 12 month period up to and including the date of the termination of Participant’s employment.
Non-Disparagement
Participant acknowledges and agrees that Participant will not, either during the period of his or her employment or at any time thereafter, disparage (or induce or encourage others to disparage) the Employer or any of its present directors or executive officers with respect to any events relating directly or indirectly to Participant's employment with the Corporation including, without limitation, criticizing the Corporation’s or the Employer’s business strategy.  For the purposes of this Plan and the Release, the term "disparage" means any comments or statements which would adversely affect in any manner the business reputation or relationships of Participant or the Corporation and/or any of its past or present directors, officers, agents, trustees, subsidiaries or affiliates, administrators, attorneys or employees known to Participant, as the case may be. Nothing herein, including the terms regarding confidentiality and non-disparagement, prohibit Participant from reporting possible violations of federal law or regulation to any governmental agency or entity including but not limited to the Department of Justice, the Securities and Exchange Commission, the Congress, and any Inspector General, or making other disclosures that are protected under the whistleblower provisions of federal law or regulation.  Participant understands that he/she does not need the prior authorization of the Corporation to make any such reports or disclosures and is not required to notify the Corporation that he/she has made such reports or disclosures.
Remedies
Participant also acknowledges and agrees that the Corporation’s remedies at law for a breach of any of the Covenants would be inadequate and, in recognition of this fact, Participant agrees that, in the event of such a breach, in addition to any remedies at law, the Corporation shall be entitled to obtain (a) equitable relief in the form of specific performance, temporary or permanent injunction or any other equitable remedy which may then be available, and Participant hereby consents to the issuance thereof forthwith and without bond by any court of competent jurisdiction as set forth herein; and (b) recovery of all reasonable sums and costs, including attorneys’ fees, incurred by the Corporation to defend or enforce the Covenants.
Waiver

 26

The Corporation reserves the right to waive all or any part of the terms and conditions of the Covenants under appropriate circumstances, in its sole discretion.  Any such waiver must be in writing and signed by the Chief Human Resources Officer.  No waiver by the Corporation of any breach of the Covenants shall be a waiver of any preceding or succeeding breach.  No waiver by the Corporation of any right under the Covenants shall be construed as a waiver of any other right.  The Corporation shall not be required to give notice to enforce strict adherence to all terms of the Covenants.
Miscellaneous
Participant agrees that the restrictions in the Covenants are reasonable and necessary for the protection of the Corporation’s legitimate interests.  If at any time there is a final determination in arbitration or temporary or preliminary determination in court that the time period, geographic scope, or any other restriction contained in the Covenants is unenforceable against Participant, the provisions of the Covenants shall not be deemed void but shall be deemed amended to apply as to such maximum time period, geographic scope and to such other maximum extent as the arbitrator may determine or indicate to be enforceable.
In the event any provision in the Covenants should be held by an arbitrator or court to be invalid, illegal or unenforceable in any respect, neither party will be required to comply with such provision for so long as the provision is held to be invalid, illegal or unenforceable, but the validity, legality, and enforceability of the remaining provisions contained in the Covenants shall not in any way be affected or impaired by the illegality, invalidity or unenforceability of such provision.
The Covenants together with the Confidentiality Agreement and the Plan constitute a single, integrated written contract expressing the entire agreement of the parties hereto relative to the subject matter hereof and represents the complete understanding between the Corporation and Participant concerning the subject matter of the Covenants, and no other promises or agreements concerning the subject matter of the Covenants shall be binding unless signed by the Company’s Chief Human Resources Officer and Participant.  The Covenants supersede and terminate any and all prior agreements or understandings between the parties, whether oral or written, concerning the subject matter of the Covenants.

 27Exhibit

EXHIBIT 10.7

THIRD AMENDED AND RESTATED SOTHEBY’S
RESTRICTED STOCK UNIT PLAN

Effective as of May 5, 2016

THIRD AMENDED AND RESTATED
SOTHEBY’S RESTRICTED STOCK UNIT PLAN

Effective as of May 5, 2016

TABLE OF CONTENTS
	
						
	 
	 
	 
	 
	Page
	

	 
	 
	 
	 
	 

	ARTICLE 1
	 
	BACKGROUND, AMENDMENT, PURPOSE AND TERM
	 
	1
	

	1.1
	 
	Establishment of Original Plan and Third Amended and Restated Plan
	 
	1
	

	1.2
	 
	Plan Amendments
	 
	1
	

	1.3
	 
	Purpose of Plan
	 
	1
	

	1.4
	 
	Types of Awards
	 
	1
	

	1.5
	 
	Adoption and Term
	 
	1
	

	 
	 
	 
	 
	 

	ARTICLE 2
	 
	DEFINITIONS
	 
	1
	

	 
	 
	 
	 
	 

	ARTICLE 3
	 
	ADMINISTRATION
	 
	8
	

	3.1
	 
	Administration
	 
	8
	

	3.2
	 
	Expenses of Administration
	 
	9
	

	3.3
	 
	Rules of foreign Juirsdictions
	 
	9
	

	3.4
	 
	Beneficiary Designation
	 
	9
	

	3.5
	 
	Indemnification
	 
	9
	

	3.6
	 
	Deferrals
	 
	10
	

	3.7
	 
	Withholding Taxes
	 
	10
	

	 
	 
	 
	 
	 

	ARTICLE 4
	 
	SHARES OF COMMON STOCK SUBJECT TO THE PLAN
	 
	10
	

	4.1
	 
	Shares Subject to the Plan
	 
	10
	

	4.2
	 
	Awards Subject to Forfeited or Terminated Awards or Withholding Tax
	 
	10
	

	4.3
	 
	Maximum Shares That May Be Awarded
	 
	10
	

	 
	 
	 
	 
	 

	ARTICLE 5
	 
	PARTICIPATION
	 
	11
	

	 
	 
	 
	 
	 

	ARTICLE 6
	 
	RESTRICTED STOCK UNITS
	 
	11
	

	6.1
	 
	Grant Restricted Stock Units
	 
	11
	

	6.2
	 
	Establishment of Performance Criteria and Restrictions
	 
	11
	

	6.3
	 
	Transfer of Shares
	 
	11
	

	6.4
	 
	Voting and Dividend Equivalent Rights
	 
	11
	

	 
	 
	 
	 
	 

	ARTICLE 7
	 
	TERMS AND CONDITIONS OF RESTRICTED STOCK UNITS
	 
	12
	

	7.1
	 
	Award Agreements
	 
	12
	

	7.2
	 
	Plan Provisions Control Terms
	 
	12
	

	7.3
	 
	Vesting
	 
	12
	

	7.4
	 
	Acceleration of Vesting
	 
	14
	

	7.5
	 
	Surrender of Restricted Stock Units
	 
	14
	

	 
	 
	 
	 
	 

	
						
	ARTICLE 8
	 
	RESTRICTED STOCK
	 
	14
	

	8.1
	 
	Grant of Restricted Stock
	 
	14
	

	8.2
	 
	Award Agreement
	 
	14
	

	8.3
	 
	Certificates
	 
	14
	

	8.4
	 
	Stockholder Rights; Dividends and Other Distributions
	 
	15
	

	 
	 
	 
	 
	 

	ARTICLE 9
	 
	PERFORMANCE SHARES AND PERFORMANCE UNITS
	 
	15
	

	9.1
	 
	Grant of Performance Shares and Performance Units
	 
	15
	

	9.2
	 
	Award Agreement 
	 
	15
	

	9.3
	 
	Performance Unit Value and Performance Objectives
	 
	15
	

	9.4
	 
	Earning of Performance Shares and Performance Unit
	 
	15
	

	9.5
	 
	Stockholder Rights; Dividends and Other Distributions
	 
	16
	

	 
	 
	 
	 
	 

	ARTICLE 10
	 
	OTHER AWARDS
	 
	16
	

	 
	 
	 
	 
	 

	ARTICLE 11
	 
	PERFORMANCE MEASURES
	 
	16
	

	11.1
	 
	In General  
	 
	16
	

	11.2
	 
	Qualified Performance-Based Awards
	 
	16
	

	11.3
	 
	Performance Measures for Qualified Performance-Based Awards
	 
	17
	

	11.4
	 
	General Awards
	 
	17
	

	11.5
	 
	Performance Measures for General Awards and Negative Discretion
	 
	17
	

	11.6
	 
	Definitions of Performance Objectives
	 
	17
	

	11.7
	 
	Determinations of Performance
	 
	17
	

	11.8
	 
	Increases
	 
	18
	

	11.9
	 
	Changes
	 
	18
	

	 
	 
	 
	 
	 

	ARTICLE 12
	 
	TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
	 
	18
	

	12.1
	 
	General
	 
	18
	

	12.2
	 
	Termination of Employment
	 
	18
	

	12.3
	 
	Change in Control 
	 
	19
	

	 
	 
	 
	 
	 

	
						
	ARTICLE 13
	 
	AMENDMENT AND TERMINATION OF THE PLAN; REORGANIZATIONS AND RECAPITALIZATIONS OF THE CORPORATION
	 
	19
	

	13.1
	 
	Amendment of the Plan
	 
	19
	

	13.2
	 
	Termination of the Plan
	 
	19
	

	13.3
	 
	Amendment of Award Agreement
	 
	19
	

	13.4
	 
	Reorganizations and Recapitalizations of the Corporation
	 
	20
	

	13.5
	 
	Assumption or Cancellation of Awards Upon a Corporate Transaction
	 
	20
	

	 
	 
	 
	 
	 

	ARTICLE 14
	 
	COMPLIANCE WITH OTHER LAWS AND REGULATIONS
	 
	21
	

	14.1
	 
	Registration or Qualification of Securities
	 
	21
	

	14.2
	 
	Representation
	 
	21
	

	 
	 
	 
	 
	 

	ARTICLE 15
	 
	RESTRICTIONS ON TRANSFER
	 
	21
	

	 
	 
	 
	 
	 

	ARTICLE 16
	 
	GENERAL PROVISIONS 
	 
	22
	

	16.1
	 
	No Right to Continued Employment 
	 
	22
	

	16.2
	 
	Rights of a Stockholder
	 
	22
	

	16.3
	 
	Incorporation by Reference of Certificate of Incorporation
	 
	22
	

	16.4
	 
	Beneficiaries or Representatives of a Participant
	 
	22
	

	16.5
	 
	Elimination of Fractional Shares
	 
	22
	

	16.6
	 
	Inspection of Records
	 
	22
	

	16.7
	 
	Word Meanings 
	 
	22
	

	16.8
	 
	Section Titles
	 
	22
	

	16.9
	 
	Severability
	 
	22
	

	16.10
	 
	Compliance with Section 16(b) of the Securities Exchange Act
	 
	23
	

	16.11
	 
	Compliance with Section 162(m)
	 
	23
	

	16.12
	 
	Successors
	 
	23
	

	16.13
	 
	Tax Elections
	 
	23
	

	16.14
	 
	Uncertificated Shares
	 
	23
	

	16.15
	 
	Strict Construction
	 
	23
	

	16.16
	 
	Choice of Law
	 
	23
	

	16.17
	 
	Section 409A
	 
	23
	

SOTHEBY’S THIRD AMENDED AND RESTATED
RESTRICTED STOCK UNIT PLAN

Effective as of May 5, 2016
Article 1 
Background, Amendment, Purpose and Term
1.1    Establishment of Original Plan and Third Amended and Restated 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 as Sotheby’s. Effective February 1, 2009, the Plan was renamed the Sotheby’s Restricted Stock Unit Plan and amended and restated. At the 2013 Annual Meeting of Stockholders, the Second Amended and Restated Sotheby’s Restricted Stock Unit Plan was approved by stockholders, effective as of March 1, 2013. The Plan was later amended pursuant to the First Amendment to the Second Amended and Restated Sotheby’s Restricted Stock Unit Plan, made and entered into on November 5, 2014 and effective as of January 1, 2015.  The Plan is hereby amended and restated as the Third Amended and Restated Sotheby’s Restricted Stock Unit Plan effective May 5, 2016 (the “Effective Date”).
1.2    Plan Amendments.  Since the Plan was last approved by the Corporation’s stockholders, the Plan was amended effective as of January 1, 2015 in order to address the vesting of Restricted Stock Units and performance share units in the event of a change in control, with the purpose of the Amendment being to provide for such vesting only in the event of a “double trigger”; that is, a change in control followed by a termination. This amendment and restatement of the Plan expands the Plan to include additional types of full-value awards and make other updates to the Plan that do not require stockholder approval.
1.3    Purpose of Plan.  The purpose of the Plan is to promote the interests of the Corporation and its stockholders 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    Types of Awards.  Awards under the Plan may be made to eligible Participants in the form of Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, Other Awards or any combination thereof.
1.5    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:
2.1    “Annual Bonus Plan” means the Sotheby’s Annual Bonus Plan, as adopted by the Board on February 25, 2016, and as effective May 6, 2016, and as it may be amended or superseded from time to time.

2.2    “Award” means individually or collectively, a grant of Restricted Stock Units, Restricted Stock, Performance Shares, Performance Units, Other Awards or a combination of these under this Plan.
2.3    “Award Agreement” means the written or electronic agreement evidencing an Award granted to a Participant under the Plan. As determined by the Committee, each Award Agreement shall consist of either (i) a written agreement in a form approved by the Committee and executed by the Participant and by the Corporation (through an officer duly authorized to act on its behalf), or (ii) an electronic notice of an Award in a form approved by the Committee and recorded by the Corporation (or its designee) in an electronic recordkeeping system used for the purpose of tracking Awards, and if required by the Committee, executed or otherwise electronically accepted by the recipient of the Award in such form and manner as the Committee may require. The Committee may authorize any officer of the Corporation (other than the particular Award recipient) to execute any or all Agreements on behalf the Corporation.
2.4    “Beneficiary” means one or more individuals who, as a result of designation by a Participant that is done using a procedure authorized by the Committee, succeed 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 (“NYSE”)is open for trading.
2.7    “Cause” means:
(a)    with respect to Awards granted prior to the Effective Date,
(i)    a Participant’s conviction for a felony crime (or the equivalent outside the United States, as determined by the Committee); or
(ii)    fraud, willful malfeasance, gross negligence, or any other act in connection with performance of a Participant’s duties which is materially injurious to the Corporation.
(b)    with respect to Awards granted on or after the Effective Date,
(i)    except as provided otherwise in the applicable Award Agreement, the following circumstances with respect to a Participant that lead to the Participant’s termination of employment:
(ii)    conviction of, or entering into a plea of either guilty or nolo contendere to, any felony (or the equivalent outside the United States, as determined by the Committee);
(iii)    fraud, misappropriation or embezzlement with respect to the Corporation or any affiliate, or any other act in connection with the performance of an Employee’s duties which is materially injurious to the Corporation;
(iv)    refusal to follow the reasonable and lawful directions of the Board or the Participant’s supervisor;
(v)    substantial failure to perform the Participant’s duties for the Corporation or any affiliate, after the Corporation delivers written demand for substantial performance to the Participant, which demand specifically identifies the manner in which the Corporation believes that the Participant has failed to substantially perform the Participant’s duties and either (i) determines that the failure is not capable of adequate cure, or (ii) provides the 

2

Participant with a reasonable period of time to cure such failure (and the Participant does not cure the failure within the period);
(vi)    engaging in an act of willful misconduct or gross negligence in connection with the Corporation’s or an affiliate’s business;
(vii)    a material breach of any affirmative covenant (which may also be referred to as a “restrictive covenant”) between the Participant and the Corporation or any Affiliate, including but not limited to those set forth in the Corporation’s Executive Severance Benefits Plan, any non-compete obligations and any confidentiality obligations (with respect to Participants covered by any such obligations); or
(viii)    breach of a material Corporation policy or the Corporation’s Code of Business Conduct which reasonably would be expected to result in a material liability to, or have a material adverse effect on the business or financial condition of, the Corporation or any affiliate.
In applying this definition, the group of entities that constitute affiliates of the Corporation shall be identified, as of any applicable time, by the Committee.
2.8    “Certification of Incorporation” means the Certificate of Incorporation of the Corporation, as it may be amended from time to time
2.9    “Change in Control” means:
(a)    with respect to Awards granted prior to the Effective Date, 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 stockholders, 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.
(b)    with respect to Awards granted on or after the Effective Date, the occurrence of any of the following events:
(i)    any Person, other than an Exempt Person, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, over a period of 12 consecutive months, of securities of the Corporation representing 50% or more of the combined voting power of the Corporation’s then-outstanding securities;
(ii)    the consummation of a merger, consolidation or combination that results in the Corporation’s voting securities representing less than 50% of the combined voting power of the securities of the Corporation or of the surviving entity outstanding immediately after such merger, consolidation or combination;
(iii)    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 that any individual becoming a director whose election, or nomination for election by the Corporation’s stockholders, was approved by a vote of at 

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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; or
(iv)    the sale or disposition by the Corporation of all or substantially all the Corporation’s assets, other than a sale or disposition to an Exempt Person or a sale or disposition to an entity of which at least 50% of the voting power is represented by voting securities of the Corporation.
In all cases, a “Change in Control” shall occur pursuant to any of clauses (a) – (d) above only if the event also constitutes a change in the effective ownership or effective control of the Corporation or a change in the ownership of a substantial portion of the assets of the Corporation within the meaning of Treasury Regulation section 1.409A-3(i)(5).
2.10    “Code” means the Internal Revenue Code of 1986, as now in effect and as hereafter amended from time to time. Any reference to a particular section of the Code includes any applicable regulations promulgated under that section. All citations to sections of the Code are to such sections as they may from time to time be amended or renumbered.
2.11    “Common Stock” means Common Stock, par value $0.01 per share, of the Corporation, and any other shares into which such stock may be changed by reason of a recapitalization, reorganization, merger, consolidation or any other change in the corporate structure or capital stock of the Corporation.
2.12    “Compensation Committee” or “Committee” means the Compensation Committee established by the Board of Directors, or such other committee consisting of two or more members of the Board as may be appointed by the Board from time to time to administer this Plan pursuant to Article 3. If the Common Stock is traded on the NYSE or the NASDAQ, all of the members of the Committee shall be independent directors within the meaning of the NYSE’s or NASDAQ’s listing standards (as applicable). If any member of the Committee does not qualify as (i) a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act, and (ii) an “outside director” within the meaning of Code section 162(m), the Board shall appoint a subcommittee of the Committee, consisting of at least two Independent Directors, to grant Awards to Covered Employees and to Reporting Persons; each member of such subcommittee shall satisfy the requirements of (i) and (ii) above. Alternatively, the Board may appoint two separate subcommittees of the Committee, with one consisting of at least two Independent Directors who are “non-employee directors” within the meaning of Rule 16b-3 under the Exchange Act (which shall have authority to approve Awards to Reporting Persons for purposes of Exchange Act section 16(a)), and one consisting of at least two Independent Directors who are “outside directors” within the meaning of Code section 162(m) (which shall have authority with respect to the performance terms in Awards to Covered Employees as necessary to comply with the Exception).  References to the Committee in the Plan shall include and, as appropriate, apply to any such subcommittee.
2.13    “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.
2.14    “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.
2.15    “Covered Employee” means a Participant whom the Committee determines is or may be subject to the limitations of Code section 162(m).

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2.16    “Date of Grant”, with respect to an Award, means the date on which the Compensation Committee grants such Award pursuant to the Plan.
2.17    “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.
2.18    “Disability” or “Disabled” means, unless provided otherwise in an Award Agreement (in which case such definition shall apply for purposes of the Plan with respect to that particular Award):
(a)    with respect to Awards granted prior to the Effective Date and to a Participant who is not eligible to participate in a qualifying program of long-term disability insurance maintained by the Employer (as identified by the Committee), a physical or mental condition resulting from any medically determinable physical or mental impairment that renders such Participant 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 (taking into account applicable foreign law outside the United States, as determined by the Committee), and
(b)    in other cases, the date on which the insurer or administrator under such program of long-term disability insurance determines that the Participant is eligible to commence benefits under such program, and (ii with respect to any other Participant.
For purposes of subsection (a) above, the existence of a Disability shall be determined by the Committee in accordance with uniform principles consistently applied, upon the basis of such evidence as the Committee deems necessary and desirable, and its good faith determination shall be conclusive for all purposes of this Plan and the relevant Award Agreement. For purposes of both subsection (a) and (b) above, the date upon which a Participant ceases to be employed by reason of Disability shall be determined by the Committee in accordance with uniform principles consistently applied, upon the basis of such evidence as the Committee deems necessary and desirable, and its good faith determination shall be conclusive for all purposes of this Plan and the relevant Award Agreement.
2.19    “Employee” means any service provider to an Employer whom the Employer treats as a common law employee for payroll tax purposes, as of the time in question (and disregarding any subsequent change in treatment to the extent it is applicable retroactively), either within the United States, the United Kingdom or Hong Kong (or any other jurisdiction specified by the Committee from time), unless the Committee, in its discretion, determines that the individual is not an Employee or has ceased to be an Employee.  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, for Good Reason 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.
2.20    “Employer” means the Corporation and the Subsidiaries.
2.21    “Exception” means the performance-based compensation exception to the deductibility limitation of Code section 162(m).
2.22    “Exchange Act” means the Securities Exchange Act of 1934, as now in effect and as hereafter amended from time to time. Any reference to a particular section of the Exchange Act includes any applicable regulations promulgated under that section. All citations to sections of the Act or rules thereunder are to such sections or rules as they may from time to time be amended or renumbered

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2.23    “Exempt Person” means an employee benefit plan of the Corporation or an Affiliate or a trustee or other administrator or fiduciary holding securities under an employee benefit plan of the Corporation or an Affiliate.
2.24    “Fair Market Value” of a share of Common Stock of the Corporation means, as of the date in question,
(a)    if the Common Stock is listed for trading on the NYSE or another national securities exchange, the closing sale price of a share of Common Stock on such date, as reported by the NYSE or such other exchange or such other source as the Committee deems reliable, or if no such reported sale of the Common Stock shall have occurred on such date, on the last day prior to such date on which there was such a reported sale;
(b)    if the Common Stock is not listed for trading on a national securities exchange but nevertheless is publicly traded and reported (through the OTC Bulletin Board or otherwise), the closing sale price of a share of Common Stock on such date, or if no such reported sale of the Common Stock shall have occurred on such date, on the last day prior to such date on which there was such a reported sale; or
(c)    if the Common Stock is not publicly traded and reported, the fair market value as determined by the Committee, in good faith and in accordance with uniform principles consistently applied.
Notwithstanding the foregoing but subject to the next paragraph, if the Committee determines in its discretion that an alternative definition of Fair Market Value should be used in connection with the grant, exercise, vesting, settlement or payout of any Award, it may specify such alternative definition in the Award Agreement applicable to the Award. Such alternative definition may include a price that is based on the opening, actual, high, low, or average selling prices of a share of Common Stock on the NYSE or other securities exchange on the given date, the trading date preceding the given date, the trading date next succeeding the given date, or an average of trading days.
Notwithstanding the foregoing, in the case of an Award that is intended to qualify for the Exception, Fair Market Value shall be determined by the Committee in accordance with the requirements of Code section 162(m).
2.25    “409A Award” means an Award that is not exempt from Code section 409A.
2.26    “Fractional Share” means a portion of, or less than the whole of, a share of Common Stock.
2.27    “General Award” means an Award that is not a Qualified Performance-Based Award.
2.28    “Good Reason” means, and is limited to:
(a)    a Participant being required to relocate to a principal place of business more than fifty (50) miles outside the town or city in which the Participant currently works without the Participant’s express consent; or
(b)    any action by the Corporation that results in a material diminution in a Participant’s authority, duties and responsibilities or a reduction in base salary greater than ten percent (10%) of base salary without that Participant’s express consent (except in connection with the termination of that Participant’s employment for Cause or as a result of his death or Disability or temporarily as a result of his illness or other absence);

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provided, however, that the Participant shall provide the Corporation thirty (30) days’ prior written notice from the date one of the above-referenced events occurs constituting Good Reason that he is terminating his employment for Good Reason, and the Corporation shall have thirty (30) days following the receipt of that written notice to correct such circumstances.
2.29    “Independent Director” means any individual who is a member of the Board and who is not also employed by the Employer.
2.30    “NASDAQ” means The NASDAQ Stock Market LLC or its successor.
2.31    “Negative Discretion” means the absolute and unrestricted discretion that the Committee may exercise to reduce, but not increase, the amount that otherwise would be payable pursuant to an Award in connection with the attainment of a performance objective under the Award for any reason, including but not limited to the Committee’s determination that the performance objective has become an inappropriate measure of achievement, a change in the employment status, position or duties of the Participant, or unsatisfactory performance of the Participant. It is expressly permissible to reduce the amount otherwise payable pursuant to an Award to zero.
2.32    “NYSE” means The New York Stock Exchange or its successor.
2.33    “Other Award” means any form of full-value equity-based or equity-related award, other than Restricted Stock, a Restricted Stock Unit, a Performance Share or a Performance Unit, that is granted pursuant to Article 10 (and that may be provided pursuant to the Plan without seeking stockholder approval).
2.34    “Other Corporation Securities” mean securities of the Corporation other than Common Stock, which may include, without limitation, unbundled stock units or components thereof, debentures, preferred stock, warrants and securities convertible into or exchangeable for Common Stock or other property.
2.35    “Participant” means an Employee who has an outstanding Award granted under this Plan.
2.36    “Period of Restriction” means the period during which the transfer of shares of Common Stock subject to an 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.
2.37    “Performance Period “ shall have the meaning ascribed to such term in Section 9.3.
2.38    “Performance Share” means an Award of Common Stock under Article 9 of the Plan that is conditioned upon achievement of such performance objectives during the relevant Performance Period as the Committee shall establish at the time of such Award or thereafter, but not later than the time permitted by Code section 162(m) in the case of a Covered Employee, unless the Committee does not intend for such Award to be a Qualified Performance-Based Award. The Committee may also apply other conditions that it determines to be appropriate.
2.39    “Performance Unit” means an Award under Article 9 of the Plan that is valued by reference to a share of Common Stock, which value may be paid to the Participant (by delivery of Common Stock, cash or other property as the Committee shall determine) upon achievement of such performance objectives during the relevant Performance Period as the Committee shall establish at the time of such Award or thereafter, but not later than the time permitted by Code section 162(m) in the case of a Covered Employee, unless the Committee does not intend for such Award to be a Qualified Performance-Based Award. The Committee may also apply other conditions that it determines to be appropriate.
2.40    “Person” means any “person” or “group” as those terms are used in Sections 13(d) and 14(d) of the Exchange Act.

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2.41    “Plan” means the Third Amended and Restated Sotheby’s Restricted Stock Unit Plan set forth in this document effective as of May 5, 2016, as such plan may be amended from time to time.
2.42    “Qualified Performance-Based Award” means an Award (or a specified portion of an Award) to a Participant that is intended to satisfy the requirements for the Exception.
2.43    “Restricted Stock” means an Award of shares of Common Stock under Article 8 of the Plan, which shares are issued with such restrictions as the Committee, in its sole discretion, may impose.
2.44    “Restriction Period” means the period commencing on the date an Award of Restricted Stock or a Restricted Stock Unit is granted and ending on such date as the Committee shall determine, during which time the Award is subject to forfeiture as provided in the Award Agreement.
2.45    “Reporting Person” means any and all Employees subject to Section 16 of the Exchange Act.
2.46    “Restricted Stock Unit” means an Award under Article 6 of the Plan that is valued by reference to a share of Common Stock, which value may be paid to the Participant by delivery of Common Stock, cash or other property as the Committee shall determine and that has such restrictions as the Committee, in its sole discretion, may impose.
2.47    “Retirement” means the termination of employment by an Employee after the attainment of the age of sixty-five (65) years or as otherwise determined or approved by the Compensation Committee and under any other conditions the Committee may add including, but not limited to, a minimum length of service requirement.
2.48    “Securities Act” means the Securities Act of 1933, as amended.
2.49    “Subsidiary” means any corporation at least 50% of the total combined voting power of which is owned by the Corporation or another Subsidiary.
2.50    “Valuation Date” means, with respect to an Award, the Business Day immediately preceding either (a) the vesting date or (b) any 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 shall have the sole discretionary authority:
(a)    to authorize the granting of Awards;
(b)    to select any Reporting Persons who are to be granted Awards under the Plan and to determine, subject to the limitations provided in the Plan, the number of Awards to be granted to each Reporting Person;
(c)    to construe and interpret the Plan;
(d)    to establish and modify administrative rules for the Plan;

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(e)    to impose such conditions and restrictions with respect to the 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.
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, in its discretion, at any time and from time to time, delegate to one or more of its members such of its authority as it deems appropriate, provided that any such delegation shall be to at least two members of the Committee with respect to Awards to Covered Employees and Reporting Persons. Except with respect to the grant or amendment of Qualified Performance-Based Awards, the Committee may, at any time and from time to time, delegate to one or more other members of the Board such of its authority as it deems appropriate. To the extent permitted by law and applicable stock exchange rules, the Committee may also delegate its authority to one or more persons who are not members of the Board, except that no such delegation will be permitted with respect to Covered Employees and Reporting Persons.
3.2    Expenses of Administration    .  The Corporation shall pay all costs and expenses of administering the Plan.
3.3    Rules for Foreign Jurisdictions    .  Notwithstanding anything in the Plan to the contrary, the Committee may, in its sole discretion, (i) amend or vary the terms of the Plan in order to conform such terms with the requirements of each non-U.S. jurisdiction where a Participant works or resides or to meet the goals and objectives of the Plan; (ii) establish one or more sub-plans for these purposes; and (iii) establish administrative rules and procedures to facilitate the operation of the Plan in such non-U.S. jurisdictions. If as a result of the exercise of the Committee’s discretion in accordance with the prior sentence, the terms and conditions contained herein are subject to variation in a non-U.S. jurisdiction, then they shall be reflected in a special form of Award Agreement approved by the Committee or one or more written addendums to the Plan with respect to such non-U.S. jurisdictions.
3.4    Beneficiary Designation    .  To the extent permitted by the Committee, a Participant may, from time to time, name a person (or persons) as the Participant’s Beneficiary (or Beneficiaries) within the meaning of Section 2.4, who may be named contingently or successively and to whom any vested but unpaid Award is to be paid in case of the Participant’s death.  Each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Corporation, and will be effective only when filed by the Participant in writing with the Corporation or its designee during the Participant’s lifetime.  In the absence of any such designation, benefits remaining unpaid at the Participant’s death shall be paid to the Participant’s spouse, and if the Participant has no surviving spouse, to the Participant’s estate.
3.5    Indemnification    .  No member or former member of the Committee or the Board or person to whom the Committee has delegated responsibility under the Plan shall be liable for any action or determination made in good faith with respect to the Plan or any Award granted under it. The Corporation shall indemnify and hold harmless each member and former member of the Committee and the Board and each person to whom the Committee has delegated responsibility under the Plan against all cost or expense (including counsel fees and expenses) or liability (including any sum paid in settlement of a claim with the approval of the Board) arising out of any act or omission to act in connection with the Plan, unless arising out of such member’s or former member’s own willful misconduct, fraud, bad faith or as expressly prohibited by statute. Such indemnification shall be in addition (without duplication) to any rights to indemnification or insurance the member or former member may have as a director or under the Certificate of Incorporation.

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3.6    Deferrals    .  The Committee may permit a Participant to defer such Participant’s receipt of the payment of cash or the delivery of shares that would otherwise be due to such Participant by virtue of the lapse or waiver of restrictions with respect to Restricted Stock Units and Other Awards, or the satisfaction of any requirements or objectives with respect to Performance Shares and Performance Units. If any such deferral election is permitted or required, the Committee shall, in its sole discretion, establish rules and procedures for such payment deferrals, which rules and procedures shall comply with Code section 409A to the extent the compensation is covered by Code section 409A.
3.7    Withholding Taxes    .
(a)    The Corporation shall have the power and the right to deduct or withhold, or require a Participant to remit to the Corporation, an amount sufficient to satisfy Federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of or in connection with this Plan or any Award.
(b)    Except as otherwise permitted by the Committee or provided in the Award Agreement corresponding to an Award, upon the lapse of restrictions on Restricted Stock or upon any other taxable event arising as a result of or in connection with an Award granted hereunder that is settled in shares of Common Stock, Participants shall satisfy the withholding requirement by having the Corporation withhold shares of Common Stock having a Fair Market Value on the date the tax is to be determined equal to not more than the amount necessary to satisfy the Corporation’s withholding obligations at the minimum statutory withholding rates (or, if permitted by the Corporation, such greater rate, if any, as will not cause adverse accounting consequences and is permitted under applicable Internal Revenue Service withholding rules). All such withholding arrangements shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate.
Article 4 
Shares of Common Stock Subject to the Plan
4.1    Shares Subject to the Plan.  The shares of stock underlying 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 13.4 hereof, the aggregate number of shares of Common Stock that may be issued by the Corporation under the Plan is 9,500,000 shares of Common Stock. The number of shares of Common Stock underlying Awards shall not exceed the relevant number of shares of Common Stock remaining available for issuance under the Plan.
4.2    Awards Subject to Forfeited or Terminated Awards or Withholding Tax.  In the event that any shares of Common Stock underlying Awards are forfeited, surrendered, expire or are terminate for any reason before the Period of Restriction has been satisfied, all shares allocable to the forfeited or 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 28, 2023, 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 28, 2023 shall not be available for Awards subsequently granted under the Plan unless the surrender and reissuance of these shares is approved by stockholders, if such approval is then deemed necessary to comply with applicable rules or regulations.
4.3    Maximum Shares That May Be Awarded.  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, 

10

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 number of shares under an Award, if any, shall not be counted against the maximum number of shares which may be granted to the Participant.
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 Units
6.1    Grant Restricted Stock Units.  The Compensation Committee may cause the Corporation 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. Restricted Stock Units may be granted under the Plan as payment of the performance bonuses earned under the Annual Bonus Plan which are intended to qualify for the Exception pursuant to the requirements of Article 9.
6.2    Establishment of Performance Criteria and Restrictions.  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 pursuant to Article 11, which shall be applicable to all or any portion of the Award. Each Award may be subject to a different Period of Restriction as specified in the Award Agreement. Subject to Section 7.4 and except for performance features related to satisfying the Exception in the case of Restricted Stock Units intended to qualify for the Exception, 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 Units may be sold, transferred, assigned, pledged or otherwise encumbered or disposed of prior to the date on which the Restricted Stock Unit vests in accordance with Sections 6.2 and 7.3.
6.4    Voting and Dividend Equivalent Rights. 
(a)    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 in accordance with Section 6.3. Except to the extent the Committee provides otherwise, Participants will have the right to receive dividend equivalents with respect to the equivalent number of Restricted Stock Units. Such dividend equivalents shall comply with section 409A of the Code and 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.

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(b)    Restricted Stock Unit Awards with Performance-Based Restrictions.  Notwithstanding the foregoing, for grants of Restricted Stock Units with performance-based restrictions, Participants’ right to receive dividend equivalents will accrue throughout the vesting period specified in the Award Agreement but will only be paid as the Restricted Stock Units vest. Dividend equivalents, to the extent they are accrued and payable, shall be paid no later than seventy-four (74) days after the Vesting Date. 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.
Article 7 
Terms and Conditions of Restricted Stock Units
7.1    Award Agreements.  The terms of the 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 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    Vesting.      
(a)    Awards Granted Prior to Effective Date.  
(i)    In General.  The terms of this subsection (a) apply to Awards granted under the Plan prior to the Effective Date.  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 Units 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%

Subject to Section 7.4, the Compensation Committee may approve Restricted Stock Unit Awards that provide alternate vesting schedules. 
In the event a Participant terminates employment prior to 100% vesting or gives notice of termination or the Corporation gives notice of intent to terminate the Participant (regardless of whether or not the Participant is required to work during the notice period), any Restricted Stock Units that are not vested shall cease vesting and be forfeited immediately and permanently unless otherwise determined by the Compensation Committee which may allow vesting to continue, for example, through the duration of a notice period (or other period identified by the Committee), provided that the originally scheduled vesting and payment dates and performance requirements are not changed. 

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However, a Participant shall be 100% vested in his Restricted Stock Units without performance-based restrictions in the event he terminates employment or gives notice of termination of employment by reason of death, Disability, or Retirement. For grants of 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 or Retirement.
(ii)    Change in Control.  With respect to grants of Restricted Stock Units without performance-based restrictions, a Participant shall also be 100% vested on the date of a termination of the Participant’s employment either without Cause by the Corporation or for Good Reason by the Participant if such termination occurs within two (2) years after or on the date of a Change in Control. With respect to grants of Restricted Stock Units with performance-based restrictions, a Participant shall be vested at 100% of “target” level, and all performance restrictions waived, on the date of a termination of the Participant’s employment either without Cause by the Corporation or for Good Reason by the Participant if such termination occurs within two (2) years after or on the date of a Change in Control. The preceding two sentences will be effective with respect to Restricted Stock Unit Awards initially granted after January 1, 2015 and prior to the Effective Date, with or without performance-based restrictions. In such events, the payment date(s) for Restricted Stock Units, whether with or without performance-based restrictions, will be in accordance with the applicable Award Agreement.
Notwithstanding the foregoing, if a Change in Control occurs and the Common Stock thereafter is no longer available for payment of the Restricted Stock Unit Award, or the Restricted Stock Units are not assumed or converted into comparable awards with respect to shares of the acquiring or successor company (or parent thereof), then each Restricted Stock Unit, whether or not previously vested, shall be converted into the right to receive cash or, if the consideration paid to the Common Stock holders in the Change in Control was not cash, then into the right to receive consideration in a form that is equivalent in value to the form of consideration payable to the Common Stock holders in exchange for their shares of Common Stock, in an amount equal to the product of (i) the consideration per share payable to the Common Stock holders multiplied by (ii) the number of shares of Common Stock covered by the Restricted Stock Unit.  The Restricted Stock Unit to be settled with this alternate form of consideration shall continue to vest in accordance with its original vesting schedule, but shall become 100% vested on the date of a qualifying termination event as described above occurring within two (2) years after or on the date of a Change in Control. This paragraph applies to all Restricted Stock Units, whether with or without performance-based restrictions.
(iii)    Employment Agreements.  If this Section 7.3(a) conflicts with the terms of any employment or similar agreement to which a Participant is a party, that agreement’s terms will control with respect to any Restricted Stock Units that are granted to the Participant after the date on which such agreement is entered into.
(b)    Awards Granted On or After Effective Date.  This terms of this subsection (b) apply to Awards granted under the Plan on or after the Effective Date and are subject to the provisions of Sections 6.2 and 7.4 hereof. Except to the extent the Compensation Committee provides an alternate vesting schedule for a Restricted Stock Unit Award, and except in the case of the death, Disability or Retirement of a Participant, the Restricted Stock Units granted under the Plan will vest in accordance with the following schedule:

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	Completed Years of Employment 
From Date of Grant
	Cumulative 
Vesting Percentage

	1
	331⁄3%

	2
	662⁄3%

	3 or more
	100%

If a Participant ceases to be an Employee of, or to otherwise perform services for, the Corporation and its Subsidiaries for any reason (including death, Disability or Retirement), the Participant’s Restricted Stock Units will vest as provided in Article 12.
If this Section 7.3(b) conflicts with the terms of any employment or similar agreement to which a Participant is a party, that agreement’s terms will control with respect to any Restricted Stock Units that are granted to the Participant after the date on which such agreement is entered into.
(c)    Adjustments.  For purposes of this Section 7.3, account shall be taken of any adjustments made to the number of Restricted Stock Units subject to Awards as described in Section 13.4 hereof after the Date of Grant, such that the number of shares of Common Stock underlying 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 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    Surrender of Restricted Stock Units.  Any 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.
Article 8 
Restricted Stock
8.1    Grant of Restricted Stock    .  Subject to provisions of the Plan, the Committee may from time to time grant Awards of Restricted Stock to Participants. Awards of Restricted Stock may be made either alone or in addition to or in tandem with other Awards granted under the Plan.
8.2    Award Agreement    .  The Restricted Stock Award Agreement shall set forth the terms of the Award, as determined by the Committee, including, without limitation, the number of shares of Restricted Stock; the purchase price, if any, to be paid for such Restricted Stock, which may be equal to or less than Fair Market Value of a share and may be zero, subject to such minimum consideration as may be required by applicable law; the restrictions applicable to the Restricted Stock, the length of the Restriction Period and any circumstances that will shorten or terminate the Restriction Period; and rights of the Participant to vote the shares during the Restriction Period. The Restriction Period may be of any duration and the Award Agreement may provide for lapse of the Restriction Period in monthly or longer installments over the course of the Restriction Period, as determined by the Committee.
8.3    Certificates    .  Upon an Award of Restricted Stock to a Participant, shares of restricted Common Stock shall be registered in the Participant’s name. Certificates, if issued, may either (i) be held in custody by the Corporation until the Restriction Period expires or until restrictions thereon otherwise lapse, and/or (ii) be issued to the Participant and registered in the name of the Participant, bearing an appropriate restrictive legend and remaining subject to appropriate stop-transfer orders. If required by the 

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Committee, the Participant shall deliver to the Corporation one or more stock powers endorsed in blank relating to the Restricted Stock. If and when the Restriction Period expires without a prior forfeiture of the Restricted Stock subject to such Restriction Period, unrestricted certificates for such shares shall be delivered to the Participant or registered in the Participant’s name on the Corporation’s or transfer agent’s records; provided, however, that the Committee may cause such legend or legends to be placed on any such certificates as it may deem advisable under the terms of the Plan and the rules, regulations and other requirements of the Securities and Exchange Commission and any applicable federal or state law. Concurrently with the lapse of any risk of forfeiture applicable to the Restricted Stock, the Participant shall be required to pay to the Corporation an amount necessary to satisfy any applicable federal, state and local tax requirements as set out in Article 3 above.
8.4    Stockholder Rights; Dividends and Other Distributions.  Except as provided in this Article 8 or in the applicable Award Agreement, a Participant who receives a Restricted Stock Award shall have (during and after the Restriction Period), with respect to such Restricted Stock Award, all of the rights of a stockholder of the Corporation, including the right to vote the shares and the right to receive dividends and other distributions to the extent, if any, such shares possess such rights; provided, however, the Committee may require that any dividends and other distributions paid on such shares of Restricted Stock during the Restriction Period shall be paid to the Corporation for the account of the Participant and held pending and subject to the same restrictions on vesting as the underlying Award; provided, however that to the extent that any dividends are deferred or otherwise not paid when such dividends would otherwise normally be paid (i) all terms and conditions for such delayed payment shall be included in the Award Agreement, and (ii) such deferral or delay in payment of the dividends shall only be allowed to the extent it complies with, or is exempt from, the requirements of Code section 409A. In addition, with respect to Covered Employees, the Committee may apply any restrictions it deems appropriate to the payment of dividends declared with respect to Restricted Stock such that the dividends and/or the Restricted Stock maintain eligibility for the Exception.
Article 9 
Performance Shares and Performance Units
9.1    Grant of Performance Shares and Performance Units.  The Committee may grant Performance Shares and Performance Units to Participants in such amounts and upon such terms, and at any time and from time to time, as the Committee shall determine.
9.2    Award Agreement.  The Performance Share or Performance Unit Award Agreement shall set forth the terms of the Award, as determined by the Committee, including, without limitation, the number of Performance Shares or Performance Units granted; the purchase price, if any, to be paid for such Performance Shares or Performance Units, which may be equal to or less than Fair Market Value of a share and may be zero, subject to such minimum consideration as may be required by applicable law; the performance objectives applicable to the Performance Shares or Performance Units; and any additional restrictions applicable to the Performance Shares or Performance Units. Vesting of each Award of Performance Shares or Performance Units shall be conditioned upon such vesting requirements as the Committee may impose in its discretion. The Committee shall have sole discretion to determine and specify in each Performance Shares or Performance Units Award Agreement whether the Award will be settled in the form of all cash, all shares of Common Stock, other Corporation Securities (if doing so will not require stockholder approval), or any combination of these. Unless and to the extent the Committee specifies otherwise, such settlement will be in the form of shares of Common Stock. Any such shares may be granted subject to any restrictions deemed appropriate by the Committee.
9.3    Performance Unit Value and Performance Objectives.  Each Performance Unit shall have an initial value equal to the Fair Market Value of a share of Common Stock on the date of grant. In addition to any non-performance terms applicable to the Award, the Committee shall set performance objectives in its discretion which, depending on the extent to which they are met, will determine the Award 

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that is ultimately payable to the Participant. The time period during which the performance objectives must be met shall be called a “Performance Period.” The Committee may set, (but is not obligated to set, except in the case of Qualified Performance-Based Awards) such performance objectives by reference to the performance measures set forth in Article 11.
9.4    Earning of Performance Shares and Performance Units.  Subject to the terms of this Plan, after the applicable Performance Period has ended, the holder of the Performance Shares or Performance Units shall be entitled to receive a payout of the number and value of Performance Shares or Performance Units, as applicable, earned by the Participant over the Performance Period, if any, to be determined as a function of the extent to which the corresponding performance objectives have been achieved and any applicable non-performance terms have been met.
9.5    Stockholder Rights; Dividends and Other Distributions.  A Participant receiving Performance Shares or Performance Units shall not possess voting rights.  A Participant receiving Performance Shares or Performance Units shall accrue dividend equivalents on such Award only to the extent provided in the Award Agreement relating to the Award; provided that rights to dividend equivalents shall only be allowed to the extent they comply with, or are exempt from, Code section 409A. The Committee shall require that any rights to dividends or dividend equivalents on Performance Shares or Performance Units or any other Award subject to performance conditions be subject to the same restrictions on vesting and payment as the underlying Award. In addition, with respect to Covered Employees, the Committee may apply any restrictions it deems appropriate to the payment of dividends declared with respect to Performance Shares and Performance Units such that the dividends and/or Performance Shares or Performance Units maintain eligibility for the Exception.
Article 10 
Other Awards
The Committee shall have the authority to specify the terms and provisions of other forms of full-value equity-based or equity-related awards not described in Articles 6 through 9 of this Plan that the Committee determines (i) to be consistent with the purpose of the Plan and the interests of the Corporation, and (ii) to be exempt from any potentially applicable requirement for stockholder approval (“Other Awards”). Vesting of each Other Award shall be conditioned upon such vesting requirements as the Committee may impose in its discretion.
Article 11 
Performance Measures
11.1    In General.  The Committee may, in its discretion, include performance objectives in any Award. If the Committee intends to grant a Qualified Performance-Based Award, the Committee shall designate the Award as such in writing at the time the Award is granted. Any such designation shall become irrevocable at the end of the period described in Section 11.2 below that applies to the Award. To the extent the Committee does not designate an Award as a Qualified Performance-Based Award at the time the Award is granted, it shall be a General Award.
11.2    Qualified Performance-Based Awards.  In the case of a Qualified Performance-Based Award, the Committee shall establish at least one performance objective that is intended to permit the Award to satisfy the Exception with respect to the Award and shall determine the maximum amount payable under the Qualified Performance-Based Award for attainment of the performance objective. The Committee may also establish lower amounts payable for lower levels of achievement with respect to the performance objective and may also establish one or more threshold levels of achievement with respect to the performance objective in order for any amount to be paid pursuant to the Qualified Performance-Based Award. If none of the threshold levels of achievement with respect to the performance objective intended 

16

to permit the Award to satisfy the Exception are attained, no amount may be paid pursuant to the Qualified Performance-Based Award.
(a)    The Committee shall establish in writing the performance objective intended to permit the Award to satisfy the Exception within the first 90 days of the Performance Period and at a time when the outcome of the performance objective is substantially uncertain. Notwithstanding the 90-day deadline specified in the prior sentence, in the event that a Performance Period (or a Participant’s service during a Performance Period) is expected to be less than 12 months, the Committee shall establish in writing the performance objective intended to permit the Award to satisfy the Exception on or before the date when 25% of the Performance Period (or the Participant’s service during the Performance Period), as each is scheduled in good faith at the time the objective is established, has elapsed.
(b)    In addition to specifying the performance objective intended to permit the Award to satisfy the Exception, the Committee may specify one or more additional performance objectives, or such other conditions and criteria as it chooses, to guide the exercise of its Negative Discretion and thereby determine the final amount payable to the Participant under the Qualified Performance-Based Award.
11.3    Performance Measures for Qualified Performance-Based Awards.  In the case of a Qualified Performance-Based Award, the corporate or individual performance measures intended to permit the Award to satisfy the Exception shall be stated as levels of, or growth or changes in, or other objective specification of performance with respect to one or more of the following performance criteria: achievement of corporate pre-tax earnings thresholds, designated levels or changes in total stockholder return, net income, return on equity, return on assets, or EBIDTA (and the Committee may also specify such other financial measures or performance criteria that may be applied after and in addition to the performance measures that are intended to permit the Award to satisfy the Exception). Such restrictions shall be set forth in the Participant’s Award Agreement.
11.4    General Awards.  If the Committee assigns a Participant a General Award, the Committee may provide for a threshold level of performance below which no amount of compensation will be paid, and it may provide for the payment of differing amounts of compensation for different levels of performance.
11.5    Performance Measures for General Awards and Negative Discretion.   In the case of a General Award, and when selecting targets to guide the exercise of Negative Discretion with respect to an Award that is intended to qualify under the Exception, the Committee may establish one or more performance objectives that is based on categories of performance that are different than those set forth in Section 11.3.
11.6    Definitions of Performance Objectives.  If the Committee makes an Award subject to a particular performance objective, the Committee shall adopt or confirm a written definition of that performance objective at the time the performance objective is established, provided that the Committee retains the discretion to forego such written definition in connection with a General Award. The performance objective for an Award may be described in terms of Corporation-wide objectives or objectives that are related to a specific division, subsidiary, Employer, department, region, or function in which the participant is employed or as some combination of these (as alternatives or otherwise). A performance objective may be measured on an absolute basis or relative to a pre-established target, results for a previous year, the performance of other corporations (or a peer group determined by the Committee that may include non-corporate entities), or a stock market or other index. If the Committee specifies more than one individual performance objective for a particular Award, the Committee shall also specify, in writing, whether one, all or some other number of such objectives must be attained.
11.7    Determinations of Performance.  For each Award that has been made subject to a performance objective, within 60 days following the end of each Performance Period, the Committee shall 

17

determine whether the performance objective for such Performance Period has been satisfied. With respect to the performance objective related to a Qualified Performance-Based Award, the Award may not be paid out unless and until the Committee has made a final written certification that the performance objective intended to permit such Award to satisfy the Exception has, in fact, been satisfied. This may be accomplished through approved minutes of the Committee meeting (or by some other form of written certification). In addition, prior to paying out an Award, the Committee shall complete the exercise of its Negative Discretion (or it shall decide not to apply Negative Discretion). In this regard, the Committee shall determine whether any performance objective or other conditions or criteria specified to guide the exercise of its Negative Discretion were satisfied, and thereby make a final determination with respect to the Award. If a performance objective applicable to a General Award for a Performance Period is not achieved, the Committee in its sole discretion may pay all or a portion of that Award based on such criteria as the Committee deems appropriate, including without limitation individual performance, Corporation-wide performance or the performance of the specific division, subsidiary, Employer, department, region, or function employing the participant.
11.8    Increases.  The Committee may not increase the amount payable under a Qualified Performance-Based Award above the level applicable under the performance objective that is intended to permit the Award to satisfy the Exception, except as a result of an adjustment under Section 13.4 (and then only to extent permissible in accordance with the Exception).
11.9    Changes.  If applicable tax and/or securities laws change to permit Committee discretion to alter the governing performance measures without obtaining stockholder approval of such changes, the Committee shall have sole discretion to make such changes without obtaining stockholder approval. In addition, in the event that the Committee determines that it is advisable to grant Awards which shall not qualify for the Exception, the Committee may make such grants without satisfying the requirements of the Exception.
Article 12 
Termination of Employment and Change in Control
12.1    General.  This Article 12 is effective with respect to Awards granted on or after the Effective Date.
12.2    Termination of Employment.  If a Participant ceases to be an Employee of, or to otherwise perform services for, the Corporation and its Subsidiaries for any reason, all of the Participant’s Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units and Other Awards that were not vested on the date of such cessation shall be forfeited immediately upon such cessation. The Committee may, in its sole discretion and in such manner as it may from time to time prescribe, provide that a Participant shall be eligible for (A) a prorated Award in the event of a cessation of the Participant’s service relationship with the Employer as a result of death, Disability, Retirement or reduction in force, or under the terms of a Corporation severance plan and/or (B) continued vesting, for example, through the time of a notice period (or other period identified by the Committee), provided the originally scheduled vesting and payment dates and performance requirements are not changed. Subject to the preceding provisions of this Section 12.2, in the case of Awards that are subject to one or more performance objectives, the Committee may, in its sole discretion, provide that any such full or prorated Award will be paid prior to when any or all such performance objectives are certified (or without regard to whether they are certified); provided that an opportunity to receive a Qualified Performance-Based Award may result in payment of the Award prior to, or without certification of, a performance objective that is intended to permit the Award to satisfy the Exception only in connection with death, Disability, or Change in Control; and provided further that payment of an Award that is not a 409A Award may be changed only if the Award will continue to not be a 409A Award (or if the Committee clearly and expressly acts to convert the Award to a 409A Award and to provide terms of payment that are permissible for such a 409A Award). The Committee may, in its sole discretion, and to the extent applicable, in accordance with the provisions of Code section 409A, determine (i) whether 

18

any bona fide leave of absence (including short-term or long-term disability or medical leave) shall constitute a termination of employment for purposes of this Plan, and (ii) the impact, if any, of any such leave on outstanding Awards under the Plan.
12.3    Change in Control.  The Committee may, in its sole discretion and in such manner as it may from time to time prescribe (including, but not by way of limitation, in granting an Award or in an individual employment agreement, severance plan or individual severance agreement), provide that a Participant shall be eligible for (i) a full or prorated Award (determined based on time elapsed in the performance period) in the event that both a Change in Control and a cessation of the Participant’s service relationship with the Employer occurs during a specified time thereafter (either by action of the Corporation or by the Participant for Good Reason), or (ii) a full or prorated award in the event that both a Change in Control occurs and the surviving entity in such Change in Control does not assume or replace the Award in the Change in Control. With respect to Awards that are subject to one or more performance objectives, the Committee may, in its sole discretion, provide that any such full or prorated Award will be paid under the provisions of this Section 12.3 prior to when any or all such performance objectives are certified (or without regard to whether they are certified).
Article 13 
Amendment and Termination of the Plan; Reorganizations and 
Recapitalizations of the Corporation 

13.1    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), stockholder 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 Awards 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 no amendment, suspension, termination or modification of the Plan shall materially adversely affect any right or obligations with respect to Awards previously granted under the Plan except to the extent required by applicable law or the requirements of any stock exchange on which the Common Stock is listed or quoted or the affected Participant consents in writing.
13.2    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 Awards 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 Awards shall be subject to the same terms and conditions of the Plan that would have applied to such Awards if the Plan had not been terminated.
13.3    Amendment of Award Agreement.  The Committee shall be permitted to amend any outstanding Award Agreement in its discretion to the extent the Committee determines that such amendment is necessary or desirable to achieve compliance with applicable securities law or exchange requirements, including but not limited to the Dodd-Frank Wall Street Reform and Consumer Protection Act and the guidance thereunder. In particular, all Awards, amounts or benefits received or outstanding under the Plan shall be subject to clawback, cancellation, recoupment, rescission, payback, reduction or other similar action in accordance with the terms of any Corporation clawback or similar policy or any applicable law related to such actions, as may be in effect from time to time.  A Participant’s acceptance of an Award shall be deemed to constitute the Participant’s acknowledgement of and consent to the Corporation’s application, implementation and enforcement of any applicable Corporation clawback or similar policy that may apply to the Participant, whether adopted prior to or following the Effective Date, 

19

and any provision of applicable law relating to clawback, cancellation, recoupment, rescission, payback, or reduction of compensation, and the Participant’s agreement that the Corporation may take such action as may be necessary to effectuate any such policy or applicable law, without further consideration or action. The Committee may, at any time, amend outstanding Award Agreements in any other manner not inconsistent with the terms of the Plan; provided, however, except as provided in Sections 13.1, 13.5 and 16.17, if such amendment is materially adverse to the Participant, as determined by the Committee, the amendment shall not be effective unless and until the Participant consents, in writing, to such amendment. To the extent not inconsistent with the terms of the Plan, the Committee may, at any time, amend an outstanding Award Agreement in a manner that is not unfavorable to the Participant without the consent of such Participant.
13.4    Reorganizations and Recapitalizations of the Corporation.
(a)    The existence of this Plan and Awards granted hereunder shall not affect in any way the right or power of the Corporation or its stockholders 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 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 underlying Awards granted hereunder.
(c)    The shares underlying Awards that 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 Awards 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 Awards granted, as well as the number of shares of Common Stock available for 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 13.4 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.
13.5    Assumption or Cancellation of Awards Upon a Corporate Transaction.
(a)    In the event of a sale of all or substantially all of the assets or stock of the Corporation, the merger of the Corporation with or into another corporation such that stockholders of the Corporation immediately prior to the merger exchange their shares of stock in the Corporation for cash and/or shares of another entity or any other corporate transaction to which the Committee 

20

deems this provision applicable (any such event is referred to as a “Corporate Transaction”), the Committee may, in its discretion, cause each Award to be assumed or for an equivalent Award to be substituted by the successor corporation or a parent or subsidiary of such successor corporation and adjusted as appropriate.
(b)    In addition or in the alternative, the Committee, in its discretion, may cancel all or certain types of outstanding Awards at or immediately prior to the time of the Corporate Transaction provided that the Committee either (i) provides that the Participant is entitled to a payment (in cash or shares) equal to the value of the portion of the Award that would be vested upon the Corporate Transaction, as determined below and to the extent there is any such value, or (ii) at least 15 days prior to the Corporate Transaction (or, if not feasible to provide 15 days’ notice, within a reasonable period prior to the Corporate Transaction), notifies the Participant that, subject to rescission if the Corporate Transaction is not successfully completed within a certain period, the Award will be terminated. 
(c)    For purposes of this provision, the value of the Award that would be vested upon the Corporate Transaction shall be measured as of the date of the Corporate Transaction and shall equal the value of the cash, shares or other property that would be payable to the Participant for such vested Award. The Committee may adopt such valuation methodologies for outstanding Awards as it deems reasonable in the event of a cash settlement. Payment of any amount payable pursuant to this cancellation provision may be made in cash or, in the event that the consideration to be received in such transaction includes securities or other property, in cash and/or securities or other property in the Committee’s discretion.
(d)    Any actions taken under this Section 13.5 shall be valid and applicable with respect to a 409A Award only to the extent that such action complies with Code section 409A.
Article 14 
Compliance With Other Laws and Regulations
14.1    Registration or Qualification of Securities.  The Plan and the grant of Awards 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 Award shall be subject to the requirement that if at any time the Compensation Committee shall determine, in its discretion, that the listing, registration or qualification of the underlying 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 Awards, the Awards shall comply with any registration, qualification, consent or approval requirements as imposed by the Compensation Committee.
14.2    Representation    .  The Compensation Committee may require that any Person who is granted Awards under the Plan represent and agree in writing that if the shares of Common Stock made subject to the Awards 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 15 
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 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 

21

or right therein whatsoever but immediately upon any such purported assignment or transfer, or any attempt to make the same, such Restricted Stock Units thereunder shall terminate and become of no further effect.
Article 16 
General Provisions
16.1    No Right to Continued Employment    .  No Employee or any other Person shall have any claim or right to be issued Awards under the Plan. Neither the adoption and maintenance of the Plan nor the granting of Awards 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 Awards 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.”
16.2    Rights of a Stockholder.  Except as provided otherwise in the Plan or in an Award Agreement, no Participant awarded a Restricted Stock Unit, Performance Unit or Other Award shall have any right as a stockholder with respect to any shares covered by such Award prior to the date of issuance to him or her or his or her delegate of a certificate or certificates for such shares or the date the Participant’s name is registered on the Corporation’s books as the stockholder of record with respect to such shares.
16.3    Incorporation by Reference of Certificate of Incorporation.  The relevant provisions of the Certificate of Incorporation are hereby incorporated by reference.
16.4    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.
16.5    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.
16.6    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.
16.7    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 otherwise requires.
16.8    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.
16.9    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 

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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.
16.10    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.
16.11    Compliance with Section 162(m).  At all times when the Committee determines that compliance with Code section 162(m) is required or desirable, all Awards to Covered Employees shall comply with the requirements of Code section 162(m). In addition, in the event that changes are made to Code section 162(m) to permit greater flexibility with respect to any Awards, the Committee may, subject to the requirements of Article 13, make any adjustments it deems appropriate.
16.12    Successors.  The terms of the Plan and outstanding Awards shall be binding upon the Employer and its successors and assigns.
16.13    Tax Elections.  Each Participant agrees to give the Committee prompt written notice of any election made by such Participant under Code section 83(b) or any similar provision thereof. Notwithstanding the preceding sentence, the Committee may condition any award on the Participant’s not making an election under Code section 83(b).
16.14    Uncertificated Shares.  To the extent that the Plan provides for issuance of certificates to reflect the transfer of shares of Common Stock, the transfer of such shares may be effected on a non-certificated basis, to the extent not prohibited by applicable law or the rules of any stock exchange on which shares of Common Stock are traded.
16.15    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.
16.16    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 without giving effect to any choice of law provisions. Unless otherwise provided in the applicable Award Agreement, the recipient of an Award is deemed to submit to the exclusive jurisdiction and venue of the Federal and state courts of New York to resolve any and all issues that may arise out of or relate to the Plan or such Award Agreement.
16.17    Section 409A.
(a)    At all times, this Plan shall be interpreted and operated (i) with respect to 409A Awards in accordance with the requirements of Code section 409A, and (ii) to maintain the exemptions from Code section 409A of Restricted Stock and any Awards designed to meet the short-term deferral exception under Code section 409A. To the extent there is a conflict between the provisions of the Plan relating to compliance with Code section 409A and the provisions of any Award Agreement issued under the Plan, the provisions of the Plan control. Moreover, any discretionary authority that the Committee may have pursuant to the Plan shall not be applicable to a 409A Award to the extent such discretionary authority would conflict with Code section 409A, and the exercise 

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of discretionary authority that does not conflict with Code section 409A shall comply with Code section 409A in the case of a 409A Award.
(b)    To the extent that a 409A Award provides for payment upon the recipient’s termination of employment as an Employee, (i) the 409A Award shall be deemed to require payment upon the individual’s “separation from service” within the meaning of Code section 409A, and (ii) if the individual is a “specified employee” on the date of the individual’s termination of employment (with such status determined by the Corporation in accordance with rules established by the Corporation in writing in advance of the “specified employee identification date” within the meaning of Code section 409A that relates to the date of the individual’s termination of employment or, in the absence of such rules established by the Corporation, under the default rules for identifying specified employees under Code section 409A), such payment shall not be paid earlier than six months after such termination of employment (provided that if the individual dies after the date of the individual’s termination of employment but before payment has been made, payment will be made to the individual’s estate without regard to such six-month delay).
(c)    To the extent any provision of this Plan or an Award Agreement would cause a payment of a 409A Award to be made because of the occurrence of a change in control, then such payment shall not be made unless such change in control also constitutes a “change in ownership”, “change in effective control” or “change in ownership of a substantial portion of the Corporation’s assets” within the meaning of Code section 409A. Any payment that would have been made except for the application of the preceding sentence shall be made in accordance with the payment schedule that would have applied in the absence of a change in control.  In the case of an Award that is not a 409A Award, the timing of payment following a change in control shall preserve the status of each as an Award that is not a 409A Award, in all cases where it is possible to preserve such status. 
(d)    To the extent any provision of this Plan or an Award Agreement would cause a payment of a 409A Award to be made because of the Participant’s Disability, then such payment shall not be made unless the Participant’s Disability also constitutes a “disability”  within the meaning of Code section 409A(a). Any payment that would have been made except for the application of the preceding sentence shall be made in accordance with the payment schedule that would have applied in the absence of a Disability.
(e)    To the extent an Award is a 409A Award and is subject to a substantial risk of forfeiture within the meaning of Code section 409A (or will be granted upon the satisfaction of a condition that constitutes such a substantial risk of forfeiture), any compensation due under the Award (or pursuant to a commitment to grant an Award) shall be paid in full not later than the 60th day following the date on which there would no longer be a substantial risk of forfeiture with respect to the Award (for this purpose, any changes to the terms of the Award that would affect the time of payment shall be disregarded, and the Participant shall have no right to designate the year of the payment), unless the Committee shall clearly and expressly provide otherwise at the time of granting the Award.
(f)    In the event that an Award shall be deemed not to comply with Code section 409A, then neither the Corporation, the Board, the Committee nor its or their designees or agents, nor any of their affiliates, assigns or successors (each a “protected party”) shall be liable to any Award recipient or other person for actions, inactions, decisions, indecisions or any other role in relation to the Plan by a protected party if made or undertaken in good faith or in reliance on the advice of counsel (who may be counsel for the Corporation), or made or undertaken by someone other than a protected party.

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To record the adoption of the Third Amended and Restated Sotheby’s Restricted Stock Unit Plan effective as of May 5, 2016, the Corporation has caused the execution hereof this 5th day of May, 2016.
SOTHEBY’S 
a Delaware corporation

By:        

Its:        

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