Severance Agreement

Severance Arrangements.

If at any time from the date hereof through December 31, 2015 (the “Applicable Period”), your employment by the Company is terminated by you for Good Reason or by the Company without Cause, the Company shall, in addition to continuing to indemnify you in accordance with the Company’s Charter and By-Laws, pay or provide you with the following:

(x) Within fifteen (15) days of your termination date, payment of any unpaid base salary, signing bonus, accrued vacation, unpaid Business Development Allowance expenses, unpaid car allowance expenses, unpaid financial planning allowance expenses and legal expense reimbursement through the date of termination, (y) within sixty (60) days of your termination date, reimbursement for any unreimbursed travel and entertainment expenses incurred through the date of termination, and (z) any amounts to which you are entitled under the Company’s benefit plans in accordance with their terms (“Accrued Obligations”);

Within fifteen (15) days after approval thereof by the Compensation Committee, but no later than March 15 of the year following the bonus calendar year, any earned and unpaid cash incentive compensation amount for the calendar year prior to your date of termination, or for the 2013 calendar year if your termination occurs in 2013, notwithstanding that you are no longer an employee on the date of payment, but provided that, other than in the case of the 2013 cash incentive compensation amount, you were an employee on the last day of such prior calendar year;

$3,750,000 which amount shall be in lieu of any severance payments or benefits to which you may otherwise be entitled except as expressly set forth herein or for which you could be eligible under the Sotheby’s, Inc. Severance Plan, any amended version of such Plan,

Eighteen (18) months of Company paid continued coverage under Sotheby’s group medical and dental insurance plans pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) in accordance with the terms of the applicable medical and dental plans beginning when your coverage would terminate as an employee; provided that you timely and properly elect COBRA continuation coverage.

If during the Applicable Period, your employment is terminated by the Company for Cause, or you terminate your employment without Good Reason, other than on account of death or Permanent Disability, the Company shall have no further obligations to you under this Agreement, except that the Company shall pay you any Accrued Obligations as defined above, other than any unpaid signing bonus, and shall continue to indemnify you in accordance with the provisions of the Company’s Charter and By-laws.

If during the Applicable Period, your employment is terminated by the Company because of your Permanent Disability or death, the Company shall have no further obligations to you under this Agreement, except that the Company shall pay you or your estate (i) any Accrued Obligations as defined above and (ii) any earned and unpaid cash incentive compensation amount for the calendar year prior to your date of termination notwithstanding that you are no longer an employee on the date of payment, but provided that, other than in the case of the 2013 cash incentive compensation amount, you were an employee on the last day of such prior calendar year. In addition, the Company shall continue to indemnify you in accordance with the provisions of the Company’s Charter and By-laws.

During the term of this Agreement, you hereby agree to waive any rights or benefits under the Severance Plan. Upon expiration of this Agreement at the end of the Applicable Period (or later, if you and the Company have entered into a mutually agreed new severance agreement providing for such waiver), you will become eligible for benefits under the terms of the Company’s Severance Plan as then in effect.

Any payments payable pursuant to this Paragraph (1) in excess of Accrued Obligations shall only be payable if you deliver to the Company a release, in the form of Exhibit C hereto (the “Release”), and such Release becomes effective not later than the forty-fifth day after termination of employment; provided, however, that you shall only be required to deliver the Release if the Company has executed the Release within such forty-five day period. If the forty-five (45) day period spans more than one calendar year, any amounts payable pursuant to this Paragraph (1) in excess of Accrued Obligations shall not be made earlier than the first business day of the second calendar year.

You shall have no duty to mitigate with respect to any benefits under this Paragraph (1).

Certain Agreements. In consideration of the undertakings by the Company in Paragraph (1), you agree to be bound by the covenants and agreements set forth in Exhibit B hereto, subject to performance by the Company of its obligations under this Agreement.

Miscellaneous. You may not assign your rights or delegate your obligations under this Agreement. This Agreement shall inure to the benefit of your successors, heirs and personal representatives. Sotheby’s shall be entitled to withhold from any payments or deemed payments under this Agreement any amount of withholding required by law. This Agreement, including the agreements and policies referenced herein, together with your Offer Letter constitute the entire agreement between you and Sotheby’s concerning the subject matter of your employment and supersede any prior employment, severance, or notice and non-compete agreement between the parties. Any

Legal and Equitable Remedies. Sotheby’s shall be entitled to seek to enjoin a violation by you of any provision of Exhibit B. Moreover, the parties hereto acknowledge that the damages suffered by Sotheby’s as a result of any violation of this Agreement may be difficult to ascertain. Accordingly, the parties agree that in the event of a breach of this Agreement by you, Sotheby’s shall be entitled to seek specific enforcement by injunctive relief of your obligations to Sotheby’s. The remedies referred to above shall not be deemed to be exclusive of any other remedies available to Sotheby’s, including to enforce the performance or observation of the covenants and agreements contained in this Agreement.

Arbitration. Any dispute, controversy or claim arising out of or relating to this Agreement or the Offer Letter, or breach thereof (other than an action or proceeding for an injunction or other equitable relief pursuant to Paragraph (4) hereof), shall be settled by arbitration in New York City in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association by a single arbitrator. Any rights, defenses, or remedies available in a court of competent jurisdiction shall also be available to the parties in arbitration. The arbitrator’s award shall be final and binding upon both parties, and judgment upon the award may be entered in any court of competent jurisdiction in any state of the United States or country or application may be made to such court for a judicial acceptance of the award and such enforcement as the law of such jurisdiction may require or allow.

Severability. If at any time there is a judicial determination by any court of competent jurisdiction that any provision of this Agreement is unenforceable against you, the other provisions of this Agreement shall not be rendered void but shall be deemed amended to apply to such maximum extent as the court may judicially determine or indicate to be enforceable under New York law.

Choice of Law/Choice of Forum. This Agreement shall be governed by, construed and enforced in accordance with the laws of the State of New York irrespective of the principles of conflicts of law, and you consent to the exclusive jurisdiction of the state and federal courts situated in New York City for the purpose of adjudicating any dispute (other than disputes required to be arbitrated under Paragraph (5) hereof relating to this Agreement).

Binding on Successor Company. This Agreement shall not be assignable by Sotheby’s or Sotheby’s, Inc. except in connection with a sale of all or substantially all of their respective assets or to an affiliated Company provided that Sotheby’s and Sotheby’s, Inc. remain responsible for the obligations of the Company hereunder. This Agreement shall remain in effect and be binding upon any successor or assign of Sotheby’s or Sotheby’s, Inc. including any entity that (whether directly or indirectly, by purchase, merger, reorganization, consolidation, acquisition of property or stock, liquidation or otherwise) is the survivor of the Company or Sotheby’s, Inc. and/or that acquires the Company or Sotheby’s, Inc. and/or substantially all the assets of the Company or Sotheby’s, Inc. and such successor entity shall be deemed the “Company” or Sotheby’s, Inc., as the case may be, for purposes of this Agreement.

409A. Anything in this Agreement to the contrary notwithstanding,

It is intended that any amounts payable under this Agreement will either be exempt from or comply with Section 409A of the Internal Revenue Code and all regulations, guidance and other interpretive authority issued thereunder (“Section 409A”) so as not to subject you to payment of any additional tax penalty or interest imposed under Section 409A, and this Agreement will be interpreted on a basis consistent with such intent. References to termination of employment herein mean a termination of employment that constitutes a Separation from Service within the meaning of Section 409A.

To the extent that the reimbursement of any expenses or the provision of any in-kind benefits under this Agreement is subject to Section 409A, (i) the amount of such expenses eligible for

Notwithstanding the payment dates set forth herein, if and to the extent necessary to prevent you from being subject to adverse tax consequences under Section 409A, you shall not be paid the amounts under Paragraph 1 until the first day after the six month anniversary of your termination of employment date. The foregoing sentence shall not be applicable in the event of your death. All amounts payable under this Agreement shall be without interest if paid when due.

Notices. For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be delivered personally or mailed by United States certified or registered mail, return receipt requested, postage prepaid, addressed to you at your home address set forth on the Company’s records (with a copy to Hughes Hubbard & Reed LLP, One Battery Park Plaza, NY, NY 10004 Attention: Kenneth A. Lefkowitz, Esq.) and to the Company at Sotheby’s, 1334 York Avenue, New York, New York 10021, Attention: Executive Vice President and Worldwide Head of Human Resources, or to such other address as either party may have furnished to the other in writing in accordance herewith. Any such notice shall be deemed given when so delivered personally, or, if mailed, five (5) days after the date of deposit in the United States mail, except that notice of change of address shall be effective only upon receipt. Please review this Agreement carefully and, if it correctly states our agreement, sign and return to me the enclosed copy.

Joint and Several Liability. Sotheby’s Inc. hereby agrees that it is jointly and severally liable to you for all of the Company’s obligations hereunder.

conviction of a felony crime;

your fraud, willful malfeasance or gross negligence, in each case in connection with the performance of your duties for the Company which is materially injurious to the Company; or

any material breach of this Agreement by you;

any material breach by the Company of this Agreement or the provisions of your Offer Letter, including without limitation failure of the Company to pay the signing bonus described in the second paragraph of the Offer Letter or to make the award of performance restricted stock units described in the fourth paragraph of the Offer Letter by February 2014;

your being required to relocate to a principal place of business more than fifty (50) miles outside New York, New York, except for travel reasonably required in the performance of your responsibilities;

any action by the Company that results in a material diminution in your authority, duties or responsibilities (any diminution in your responsibility to report to the Chief Executive Officer (and Audit Committee) of the Company shall be deemed to be material) and/or any diminution in title or base salary or incentive target bonus opportunity as set forth in the Offer Letter, including without limitation by virtue of the Company ceasing to be a public company (except in connection with the termination of your employment for Cause or as a result of your death or Permanent Disability or temporarily as a result of your illness or other absence or except for a reduction in base salary or incentive target bonus opportunity effected as a result of cost cutting efforts that does not exceed 10% and applies to all executive officers);

any action by the Company to preclude you (and to the extent applicable, your dependents) from continuing to participate in or be covered under all pension, retirement, deferred compensation, savings, medical, dental, disability, life insurance and other programs applicable to Executive Vice Presidents generally; or

any failure by the Company to obtain the assumption and agreement to perform the terms of the Offer Letter and this Agreement by a successor;

Christie’s, Bonhams, or Phillips de Pury & Company or any affiliate or successor of any of those entities anywhere in the world; or

another entity whose principal business is conducting auctions, dealing in or making private sales of, collecting or advising with respect to any core collecting category in which the Company sells property within the prior twelve (12) months in the United States, United Kingdom, Hong Kong, Switzerland or France, or the art finance or art fund business.

directly or indirectly hire, recruit, solicit or induce any Company employees to terminate their employment with the Company;

directly or indirectly solicit the business of, do business with, or seek to do business with, any client of the Company in the art related business;

directly or indirectly encourage or assist any competitor of the Company to solicit or service any client of the Company in the art related business; or

knowingly otherwise directly induce any client of the Company to cease doing business with, or lessen its business with, the Company.

As consideration for this Release, Executive will receive the full amount to which he is entitled pursuant to the Agreement.

Executive agrees that the consideration provided in the Agreement and this Release:

exceeds any payment, benefit or other thing of value to which he might otherwise be entitled under any policy, plan or procedure of Sotheby’s; and

is in full discharge of any and all of Sotheby’s liabilities and obligations to him, whether written or oral, except to the extent set forth in the Agreement.

Sotheby’s agrees that the consideration provided in the Agreement and this Release:

exceeds any payment, benefit or other thing of value to which Sotheby’s might otherwise be entitled; and

is in full discharge of any and all of Executive’s liabilities and obligations to it, whether written or oral, except to the extent set forth in the Agreement.

For good and valuable consideration, the receipt of which is hereby acknowledged, Executive for himself and for his heirs, executors, administrators, trustees, legal representatives and assigns (hereinafter collectively referred to as “Releasors”), hereby forever releases and discharges Sotheby’s, or any of Sotheby’s past, present or future parent entities, partners, subsidiaries, affiliates, divisions, employee benefit and/or pension plans or funds, insurers, successors and assigns and any of its or their past, present or future officers, directors, attorneys, agents, trustees, administrators, employees, or assigns (whether acting as agents for Sotheby’s or in their individual capacities) (collectively referred to as “Releasees”) from any and all claims, debts, liabilities, demands, obligations, liens, promises, acts, agreements, costs, expenses, damages, actions and causes of action, of any kind whatsoever (upon any legal or equitable theory, whether contractual, common-law, statutory, federal, state, local, or otherwise), whether known or unknown, by reason of any act, omission, transaction or occurrence which Releasors ever had, now have or hereafter can, shall or may have against Releasees up to and including the Release Effective Date as defined in Subparagraph 8(c) below. This Release does not apply to claims by Releasors with regard to payments or benefits specifically payable under the Agreement which are not yet paid as of the Release Effective Date, claims for vested accrued benefits, claims relating to any rights of indemnification under the Company’s by-laws, claims under any directors’ and officers’ liability insurance policy or to claims arising out of facts or circumstances that were known to Sotheby's chief executive officer, chief operating officer, general counsel or the worldwide head of human resources and which were not disclosed to Executive prior to the date that Executive signs this release. Without limiting the generality of the foregoing, Releasors hereby release and discharge Releasees from:

any and all claims relating to Executive’s employment by Sotheby’s, the terms and conditions of such employment, any employee benefits related to his employment and/or his termination from such employment;

any and all claims of employment discrimination and/or retaliation under any federal, state or local statute or ordinance, including without limitation, any and all claims under Title VII of the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1866 (42 U.S.C. Section 1981); the Age Discrimination in Employment Act (including the Older Worker Benefit Protection Act); the Americans with Disabilities Act; the federal Worker Adjustment and Retraining Notification Act; the Family and Medical Leave Act of 1993; the Equal Pay Act; the Rehabilitation Act of 1973; the Employee Retirement Income Security Act; the Equal Pay Act; the

any and all claims for wrongful discharge and/or breach of contract or any claims related to compensation or benefits, including claims for bonus or deferred payments;

any and all claims for defamation, libel or slander against any of the Releasees; and

any and all claims for attorneys’ fees, costs, disbursements and the like; which Releasors ever had, now have or hereafter can, shall or may have against Releasees for, upon or by reason of any act, omission, transaction or occurrence up to and including the Release Effective Date as defined in Subparagraph 8(c) below.

Executive agrees, to the extent consistent with law, that he will not commence, maintain, prosecute or participate (except as compelled by legal process) in any action or proceedings of any kind (judicial or administrative) against Releasees, arising out of any act, omission, transaction or occurrence occurring up to and including the Release Effective Date as defined in Subparagraph 8(c) below. Notwithstanding the foregoing, nothing in this Release prevents or prohibits the Executive from filing a claim with a government agency, such as the U.S. Equal Employment Opportunity Commission, that is responsible for enforcing a law on behalf of the government. However, the Executive understands that, to the extent consistent with law, because he is waiving and releasing any and all claims for monetary damages and any other form of personal relief, he may only seek and receive non-personal forms of relief through any such claim.

Executive further agrees, to the extent consistent with law, that he will not seek or accept any award or settlement from any source or proceeding with respect to any claim or right covered by Subparagraphs 4(a) and 4(b) and that this Release shall act as a bar to recovery in any such proceedings.

Executive shall have twenty-one (21) days from the date of receipt of this Release, or until __________, 201_, to consider the terms and conditions of this Release. Executive may accept this Release by signing it and returning it to Ms. Susan Alexander or her successor as Worldwide Head of Human Resources, Sotheby’s, 1334 York Avenue, New York, New York 10021.

After signing this Release, Executive shall have seven (7) days to revoke this Release by indicating his desire to do so in writing (i) addressed to Ms. Susan Alexander (or such successor) at the address listed above and (ii) received by Ms. Alexander (or such successor) no later than 5:00 p.m. on the seventh (7th) day following the date Executive signs this Release.

The effective date of this Release shall be the eighth (8th) day following Executive’s signing of this Release (the “Release Effective Date”) provided Executive does not revoke this Release during the revocation period.

Executive acknowledges and reaffirms his obligations pursuant to the Confidentiality Agreement signed by him in September 2013 (the “Confidentiality Agreement”).

If Executive has not already done so, he shall return to Sotheby’s all Sotheby’s property in his possession including, but not limited to, credit cards, building passes, airline tickets, computers, laptops, facsimile machines, portable telephones and other wireless devices no later than his termination date; provided that Executive (as well as the Company) shall be entitled to retain a copy of his Outlook contacts (or such other form of contact information, as may be applicable).