SOTHEBYS (Form: 10-Q, Received: 08/07/2015 10:24:10)

Auction Dollar Tranche Swing Line Commitment

Auction Multicurrency Tranche Swing Line Commitment

General Electric Capital Corporation

$4,000,000

$1,000,000



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549


	FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2015

Commission File Number 1-9750



(Exact name of registrant as specified in its charter)

Delaware		38-2478409
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1334 York Avenue New York, New York		10021
(Address of principal executive offices)		(Zip Code)
Registrant's telephone number, including area code: (212) 606-7000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of the Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	ý		Accelerated filer	¨
Non-accelerated filer	¨	(Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No ý

As of July 31, 2015 , there were 69,496,777 outstanding shares of Common Stock, par value $0.01 per share, of the registrant.

______________________________________________________________________________________________________

TABLE OF CONTENTS



		PAGE
PART I	FINANCIAL INFORMATION

Item 1	Financial Statements (UNAUDITED):

	Condensed Consolidated Income Statements for the Three and Six Months Ended June 30, 2015 and 2014	3
	Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2015 and 2014	4
	Condensed Consolidated Balance Sheets as of June 30, 2015, December 31, 2014, and June 30, 2014	5
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2015 and 2014	6
	Notes to Condensed Consolidated Financial Statements	7

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29

Item 3	Quantitative and Qualitative Disclosures About Market Risk	59

Item 4	Controls and Procedures	60

PART II	OTHER INFORMATION

Item 1	Legal Proceedings	60

Item 1A	Risk Factors	60

Item 4	Mine Safety Disclosures	65

Item 6	Exhibits and Reports on Form 8-K	66

SIGNATURE		68

EXHIBIT INDEX		69

2 #

PART I: FINANCIAL INFORMATION

ITEM 1 : FINANCIAL STATEMENTS

SOTHEBY’S

CONDENSED CONSOLIDATED INCOME STATEMENTS

(UNAUDITED)

(Thousands of dollars, except per share data)



	Three Months Ended						Six Months Ended
	June 30, 2015			June 30, 2014			June 30, 2015			June 30, 2014
Revenues:
Agency commissions and fees	$	310,377		$	316,187		$	438,259		$	439,315
Inventory sales	7,005			8,733			19,988			34,734
Finance	11,970			8,140			24,657			13,822
License fees	2,468			2,462			4,442			4,159
Other	186			295			335			598
Total revenues	332,006			335,817			487,681			492,628
Expenses:
Agency direct costs	32,730			31,617			44,569			42,054
Cost of inventory sales	16,989			7,518			28,702			32,020
Cost of Finance revenues	3,874			2,024			7,262			2,734
Marketing	4,748			4,564			8,808			7,697
Salaries and related	108,182			97,833			171,112			163,589
General and administrative	44,731			38,210			79,460			75,542
Depreciation and amortization	4,781			5,066			9,563			10,213
CEO separation and transition costs (see Note 13)	43			—			4,232			—
Restructuring charges, net (see Note 14)	(530		)	—			(889		)	—
Special charges (see Note 15)	—			18,554			—			24,257
Total expenses	215,548			205,386			352,819			358,106
Operating income	116,458			130,431			134,862			134,522
Interest income	630			402			759			818
Interest expense	(9,074		)	(8,768		)	(17,735		)	(17,551		)
Other income (expense)	245			694			(1,714		)	(748		)
Income before taxes	108,259			122,759			116,172			117,041
Equity in earnings of investees	1,982			230			3,126			384
Income tax expense	42,789			45,344			46,713			45,675
Net income	67,452			77,645			72,585			71,750
Less: Net (loss) income attributable to noncontrolling interest	(120		)	13			(189		)	232
Net income attributable to Sotheby's	$	67,572		$	77,632		$	72,774		$	71,518
Basic earnings per share - Sotheby’s common shareholders	$	0.97		$	1.12		$	1.04		$	1.02
Diluted earnings per share - Sotheby’s common shareholders	$	0.96		$	1.11		$	1.04		$	1.01
Weighted average basic shares outstanding	69,332			68,938			69,211			69,041
Weighted average diluted shares outstanding	69,884			69,491			69,794			69,619
Cash dividends declared per common share	$	0.10		$	0.10		$	0.20		$	4.54

See accompanying Notes to Condensed Consolidated Financial Statements

3 #

SOTHEBY’S

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(Thousands of dollars)



	Three Months Ended					Six Months Ended
	June 30, 2015			June 30, 2014		June 30, 2015			June 30, 2014
Net income	$	67,452		$	77,645	$	72,585		$	71,750
Other comprehensive income:
Cumulative foreign currency translation adjustments, net of tax of $2,047 and $380 for the three and six months ended June 30, 2015	17,553			4,029		(1,716		)	5,497
Reclassification of cumulative translation adjustment included in net income	—			—		—			2,058
Amortization of previously unrecognized net pension losses and prior service costs included in net income, net of tax of $217, $120, $432, and $237	867			479		1,725			951
Other comprehensive income	18,420			4,508		9			8,506
Comprehensive income	85,872			82,153		72,594			80,256
Less: Comprehensive (loss) income attributable to noncontrolling interest	(120		)	13		(189		)	232
Comprehensive income attributable to Sotheby's	$	85,992		$	82,140	$	72,783		$	80,024

See accompanying Notes to Condensed Consolidated Financial Statements

4 #

SOTHEBY’S CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Thousands of dollars)

	June 30, 2015			December 31, 2014			June 30, 2014
	June 30, 2015			December 31, 2014			June 30, 2014
A S S E T S
Current Assets:
Cash and cash equivalents	$	613,688		$	693,829		$	576,445
Restricted cash	37,072			32,837			56,656
Accounts receivable, net of allowance for doubtful accounts of $7,854, $7,318, and $6,995	822,725			913,743			993,302
Notes receivable, net of allowance for credit losses of $1,359, $1,166, and $1,001	57,847			130,796			96,883
Inventory	257,993			217,132			218,878
Deferred income taxes and income tax receivable	32,509			17,078			41,336
Prepaid expenses and other current assets	34,266			34,107			27,633
Total Current Assets	1,856,100			2,039,522			2,011,133
Notes receivable	748,204			568,942			510,905
Fixed assets, net of accumulated depreciation and amortization of $200,181, $191,260, and $188,273	357,768			364,382			373,476
Goodwill and other intangible assets, net of accumulated amortization of $5,247, $5,760, and $6,415	14,153			14,341			14,914
Equity method investments	41,557			10,210			10,862
Deferred income taxes and income tax receivable	18,940			38,202			38,836
Trust assets related to deferred compensation liability	48,370			50,490			52,041
Pension asset	31,671			28,993			41,525
Other long-term assets	20,756			19,738			19,309
Total Assets	$	3,137,519		$	3,134,820		$	3,073,001
L I A B I L I T I E S A N D S H A R E H O L D E R S’ E Q U I T Y
Current Liabilities:
Due to consignors	$	781,927		$	980,470		$	1,000,029
Accounts payable and accrued liabilities	101,255			111,639			129,071
Accrued salaries and related costs	69,011			88,915			56,174
York Property Mortgage	6,542			218,728			3,730
Accrued and deferred income taxes	35,547			13,828			46,808
Other current liabilities	15,684			15,627			16,068
Total Current Liabilities	1,009,966			1,429,207			1,251,880
Credit facility borrowings	593,000			445,000			345,000
Long-term debt, net	512,067			300,000			515,031
Accrued and deferred income taxes	18,621			21,192			21,182
Deferred compensation liability	48,269			49,633			51,350
Other long-term liabilities	8,915			11,550			11,413
Total Liabilities	2,190,838			2,256,582			2,195,856
Commitments and contingencies (see Note 9)
Shareholders’ Equity:
Common Stock, $0.01 par value	700			695			695
Authorized shares—200,000,000
Issued shares—70,054,948, 69,550,073, and 69,525,947
Outstanding shares—69,496,777, 68,991,902, and 68,967,776
Additional paid-in capital	418,764			408,874			394,261
Treasury stock, at cost: 558,171 shares at June 30, 2015, December 31, 2014, and June 30, 2014	(25,000		)	(25,000		)	(25,000		)
Retained earnings	628,626			569,894			537,565
Accumulated other comprehensive loss	(76,757		)	(76,766		)	(30,947		)
Total Shareholders’ Equity	946,333			877,697			876,574
Noncontrolling interest	348			541			571
Total Equity	946,681			878,238			877,145
Total Liabilities and Shareholders’ Equity	$	3,137,519		$	3,134,820		$	3,073,001

See accompanying Notes to Condensed Consolidated Financial Statements

5 #

SOTHEBY’S CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Thousands of dollars)

	Six Months Ended
	June 30, 2015			June 30, 2014
Operating Activities:
Net income attributable to Sotheby's	$	72,774		$	71,518
Adjustments to reconcile net income attributable to Sotheby's to net cash used by operating activities:
Depreciation and amortization	9,563			10,213
Loss from cumulative translation adjustment upon liquidation of foreign subsidiary	—			2,058
Deferred income tax expense	14,360			11,980
Share-based payments	17,235			12,895
Net pension cost (benefit)	784			(350		)
Inventory writedowns and bad debt provisions	13,825			3,316
Amortization of debt discount	1,782			1,782
Excess tax benefits from share-based payments	(1,067		)	(3,625		)
Equity in earnings of investees	(3,126		)	(384		)
Other	(222		)	1,366
Changes in assets and liabilities:
Accounts receivable	81,662			(192,351		)
Due to consignors	(194,480		)	50,770
Inventory	(53,997		)	(34,495		)
Prepaid expenses and other current assets	(5,857		)	(4,872		)
Other long-term assets	3,251			(1,391		)
Deferred income tax assets and income tax receivable	(10,512		)	(22,405		)
Accrued income taxes and deferred income tax liabilities	18,543			20,098
Accounts payable and accrued liabilities and other liabilities	(30,818		)	10,318
Net cash used by operating activities	(66,300		)	(63,559		)
Investing Activities:
Funding of notes receivable	(262,060		)	(297,903		)
Collections of notes receivable	163,373			247,234
Capital expenditures	(2,785		)	(3,634		)
Funding of equity method investment	(30,725		)	—
Distributions from equity investees	2,500			875
Proceeds from the sale of equity method investment	150			125
Increase in restricted cash	(6,434		)	(24,822		)
Net cash used by investing activities	(135,981		)	(78,125		)
Financing Activities:
Debt issuance and other borrowing costs	(2,572		)	—
Proceeds from credit facility borrowings	162,000			345,000
Repayments of credit facility borrowings	(14,000		)	—
Repayments of York Property Mortgage	(1,901		)	(1,799		)
Repurchase of common stock	—			(25,000		)
Dividends paid	(16,439		)	(317,702		)
Proceeds from exercise of employee stock options	—			967
Excess tax benefits from share-based payments	1,067			3,625
Funding of employee tax obligations upon the vesting of share-based payments	(8,897		)	(11,835		)
Net cash provided (used) by financing activities	119,258			(6,744		)
Effect of exchange rate changes on cash and cash equivalents	2,882			3,558
Decrease in cash and cash equivalents	(80,141		)	(144,870		)
Cash and cash equivalents at beginning of period	693,829			721,315
Cash and cash equivalents at end of period	$	613,688		$	576,445

Supplemental information on non-cash investing and financing activities:

See Note 5 for information regarding non-cash transfers between Accounts Receivable (net) and Notes Receivable (net).

See accompanying Notes to Condensed Consolidated Financial Statements

6 #

SOTHEBY’S

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. Basis of Presentation

The Condensed Consolidated Financial Statements included herein have been prepared by Sotheby’s pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States of America (the “U.S.”) have been condensed or omitted from this report, as is permitted by such rules and regulations; however, the management of Sotheby’s believes that the disclosures herein are adequate to make the information presented not misleading and that all normal and recurring adjustments necessary for a fair presentation of the Condensed Consolidated Financial Statements are reflected in the interim periods presented. It is suggested that these Condensed Consolidated Financial Statements be read in conjunction with the financial statements and notes thereto included in Sotheby’s 2014 Annual Report on Form 10-K.

The Condensed Consolidated Financial Statements include the accounts of Sotheby’s wholly-owned subsidiaries and Sotheby's Beijing Auction Co., Ltd ("Sotheby's Beijing"), a joint venture in which Sotheby's has a controlling 80% ownership interest. The net (loss) income attributable to the minority owner of Sotheby's Beijing is reported as "Net (Loss) Income Attributable to Noncontrolling Interest" in the Condensed Consolidated Income Statements and the non-controlling 20% ownership interest is reported as "Noncontrolling Interest" within the Equity section of the Condensed Consolidated Balance Sheets.

Equity investments through which Sotheby’s exercises significant influence over the investee, but does not control, are accounted for using the equity method. Under the equity method, Sotheby’s share of investee earnings or losses is recorded within Equity in Earnings of Investees in the Condensed Consolidated Income Statements. Sotheby’s interest in the net assets of the investee is recorded within Equity Method Investments on the Condensed Consolidated Balance Sheets. Sotheby's equity method investees include RM Sotheby's (see Note 7) and Acquavella Modern Art.

2. Seasonality of Business

The worldwide art auction market has two principal selling seasons, which generally occur in the second and fourth quarters of the year. In the aggregate, second and fourth quarter Net Auction Sales ¹ represented 79% and 83% of total Net Auction Sales in 2014 and 2013, respectively, with auction commission revenues comprising approximately 81% of Sotheby's total revenues in those years. Accordingly, Sotheby’s financial results are seasonal, with peak revenues and operating income generally occurring in the second and fourth quarters. Consequently, first and third quarter results have historically reflected lower revenues when compared to the second and fourth quarters and, typically, a net loss due to the fixed nature of many of Sotheby’s operating expenses.

3. Earnings Per Share

Basic earnings per share —Basic earnings per share attributable to Sotheby's common shareholders is computed under the two-class method using the weighted average number of common shares outstanding during the period. The two-class method requires that the amount of net income attributable to participating securities be deducted from consolidated net income in the computation of basic earnings per share. In periods with a net loss, the net loss attributable to participating securities is not deducted from consolidated net loss in the computation of basic loss per share as the impact would be anti-dilutive. Sotheby's participating securities include unvested restricted stock units and restricted stock shares, which have non-forfeitable rights to dividends. (See Note 12 for information on Sotheby's share-based payment programs.)

Diluted earnings per share —Diluted earnings per share attributable to Sotheby's common shareholders is computed in a similar manner to basic earnings per share under the two-class method, using the weighted average number of common shares outstanding during the period and, if dilutive, the weighted average number of potential common shares outstanding during the period. Sotheby's potential common shares currently include unvested performance share units held by employees, incremental common shares issuable upon the exercise of employee stock options, and deferred stock units held by members of the Board of Directors. (See Note 12 for information on Sotheby's share-based payment programs.)

___________________________________________________________________

¹ Net Auction Sales represents the hammer or sale price of property sold at auction.

7 #

For the three and six months ended June 30, 2015 , 0.9 million and 1 million potential common shares, respectively, related to unvested performance share units were excluded from the computation of diluted earnings per share because the profitability or stock price targets inherent in such awards were not achieved as of the balance sheet date. For the three and six months ended June 30, 2014 , 1.1 million and 1.2 million potential common shares, respectively, related to unvested performance share units were excluded from the computation of diluted earnings per share because the profitability targets inherent in such awards were not achieved as of the balance sheet date.

The table below summarizes the computation of basic and diluted earnings per share for the three and six months ended June 30, 2015 and 2014 (in thousands, except per share amounts):



	Three Months Ended June 30,				Six Months Ended June 30,
	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Basic:
Numerator:
Net income attributable to Sotheby’s	$	67,572	$	77,632	$	72,774	$	71,518
Less: Net income attributable to participating securities	590		256		485		1,001
Net income attributable to Sotheby’s common shareholders	$	66,982	$	77,376	$	72,289	$	70,517
Denominator:
Weighted average basic shares outstanding	69,332		68,938		69,211		69,041
Basic earnings per share - Sotheby’s common shareholders	$	0.97	$	1.12	$	1.04	$	1.02
Diluted :
Numerator:
Net income attributable to Sotheby’s	$	67,572	$	77,632	$	72,774	$	71,518
Less: Net income attributable to participating securities	590		256		485		1,001
Net income attributable to Sotheby’s common shareholders	$	66,982	$	77,376	$	72,289	$	70,517
Denominator:
Weighted average common shares outstanding	69,332		68,938		69,211		69,041
Weighted average effect of Sotheby's dilutive potential common shares:
Performance share units	368		362		404		386
Deferred stock units	164		172		159		168
Stock options	20		19		20		24
Weighted average dilutive potential common shares outstanding	552		553		583		578
Weighted average diluted shares outstanding	69,884		69,491		69,794		69,619
Diluted earnings per share - Sotheby’s common shareholders	$	0.96	$	1.11	$	1.04	$	1.01

8 #

4. Segment Reporting

Sotheby’s is a global art business whose operations are currently organized under two segments—Agency and Finance. The Agency segment earns commissions by matching buyers and sellers of authenticated fine art, decorative art, and jewelry (collectively, “art” or “works of art” or “artwork” or "property") through the auction or private sale process. To a much lesser extent, the Agency segment also earns revenues from the sale of artworks that have been purchased opportunistically by Sotheby’s. The Finance segment earns interest income through art-related financing activities by making loans that are secured by works of art.

Prior to the second quarter of 2015, Sotheby's also separately reported the results of the Principal segment, which was comprised of its dealer activities and principally included the sale of artworks purchased opportunistically by Sotheby’s. In the second quarter of 2015, Sotheby's transitioned to its new CEO and Chief Operating Decision Maker, and the information regularly reviewed for the purpose of allocating resources and assessing performance changed, reflecting a simplified internal reporting structure which was implemented in the quarter. As a resuly, beginning in the second quarter of 2015, the sale of artworks purchased opportunistically by Sotheby’s is reported as part of the Agency segment. The remaining activities of the former Principal segment are reported within All Other. Such activities include Sotheby’s retail wine operations, Acquavella Modern Art ("AMA"), an equity investee, and sales of the remaining inventory of Noortman Master Paintings, an art dealer that was owned and operated by Sotheby's from its acquisition in June 2006 until its closure in December 2013. Prior period amounts have been restated to reflect this new segment presentation.

The table below presents Sotheby’s revenues and income before taxes by segment for the three and six months ended June 30, 2015 and 2014 (in thousands of dollars):



Three Months Ended June 30, 2015	Agency (a)		Finance (a)			All Other		Reconciling items (a)			Total
Revenues	$	314,403	$	16,339		$	5,633	$	(4,369	)	$	332,006
Segment income before taxes	$	106,189	$	10,170		$	3,426	$	(11,526	)	$	108,259
Three Months Ended June 30, 2014
Revenues	$	322,873	$	12,344		$	4,804	$	(4,204	)	$	335,817
Segment income before taxes	$	130,930	$	8,891	(b)	$	1,910	$	(18,972	)	$	122,759
Six Months Ended June 30, 2015
Revenues	$	454,092	$	32,296		$	8,932	$	(7,639	)	$	487,681
Segment income before taxes	$	106,627	$	20,990		$	5,414	$	(16,859	)	$	116,172
Six Months Ended June 30, 2014
Revenues	$	470,811	$	21,291		$	7,995	$	(7,469	)	$	492,628
Segment income before taxes	$	123,901	$	14,787	(b)	$	3,308	$	(24,955	)	$	117,041

(a)

The reconciling items related to Revenues consist principally of amounts charged by the Finance segment to the Agency segment, including interest and facility fees related to certain loans made to Agency segment clients, as well as, beginning on January 1, 2015, fees charged for term loan collateral sold at auction or privately through the Agency segment. For the three and six months ended June 30, 2015, such fees totaled $2.3 million and $4.3 million , respectively. Prior period segment results for the three and six months ended June 30, 2014 have been adjusted to include $2.2 million and $2.9 million of such fees, respectively. Each of the individual reconciling items related to segment income before taxes is listed in the table below.

(b) For the three and six months ended June 30, 2014 , Finance segment income before taxes includes $0.7 million and $1.8 million , respectively, of intercompany charges from Sotheby's global treasury function.

9 #

For the three and six months ended June 30, 2015 and 2014 , Agency segment revenues consist of the following (in thousands of dollars):



	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Auction commissions	$	287,487		$	299,167		$	400,502		$	403,840
Private sale commissions	22,292			16,876			33,750			29,931
Auction guarantees, net	(7,508		)	(6,215		)	(8,259		)	(5,545		)
Other Agency revenues (a)	8,106			6,359			12,266			11,089
Total Agency commissions and fees	310,377			316,187			438,259			439,315
Inventory sales	4,026			6,686			15,833			31,496
Total Agency segment revenues	$	314,403		$	322,873		$	454,092		$	470,811


(a)	Includes commissions and other fees earned by Sotheby's on sales brokered by third parties, fees charged to consignors for property withdrawn prior to auction and for catalogue production and insurance, and catalogue subscription and advertising revenues.

The table below presents a reconciliation of segment income before taxes to consolidated income before taxes for the three and six months ended June 30, 2015 and 2014 (in thousands of dollars):



	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Agency	$	106,189		$	130,930		$	106,627		$	123,901
Finance	10,170			8,891			20,990			14,787
All Other	3,426			1,910			5,414			3,308
Segment income before taxes	119,785			141,731			133,031			141,996
Reconciling items:
CEO separation and transition costs (see Note 13)	(43		)	—			(4,232		)
Leadership transition severance costs (a)	(9,501		)	—			(9,501		)	—
Special charges (see Note 15)	—			(18,554		)	—			(24,257		)
Equity in earnings of investees (b)	(1,982		)	(418		)	(3,126		)	(698		)
Income before taxes	$	108,259		$	122,759		$	116,172		$	117,041


(a)	In the second quarter of 2015, in conjunction with its leadership transition, Sotheby's incurred severance costs of $9.5 million associated with the termination of the employment of certain Executive Officers, including its Chief Operating Officer.

(b)

For segment reporting purposes, Sotheby's share of earnings related to its equity investees is included as part of income before taxes. However, such earnings are reported separately below income before taxes in the Condensed Consolidated Income Statements. For the three and six months ended June 30, 2015, Agency segment results include $1 million and $1.7 million , respectively, of equity earnings related to RM Sotheby's. For the three months ended June 30, 2015 and 2014, All Other includes $1 million and $0.4 million , respectively, of equity earnings related to Acquavella Modern Art. For the six months ended June 30, 2015 and 2014, All Other includes $1.4 million and $0.7 million , respectively, of equity earnings related to Acquavella Modern Art.

10 #

The table below presents Sotheby's assets by segment, as well as a reconciliation of segment assets to consolidated assets as of June 30, 2015 , December 31, 2014 , and June 30, 2014 (in thousands of dollars):



	June 30, 2015		December 31, 2014		June 30, 2014
Agency	$	2,247,411	$	2,391,763	$	2,350,976
Finance	812,012		658,710		611,461
All Other	26,647		29,067		30,392
Total segment assets	3,086,070		3,079,540		2,992,829
Unallocated amounts:
Deferred tax assets and income tax receivable	51,449		55,280		80,172
Consolidated assets	$	3,137,519	$	3,134,820	$	3,073,001

5. Receivables

Accounts Receivable, Net —Through its Agency segment, Sotheby's accepts property on consignment and matches sellers, also known as consignors, to buyers through the auction or private sale process. Following an auction or private sale, Sotheby's invoices the buyer for the purchase price of the property (including any commissions owed by the buyer), collects payment from the buyer, and remits to the consignor the net sale proceeds after deducting its commissions, expenses and applicable taxes and royalties.

Under Sotheby’s standard auction payment terms, payments from buyers are due no more than 30 days from the sale date and payments to consignors are due 35 days from the sale date. For private sales, payment from the buyer is typically due on the sale date, with the net sale proceeds being due to the consignor shortly thereafter. Extended payment terms are sometimes provided to an auction or private sale buyer. For auctions, the extent to which extended payment terms are provided to buyers can vary considerably from selling season to selling season. Extended payment terms typically extend the payment due date to a date that is no longer than one year from the sale date. In limited circumstances, the payment due date may be extended to a date that is beyond one year from the sale date. All extended payment term arrangements are approved by management under Sotheby's internal corporate governance policy. When providing extended payment terms, Sotheby’s attempts to match the timing of cash receipt from the buyer with the timing of payment to the consignor, but is not always successful in doing so.

In the limited circumstances when the payment due date is extended to a date that is beyond one year from the sale date, if the consignor does not provide Sotheby's matched payment terms, the receivable balance is reclassified from Accounts Receivable to Notes Receivable in the Condensed Consolidated Balance Sheets. As of June 30, 2015 and December 31, 2014, Notes Receivable within the Agency segment included $22.6 million and $22.7 million , respectively, of amounts reclassified from Accounts Receivable. As of June 30, 2014 , there were no such Notes Receivable outstanding. (See discussion of Agency segment Notes Receivable below.)

Under the standard terms and conditions of its auction and private sales, Sotheby’s is not obligated to pay the consignor for property that has not been paid for by the buyer. If a buyer defaults on payment, the sale may be cancelled, and the property will be returned to the consignor. Alternatively, the consignor may reoffer the property at a future Sotheby's auction or negotiate a private sale with Sotheby's acting as its agent. In certain instances and subject to management approval under Sotheby’s internal corporate governance policy, the consignor may be paid the net sale proceeds before payment is collected from the buyer and/or the buyer may be allowed to take possession of the property before making payment. In situations when the buyer takes possession of the property before making payment, Sotheby’s is liable to the seller for the net sales proceeds whether or not the buyer makes payment. As of June 30, 2015 , December 31, 2014 , and June 30, 2014 , Accounts Receivable (net) included $107.6 million , $116 million , and $126.6 million , respectively, related to situations when Sotheby's paid the consignor all or a portion of the net sales proceeds before payment was collected from the buyer. As of June 30, 2015 , December 31, 2014 , and June 30, 2014 , Accounts Receivable (net) also included $75.4 million , $96.5 million , and $48.9 million , respectively, related to situations when the buyer was allowed to take possession of the property before making payment to Sotheby’s.

Notes Receivable (Finance Segment) —The Finance segment provides certain collectors and art dealers with financing secured by works of art that Sotheby's either has in its possession or permits borrowers to possess. The Finance segment generally makes two types of secured loans: (1) advances secured by consigned property where the borrowers are contractually committed, in the near term, to sell the property through Sotheby's Agency segment (a “consignor advance”) and (2) general purpose term loans secured by property not presently intended for sale (a “term loan”).

11 #

Consignor advances allow sellers to receive funds upon consignment for an auction or private sale that will typically occur up to one year in the future and normally have short-term maturities. Term loans allow Sotheby's to establish or enhance mutually beneficial relationships with borrowers and may generate future auction or private sale consignments and/or purchases. Term loans normally have initial maturities of up to two years and typically carry a variable market rate of interest.

As of June 30, 2015 , December 31, 2014 , and June 30, 2014 , Notes Receivable (net) related to the Finance segment consisted of the following (in thousands of dollars):



	June 30, 2015		December 31, 2014		June 30, 2014
Consignor advances	$	30,291	$	25,994	$	71,091
Term loans	743,749		618,447		523,279
Total	$	774,040	$	644,441	$	594,370

In certain situations, term loans are also made to refinance client auction and private sale purchases. For the six months ended June 30, 2015 and 2014 , the Finance segment made $32.6 million and $34.6 million , respectively, of such loans. These loans are accounted for as non-cash transfers between Accounts Receivable (net) and Notes Receivable (net) and are, therefore, not reflected as the funding of Notes Receivable within Investing Activities in the Condensed Consolidated Statements of Cash Flows. Upon repayment, the cash received in settlement of such loans is classified within Operating Activities in the Condensed Consolidated Statements of Cash Flows. For the six months ended June 30, 2015 and 2014, such repayments totaled $ 16.4 million and $ 19.6 million , respectively. As of June 30, 2015 , December 31, 2014 , and June 30, 2014 , Notes Receivable (net) included $106.5 million , $90.4 million , and $87.9 million , respectively, of such loans.

Prior to 2014, the lending activities of the Finance segment were funded primarily by the operating cash flows of the Agency segment, with the ability to supplement those cash flows with revolving credit facility borrowings. In January 2014, in order to reduce the Finance segment's cost of capital and enhance returns, Sotheby's established a separate capital structure for the Finance segment through which client loans are predominantly funded with borrowings drawn from a dedicated revolving credit facility. The establishment of the Finance segment's dedicated revolving credit facility in February 2014 has allowed management to debt fund a substantial portion of pre-existing loans and fund further growth of the loan portfolio. Cash balances are also used to fund a portion of the Finance segment loan portfolio, as appropriate. (See Note 6 for information related to the Finance segment's dedicated revolving credit facility.)

The collection of secured loans can be adversely impacted by a decline in the art market in general or in the value of the particular collateral. In addition, in situations when there are competing claims on the collateral and/or when a borrower becomes subject to bankruptcy or insolvency laws, Sotheby’s ability to realize on its collateral may be limited or delayed.

Sotheby’s target loan-to-value (“LTV”) ratio, which is defined as the principal loan amount divided by the low auction estimate of the collateral, is 50% , but loans are sometimes made with LTV ratios between 51% and 60% as the Finance segment credit facility permits borrowings on loans with an LTV of up to 60% . In rare circumstances, loans are also made at an initial LTV ratio higher than 60% . In addition, the LTV ratio of certain loans may increase above the 50% target due to decreases in the low auction estimates of the collateral. The revaluation of loan collateral is performed by Sotheby’s specialists on an annual basis or more frequently if there is a material change in circumstances related to the loan, the value of the collateral, the disposal plans for the collateral, or if an event of default occurs. Management believes that the LTV ratio is the critical credit quality indicator for Finance segment secured loans.

The table below provides the aggregate LTV ratio for the Finance segment loan portfolio as of June 30, 2015 , December 31, 2014 , and June 30, 2014 (in thousands of dollars):



	June 30, 2015			December 31, 2014			June 30, 2014
Finance segment secured loans	$	774,040		$	644,441		$	594,370
Low auction estimate of collateral	$	1,539,092		$	1,349,094		$	1,299,433
Aggregate LTV ratio	50		%	48		%	46		%

12 #

The table below provides the aggregate LTV ratio for Finance segment secured loans with an LTV ratio above 50% as of June 30, 2015 , December 31, 2014 , and June 30, 2014 (in thousands of dollars):



	June 30, 2015			December 31, 2014			June 30, 2014
Finance segment secured loans with an LTV ratio above 50%	$	441,246		$	329,135		$	294,956
Low auction estimate of collateral related to Finance segment secured loans with an LTV ratio above 50%	$	784,119		$	556,662		$	485,088
Aggregate LTV ratio of Finance segment secured loans with an LTV ratio above 50%	56		%	59		%	61		%

The table below provides other credit quality information regarding Finance segment secured loans as of June 30, 2015 , December 31, 2014 , and June 30, 2014 (in thousands of dollars):



	June 30, 2015		December 31, 2014		June 30, 2014
Total secured loans	$	774,040	$	644,441	$	594,370
Loans past due	$	420	$	22,409	$	88,931
Loans more than 90 days past due	$	—	$	—	$	14,630
Non-accrual loans	$	—	$	—	$	—
Impaired loans	$	—	$	—	$	—
Allowance for credit losses:
Allowance for credit losses for impaired loans	$	—	$	—	$	—
Allowance for credit losses based on historical data	1,359		1,166		1,001
Total allowance for credit losses - secured loans	$	1,359	$	1,166	$	1,001

Management considers a loan to be past due when principal payments are not paid in accordance with the stated terms of the loan. Sotheby's received a $0.2 million payment on the past due loan balance in July 2015 and intends to offer loan collateral at auction in the fourth quarter of 2015 to settle the remaining balance.

A non-accrual loan is a loan for which future Finance revenue is not recorded due to management’s determination that it is probable that future interest on the loan is not collectible. Any cash receipts subsequently received on non-accrual loans are first applied to reduce the recorded principal balance of the loan, with any proceeds in excess of the principal balance then applied to interest owed by the borrower. The recognition of Finance revenue may resume on a non-accrual loan if sufficient additional collateral is provided by the borrower or if management becomes aware of other circumstances that indicate that it is probable that the borrower will make future interest payments on the loan. As of June 30, 2015 , December 31, 2014 , and June 30, 2014 , there were no non-accrual loans outstanding.

A loan is considered to be impaired when management determines that it is probable that a portion of the principal and interest owed by the borrower will not be recovered after taking into account the estimated realizable value of the collateral securing the loan, as well as the ability of the borrower to repay any shortfall between the value of the collateral and the amount of the loan. If a loan is considered to be impaired, Finance Revenue is no longer recognized and bad debt expense is recorded for any principal or accrued interest that is deemed uncollectible. As of June 30, 2015 , December 31, 2014 , and June 30, 2014 , there were no impaired loans outstanding.

During the period January 1, 2015 to June 30, 2015 , activity related to the Allowance for Credit Losses was as follows (in thousands of dollars):



Allowance for credit losses as of January 1, 2015	$	1,166
Change in loan loss provision	193
Allowance for credit losses as of June 30, 2015	$	1,359

As of June 30, 2015 , unfunded commitments to extend additional credit through Sotheby's Finance segment were $10.2 million .

13 #

Notes Receivable (Agency Segment) —Sotheby’s is obligated under the terms of certain auction guarantees to advance a portion of the guaranteed amount prior to the auction. In addition, in certain limited situations, the Agency segment will also provide advances to consignors that are secured by property scheduled to be offered at auction in the near term. Such auction guarantee and Agency segment consignor advances are recorded on the Condensed Consolidated Balance Sheets within Notes Receivable (net). As of June 30, 2015 , Agency segment consignor advances totaled $2.5 million and there were no auction guarantee advances outstanding. As of December 31, 2014 and June 30, 2014 , auction guarantee advances totaled $25 million and $5.5 million , respectively, and there were no Agency segment consignor advances outstanding. (See Note 10 for additional information related to auction guarantees.)

In the limited circumstances when the payment due date for an auction or private sale receivable is extended to a date that is beyond one year from the sale date, if the consignor does not provide Sotheby's matched payment terms, the receivable balance is reclassified from Accounts Receivable to Notes Receivable in the Condensed Consolidated Balance Sheets. As of June 30, 2015 and December 31, 2014 , Notes Receivable within the Agency segment included $22.6 million and $22.7 million , respectively, of amounts reclassified from Accounts Receivable against which Sotheby's held $3.7 million of collateral. As of June 30, 2014 , there were no such Notes Receivable outstanding. These Notes Receivable are accounted for as non-cash transfers between Accounts Receivable (net) and Notes Receivable (net) and are, therefore, not reflected within Investing Activities in the Condensed Consolidated Statements of Cash Flows. Upon repayment, the cash received in settlement of such Notes Receivable is classified within Operating Activities in the Condensed Consolidated Statements of Cash Flows.

Under certain circumstances, Sotheby's provides loans to certain art dealers to finance the purchase of works of art. In these situations, Sotheby's acquires a partial ownership interest or a security interest in the purchased property in addition to providing the loan. Upon the eventual sale of the property acquired, the loan is repaid. As of June 30, 2015 , December 31, 2014 , and June 30, 2014 , such loans totaled $4.4 million , $4.9 million , and $5.0 million , respectively. Sotheby's is no longer accruing interest with respect to one of these loans with a balance of $2.1 million , but management believes that this balance is collectible.

Notes Receivable (Other) —In the second quarter of 2013, Sotheby's sold its interest in an equity method investee for $4.3 million and, as a result, recognized a gain of $0.3 million . The sale price was funded by an upfront cash payment to Sotheby's of $0.8 million and the issuance of a $3.5 million unsecured loan. This loan matures in December 2018, has a variable market rate of interest, and requires monthly payments during the loan term. As of June 30, 2015 , December 31, 2014 , and June 30, 2014 the carrying value of this loan was approximately $2.6 million , $2.7 million , and $2.9 million , respectively.

6. Debt

Revolving Credit Facilities —Sotheby's and certain of its wholly-owned subsidiaries are parties to a credit agreement with an international syndicate of lenders led by General Electric Capital Corporation, which provides for separate dedicated revolving credit facilities for the Agency segment (the “Agency Credit Agreement”) and the Finance segment (the “Finance Credit Agreement”) (collectively, the “Credit Agreements”). On June 15, 2015, the Credit Agreements were amended to increase the commitments under the Finance Credit Agreement in order to support the continued growth of the Finance segment's loan portfolio and to extend the maturity date of the Credit Agreements by one year to August 22, 2020.

The Agency Credit Agreement provides for an asset-based revolving credit facility the proceeds of which may be used primarily for the working capital and other general corporate needs of the Agency segment. The Finance Credit Agreement provides for an asset-based revolving credit facility the proceeds of which may be used primarily for the working capital and other general corporate needs of the Finance segment, including the funding of client loans. The Credit Agreements allow Sotheby's to transfer the proceeds of borrowings under each of the revolving credit facilities between the Agency and Finance segments.

The maximum aggregate borrowing capacity of the Credit Agreements, which is subject to a borrowing base, is approximately $1.335 billion , with $300 million committed to the Agency segment and $1.035 billion committed to the Finance segment, including a $485 million increase that was secured for the Finance segment in conjunction with the June 2015 amendment. The borrowing capacity of the Agency Credit Agreement includes a $50 million incremental revolving credit facility with higher advance rates against certain assets and higher commitment and borrowing costs (the "Incremental Facility"). As a result of the June 2015 amendment of the Credit Agreements, the Incremental Facility has a maturity date of August 22, 2016, which may be extended for an additional 365 days on an annual basis with the consent of the lenders who agree to extend their commitments under the Incremental Facility. Prior to the amendment, the maturity date of the Incremental Facility was August 21, 2015.

14 #

The Credit Agreements have a sub-limit of $400 million for borrowings in the U.K. and Hong Kong, with up to $50 million available for foreign borrowings under the Agency Credit Agreement and up to $350 million available for foreign borrowings under the Finance Credit Agreement. The Credit Agreements also include an accordion feature, which allows Sotheby’s to seek an increase to the combined borrowing capacity of the Credit Agreements until February 23, 2020 by an amount not to exceed $150 million in the aggregate. Though new commitments would need to be obtained, the uncommitted accordion feature permits Sotheby’s to seek an increase to the aggregate commitments of either or both of the Agency and Finance credit facilities under an expedited arrangement process.

The borrowing base under the Agency Credit Agreement is determined by a calculation that is primarily based upon a percentage of the carrying values of certain auction guarantee advances, a percentage of the carrying value of certain inventory, a percentage of the carrying value of certain extended payment term receivables arising from auction or private sale transactions, and the fair value of certain of Sotheby's trademarks. The borrowing base under the Finance Credit Agreement is determined by a calculation that is primarily based upon a percentage of the carrying values of certain loans in the Finance segment loan portfolio and the fair value of certain of Sotheby's trademarks. The borrowing base of the Incremental Facility is determined by a calculation that is based on a percentage of the carrying value of certain inventory and the fair value of certain of Sotheby's trademarks.

The obligations under the Credit Agreements are cross-guaranteed and cross-collateralized. Domestic borrowers are jointly and severally liable for all obligations under the Credit Agreements and, subject to certain limitations, borrowers in the U.K. and Sotheby's Hong Kong Limited, are jointly and severally liable for all obligations of the foreign borrowers under the Credit Agreements. In addition, the obligations of the borrowers under the Credit Agreements are guaranteed by certain of their subsidiaries. Sotheby's obligations under the Credit Agreements are secured by liens on all or substantially all of the personal property of the entities that are borrowers and guarantors under the Credit Agreements.

The Credit Agreements contain certain customary affirmative and negative covenants including, but not limited to, limitations on capital expenditures, a $600 million limitation on net outstanding auction guarantees (i.e., auction guarantees less the impact of related risk and reward sharing arrangements), and limitations on the use of proceeds from borrowings under the Credit Agreements. However, the Credit Agreements do not limit dividend payments and Common Stock repurchases provided that, both before and after giving effect thereto: (i) there are no events of default, (ii) the aggregate available borrowing capacity equals or exceeds $100 million , and (iii) the Liquidity Amount, as defined in the Credit Agreements, equals or exceeds $200 million . The Credit Agreements also contain certain financial covenants, which are only applicable during certain defined compliance periods. These financial covenants were not applicable for the twelve month period ended June 30, 2015.

Since August 2009, Sotheby’s has incurred aggregate fees of approximately $21.2 million in conjunction with the establishment of and subsequent amendments to its credit agreement with General Electric Capital Corporation. These fees are being amortized on a straight-line basis through the August 22, 2020 maturity date of the Credit Agreements.

15 #

The following tables summarize information relevant to the Credit Agreements as of and for the periods ended June 30, 2015 , December 31, 2014, and June 30, 2014 (in thousands of dollars):



As of and for the three and six months ended June 30, 2015	Agency Credit Agreement		Finance Credit Agreement		Total
Maximum borrowing capacity (a)	$	300,000	$	1,035,000	$	1,335,000
Borrowing base	$	221,812	$	622,849	$	844,661
Borrowings outstanding	$	—	$	593,000	$	593,000
Available borrowing capacity (b)	$	221,812	$	29,849	$	251,661
Average Borrowings Outstanding:
Three months ended June 30, 2015	$	—	$	538,868	$	538,868
Six months ended June 30, 2015	$	—	$	506,052	$	506,052
Borrowing Costs:
Three months ended June 30, 2015	$	751	$	3,874	$	4,625
Six months ended June 30, 2015	$	1,457	$	7,262	$	8,719



As of and for the year ended December 31, 2014	Agency Credit Agreement		Finance Credit Agreement		Total
Maximum borrowing capacity (a)	$	300,000	$	550,000	$	850,000
Borrowing base	$	237,830	$	519,255	$	757,085
Borrowings outstanding	$	—	$	445,000	$	445,000
Available borrowing capacity (b)	$	237,830	$	74,255	$	312,085
Average borrowings outstanding	$	—	$	306,448	$	306,448
Borrowing Costs	$	2,240	$	8,740	$	10,980



As of and for the three and six months ended June 30, 2014	Agency Credit Agreement		Finance Credit Agreement		Total
Maximum borrowing capacity (a)	$	150,000	$	450,000	$	600,000
Borrowing base	$	61,647	$	451,057	$	512,704
Borrowings outstanding	$	—	$	345,000	$	345,000
Available borrowing capacity (b)	$	61,647	$	105,000	$	166,647
Average Borrowings Outstanding:
Three months ended June 30, 2014	$	—	$	284,176	$	284,176
Six months ended June 30, 2014	$	—	$	188,591	$	188,591
Borrowing Costs:
Three months ended June 30, 2014	$	371	$	2,024	$	2,395
Six months ended June 30, 2014	$	968	$	2,734	$	3,702

(a) In August 2014, the Credit Agreements were amended and restated to, among other things, increase the maximum borrowing capacity of the Credit Agreements from $600 million to $850 million . In June 2015, the Credit Agreements were amended to, among other things, increase the maximum borrowing capacity of the Credit Agreements from $850 million to approximately $1.335 billion .

(b) The available borrowing capacity is calculated as the borrowing base less borrowings outstanding.

For the three months ended June 30, 2015 and 2014 , borrowing costs related to the Finance Credit Agreement include interest of $3.7 million and $1.7 million , respectively, and fee amortization of $0.2 million and $0.3 million , respectively. For the six months ended June 30, 2015 and 2014 , borrowing costs related to the Finance Credit Agreement include interest of $6.8 million and $2.2 million , respectively, and fee amortization of $0.4 million and $0.5 million , respectively. For the year ended December 31, 2014, borrowing costs related to the Finance Credit Agreement include interest of $7.7 million and fee amortization of $1 million . Such borrowing costs are reflected in the Condensed Consolidated Income Statements as the Cost of Finance Revenues. The weighted average cost of borrowing related to the Finance Credit Agreement was approximately 2.9% for all periods presented.

16 #

Borrowing costs related to the Agency Credit Agreement, which include interest and fee amortization, are reflected in the Condensed Consolidated Income Statements as Interest Expense.

Long-Term Debt —As of June 30, 2015 , December 31, 2014 , and June 30, 2014 , Long-Term Debt consisted of the following (in thousands of dollars):



	June 30, 2015			December 31, 2014			June 30, 2014
York Property Mortgage, net of unamortized discount of $0, $1,782, and $3,564	$	218,609		$	218,728		$	218,761
2022 Senior Notes	300,000			300,000			300,000
Less current portion:
York Property Mortgage	(6,542		)	(218,728		)	(3,730		)
Total Long-Term Debt, net	$	512,067		$	300,000		$	515,031

(See the captioned sections below for information related to the York Property Mortgage and the 2022 Senior Notes.)

York Property Mortgage —On February 6, 2009, Sotheby's purchased the land and building located at 1334 York Avenue, New York, New York (the “York Property”) from RFR Holding Corp. (“RFR”) for a purchase price of $370 million . The York Property is home to Sotheby's sole North American auction salesroom and principal North American exhibition space, including S|2, Sotheby's private sale exhibition gallery. The York Property is also home to the U.S. operations of the Finance segment, as well as Sotheby's corporate offices.

Sotheby's financed the $370 million purchase price through an initial $50 million cash payment made in conjunction with the signing of the related purchase and sale agreement on January 11, 2008, an $85 million cash payment made when the purchase was consummated on February 6, 2009, and the assumption of a $235 million mortgage that carried an initial annual rate of interest of approximately 5.6% (the "York Property Mortgage"). The York Property Mortgage was due to mature on July 1, 2035, but had an optional pre-payment date of July 1, 2015, after which the annual rate of interest was scheduled to increase to 10.6% . As of June 30, 2015 , the carrying value and fair value of York Property Mortgage was approximately $218.6 million .

On July 1, 2015, Sotheby's entered into a seven -year, $325 million mortgage loan (the "New Mortgage") to refinance the York Property Mortgage. After the repayment of the York Property Mortgage and the funding of all closing costs, reserves, and expenses, Sotheby's received net cash proceeds of approximately $98 million . The interest rate for the New Mortgage is the one -month LIBOR rate (the "LIBOR rate") plus a spread of 2.25% . The New Mortgage amortizes based on a 25 -year mortgage-style amortization schedule.

In connection with the New Mortgage, Sotheby's entered into interest rate protection agreements secured by the York Property, consisting of a two -year swap and a five -year collar, both of which have a notional amount equal to the applicable principal balance of the New Mortgage and have an identical amortization schedule. These interest rate protection agreements effectively hedge the LIBOR rate on the entire outstanding principal balance of the New Mortgage at a rate equal to 0.877% per annum for the first two years and no more than 3.75% per annum for the remainder of the seven -year term. Therefore, after taking into account the interest rate protection agreements, the interest rate for the first two years of the New Mortgage will be approximately 3.13% per annum and no more than 6% per annum for the remainder of the seven-year term.

17 #

The loan agreement governing the New Mortgage contains the following financial covenants, which are subject to additional terms and conditions as provided in the underlying loan agreement:


•	As of July 1, 2020, the LTV ratio may not exceed 65% (the “Maximum LTV”) based on the then-outstanding principal balance of the New Mortgage. If the LTV ratio exceeds the Maximum LTV, Sotheby's may, at its option, post cash or a letter of credit or pay down the New Mortgage without any prepayment penalty or premium, in an amount that will cause the LTV ratio not to exceed the Maximum LTV.

•

At all times during the term of the New Mortgage, the Debt Yield (as defined in the loan agreement governing the New Mortgage) will not be less than 8.5% (the “Minimum Debt Yield”). If the Debt Yield falls below the Minimum Debt Yield, Sotheby's has the option to post cash or a letter of credit or prepay the New Mortgage without any prepayment penalty or premium, in an amount that will cause the Debt Yield to exceed the Minimum Debt Yield.

•

If Sotheby’s corporate credit rating from Standard & Poor’s Rating Services is downgraded to “BB-”, Sotheby's must establish a cash management account (the "Cash Management Account") under the control of the lender, whereby any excess cash remaining after the monthly payment of debt service, insurance, and taxes would remain in the account. If the rating is downgraded to “B+” or “B”, Sotheby's must deposit a certain amount of debt service into the Cash Management Account. If the rating is downgraded to lower than “B”, Sotheby's must make principal payments on the New Mortgage such that the LTV ratio does not exceed 65% .


•	At all times during the term of the New Mortgage, Sotheby’s will, subject to a cure period, maintain a net worth of at least $425 million . If, however, Sotheby's fails to maintain the required minimum net worth, it will have 60 days to cure such default.

As a result of the refinancing of the York Property Mortgage, $212.7 million of its $218.6 million carrying value as of June 30, 2015 is classified within Long-Term Debt on Sotheby's Condensed Consolidated Balance Sheets. The $6.5 million recorded within current liabilities represents the principal payments due on the New Mortgage within one year from the June 30, 2015 balance sheet date.

The York Property and the related mortgage are held by 1334 York, LLC, a separate legal entity of Sotheby's that maintains its own books and records and whose results are ultimately consolidated into Sotheby's financial statements. The assets of 1334 York, LLC are not available to satisfy the obligations of other Sotheby's affiliates or any other entity.

2022 Senior Notes —On September 27, 2012, Sotheby's issued $300 million aggregate principal amount of 5.25% Senior Notes, due October 1, 2022 (the "2022 Senior Notes"). The 2022 Senior Notes were offered only to qualified institutional buyers in accordance with Rule 144A and to non-U.S. Persons under Regulation S of the Securities Act of 1933, as amended (the “Securities Act”). Holders of the 2022 Senior Notes do not have registration rights, and the 2022 Senior Notes have not been and will not be registered under the Securities Act.

The net proceeds from the issuance of the 2022 Senior Notes were approximately $293.7 million , after deducting fees paid to the initial purchasers, and were principally used to retire previously outstanding debt.

The 2022 Senior Notes are guaranteed, jointly and severally, on a senior unsecured basis by certain of Sotheby's existing and future domestic subsidiaries to the extent and on the same basis that such subsidiaries guarantee borrowings under the Credit Agreements. Interest on the 2022 Senior Notes is payable semi-annually in cash on April 1 and October 1 of each year.

The 2022 Senior Notes are redeemable by Sotheby's, in whole or in part, on or after October 1, 2017, at specified redemption prices set forth in the underlying indenture, plus accrued and unpaid interest to, but excluding, the redemption date. Prior to October 1, 2017, the 2022 Senior Notes are redeemable, in whole or in part, at a redemption price equal to 100% of the principal amount to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date, plus a premium equal to the greater of 1% of the principal amount of the 2022 Senior Notes and a make-whole premium (as defined in the underlying indenture).

In addition, at any time prior to October 1, 2015, Sotheby's may redeem up to 35% of the aggregate principal amount of the 2022 Senior Notes with the net cash proceeds of certain equity offerings at the redemption price of 105.25% plus accrued and unpaid interest. The 2022 Senior Notes are not callable by holders unless Sotheby's is in default under the terms of the underlying indenture.

As of June 30, 2015 , the $300 million principal amount of 2022 Senior Notes had a fair value of approximately $294 million based on a broker quoted price derived via a pricing model using observable and unobservable inputs. As such, this fair value measurement is considered to be a Level 3 fair value measurement in the fair value hierarchy as per Accounting Standards Codification 820, Fair Value Measurements ("ASC 820").

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Future Principal and Interest Payments —The aggregate future payments due under the York Property Mortgage and the 2022 Senior Notes during the five-year period after the June 30, 2015 balance sheet date are as follows (in thousands of dollars):



July 2015 to June 2016	$	28,586
July 2016 to June 2017	$	29,867
July 2017 to June 2018	$	32,084
July 2018 to June 2019	$	32,110
July 2019 to June 2020	$	32,120

Interest Expense —For the three and six months ended June 30, 2015 and 2014 , Interest Expense consisted of the following (in thousands of dollars):



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
Agency Credit Agreement:
Amortization of amendment and arrangement fees	$	314	$	181	$	629	$	505
Commitment fees	437		190		828		463
Sub-total	751		371		1,457		968
York Property Mortgage	4,064		4,115		8,075		8,175
2022 Senior Notes	4,098		4,098		8,196		8,196
Other interest expense	161		184		7		212
Total Interest Expense	$	9,074	$	8,768	$	17,735	$	17,551

In the table above, Interest Expense related to the York Property Mortgage and the 2022 Senior Notes includes the amortization of debt issuance costs and, when applicable, the amortization of discount.

7. Investment in RM Sotheby's

On February 18, 2015, Sotheby's acquired a 25% ownership interest in RM Auctions, an auction house for investment-quality automobiles, for $30.7 million . Following this investment, RM Auctions is now known as RM Sotheby's. In addition to the initial 25% ownership interest, Sotheby’s has governance participation and a comprehensive partnership agreement to work together to drive growth in the business. Over time, Sotheby’s will have opportunities to increase its ownership stake as the partnership evolves and grows. For the three and six months ended June 30, 2015, Sotheby's results include $1 million and $1.7 million , respectively, of equity earnings related to RM Sotheby's.

8. Defined Benefit Pension Plan

Sotheby’s sponsors a defined benefit pension plan covering U.K. employees who entered service prior to April 1, 2004 (the “U.K. Pension Plan”). The table below summarizes the components of the net pension cost (benefit) related to the U.K. Pension Plan for the three and six months ended June 30, 2015 and 2014 (in thousands of dollars):



	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Service cost	$	1,126		$	1,149		$	2,241		$	2,279
Interest cost	3,237			3,993			6,442			7,920
Expected return on plan assets	(5,053		)	(5,918		)	(10,057		)	(11,737		)
Amortization of previously unrecognized net pension losses	993			599			1,977			1,188
Amortization of prior service cost	91			—			181			—
Net pension cost (benefit)	$	394		$	(177	)	$	784		$	(350	)

For the six months ended June 30, 2015 , Sotheby's contributed $1.2 million to the U.K. Pension Plan, and total contributions for the year ending December 31, 2015 are expected to be approximately $2.2 million .

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9. Commitments and Contingencies

Compensation Arrangements —Sotheby’s has compensation arrangements with certain senior employees, which expire at various points between August 31, 2015 and March 31, 2020 . Such arrangements may provide, among other benefits, for minimum salary levels and for compensation under Sotheby's incentive compensation programs that is payable only if specified Company and individual goals are attained. Additionally, under certain circumstances, certain of these arrangements provide annual share-based payments, severance payments, and other cash compensation. The aggregate remaining commitment for salaries and other cash compensation related to these compensation arrangements, excluding any participation in Sotheby’s incentive compensation programs, was approximately $27.4 million as of June 30, 2015 .

Legal Actions —Sotheby’s becomes involved in various claims and lawsuits incidental to the ordinary course of its business, including the matters described below. Management is required to assess the likelihood of any adverse judgments or outcomes in these matters, as well as potential ranges of probable or reasonably possible losses. A determination of the amount of losses, if any, to be recorded or disclosed as a result of these contingencies is based on a careful analysis of each individual exposure with, in some cases, the assistance of outside legal counsel. The amount of losses recorded or disclosed for such contingencies may change in the future due to new developments in each matter or a change in settlement strategy. Management does not believe that the outcome of any of these pending claims or proceedings, individually and in the aggregate, will have a material adverse effect on Sotheby’s consolidated results of operations, financial condition and/or cash flows.

Estate of Robert Graham, et al. v. Sotheby's, Inc. is a purported class action commenced in the U.S. District Court for the Central District of California in October 2011 on behalf of U.S. artists (and their estates) whose artworks were sold by Sotheby's in the State of California or at auction by California sellers and for which a royalty was allegedly due under the California Resale Royalties Act (the “Resale Royalties Act”). Plaintiffs seek unspecified damages, punitive damages and injunctive relief for alleged violations of the Resale Royalties Act and the California Unfair Competition Law. In January 2012, Sotheby’s filed a motion to dismiss the action on the grounds, among others, that the Resale Royalties Act violates the U.S. Constitution and is preempted by the U.S. Copyright Act of 1976. In February 2012, the plaintiffs filed their response to Sotheby's motion to dismiss. The court heard oral arguments on the motion to dismiss on March 12, 2012. On May 17, 2012, the court issued an order dismissing the action on the ground that the Resale Royalties Act violated the Commerce Clause of the U.S. Constitution. The plaintiffs appealed this ruling. On May 5, 2015, an en banc panel of the U.S. Court of Appeals for the Ninth Circuit issued a decision affirming the lower court decision that the Resale Royalties Act was unconstitutional insofar as it sought to apply to sales outside of the state of California.

(See Note 5 for information related to unfunded commitments to extend additional credit through Sotheby's Finance segment. See Note 6 for information related to Sotheby's debt commitments. See Note 10 for information related to Sotheby's auction guarantees. See Note 17 for information related to Sotheby's income tax contingencies.)

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10. Auction Guarantees

From time-to-time in the ordinary course of its business, Sotheby’s will guarantee to a consignor a minimum sale price in connection with the sale of property at auction (an “auction guarantee”). Sotheby’s is generally entitled to a share of the excess proceeds (the “overage”) if the property under the auction guarantee sells above the guaranteed price. In the event that the property sells for less than the guaranteed price, Sotheby’s must perform under the auction guarantee by funding the difference between the sale price at auction and the amount of the auction guarantee. If the property does not sell, the amount of the auction guarantee must be paid, but Sotheby’s has the right to recover such amount through the future sale of the property. Depending on the mix of items subject to a guarantee, in advance of peak selling seasons, a small number of guaranteed items may represent a substantial portion of the aggregate amount of outstanding auction guarantees.

In situations when the guaranteed property does not sell, the property is recorded as Inventory on the Condensed Consolidated Balance Sheets at the lower of cost (i.e., the amount paid under the auction guarantee) or management’s estimate of the property's net realizable value (i.e., the expected sale price upon disposition). The sale proceeds ultimately realized by Sotheby’s in these situations may equal, exceed, or be less than the amount recorded as Inventory.

Sotheby’s may reduce its financial exposure under auction guarantees through contractual risk and reward sharing arrangements. Such auction guarantee risk and reward sharing arrangements include irrevocable bids and partner sharing arrangements. An irrevocable bid is an arrangement under which a counterparty commits to bid a predetermined price on the guaranteed property. If the irrevocable bid is the winning bid, the counterparty purchases the property at the predetermined price plus the applicable buyer’s premium, which is the same amount that any other successful bidder would pay at that price. If the irrevocable bid is not the winning bid, the counterparty is generally entitled to receive a share of the auction commission earned on the sale and/or a share of any overage. In a partner sharing arrangement, a counterparty commits to fund: (i) a share of the difference between the sale price at auction and the amount of the auction guarantee if the property sells for less than the minimum guaranteed price or (ii) a share of the minimum guaranteed price if the property does not sell while taking ownership of a proportionate share of the unsold property. In exchange for accepting a share of the financial exposure under the auction guarantee, the counterparty in a partner sharing arrangement is generally entitled to receive a share of the auction commission earned if the property sells and/or a share of any overage.

The counterparties to Sotheby's auction guarantee risk and reward sharing arrangements are typically major international art dealers or major art collectors. Sotheby’s could be exposed to losses in the event any of these counterparties do not perform according to the terms of these contractual arrangements.

Although irrevocable bid and partner sharing arrangements may be used to reduce the risk associated with auction guarantees, Sotheby's may also enter into auction guarantees without securing such arrangements. In these circumstances, Sotheby's could be exposed to auction guarantee losses and/or deterioration in auction commission margins if the underlying property fails to sell at the minimum guaranteed price. Furthermore, in such situations, Sotheby's liquidity could be reduced.

Sotheby's credit agreement has a covenant that imposes a $600 million limitation on net outstanding auction guarantees (i.e., auction guarantees less the impact of related risk and reward sharing arrangements). In addition to compliance with this covenant, Sotheby's use of auction guarantees and related risk and reward sharing arrangements is also subject to management and, in some cases, Board of Directors, approval.

As of June 30, 2015 , Sotheby’s had outstanding auction guarantees totaling $16.2 million . Sotheby's financial exposure under these auction guarantees is reduced by irrevocable bids totaling $11.9 million . Each of these auction guarantees has a minimum guaranteed price that is within the range of the pre-sale auction estimates for the underlying property. A substantial portion of the property related to these auction guarantees was offered at an auction in July 2015 with the remainder scheduled to be offered in the fourth quarter of 2015.

Sotheby's is obligated under the terms of certain auction guarantees to advance all or a portion of the guaranteed amount prior to auction. As of June 30, 2015 , December 31, 2014 , and June 30, 2014 , the carrying value of the liability representing the estimated fair value of Sotheby’s obligation to perform under its auction guarantees totaled $0.5 million , $5.3 million , and $1.5 million , respectively, and is recorded on the Condensed Consolidated Balance Sheets within Accounts Payable and Accrued Liabilities.

As of July 30, 2015, Sotheby's had outstanding auction guarantees totaling $3.8 million and, as of that date, Sotheby's financial exposure was reduced by risk and reward sharing arrangements totaling $3.3 million . Each of the auction guarantees outstanding as of July 30, 2015 had a minimum guaranteed price that was within the range of the pre-sale auction estimates for the underlying property. All of the property related to these auction guarantees is being offered at auctions in the fourth quarter of 2015. As of July 30, 2015, $0.2 million of the guaranteed amount had been advanced by Sotheby's.

21 #

11. Shareholders' Equity and Dividends

Special Dividend and Common Stock Repurchase Program —In January 2014, Sotheby's completed a review of its capital allocation and financial policies and as a result: (i) established separate capital structures and financial policies for its Agency and Finance segments, (ii) declared a special dividend of $300 million ( $4.34 per share), and (iii) authorized a 5 -year, $150 million Common Stock repurchase program principally to offset the annual vesting of employee share-based payments.

The $300 million special dividend was paid on March 17, 2014 and was funded principally by the repatriation of $250 million of cash from Sotheby’s foreign subsidiaries, with the remaining $50 million funded by existing domestic cash balances. In conjunction with this special dividend, dividend equivalents of approximately $11 million were accrued on share-based payments to Sotheby's employees and charged against retained earnings, of which approximately $2 million and $4 million was paid in March 2015 and March 2014, respectively. (See Note 12 for information related to Sotheby's share-based payment programs.)

In conjunction with the Common Stock repurchase program, Sotheby's repurchased 558,171 shares of its Common Stock for an aggregate purchase price of $25 million ( $44.79 per share) pursuant to an accelerated stock buyback agreement that was concluded in March 2014.

Quarterly Cash Dividends —On February 26, 2015, Sotheby's Board of Directors declared a quarterly dividend of $0.10 per share (approximately $6.9 million ) that was paid on March 16, 2015 to shareholders of record as of March 9, 2015. On May 7, 2015, the Board of Directors declared a quarterly cash dividend of $0.10 per share (approximately $6.9 million ) that was paid on June 15, 2015 to shareholders of record as of June 1, 2015. On August 6, 2015, the Board of Directors declared a quarterly cash dividend of $0.10 per share (approximately $6.9 million ) payable on September 15, 2015 to shareholders of record as of September 1, 2015. On February 27, 2014, the Board of Directors declared a quarterly dividend of $0.10 per share (approximately $6.9 million ) that was paid on March 17, 2014 to shareholders of record as of March 10, 2014. On May 6, 2014, the Board of Directors declared a quarterly cash dividend of $0.10 per share (approximately $6.9 million ) that was paid on June 16, 2014 to shareholders of record as of June 2, 2014.

Subsequent Event —On August 6, 2015, Sotheby’s Board of Directors approved an increase of $125 million to Sotheby's remaining share repurchase authorization of $125 million , resulting in a total share repurchase authorization of $250 million . The Board of Directors has concluded that this share repurchase program, which is expected to be funded from existing cash balances, provides a balance between preserving capital for growth, downside risk protection, and returning available capital to shareholders. Sotheby’s intends to repurchase $125 million of its Common Stock from shareholders in the near term via an Accelerated Share Repurchase (“ASR”) Program. Management expects that the balance of the share repurchase program will be executed in the next 12 months to 18 months, via open market transactions and/or additional ASR Programs.

12. Share-Based Payments

Share-based payments to employees include performance-based stock unit awards, market-based stock unit awards, restricted stock units, restricted stock shares, and stock options. A description of each of these share-based payments is provided below. Compensation expense related to share-based payments is generally recorded as a component of Salaries and Related Costs in the Condensed Consolidated Income Statements. However, share-based payment expense of $2 million recognized in the first quarter of 2015 related to fully vested restricted stock units granted to Thomas S. Smith, Jr. upon the commencement of his employment as Sotheby's President and Chief Executive Officer ("CEO") is reported within CEO Separation and Transition Costs (see Note 13).

For the three and six months ended June 30, 2015 and 2014 , compensation expense related to share-based payments, including the $2 million charge recognized and classified within CEO Separation and Transition Costs in the first quarter of 2015, was as follows (in thousands of dollars):



	Three Months Ended June 30,				Six Months Ended June 30,
	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Pre-Tax	$	9,582	$	6,648	$	17,235	$	12,895
After-Tax	$	6,623	$	4,503	$	11,453	$	8,655

For the six months ended June 30, 2015 and 2014 , Sotheby's recognized $1.1 million and $3.6 million , respectively, of excess tax benefits related to share-based payment arrangements. These tax benefits represent the amount by which the tax deduction resulting from the exercise or vesting of share-based payments exceeded the tax benefit initially recognized in Sotheby's financial statements upon the amortization of compensation expense for these awards. Such excess tax benefits are recognized on the Condensed Consolidated Balance Sheets as an increase to Additional Paid-in Capital and are classified within Financing Activities in the Condensed Consolidated Statements of Cash Flows.

22 #

As of June 30, 2015 , unrecognized compensation expense related to the unvested portion of share-based payments was $43.9 million . This compensation expense is expected to be amortized over a weighted-average period of approximately 2.7 years. Sotheby’s does not capitalize any compensation expense related to share-based payments to employees.

Sotheby's Restricted Stock Unit Plan —Sotheby's Second Amended and Restated Restricted Stock Unit Plan (the “Restricted Stock Unit Plan”) provides for the issuance of Restricted Stock Units (“RSU's”) to employees, subject to the approval of the Compensation Committee of the Board of Directors (the “Compensation Committee”). In making awards under the Restricted Stock Unit Plan, the Compensation Committee takes into account the nature of the services rendered by employees, their present and potential future contributions to Sotheby's success, and such other factors as the Compensation Committee in its discretion deems relevant.

RSU's issued under the Restricted Stock Unit Plan generally vest evenly over a three -year service period. Prior to vesting, holders of RSU's do not have voting rights, but are entitled to receive dividend equivalents. Dividend equivalents paid to holders of unvested RSU's are not forfeitable. RSU's may not be sold, assigned, transferred, pledged or otherwise encumbered until they vest.

Performance Share Units (or “PSU's”) are RSU's that generally vest over three or four years, subject to the achievement of certain profitability targets. Prior to vesting, holders of PSU's do not have voting rights and are not entitled to receive dividends or dividend equivalents. Dividend equivalents are generally credited to holders of PSU's and are only paid for the portion of PSU's that vest and become shares of Common Stock. PSU's may not be sold, assigned, transferred, pledged or otherwise encumbered until they vest.

As discussed in more detail below, in the first quarter of 2015, Sotheby's granted Thomas S. Smith, Jr., its new President and CEO, PSU's under the Restricted Stock Unit Plan with a single vesting opportunity after a five -year service period contingent upon the achievement of pre-determined levels of Sotheby's stock price appreciation. These PSU's do not have any voting or dividend equivalent rights. In addition, as discussed in more detail below under "CEO Share-Based Payment Awards," in the first quarter of 2015, Sotheby's also granted Mr. Smith 158,638 restricted stock shares and 47,070 fully vested RSU's outside of the Restricted Stock Unit Plan.

For the six months ended June 30, 2015 , in addition to the PSU's granted to Mr. Smith, Sotheby's issued share-based payment awards under the Restricted Stock Unit Plan with a total fair value of $28.7 million , as follows:


•	384,664 PSU's with a fair value of $16.9 million and a single vesting opportunity after a three -year service period, including:


◦	304,882 PSU's with a fair value of $13.4 million , related almost entirely to Sotheby's incentive compensation programs, and


◦	79,782 PSU's with a fair value of $3.5 million issued to William F. Ruprecht, Sotheby's former President and CEO. In accordance with the terms of his amended employment agreement, upon the termination of his employment on March 31, 2015, Mr. Ruprecht forfeited 60,109 PSU's from this award. Accordingly, Mr. Ruprecht ultimately retained 19,673 PSU's with a fair value of $0.9 million .


•	268,865 RSU's with annual vesting over a three -year service period and a fair value of $11.8 million , related almost entirely to Sotheby's incentive compensation programs.

23 #

CEO Share-Based Payment Awards —In the first quarter of 2015, share-based payment awards with a fair value of $16.5 million were granted to Thomas S. Smith, Jr., Sotheby's new President and CEO, upon the commencement of his employment on March 31, 2015. These awards consist of the following:

•

An inducement award of 158,638 shares of restricted stock with a fair value of $6.5 million , with periodic vesting opportunities between March 4, 2016 and September 1, 2017, which substantially correspond to the times when forfeited opportunities at Mr. Smith's previous employer would otherwise have become eligible to vest. These restricted stock shares were not issued pursuant to the Restricted Stock Unit Plan and have not been registered with the Securities and Exchange Commission. These shares have voting rights and a non-forfeitable right to dividends.

•

An inducement award of 47,070 fully vested RSU's with a fair value of $2 million aw arded to Mr. Smith to compensate him for a portion of the annual bonus that he would have received from his previous employer. The Common Stock shares associated with this award will be distributed in three approximately equal installments on the third, fourth, and fifth anniversaries of the grant date. These RSU's were not issued pursuant to the Restricted Stock Unit Plan and have not been registered with the Securities and Exchange Commission. These RSU's will be credited with dividend equivalents based on the dividends paid on the underlying number of shares of Common Stock.

•

An award of 94,140 PSU's under the Restricted Stock Unit Plan with a fair value of $8 million and with a single vesting opportunity after a five -year service period contingent upon the achievement of pre-determined levels of Sotheby's stock price appreciation. This award provides opportunities to vest in incremental PSU's up to 350% of the initial award, such that the maximum number of shares that may be payable with respect to this award is 329,490 shares. These PSU's do not have a right to earn dividend equivalents.

Summary of Outstanding Share-Based Payment Awards —For the six months ended June 30, 2015 , changes to the number of outstanding RSU’s, PSU’s, and Restricted Stock shares were as follows (shares in thousands):



	Number of RSU’s, PSU’s, and Restricted Stock Shares		Weighted Average Grant Date Fair Value
Outstanding at January 1, 2015	1,806		$	40.32
Granted	953		47.36
Vested	(549	)	39.31
Canceled	(190	)	42.48
Outstanding at June 30, 2015	2,020		$	43.72

As of June 30, 2015 , 3.2 million units were available for future awards pursuant to the Restricted Stock Unit Plan. The aggregate fair value of RSU’s and PSU's that vested during the six months ended June 30, 2015 and 2014 was $22.9 million and $28.1 million , respectively, based on the closing price of Sotheby's Common Stock on the dates the shares vested.

Stock Options —Stock options issued pursuant to the Sotheby's 1997 Stock Option Plan are exercisable into authorized, but unissued shares of Sotheby's Common Stock. Stock options vest evenly over four years and expire ten years after the date of grant. As of June 30, 2015 , 104,100 shares of Common Stock were available for the issuance of stock options under the Stock Option Plan. As of June 30, 2015 , 50,000 stock options were outstanding and exercisable with a weighted average exercise price of $22.11 per share, a weighted average remaining contractual term of 4.6 years, and an aggregate intrinsic value of $1.2 million .

No stock options were exercised or granted during the six months ended June 30, 2015 . For the six months ended June 30, 2014, the aggregate intrinsic value of options exercised was $1.2 million , the cash proceeds received as a result of these exercises was $1 million , and the associated excess tax benefit recognized was $0.3 million .

13. CEO Separation and Transition Costs

In the first quarter of 2015, Sotheby's recognized $4.2 million in costs associated with the hiring of Thomas S. Smith, Jr. as its President and Chief Executive Officer which are classified within CEO Separation and Transition Costs. These costs principally relate to compensation of $3.1 million owed to Mr. Smith to replace incentive compensation that he expected to receive from his previous employer, consisting of a fully vested restricted stock unit award with a fair value of $2 million granted on March 31, 2015 and a $1.1 million cash payment due in September 2015. There is no required service period associated with this compensation. CEO Separation and Transition Costs also include approximately $1.1 million in recruitment and other professional fees associated with the CEO hiring process.

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14. Restructuring Charges

On July 16, 2014, Sotheby's Board of Directors approved a restructuring plan (the "2014 Restructuring Plan") principally impacting Sotheby's operations in the United States and the U.K. The 2014 Restructuring Plan resulted in Restructuring Charges (net) of approximately $14.2 million in 2014, consisting of $13.9 million in employee termination benefits recognized in the second half of 2014 and approximately $0.3 million of lease exit costs recognized in the fourth quarter of 2014. Substantially all of the headcount reductions resulting from the 2014 Restructuring Plan have been completed.

For the three and six months ended June 30, 2015, Sotheby's recognized benefits in Restructuring Charges (net) of $0.5 million and $0.9 million , respectively, related to adjustments to the accrual for employee termination benefits. As of June 30, 2015 , Sotheby's has made payments of approximately $9.6 million related to the 2014 Restructuring Plan, and the related accrued liability has been reduced by $0.9 million as a result of foreign currency exchange rate changes. Accordingly, as of June 30, 2015 , the remaining accrued liability related to the 2014 Restructuring Plan recorded on the Condensed Consolidated Balance Sheets within Accounts Payable and Accrued Liabilities was $2.8 million . This liability is expected to be settled through cash payments to be made in the third quarter of 2015.

15. Special Charges

For the three and six months ended June 30, 2014 , Sotheby's recognized special charges of $18.6 million and $24.3 million , respectively, related to third party advisory, legal, and other professional service fees directly associated with issues related to shareholder activism, the resulting proxy contest with Third Point LLC ("Third Point"), and the litigation concerning Sotheby's former shareholder rights plan and the change in control provision in its credit agreement. Included in these amounts is $10 million for the reimbursement by Sotheby's of Third Point's documented, out-of-pocket expenses incurred in connection with the proxy contest and the litigation concerning Sotheby's former shareholder rights plan. This reimbursement was part of a support agreement Sotheby's entered into with Third Point, Daniel S. Loeb, Olivier Reza, Harry J. Wilson and other entities affiliated with Third Point (together with Third Point, the “Third Point Entities”) on May 4, 2014 pursuant to which Sotheby's and Third Point settled the previously pending proxy contest for the election of directors (the "Support Agreement"). Pursuant to the Support Agreement, Mr. Loeb, Mr. Reza and Mr. Wilson (the “Third Point Nominees”) were appointed to Sotheby's Board of Directors. The Support Agreement also contains various other terms and provisions, including with respect to standstill and voting commitments entered into by Third Point, Third Point's withdrawal of the litigation concerning Sotheby's former shareholder rights plan, and the accelerated expiration of Sotheby's former shareholder rights plan.

25 #

16. Accumulated Other Comprehensive Loss

The following is a summary of the changes in Accumulated Other Comprehensive Loss for the three and six months ended June 30, 2015 and 2014 (in thousands of dollars):



Three Months Ended June 30, 2015	Foreign Currency Items			Defined Benefit Pension Items			Total
Balance at March 31, 2015	$	(54,681	)	$	(40,496	)	$	(95,177	)
Other comprehensive income (loss) before reclassifications	20,079			(2,526		)	17,553
Amounts reclassified from accumulated other comprehensive loss	—			867			867
Net other comprehensive income (loss)	20,079			(1,659		)	18,420
Balance at June 30, 2015	$	(34,602	)	$	(42,155	)	$	(76,757	)

Three Months Ended June 30, 2014	Foreign Currency Items			Defined Benefit Pension Items			Total
Balance at March 31, 2014	$	2,572		$	(38,027	)	$	(35,455	)
Other comprehensive income (loss) before reclassifications	4,880			(851		)	4,029
Amounts reclassified from accumulated other comprehensive loss	—			479			479
Net other comprehensive income (loss)	4,880			(372		)	4,508
Balance at June 30, 2014	$	7,452		$	(38,399	)	$	(30,947	)

Six Months Ended June 30, 2015	Foreign Currency Items			Defined Benefit Pension Items			Total
Balance at January 1, 2015	$	(33,223	)	$	(43,543	)	$	(76,766	)
Other comprehensive income (loss) before reclassifications	(1,379		)	(337		)	(1,716		)
Amounts reclassified from accumulated other comprehensive loss	—			1,725			1,725
Net other comprehensive (loss) income	(1,379		)	1,388			9
Balance at June 30, 2015	$	(34,602	)	$	(42,155	)	$	(76,757	)

Six Months Ended June 30, 2014	Foreign Currency Items			Defined Benefit Pension Items			Total
Balance at January 1, 2014	$	(1,352	)	$	(38,101	)	$	(39,453	)
Other comprehensive income (loss) before reclassifications	6,746			(1,249		)	5,497
Amounts reclassified from accumulated other comprehensive loss	2,058			951			3,009
Net other comprehensive income (loss)	8,804			(298		)	8,506
Balance at June 30, 2014	$	7,452		$	(38,399	)	$	(30,947	)

Other Comprehensive Income (Loss) reflects the change in the foreign currency translation adjustment account during the period, including the change in the foreign currency translation adjustment account related to the U.K. Pension Plan. Such amounts are reported on a cumulative basis in Accumulated Other Comprehensive Loss on the Condensed Consolidated Balance Sheets.

For the three and six months ended June 30, 2015 , $0.9 million and $1.7 million (respectively, net of taxes) was reclassified from Accumulated Other Comprehensive Loss and recorded on a pre-tax basis to Salaries and Related Costs in the Condensed Consolidated Income Statements as a result of the amortization of previously unrecognized U.K. Pension Plan losses and prior service costs. For the three and six months ended June 30, 2014 , $0.5 million and $1 million (respectively, net of taxes) was reclassified from Accumulated Other Comprehensive Loss and recorded on a pre-tax basis to Salaries and Related Costs in the Condensed Consolidated Income Statements as a result of the amortization of previously unrecognized U.K. Pension Plan losses. (See Note 8 for information related to the U.K. Pension Plan.)

For the six months ended June 30, 2014, $2.1 million was reclassified from Accumulated Other Comprehensive Loss to Other Expense in the Condensed Consolidated Income Statements as a result of the cumulative translation adjustment that was recognized upon the liquidation of a foreign subsidiary.

26 #

17. Uncertain Tax Positions

As of June 30, 2015 , Sotheby’s liability for unrecognized tax benefits, excluding interest and penalties, was $20.5 million , representing a net decrease of $2.3 million when compared to the liability of $22.8 million as of December 31, 2014 . This net decrease is primarily the result of both the expiration of the statute of limitations for certain tax years and the closing of tax audits for certain tax years, partially offset by the accrual of tax reserves related to transfer pricing. As of June 30, 2014 , Sotheby’s liability for unrecognized tax benefits, excluding interest and penalties, was $23.9 million . As of June 30, 2015 , December 31, 2014 , and June 30, 2014 , the total amount of unrecognized tax benefits that, if recognized, would favorably affect Sotheby’s effective tax rate was $12.7 million , $12.3 million , and $12.5 million , respectively. Sotheby’s believes it is reasonably possible that a decrease of $4.7 million in the balance of unrecognized tax benefits can occur within 12 months of the June 30, 2015 balance sheet date as a result of the expiration of statutes of limitations and the expected settlements of ongoing tax audits.

Sotheby’s is subject to taxation in the U.S. and various state and foreign jurisdictions and, as a result, is subject to ongoing tax audits in various jurisdictions. Sotheby’s is currently under examination by various U.S. state and foreign taxing authorities. The earliest open tax year for the major jurisdictions in which Sotheby's does business, which include the U.S. (including various state and local jurisdictions), the U.K., and Hong Kong, is 2007.

Sotheby’s recognizes interest expense and penalties related to unrecognized tax benefits as a component of Income Tax Expense. The accrual for such interest and penalties decreased by $0.2 million for the six months ended June 30, 2015 .

Sotheby’s policy is to record interest expense related to sales, value added and other non-income based taxes as Interest Expense in its Condensed Consolidated Income Statements. Penalties related to such taxes are recorded as General and Administrative Expenses in its Condensed Consolidated Income Statements. Interest expense and penalties related to income taxes are recorded as a component of Income Tax (Benefit) Expense in Sotheby’s Condensed Consolidated Income Statements.

18. Related Party Transactions

From time-to-time, in the ordinary course of business, related parties such as members of the Board of Directors and management transact with Sotheby's to buy and sell property at auction and through private sales. For the three and six months ended June 30, 2015 , Sotheby’s recognized Agency Revenues of $1.3 million and $2 million , respectively, related to the sale and purchase of property by related parties. For the three and six months ended June 30, 2014 , Sotheby’s recognized Agency Revenues of $2.1 million and $2.7 million , respectively, related to the sale and purchase of property by related parties. As of June 30, 2015 , December 31, 2014 , and June 30, 2014 , Accounts Receivable (net) included $0.3 million , $1.1 million , and $9.8 million , respectively, associated with auction or private sale purchases made by related parties.

19. Recently Issued Accounting Standards

In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09, which introduces a new five-step framework for revenue recognition. The core principal of the standard is that entities should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. This ASU also requires enhanced disclosures regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. This standard can be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. In July 2015, the FASB voted to defer the effective date of ASU 2014-09 to January 1, 2018 with early adoption beginning January 1, 2017. Management is currently assessing the potential impact of adopting this new accounting standard on Sotheby’s financial statements.

In February 2015, the FASB issued ASU 2015-02 which eliminates the deferral of the requirements of ASU 2009-17 for certain interests in investment funds and provides a scope exception from Accounting Standards Codification Topic 810 for certain investments in money market funds. ASU 2015-02 also makes several modifications to the consolidation guidance for variable interest entities ("VIEs") and general partners’ investments in limited partnerships, as well as modifications to the evaluation of whether limited partnerships are VIEs or voting interest entities. ASU 2015-02 is effective for interim and annual reporting periods beginning after December 15, 2015. Early adoption is permitted. Management is currently assessing the potential impact of adopting this new accounting standard on Sotheby’s financial statements.

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In March 2015, the FASB issued ASU 2015-03, which changes the presentation of debt issuance costs in the balance sheet. ASU 2015-03 requires debt issuance costs to be included as a direct deduction from the related debt liability in the balance sheet. Under the current guidance, unamortized debt issuance costs are reported as assets in the balance sheet, but under the new standard, debt issuance costs will no longer be reported as assets. ASU 2015-03 will be effective for Sotheby’s beginning January 1, 2016 and must be applied retrospectively to each period presented. Management is currently assessing the potential impact of adopting this new accounting standard on Sotheby’s financial statements.

28 #

ITEM 2 : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

Management's Discussion and Analysis of Financial Condition and Results of Operations (or “MD&A”) should be read in conjunction with Note 4 (“Segment Reporting”) of Notes to Condensed Consolidated Financial Statements.

Sotheby's Business

Sotheby’s is a global art business whose operations are organized under two segments—Agency and Finance. The Agency segment earns commissions by matching buyers and sellers of authenticated fine art, decorative art, and jewelry (collectively, “art” or “works of art” or “artwork” or "property") through the auction or private sale process. To a much lesser extent, the Agency segment also earns revenues from the sale of artworks that have been purchased opportunistically by Sotheby’s. The Finance segment earns interest income through art-related financing activities by making loans that are secured by works of art. (See Note 4 of Notes to Condensed Consolidated Financial Statements for information regarding a change in Sotheby's segment reporting that became effective in the second quarter of 2015.)

The global art market is influenced over time by the overall strength and stability of the global economy, the financial markets of various countries, geopolitical conditions, and world events, all of which may impact the willingness of potential buyers and sellers to purchase and sell art. In addition, the amount and quality of art consigned for sale is influenced by other factors not within Sotheby’s control, and many consignments often become available as a result of the death or financial or marital difficulties of the owner. These factors cause the supply and demand for works of art to be unpredictable and may lead to significant variability in Sotheby's revenues from period to period.

Competition in the international art market is intense. A fundamental challenge facing any auctioneer or art dealer is the sourcing of high quality and valuable property for sale either as agent or as principal. Sotheby's primary global competitor is Christie’s International, PLC, a privately held, French-owned, auction house. In response to the competitive environment, Sotheby’s may offer consignors a variety of financial inducements such as auction commission sharing arrangements and auction guarantees as a means to secure high-value consignments. Although these inducements may lead to a higher level of auction consignments, they put pressure on auction commission margins, and auction guarantees introduce the possibility of incurring a loss on the transaction and reduced liquidity if the underlying property fails to sell at the minimum guaranteed price. To mitigate the pressure on auction commission margins, from time-to-time, Sotheby’s adjusts its commission rate structures. In addition, Sotheby’s may reduce its financial exposure under auction guarantees through contractual risk and reward sharing arrangements such as irrevocable bids under which a counterparty commits to bid a predetermined price on the guaranteed property. However, Sotheby’s could be exposed to losses in the event any of its counterparties do not perform according to the terms of these contractual arrangements.

Sotheby's is a service business in which the ability of its employees to source high-value works of art and develop and maintain relationships with potential sellers and buyers of art is essential to its success. Sotheby's business is highly dependent upon attracting and retaining qualified personnel and employee compensation is its most substantial operating expense. Sotheby’s also incurs significant costs to promote and conduct its auctions, as well as general and administrative expenses to support its global operations. While a large portion of Sotheby’s expenses are fixed, certain categories of expense are variable. For example, sale marketing costs are dependent upon the volume of auction activity and certain elements of employee compensation are a function of Sotheby’s profitability.

Business and Industry Trends

In late-2009, the global art market began a period of expansion that has resulted in some of the most profitable years in Sotheby’s history, and the art market has remained strong to date. A significant driver of the expansion of the global art market and Sotheby’s profitability during this period has been the growth of the Contemporary and Asian art markets, as well as increased demand for art from clients in China and other emerging markets across several collecting categories.

As the global art market has grown, the value of the property sold by Sotheby's has increased and the competitive environment between Sotheby’s and Christie’s has intensified. These factors have resulted in a decline in auction commission margins over the past few years, with the competitive environment for high-value consignments causing an increase in the use of auction commission sharing arrangements and an increase in the use of auction guarantees, sometimes without the protection of irrevocable bids. To help mitigate the recent decline in auction commission margins, in March 2013 and again in February 2015, management enacted increases in Sotheby’s buyer’s premium rate structure. (See "Auction Commission Margin" within the discussion of Agency segment results below for additional commentary.)

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In recent years, there has also been an increase in the demand for art-related financing. In response, and in an effort to reduce the Finance segment's cost of capital and enhance returns, in January 2014, Sotheby's established a separate capital structure for the Finance segment through which client loans are predominantly funded with borrowings drawn from a dedicated revolving credit facility. The establishment of the Finance segment's dedicated revolving credit facility has allowed management to debt fund 77% of the loan portfolio, and has contributed to a 63% increase in the client loan portfolio when compared to December 31, 2013 resulting in a 35% increase in Finance segment gross profit for the six months ended June 30, 2015 when compared to the same period in the prior year.

Strategic Review

In the second quarter of 2015, Sotheby’s initiated a broad review of its business, with the objective of implementing a multi-faceted growth strategy for the Company. More details will be provided as management refines and implements these initiatives.

Seasonality

The worldwide art auction market has two principal selling seasons, which generally occur in the second and fourth quarters of the year. In the aggregate, second and fourth quarter Net Auction Sales represented 79% and 83% of total Net Auction Sales in 2014 and 2013 , respectively, with auction commission revenues comprising approximately 81% of Sotheby's total revenues in those years. Accordingly, Sotheby's financial results are seasonal, with peak revenues and operating income generally occurring in the second and fourth quarters. Consequently, first and third quarter results have historically reflected lower revenues when compared to the second and fourth quarters and, typically, a net loss due to the fixed nature of many of Sotheby's operating expenses. Management believes that investors should focus on results for six and twelve month periods, which better reflect the business cycle of the art auction market.

CONSOLIDATED RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2015

Overview

For the three and six months ended June 30, 2015, Sotheby's reported operating income of $116.5 million and $134.9 million, respectively, as compared to $130.4 million and $134.5 million, respectively, for the same periods in the prior year. Excluding CEO and other leadership transition costs in the current year, and special charges associated with shareholder activism in the prior year, Adjusted Operating Income* for the three and six months ended June 30, 2015 was $125.5 million and $147.7 million , respectively, representing decreases of $23.5 million (16%) and $11.1 million (7%), respectively, versus the prior year.

The lower level of Adjusted Operating Income* in the current periods is largely due to a change in the timing of Sotheby's evening sale of Contemporary Art in London, which was held in the third quarter in 2015 after being held in the second quarter in 2014, as well as a loss incurred on a painting acquired by Sotheby’s earlier in the year and sold at auction in the second quarter. This painting was acquired along with another painting that was sold at auction for an offsetting profit which will be recognized later in the year when payment is received and title passes to the buyer. Also unfavorably influencing the comparison to the prior periods is the impact of provisions recorded in the second quarter of 2015 as a result of recent developments, including a cancelled sale provision due to a buyer default and the cost associated with a client authenticity claim, both related to property sold through Sotheby's in prior years. The comparison of Adjusted Operating Income* between the periods is favorably impacted by the increase in Sotheby's buyer's premium rate structure that was enacted in February 2015 and a higher level of private sale commissions, as well as continued growth in the profitability of Sotheby's Finance segment.

___________________

^* See "Non-GAAP Financial Measures" below for a description of this non-GAAP financial measure.

30 #

Outlook

The third quarter at Sotheby’s is a seasonally slow period, with only a few important sales - Contemporary Art and Old Masters in London, in July, and Asia Week in New York, upcoming in September - along with only a few sales across other collecting categories. Based on the results of the July sales in London, management projects that Adjusted Operating Income* for the third quarter of 2015 will be similar to the third quarter a year ago. Although the results for the third quarter of 2015 will include the typically low margin Contemporary Art evening sale in London, which was held in the second quarter in 2014, management has seen weaker sales results in the quarter in other collecting categories that typically have higher margins, including Old Masters. Final results for the third quarter of 2015 will depend on the remaining sales in the period, including the New York Asia Week sales in September. (See statement on Forward Looking Statements.)

On August 6, 2015, Sotheby’s Board of Directors approved an increase of $125 million to Sotheby's remaining share repurchase authorization of $125 million, resulting in a total share repurchase authorization of $250 million. The Board of Directors has concluded that this share repurchase program, which is expected to be funded from existing cash balances, provides a balance between preserving capital for growth, downside risk protection, and returning available capital to shareholders. Sotheby’s intends to repurchase $125 million of its Common Stock from shareholders in the near term via an Accelerated Share Repurchase (“ASR”) Program. Management expects that the balance of the share repurchase program will be executed in the next 12 to 18 months, via open market transactions and/or additional ASR Programs. (See statement on Forward Looking Statements.)

___________________

^* See "Non-GAAP Financial Measures" below for a description of this non-GAAP financial measure.

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Results of Operations for the Three and Six Months Ended June 30, 2015 and 2014

The table below presents a summary of Sotheby’s consolidated results of operations for the three and six months ended June 30, 2015 and 2014 (in thousands of dollars, except per share data):



							Favorable /(Unfavorable)
Three Months Ended June 30,	2015			2014			$ / % Change			% Change
Revenues:
Agency commissions and fees	$	310,377		$	316,187		$	(5,810	)	(2	%)
Inventory sales	7,005			8,733			(1,728		)	(20	%)
Finance	11,970			8,140			3,830			47	%
License fees	2,468			2,462			6			—	%
Other	186			295			(109		)	(37	%)
Total revenues	332,006			335,817			(3,811		)	(1	%)
Expenses:
Agency direct costs	32,730			31,617			(1,113		)	(4	%)
Cost of inventory sales	16,989			7,518			(9,471		)	*
Cost of Finance revenues	3,874			2,024			(1,850		)	(91	%)
Marketing	4,748			4,564			(184		)	(4	%)
Salaries and related	108,182			97,833			(10,349		)	(11	%)
General and administrative	44,731			38,210			(6,521		)	(17	%)
Depreciation and amortization	4,781			5,066			285			6	%
CEO separation and transition costs (a)	43			—			(43		)	N/A
Restructuring charges, net (b)	(530		)	—			530			N/A
Special charges (c)	—			18,554			18,554			100	%
Total expenses	215,548			205,386			(10,162		)	(5	%)
Operating income	116,458			130,431			(13,973		)	(11	%)
Net interest expense (d)	(8,444		)	(8,366		)	(78		)	(1	%)
Other income	245			694			(449		)	(65	%)
Income before taxes	108,259			122,759			(14,500		)	(12	%)
Equity in earnings of investees	1,982			230			1,752			*
Income tax expense	42,789			45,344			2,555			6	%
Net income	67,452			77,645			(10,193		)	(13	%)
Less: Net (loss) income attributable to noncontrolling interest	(120		)	13			(133		)	N/A
Net income attributable to Sotheby's	$	67,572		$	77,632		$	(10,060	)	(13	%)
Diluted earnings per share - Sotheby’s common shareholders	$	0.96		$	1.11		$	(0.15	)	(14	%)
Statistical Metrics:
Aggregate Auction Sales (e)	$	2,201,464		$	2,323,976		$	(122,512	)	(5	%)
Net Auction Sales (f)	$	1,856,643		$	1,971,338		$	(114,695	)	(6	%)
Private Sales (g)	$	232,702		$	146,681		$	86,021		59	%
Consolidated Sales (h)	$	2,439,086		$	2,477,390		$	(38,304	)	(2	%)
Adjusted Expenses (i)	$	185,671		$	177,290		$	(8,381	)	(5	%)
Adjusted Operating Income (i)	$	125,472		$	148,985		$	(23,513	)	(16	%)
Adjusted Net Income (i)	$	73,061		$	87,836		$	(14,775	)	(17	%)
Adjusted Diluted Earnings Per Share (i)	$	1.04		$	1.26		$	(0.22	)	(17	%)
EBITDA (i)	$	127,460		$	138,620		$	(11,160	)	(8	%)
Adjusted EBITDA (i)	$	136,474		$	157,174		$	(20,700	)	(13	%)
EBITDA Margin (i)	38.4		%	41.3		%	(2.9		%)	N/A
Adjusted EBITDA Margin (i)	41.1		%	46.8		%	(5.7		%)	N/A
Effective income tax rate	39.5		%	36.9		%	(2.6		%)	N/A

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							Favorable /(Unfavorable)
Six Months Ended June 30,	2015			2014			$ / % Change			% Change
Revenues:
Agency commissions and fees	$	438,259		$	439,315		$	(1,056	)	—	%
Inventory sales	19,988			34,734			(14,746		)	(42	%)
Finance	24,657			13,822			10,835			78	%
License fees	4,442			4,159			283			7	%
Other	335			598			(263		)	(44	%)
Total revenues	487,681			492,628			(4,947		)	(1	%)
Expenses:
Agency direct costs	44,569			42,054			(2,515		)	(6	%)
Cost of inventory sales	28,702			32,020			3,318			10	%
Cost of Finance revenues	7,262			2,734			(4,528		)	*
Marketing	8,808			7,697			(1,111		)	(14	%)
Salaries and related	171,112			163,589			(7,523		)	(5	%)
General and administrative	79,460			75,542			(3,918		)	(5	%)
Depreciation and amortization	9,563			10,213			650			6	%
CEO separation and transition costs (a)	4,232			—			(4,232		)	N/A
Restructuring charges, net (b)	(889		)	—			889			N/A
Special charges (c)	—			24,257			24,257			100	%
Total expenses	352,819			358,106			5,287			1	%
Operating income	134,862			134,522			340			—	%
Net interest expense (d)	(16,976		)	(16,733		)	(243		)	(1	%)
Other expense	(1,714		)	(748		)	(966		)	*
Income before taxes	116,172			117,041			(869		)	(1	%)
Equity in earnings of investees	3,126			384			2,742			*
Income tax expense	46,713			45,675			(1,038		)	(2	%)
Net income	72,585			71,750			835			1	%
Less: Net (loss) income attributable to noncontrolling interest	(189		)	232			(421		)	N/A
Net income attributable to Sotheby's	$	72,774		$	71,518		$	1,256		2	%
Diluted earnings per share - Sotheby’s common shareholders	$	1.04		$	1.01		$	0.03		3	%
Statistical Metrics:
Aggregate Auction Sales (e)	$	3,096,907		$	3,191,657		$	(94,750	)	(3	%)
Net Auction Sales (f)	$	2,612,460		$	2,705,708		$	(93,248	)	(3	%)
Private Sales (g)	$	370,193		$	294,031		$	76,162		26	%
Consolidated Sales (h)	$	3,476,624		$	3,497,281		$	(20,657	)	(1	%)
Adjusted Expenses (i)	$	304,011		$	299,095		$	(4,916	)	(2	%)
Adjusted Operating Income (i)	$	147,706		$	158,779		$	(11,073	)	(7	%)
Adjusted Net Income (i)	$	80,484		$	84,859		$	(4,375	)	(5	%)
Adjusted Diluted Earnings Per Share (i)	$	1.15		$	1.20		$	(0.05	)	(4	%)
EBITDA (i)	$	153,288		$	147,187		$	6,101		4	%
Adjusted EBITDA (i)	$	166,132		$	171,444		$	(5,312	)	(3	%)
EBITDA Margin (i)	31.4		%	29.9		%	1.5		%	N/A
Adjusted EBITDA Margin (i)	34.1		%	34.8		%	(0.7		%)	N/A
Effective income tax rate	40.2		%	39.0		%	(1.2		%)	N/A

33 #



Legend :
*	Represents a change in excess of 100%.
(a)	Includes compensation-related costs and professional fees associated with the hiring of Thomas S. Smith, Jr. as Sotheby's President and Chief Executive Officer.
(b)	Relates to adjustments made to the accrual for employee termination benefits associated with the 2014 Restructuring Plan.
(c)	Consists of expenses directly associated with issues related to shareholder activism and the resulting proxy contest with Third Point LLC ("Third Point").
(d)	Represents interest expense less interest income.
(e)	Represents the total hammer price of property sold at auction plus buyer’s premium.
(f)	Represents the total hammer price of property sold at auction.
(g)	Represents the total purchase price of property sold in private sales brokered by Sotheby’s, including its commissions.
(h)	Represents the sum of Aggregate Auction Sales, Private Sales, and Inventory sales. For the purposes of this calculation, the aggregate sale price associated with Sotheby's inventory sold at auction during the period is eliminated. For the three months ended June 30, 2015 and 2014, such sales totaled $2.1 million and $2 million, respectively. For the six months ended June 30, 2015 and 2014, such sales totaled $10.5 million and $23.1 million, respectively.
(i)	See "Non-GAAP Financial Measures" below for a description of this non-GAAP financial measure and a reconciliation to the most comparable GAAP measure.

34 #

Agency Segment

The Agency segment earns commissions by matching buyers and sellers (also known as consignors) of authenticated fine art, decorative art, and jewelry through the auction or private sale process. To a much lesser extent, the Agency segment also earns revenues from the sale of artworks that have been purchased opportunistically by Sotheby's. (See Note 4 of Notes to Condensed Consolidated Financial Statements for information regarding a change in Sotheby's segment reporting that became effective in the second quarter of 2015.)

The table below presents a summary of Agency segment gross profit and related statistical metrics for the three and six months ended June 30, 2015 and 2014 (in thousands of dollars):



							Favorable /(Unfavorable)
Three Months Ended June 30,	2015			2014			$ / % Change			% Change
Agency commissions and fees:
Auction commissions	$	287,487		$	299,167		$	(11,680	)	(4	%)
Private sale commissions	22,292			16,876			5,416			32	%
Auction guarantees, net	(7,508		)	(6,215		)	(1,293		)	(21	%)
Other	8,106			6,359			1,747			27	%
Total Agency commissions and fees	310,377			316,187			(5,810		)	(2	%)
Inventory sales	4,026			6,686			(2,660		)	(40	%)
Total Agency segment revenues	314,403			322,873			(8,470		)	(3	%)
Agency direct costs:
Auction direct costs	31,386			30,100			(1,286		)	(4	%)
Private sale expenses	1,344			1,517			173			11	%
Total Agency direct costs	32,730			31,617			(1,113		)	(4	%)
Cost of inventory sales	15,017			5,184			(9,833		)	*
Total Agency direct costs and cost of inventory sales	47,747			36,801			(10,946		)	(30	%)
Intersegment costs:
Interest (a)	1,557			1,510			(47		)	(3	%)
Facility fees (b)	494			536			42			8	%
Consignment fees (c)	2,318			2,158			(160		)	(7	%)
Total intersegment costs	4,369			4,204			(165		)	(4	%)
Agency segment gross profit (d)	$	262,287		$	281,868		$	(19,581	)	(7	%)
Statistical Metrics:
Aggregate Auction Sales (e)	$	2,201,464		$	2,323,976		$	(122,512	)	(5	%)
Net Auction Sales (f)	$	1,856,643		$	1,971,338		$	(114,695	)	(6	%)
Items sold at auction with a hammer price greater than $1 million	261			305			(44		)	(14	%)
Total hammer price of items sold at auction with a hammer price greater than $1 million	$	1,280,536		$	1,292,115		$	(11,579	)	(1	%)
Items sold at auction with a hammer price greater than $2 million	148			179			(31		)	(17	%)
Total hammer price of items sold at auction with a hammer price greater than $2 million	$	1,139,803		$	1,116,567		$	23,236		2	%
Items sold at auction with a hammer price greater than $3 million	97			125			(28		)	(22	%)
Total hammer price of items sold at auction with a hammer price greater than $3 million	$	1,014,503		$	987,908		$	26,595		3	%
Auction commission margin (g)	15.5		%	15.2		%	0.3		%	N/A
Auction direct costs as a percentage of Net Auction Sales	1.69		%	1.53		%	(0.16		%)	N/A
Private Sales (h)	$	232,702		$	146,681		$	86,021		59	%

35 #



							Favorable /(Unfavorable)
Six Months Ended June 30,	2015			2014			$ / % Change			% Change
Agency commissions and fees:
Auction commissions	$	400,502		$	403,840		$	(3,338	)	(1	%)
Private sale commissions	33,750			29,931			3,819			13	%
Auction guarantees, net	(8,259		)	(5,545		)	(2,714		)	(49	%)
Other	12,266			11,089			1,177			11	%
Total agency commissions and fees	438,259			439,315			(1,056		)	—	%
Inventory sales	15,833			31,496			(15,663		)	(50	%)
Total Agency segment revenues	454,092			470,811			(16,719		)	(4	%)
Agency direct costs:
Auction direct costs	41,468			38,978			(2,490		)	(6	%)
Private sale expenses	3,101			3,076			(25		)	(1	%)
Total Agency direct costs	44,569			42,054			(2,515		)	(6	%)
Cost of inventory sales	25,911			28,837			2,926			10	%
Total Agency direct costs and cost of inventory sales	70,480			70,891			411			1	%
Intersegment costs:
Interest (a)	2,458			3,545			1,087			31	%
Facility fees (b)	918			1,034			116			11	%
Consignment fees (c)	4,263			2,890			(1,373		)	(48	%)
Total intersegment costs	7,639			7,469			(170		)	(2	%)
Agency segment gross profit (d)	$	375,973		$	392,451		$	(16,478	)	(4	%)
Statistical Metrics:
Aggregate Auction Sales (e)	$	3,096,907		$	3,191,657		$	(94,750	)	(3	%)
Net Auction Sales (f)	$	2,612,460		$	2,705,708		$	(93,248	)	(3	%)
Items sold at auction with a hammer price greater than $1 million	373			412			(39		)	(9	%)
Total hammer price of items sold at auction with a hammer price greater than $1 million	$	1,757,419		$	1,709,608		$	47,811		3	%
Items sold at auction with a hammer price greater than $2 million	212			240			(28		)	(12	%)
Total hammer price of items sold at auction with a hammer price greater than $2 million	$	1,550,833		$	1,466,242		$	84,591		6	%
Items sold at auction with a hammer price greater than $3 million	136			160			(24		)	(15	%)
Total hammer price of items sold at auction with a hammer price greater than $3 million	$	1,363,003		$	1,273,608		$	89,395		7	%
Auction commission margin (g)	15.3		%	14.9		%	0.4		%	N/A
Auction direct costs as a percentage of Net Auction Sales	1.59		%	1.44		%	(0.15		%)	N/A
Private Sales (h)	$	370,193		$	294,031		$	76,162		26	%

36 #



Legend:
*	Represents a change in excess of 100%.
(a)	Represents interest charged by the Finance segment for secured loans issued with an interest rate below the Finance segment's target rate. Such loans are sometimes issued by the Finance segment as an accommodation to the Agency segment in order to obtain consigned property or enhance a client relationship.
(b)	Represents facility fees charged by the Finance segment for secured loans where a reduced or no facility fee is collected from the borrower. Such fees are sometimes reduced or waived by the Finance segment as an accommodation to the Agency segment in order to secure consignments or enhance a client relationship.
(c)	Represents fees charged by the Finance segment for term loan collateral consigned to and sold at auction or privately during the period. The Finance segment began charging this fee effective January 1, 2015. Prior period segment results are presented on a comparable basis.
(d)	The calculation of Agency segment gross profit does not include the impact of salaries and related costs, general and administrative expenses, and depreciation and amortization expense. However, these items are deducted in the determination of segment income before taxes as reported in Note 4 of Notes to Condensed Consolidated Financial Statements.
(e)	Represents the total hammer price of property sold at auction plus buyer's premium.
(f)	Represents the total hammer price of property sold at auction.
(g)	Represents total auction commission revenues as a percentage of Net Auction Sales.
(h)	Represents the total purchase price of property sold in private sales brokered by Sotheby's, including its commissions.

Overview —For the three and six months ended June 30, 2015 , Agency segment gross profit decreased $19.6 million (7%) and $16.5 million (4%) , respectively, due in large part to a change in the timing of the evening sale of Contemporary Art in London, which was held in the third quarter in 2015 after being held in the second quarter in 2014. This shift in timing contributed to the lower level of auction commission revenues during the current three and six month periods, which saw decreases of 4% and 1% , respectively, when compared to the prior year. Also significantly contributing to the decline in Agency segment gross profit for the current periods are unfavorable movements in foreign currency exchange rates, as well as higher auction direct costs and a loss incurred on a painting acquired by Sotheby’s earlier in the year and sold at auction in the second quarter. This painting was acquired along with another painting that was sold at auction for an offsetting profit which will be recognized later in the year when payment is received and title passes to the buyer. Partially offsetting these factors is the increase in Sotheby's buyer's premium rate structure that was enacted in February 2015, as well as increases of $5.4 million ( 32% ) and $3.8 million ( 13% ), respectively, in private sale commissions.

Auction Commission Revenues —In its role as auctioneer, Sotheby’s accepts property on consignment and matches sellers to buyers through the auction process. Sotheby’s invoices the buyer for the purchase price of the property (including the commission owed by the buyer), collects payment from the buyer, and remits to the seller the net sale proceeds after deducting its commissions, expenses and applicable taxes and royalties. Sotheby’s auction commissions include those paid by the buyer (“buyer’s premium”) and those paid by the seller (“seller’s commission”) (collectively, “auction commission revenue”), both of which are calculated as a percentage of Net Auction Sales.

For the three and six months ended June 30, 2015 , auction commission revenues decreased by $11.7 million ( 4% ) and $3.3 million ( 1% ), respectively, and were significantly impacted by unfavorable foreign currency exchange rate changes which contributed $11.3 million and $18.2 million, respectively, to the overall decreases. Excluding the impact of foreign currency exchange rate changes, and despite the change in the timing of the evening sale of Contemporary Art in London discussed above, auction commission revenues remained relatively constant in relation to the second quarter of 2014 and increased by $14.8 million (4%) when compared to the prior year-to-date period principally due to an improvement in Auction Commission Margin. See "Net Auction Sales" and "Auction Commission Margin" below for a more detailed discussion of these statistical metrics.

Net Auction Sales —For the three and six months ended June 30, 2015 , Net Auction Sales decreased by $114.7 million ( 6% ) and $93.2 million ( 3% ), respectively, and were significantly influenced by the timing of the evening sale of Contemporary Art in London which, in 2014, was held in the second quarter and totaled $137.4 million in Net Auction Sales. In 2015, the comparable sale was held in the third quarter and totaled approximately $177.3 million in Net Auction Sales. The comparisons to prior year periods were also significantly impacted by unfavorable foreign currency exchange rate changes which contributed $61.7 million and $111.8 million, respectively, to the overall decreases. Excluding the impact of foreign currency exchange rate changes, Net Auction Sales decreased $53 million (3%) in relation to the second quarter of 2014 and increased $18.6 million (1%) when compared to the prior year-to-date period. The comparisons versus the prior year periods are also influenced by the strong performance of Sotheby's Impressionist and Modern Art sales during the periods, with second quarter results improving $174.6 million (36%) and year-to-date results improving $196.6 million (25%), partially offset by lower sales of other fine art, decorative art, and collectibles, due in part to a lower level of single-owner sales in those categories.

37 #

The tables below summarize Sotheby's Net Auction Sales for the three and six months ended June 30, 2015 and 2014 (in millions of dollars):



						Favorable /(Unfavorable)
Three Months Ended June 30,	2015			2014		$ Change			% Change
Impressionist and Modern Art	$	661.3		$	486.7	$	174.6		36	%
Contemporary Art	429.9			589.4		(159.5		)	(27	%)
Asian Art	267.6			294.7		(27.1		)	(9	%)
Jewelry	244.4			240.2		4.2			2	%
Old Master and British Paintings and Drawings	29.0			25.6		3.4			13	%
Other fine art, decorative art and collectibles	286.1			334.7		(48.6		)	(15	%)
Sub-total	1,918.3			1,971.3		(53.0		)	(3	%)
Impact of foreign exchange rate changes	(61.7		)	N/A		(61.7		)	N/A
Total	$	1,856.6		$	1,971.3	$	(114.7	)	(6	%)



						Favorable /(Unfavorable)
Six Months Ended June 30,	2015			2014		$ Change			% Change
Impressionist and Modern Art	$	975.2		$	778.6	$	196.6		25	%
Contemporary Art	701.3			764.7		(63.4		)	(8	%)
Asian Art	331.5			346.6		(15.1		)	(4	%)
Jewelry	256.6			252.8		3.8			2	%
Old Master and British Paintings and Drawings	98.1			92.6		5.5			6	%
Other fine art, decorative art and collectibles	361.6			470.4		(108.8		)	(23	%)
Sub-total	2,724.3			2,705.7		18.6			1	%
Impact of foreign exchange rate changes	(111.8		)	N/A		(111.8		)	N/A
Total	$	2,612.5		$	2,705.7	$	(93.2	)	(3	%)

Auction Commission Margin —Auction Commission Margin represents total auction commission revenues as a percentage of Net Auction Sales. Typically, Auction Commission Margin is higher for lower value works of art or collections, while higher valued property earns a lower Auction Commission Margin. Accordingly, Auction Commission Margin may be adversely impacted by the mix of property sold in a period. Auction Commission Margin may also be adversely impacted by arrangements whereby Sotheby's shares its buyer's premium with a consignor in order to secure a high-value consignment, as well as by Sotheby's use of auction guarantees. For example, when issuing an auction guarantee, Sotheby's may enter into a risk and reward sharing arrangement with a counterparty whereby Sotheby's financial exposure under the auction guarantee is reduced in exchange for sharing its buyer's premium. Also, in situations when guaranteed property sells for less than the guaranteed price, Sotheby's buyer's premium from that sale is used to reduce the loss on the transaction. (See Note 10 of Notes to Condensed Consolidated Financial Statements for information related to Sotheby's use of auction guarantees.)

In order to enhance revenue and strengthen auction commission margins, on February 1, 2015, Sotheby’s enacted a new buyer's premium rate structure that is generally 25% on the first $200,000 of hammer (sale) price; 20% on the portion of hammer (sale) price above $200,000 up to and including $3 million; and 12% on any remaining amount above $3 million. The hammer (sale) price thresholds in other currencies have been adjusted in a commensurate manner. The previous buyer’s premium rate structure, which was in effect since March 15, 2013, was 25% on the first $100,000 of hammer (sale) price; 20% on the portion of hammer (sale) price above $100,000 up to and including $2 million; and 12% on any remaining amount above $2 million.

For the three and six months ended June 30, 2015 , Auction Commission Margin increased 0.3% (from 15.2% to 15.5% ) and 0.4% (from 14.9% to 15.3% ), respectively, primarily due to the change in the buyer's premium rate structure enacted on February 1, 2015, which added $25 million and $31 million in incremental buyer's premium revenues during the three and six months ended June 30, 2015, respectively, partially offset by a higher level of shared auction commissions. Auction Commission Margin was also unfavorably impacted by a change in sales mix, as a higher value of property was sold in the upper price bands of Sotheby's buyer's premium rate structure in the current periods.

38 #

Private Sale Commission Revenues —Private sale commission revenues are earned through the direct brokering of purchases and sales of art. Private sales are initiated either by a client wishing to sell property with Sotheby's acting as its exclusive agent in the transaction, or by a prospective buyer who is interested in purchasing a certain work of art privately. Because private sales are individually negotiated non-recurring transactions, the volume and value of transactions completed can vary from period to period, with associated variability in revenues. For the three and six months ended June 30, 2015 , private sale commissions increased $5.4 million ( 32% ) and $3.8 million ( 13% ) due to an increase in the volume of high-value transactions completed during the periods.

Other Agency Revenues —Other Agency revenues principally includes commissions and other fees earned by Sotheby's on sales brokered by third parties, fees charged to consignors for property withdrawn prior to auction and for catalogue production and insurance, and catalogue subscription and advertising revenues. For the three and six months ended June 30, 2015 , other Agency revenues increased $1.7 million ( 27% ) and $1.2 million ( 11% ), respectively, primarily due to an increase in property withdrawal fees.

Agency Direct Costs —The table below presents a summary of Agency direct costs for the three and six months ended June 30, 2015 and 2014 , as well as a comparison between the current and prior year periods (in thousands of dollars):



							Favorable / (Unfavorable)
Three Months Ended June 30,	2015			2014			$ / % Change			% Change
Auction direct costs:
Sale marketing	$	13,795		$	12,920		$	(875	)	(7	%)
Shipping	5,035			4,397			(638		)	(15	%)
Sale venue	6,581			6,201			(380		)	(6	%)
Other	5,975			6,582			607			9	%
Total auction direct costs	31,386			30,100			(1,286		)	(4	%)
Private sale expenses	1,344			1,517			173			11	%
Total Agency direct costs	$	32,730		$	31,617		$	(1,113	)	(4	%)
Statistical Metric:
Auction direct costs as a % of Net Auction Sales	1.69		%	1.53		%	(0.16		%)	N/A



							Favorable / (Unfavorable)
Six Months Ended June 30,	2015			2014			$ / % Change			% Change
Auction direct costs:
Sale marketing	$	18,534		$	16,806		$	(1,728	)	(10	%)
Shipping	7,837			6,472			(1,365		)	(21	%)
Sale venue	7,807			7,327			(480		)	(7	%)
Other	7,290			8,373			1,083			13	%
Total auction direct costs	41,468			38,978			(2,490		)	(6	%)
Private sale expenses	3,101			3,076			(25		)	(1	%)
Total Agency direct costs	$	44,569		$	42,054		$	(2,515	)	(6	%)
Statistical Metric:
Auction direct costs as a % of Net Auction Sales	1.59		%	1.44		%	(0.15		%)	N/A

Auction Direct Costs —A large portion of auction direct costs relate to sale marketing expenses such as catalogue production and distribution, advertising and promotion costs, and traveling exhibition costs. Auction direct costs also include the cost of shipping property, sale venue costs, and other direct costs such as debit and credit card processing fees. The level of auction direct costs incurred in a period is generally dependent upon the volume and composition of Sotheby's auction sale offerings. For example, direct costs attributable to auctions of single-owner or other high-value collections are typically higher than those associated with standard various-owner auctions, mainly due to higher promotional costs for catalogues, special events, and traveling exhibitions, as well as higher shipping expenses.

39 #

For the three and six months ended June 30, 2015 , changes in foreign currency exchange rates reduced Agency direct costs by $0.9 million and $1.7 million, respectively. Excluding the the impact of foreign currency exchange rate changes, auction direct costs increased $2 million (6%) and $4.2 million (10%), respectively, primarily due to higher costs incurred to promote and conduct Sotheby's Impressionist and Contemporary Art sales in New York and London and costs associated with Sotheby's Contemporary Art auction held in Doha. Sotheby's did not conduct auction sales in Doha in the first half of 2014.

Inventory Sales and Cost of Inventory Sales —The tables below summarize the results of Sotheby's inventory activities for the three and six months ended June 30, 2015 and 2014 (in thousands of dollars):



						Favorable /(Unfavorable)
Three Months Ended June 30,	2015			2014		$ Change			% Change
Inventory sales	$	4,026		$	6,686	$	(2,660	)	(40	%)
Cost of inventory sales	15,017			5,184		(9,833		)	*
Gross (loss) profit	$	(10,991	)	$	1,502	$	(12,493	)	N/A



						Favorable /(Unfavorable)
Six Months Ended June 30,	2015			2014		$ Change			% Change
Inventory sales	$	15,833		$	31,496	$	(15,663	)	(50	%)
Cost of inventory sales	25,911			28,837		2,926			10	%
Gross (loss) profit	$	(10,078	)	$	2,659	$	(12,737	)	N/A
Legend:
* Represents a change in excess of 100%.

The unfavorable comparison of Sotheby's inventory activities to the prior periods is significantly impacted by a loss incurred on a painting acquired by Sotheby’s earlier in the year and sold at auction in the second quarter. This painting was acquired along with another painting that was sold at auction for an offsetting profit which will be recognized later in the year when payment is received and title passes to the buyer. Also impacting the unfavorable comparison to the prior periods is a series of profitable sales in the first and second quarter of 2014 of items acquired for investment purposes.

Finance Segment

The Finance segment provides certain collectors and art dealers with financing secured by works of art that Sotheby's either has in its possession or permits borrowers to possess. The Finance segment generally makes two types of secured loans: (1) advances secured by consigned property where the borrowers are contractually committed, in the near term, to sell the property through Sotheby's Agency segment (a “consignor advance”); and (2) general purpose term loans secured by property not presently intended for sale (a “term loan”).

Prior to 2014, the lending activities of the Finance segment were funded primarily by the operating cash flows of the Agency segment, with the ability to supplement those cash flows with revolving credit facility borrowings. In January 2014, in order to reduce the Finance segment's cost of capital and enhance returns, Sotheby's established a separate capital structure for the Finance segment through which client loans are predominantly funded with borrowings drawn from a dedicated revolving credit facility. The establishment of the Finance segment's dedicated revolving credit facility in February 2014 allowed management to debt fund a substantial portion of pre-existing loans and fund further growth of the loan portfolio. Cash balances are also used to fund a portion of the Finance segment loan portfolio, as appropriate.

On June 15, 2015, Sotheby's credit agreement was amended to increase the borrowing capacity of the Finance segment's dedicated revolving credit facility by $485 million to $1.035 billion in order to support the continued growth of the Finance segment's loan portfolio.

40 #

The table below presents a summary of Finance segment gross profit and related statistical metrics as of and for the three and six months ended June 30, 2015 and 2014 , as well as a comparison between the current and prior year periods (in thousands of dollars):



							Favorable/(Unfavorable)
Three Months Ended June 30,	2015			2014			$ / % Change			% Change
Finance revenues:
Client paid revenues:
Interest	$	10,528		$	7,157		$	3,371		47	%
Fees	1,442			983			459			47	%
Total client paid revenues	11,970			8,140			3,830			47	%
Intersegment revenues:
Interest (a)	1,557			1,510			47			3	%
Facility fees (b)	494			536			(42		)	(8	%)
Consignment fees (c)	2,318			2,158			160			7	%
Total intersegment revenues	4,369			4,204			165			4	%
Total Finance revenues	16,339			12,344			3,995			32	%
Cost of Finance revenues (d)	3,874			2,024			(1,850		)	(91	%)
Finance segment gross profit (e)	$	12,465		$	10,320		$	2,145		21	%
Loan Portfolio Metrics:
Loan Portfolio Balance (f)	$	774,040		$	594,370		$	179,670		30	%
Average Loan Portfolio (g)	$	752,874		$	561,730		$	191,144		34	%
Credit Facility Borrowings Outstanding (h)	$	593,000		$	345,000		$	248,000		72	%
Average Credit Facility Borrowings (i)	$	538,868		$	284,176		$	254,692		90	%
Average Equity in Loan Portfolio (j)	$	214,006		$	277,554		$	63,548		23	%
Finance Revenue Margin (k)	8.7		%	8.8		%	(0.1%)			N/A
Finance Segment Leverage Ratio (l)	76.6		%	58.0		%	18.6		%	N/A
Finance Segment LTM Return on Equity (m)	12.3		%	N/A			N/A			N/A

41 #



							Favorable/(Unfavorable)
Six Months Ended June 30,	2015			2014			$ / % Change			% Change
Finance revenues:
Client paid revenues:
Interest	$	20,244		$	12,318		$	7,926		64	%
Fees	4,413			1,504			2,909			*
Total client paid revenues	24,657			13,822			10,835			78	%
Intersegment revenues:
Interest (a)	2,458			3,545			(1,087		)	(31	%)
Facility fees (b)	918			1,034			(116		)	(11	%)
Consignment fees (c)	4,263			2,890			1,373			48	%
Total intersegment revenues	7,639			7,469			170			2	%
Total Finance revenues	32,296			21,291			11,005			52	%
Cost of Finance revenues (d)	7,262			2,734			(4,528		)	*
Finance segment gross profit (e)	$	25,034		$	18,557		$	6,477		35	%
Loan Portfolio Metrics:
Loan Portfolio Balance (f)	$	774,040		$	594,370		$	179,670		30	%
Average Loan Portfolio (g)	$	715,464		$	521,463		$	194,001		37	%
Credit Facility Borrowings Outstanding (h)	$	593,000		$	345,000		$	248,000		72	%
Average Credit Facility Borrowings (i)	$	506,052		$	188,591		$	317,461		*
Average Equity in Loan Portfolio (j)	$	209,412		$	332,872		$	123,460		37	%
Finance Revenue Margin (k)	9.0		%	8.2		%	0.8		%	N/A
Finance Segment Leverage Ratio (l)	76.6		%	58.0		%	18.6		%	N/A
Finance Segment LTM Return on Equity (m)	12.3		%	N/A			N/A			N/A

42 #



Legend:
*	Represents a change in excess of 100%.
(a)	Represents interest earned from the Agency segment for secured loans issued with an interest rate below the Finance segment's target rate. Such loans are sometimes issued by the Finance segment as an accommodation to the Agency segment in order to secure consignments or enhance a client relationship.
(b)	Represents facility fees earned from the Agency segment for secured loans where a reduced or no facility fee is collected from the borrower. Such fees are sometimes reduced or waived by the Finance segment as an accommodation to the Agency segment in order to obtain consigned property or enhance a client relationship.
(c)	Represents fees earned from the Agency segment for Finance segment term loan collateral sold at auction or privately during the period. The Finance segment began charging this fee effective January 1, 2015. Prior period segment results are presented on a comparable basis.
(d)	The cost of Finance revenues includes borrowing costs related to the Finance segment's dedicated revolving credit facility, including interest expense, commitment fees, and the amortization of amendment and arrangement fees.
(e)	The calculation of Finance segment gross profit does not include the impact of salaries and related costs, general and administrative expenses, depreciation and amortization expense, and intercompany charges from Sotheby's global treasury function. However, these items are deducted in the determination of segment income before taxes as reported in Note 4 of Notes to Condensed Consolidated Financial Statements.
(f)	Represents the period ending net loan portfolio balance for the Finance segment.
(g)	Represents the average loan portfolio outstanding during the period.
(h)	Represents the period ending balance of borrowings outstanding under the Finance segment's dedicated revolving credit facility.
(i)	Represents average borrowings outstanding during the period under the Finance segment's dedicated revolving credit facility.
(j)	Represents the average loan portfolio balance outstanding during the period less the average borrowings outstanding during the period under the Finance segment's dedicated revolving credit facility.
(k)	Represents the annualized margin of total client paid and intersegment Finance revenues in relation to the Average Loan Portfolio.
(l)	Calculated as Credit Facility Borrowings Outstanding divided by the Loan Portfolio Balance.
(m)	Represents the return of Finance segment net income, excluding allocated corporate overhead costs, over the last twelve months ("LTM") in relation to the Average Equity in Loan Portfolio during that period. For the purposes of this calculation, income taxes are provided using Sotheby's consolidated effective tax rate for the period. On a pro-forma basis, assuming the current period-end Finance segment Leverage Ratio of 76.6%, the Finance segment LTM Return on Equity for the period ended June 30, 2015 would be 16.6%. This metric is not applicable for the LTM period ended June 30, 2014, as the debt funding of the Finance segment loan portfolio did not begin until February 2014.

For three and six months ended June 30, 2015, the improvement in Finance segment gross profit reflects the continued growth of the client loan portfolio, which can be attributed to a number of factors, including an increase in the demand for art-related financing, the increased ability to fund loans through revolving credit facility borrowings, the relatively low nominal interest rate environment, and the improved global reach of Sotheby's art-financing business. Finance segment results for the six months ended June 30, 2015, are also favorably impacted by a $1.3 million collateral withdrawal fee earned in the first quarter of 2015. Intersegment revenues for the three and six months ended June 30, 2015 were flat when compared to the prior year, as an increase in fees earned from the sale of term loan collateral through the Agency segment was offset by a lower balance of below target loans issued to Agency segment clients. The overall improvement in Finance segment gross profit is partially offset by the higher cost of revolving credit facility borrowings as management began the process of debt financing the loan portfolio after establishing the Finance segment's dedicated revolving credit facility on February 13, 2014.

43 #

Marketing Expenses

Marketing expenses are costs related to the promotion of the Sotheby’s brand and include corporate advertising, Sotheby’s lifestyle magazines, client service initiatives, and strategic sponsorships of and charitable donations to cultural institutions. For the three and six months ended June 30, 2015 , marketing expenses increased $0.2 million (4%) and $1.1 million (14%) , respectively, as a result of initiatives to enhance Sotheby's brand preeminence and accessibility, partially offset by a lower level of contributions to cultural institutions.

Salaries and Related Costs

For the three and six months ended June 30, 2015 and 2014 , salaries and related costs consisted of the following (in thousands of dollars):



					Favorable / (Unfavorable)
Three Months Ended June 30,	2015		2014		$ / % Change			% Change
Full-time salaries	$	36,769	$	38,069	$	1,300		3	%
Incentive compensation expense	33,228		33,023		(205		)	(1	%)
Leadership transition severance costs	9,501		—		(9,501		)	N/A
Share-based payment expense	9,582		6,648		(2,934		)	(44	%)
Payroll taxes	6,379		6,250		(129		)	(2	%)
Employee benefits	7,346		8,905		1,559			18	%
Other compensation expense	5,377		4,938		(439		)	(9	%)
Total salaries and related costs	$	108,182	$	97,833	$	(10,349	)	(11	%)



							Favorable / (Unfavorable)
Six Months Ended June 30,	2015			2014			$ / % Change			% Change
Full-time salaries	$	73,545		$	75,978		$	2,433		3	%
Incentive compensation expense	35,041			36,040			999			3	%
Leadership transition severance costs	9,501			—			(9,501		)	N/A
Share-based payment expense	15,235			12,895			(2,340		)	(18	%)
Payroll taxes	11,985			12,842			857			7	%
Employee benefits	16,249			15,585			(664		)	(4	%)
Other compensation expense	9,556			10,249			693			7	%
Total salaries and related costs	$	171,112		$	163,589		$	(7,523	)	(5	%)
Statistical Metric:
Salaries and related costs as a % of total revenues	35.1		%	33.2		%	(1.9		%)	N/A

For the three and six months ended June 30, 2015 , changes in foreign currency exchange rates reduced salaries and related costs by $5.1 million and $8.4 million, respectively, when compared to the prior year periods. Excluding the impact of foreign currency exchange rate changes, salaries and related costs increased $15.5 million (16%) and $16 million (10%) for the three and six months ended June 30, 2015 , respectively.

See below for a detailed discussion of the significant factors impacting the comparison of the various elements of salaries and related costs between the current and prior periods.

Full-Time Salaries —For the three and six months ended June 30, 2015 , full-time salaries decreased $1.3 million ( 3% ) and $2.4 million ( 3% ), respectively, principally due to changes in foreign currency exchange rates ($2.1 million and $4 million, respectively) and savings resulting from the restructuring plan enacted in July 2014 (see "Restructuring Charges" below), partially offset by base salary increases and headcount reinvestments in the current year. Excluding the impact of foreign currency exchange rate changes, full-time salaries increased $0.8 million (2%) and $1.5 million (2%) for the three and six months ended June 30, 2015 , respectively.

44 #

Incentive Compensation —Incentive compensation principally includes the expense associated with cash payments made under Sotheby's incentive compensation program. The amount of incentive compensation paid under this program is awarded based upon the recommendation of the Compensation Committee to the Board of Directors after assessing Sotheby's annual earnings, as measured by Adjusted EBITDA ^* . In addition, incentive compensation includes amounts awarded to employees for brokering certain eligible private sale transactions under a formula established by the Compensation Committee and, to a much lesser extent, amounts awarded to employees with respect to other selling activities. For the six months ended June 30, 2015, the 3% decrease in incentive compensation expense is consistent with the decrease in Adjusted EBITDA ^* when compared to the prior year.

Leadership Transition Severance Costs —In the second quarter of 2015, in conjunction with Sotheby's leadership transition, Sotheby's incurred severance costs of $9.5 million associated with the termination of the employment of certain Executive Officers, including its Chief Operating Officer.

Share-Based Payment Expense —Share-based payment expense relates to the amortization of equity compensation awards such as performance share units, market-based share units, restricted stock units, restricted stock, and stock options. Equity compensation awards are generally granted annually in the first quarter of the year, primarily under Sotheby's incentive compensation program, with the annual award value generally dependent upon the level of Sotheby’s financial results for the prior year. The amount of compensation expense recognized for share-based payments is based on management’s estimate of the number of units or shares ultimately expected to vest as a result of employee service. In addition, for performance share units, the amount and timing of expense recognition is significantly impacted by management’s quarterly assessment of the likelihood and timing of achieving certain profitability targets.

For the three and six months ended June 30, 2015 , share-based payment expense increased $2.9 million (44%) and $2.3 million (18%) , respectively, largely due to the accelerated recognition of $2.1 million of compensation expense in the second quarter of 2015 pursuant to the terms of the severance agreement with Sotheby's Chief Operating Officer, as well as higher amortization of CEO share-based payment awards. (See Note 12 of Notes to Condensed Consolidated Financial Statements for more detailed information related to Sotheby’s share-based compensation programs.)

Employee Benefits —Employee benefits include the cost of Sotheby’s retirement plans and health and welfare programs, as well as certain employee severance costs. Sotheby’s material retirement plans include defined benefit and defined contribution pension plans for its employees in the U.K. and defined contribution and deferred compensation plans for its U.S. employees.

Generally, the amount of employee benefit costs recognized in a period is dependent upon headcount and overall compensation levels, as well as Sotheby’s financial performance. Additionally, the level of expense related to Sotheby’s defined benefit pension plan in the U.K. is significantly influenced by interest rates, investment performance in the debt and equity markets, and actuarial assumptions. Also, the amount recorded in a period for Sotheby’s Deferred Compensation Plan (the “DCP”) is dependent upon changes in the fair value of the DCP liability resulting from gains and losses in deemed participant investments. Gains in deemed participant investments increase the DCP liability and, therefore, increase employee benefit costs. Losses in deemed participant investments decrease the DCP liability and, therefore, decrease employee benefit costs. On a consolidated basis, cost increases (decreases) related to the DCP liability are largely offset by market gains (losses) in the trust assets related to the DCP liability, which are reflected in the Condensed Consolidated Income Statements within other expense.

For the three months ended June 30, 2015 , employee benefit costs decreased $1.6 million ( 18% ) primarily due to a decrease of $1.3 million in expense associated with the DCP as a result of a decline in the performance of deemed participant investments, a $0.6 million decrease in other employee severance costs, and favorable changes in foreign currency exchange rates. These factors are partially offset by higher pension costs in the U.K., including $0.6 million related to the defined benefit plan (see Note 8 of Notes to Condensed Consolidated Financial Statements) and $0.3 million related to defined contribution plan profit-sharing accruals. Beginning in 2015, Sotheby's may contribute an annual discretionary amount to the U.K. defined contribution plan, depending on Sotheby's profitability.

___________________

^* See "Non-GAAP Financial Measures" below for a description of this non-GAAP financial measure.

45 #

For the six months ended June 30, 2015 , employee benefit costs increased $0.7 million (4%) primarily due to higher pension costs in the U.K., including $1.1 million related to the defined benefit plan (see Note 8 of Notes to Condensed Consolidated Financial Statements), $0.6 million related to defined contribution plan profit-sharing accruals, and higher other employee severance costs. These increases are partially offset by a $1 million decrease in costs associated with the DCP and favorable changes in foreign currency exchange rates.

For the year ending December 31, 2015, the net cost associated with the U.K. defined benefit plan is expected to increase $2.3 million primarily due to a decrease in the assumption for the weighted average expected long-term rate of return on plan assets (from 6.1% to 5.4%) and an increase in the required amortization of prior year actuarial losses. (See statement on Forward Looking Statements.)

Other Compensation Expense —Other compensation expense typically includes the cost of certain retention-based, new-hire and other employment arrangements, as well as the cost of temporary labor and overtime. For the six months ended June 30, 2015 , other compensation expense decreased $0.7 million ( 7% ) primarily due to a lower level of amortization expense associated with retention-based employment arrangements.

46 #

General and Administrative Expenses

For the three and six months ended June 30, 2015 and 2014 , general and administrative expenses consisted of the following (in thousands of dollars):



					Favorable /(Unfavorable)
Three Months Ended June 30,	2015		2014		$ Change			% Change
Professional fees:
Operations	$	6,234	$	6,176	$	(58	)	(1	%)
Legal and compliance	3,735		4,310		575			13	%
Other	4,057		3,207		(850		)	(27	%)
Total professional fees	14,026		13,693		(333		)	(2	%)
Facilities-related expenses	9,544		10,768		1,224			11	%
Travel and entertainment	7,707		7,278		(429		)	(6	%)
Telecommunication and technology	2,249		2,247		(2		)	—	%
Insurance	1,668		1,556		(112		)	(7	%)
Other indirect expenses	9,537		2,668		(6,869		)	*
Total general and administrative expenses	$	44,731	$	38,210	$	(6,521	)	(17	%)



					Favorable /(Unfavorable)
Six Months Ended June 30,	2015		2014		$ Change			% Change
Professional fees:
Operations	$	10,851	$	11,438	$	587		5	%
Legal and compliance	6,990		8,411		1,421			17	%
Other	7,263		6,915		(348		)	(5	%)
Total professional fees	25,104		26,764		1,660			6	%
Facilities-related expenses	20,226		22,131		1,905			9	%
Travel and entertainment	14,282		13,428		(854		)	(6	%)
Telecommunication and technology	4,285		4,458		173			4	%
Insurance	2,951		2,900		(51		)	(2	%)
Other indirect expenses	12,612		5,861		(6,751		)	*
Total general and administrative expenses	$	79,460	$	75,542	$	(3,918	)	(5	%)
* Represents a change in excess of 100%.

For the three and six months ended June 30, 2015 , changes in foreign currency exchange rates decreased general and administrative expenses by $2.4 million and $3.9 million, respectively, when compared to the prior periods. Excluding the impact of foreign currency exchange rate changes, general and administrative expenses increased $8.9 million (23%) and $7.8 million (10%), respectively, during the periods.

See below for a detailed discussion of the significant operating factors impacting the comparison of the various elements of general and administrative expenses between the current and prior periods.

Professional fees (Operations)— Sotheby's incurs professional fees to outsource certain business functions such as catalogue production and its client contact management center, as well as for assistance with personnel recruiting, website maintenance and development, and other activities. For the six months ended June 30, 2015 , this category of professional fees decreased $0.6 million ( 5% ) primarily due to negotiated rate reductions related to outsourced functions and reduced usage of service providers in other areas.

Professional fees (Legal and Compliance)— Sotheby's incurs professional fees related to legal, audit and other compliance-related activities. For the three and six months ended June 30, 2015 , this category of professional fees decreased $0.6 million ( 13% ) and $1.4 million ( 17% ), respectively, primarily due to a recovery of legal fees resulting from a favorable court ruling.

47 #

Professional fees (Other)— Other professional fees include business consulting costs incurred to assist management in the analysis and development of business and operational strategies, Board of Director fees, and costs related to various administrative areas. For the three months ended June 30, 2015, this category of professional fees increased $0.9 million (27%) primarily due to strategic business consulting costs incurred in the second quarter of 2015.

Facilities-related expenses— Facilities-related expenses principally include rent expense, real estate taxes and other costs related to the operation, security and maintenance of Sotheby's worldwide premises. For the three and six months ended June 30, 2015 , facilities-related expenses decreased $1.2 million ( 11% ) and $1.9 million ( 9% ), respectively, principally due to real estate tax rebates received in respect of Sotheby's London premises and favorable changes in foreign currency exchange rates.

Other indirect expenses— Other indirect expenses include costs related to client goodwill gestures and claims, uncollectible accounts and other miscellaneous indirect costs. The increase in other indirect expenses during the current periods is primarily due to an unexpected authenticity claim related to property sold through Sotheby's several years ago. The comparison to the prior periods is also unfavorably influenced by a $0.8 million reduction to the Finance segment's allowance for credit losses recorded in the second quarter of 2014 as a result of better than anticipated loan loss rates.

CEO Separation and Transition Costs

Restructuring Charges

For the three and six months ended June, 2015, Sotheby's recognized benefits in Restructuring Charges (net) of $0.5 million and $0.9 million , respectively, related to adjustments to the accrual for employee termination benefits. As of June 30, 2015 , Sotheby's has made payments of approximately $9.6 million related to the 2014 Restructuring Plan, and the related accrued liability has been reduced by $0.9 million as a result of foreign currency exchange rate changes. Accordingly, as of June 30, 2015 , the remaining accrued liability related to the 2014 Restructuring Plan recorded on the Condensed Consolidated Balance Sheets within Accounts Payable and Accrued Liabilities was $2.8 million . This liability is expected to be settled through cash payments to be made in the third quarter of 2015.

Special Charges

48 #

Net Interest Expense

For the three and six months ended June 30, 2015, net interest expense was relatively flat when compared to the prior year periods. However, for the year ending December 31, 2015 net interest expense is expected to decrease approximately $2.4 million when compared to 2014, due in large part to the refinancing of the mortgage on Sotheby's headquarters at 1334 York Avenue in New York. (See statement on Forward Looking Statements. See "Liquidity and Capital Resources" below and Note 6 of Notes to Condensed Consolidated Financial Statements)

Income Tax Expense

The quarterly income tax provision is calculated using an estimated annual effective income tax rate for the period based on actual historical information and forward looking estimates. The estimated annual effective income tax rate may fluctuate due to changes in forecasted annual pre-tax income, changes in the jurisdictional mix of forecasted pre-tax income, and changes to actual or forecasted permanent book to tax differences (e.g., non-deductible expenses). Furthermore, the effective income tax rate may fluctuate as the result of positive or negative changes to the valuation allowance for net deferred tax assets, the impact of future tax settlements with federal, state or foreign tax authorities, or the impact of tax law changes. Management identifies items which are unusual and non-recurring in nature and treats these as discrete events. The tax effect of discrete items is booked entirely in the quarter in which the discrete event occurs.

As of June 30, 2015, management estimates that Sotheby’s annual effective income tax rate, excluding discrete items, will be approximately 35% as compared to its estimate of approximately 38% as of June 30, 2014. The decrease in the estimate of the annual effective income tax rate is primarily due to a reduction in state and local taxes as a result of legislation enacted during the current quarter, as discussed below, and, to a lesser extent, a change in the jurisdictional mix of Sotheby’s pre-tax income. (See statement on Forward Looking Statements.)

Sotheby’s effective income tax rate for the three and six months ended June 30, 2015 is approximately 40%, as compared to an effective income tax rate of approximately 37% and 39% for the same periods in the prior year, respectively. The effective income tax rates for the current periods are higher than the 2015 estimated annual effective income tax rate and higher than the effective income tax rates for the prior periods primarily due to a discrete tax expense of approximately $4 million recorded in the second quarter to reflect the impact of New York tax legislation enacted during the period, as discussed in more detail below. The current year-to-date period also includes tax expense of $1.2 million associated with Sotheby’s share of the earnings of its equity investees (see “Equity in Earnings of Investees” below) and discrete tax expense of $1.1 million related to the conclusion of income tax audits.

Sotheby’s effective income tax rate for the three and six months ended June 30, 2014 includes tax benefits related to previously unrecognized tax positions, as well as a discrete tax benefit related to deductions recorded in 2014 at U.S. federal, state and local tax rates, which together, were higher than Sotheby's 2014 estimated annual effective income tax rate. These benefits were more than offset by approximately $3.1 million of tax expense recorded in the first quarter of 2014 to reduce the value of certain deferred tax assets to reflect the enactment of New York State tax legislation during the quarter.

On April 13, 2015, New York State Governor Andrew Cuomo signed legislation that reforms several provisions of the state’s revised corporate franchise tax, including legislation that reforms business taxes in New York City, retroactively to January 1, 2015. The legislation reduced the amount of Sotheby’s taxable income apportioned to New York City, thereby reducing Sotheby’s state and local effective income tax rate. The discrete tax expense of approximately $4 million recorded in the second quarter of 2015 reduced the value of certain deferred tax assets to the amount that will be recognized in the future as a result of the reduction of the New York City effective income tax rate.

49 #

Equity in Earnings of Investees

Sotheby's equity method investments include a 25% ownership interest in RM Sotheby's, which was acquired on February 18, 2015 (see Note 7 of Notes to Condensed Consolidated Financial Statements), and a 50% ownership interest in Acquavella Modern Art ("AMA"). For the six months ended June 30, 2015, Sotheby's equity in earnings of investees increased by $2.7 million when compared to the prior year due to the earnings contributed by RM Sotheby's ($1.7 million) and an increase in earnings from AMA ($1 million).

Impact of Changes in Foreign Currency Exchange Rates

For the three and six months ended June 30, 2015 , foreign currency exchange rates had a net unfavorable impact of $3.3 million and $5.3 million, respectively, on Sotheby's operating income when compared to the prior periods, with revenues unfavorably impacted by $12.4 million and $20.5 million, respectively, and expenses favorably impacted by $9.1 million and $15.1 million, respectively.

USE OF NON-GAAP FINANCIAL MEASURES

GAAP refers to generally accepted accounting principles in the United States of America. Included in Management's Discussion and Analysis of Financial Condition and Results of Operations (or “MD&A”) are financial measures presented in accordance with GAAP and also on a non-GAAP basis. In MD&A, Sotheby’s presents Adjusted Expenses, Adjusted Operating Income, Adjusted Net Income, Adjusted Diluted Earnings Per Share, EBITDA, Adjusted EBITDA, EBITDA Margin, and Adjusted EBITDA Margin, which are supplemental financial measures that are not required by or presented in accordance with GAAP. Sotheby's definition of these non-GAAP financial measures is provided in the following paragraphs.

Adjusted Expenses is defined as total expenses excluding the cost of inventory sales, the cost of Finance revenues, CEO separation and transition costs, leadership transition severance costs, restructuring charges (net), and special charges. Adjusted Operating Income is defined as operating income excluding CEO separation and transition costs, leadership transition severance costs, restructuring charges (net), and special charges. Adjusted Net Income is defined as net income attributable to Sotheby's, excluding after-tax CEO separation and transition costs, leadership transition severance costs, restructuring charges (net), and special charges. Adjusted Diluted Earnings Per Share is defined as diluted earnings per share excluding the per share impact of CEO separation and transition costs, leadership transition severance costs, restructuring charges (net), and special charges. EBITDA is defined as net income attributable to Sotheby's, excluding income tax expense, interest expense, interest income, the cost of Finance revenues, and depreciation and amortization. Adjusted EBITDA is defined as EBITDA excluding CEO separation and transition costs, leadership transition severance costs, special charges (net), and restructuring charges (net). EBITDA Margin is defined as EBITDA as a percentage of total revenues. Adjusted EBITDA Margin is defined as Adjusted EBITDA as a percentage of total revenues.

Adjusted Expenses is used by the Board of Directors and management to assess Sotheby’s cost structure when compared to prior periods and on a forward-looking basis, particularly in evaluating performance against management's cost control initiatives. Accordingly, Adjusted Expenses allows investors to assess Sotheby's performance on the same basis as the Board of Directors and management. Adjusted Expenses provides insight into Sotheby's ongoing cost structure, absent the costs of funding the Finance segment loan portfolio, the volatility associated with the cost of inventory sales, which is unpredictable and can vary significantly from one period to the next, and the cost of unusual items.

Adjusted Operating Income, Adjusted Net Income, Adjusted Diluted Earnings Per Share, EBITDA, Adjusted EBITDA, EBITDA Margin, and Adjusted EBITDA Margin are important supplemental measures used by the Board of Directors and management in their financial and operational decision making processes, for internal reporting, and as part of Sotheby’s forecasting and budgeting processes, as they provide helpful measures of Sotheby’s core operations. These measures allow the Board of Directors and management to view operating trends, perform analytical comparisons, and benchmark performance between periods. In addition, incentive compensation is awarded by Sotheby’s Board of Directors after an assessment of annual earnings as measured by Adjusted EBITDA. Management also believes that these measures may be used by securities analysts, investors, financial institutions, and other interested parties in their evaluation of Sotheby's.

Management cautions users of Sotheby's financial statements that amounts presented in accordance with its definitions of these non-GAAP financial measures may not be comparable to similar measures disclosed by other companies because not all companies and analysts calculate such measures in the same manner.

50 #

The following is a reconciliation of total expenses to Adjusted Expenses for the three and six months ended June 30, 2015 and 2014 (in thousands of dollars):



	Three Months Ended June 30,						Six Months Ended June 30,
	2015				2014		2015			2014
Total expenses	$	215,548			$	205,386	$	352,819		$	358,106
Subtract: Cost of inventory sales	16,989				7,518		28,702			32,020
Subtract: Cost of Finance revenues	3,874				2,024		7,262			2,734
Subtract: CEO separation and transition costs	43				—		4,232			—
Subtract: Leadership transition severance costs	9,501				—		9,501			—
Subtract: Restructuring charges, net	(530		)		—		(889		)	—
Subtract: Special charges	—				18,554		—			24,257
Adjusted Expenses	$	185,671		—	$	177,290	$	304,011		$	299,095

The following is a reconciliation of operating income to Adjusted Operating Income for the three and six months ended June 30, 2015 and 2014 (in thousands of dollars):



	Three Months Ended June 30,					Six Months Ended June 30,
	2015			2014		2015			2014
Operating income	$	116,458		$	130,431	$	134,862		$	134,522
Add: CEO separation and transition costs	43			—		4,232			—
Add: Leadership transition severance costs	9,501			—		9,501			—
Add: Restructuring charges, net	(530		)	—		(889		)	—
Add: Special charges	—			18,554		—			24,257
Adjusted Operating Income	$	125,472		$	148,985	$	147,706		$	158,779

The following is a reconciliation of net income attributable to Sotheby's to Adjusted Net Income for the three and six months ended June 30, 2015 and 2014 (in thousands of dollars):



	Three Months Ended June 30,					Six Months Ended June 30,
	2015			2014		2015			2014
Net income attributable to Sotheby's	$	67,572		$	77,632	$	72,774		$	71,518
Add: CEO separation and transition costs, net of tax	118			—		2,564			—
Add: Leadership transition severance costs, net of tax	5,758			—		5,758			—
Add: Restructuring charges (net), net of tax	(387		)	—		(612		)	—
Add: Special charges, net of tax	—			10,204		—			13,341
Adjusted Net Income	$	73,061		$	87,836	$	80,484		$	84,859

The following is a reconciliation of diluted earnings per share to Adjusted Diluted Earnings Per Share for the three and six months ended June 30, 2015 and 2014 :



	Three Months Ended June 30,					Six Months Ended June 30,
	2015			2014		2015			2014
Diluted earnings per share	$	0.96		$	1.11	$	1.04		$	1.01
Add: CEO separation and transition costs, per share	0.01			—		0.04			—
Add: Leadership transition severance costs, per share	0.08			—		0.08			—
Add: Restructuring charges (net), per share	(0.01		)	—		(0.01		)	—
Add: Special charges, per share	—			0.15		—			0.19
Adjusted Diluted Earnings Per Share	$	1.04		$	1.26	$	1.15		$	1.20

51 #

The following is a reconciliation of net income attributable to Sotheby's to EBITDA and Adjusted EBITDA for the three and six months ended June 30, 2015 and 2014 (in thousands of dollars):



	Three Months Ended June 30,					Six Months Ended June 30,
	2015			2014		2015			2014
Net income attributable to Sotheby's	$	67,572		$	77,632	$	72,774		$	71,518
Add: Income tax expense	42,789			45,344		46,713			45,675
Add: Income tax expense related to equity investees	—			188		—			314
Subtract: Interest income	630			402		759			818
Add: Interest expense	9,074			8,768		17,735			17,551
Add: Cost of Finance revenues	3,874			2,024		7,262			2,734
Add: Depreciation and amortization	4,781			5,066		9,563			10,213
EBITDA	127,460			138,620		153,288			147,187
Add: CEO separation and transition costs, net	43			—		4,232			—
Add: Leadership transition severance costs	9,501			—		9,501			—
Add: Restructuring charges, net	(530		)	—		(889		)	—
Add: Special charges, net	—			18,554		—			24,257
Adjusted EBITDA	$	136,474		$	157,174	$	166,132		$	171,444

CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2015 AND 2014

This discussion should be read in conjunction with Sotheby’s Condensed Consolidated Statements of Cash Flows. For the six months ended June 30, 2015 , total cash and cash equivalents decreased $80.1 million to $613.7 million , as compared to a decrease of $144.9 million to $576.4 million for the six months ended June 30, 2014 , primarily due to the factors discussed below.

Net Cash Used by Operating Activities —Sotheby's is predominantly an agency business that collects and remits cash on behalf of its clients. Accordingly, the net amount of cash provided or used in a period by Sotheby's operating activities is significantly influenced by the timing of auction and private sale settlements. As discussed in Note 5 of Notes to Condensed Consolidated Financial Statements, under Sotheby’s standard auction payment terms, payments from buyers are due no more than 30 days from the sale date and payments to consignors are due 35 days from the sale date. Accordingly, it is not unusual for Sotheby's to hold significant balances of consignor net sale proceeds at the end of a quarterly accounting period that are disbursed soon thereafter. Additionally, Sotheby's sometimes provides extended payment terms to auction and private sale buyers and the level of such extended payment terms for auctions can vary considerably from selling season to selling season. In certain of these situations, the consignor may be paid the net sale proceeds before payment is collected from the buyer, with the collection from the buyer sometimes occurring after the current balance sheet date. The amount of net cash provided or used by Sotheby's operating activities in a reporting period is also a function of its net income or loss, the timing of payments made to vendors, the timing of compensation-related payments, and the timing of the collection and/or payment of tax-related receivables and payables.

Net cash used by operating activities of $66.3 million for the six months ended June 30, 2015 is principally the result of net cash outflows of $112.8 million associated with the settlement of auction and private sale transactions during the period. This net cash outflow is particularly influenced by the payment of net sale proceeds to certain consignors for property sold in Sotheby's second quarter auctions in London and New York and first quarter auctions in London in advance of collecting the purchase price from the buyer. Cash flows from operating activities are also impacted by the funding of approximately $62 million of 2014 incentive compensation payments and $55 million used to fund the acquisition of property sold at auctions in the second quarter of 2015. Sotheby's expects to receive payment for these items in the second half of 2015, at which point title will pass to the buyers and the sales will be recognized in Sotheby's financial statements. These net cash outflows are partially offset by Sotheby's net income for the period. (See statement on Forward Looking Statements.)

Net cash used by operating activities of $63.6 million for the six months ended June 30, 2014 was principally the result of net cash outflows of $141.6 million associated with the settlement of auction and private sale transactions, as sales proceeds collected from buyers late in 2013 were paid to consignors early in 2014. Cash flows from operating activities were also impacted by $34.5 million used to fund acquisitions of property acquired for resale and guaranteed property that failed to sell at auction. These net cash outflows were partially offset by Sotheby's net income for the period.

52 #

Net Cash Used by Investing Activities —Net cash used by investing activities of $136 million for the six months ended June 30, 2015 is principally the result of the net funding of client loans of $98.7 million and Sotheby's acquisition of a 25% ownership interest in RM Auctions for $30.7 million in the first quarter of 2015 (see Note 7 of Notes to Condensed Consolidated Financial Statements).

Net cash used by investing activities of $78.1 million for the six months ended June 30, 2014 was principally the result of cash used to fund client loans, including a $107 million loan issued to one borrower in the second quarter of 2014. Net cash used by investing activities for the period was also the result of a $24.8 million increase in restricted cash related to certain foreign jurisdictions where there is a legal requirement for auction houses to maintain consignor funds in segregated accounts.

Net Cash Provided (Used) by Financing Activities —Net cash provided by financing activities of $119.3 million for the six months ended June 30, 2015 is largely due to $148 million in net borrowings under the Finance segment's dedicated revolving credit facility, partially offset by dividend and dividend equivalent payments of $16.4 million, and the funding of employee tax obligations related to share-based payments of $8.9 million.

Net cash used by financing activities of $6.7 million for the six months ended June 30, 2014 was largely due to the payment of a $300 million special dividend, Common Stock repurchases of $25 million, quarterly dividend payments of $13.8 million, and the funding of employee tax obligations related to share-based payments ($11.8 million), almost entirely offset by $345 million of borrowings under the Finance segment's revolving credit facility.

53 #

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

The following table summarizes Sotheby’s material contractual obligations and commitments as of June 30, 2015 (in thousands of dollars):



	Payments Due by Period
	Total		Less Than One Year		1 to 3 Years		3 to 5 Years		After 5 Years
Debt (a):
York Property Mortgage:
Principal payments	$	218,609	$	6,542	$	15,336	$	16,695	$	180,036
Interest payments	89,440		6,294		15,115		16,035		51,996
Sub-total	308,049		12,836		30,451		32,730		232,032
2022 Senior Notes:
Principal payments	300,000		—		—		—		300,000
Interest payments	118,125		15,750		31,500		31,500		39,375
Sub-total	418,125		15,750		31,500		31,500		339,375
Revolving credit facility borrowings	593,000		—		—		—		593,000
Total debt and interest payments	1,319,174		28,586		61,951		64,230		1,164,407
Other commitments:
Operating lease obligations (b)	90,254		17,726		24,795		10,446		37,287
Compensation arrangements (c)	27,424		16,571		8,173		2,680		—
Auction guarantees (d)	16,180		16,180		—		—		—
Unfunded loan commitments (e)	10,220		10,220		—		—		—
Uncertain tax positions (f)	—		—		—		—		—
Total other commitments	144,078		60,697		32,968		13,126		37,287
Total	$	1,463,252	$	89,283	$	94,919	$	77,356	$	1,201,694


(a)	On July 1, 2015, Sotheby's entered into a seven-year, $325 million mortgage loan (the "New Mortgage") to refinance the York Property Mortgage. (See Note 9 of Notes to Condensed Consolidated Financial Statements.)


(b)	These amounts represent the undiscounted future minimum rental commitments under non-cancellable operating leases.


(c)	These amounts represent the remaining commitment for future salaries and other cash compensation, excluding any participation in Sotheby’s incentive compensation and share-based payment programs, related to compensation arrangements with certain senior employees. (See Note 9 of Notes to Condensed Consolidated Financial Statements.)


(d)	Represents the amount of auction guarantees outstanding net of amounts advanced, if any, as of June 30, 2015 . (See Note 10 of Notes to Condensed Consolidated Financial Statements for information related to auction guarantees.)


(e)	Represents unfunded commitments to extend additional credit through Sotheby's Finance segment. (See Note 5 of Notes to Condensed Consolidated Financial Statements for information related to Sotheby's Finance segment loan portfolio.)

(f)

Excludes the $22.2 million liability recorded for uncertain tax positions that would be settled by cash payments to the respective taxing authorities, which are classified as long-term liabilities in the Condensed Consolidated Balance Sheet as of June 30, 2015 . This liability is excluded from the table above because management is unable to make reliable estimates of the period of settlement with the respective taxing authorities. (See Note 17 of Notes to Condensed Consolidated Financial Statements for more detailed information related to uncertain tax positions.)

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OFF-BALANCE SHEET ARRANGEMENTS

For information related to off-balance sheet arrangements see: (i) Note 5 of Notes to Condensed Consolidated Financial Statements, which discusses unfunded Finance segment loan commitments and (ii) Note 10 of Notes to Condensed Consolidated Financial Statements, which discusses auction guarantees.

CONTINGENCIES

For information related to contingencies see: (i) Note 9 of Notes to Condensed Consolidated Financial Statements, which discusses legal contingencies, (ii) Note 10 of Notes to Condensed Consolidated Financial Statements, which discusses auction guarantees, and (iii) Note 17 of Notes to Condensed Consolidated Financial Statements, which discusses income tax contingencies.

UNCERTAIN TAX POSITIONS

For information related to uncertain tax positions, see Note 17 of Notes to Condensed Consolidated Financial Statements.

LIQUIDITY AND CAPITAL RESOURCES

Overview —Sotheby's continues to have strong liquidity with significant cash balances and borrowing capacity available under its revolving credit facility (see below for borrowing capacity details). As of June 30, 2015 , cash and cash equivalents totaled $613.7 million , with $148.6 million held in the U.S. and $465.1 million held by foreign subsidiaries. As of June 30, 2015 , Sotheby's also held $37.1 million of restricted cash that is almost entirely in certain foreign jurisdictions where there is a legal requirement for auction houses to maintain consignor funds in segregated accounts. After taking into account funds held that are due to consignors, management estimates that approximately $462 million of Sotheby's total cash and cash equivalents is available to support its capital needs, which include its current business requirements, the pursuit of business opportunities and growth initiatives, the execution of its share repurchase program, as discussed below, and to ensure appropriate liquidity for a market downturn that could occur due to the cyclical nature of the global art market. The current focus of Sotheby’s cash investment policy is to preserve principal and ensure liquidity. Accordingly, Sotheby's cash balances are primarily invested in the highest rated overnight deposits.

On July 1, 2015, Sotheby's entered into a seven-year, $325 million mortgage loan to refinance the existing mortgage on its headquarters at 1334 York Avenue in New York. After the repayment of the existing mortgage and the funding of all closing costs, reserves, and expenses associated with the refinancing, Sotheby's received net cash proceeds of approximately $98 million . The interest rate for the new mortgage is one month LIBOR plus a spread of 2.25% . In connection with the new mortgage, Sotheby's entered into interest rate protection agreements secured by 1334 York Avenue, consisting of a two year swap and a five year collar, both of which have a notional amount equal to the applicable principal balance of the new mortgage and have an identical amortization schedule. These interest rate protection agreements effectively hedge the LIBOR rate on the entire outstanding principal balance of the new mortgage at a rate equal to 0.877% per annum for the first two years and no more than 3.75% per annum for the remainder of the seven-year term. Therefore, after taking into account the interest rate protection agreements, the interest rate for the first two years of the new mortgage will be approximately 3.13% per annum and no more than 6% per annum for the remainder of the seven-year term. (See Note 6 of Notes to Condensed Consolidated Financial Statements for additional information with respect to the mortgage on 1334 York Avenue.)

Based on its current projections and planned uses of foreign cash balances, management believes that foreign earnings accumulated through December 31, 2013 will be indefinitely reinvested outside of the U.S. and will not be needed to fund Sotheby's U.S. operations or commitments. However, based on these plans and projections, for years beginning in 2014, management believes that the earnings of its foreign subsidiaries will not be indefinitely reinvested outside of the U.S. (See statement on Forward Looking Statements.)

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The following tables summarize information relevant to the Credit Agreements as of and for the periods ended June 30, 2015 , December 31, 2014, and June 30, 2014 (in thousands of dollars):



As of and for the three and six months ended June 30, 2015	Agency Credit Agreement		Finance Credit Agreement		Total
Maximum borrowing capacity (a)	$	300,000	$	1,035,000	$	1,335,000
Borrowing base	$	221,812	$	622,849	$	844,661
Borrowings outstanding	$	—	$	593,000	$	593,000
Available borrowing capacity (b)	$	221,812	$	29,849	$	251,661
Average Borrowings Outstanding:
Three months ended June 30, 2015	$	—	$	538,868	$	538,868
Six months ended June 30, 2015	$	—	$	506,052	$	506,052
Borrowing Costs:
Three months ended June 30, 2015	$	751	$	3,874	$	4,625
Six months ended June 30, 2015	$	1,457	$	7,262	$	8,719



As of and for the year ended December 31, 2014	Agency Credit Agreement		Finance Credit Agreement		Total
Maximum borrowing capacity (a)	$	300,000	$	550,000	$	850,000
Borrowing base	$	237,830	$	519,255	$	757,085
Borrowings outstanding	$	—	$	445,000	$	445,000
Available borrowing capacity (b)	$	237,830	$	74,255	$	312,085
Average borrowings outstanding	$	—	$	306,448	$	306,448
Borrowing Costs	$	2,240	$	8,740	$	10,980



As of and for the three and six months ended June 30, 2014	Agency Credit Agreement		Finance Credit Agreement		Total
Maximum borrowing capacity (a)	$	150,000	$	450,000	$	600,000
Borrowing base	$	61,647	$	451,057	$	512,704
Borrowings outstanding	$	—	$	345,000	$	345,000
Available borrowing capacity (b)	$	61,647	$	105,000	$	166,647
Average Borrowings Outstanding:
Three months ended June 30, 2014	$	—	$	284,176	$	284,176
Six months ended June 30, 2014	$	—	$	188,591	$	188,591
Borrowing Costs:
Three months ended June 30, 2014	$	371	$	2,024	$	2,395
Six months ended June 30, 2014	$	968	$	2,734	$	3,702

(b) The available borrowing capacity is calculated as the borrowing base less borrowings outstanding.

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Borrowing costs related to the Agency Credit Agreement, which include interest and fee amortization, are reflected in the Condensed Consolidated Income Statements as Interest Expense.

Assessment of Liquidity and Capital Requirements —Sotheby's has separate capital structures and financial policies for its Agency and Finance segments. The Agency segment generally relies on existing cash balances (including amounts collected on behalf of and owed to consignors), operating cash flows, and revolving credit facility borrowings, if needed, to meet its liquidity and capital requirements. The timing and extent of any revolving credit facility borrowings by the Agency segment is dependent upon a number of factors including, but not limited to, the cyclical nature of the global art market, the seasonality of the art auction market, the timing of auction and private sale settlements, the potential funding of auction guarantees, the pursuit of business opportunities and growth initiatives, and the geographic mix of cash and cash equivalent balances.

The Finance segment predominantly relies on revolving credit facility borrowings to fund client loans. To a lesser extent, cash balances are also used to fund a portion of the Finance segment loan portfolio, as appropriate. The timing and extent of revolving credit facility borrowings by the Finance segment is dependent upon a number of factors including, but not limited to, the demand for art-related financing, which can be significantly influenced by overall economic conditions and by the often unpredictable financial requirements of owners of major art collections, the timing of the funding of new client loans, and the timing of the settlement of existing client loans.

Sotheby’s short-term operating needs and capital requirements include the funding of net sales proceeds to consignors when unmatched extended payment terms are granted to auction and private sale buyers (see Note 5 of Notes to Condensed Consolidated Financial Statements), the potential funding of auction guarantees, the funding of potential inventory purchases, the funding of client loans, the potential repayment of revolving credit facility borrowings, the funding of capital expenditures, the funding of possible business initiatives and/or investments, the payment of quarterly dividends, and the funding of Common Stock repurchases, as well as the funding of the other short-term commitments due on or before June 30, 2016, as summarized in the table of contractual obligations and commitments above. (See statement on Forward Looking Statements.)

Sotheby’s long-term operating needs and capital requirements include the funding of net sales proceeds to consignors when unmatched extended payment terms are granted to auction and private sale buyers (see Note 5 of Notes to Condensed Consolidated Financial Statements), the potential funding of auction guarantees, the funding of potential inventory purchases, the funding of client loans, the repayment of revolving credit facility borrowings, the funding of capital expenditures, the funding of possible business initiatives and/or investments, the payment of quarterly dividends, and the funding of potential Common Stock repurchases, as well as the funding of the presently anticipated long-term contractual obligations and commitments summarized in the table of contractual obligations and commitments above. (See statement on Forward Looking Statements.)

Management believes that operating cash flows, existing cash balances and revolving credit facility borrowings will be adequate to meet Sotheby’s anticipated short-term and long-term commitments, operating needs and capital requirements through the August 22, 2020 expiration of the Credit Agreements. (See statement on Forward Looking Statements.)

FUTURE IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

See Note 19 of Notes to Condensed Consolidated Financial Statements for a discussion of recently issued accounting standards.

PREMISES UPDATE

In 2013 and 2014, management performed a review of its real estate holdings, including the York Property in New York and the New Bond Street premises in London. The results of this review will be further evaluated by the Board in consultation with Sotheby's new CEO after taking into account the strategic and operating requirements for these locations.

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LEGISLATION

In July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) was signed into law in the U.S. This legislation significantly changed the banking and financial institution regulatory structure and impacted the lending, deposit, investment, trading and operating activities of such financial institutions. Management continues to review the provisions of the Dodd-Frank Act as they are finalized, and to assess its impact on Sotheby’s operations. This legislation has not had, nor does management believe it will have, a material impact on Sotheby's business. (See statement on Forward Looking Statements.)

Over the past year, there have been a number of Federal and State policy changes that impact the import, sale and export of objects containing ivory and other endangered species material. Sotheby’s continues to engage with Federal and State legislators and regulators to ensure the preservation of the existing exemption for antique artworks, furniture and other collectibles containing such material. Although Sotheby’s faces some new limitations in its ability to transact with property containing endangered species, management does not believe that the changes effected to date will have a material impact on Sotheby’s business, results of operations, financial condition, or cash flows. (See statement on Forward Looking Statements.)

FORWARD LOOKING STATEMENTS

This Form 10-Q contains certain forward looking statements; as such term is defined in Section 21E of the Securities Exchange Act of 1934, as amended, relating to future events and the financial performance of Sotheby’s. Such statements are only predictions and involve risks and uncertainties, resulting in the possibility that the actual events or performance will differ materially from such predictions. Major factors which could cause the actual results to differ materially from the predicted results in the forward looking statements include, but are not limited to, the factors listed below under Part II, Item 1A, “Risk Factors,” which are not ranked in any particular order.

ITEM 3 : QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Sotheby's continually evaluates the market risk associated with its financial instruments in the normal course of its business. As of June 30, 2015 , Sotheby's material financial instruments include: (i) cash and cash equivalents, (ii) restricted cash, (iii) notes receivable, (iv) credit facility borrowings, (v) the York Property Mortgage, (vi) long-term debt, (vii) the DCP liability and related trust assets, and (viii) outstanding forward exchange contracts. (See Note 5 of Notes to Condensed Consolidated Financial Statements for information related to notes receivable. See Note 6 of Notes to Condensed Consolidated Financial Statements for information related to credit facility borrowings, the York Property Mortgage, and long-term debt.)

Management believes that the interest rate risk associated with its financial instruments is minimal as a hypothetical 10% increase or decrease in interest rates is immaterial to its cash flow, earnings, and the fair value of its financial instruments. As of June 30, 2015 , a hypothetical 10% strengthening or weakening of the U.S. dollar relative to all other currencies would result in a decrease or increase in Sotheby's cash balances of approximately $56.6 million.

Sotheby’s utilizes forward exchange contracts to hedge cash flow exposures related to foreign currency exchange rate movements, which primarily arise from short-term foreign currency denominated intercompany balances and, to a much lesser extent, foreign currency denominated client payable balances, as well as foreign currency denominated auction guarantee obligations. Such forward exchange contracts are typically short-term with settlement dates less than six months from their inception. Additionally, on rare occasions, Sotheby’s may purchase foreign currency option contracts to hedge risks associated with foreign currency denominated client payable balances. All derivative financial instruments are entered into by Sotheby’s global treasury function, which is responsible for monitoring and managing Sotheby's exposure to foreign currency exchange rate movements. As of June 30, 2015 , the notional value of outstanding forward exchange contracts was $98.1 million. Notional values do not quantify risk or represent assets or liabilities of Sotheby’s, but are used to calculate cash settlements under outstanding forward exchange contracts. Sotheby’s is exposed to credit-related risks in the event of nonperformance by the three counterparties to its outstanding forward exchange contracts. Sotheby’s does not expect any of these counterparties to fail to meet their obligations, given their high short-term (A1/P1) credit ratings.

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ITEM 4 : CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of June 30, 2015 , the Company has carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures. Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) were effective as of June 30, 2015 .

Changes in Internal Control over Financial Reporting

There was no change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II: OTHER INFORMATION

ITEM 1 : LEGAL PROCEEDINGS

For information related to legal proceedings, see Note 9 of Notes to Condensed Consolidated Financial Statements.

ITEM 1A : RISK FACTORS

Sotheby's operating results and liquidity are significantly influenced by a number of risk factors, many of which are not within its control. These factors, which are not ranked in any particular order, are discussed below.

The global economy and the financial markets and political conditions of various countries may negatively affect Sotheby's business and clients, as well as the supply of and demand for works of art.

The international art market is influenced over time by the overall strength and stability of the global economy and the financial markets of various countries, although this correlation may not be immediately evident. In addition, global political conditions and world events may affect Sotheby's business through their effect on the economies of various countries, as well as on the willingness of potential buyers and sellers to purchase and sell art in the wake of economic uncertainty. Sotheby's business can be particularly influenced by the economies, financial markets and political conditions of the U.S., the U.K., China, and the other major countries or territories of Europe and Asia (including the Middle East). Accordingly, weakness in those economies and financial markets can adversely affect the supply of and demand for works of art and Sotheby's business. Furthermore, global political conditions may also influence the enactment of legislation that could adversely impact Sotheby's business.

Government laws and regulations may restrict or limit Sotheby's business or impact the value of its real estate assets.

Many of Sotheby's activities are subject to laws and regulations including, but not limited to, import and export regulations, cultural property regulations, data protection and privacy laws, anti-money laundering laws, antitrust laws, copyright and resale royalty laws, laws and regulations involving sales, use, value-added and other indirect taxes, and regulations related to the use of real estate. In addition, Sotheby's is subject to local auction regulations, such as New York City Auction Regulations Subchapter M of Title 6 §§ 2-121-2-125, et. seq. Such regulations currently do not impose a material impediment to the worldwide business of Sotheby's, but do affect the art market generally. A material adverse change in such regulations, such as the American Royalties Too Act of 2014 introduced in the U.S. Congress, which would impose a 5% resale royalty (with a cap of $35,000) on sales of art through large auction houses, could affect Sotheby's business. Additionally, export and import laws and cultural property ownership laws could affect the availability of certain kinds of property for sale at Sotheby's principal auction locations, increase the cost of moving property to such locations, or expose Sotheby's to legal claims or government inquiries.

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Foreign currency exchange rate movements can significantly impact Sotheby's results of operations and financial condition.

Sotheby's has operations throughout the world. Approximately 59% of Sotheby's total revenues were earned outside of the U.S. in 2014, including 29% of its total revenues earned in the U.K. Additionally, Sotheby's has significant assets and liabilities denominated in the Pound Sterling, the Euro, and the Swiss Franc. Revenues, expenses, gains, and losses recorded in foreign currencies are translated using the monthly average exchange rates prevailing during the period in which they are recognized. Assets and liabilities recorded in foreign currencies are translated at the exchange rate on the balance sheet date. Accordingly, fluctuations in foreign currency exchange rates, particularly for the Pound Sterling, the Euro, and the Swiss Franc can significantly impact Sotheby's results of operations and financial condition.

Competition in the international art market is intense and may adversely impact Sotheby's results of operations.

Sotheby's competes with other auctioneers and art dealers to obtain valuable consignments to offer for sale either at auction or through private sale. The level of competition is intense and can adversely impact Sotheby's ability to obtain valuable consignments for sale, as well as the commission margins achieved on such consignments.

Sotheby's cannot be assured of the amount and quality of property consigned for sale, which may cause significant variability in its financial results.

The amount and quality of property consigned for sale is influenced by a number of factors not within Sotheby's control. Many major consignments, and specifically single-owner sale consignments, often become available as a result of the death or financial or marital difficulties of the owner, all of which are unpredictable and may cause significant variability in Sotheby's financial results from period to period.

The demand for art is unpredictable, which may cause significant variability in Sotheby's results of operations.

The demand for art is influenced not only by overall economic conditions, but also by changing trends in the art market as to which collecting categories and artists are most sought after and by the collecting preferences of individual collectors, all of which are difficult to predict and which may adversely impact the ability of Sotheby's to obtain and sell consigned property, potentially causing significant variability in Sotheby's results from period to period.

The loss of key personnel could adversely impact Sotheby's ability to compete.

Sotheby's is largely a service business in which the ability of its employees to develop and maintain relationships with potential sellers and buyers of works of art is essential to its success. Moreover, Sotheby's business is unique, making it important to retain key specialists and members of management. Accordingly, Sotheby's business is highly dependent upon its success in attracting and retaining qualified personnel.

The business plans and strategic initiatives being implemented by Sotheby's may not succeed.

Sotheby's future operating results are dependent, in part, on management's success in implementing its business plans and strategic initiatives. The inability of Sotheby's to successfully implement its business plans and strategic initiatives could result in, among other things, the loss of clients, the impairment of assets, and inefficiencies from operating in new and emerging markets. Also, Sotheby's short-term operating results and liquidity could be unfavorably impacted by the implementation of its business plans and strategic initiatives.

Sotheby's joint venture and wholly-owned subsidiary in China are foreign-invested enterprises under Chinese law. As such, enforcement of certain of Sotheby's rights within these entities are subject to approval from the Chinese government, which could limit the ability of the entities to operate and succeed.

Sotheby's operates an equity joint venture with Beijing GeHua Art Company in China and, in 2014, established a wholly-owned subsidiary in China after obtaining the license required to operate as a Foreign-Invested Commercial Enterprise. Because these entities are foreign-invested enterprises under Chinese law, enforcement of certain of Sotheby's rights within these entities is subject to approval from the Chinese government. For example, all changes in ownership and constitution of the joint venture will be subject to approval by the Chinese government, including in the event Sotheby's is seeking to terminate the joint venture agreement, exercise its put option, or wind-up the joint venture. Accordingly, Sotheby's ability to successfully operate its businesses in China could be constrained by the Chinese government and other unforeseen circumstances.

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Sotheby's capital allocation and financial policies may impact its liquidity, financial condition, market capitalization and business, and Sotheby's ongoing ability to return capital to its shareholders (and the size and timing of such return) is subject to ongoing business variables.

The actions taken by management based on its review of Sotheby's capital allocation and financial policies may impact its current and future liquidity, financial condition, market capitalization, and business. In addition, the amount and timing of any potential return of capital to shareholders depends on various factors, including the amount of excess cash generated by the business in the future, the ability to continue to debt finance the Finance segment loan portfolio, the business initiatives contemplated and implemented by management, and the amount of capital that may be required to support Sotheby’s future liquidity needs, among other factors.

A breach of the security measures protecting Sotheby's global network of information systems and those of certain third-party service providers utilized by Sotheby's may occur.

Sotheby's is dependent on a global network of information systems to conduct its business and is committed to maintaining a strong infrastructure to secure these systems. As part of its information systems infrastructure, Sotheby's relies, to a certain extent, upon third-party service providers to perform services related to its live auction bidding platform BIDnow ^TM , retail wine e-commerce, video broadcasting, website content distribution, and SAP hosting, as well as the live auction streaming and bidding via eBay's Live Auctions channel that commenced in April 2015. While these third-party service providers offer unique and specialized information security measures, certain elements of Sotheby's global information system security are outside management's direct control due to the use of these service providers. These third-party service providers are contractually obligated to host and maintain the service in a professional manner, in accordance with the rules and standards generally accepted within the industry. This includes conventional security measures such as firewall, password and encryption protection, breach notification requirements, and PCI practices for credit card processing services. A breach of the security measures protecting Sotheby's information systems could adversely impact its operations, reputation, and brand.

Sotheby's business continuity plans may not be effective in addressing the impact of unexpected events that could impact its business.

Sotheby's inability to successfully implement its business continuity plans in the wake of an unexpected event, such as an act of God or a terrorist attack occurring near one of its major selling and/or sourcing offices and/or any other unexpected event, could disrupt its ability to operate and adversely impact its operations.

Sotheby's relies on a small number of clients who make a significant contribution to its revenues, profitability, and operating cash flows.

Sotheby's relies on a small number of clients who make a significant contribution to its revenues, profitability, and operating cash flows. Accordingly, Sotheby's revenues, profitability, and operating cash flows are highly dependent upon its ability to develop and maintain relationships with this small group of clients, as well as the financial strength of these clients.

Subject to management approval under Sotheby's internal corporate governance policy, Sotheby's may pay a consignor the net sale proceeds from an auction or private sale before payment is collected from the buyer and/or may allow the buyer to take possession of purchased property before payment is received. In these situations, Sotheby's is exposed to losses in the event the buyer does not make payment.

Under the standard terms and conditions of its auction and private sales, Sotheby's is not obligated to pay the consignor for property that has not been paid for by the buyer. However, in certain instances and subject to management approval under Sotheby's internal corporate governance policy, the consignor may be paid the net sale proceeds before payment is collected from the buyer while Sotheby's retains possession of the property. In such situations, if the buyer does not make payment, Sotheby's will take title to the property, but could be exposed to losses if the value of the property declines. In certain other situations and subject to management approval under Sotheby's internal corporate governance policy, the buyer is allowed to take possession of purchased property before making payment. In these situations, Sotheby's is liable to the seller for the net sale proceeds whether or not the buyer makes payment and would incur losses in the event of buyer default. (See Note 5 of Notes to Condensed Consolidated Financial Statements for information about auction and private sale receivables.)

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Sotheby's ability to collect auction receivables may be adversely impacted by buyers from emerging markets, as well as by the banking and foreign currency laws and regulations, and judicial systems of the countries in which it operates and in which its clients reside.

Sotheby's operates in 40 countries and has a worldwide client base that has grown in recent years due in part to a dramatic increase in the activity of buyers from emerging markets, and in particular, China. The collection of auction receivables related to buyers from emerging markets may be adversely impacted by the buyer's lack of familiarity with the auction process and the buyer's financial condition. Sotheby's ability to collect auction receivables may also be adversely impacted by the banking and foreign currency laws and regulations regarding the movement of funds out of certain countries, as well as by Sotheby's ability to enforce its rights as a creditor in jurisdictions where the applicable laws and regulations may be less defined, particularly in emerging markets.

Demand for art-related financing is unpredictable, which may cause variability in Sotheby's results of operations.

Sotheby's business is, in part, dependent on the demand for art-related financing, which can be significantly influenced by overall economic conditions and by the often unpredictable financial requirements of owners of major art collections. Accordingly, the results of Sotheby's Finance segment are subject to variability from period to period.

The ability of Sotheby's to realize proceeds from the sale of collateral for Finance segment loans may be delayed or limited.

In situations when there are competing claims on the collateral for Finance segment loans and/or when a borrower becomes subject to bankruptcy or insolvency laws, Sotheby's ability to realize proceeds from the sale of its collateral may be limited or delayed.

The value of the property held in inventory and the property pledged as collateral for Finance segment loans is subjective and often fluctuates, exposing Sotheby's to losses and significant variability in its results.

The market for fine art, decorative art, and jewelry is not a highly liquid trading market. As a result, the valuation of these items is inherently subjective and their realizable value often fluctuates over time. Accordingly, Sotheby's is at risk both as to the realizable value of the property held in inventory and as to the realizable value of the property pledged as collateral for Finance segment loans. In estimating the realizable value of the property held in inventory and the property pledged as collateral for Finance segment loans, management relies on the opinions of Sotheby's specialists, who consider the following complex array of factors when valuing these items: (i) whether the property is expected to be offered at auction or sold privately, and the timing of any such sale, (ii) the supply and demand for the property, taking into account economic conditions and, when relevant, changing trends in the art market as to which collecting categories and artists are most sought after; and (iii) recent sale prices achieved for comparable items within a particular collecting category and/or by a particular artist. If there is evidence that the estimated realizable value of a specific item held in inventory is less than its carrying value, a loss is recorded to reflect management's revised estimate of realizable value. In addition, if the estimated realizable value of the property pledged as collateral for a Finance segment loan is less than the corresponding loan balance, management assesses whether it is necessary to record a loss to reduce the carrying value of the loan, after taking into account the ability of the borrower to repay any shortfall between the value of the collateral and the amount of the loan. These factors may cause significant variability in Sotheby's results from period to period.

The low rate of historic losses on the Finance segment loan portfolio may not be indicative of future loan loss experience.

Sotheby's has historically incurred minimal losses on the Finance segment loan portfolio. However, despite management's stringent loan underwriting standards, Sotheby's previous loan loss experience may not be indicative of the future performance of the loan portfolio.

The collateral supporting the Finance segment loan portfolio is concentrated within certain collecting categories. A material decline in these markets could impair Sotheby’s ability to collect the principal and interest owed on certain loans and could require repayments of borrowings on such affected loans under Sotheby's revolving credit facility.

The collateral supporting the Finance segment loan portfolio is concentrated within certain collecting categories. Although management believes the Finance segment loan portfolio is sufficiently collateralized due to its current aggregate loan-to-value ratio of 50%, a material decline in these markets could impair Sotheby’s ability to collect the principal and interest owed on certain loans. Additionally, the eligibility of individual Finance segment loans included in the borrowing base of Sotheby's revolving credit facility requires a minimum loan-to-value ratio of 60%. A material decline in the value of Finance segment loan collateral could result in an increase in the loan-to-value ratio above 60% for individual loans and could require repayment of a portion of the borrowings associated with such loans.

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Sotheby's could be exposed to losses and/or reputational harm as a result of various claims and lawsuits incidental to the ordinary course of its business.

Sotheby's becomes involved in various legal proceedings, lawsuits, and other claims incidental to the ordinary course of its business. Management is required to assess the likelihood of any adverse judgments or outcomes in these matters, as well as potential ranges of probable or reasonably possible losses. A determination of the amount of losses, if any, to be recorded or disclosed as a result of these contingencies is based on a careful analysis of each individual exposure with, in some cases, the assistance of outside legal counsel. The amount of losses recorded or disclosed for such contingencies may change in the future due to new developments in each matter or a change in settlement strategy.

Sotheby's could be exposed to reputational harm as a result of wrongful actions by certain third parties.

Sotheby's is involved in various business arrangements and ventures with unaffiliated third parties. Wrongful actions by such parties could harm Sotheby's brand and reputation.

Sotheby's could be exposed to losses in the event of title or authenticity claims.

The assessment of property offered for auction or private sale can involve potential claims regarding title and authenticity. Items sold by Sotheby's may be subject to statutory warranties as to title and to a limited guarantee as to authenticity under the Conditions of Sale and Terms of Guarantee that are published in Sotheby's auction sale catalogues and the terms stated in, and the laws applicable to, agreements governing private sale transactions. The authentication of the items offered by Sotheby's is based on scholarship and research, but necessarily requires a degree of judgment from Sotheby's specialists. In the event of a title or authenticity claim against Sotheby's, Sotheby's may have recourse against the seller of the property and may have the benefit of insurance, but a claim could nevertheless expose Sotheby's to losses and to reputational risk.

Auction guarantees create the risk of loss resulting from the potential inaccurate valuation of art.

As discussed above, the market for fine art, decorative art, and jewelry is not a highly liquid trading market and, as a result, the valuation of these items is inherently subjective. Accordingly, Sotheby's is at risk with respect to management's ability to estimate the likely selling prices of property offered with auction guarantees. If management's judgments about the likely selling prices of property offered with auction guarantees prove to be inaccurate, there could be a significant adverse impact on Sotheby's results, financial condition, and liquidity. (See Note 10 of Notes to Condensed Consolidated Financial Statements for information related to auction guarantees.)

Sotheby's could be exposed to losses in the event of nonperformance by its counterparties in auction guarantee risk and reward sharing arrangements.

In certain situations, Sotheby's reduces its financial exposure under auction guarantees through risk and reward sharing arrangements. Sotheby's counterparties to these risk and reward sharing arrangements are typically major international art dealers or major art collectors. Sotheby's could be exposed to losses in the event any of these counterparties do not perform according to the terms of these contractual arrangements. (See Note 10 of Notes to Condensed Consolidated Financial Statements for information related to auction guarantees.)

Future costs and obligations related to Sotheby's U.K. Pension Plan are dependent on unpredictable factors, which may cause significant variability in employee benefit costs.

Future costs and obligations related to Sotheby's defined benefit pension plan in the U.K. are heavily influenced by changes in interest rates, investment performance in the debt and equity markets, changes in statutory requirements in the U.K., and actuarial assumptions, each of which is unpredictable and may cause significant variability in Sotheby's employee benefit costs. (See "Results of Operations" within Part I, Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations," and Note 8 of Notes to Condensed Consolidated Financial Statements for information related to the U.K. Pension Plan.)

64 #

Tax matters may cause significant variability in Sotheby's financial results.

Sotheby's operates in many tax jurisdictions throughout the world and the provision for income taxes involves a significant amount of management judgment regarding interpretation of relevant facts and laws in the jurisdictions in which Sotheby's operates. Sotheby's effective income tax rate can vary significantly between periods due to a number of complex factors including, but not limited to: (i) future changes in applicable laws; (ii) projected levels of taxable income; (iii) changes in the jurisdictional mix of forecasted and/or actual pre-tax income; (iv) increases or decreases to valuation allowances recorded against deferred tax assets; (v) tax audits conducted by various tax authorities; (vi) adjustments to income taxes upon the finalization of income tax returns; (vii) the ability to claim foreign tax credits; (viii) the repatriation of foreign earnings for which Sotheby's has not previously provided income taxes; and (ix) tax planning strategies.

Sotheby's clients reside in various tax jurisdictions throughout the world. To the extent that there are changes to tax laws or tax reporting obligations in any of these jurisdictions, such changes could adversely impact the ability and/or willingness of clients to purchase or sell works of art through Sotheby's. Additionally, Sotheby's is subject to laws and regulations in many countries involving sales, use, value-added and other indirect taxes which are assessed by various governmental authorities and imposed on certain revenue-producing transactions between Sotheby's and its clients. The application of these laws and regulations to Sotheby's unique business and global client base, and the estimation of any related liabilities, is complex and requires a significant amount of judgment. These indirect tax liabilities are generally not those of Sotheby’s unless it fails to collect the correct amount of sales, use, value-added, or other indirect taxes. Failure to collect the correct amount of indirect tax on a transaction may expose Sotheby's to claims from tax authorities.

Insurance coverage for artwork may become more difficult to obtain, exposing Sotheby's to losses for artwork in Sotheby's possession .

Sotheby's maintains insurance coverage for the works of art it owns, works of art consigned by clients, and all other property that may be in Sotheby's custody, which are exhibited and stored at Sotheby's facilities around the world. An inability to adequately insure such works of art due to limited capacity of the global art insurance market could, in the future, have a material adverse impact on Sotheby's business.

Due to the nature of its business, valuable works of art are exhibited and stored at Sotheby's facilities around the world. Such works of art could be subject to damage or theft, which could have a material adverse effect on Sotheby's business and reputation.

Valuable works of art are exhibited and stored at Sotheby's facilities around the world. Although Sotheby's maintains state of the art security measures at its premises, valuable artworks may be subject to damage or theft. The damage or theft of valuable property despite Sotheby's security measures could have a material adverse impact on Sotheby's business and reputation. Sotheby's maintains insurance coverage for the works of art that are exhibited and stored at its facilities, which could significantly mitigate any potential losses resulting from the damage or theft of such works of art.

ITEM 4 : MINE SAFETY DISCLOSURES

Not applicable.

65 #

ITEM 6 : EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits


10.1	Severance Agreement, dated June 1, 2015, between Sotheby's and David Goodman.

10.2

Amendment No. 1 to the Amended and Restated Auction Credit Agreement and Amended and Restated SFS Credit Agreement, dated June 15, 2015, by and among Sotheby’s, a Delaware corporation, Sotheby’s, Inc., Sotheby’s Financial Services, Inc., Sotheby’s Financial Services California, Inc., Oberon, Inc., Sotheby’s Ventures, LLC, Sotheby’s Financial Services Limited, Oatshare Limited, Sotheby’s, a company registered in England, and Sotheby’s Hong Kong Limited as Borrowers, the Other Credit Parties signatory hereto, General Electric Capital Corporation, as Administrative Agent and Collateral Agent, and the Lenders signatory hereto.

10.3

Amendment No. 1 to Amended and Restated Credit Agreement (the Auction Revolving Credit Facility), dated June 15, 2015, among Sotheby’s, a Delaware corporation, Sotheby’s, Inc., Sotheby’s Financial Services, Inc., Sotheby’s Financial Services California, Inc., Oberon, Inc., Sotheby’s Ventures, LLC, Sotheby’s Financial Services Limited, Oatshare Limited, Sotheby’s, a company registered in England, and Sotheby’s Hong Kong Limited as Borrowers, the Other Credit Parties signatory hereto, as Credit Parties, the Lenders Signatory Hereto from time to time, as Lenders, General Electric Capital Corporation, as Administrative Agent, Collateral Agent, and a Lender, and GE Capital Markets, Inc., J.P. Morgan Securities LLC, and HSBC Bank USA, N.A., as Joint Lead Arrangers and Joint Bookrunners.

10.4

Amendment No. 1 to Amended and Restated Credit Agreement (the SFS Revolving Credit Facility), dated June 15, 2015, among Sotheby’s, Inc., Sotheby’s Financial Services, Inc., Sotheby’s Financial Services California, Inc., Oberon, Inc., Sotheby’s Ventures, LLC, Sotheby’s Financial Services Limited, Sotheby’s, a company registered in England, and Sotheby’s Hong Kong Limited as Borrowers, the Other Credit Parties signatory hereto, as Credit Parties, the Lenders Signatory Hereto from time to time, as Lenders, General Electric Capital Corporation, as Administrative Agent, Collateral Agent, and a Lender, and GE Capital Markets, Inc., J.P. Morgan Securities LLC, and HSBC Bank USA, N.A., as Joint Lead Arrangers and Joint Bookrunners.


10.5	Second Amended and Restated Sotheby's Restricted Stock Unit Plan, reflecting amendments effective as of January 1, 2015.


31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.


31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.


32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


101.INS	XBRL Instance Document.


101.SCH	XBRL Taxonomy Extension Schema Document.


101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.


101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.


101.LAB	XBRL Taxonomy Extension Label Linkbase Document.

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document.

66 #

(b) Reports on Form 8-K


i.	On May 11, 2015, Sotheby's filed a current report on Form 8-K under Item 2.02, “Results of Operations and Financial Condition" and Item 9.01, “Financial Statements and Exhibits.”


ii.	On June 1, 2015, Sotheby's filed a current report on Form 8-K under Item 5.02, “Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers."


iii.	On June 15, 2015, Sotheby's filed a current report on Form 8-K under Item 1.01, "Entry into a Material Definitive Agreement" and Item 2.03, "Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant."


iv.	On June 26, 2015, Sotheby's filed a current report on Form 8-K under Item 5.02, “Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers."

67 #

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



	S OTHEBY’S

	By:	/s/ KEVIN M. DELANEY
		Kevin M. Delaney
		Senior Vice President, Controller and Chief Accounting Officer

Date: August 7, 2015

68 #

EXHIBIT INDEX


10.1	Severance Agreement, dated June 1, 2015, between Sotheby's and David Goodman.

10.2

10.3

10.4


10.5	Second Amended and Restated Sotheby's Restricted Stock Unit Plan, reflecting amendments effective as of January 1, 2015.


31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.


31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.


32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


101.INS	XBRL Instance Document.


101.SCH	XBRL Taxonomy Extension Schema Document.


101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.


101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.


101.LAB	XBRL Taxonomy Extension Label Linkbase Document.


101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

69 #

EXHIBIT 10.1

Severance Agreement

As of June 1, 2015

David Goodman

Dear Mr. Goodman:

This letter agreement (the "Agreement") sets forth our understanding with respect to your rights and obligations in the event of the termination of your employment with Sotheby’s (together with all of its subsidiaries and related entities, “Sotheby’s” or the “Company”). This Agreement is being provided to you because you will be a key employee at the Company and will perform highly specialized and unique duties for the Company. Consequently, Sotheby’s is offering you the following terms and financial enhancements to ensure your loyalty to the Company, and so that you will focus fully and exclusively on your job duties at Sotheby’s. Defined terms used herein are used with the meanings given to them in Exhibit A.


(1)	Severance Arrangements.


a)	If at any time from the date hereof through December 31, 2017 (the “Applicable Period”), your employment by the Company is terminated by you for Good Reason or by the Company without Cause, the Company shall pay you the following:

(i)

Within fifteen (15) days of your termination date, payment of the sum of (x) any unpaid base salary through the date of termination and (y) any unpaid and approved cash incentive compensation amount for the prior calendar year prior to your date of termination; and, within sixty (60) days of your termination date, reimbursement for any approved unreimbursed expenses incurred through the date of termination (“Accrued Obligations”);


(ii)	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, provided you were an employee on the last day of such prior calendar year; and

(iii)

Two million and eight hundred thousand dollars ($2.8 million) which amount shall be in lieu of any other payments or benefits to which you might otherwise be entitled, including but not limited to, any payments or benefits for which you could be eligible under the Sotheby’s, Inc. Severance Plan, any amended version of such Plan, or successor plan (the “Plan”). This amount shall be paid within seventy-four (74) days of termination of employment, provided all conditions for receipt of this payment have been met and shall otherwise be forfeited.

If during the Applicable Period, your employment is terminated by the Company for Cause, this Agreement shall terminate without further obligation to you, except that the Company shall pay you any Accrued Obligations as defined above and shall continue to be obligated to you with respect to vested benefits in accordance with the terms of the applicable plans. Other than Accrued Obligations, you will not be eligible for any incentive compensation for any period prior to or after the date of termination of your employment.

If during the Applicable Period, your employment is terminated by the Company because of your permanent disability or death, this Agreement shall terminate without further obligation to you, except that the Company shall pay you or your estate any Accrued Obligations as defined above and shall continue to be obligated to you or your estate with respect to vested benefits in accordance with the terms of the applicable plans. Other than Accrued Obligations, you will not be eligible for any incentive compensation for any period prior to or after the date of termination of your employment.

During the term of this Agreement, you hereby agree to waive irrevocably any rights or benefits under the Plan in its current form, as it may be amended from time to time, or under a successor plan. Upon expiration of this Agreement, if you and the Company do not enter into a mutually agreed new severance agreement, you will become eligible for benefits under the terms of the Company’s severance plan in effect at that time.


e)	Any payments payable pursuant to this Paragraph 1 beyond Accrued Obligations shall only be payable if you deliver to the Company a release, in a form acceptable to the Company, as similarly required under the Plan, of any and all your claims (except with regard to claims for payments or benefits specifically

payable or providable hereunder which are not yet paid as of the effective date of the release, claims for vested accrued benefits, claims under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, or claims relating to any rights of indemnification under the Company’s certificate of incorporation or by-laws or claims under any directors and officers liability insurance policy) occurring up to the release date with regard to the Company and its respective past or present officers, directors and employees and such release becomes effective not later than the seventy-fourth (74 ^th ) day after termination of employment. If the seventy-four (74) day period spans more than one calendar year, any amounts payable pursuant to the Paragraph (1) in excess of Accrued Obligations shall not be made earlier than the first business day of the second calendar year.


(2)	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.

(3)

Miscellaneous . You may not assign your rights or delegate your obligations under this Agreement. 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 constitutes the entire agreement between you and Sotheby’s concerning the subject matter of your employment. Any waiver or amendment of any provision of this Agreement must be in writing and signed by both parties.

(4)

Legal and Equitable Remedies . Sotheby’s shall be entitled to seek an injunction against an alleged violation by you of any material provision hereof, including, but not limited to, the obligations in 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 an alleged 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, and shall not operate to prevent, restrict or prohibit you from contesting any facts alleged by Sotheby’s in support of any application for such relief.

(5)

Arbitration . Any dispute, controversy or claim arising out of or relating to this agreement, 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.


(6)	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 as to such maximum extent as the court may judicially determine or indicate to be enforceable under New York law.


(7)	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 jurisdiction of the state and federal courts situated in New York City for the purpose of adjudicating any dispute relating to this Agreement.

(8)

Binding on Successor Company . This Agreement shall remain in effect and be binding upon any successor or assign of Sotheby’s 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 that acquires the Company and/or substantially all the assets of the Company, and such successor entity shall be deemed the “Company” for purposes of this Agreement.

(1)

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 the address set forth on the initial page of this Agreement and to the Company at Sotheby’s, 1334 York Avenue, New York, New York 10021, Attention: General Counsel, 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.

Very truly yours,

SOTHEBY’S

By: /s/ Tad Smith

Tad Smith

President and Chief Executive Officer

Read, accepted and agreed to this
27 day of May, 2015

/S/ David Goodman

David Goodman

EXHIBIT A

DEFINITIONS

“Cause” means:


a)	your commission of an act of fraud, embezzlement, misappropriation, willful misconduct, gross negligence or breach of fiduciary duty against the Company or an affiliate thereof;


b)	your commission of any act or omission that results in a conviction, plea of no contest, plea of nolo contendere, or imposition of unadjudicated probation for any crime involving moral turpitude or any felony; or


c)	any material breach of this Agreement by you.

For the purposes of this definition of “Cause,” no act, or failure to act, on your part shall be considered “willful” unless it is done, or omitted to be done, by you in bad faith or without reasonable belief that your action or omission was in the best interests of the Company. In addition, prior to any termination for “Cause,” you shall have thirty (30) days following the receipt of written notice from the Company to cure (to the extent curable) the neglect or conduct that is the basis of such claim.

“Good Reason” shall mean the occurrence of any of the following events:


a)	any material breach of this Agreement by the Company;


b)	your being required to relocate to a principal place of business more than fifty (50) miles outside New York, New York without your express consent; or


c)	any action by the Company that results in a reduction of 10% or more of your base salary without your express consent (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).

Provided, however, that you shall provide the Company thirty (30) days’ prior written notice from the date one of the above-referenced events occurs constituting Good Reason that you are terminating your employment for Good Reason, and the Company shall have thirty (30) days following the receipt of that written notice to correct such circumstances.

“Permanent Disability” shall mean, and be limited to, any physical or mental illness, disability or impairment that has prevented you from continuing the performance of the essential

functions of your position with reasonable accommodation for a period in excess of six (6) consecutive months.

EXHIBIT B

CERTAIN AGREEMENTS

Notice, Non-Compete, Non-Disparagement and Non-Solicitation Agreement.

You agree to give the Company not less than six (6) months’ prior written notice to terminating your employment without Good Reason.

Because you will have specialized, unique confidential knowledge vital to the Company and the special nature of the services that you will provide to the Company, you agree that during your employment and for twelve (12) months following your date of termination (“the Restricted Period”), you will not, without the consent of the Company, directly or indirectly: consult for, become employed by, provide services for, or solicit or accept any funds, loans or other consideration from


a)	Christie’s, Bonhams, or Phillips or any affiliate or successor of any of those entities anywhere in the world; or


b)	another entity engaged in 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 last twelve (12) months in the United States, United Kingdom, Hong Kong, Switzerland or France.

You agree, during and after your employment, to refrain from disparaging the Company, its subsidiaries and affiliates, including, without limitation, making derogatory comments about the character or ability of the Company or its directors, officers, shareholders, agents or representatives. The foregoing non-disparagement covenant shall not apply to statements in proceedings to enforce your rights or defend your claims under this Agreement and other legally required testimony.

In addition to the foregoing, during the Restricted Period, you agree that you will not, either alone or in concert with others, and will not cause another to, in any such case, directly or indirectly


a)	hire, recruit, solicit or induce any Sotheby’s employees to terminate their employment with Sotheby’s;


b)	solicit the business of, do business with, or seek to do business with, any client of the Company in a manner that could compete with the Company;


c)	encourage or assist any competitor of the Company to solicit or service any client of the Company; or


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

If at any time there is a judicial determination by any court of competent jurisdiction that the time period, geographical scope, or any other restriction contained in this Agreement is unenforceable against you, the provisions of this Agreement shall not be deemed void but shall be deemed amended to apply as to such maximum time period, geographical scope and to such other maximum extent as the court may judicially determine or indicate to be enforceable. You understand and agree that, during the Restricted Period, you are not prohibited from obtaining alternative employment subject to the provisions above.

Confidentiality Agreement.

As a condition to your offer of employment by the Company and in consideration for this Agreement, you agree to be bound by the Company’s Confidentiality Agreement, Compliance Policies, including but not limited to, its Auction Rules, Code of Business Conduct and Ethics, Worldwide Conflicts of Interest Policy, and Human Resources polices.

EXHIBIT 10.2

EXECUTION COPY

AMENDMENT NO. 1 TO

AMENDED AND RESTATED AUCTION CREDIT AGREEMENT

AND

AMENDED AND RESTATED SFS CREDIT AGREEMENT

This AMENDMENT NO. 1 TO AMENDED AND RESTATED AUCTION CREDIT AGREEMENT AND AMENDED AND RESTATED SFS CREDIT AGREEMENT (this “ Amendment ”), dated as of June 15, 2015, by and among Sotheby’s, a Delaware corporation (“ Parent ”), Sotheby’s, Inc., a New York corporation (“ Sotheby’s, Inc. ”), Sotheby’s Financial Services, Inc., a Nevada corporation (“ SFS Inc. ”), Sotheby’s Financial Services California, Inc., a Nevada corporation (“ SFS California ”), Oberon, Inc., a Delaware corporation (“ Oberon ”), Sotheby’s Ventures, LLC, a New York limited liability company (“ Ventures ”), Sotheby’s Financial Services Limited, a company registered in England (“ SFS Ltd. ”), Oatshare Limited, a company registered in England (“ Oatshare ”), Sotheby’s, a company registered in England (“ Sotheby’s U.K. ”), and Sotheby’s Hong Kong Limited, a company incorporated in Hong Kong (“ Sotheby’s H.K. ” and, collectively with Sotheby’s Inc., SFS Inc., SFS California, Oberon, Ventures, Sotheby’s U.K. and SFS Ltd., the “ SFS Borrowers ”; the SFS Borrowers, collectively with the Parent and Oatshare, the “ Auction Borrowers ” and the Auction Borrowers together with the SFS Borrowers, the “ Borrowers ”), the other Credit Parties signatory hereto, General Electric Capital Corporation, as Administrative Agent (in such capacity, the “ Administrative Agent ”) and Collateral Agent (in such capacity, the “ Collateral Agent ”; the Collateral Agent and the Administrative Agent are collectively referred to herein as the “ Agents ”), and the Lenders signatory hereto, amends that certain (i) Amended and Restated Credit Agreement, dated as of August 22, 2014 (as amended, restated, supplemented or otherwise modified from time to time prior to the date hereof, the “ Auction Credit Agreement ”), by and among the Auction Borrowers, the other Credit Parties signatory thereto, the Lenders party thereto and the Agents, and (ii) Amended and Restated Credit Agreement, dated as of August 22, 2014 (as amended, restated, supplemented or otherwise modified from time to time prior to the date hereof, the “ SFS Credit Agreement ” and together with the Auction Credit Agreement, the “ Credit Agreements ”), by and among the SFS Borrowers, the other Credit Parties signatory thereto, the Lenders party thereto and the Agents. Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in Annex A to the applicable Credit Agreement, as amended hereby.

WHEREAS, Parent and the other Credit Parties have requested that the Lenders and the Agents agree to certain amendments to the Credit Agreements; and

WHEREAS, the Credit Parties, the Lenders party hereto and the Agents have so agreed on the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the continued performance by the Borrowers and each other Credit Party of their respective promises and obligations under the Credit Agreements and the other Loan Documents, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrowers, the other Credit Parties signatory hereto, the Lenders party hereto and the Agents hereby agree as follows:

1. Amendments to Auction Credit Agreement . Subject to the satisfaction of the conditions precedent set forth in Paragraph 5 of this Amendment, the Auction Credit Agreement (including certain Schedules and Exhibits thereto) is hereby amended as set forth in Attachment A hereto. In Attachment A hereto, deletions of text are indicated by struck-through text, and insertions of text are indicated by bold double-underlined text.

2. Amendments to SFS Credit Agreement . Subject to the satisfaction of the conditions precedent set forth in Paragraph 5 of this Amendment, the SFS Credit Agreement (including certain Schedules and Exhibits thereto) is hereby amended as set forth in Attachment B hereto. In Attachment B hereto, deletions of text are indicated by struck-through text, and insertions of text are indicated by bold double-underlined text.

3. Release of Guarantor . Concurrently with the Effective Date (as defined below) and in reliance on the information provided by the Borrowers to the Administrative Agent that such entity is in process of being dissolved, Noortman Master Paintings Limited, a private limited liability company incorporated in England and Wales, is hereby released as a Guarantor and shall cease to be a Credit Party under each of the Credit Agreements, Collateral Documents and each other Loan Document. Each of the Lenders party hereto and the Administrative Agent authorizes and directs the Collateral Agent to prepare, execute, deliver or file any and all termination or release documents reasonably acceptable to the Collateral Agent to evidence such release hereunder.

4. New Lenders .

(a) Each of the undersigned financial institutions that is not a party to the Credit Agreements prior to the date hereof and identified on the signature pages hereto as a “New Lender” (each, a “ New Lender ”) agrees to be bound by the provisions of each Credit Agreement as amended hereby and agrees that it shall, on the date hereof, become a Lender for all purposes of each Credit Agreement as amended hereby, with Commitments as set forth in each Credit Agreement as amended as set forth in Attachment A and Attachment B attached hereto.

(b) In its capacity as a new Lender under the Credit Agreements as amended hereby, each New Lender (i) represents and warrants that it is legally authorized to enter into this Amendment and to become bound by each Credit Agreement as amended hereby, (ii) confirms that it has received a copy of each Credit Agreement, together with copies of the most recent financial statements delivered pursuant to its terms and has reviewed such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Amendment and to become bound by each Credit Agreement as amended hereby, (iii) agrees that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under each Credit Agreement as amended hereby or any other instrument or document furnished pursuant hereto or thereto, (iv) appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers and discretion under each Credit Agreement as amended hereby or any other instrument or document furnished pursuant hereto or thereto as are delegated to the Administrative Agent by the terms thereof, together with such powers as are incidental thereto, (v) agrees that it will be bound by the provisions of each Credit Agreement as amended hereby and will perform in accordance with its terms all the obligations which, by the terms of such Credit Agreement as amended hereby, are required to be performed by it as a Lender and (vi) agrees to become, and does hereby become, a “Lender” under the CAM Agreement and agrees to be bound by the CAM Agreement as if originally a party thereto.

5. Effectiveness of this Amendment; Conditions Precedent; Reallocations . The provisions of this Amendment shall be deemed to have become effective as of the date of this Amendment (the “ Effective Date ”), but such effectiveness shall be expressly conditioned upon:

(a) the Administrative Agent’s receipt of a counterpart of this Amendment executed and delivered by duly authorized officers of each Borrower, each other Credit Party, each Lender (including each New Lender) and the Agents;

(b) the Administrative Agent’s receipt, on behalf of each Lender, of upfront fees equal to (x) 0.075% of the lesser of (1) such Lender’s final aggregate allocated Commitments under the Credit Agreements (other than Incremental Commitments) after giving effect to this Amendment and (2) such Lender’s aggregate Commitments (if any) under the Credit Agreements (other than Incremental Commitments) immediately prior to giving effect to this Amendment and (y) 0.25% of the final aggregate allocated Commitments of such Lender under the Credit Agreements (other than Incremental Commitments) after giving effect to this Amendment in excess of the amount of such Lender’s aggregate Commitments (if any) under the Credit Agreements (other than Incremental Commitments) immediately prior to giving effect to this Amendment;

(c) the Administrative Agent’s receipt, on behalf of each Incremental Lender (after giving effect to this Amendment), of Incremental Commitment renewal fees equal to 0.25% of such Lender’s Incremental Commitments after giving effect to this Amendment;

(d) the Administrative Agent’s receipt of payment and/or reimbursement of the Administrative Agent’s and its affiliates’ reasonable and documented out-of-pocket fees and expenses required to be paid on the Effective Date pursuant to Section 5(i) hereof in connection with this Amendment and the other Loan Documents executed and delivered in connection herewith;

(e) the Lenders (including the New Lenders) shall have completed such reallocations and fundings among each other as may be directed by the Administrative Agent in order that the outstanding Loans with respect to each Lender reflects such Lender’s Pro Rata Share of the Loans under each Credit Agreement as amended hereby and that each Lender maintains an equal Pro Rata Share under each of the Credit Agreements as amended hereby, and the Borrowers shall have compensated each Lender for any and all losses, costs and expenses incurred by such Lender in connection with the sale and assignment of any LIBOR Loans and the reallocations described in this clause (e), in each case on the terms and in the manner set forth in Section 1.14(b) of each Credit Agreement (as if such section of the Credit Agreements applied to this circumstance); and

(f) the Administrative Agent’s receipt of each of the opinions, instruments and documents described on Attachment C hereto.

6. Miscellaneous .

(a) Headings . The various headings of this Amendment are inserted for convenience of reference only and shall not affect the meaning or interpretation of this Amendment or any provisions hereof.

(b) Counterparts . This Amendment may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument. Delivery of an executed counterpart of a signature page to this Amendment by facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart thereof.

(c) Interpretation . No provision of this Amendment shall be construed against or interpreted to the disadvantage of any party hereto by any court or other governmental or judicial authority by reason of such party’s having or being deemed to have structured, drafted or dictated such provision.

(d) Reaffirmation . Each of the Borrowers and Credit Parties, by its signature below, hereby (a) agrees that this Amendment and the transactions contemplated hereby shall not limit or diminish the obligations of such Person arising under or pursuant to the Loan Documents to which it is a party, (b) reaffirms all of its guaranty and other obligations under the Loan Documents to which it is a party, (c) reaffirms all Liens on any Collateral which have been granted by it in favor of the Collateral Agent (for itself and the other Lenders) pursuant to any of the Loan Documents, and (d) acknowledges and agrees that each Loan Document executed by it remains in full force and effect and is hereby reaffirmed, ratified and confirmed.

(e) Representations and Warranties . Each Credit Party hereby represents and warrants that, as of the date hereof:

(i) this (x) Amendment and (y) each Credit Agreement to which it is a party, in each case, constitutes the legal, valid and binding obligation of such Credit Party, enforceable against it in accordance with its terms except as enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditor’s rights generally or by equitable principles relating to enforceability;

(ii) its execution, delivery and performance of this Amendment and its performance of each Credit Agreement, as amended by this Amendment, to the extent it is a party thereto, have been duly authorized by all necessary corporate, limited liability company, limited partnership or unlimited liability company, as applicable, action and do not: (1) contravene the terms of any of such Credit Party’s charter, bylaws or partnership or operating agreement, as applicable, (2) violate any law or regulation, or any order or decree of any court or Governmental Authority; (3) conflict with or result in the breach or termination of, constitute a default under or accelerate or permit the acceleration of any performance required by, any indenture, mortgage, deed of trust, lease, agreement or other instrument to which any Sotheby Entity is a party or by which any Sotheby Entity or any of its property is bound, (4) result in the creation or imposition of any Lien upon any of the property of any Sotheby Entity other than those in favor of the Collateral Agent, on behalf of itself and the other Secured Parties, pursuant to the Loan Documents; or (5) require the consent or approval of any Governmental Authority or any other Person that has not already been obtained; and

(iii) after giving effect to this Amendment, (1) no Default or Event of Default under the Credit Agreements has occurred and is continuing and (2) all of the representations and warranties of such Credit Party contained in each Credit Agreement to which it is a party and in each other Loan Document to which it is a party (other than representations and warranties which, in accordance with their express terms, are made only as of an earlier specified date) are true and correct in all material respects (or, in the case of any representation or warranty already qualified by materiality, in all respects) as of the date hereof or thereof as though made on and as of such date.

(f) Governing Law . THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE.

(g) Effect . Upon the effectiveness of this Amendment, each reference in either Credit Agreement to “this Agreement,” “hereunder,” “hereof” or words of like import shall mean and be a reference to such Credit Agreement, as amended hereby, and each reference in the other Loan Documents to either Credit Agreement, “thereunder,” “thereof,” or words of like import shall mean and be a reference to such Credit Agreement, as amended hereby. Except as expressly provided in this Amendment, all of the terms, conditions and provisions of the Credit Agreements and the other Loan Documents shall remain the same. This Amendment shall constitute a Loan Document for purposes of the Credit Agreements.

(h) No Novation or Waiver . Except as specifically set forth in this Amendment, the execution, delivery and effectiveness of this Amendment shall not (a) limit, impair, constitute a waiver by, or otherwise affect any right, power or remedy of, any Agent or any Lender under either Credit Agreement or any other Loan Document, (b) constitute a waiver of any provision in either Credit Agreement or in any of the other Loan Documents or of any Default or Event of Default that may have occurred and be continuing or (c) alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in either Credit Agreement or in any of the other Loan Documents, all of which are ratified and affirmed in all respects and shall continue in full force and effect.

(i) Agents’ Expenses . The Borrowers hereby jointly and severally agree to reimburse the Agents (i) on the Effective Date, to the extent an invoice therefor is received at least three (3) Business Days prior to the Effective Date (the “Invoice Date”), or such later date to which the Borrowers may agree or (ii) if invoiced after the Invoice Date, within 30 days following receipt of such invoice therefor, for all of the reasonable and documented out-of-pocket expenses (but limited, in the case of legal expenses, to the reasonable and documented out of pocket expenses of one legal counsel and, to the extent necessary, one local counsel in each relevant jurisdiction and regulatory counsel for the Agent) they have heretofore or hereafter incurred or incur in connection with the preparation, negotiation and execution of this Amendment.

[SIGNATURE PAGES FOLLOW]

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written.

SOTHEBY’S,

a Delaware corporation

By: /s/ Michael L. Gillis

Name: Michael L. Gillis

Title: Vice President and Treasurer

SOTHEBY’S, INC.

By: /s/ Michael L. Gillis

Name: Michael L. Gillis

Title: Vice President and Treasurer

SOTHEBY’S FINANCIAL SERVICES, INC.

SOTHEBY’S FINANCIAL SERVICES CALIFORNIA, INC.

OBERON, INC.

SOTHEBY’S VENTURES, LLC

By: /s/ Michael L. Gillis

Name: Michael L. Gillis

Title: Vice President and Treasurer

OATSHARE LIMITED

By: /s/ Clive Lord

Name: Clive Lord

Title: Director

SOTHEBY’S,

a company registered in England

By: /s/ Clive Lord

Name: Clive Lord

Title: Director

Signature Page to Amendment No. 1

to A&R Auction Credit Agreement

and A&R SFS Credit Agreement

SOTHEBY’S FINANCIAL SERVICES LIMITED

By: /s/ Clive Lord

Name: Clive Lord

Title: Director

SOTHEBY’S HONG KONG LIMITED

By: /s/ Henry Li

Name: Henry Li

Title: Director

SOTHEBY’S WINE HONG KONG LIMITED

By: /s/ Henry Li

Name: Henry Li

Title: Director

SOTHEBY’S FINE ART HOLDINGS, INC.

SPTC, INC.

SOTHEBY PARKE BERNET, INC.

SOTHEBY’S RES, INC.

YORK AVENUE DEVELOPMENT, INC.

SOTHEBY’S THAILAND, INC.

SOTHEBY’S HOLDINGS INTERNATIONAL, INC.

SOTHEBY’S NEVADA, INC.

SOTHEBYS.COM LLC

SOTHEBYS.COM AUCTIONS, INC.

SIBS, LLC

72ND AND YORK, INC.

YORK HOLDINGS INTERNATIONAL, INC. ,

By: /s/ Michael L. Gillis

Name: Michael L. Gillis

Title: Vice President and Treasurer

SOTHEBY’S RES, INC.

By: /s/ Michael L. Gillis

Name: Michael L. Gillis

Title: Vice President and Treasurer

Signature Page to Amendment No. 1

to A&R Auction Credit Agreement

and A&R SFS Credit Agreement

CATALOGUE DISTRIBUTION COMPANY LIMITED

SOTHEBY’S SHIPPING LIMITED

YORK UK HOLDCO INTERNATIONAL LIMITED

By: /s/ Clive Lord

Name: Clive Lord

Title: Director

Signature Page to Amendment No. 1

to A&R Auction Credit Agreement

and A&R SFS Credit Agreement

GENERAL ELECTRIC CAPITAL

CORPORATION, as the Administrative Agent, the Collateral Agent, the Fronting Lender and a Lender

By: /s/ Dritar Vinca

Name: Dritar Vinca

Title: Duty Authorized Signatory

Signature Page to Amendment No. 1

to A&R Auction Credit Agreement

and A&R SFS Credit Agreement

JPMORGAN CHASE BANK, N.A. ,

as a Lender

By: /s/ Donna DiForio

Name: Donna DiForio

Title: Authorized Officer

Signature Page to Amendment No. 1

to A&R Auction Credit Agreement

and A&R SFS Credit Agreement

HSBC BANK PLC, as a Lender

By: /s/ Nicholas Raye

Name: Nicholas Raye

Title: Relationship Director, 1st Floor, Queen Victoria Street, London EC4N 4TR

Signature Page to Amendment No. 1

to A&R Auction Credit Agreement

and A&R SFS Credit Agreement

HSBC BANK USA, NATIONAL

ASSOCIATION, as a Lender

By: /s/ Aidan R. Spoto

Name: Aidan R. Spoto

Title: Vice President

Signature Page to Amendment No. 1

to A&R Auction Credit Agreement

and A&R SFS Credit Agreement

ING CAPITAL LLC, as a Lender

By: /s/ Doug S. Clarida

Name: Doug S. Clarida

Title: Director

By: /s/ William C. Beddingfield

Name: William C. Beddingfield

Title: Managing Director

Signature Page to Amendment No. 1

to A&R Auction Credit Agreement

and A&R SFS Credit Agreement

GOLDMAN SACHS BANK USA , as a Lender

By: /s/ Barrett D. Bencivenga

Name: Rebecca Kratz

Title: Authorized Signatory

Signature Page to Amendment No. 1

to A&R Auction Credit Agreement

and A&R SFS Credit Agreement

CITIZENS BANK, N.A. , as a Lender

By: /s/ Barrett D. Bencivenga

Name: Barrett D. Bencivenga

Title: Senior Vice President

Signature Page to Amendment No. 1

to A&R Auction Credit Agreement

and A&R SFS Credit Agreement

CREDIT SUISSE AG , as a Lender

By: /s/ Lorenz Meier

Name: Lorenz Meier

Title: Assistant Vice President

By: /s/ Stefan Willi

Name: Stefan Willi

Title: Director

Signature Page to Amendment No. 1

to A&R Auction Credit Agreement

and A&R SFS Credit Agreement

NYCB SPECIALTY FINANCE COMPANY, LLC, as a Lender

By: /s/ William D. Dickerson, Jr.

Name: William D. Dickerson, Jr.

Title: Senior Vice President

Signature Page to Amendment No. 1

to A&R Auction Credit Agreement

and A&R SFS Credit Agreement

COMERICA BANK , as a Lender

By: /s/ Timothy O'Rourke

Name: Timothy O'Rourke

Title: Vice President

Signature Page to Amendment No. 1

to A&R Auction Credit Agreement

and A&R SFS Credit Agreement

PEOPLE'S UNITED BANK, N.A. as a Lender

By: /s/ Jeffrey Giunta

Name: Jeffrey Giunta

Title: Vice President

Signature Page to Amendment No. 1

to A&R Auction Credit Agreement

and A&R SFS Credit Agreement

INVESTORS BANK , as a Lender

By: /s/ Anthony Rotondaro

Name: Anthony Rotondaro

Title: Senior Vice President

Signature Page to Amendment No. 1

to A&R Auction Credit Agreement

and A&R SFS Credit Agreement

THE PRIVATEBANK AND TRUST COMPANY , as a Lender

By: /s/ Mitchell Rasky

Name: Mitchell Rasky

Title: Managing Director

Signature Page to Amendment No. 1

to A&R Auction Credit Agreement

and A&R SFS Credit Agreement

T.D. BANK, N.A. , as a Lender

By: /s/ Stephen A. Caffrey

Name: Stephen A. Caffrey

Title: Vice President

Signature Page to Amendment No. 1

to A&R Auction Credit Agreement

and A&R SFS Credit Agreement

ISRAEL DISCOUNT BANK OF NEW YORK , as a Lender

By: /s/ James Morton

Name: James Morton

Title: Senior Vice President

By: /s/ David Herzog

Name: David Herzog

Title: Senior Vice President

Signature Page to Amendment No. 1

to A&R Auction Credit Agreement

and A&R SFS Credit Agreement

WEBSTER BUSINESS CREDIT , as a Lender

By: /s/ Steven Shuit

Name: Steven Shuit

Title: Vice President

Signature Page to Amendment No. 1

to A&R Auction Credit Agreement

and A&R SFS Credit Agreement

FLUSHING BANK , as a Lender

By: /s/ Lisa J. Archinow

Name: Lisa J. Archinow

Title: Vice President

Signature Page to Amendment No. 1

to A&R Auction Credit Agreement

and A&R SFS Credit Agreement

NYCB SPECIALTY FINANCE COMPANY, LLC , as a Lender

By: /s/ William D. Dickerson Jr.

Name: William D. Dickerson Jr.

Title: Senior Vice President

Signature Page to Amendment No. 1

to A&R Auction Credit Agreement

and A&R SFS Credit Agreement

PEOPLE’S UNITED BANK , as a Lender

By: /s/ Jeffrey Giunta

Name: Jeffrey Giunta

Title: VicePresident

Signature Page to Amendment No. 1

to A&R Auction Credit Agreement

and A&R SFS Credit Agreement

BANK LEUMI USA , as a Lender

By: /s/ Alex Kozlowsky

Name: Alex Kozlowsky

Title: Vice President

Signature Page to Amendment No. 1

to A&R Auction Credit Agreement

and A&R SFS Credit Agreement

WEBSTER BUSINESS CREDIT CORPORATION , as a Lender

By: /s/ Stephen Schuit

Name: Stephen Schuit

Title: Vice President

Signature Page to Amendment No. 1

to A&R Auction Credit Agreement

and A&R SFS Credit Agreement

FLUSHING BANK , as a Lender

By: /s/ Lisa J. Archinow

Name: Lisa J. Archinow

Title: Vice President

Signature Page to Amendment No. 1

to A&R Auction Credit Agreement

and A&R SFS Credit Agreement

SANTANDER BANK, N.A. , as a New Lender

By: /s/ Pierre A. Desbians

Name: Pierre A. Desbians

Title: Senior Vice President

Address for notices:
28 State Street

Boston, MA 02109
Attn: Pierre Desbiens
Facsimile: 617-367-5953

Lending office:

_____________________________
_____________________________
_____________________________

Signature Page to Amendment No. 1

to A&R Auction Credit Agreement

and A&R SFS Credit Agreement

ING LLC , as a New Lender

By: /s/ Doug S. Clarida

Name: Doug S. Clarida

Title: Director

By: /s/ William C. Beddingfield

Name: William C. Beddingfield

Title: Managing Director

Address for notices:
__________________________________

__________________________________
Attn: ______________________________
Facsimile: __________________________

Lending office:

_____________________________
_____________________________
_____________________________

Signature Page to Amendment No. 1

to A&R Auction Credit Agreement

and A&R SFS Credit Agreement

dBANK OF AMERICA, N.A. , as a New Lender

By: /s/ James Foley

Name: James Foley

Title: Senior Vice President

Address for notices:
150 N. College Street, NC1-028-17-06

Charlotte, NC 28255
Attn: John Cochran
Facsimile: __________________________

Lending office:

__One Bryant Park ____________
__New York, NY 10036_________
__Attn: Susanna Profis___________

Signature Page to Amendment No. 1

to A&R Auction Credit Agreement

and A&R SFS Credit Agreement

EVERBANK , as a New Lender

By: /s/ Christopher J. Norrito

Name: Christoper J. Norrito

Title: Managing Director

Address for notices:
200 Park Avenue, Suite 1700

New York, NY 10166
Attn: Rick Lampack
Facsimile: 201-770-5053

Email: BusinessCreditNotifications@EverBank.com

Lending office:

_____________________________
_____________________________
_____________________________

Signature Page to Amendment No. 1

to A&R Auction Credit Agreement

and A&R SFS Credit Agreement

AMALGAMATED BANK , as a New Lender

By: /s/ Jackson Eng

Name: Jackson Eng

Title: First Vice President

Address for notices:
275 Seventh Avenue, 14 ^th Floor

New York, NY 10001
Attn: Lin Hung
Facsimile: 212-895-4734

Lending office:

_275 Seventh Avenue, 6th Floor
__New York, NY 10001__________
Attn: Lin Hung__________ ___

_______Facsimile: 212-895-4734________

Signature Page to Amendment No. 1

to A&R Auction Credit Agreement

and A&R SFS Credit Agreement

CIT FINANCE LLC , as a New Lender

By: /s/ Robert L. Klein

Name: Robert L. Klein

Title: Director

Address for notices:
11 West 42 ^nd Street

New York, NY 10034
Attn: Dustin Carter
Facsimile: 800-394-9508

Lending office:

___11 West 42nd Street _________
___New York, NY 10036________
_____________________________

Signature Page to Amendment No. 1

to A&R Auction Credit Agreement

and A&R SFS Credit Agreement

THE HUNTINGTON NATIONAL BANK , as a New Lender

By: /s/ Tracy Salyers

Name: Tracy Salyers

Title: Vice President

Address for notices:
125 S. Walker Dr., Suite 2840

Chicago, IL 60606
Attn: Tracy Salyers
Facsimile: 877-238-7120

Lending office:

_____________________________
_____________________________
_____________________________

Signature Page to Amendment No. 1

to A&R Auction Credit Agreement

and A&R SFS Credit Agreement

ROCKLAND TRUST COMPANY , as a New Lender

By: /s/ Cynthia J. Tonucci

Name: Cynthia J. Tonucci

Title: Vice President

Address for notices:
288 Union Street

Rockland, MA 02370
Attn: ___ Loan Servicing _______________
Facsimile: ___ 508-732-7405 _________

Lending office:

Rockland Trust ABL____________
120 Liberty Street______________
Brockton, MA 02301____________

Signature Page to Amendment No. 1

to A&R Auction Credit Agreement

and A&R SFS Credit Agreement

SUNTRUST BANK , as a New Lender

By: /s/ Seth Meier

Name: Seth Meier

Title: Director

Address for notices:
303 Peachtree Street N.E.

Atlanta, GA 30308
Attn: _ Asset Management _____________
Facsimile: ___ 404-926-5646 ___________

Lending office:

303 Peachtree St N.E.____________
Atlanta, GA 30308______________
_____________________________

Signature Page to Amendment No. 1

to A&R Auction Credit Agreement

and A&R SFS Credit Agreement

ATTACHMENT A

MARKED AUCTION CREDIT AGREEMENT

Attached.

ATTACHMENT B

MARKED SFS CREDIT AGREEMENT

Attached.

ATTACHMENT C

CLOSING DOCUMENTS

Attached.

Exhibit 10.3

ATTACHMENT A

Conformed Auction Credit Agreement incorporating

Amendment No. 1 dated June 15, 2015

AMENDED AND RESTATED

CREDIT AGREEMENT

Dated as of August 22, 2014

among

SOTHEBY’S,

a Delaware corporation
SOTHEBY’S, INC.,
SOTHEBY’S FINANCIAL SERVICES, INC.,
SOTHEBY’S FINANCIAL SERVICES CALIFORNIA, INC.,
OBERON, INC.,
SOTHEBY’S VENTURES, LLC,
OATSHARE LIMITED,
SOTHEBY’S,

a company registered in England,
SOTHEBY’S FINANCIAL SERVICES LIMITED, and

SOTHEBY’S HONG KONG LIMITED
as Borrowers,

THE OTHER CREDIT PARTIES SIGNATORY HERETO,
as Credit Parties,

THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders,

GENERAL ELECTRIC CAPITAL CORPORATION,
as Administrative Agent, Collateral Agent and a Lender

and

GE CAPITAL MARKETS, INC., J.P. MORGAN SECURITIES LLC and HSBC BANK USA, N.A.,
as Joint Lead Arrangers and Joint Bookrunners

Auction Revolving Credit Facility

(incorporating an Incremental Revolving Credit Facility)

TABLE OF CONTENTS

Page


1.	AMOUNT AND TERMS OF CREDIT 2


1.1	Credit Facilities . 2


1.2	Letters of Credit . 11


1.3	Prepayments; Commitment Reductions . 11


1.4	Use of Proceeds . 20


1.5	Interest and Applicable Margins . 20


1.6	Eligible Art Loans. 23


1.7	Eligible Art Inventory . 26


1.8	Eligible Extended Term Art Receivables 28


1.9	Cash Management Systems . 30


1.10	Fees . 31


1.11	Receipt of Payments . 32


1.12	Application and Allocation of Payments . 32


1.13	Loan Account and Accounting . 36


1.14	Indemnity . 37


1.15	Access . 38


1.16	Taxes . 39


1.17	Capital Adequacy; Increased Costs; Illegality . 43


1.18	Credit Support . 46


1.19	Conversion to Dollars and Foreign Currency . 46


1.20	Judgment Currency; Contractual Currency . 47


1.21	Currency of Account . 48


1.22	Extension of Incremental Maturity Date 48


2.	CONDITIONS PRECEDENT 49


2.1	Conditions to Effectiveness of Agreement and the Initial Loans . 49


2.2	Further Conditions to Each Loan . 50


3.	REPRESENTATIONS AND WARRANTIES 52


3.1	Corporate Existence; Compliance with Law . 52


3.2	Executive Offices, Collateral Locations, FEIN . 53


3.3	Corporate Power, Authorization, Enforceable Obligations . 53


3.4	Financial Disclosures . 53


3.5	Material Adverse Effect . 54


3.6	Ownership of Property; Liens . 54


3.7	Labor Matters . 55


3.8	Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness . 55


3.9	Government Regulation . 55


3.10	Margin Regulations . 56


3.11	Taxes . 56


3.12	ERISA/U.K. Pension Plans . 56


3.13	Litigation . 58


3.14	Brokers . 58


3.15	Intellectual Property . 58


3.16	Full Disclosure . 58


3.17	Environmental Matters . 59


3.18	Insurance . 60


3.19	Deposit . 60


3.20	[ Reserved ] . 60


3.21	Bonding; Licenses . 60


3.22	Solvency . 60


3.23	Sale-Leasebacks . 60


3.24	U.S. Sanctions, Money-Laundering and Terrorism Regulatory Matters . 60


3.25	Lending and Auction Regulatory Matters . 62


4.	FINANCIAL STATEMENTS AND INFORMATION 62


4.1	Reports and Notices . 62


5.	AFFIRMATIVE COVENANTS 63


5.1	Maintenance of Existence and Conduct of Business . 63


5.2	Payment of Charges . 63


5.3	Books and Records . 63


5.4	Insurance; Damage to or Destruction of Collateral . 64


5.5	Compliance with Laws . 65

iii


5.6	Supplemental Disclosure . 65


5.7	Intellectual Property . 66


5.8	Environmental Matters . 66


5.9	Landlords’ Agreements, Bailee Letters and Real Estate Purchases . 67


5.10	Lending and Auction Regulatory Matters . 67


5.11	Further Assurances . 68


5.12	Art Loans, Art Inventory and Extended Term Art Receivables . 68


5.13	Money-Laundering and Terrorism Regulatory Matters . 68


5.14	Subsidiary Loan Documents . 69


5.15	Immaterial Subsidiaries . 71


5.16	York Avenue Transactions . 72


5.17	Auction Guaranties . 72


5.18	Data Protection Matters . 72


6.	NEGATIVE COVENANTS 72


6.1	Mergers, Subsidiaries, Etc . 72


6.2	Investments; Loans and Revolving Credit Advances . 73


6.3	Indebtedness . 74


6.4	Employee Loans and Affiliate Transactions . 76


6.5	Capital Structure and Business . 77


6.6	Guaranteed Indebtedness . 77


6.7	Liens . 77


6.8	Sale of Stock and Assets . 79


6.9	ERISA . 79


6.10	Financial Covenants . 79


6.11	Hazardous Materials . 79


6.12	Sale Leasebacks . 79


6.13	Restricted Payments . 79


6.14	Change of Corporate Name, State of Incorporation or Location; Change of Fiscal Year. 81


6.15	No Impairment of Intercompany Transfers . 82


6.16	Real Estate Purchases. 82


6.17	Changes Relating to Material Contracts . 82


6.18	Use of Proceeds . 82


7.	TERM 83


7.1	Termination . 83


7.2	Survival of Obligations Upon Termination of Financing Arrangements . 83


8.	EVENTS OF DEFAULT; RIGHTS AND REMEDIES 83


8.1	Events of Default . 83


8.2	Remedies . 85


8.3	Waivers by Credit Parties . 86


9.	ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT 86


9.1	Assignment and Participations . 86


9.2	Appointment of the Administrative Agent and the Collateral Agent . 90


9.3	Agents’ Reliance, Etc . 91


9.4	GE Capital and Affiliates . 92


9.5	Lender Credit Decision . 92


9.6	Indemnification . 92


9.7	Successor Agents .. 93


9.8	Setoff and Sharing of Payments . 93


9.9	Advances; Payments; Non-Funding Lenders; Information; Actions in Concert . 94


9.10	Release of Guarantors or Collateral . 101


10.	SUCCESSORS AND ASSIGNS 101


10.1	Successors and Assigns . 101


11.	MISCELLANEOUS 101


11.1	Complete Agreement; Modification of Agreement . 101


11.2	Amendments and Waivers . 102


11.3	Fees and Expenses . 104


11.4	No Waiver . 105


11.5	Remedies . 106


11.6	Severability . 106


11.7	Conflict of Terms . 106


11.8	Confidentiality . 106


11.9	GOVERNING LAW . 107


11.10	Notices . 108


11.11	Section Titles . 110


11.12	Counterparts; Facsimile Signature . 110


11.13	WAIVER OF JURY TRIAL . 110


11.14	Press Releases and Related Matters . 111


11.15	Reinstatement . 111


11.16	Advice of Counsel . 111


11.17	No Strict Construction . 111


11.18	PATRIOT Act . 112


11.19	Creditor-Debtor Relationship 112


11.20	Restatement 112


11.21	New Borrowers 113


12.	CROSS-GUARANTY 113


12.1	Cross-Guaranty . 113


12.2	Waivers by Borrowers . 114


12.3	Benefit of Guaranty . 114


12.4	Waiver of Subrogation, Etc . 114


12.5	Subordination by Credit Parties . 114


12.6	Election of Remedies . 116

vii


12.7	Liability Cumulative . 116

viii

INDEX OF APPENDICES




Annex A (Recitals)	-	Definitions
Annex B ( Section 1.2 )	-	Letters of Credit
Annex C ( Section 1.9 )	-	Cash Management System
Annex D ( Section 2.1(a) )	-	Closing Checklist
Annex E ( Section 4.1(a) )	-	Financial Statements and Projections -- Reporting
Annex F ( Section 4.1(b) )	-	Collateral Reports
Annex G ( Section 6.10 )	-	Financial Covenants
Annex H ( Section 9.9(a) )	-	Lenders’ Wire Transfer Information
Annex I ( Section 11.10 )	-	Notice Addresses
Annex J (from Annex A -	-
Commitments definition)		Commitments as of Amendment No. 1 Effective Date

Exhibit 1.1(a)(i)	-	Form of Notice of Auction Revolving Credit Advance
Exhibit 1.1(a)(ii)-A	-	Form of Auction Dollar Tranche Revolving Note (Domestic Borrowers)
Exhibit 1.1(a)(ii)-B	-	Form of Auction Dollar Tranche Revolving Note (Foreign Borrowers)
Exhibit 1.1(a)(ii)-C	-	Form of Auction Multicurrency Tranche Revolving Note (Domestic Borrowers)
Exhibit 1.1(a)(ii)-D	-	Form of Auction Multicurrency Tranche Revolving Note (Foreign Borrowers)
Exhibit 1.1(b)(i)	-	Form of Notice of Incremental Revolving Credit Advance
Exhibit 1.1(b)(ii)-A	-	Form of Incremental Revolving Note (Domestic Borrowers)
Exhibit 1.1(b)(ii)-B	-	Form of Incremental Revolving Note (Foreign Borrowers)
Exhibit 1.1(c)(i)	-	Form of Swing Line Loan Request
Exhibit 1.1(c)(ii)-A	-	Form of Swing Line Note (Domestic Borrowers)
Exhibit 1.1(c)(ii)-B	-	Form of Swing Line Note (Foreign Borrowers)
Exhibit 1.5(e)	-	Form of Notice of Conversion/Continuation
Exhibit 4.1(A)	-	Form of Borrowing Base Certificate
Exhibit 4.1(B)	-	Form of Art Loan Receivables Report
Exhibit 4.1(C)	-	Form of Art Inventory Report
Exhibit 4.1(D)	-	Form of Extended Term Art Receivables Report
Exhibit 9.1(a)	-	Form of Assignment Agreement
Exhibit B-1	-	Form of Letter of Credit Request
Exhibit B-2	-	Application for Letter of Credit
Exhibit C	-	Form of Compliance Certificate

Schedule 1.1	-	Agents’ Representatives
Schedule 5.14	-	Subsidiary Loan Documents
Disclosure Schedule 3.1	-	Type of Entity; State of Organization



Disclosure Schedule 3.2 Disclosure Schedule 3.4(a)	- -	Executive Offices, Collateral Locations, FEIN Financial Statements
Disclosure Schedule 3.6	-	Real Estate and Leases
Disclosure Schedule 3.7	-	Labor Matters
Disclosure Schedule 3.8	-	Ventures, Subsidiaries and Affiliates; Outstanding Stock
Disclosure Schedule 3.11	-	Tax Matters
Disclosure Schedule 3.12(a)	-	ERISA Plans
Disclosure Schedule 3.12(c)	-	U.K. Pension Plans
Disclosure Schedule 3.13(a)	-	Litigation
Disclosure Schedule 3.14	-	Brokers
Disclosure Schedule 3.15	-	Intellectual Property
Disclosure Schedule 3.17	-	Hazardous Materials
Disclosure Schedule 3.18	-	Insurance
Disclosure Schedule 3.19	-	Deposit and Disbursement Accounts
Disclosure Schedule 3.21	-	Bonds; Patent, Trademark Licenses
Disclosure Schedule 5.15	-	Immaterial Subsidiaries
Disclosure Schedule 5.16	-	York Avenue Lender Recourse
Disclosure Schedule 6.3	-	Indebtedness
Disclosure Schedule 6.4(a)	-	Transactions with Affiliates
Disclosure Schedule 6.7	-	Existing Liens

This AMENDED AND RESTATED CREDIT AGREEMENT (this “ Agreement ”), dated as of August 22, 2014, among Sotheby’s, a Delaware corporation (“ Parent ”), Sotheby’s, Inc., a New York corporation (“ Sotheby’s, Inc. ”), Sotheby’s Financial Services, Inc., a Nevada corporation (“ SFS Inc. ”), Sotheby’s Financial Services California, Inc., a Nevada corporation (“ SFS California ”), Oberon, Inc., a Delaware corporation (“ Oberon ”), Sotheby’s Ventures, LLC, a New York limited liability company (“ Ventures LLC ” and, collectively with Parent, Sotheby’s, Inc., SFS Inc., SFS California and Oberon, the “ Domestic Borrowers ”), Sotheby’s Financial Services Limited, a company registered in England (“ SFS Ltd. ”), Oatshare Limited, a company registered in England (“ Oatshare ”), Sotheby’s, a company registered in England (“ Sotheby’s U.K. ” and, collectively, with SFS Ltd. and Oatshare, the “ U.K. Borrowers ”), and Sotheby’s Hong Kong Limited, a company incorporated in Hong Kong (“ Sotheby’s H.K. ” and, collectively with the U.K. Borrowers, the “ Foreign Borrowers ”; the Domestic Borrowers and the Foreign Borrowers collectively being referred to herein as the “ Borrowers ”); the other Credit Parties signatory hereto; General Electric Capital Corporation, a Delaware corporation (in its individual capacity, “ GE Capital ”), for itself, as a Lender and as Administrative Agent and Collateral Agent for the Secured Parties, and the other Lenders signatory hereto from time to time.

RECITALS

WHEREAS, certain of the Borrowers, the Credit Parties, the Agents and certain Lenders are parties to that certain Credit Agreement, dated as of February 13, 2014 (the “ Existing Credit Agreement ”);

WHEREAS, the Borrowers, the other Credit Parties, the Agents and the Lenders have agreed to enter into this Agreement in order to (i) amend and restate the Existing Credit Agreement in its entirety; (ii) re-evidence the “Obligations” under, and as defined in, the Existing Credit Agreement, which shall be repayable in accordance with the terms of this Agreement; and (iii) set forth the terms and conditions under which the Lenders will, from time to time, make loans and extend other financial accommodations to or for the benefit of the Borrowers;

WHEREAS, it is the intent of the parties hereto that this Agreement not constitute a novation of the obligations and liabilities of the parties under the Existing Credit Agreement or be deemed to evidence or constitute full repayment of such obligations and liabilities, but that this Agreement amend and restate in its entirety the Existing Credit Agreement and re-evidence the obligations and liabilities of the Credit Parties outstanding thereunder, which shall be payable in accordance with the terms hereof;

WHEREAS, it is also the intent of the “Borrowers” and the “Guarantors” (each as referred to and defined in the Existing Credit Agreement) to confirm that all obligations under the “Loan Documents” (as referred to and defined in the Existing Credit Agreement) shall continue in full force and effect as modified and/or restated by the Loan Documents (as referred to and defined herein); and

WHEREAS, capitalized terms used in this Agreement shall have the meanings ascribed to them in Annex A and, for purposes of this Agreement and the other Loan Documents,

the rules of construction set forth in Annex A shall govern. All Annexes, Disclosure Schedules, Exhibits and other attachments (collectively, “ Appendices ”) hereto, or expressly identified to this Agreement, are incorporated herein by reference, and taken together with this Agreement, shall constitute but a single agreement. These Recitals shall be construed as part of the Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained, and for other good and valuable consideration, the parties hereto hereby agree that the Existing Credit Agreement is hereby amended and restated as follows:

1. AMOUNT AND TERMS OF CREDIT


1.1	Credit Facilities .

(a) Auction Revolving Credit Facility .

(i) Subject to the terms and conditions hereof, (a) each Auction Dollar Tranche Lender agrees to make available, from time to time until the Auction Commitment Termination Date, its Pro Rata Share of advances (each, an “ Auction Dollar Tranche Revolving Credit Advance ”) in Dollars to the Borrowers and (b) except as otherwise provided in the last two sentences of this paragraph, each of the Auction Multicurrency Tranche Lenders agrees to make available, from time to time until the Auction Commitment Termination Date, its Pro Rata Share of advances (each an “ Auction Multicurrency Tranche Revolving Credit Advance ”) in Dollars or Foreign Currencies to the Borrowers. The Pro Rata Share of the aggregate Auction Dollar Tranche Revolving Loan of any Auction Dollar Tranche Lender shall not at any time exceed its separate Auction Dollar Tranche Commitment. The Pro Rata Share of the aggregate Auction Multicurrency Tranche Revolving Loan of any Auction Multicurrency Tranche Lender shall not at any time exceed its separate Auction Multicurrency Tranche Commitment. The obligations of each Lender to make Loans or purchase participation interests therein under this Agreement shall be several and not joint. Until the Auction Commitment Termination Date, Borrowers may borrow, repay and reborrow under this Section 1.1(a) ; provided , that (i) the Dollar Equivalent of the amount of any Auction Revolving Credit Advance to be made at any time to a Domestic Borrower shall not exceed the Domestic Auction Borrowing Availability at such time and (ii) the Dollar Equivalent of the amount of any Auction Revolving Credit Advance to be made at any time to a Foreign Borrower shall not exceed the Foreign Auction Borrowing Availability at such time. The Dollar Equivalent of each outstanding Auction Revolving Credit Advance, Swing Line Advance and Letter of Credit Obligation shall be recalculated hereunder on each date on which it shall be necessary to determine the Auction Revolving Loan Outstandings, as determined by the Administrative Agent in its sole discretion; provided , that the Administrative Agent shall recalculate the Dollar Equivalent of the Auction Revolving Loan Outstandings at least one time each calendar month and otherwise in accordance with Section 1.19 . Domestic Auction Borrowing Availability or Foreign Auction Borrowing Availability, or both, may be reduced by Reserves imposed by the Administrative Agent in its sole reasonable credit judgment. Each Auction Revolving Credit Advance shall be made upon Borrower Representative’s irrevocable (subject to Section 1.17(c) ) written notice delivered to one of the representatives of the Administrative Agent identified in Schedule 1.1 at the address specified therein. Any such notice must be given no later than (x) 11:00 a.m. (New York time) on the

Business Day of the proposed Auction Revolving Credit Advance, in the case of an Index Rate Loan in Dollars or (y) 11:00 a.m. (New York time) on the date which is three (3) Business Days prior to the proposed Auction Revolving Credit Advance, in the case of a LIBOR Loan. Each such notice (a “ Notice of Auction Revolving Credit Advance ”) must be given in writing (by telecopy or overnight courier) or Electronic Transmission substantially in the form of Exhibit 1.1(a)(i) or in any other written form reasonably acceptable to the Administrative Agent, and shall include the information required in such Exhibit and such other information as may be required by the Administrative Agent. If any Borrower desires to have any Auction Revolving Credit Advance be made as a LIBOR Loan, Borrower Representative must comply with Section 1.5(e) . An Auction Multicurrency Tranche Revolving Credit Advance may not be drawn in a Foreign Currency if the Administrative Agent determines at any time prior to 12:00 p.m. (New York time) on the date of such proposed Auction Multicurrency Tranche Revolving Credit Advance that by reason of any change in currency availability, unusual instability in currency exchange rates or exchange controls it is, or will be, impracticable for such Auction Multicurrency Tranche Revolving Credit Advance to be made in such Foreign Currency. In such event, the proposed Auction Multicurrency Tranche Revolving Credit Advance shall be made in Dollars.

(ii) If requested by any Auction Lender, each Borrower shall execute and deliver to such Auction Lender a note to evidence the Auction Dollar Tranche Commitment or Auction Multicurrency Tranche Commitment, as applicable, of, and Auction Dollar Tranche Revolving Credit Advances or Auction Multicurrency Tranche Revolving Credit Advances, as applicable, made by, that Auction Lender. Each note shall be in the principal amount of the Auction Dollar Tranche Commitment or Auction Multicurrency Tranche Commitment, as applicable, of the applicable Auction Lender, dated the Restatement Effective Date (or such later date as such Auction Lender becomes party to this Agreement pursuant to Section 9.1(a) or modifies its Auction Dollar Tranche Commitment or Auction Multicurrency Tranche Commitment, as applicable, pursuant to Section 9.1(a) ) and substantially in the form of Exhibit 1.1(a)(ii)-A (in the case of the Auction Dollar Tranche Lenders and the Domestic Borrowers), Exhibit 1.1(a)(ii)-B (in the case of the Auction Dollar Tranche Lenders and the Foreign Borrowers), Exhibit 1.1(a)(ii)-C (in the case of Auction Multicurrency Tranche Lenders and the Domestic Borrowers) or Exhibit 1.1(a)(ii)-D (in the case of Auction Multicurrency Tranche Lenders and the Foreign Borrowers) (each an “ Auction Revolving Note ” and, collectively, the “ Auction Revolving Notes ”). Each Auction Revolving Note shall represent the joint and several obligation of the applicable Borrowers to pay the amount of the applicable Auction Lender’s Auction Dollar Tranche Commitment or Auction Multicurrency Tranche Commitment, as applicable, or, if less, such Auction Lender’s Pro Rata Share of the aggregate unpaid principal amount of all Auction Dollar Tranche Revolving Credit Advances or Auction Multicurrency Tranche Revolving Credit Advances, as applicable, made to the Borrowers, together with interest thereon as prescribed in Section 1.5 . The entire unpaid balance of the aggregate Auction Revolving Loan and all other non-contingent Obligations shall be immediately due and payable in full in immediately available funds on the Auction Commitment Termination Date.

Auction Multicurrency Tranche Revolving Credit Advances (i) to Domestic Borrowers on behalf of Auction Lenders in amounts that cause the sum of (a) the Dollar Equivalent of the aggregate outstanding balance of the Auction Revolving Credit Advances and Swing Line Advances outstanding to the Domestic Borrowers plus (b) the Dollar Equivalent of the outstanding amount of Letter of Credit Obligations incurred for the benefit of any Domestic Borrowers to exceed the Domestic Auction Borrowing Base or (ii) to Foreign Borrowers on behalf of the Auction Lenders in amounts that cause the sum of (a) the Dollar Equivalent of the aggregate outstanding balance of the Auction Revolving Credit Advances and Swing Line Advances outstanding to the Foreign Borrowers plus (b) the Dollar Equivalent of the outstanding amount of Letter of Credit Obligations incurred for the benefit of any Foreign Borrowers to exceed the Foreign Auction Borrowing Base (any such excess Auction Revolving Credit Advances are herein referred to collectively as “ Overadvances ”); provided , that (A) no such event or occurrence shall cause or constitute a waiver of the Administrative Agent’s, Swing Line Lender’s or Auction Lenders’ right to refuse to make any further Overadvances, Swing Line Advances or Auction Revolving Credit Advances, or incur any Letter of Credit Obligations, as the case may be, at any time that an Overadvance exists and (B) no Overadvance shall result in a Default or Event of Default based on Borrowers’ failure to comply with Section 1.3(b)(ii) for so long as the Administrative Agent permits such Overadvance to be outstanding, but solely with respect to the amount of such Overadvance. In addition, Overadvances may be made even if the conditions to lending set forth in Section 2.2 have not been met. All Overadvances shall constitute Index Rate Loans (in the case of Overadvances denominated in Dollars) or LIBOR Loans having a one-month LIBOR Period (in the case of Overadvances denominated in any Foreign Currency), shall bear interest at the Default Rate and shall be payable on the earlier of demand or the Auction Commitment Termination Date. Except as otherwise provided in Section 1.12(b) , the authority of the Administrative Agent to make Overadvances that constitute Auction Dollar Tranche Revolving Credit Advances is limited to an aggregate amount not to exceed a Dollar Equivalent of $20,000,000 at any time, shall not cause the aggregate Auction Dollar Tranche Revolving Loan to exceed the Maximum Auction Dollar Tranche Amount, and may be revoked prospectively by a written notice to the Administrative Agent signed by the Majority in Interest of the Auction Dollar Tranche Lenders; provided further , that Overadvances that constitute Auction Dollar Tranche Revolving Credit Advances made other than for the purpose of protecting or preserving the Collateral shall not remain outstanding for more than sixty (60) days without the written consent of the Majority in Interest of the Auction Dollar Tranche Lenders. Except as otherwise provided in Section 1.12(b) , the authority of the Administrative Agent to make Overadvances that constitute Auction Multicurrency Tranche Revolving Credit Advances is limited to an aggregate amount not to exceed a Dollar Equivalent of $5,000,000 at any time, shall not cause the Dollar Equivalent of the aggregate Auction Multicurrency Tranche Revolving Loan to exceed the Maximum Multicurrency Tranche Amount, and may be revoked prospectively by a written notice to the Administrative Agent signed by the Majority in Interest of the Auction Multicurrency Tranche Lenders; provided further , that Overadvances that constitute Auction Multicurrency Tranche Revolving Credit Advances made other than for the purpose of protecting or preserving the Collateral shall not remain outstanding for more than sixty (60) days without the written consent of the Majority in Interest of the Auction Multicurrency Tranche Lenders. The Administrative Agent shall use commercially reasonable efforts to provide notice to Lenders

following the making of an Overadvance (unless one or more Overadvances are already outstanding as of the date of such Overadvance).

(iv) From the Restatement Effective Date until the date that is 180 days prior to the date set forth in clause (a) of the definition of “Auction Commitment Termination Date,” the Borrowers may request that any additional Person(s) may become party hereto as an Auction Lender and provide additional Auction Dollar Tranche Commitments or Auction Multicurrency Tranche Commitments or any Auction Lender may agree in its sole discretion to increase its Auction Dollar Tranche Commitment or Auction Multicurrency Tranche Commitment (any such Person or Lender, an “ Increase Lender ”) pursuant to a joinder agreement (an “ Increase Joinder ”) in form and substance reasonably acceptable to the Administrative Agent; provided that (A) the sum of (x) the aggregate amount of all such additional Auction Commitments or increases in the Auction Commitments of the Increase Lenders under this Section 1.1(a)(iv) plus (y) the aggregate amount of all additional “Commitments” or increases in the “Commitments” of the “Increase Lenders” under Section 1.1(a)(iv) of the SFS Revolving Credit Agreement, does not exceed $150,000,000, (B) no Default or Event of Default has occurred and is continuing and (C) after giving effect to any such additional Auction Commitments or increases in Auction Commitments, each Auction Lender shall maintain equal Pro Rata Shares of Auction Commitments hereunder and the “Commitments” under the SFS Revolving Credit Agreement. The Increase Joinder may, without the consent of any other Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent and the Borrowers, to effect the provisions of this Section 1.1(a)(iv) . The consent of the Administrative Agent (not to be unreasonably withheld or delayed in the case of any Qualified Assignee) shall be required prior to the addition of any Person as an Auction Lender or the increase of the Auction Commitment of any Auction Lender pursuant to this Section 1.1(a)(iv) . Each applicable Borrower shall pay any LIBOR breakage costs due to any existing Auction Lender in accordance with Section 1.14(b) (with any payment to any existing Auction Lender in respect of the assignment of any principal amount of any Loan pursuant to this Section 1.1(a)(iv) being treated as a repayment of a Loan for purposes of such Section 1.14(b) ). Nothing contained in this Section 1.1(a)(iv) shall constitute, or otherwise be deemed to be, a commitment on the part of any Auction Lender to increase its Auction Commitment hereunder at any time.

(b) Incremental Revolving Credit Facility .

(i) Subject to the terms and conditions hereof, each Incremental Lender agrees to make available, from time to time until the Incremental Commitment Termination Date, its Pro Rata Share of advances (each, an “ Incremental Revolving Credit Advance ”) in Dollars to the Borrowers. The Pro Rata Share of the aggregate outstanding principal amount of Incremental Revolving Credit Advances of any Incremental Lender shall not at any time exceed its separate Incremental Commitment. The obligations of each Lender to make Loans or purchase participation interests therein under this Agreement shall be several and not joint. Until the Incremental Commitment Termination Date, Borrowers may borrow, repay and reborrow under this Section 1.1(b) ; provided , that (i) the amount of any Incremental Revolving Credit Advance to be made at any time to a Domestic Borrower shall not exceed the

Domestic Incremental Borrowing Availability at such time and (ii) the amount of any Incremental Revolving Credit Advance to be made at any time to a Foreign Borrower shall not exceed Foreign Incremental Borrowing Availability at such time. The Domestic Incremental Borrowing Availability or Foreign Incremental Borrowing Availability, or both, may be reduced by Reserves imposed by the Administrative Agent in its sole reasonable credit judgment. Each Incremental Revolving Credit Advance shall be made upon Borrower Representative’s irrevocable (subject to Section 1.17(c) ) written notice delivered to one of the representatives of the Administrative Agent identified in Schedule 1.1 at the address specified therein. Any such notice must be given no later than (x) 11:00 a.m. (New York time) on the Business Day of the proposed Incremental Revolving Credit Advance, in the case of an Index Rate Loan or (y) 11:00 a.m. (New York time) on the date which is three (3) Business Days prior to the proposed Incremental Revolving Credit Advance, in the case of a LIBOR Loan. Each such notice (a “ Notice of Incremental Revolving Credit Advance ”) must be given in writing (by telecopy or overnight courier) or Electronic Transmission substantially in the form of Exhibit 1.1(b)(i) or in any other written form reasonably acceptable to the Administrative Agent, and shall include the information required in such Exhibit and such other information as may be required by the Administrative Agent. If any Borrower desires to have any Incremental Revolving Credit Advance be made as a LIBOR Loan, Borrower Representative must comply with Section 1.5(e) . Incremental Revolving Credit Advances may not be drawn in any Foreign Currency.

(ii) If requested by any Incremental Lender, each Borrower shall execute and deliver to such Incremental Lender a note to evidence the Incremental Commitment of, and Incremental Revolving Credit Advances made by, that Incremental Lender. Each note shall be in the principal amount of the Incremental Commitment of the applicable Incremental Lender, dated the Restatement Effective Date (or such later date as such Incremental Lender becomes party to this Agreement pursuant to Section 9.1(a) or modifies its Incremental Commitment pursuant to Section 9.1(a) ) and substantially in the form of Exhibit 1.1(b)(ii)-A (in the case of the Domestic Borrowers) or Exhibit 1.1(b)(ii)-B (in the case of the Foreign Borrowers) (each an “ Incremental Revolving Note ” and, collectively, the “ Incremental Revolving Notes ”). Each Incremental Revolving Note shall represent the joint and several obligation of the applicable Borrowers to pay the amount of the applicable Incremental Lender’s Incremental Commitment or, if less, such Incremental Lender’s Pro Rata Share of the aggregate unpaid principal amount of all Incremental Revolving Credit Advances made to the Domestic Borrowers or the Foreign Borrowers, as applicable, together with interest thereon as prescribed in Section 1.5 . The entire unpaid balance of the aggregate outstanding principal amount of all Incremental Revolving Credit Advances shall be immediately due and payable in full in immediately available funds on the Incremental Commitment Termination Date. The entire unpaid balance of the aggregate outstanding principal amount of all Incremental Revolving Credit Advances made by each Non-Extending Incremental Lender shall be immediately due and payable in full in immediately available funds on the Non-Extending Incremental Maturity Date.

(i) The Administrative Agent shall notify the Swing Line Lender upon the Administrative Agent’s receipt of any Notice of Auction Revolving Credit Advance in respect

of an Auction Dollar Tranche Revolving Credit Advance or Auction Multicurrency Tranche Revolving Credit Advance (a) to be denominated in Dollars and to bear interest by reference to the Dollar Index Rate or (b) in the case of an Auction Multicurrency Tranche Revolving Credit Advance, (i) to be denominated in Sterling and to bear interest by reference to the Sterling Index Rate, (ii) to be denominated in Euro and to bear interest by reference to the Euro Index Rate or (iii) to be denominated in Hong Kong Dollars and to bear interest by reference to the Hong Kong Dollars Index Rate. Subject to the terms and conditions hereof, the Swing Line Lender may, but shall have no duty to, in accordance with any such notice, make available from time to time until the Auction Commitment Termination Date advances in respect of such Auction Dollar Tranche Revolving Credit Advance (each, an “ Auction Dollar Tranche Swing Line Advance ”) or such Auction Multicurrency Tranche Revolving Credit Advance (each, an “ Auction Multicurrency Tranche Swing Line Advance ”; Auction Dollar Tranche Swing Line Advances and Auction Multicurrency Tranche Swing Line Advances are collectively referred to herein as “ Swing Line Advances ”), as applicable, to the Borrowers. The provisions of this Section 1.1(c) shall not relieve Auction Lenders of their obligations to make Auction Revolving Credit Advances under Section 1.1(a) ; provided , that if the Swing Line Lender makes a Swing Line Advance pursuant to any such notice, such Swing Line Advance shall be in lieu of any Auction Revolving Credit Advance that otherwise may be made by the applicable Auction Lenders pursuant to such notice. The aggregate amount of Auction Dollar Tranche Swing Line Advances outstanding shall not exceed at any time the Auction Dollar Tranche Swing Line Availability as of such time, and the aggregate amount of Auction Multicurrency Tranche Swing Line Advances outstanding shall not exceed at any time the Auction Multicurrency Tranche Swing Line Availability as of such time. Until the Auction Commitment Termination Date, the Borrowers may from time to time borrow, repay and reborrow under this Section 1.1(c) . Each Swing Line Advance shall be made in a writing substantially in the form of Exhibit 1.1(c)(i) or in any other written form reasonably acceptable to the Swing Line Lender (a “ Swing Line Request ”). Any such notice must be given no later than (x) 3:00 p.m. (New York time) on the Business Day of the proposed Swing Line Advance, in the case of a Swing Line Advance in Dollars or (y) 10:00 a.m. (New York time) on the date which is (A) two (2) Business Days prior to the proposed Swing Line Advance, in the case of a Swing Line Advance denominated in Sterling or Euro and (B) three (3) Business Days prior to the proposed Swing Line Advance, in the case of a Swing Line Advance denominated in Hong Kong Dollars. Unless the Swing Line Lender has received at least one Business Day’s prior written notice from the Majority in Interest of the Auction Dollar Tranche Lenders instructing it not to make an Auction Dollar Tranche Swing Line Advance, the Swing Line Lender shall, notwithstanding the failure of any condition precedent set forth in Sections 2.2 , be entitled to fund that Auction Dollar Tranche Swing Line Advance, and to have each Auction Dollar Tranche Lender make Auction Dollar Tranche Revolving Credit Advances in accordance with Section 1.1(c)(iii) or purchase participating interests in accordance with Section 1.1(c)(v) . Unless the Swing Line Lender has received at least one Business Day’s prior written notice from the Majority in Interest of the Auction Multicurrency Tranche Lenders instructing it not to make an Auction Multicurrency Tranche Swing Line Advance, the Swing Line Lender shall, notwithstanding the failure of any condition precedent set forth in Sections 2.2 , be entitled to fund that Auction Multicurrency Tranche Swing Line Advance, and to have each Auction Multicurrency Tranche Lender make Auction Multicurrency Tranche Revolving Credit Advances in accordance with Section 1.1(c)(iii) or 1.1(c)(iv) , as applicable, or purchase participating

interests in accordance with Section 1.1(c)(v) . If any Auction Lender shall fail to make available to the Administrative Agent its Pro Rata Share of any Auction Revolving Credit Advance in accordance with Section 1.1(c)(iii) or 1.1(c)(iv) , as applicable, Borrowers shall repay the outstanding principal amount of the portion of the Swing Line Loan then outstanding due to such failure upon demand therefor by the Administrative Agent.

(ii) If requested by the Swing Line Lender, each Borrower shall execute and deliver to the Swing Line Lender a promissory note to evidence the Auction Dollar Tranche Swing Line Commitment and the Auction Multicurrency Tranche Swing Line Commitment. Such note shall be in the principal amount of the Auction Dollar Tranche Swing Line Commitment or Auction Multicurrency Tranche Swing Line Commitment, as applicable, of the Swing Line Lender, dated the Restatement Effective Date and substantially in the form of Exhibit 1.1(c)(ii)-A (in the case of Auction Dollar Tranche Swing Line Commitment) or Exhibit 1.1(c)(ii)-B (in the case of Auction Multicurrency Tranche Swing Line Commitment) (each, a “ Swing Line Note ” and, collectively, the “ Swing Line Notes ”). Each Swing Line Note shall represent the joint and several obligation of the applicable Borrowers to pay the amount of the Auction Dollar Tranche Swing Line Commitment or Auction Multicurrency Tranche Swing Line Commitment, as applicable, or, if less, the aggregate unpaid principal amount of all Auction Dollar Tranche Swing Line Advances or Auction Multicurrency Tranche Swing Line Advances, as applicable, made to the Borrowers together with interest thereon as prescribed in Section 1.5 . The entire unpaid balance of the Swing Line Loan and all other noncontingent Obligations shall be immediately due and payable in full in immediately available funds on the Auction Commitment Termination Date if not sooner paid in full.

(iii) The Swing Line Lender, at any time and from time to time no less frequently than once weekly, shall on behalf of the Borrower Representative (and the Borrower Representative hereby irrevocably authorizes the Swing Line Lender to so act on its behalf) request (x) in the case of any outstanding Auction Dollar Tranche Swing Line Loan, each Auction Dollar Tranche Lender (including the Swing Line Lender) to make available to the Borrowers its Pro Rata Share of an Auction Dollar Tranche Revolving Credit Advance equal to the principal amount of the portion of the Auction Dollar Tranche Swing Line Loan outstanding on the date such notice is given (the “ Refunded Dollar Tranche Swing Line Loan ”) and (y) in the case of any outstanding Auction Multicurrency Tranche Swing Line Loan denominated in Dollars, each Auction Multicurrency Tranche Lender (including the Swing Line Lender) to make available to the Borrowers its Pro Rata Share of an Auction Multicurrency Tranche Revolving Credit Advance in Dollars equal to the principal amount of the portion of the Auction Multicurrency Tranche Swing Line Loan outstanding on the date such notice is given (the “ Refunded Multicurrency Tranche Dollar Swing Line Loan ”). Unless any of the events described in Sections 8.1(g) or 8.1(h) has occurred (in which event the procedures of Section 1.1(c)(v) shall apply) and regardless of whether the conditions precedent set forth in this Agreement to the making of an Auction Revolving Credit Advance are then satisfied, (x) in the case of a Refunded Dollar Tranche Swing Line Loan, each Auction Dollar Tranche Lender shall disburse directly to the Administrative Agent its Pro Rata Share of such Auction Dollar Tranche Revolving Credit Advance on behalf of the Swing Line Lender prior to 3:00 p.m. (New York time) in immediately available funds in Dollars on the Business Day next succeeding the date

that notice is given and (y) in the case of a Refunded Multicurrency Tranche Dollar Swing Line Loan, each Auction Multicurrency Tranche Lender shall disburse directly to the Administrative Agent its Pro Rata Share of such Auction Multicurrency Tranche Revolving Credit Advance on behalf of the Swing Line Lender prior to 3:00 p.m. (New York time) in immediately available funds in Dollars on the Business Day next succeeding the date that notice is given. The proceeds of each such Auction Revolving Credit Advance shall be immediately paid to the Swing Line Lender and applied to repay the Refunded Dollar Tranche Swing Line Loan or Refunded Multicurrency Tranche Dollar Swing Line Loan, as applicable.

(iv) The Swing Line Lender, at any time and from time to time no less frequently than once weekly, shall on behalf of the Borrower Representative (and the Borrower Representative hereby irrevocably authorizes the Swing Line Lender to so act on its behalf) request each Auction Multicurrency Tranche Lender (including the Swing Line Lender, as applicable) to make available to the Borrowers its Pro Rata Share of an Auction Multicurrency Tranche Revolving Credit Advance in a Foreign Currency equal to the principal amount of the portion of the Auction Multicurrency Tranche Swing Line Loan denominated in such Foreign Currency and outstanding on the date such notice is given (the “ Refunded Foreign Currency Swing Line Loan ”). Unless any of the events described in Sections 8.1(g) or 8.1(h) has occurred (in which event the procedures of Section 1.1(c)(v) shall apply) and regardless of whether the conditions precedent set forth in this Agreement to the making of an Auction Revolving Credit Advance are then satisfied, each Auction Multicurrency Tranche Lender shall disburse directly to the Administrative Agent its Pro Rata Share of such Auction Multicurrency Tranche Revolving Credit Advance on behalf of the Swing Line Lender prior to 3:00 p.m. (New York time) in immediately available funds in such Foreign Currency on the second Business Day next succeeding the date that notice is given. The proceeds of each such Auction Multicurrency Tranche Revolving Credit Advance shall be immediately paid to the Swing Line Lender and applied to repay the Refunded Foreign Currency Swing Line Loan.

(v) If, prior to refunding a portion of the Swing Line Loan with an Auction Revolving Credit Advance pursuant to Section 1.1(c)(iii) or 1.1(c)(iv) , one of the events described in Sections 8.1(g) or 8.1(h) has occurred, then, subject to the provisions of Section 1.1(c)(vi) below:

(A) in the case of any Auction Dollar Tranche Swing Line Advance, each Auction Dollar Tranche Lender shall, on the date such Auction Dollar Tranche Revolving Credit Advance was to have been made pursuant to Section 1.1(c)(iii) , purchase from the Swing Line Lender an undivided participation interest in the Auction Dollar Tranche Swing Line Loan in an amount equal to its Pro Rata Share of such portion of the Auction Dollar Tranche Swing Line Loan. Upon request, each Auction Dollar Tranche Lender shall promptly transfer to the Swing Line Lender, in immediately available funds in Dollars, the amount of each such participation interest;

(B) in the case of any portion of the Auction Multicurrency Tranche Swing Line Loan denominated in Dollars, each Auction Multicurrency Tranche Lender shall, on the date such Auction Multicurrency Tranche Revolving Credit Advance was to have

been made pursuant to Section 1.1(c)(iii) , purchase from the Swing Line Lender an undivided participation interest in the Auction Multicurrency Tranche Swing Line Loan in an amount equal to its Pro Rata Share of such portion of the Auction Multicurrency Tranche Swing Line Loan. Upon request, each Auction Multicurrency Tranche Lender shall promptly transfer to the Swing Line Lender, in immediately available funds in Dollars, the amount of each such participation interest; and

(C) in the case of any portion of the Auction Multicurrency Tranche Swing Line Loan denominated in a Foreign Currency, each Auction Multicurrency Tranche Lender shall, on the date such Auction Multicurrency Tranche Revolving Credit Advance was to have been made pursuant to Section 1.1(c)(iv) , purchase from the Swing Line Lender an undivided participation interest in the Auction Multicurrency Tranche Swing Line Loan in an amount equal to its Pro Rata Share of such portion of the Auction Multicurrency Tranche Swing Line Loan. Upon request, each Auction Multicurrency Tranche Lender shall promptly transfer to the Swing Line Lender, in immediately available funds in such Foreign Currency, the amount of each such participation interest.

(vi) Each Auction Lender’s obligation to make Auction Revolving Credit Advances in accordance with Sections 1.1(c)(iii) and 1.1(c)(iv) and to purchase participation interests in accordance with Section 1.1(c)(v) shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right that such Auction Lender may have against the Swing Line Lender, any Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of any Default or Event of Default; (C) any inability of any Borrower to satisfy the conditions precedent to borrowing set forth in this Agreement at any time or (D) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing. If any Auction Lender does not make available to the Administrative Agent or the Swing Line Lender, as applicable, the amount required pursuant to Sections 1.1(c)(iii), 1.1(c)(iv) or 1.1(c)(v) , as the case may be, the Swing Line Lender shall be entitled to recover such amount on demand from such Auction Lender, together with interest thereon for each day from the date of non-payment until such amount is paid in full (x) in the case of any portion of the Swing Line Loan denominated in Dollars, at the Federal Funds Rate for the first two Business Days and at the Dollar Index Rate thereafter or (y) in the case of any portion of the Swing Line Loan denominated in a Foreign Currency, at the Sterling Index Rate, Euro Index Rate or the Hong Kong Dollars Index Rate, as applicable.

(d) Reliance on Notices; Appointment of Borrower Representative . The Administrative Agent shall be entitled to rely upon, and shall be fully protected in relying upon, any Notice of Revolving Credit Advance, Swing Line Request, Letter of Credit Request, Notice of Conversion/Continuation or similar notice believed by the Administrative Agent to be genuine. The Administrative Agent may assume that each Person executing and delivering any notice in accordance herewith was duly authorized, unless the responsible individual acting thereon for the Administrative Agent has actual knowledge to the contrary. Each Borrower hereby designates Parent as its representative and agent on its behalf for the purposes of issuing Notices of Revolving Credit Advances and Notices of Conversion/Continuation, giving

instructions with respect to the disbursement of the proceeds of the Loans, selecting interest rate options, requesting Letters of Credit, giving and receiving all other notices and consents hereunder or under any of the other Loan Documents and taking all other actions (including in respect of compliance with covenants) on behalf of any Borrower or Borrowers under the Loan Documents. Borrower Representative hereby accepts such appointment. The Administrative Agent and each Lender may regard any notice or other communication pursuant to any Loan Document from Borrower Representative as a notice or communication from all Borrowers, and may give any notice or communication required or permitted to be given to any Borrower or Borrowers hereunder to Borrower Representative on behalf of such Borrower or Borrowers. Each Borrower agrees that each notice, election, representation and warranty, covenant, agreement and undertaking made on its behalf by Borrower Representative shall be deemed for all purposes to have been made by such Borrower and shall be binding upon and enforceable against such Borrower to the same extent as if the same had been made directly by such Borrower.

(e) Branches and Affiliates of Lenders . Each Lender at its option may make any Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan (and in the case of an Affiliate, the provisions of Sections 1.14(b) , 1.16 and 1.17 shall apply to such Affiliate to the same extent as to such Lender); provided that any exercise of such option shall not affect the obligation of the relevant Borrower to repay such Loan in accordance with the terms of this Agreement.


1.2	Letters of Credit .

Subject to and in accordance with the terms and conditions contained herein and in Annex B , Borrower Representative, on behalf of the applicable Borrower (and any Subsidiary thereof that may be a co-applicant on any applicable Letter of Credit), shall have the right to request, and Lenders agree to incur, or purchase participations in, Letter of Credit Obligations.


1.3	Prepayments; Commitment Reductions .

(a) Voluntary Prepayments; Reductions in Auction Commitments .

(vii) Borrower Representative shall notify the Administrative Agent (and, in the case of prepayment of a Swing Line Loan, the Swing Line Lender) by telephone confirmed in writing of any prepayment of a Loan hereunder (i) in the case of a LIBOR Loan, not later than 4:00 p.m. (New York time) on the date which is three (3) Business Days before the date of such prepayment, and (ii) in the case of an Index Rate Loan, not later than 11:00 a.m. (New York time) on the date of such prepayment. Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Loan or portion thereof to be prepaid. Promptly following receipt of any such notice, the Administrative Agent shall provide notice to Lenders thereof. Each partial prepayment of any Loan shall be in a minimum amount of (i) if denominated in Dollars, $5,000,000 or an integral multiple of $1,000,000 in excess of such amount, (ii) if denominated in Sterling, £3,000,000 or an integral multiple of £500,000 in excess of such amount, (iii) if denominated in Euro, €3,000,000 or an integral multiple of

€500,000 in excess of such amount or (iv) if denominated in Hong Kong Dollars, HK$40,000,000 or an integral multiple of HK$8,000,000 in excess of such amount.

(viii) Borrowers may at any time, on at least five (5) days’ prior written notice by Borrower Representative to the Administrative Agent of the intent of the Borrowers to effect such a reduction and at least two (2) days’ prior written notice by Borrower Representative to the Administrative Agent of the exact date on which such reduction shall occur, permanently reduce (but not terminate) the Auction Dollar Tranche Commitment or Auction Multicurrency Tranche Commitment; provided , that (A) any such reduction shall be in a minimum amount of $5,000,000 and integral multiples of $1,000,000 in excess of such amount, (B) the Auction Dollar Tranche Commitment shall not be reduced to an amount less than the greater of (i) $50,000,000, and (ii) the sum of (x) the aggregate Auction Dollar Tranche Revolving Loan then outstanding and (y) the Auction Dollar Tranche Swing Line Loan then outstanding, (C) the Auction Multicurrency Tranche Commitment shall not be reduced to an amount less than the greater of (i) $12,500,000, and (ii) the sum of (x) the Dollar Equivalent of the amount of the aggregate Auction Multicurrency Tranche Revolving Loan then outstanding and (y) the Dollar Equivalent of the Auction Multicurrency Tranche Swing Line Loan then outstanding and (D) after giving effect to such reductions, Borrowers shall comply with Sections 1.3(b)(i) and (ii) . In addition, Borrowers may at any time, on at least seven (7) days’ prior written notice by Borrower Representative to the Administrative Agent of the intent of the Borrowers to effect such a termination and at least two (2) days’ prior written notice by Borrower Representative to the Administrative Agent of the exact date on which such termination shall occur, terminate the Commitments; provided , that upon such termination, all Loans and other Obligations shall be immediately due and payable in full and all Letter of Credit Obligations shall be cash collateralized or otherwise satisfied in accordance with Annex B hereto. Any reduction or termination of any Commitment must be accompanied by the payment of any LIBOR funding breakage costs in accordance with Section 1.14(b) . Upon any such reduction or termination of the Commitments, each Borrower’s right to request Revolving Credit Advances, or request that Letter of Credit Obligations be incurred on its behalf, or request Swing Line Advances, shall simultaneously be permanently reduced or terminated, as the case may be; provided , that a permanent reduction of the Auction Commitments such that the sum of the Auction Dollar Tranche Commitment plus the Auction Multicurrency Tranche Commitment is less than $80,000,000 after giving effect thereto shall require a corresponding pro rata reduction in the Foreign Borrower Subfacility Limit and the L/C Sublimit to the extent of such reduction below $80,000,000.

(b) Mandatory Prepayments .

(i)

(A) If at any time the aggregate outstanding balance of the Auction Dollar Tranche Revolving Loan and the Auction Dollar Tranche Swing Line Loan exceeds the Maximum Auction Dollar Tranche Amount, Borrowers shall immediately repay the aggregate outstanding Auction Dollar Tranche Revolving Credit Advances

and Auction Dollar Tranche Swing Line Advances to the extent required to eliminate such excess. If any such excess remains after repayment in full of the aggregate outstanding Auction Dollar Tranche Revolving Credit Advances and Auction Dollar Tranche Swing Line Advances, Borrowers shall provide cash collateral for the Auction Dollar Tranche Letter of Credit Obligations in the manner set forth in Annex B to the extent of such remaining excess.

(B) If at any time the Dollar Equivalent of the aggregate outstanding balance of the Auction Multicurrency Tranche Revolving Loan and the Auction Multicurrency Tranche Swing Line Loan exceeds the Maximum Auction Multicurrency Tranche Amount, Borrowers shall immediately repay the aggregate outstanding Auction Multicurrency Tranche Revolving Credit Advances and Auction Multicurrency Tranche Swing Line Advances to the extent required to eliminate such excess. If any such excess remains after repayment in full of the aggregate outstanding Auction Multicurrency Tranche Revolving Credit Advances and Auction Multicurrency Tranche Swing Line Advances, Borrowers shall provide cash collateral for the Auction Multicurrency Tranche Letter of Credit Obligations in the manner set forth in Annex B to the extent of such remaining excess.

(C) If at any time the aggregate outstanding balance of the Incremental Revolving Credit Advances exceeds the Maximum Incremental Amount, Borrowers shall immediately repay the aggregate outstanding Incremental Revolving Credit Advances to the extent required to eliminate such excess.

(D) If at any time the sum of (i) the Dollar Equivalent of the aggregate outstanding principal balance of Auction Revolving Credit Advances and Swing Line Advances outstanding to the Foreign Borrowers plus (ii) the Dollar Equivalent of the outstanding Letter of Credit Obligations incurred on behalf of the Foreign Borrowers, in the aggregate plus (iii) the “Dollar Equivalent” of the aggregate outstanding principal balance of “Revolving Credit Advances” and “Swing Line Advances” outstanding to the “Foreign Borrowers” (as each such term in this clause (iii) is defined in the SFS Revolving Credit Agreement) plus (iv) the “Dollar Equivalent” of the outstanding “Letter of Credit Obligations” incurred on behalf of the “Foreign Borrowers” (as each such term in this clause (iv) is defined in the SFS Revolving Credit Agreement), in the aggregate exceeds the Foreign Borrower Subfacility Limit, the Foreign Borrowers shall, at the

Administrative Agent’s request, immediately repay (or cause to be repaid) such Auction Revolving Credit Advances and Swing Line Advances and/or “Revolving Credit Advances” and “Swing Line Advances” under the SFS Revolving Credit Agreement to the extent required to eliminate such excess. If any such excess remains after repayment in full of the aggregate outstanding principal balance of such Auction Revolving Credit Advances and Swing Line Advances and/or “Revolving Credit Advances” and “Swing Line Advances” under the SFS Revolving Credit Agreement, the Foreign Borrowers shall, at the Administrative Agent’s request, provide (or cause to be provided) cash collateral for such Letter of Credit Obligations and/or “Letter of Credit Obligations” under the SFS Revolving Credit Agreement in the manner set forth in Annex B or Annex B to the SFS Revolving Credit Agreement, as applicable, to the extent of such remaining excess.

(ii)

(A) If at any time the Dollar Equivalent of the aggregate outstanding balance of the Auction Revolving Credit Advances and Swing Line Advances outstanding to the Domestic Borrowers and the Dollar Equivalent of the Letter of Credit Obligations incurred on behalf of the Domestic Borrowers, in the aggregate, exceed the Domestic Auction Borrowing Base, the Domestic Borrowers shall immediately repay such outstanding Auction Revolving Credit Advances and Swing Line Advances to the extent required to eliminate such excess. If any such excess remains after repayment in full of such outstanding Auction Revolving Credit Advances and Swing Line Advances, the Domestic Borrowers shall provide cash collateral for such Letter of Credit Obligations in the manner set forth in Annex B to the extent of such remaining excess.

(B) If at any time the Dollar Equivalent of the aggregate outstanding balance of the Auction Revolving Credit Advances and Swing Line Advances outstanding to the Foreign Borrowers and the Dollar Equivalent of the Letter of Credit Obligations incurred on behalf of the Foreign Borrowers, in the aggregate, exceed the Dollar Equivalent of the Foreign Auction Borrowing Base, the Foreign Borrowers shall immediately repay such outstanding Auction Revolving Credit Advances and Swing Line Advances to the extent required to eliminate such excess. If any such excess remains after repayment in full of the aggregate outstanding principal balance of such Auction Revolving Credit Advances and Swing Line Advances, the Foreign Borrowers shall, at the

Administrative Agent’s request, provide cash collateral for such Letter of Credit Obligations in the manner set forth in Annex B to the extent of such remaining excess.

(C) If at any time the aggregate outstanding balance of the Incremental Revolving Credit Advances to the Domestic Borrowers exceeds the Domestic Incremental Borrowing Base, the Domestic Borrowers shall immediately repay such outstanding Incremental Revolving Credit Advances to the extent required to eliminate such excess. If at any time the aggregate outstanding balance of the Incremental Revolving Credit Advances to the Foreign Borrowers exceeds the Foreign Incremental Borrowing Base, the Foreign Borrowers shall immediately repay such outstanding Incremental Revolving Credit Advances to the extent required to eliminate such excess.

Notwithstanding the foregoing, any Overadvance made pursuant to Section 1.1(a)(iii) shall be repaid in accordance with Section 1.1(a)(iii) .

(iii) Subject to Section 1.3(c) and without duplication of mandatory prepayment obligations set forth in Section 1.3(b)(iii) of the SFS Revolving Credit Agreement, within three (3) Business Days after receipt by any Sotheby Entity of any cash proceeds of any asset disposition, the applicable Borrower (which is the Borrower that received such cash proceeds or, if such cash proceeds are received by a Sotheby Entity other than a Borrower, which is the Borrower that is the most direct holder of Stock of such Sotheby Entity) shall prepay the Obligations (and cash collateralize the Letter of Credit Obligations, as applicable) and the “Obligations” (and cash collateralize the “Letter of Credit Obligations,” as applicable) (in each case, as defined in the SFS Revolving Credit Agreement) in an aggregate amount equal to such proceeds, after the following amounts are deducted from the aggregate amount of all such proceeds: (1) commissions and other reasonable and customary transaction costs, fees and expenses properly attributable to such transaction and payable by Sotheby Entities in connection therewith (in each case, paid to non-Affiliates), (2) transfer taxes, (3) amounts payable to holders of senior Liens on such asset (to the extent such Liens constitute Permitted Encumbrances hereunder), if any, and (4) an appropriate reserve for income taxes in accordance with GAAP in connection therewith. Any such prepayment of the Obligations (and cash collateralization of Letter of Credit Obligations) and the “Obligations” (and cash collateralization of “Letter of Credit Obligations”) (in each case, as defined in the SFS Revolving Credit Agreement) shall be applied in accordance with Section 1.3(d) or (e) , as applicable. The following shall not be subject to mandatory prepayment under this clause (iii) : (1) proceeds of dispositions permitted under Section 6.8 and (2) asset disposition proceeds with respect to Equipment or Fixtures that are reinvested in Equipment or Fixtures within one hundred and eighty (180) days of receipt thereof; provided , that the Borrower Representative notifies the Administrative Agent of its intent to reinvest at the time such proceeds are received and when such reinvestment occurs.

(iv) Subject to Section 1.3(c) and without duplication of mandatory prepayment obligations set forth in Section 1.3(b)(iv) of the SFS Revolving Credit Agreement, if any Sotheby Entity issues Stock to any entity other than another Sotheby Entity, no later than the fifth (5 ^th ) Business Day following the date of receipt of any cash proceeds thereof, the applicable Borrower (which is the Borrower that received such cash proceeds or, if such cash proceeds are received by a Sotheby Entity other than a Borrower, which is the Borrower that is the most direct holder of Stock of such Sotheby Entity) shall prepay the Obligations (and cash collateralize Letter of Credit Obligations, as applicable) and the “Obligations” (and cash collateralize the “Letter of Credit Obligations,” as applicable) (in each case, as defined in the SFS Revolving Credit Agreement) in an aggregate amount equal to all such proceeds, after the following amounts are deducted from the aggregate amount of all such proceeds: (1) underwriting discounts, (2) commissions and (3) other reasonable costs paid to non-Affiliates in connection therewith. Any such prepayment of the Obligations (and cash collateralization of Letter of Credit Obligations) and the “Obligations” (and cash collateralization of “Letter of Credit Obligations”) (in each case, as defined in the SFS Revolving Credit Agreement) shall be applied in accordance with Section 1.3(d) or (e) , as applicable. The following shall not be subject to prepayment under this clause (iv) : (1) proceeds of Stock issuances of Parent, (2) proceeds of Stock issuances to employees of any Sotheby Entity and (3) proceeds of Stock issuances up to the Dollar Equivalent of $10,000,000 in the aggregate for any Fiscal Year.

(c) Adjustments to Mandatory Prepayment Amounts . The Borrowers shall be required to make any prepayment of the Obligations (and cash collateralization of Letter of Credit Obligations) otherwise payable pursuant to Sections 1.3(b)(iii), 1.3(b)(iv) or 5.4 only to the extent that the amount of such prepayment exceeds (i) in the case of the Domestic Borrowers, the sum of the Domestic Auction Borrowing Availability plus the Domestic Incremental Borrowing Availability as of the date of such required prepayment or (ii) in the case of the Foreign Borrowers, the sum of the Foreign Auction Borrowing Availability plus the Foreign Incremental Borrowing Availability as of the date of such required prepayment, in each case as set forth in a Borrowing Base Certificate most recently delivered as of the date of such required prepayment. In addition, if, after giving effect to the previous sentence, any Foreign Borrower shall be required to make a prepayment pursuant to Sections 1.3(b)(iii), 1.3(b)(iv) or 5.4 in excess of the outstanding principal balance of the Auction Revolving Credit Advances, Incremental Revolving Credit Advances and Swing Line Advances outstanding to the Foreign Borrowers and the Letter of Credit Obligations incurred on behalf of the Foreign Borrowers, in the aggregate, as of such date, then the Domestic Borrowers shall be jointly and severally liable to make a prepayment of the Loans (and cash collateralize the Letter of Credit Obligations) (in addition to any prepayment made by such Foreign Borrower pursuant to Sections 1.3(b)(iii), 1.3(b)(iv) or 5.4 , as applicable) in an amount equal to (i) the amount of such excess minus (ii) the sum of the Domestic Auction Borrowing Availability plus the Domestic Incremental Borrowing Availability as of the date of such required prepayment as set forth in a Borrowing Base Certificate delivered to the Administrative Agent. To the extent any proceeds from any event that would otherwise give rise to a mandatory prepayment are not required to be used to make a prepayment of Obligations (and cash collateralization of Letter of Credit Obligations) under this Agreement as a result of this Section 1.3(c) , the amount of such proceeds that would otherwise be applied in accordance with Section 1.3(d) or (e) , as applicable, to the payment of the

“Obligations” (and cash collateralization of “Letter of Credit Obligations”) (in each case, as defined in the SFS Revolving Credit Agreement) shall be increased on a non-pro rata basis such that such amount shall include the maximum portion of such unused proceeds that can be used to make a mandatory prepayment under the SFS Revolving Credit Agreement after giving effect to Section 1.3(c) of the SFS Revolving Credit Agreement.

(d) Application of Mandatory Prepayments by Domestic Borrowers . Subject to the other terms set forth herein, in the SFS Revolving Credit Agreement, and in the Collateral Documents, any prepayments made by any Domestic Borrower pursuant to Sections 1.3(b)(iii) or (iv) or Section 5.4 shall be applied as follows:

(i) first , on a pro rata basis, (x) to Fees, reimbursable expenses, indemnities and other amounts owing to the Agents which are then due and payable pursuant to any of the Loan Documents and (y) to “Fees,” reimbursable expenses, indemnities and other amounts owing to the “Agents” which are then due and payable pursuant to any of the “Loan Documents” (as each such term in this clause (y) is defined in the SFS Revolving Credit Agreement);

(ii) second , to interest then due and payable on Incremental Revolving Credit Advances outstanding to the Domestic Borrowers;

(iii) third , to the principal balance of the Incremental Revolving Credit Advances outstanding to the Domestic Borrowers until the same have been paid in full;

(iv) fourth , to interest then due and payable on Incremental Revolving Credit Advances outstanding to the Foreign Borrowers;

(v) fifth , to the principal balance of the Incremental Revolving Credit Advances outstanding to the Foreign Borrowers until the same have been paid in full;

(vi) sixth , on a pro rata basis (x) to interest then due and payable on Swing Line Advances outstanding to the Domestic Borrowers and (y) to interest then due and payable on “Swing Line Advances” outstanding to the “Domestic Borrowers” (as each such term in this clause (y) is defined in the SFS Revolving Credit Agreement);

(vii) seventh , on a pro rata basis, (x) to the principal balance of Swing Line Advances outstanding to the Domestic Borrowers until the same have been paid in full and (y) to the principal balance of “Swing Line Advances” outstanding to the “Domestic Borrowers” until the same have been paid in full (as each such term in this clause (y) is defined in the SFS Revolving Credit Agreement);

(viii) eighth , on a pro rata basis (x) to interest then due and payable on Auction Revolving Credit Advances outstanding to the Domestic Borrowers and (y) to interest then due and payable on “Revolving Credit Advances” outstanding to the “Domestic Borrowers” (as each such term in this clause (y) is defined in the SFS Revolving Credit Agreement);

(ix) ninth , on a pro rata basis, (x) to the principal balance of Auction Revolving Credit Advances outstanding to the Domestic Borrowers until the same have been paid in full and (y) to the principal balance of “Revolving Credit Advances” outstanding to the “Domestic Borrowers” until the same have been paid in full (as each such term in this clause (y) is defined in the SFS Revolving Credit Agreement);

(x) tenth , on a pro rata basis, (x) to any Letter of Credit Obligations incurred on behalf of the Domestic Borrowers to provide cash collateral therefor in the manner set forth in Annex B , until all such Letter of Credit Obligations have been fully cash collateralized in the manner set forth in Annex B and (y) to any “Letter of Credit Obligations” incurred on behalf of the “Domestic Borrowers” to provide cash collateral therefor in the manner set forth in Annex B to the SFS Revolving Credit Agreement, until all such “Letter of Credit Obligations” have been fully cash collateralized in the manner set forth in Annex B to the SFS Revolving Credit Agreement (as each such term in this clause (y) is defined in the SFS Revolving Credit Agreement);

(xi) eleventh , on a pro rata basis, (x) to any other Obligations (other than Obligations that constitute a Guaranty of the Obligations of the Foreign Credit Parties) owing by the Domestic Credit Parties and (y) to any other “Obligations” (other than “Obligations” that constitute a “Guaranty” of the “Obligations” of the “Foreign Credit Parties”) owing by the “Domestic Credit Parties” (as each such term in this clause (y) is defined in the SFS Revolving Credit Agreement);

(xii) twelfth , on a pro rata basis (x) to interest then due and payable on Swing Line Advances outstanding to the Foreign Borrowers and (y) to interest then due and payable on “Swing Line Advances” outstanding to the “Foreign Borrowers” (as each such term in this clause (y) is defined in the SFS Revolving Credit Agreement);

(xiii) thirteenth , on a pro rata basis, (x) to the principal balance of Swing Line Advances outstanding to the Foreign Borrowers until the same have been paid in full and (y) to the principal balance of “Swing Line Advances” outstanding to the “Foreign Borrowers” until the same have been paid in full (as each such term in this clause (y) is defined in the SFS Revolving Credit Agreement);

(xiv) fourteenth , on a pro rata basis (x) to interest then due and payable on Auction Revolving Credit Advances outstanding to the Foreign Borrowers and (y) to interest then due and payable on “Revolving Credit Advances” outstanding to the “Foreign Borrowers” (as each such term in this clause (y) is defined in the SFS Revolving Credit Agreement);

(xv) fifteenth , on a pro rata basis, (x) to the principal balance of Auction Revolving Credit Advances outstanding to the Foreign Borrowers until the same have been paid in full and (y) to the principal balance of “Revolving Credit Advances” outstanding to the “Foreign Borrowers” until the same have been paid in full (as each such term in this clause (y) is defined in the SFS Revolving Credit Agreement);

(xvi) sixteenth , on a pro rata basis, (x) to any Letter of Credit Obligations incurred on behalf of the Foreign Borrowers to provide cash collateral therefor in the manner set forth in Annex B , until all such Letter of Credit Obligations have been fully cash collateralized in the manner set forth in Annex B and (y) to any “Letter of Credit Obligations” incurred on behalf of the “Foreign Borrowers” to provide cash collateral therefor in the manner set forth in Annex B to the SFS Revolving Credit Agreement, until all such “Letter of Credit Obligations” have been fully cash collateralized in the manner set forth in Annex B to the SFS Revolving Credit Agreement (as each such term in this clause (y) is defined in the SFS Revolving Credit Agreement); and

(xvii) last , on a pro rata basis, (x) to any other Obligations owing by the Foreign Credit Parties and (y) to any other “Obligations” owing by the “Foreign Credit Parties” (as each such term in this clause (y) is defined in the SFS Revolving Credit Agreement).

No Commitments shall be permanently reduced by the amount of any such prepayments.

(e) Application of Mandatory Prepayments by Foreign Borrowers . Subject to the other terms set forth herein, in the SFS Revolving Credit Agreement, and in the Collateral Documents, any prepayments made by any Foreign Borrower pursuant to Sections 1.3(b)(iii) or (iv) or Section 5.4 shall be applied as follows:

(i) first , on a pro rata basis (x) to Fees, reimbursable expenses, indemnities and other amounts owing to the Agents which are then due and payable pursuant to any of the Loan Documents in respect of the Revolving Loans made to the Foreign Borrowers and (y) to “Fees,” reimbursable expenses, indemnities and other amounts owing to the “Agents” which are then due and payable pursuant to any of the “Loan Documents” in respect of the “Revolving Loans” made to the “Foreign Borrowers” (as each such term in this clause (y) is defined in the SFS Revolving Credit Agreement);

(ii) second , to interest then due and payable on Incremental Revolving Credit Advances outstanding to the Foreign Borrowers;

(iii) third , to the principal balance of the Incremental Revolving Credit Advances outstanding to the Foreign Borrowers until the same have been paid in full;

(iv) fourth , on a pro rata basis (x) to interest then due and payable on Swing Line Advances outstanding to the Foreign Borrowers and (y) to interest then due and payable on “Swing Line Advances” outstanding to the “Foreign Borrowers” (as each such term in this clause (y) is defined in the SFS Revolving Credit Agreement);

(v) fifth , on a pro rata basis, (x) to the principal balance of Swing Line Advances outstanding to the Foreign Borrowers until the same have been paid in full and (y) to the principal balance of “Swing Line Advances” outstanding to the “Foreign Borrowers” until the same have been paid in full (as each such term in this clause (y) is defined in the SFS Revolving Credit Agreement);

(vi) sixth , on a pro rata basis (x) to interest then due and payable on Auction Revolving Credit Advances outstanding to the Foreign Borrowers and (y) to interest then due and payable on “Revolving Credit Advances” outstanding to the “Foreign Borrowers” (as each such term in this clause (y) is defined in the SFS Revolving Credit Agreement);

(vii) seventh , on a pro rata basis, (x) to the principal balance of Auction Revolving Credit Advances outstanding to the Foreign Borrowers until the same have been paid in full and (y) to the principal balance of “Revolving Credit Advances” outstanding to the “Foreign Borrowers” until the same have been paid in full (as each such term in this clause (y) is defined in the SFS Revolving Credit Agreement);

(viii) eighth , on a pro rata basis, (x) to any Letter of Credit Obligations incurred on behalf of the Foreign Borrowers to provide cash collateral therefor in the manner set forth in Annex B , until all such Letter of Credit Obligations have been fully cash collateralized in the manner set forth in Annex B and (y) to any “Letter of Credit Obligations” incurred on behalf of the “Foreign Borrowers” to provide cash collateral therefor in the manner set forth in Annex B to the SFS Revolving Credit Agreement, until all such “Letter of Credit Obligations” have been fully cash collateralized in the manner set forth in Annex B to the SFS Revolving Credit Agreement (as each such term in this clause (y) is defined in the SFS Revolving Credit Agreement); and

(ix) last , on a pro rata basis, (x) to any other Obligations owing by the Foreign Credit Parties and (y) to any other “Obligations” owing by the “Foreign Credit Parties” (as each such term in this clause (y) is defined in the SFS Revolving Credit Agreement).

Neither any Commitment nor the Foreign Borrower Subfacility Limit shall be permanently reduced by the amount of any such prepayments.

(f) No Implied Consent . Nothing in this Section 1.3 shall be construed to constitute any Agent’s or any Lender’s consent to any transaction that is not permitted by other provisions of this Agreement or the other Loan Documents.

(g) Application to Revolving Credit Advances . Any prepayment made on any outstanding Revolving Credit Advances pursuant to Sections 1.1(a)(i), 1.3(b) or 5.4 shall be applied as follows: first , to such Revolving Credit Advances that are Index Rate Loans; and second , to such Revolving Credit Advances that are LIBOR Loans, in the order of the LIBOR Loans with the shortest LIBOR Periods to the LIBOR Loans with the longest LIBOR Periods. Application to specific Advances pursuant to this Section 1.3(g) shall be subject to the calculation of the indemnities, if any, owing to the Lenders pursuant to Section 1.14(b) .


1.4	Use of Proceeds .

Borrowers shall utilize the proceeds of the Loans solely for the financing of Borrowers’ and their Subsidiaries’ working capital and other general corporate needs.


1.5	Interest and Applicable Margins .

(a) Borrowers shall pay interest to the Administrative Agent, for the ratable benefit of Lenders in accordance with the various Loans being made by each Lender, in arrears on each applicable Interest Payment Date, at the following rates: (i) with respect to the Auction Revolving Credit Advances denominated in Dollars, the Dollar Index Rate plus the Applicable Auction Dollar Revolver Index Margin per annum or, at the election of Borrower Representative, the applicable Dollar LIBOR Rate plus the Applicable Auction Dollar Revolver LIBOR Margin per annum, (ii) with respect to the Auction Multicurrency Tranche Revolving Credit Advances denominated in Sterling, the applicable Sterling LIBOR Rate plus the Applicable Sterling Revolver LIBOR Margin per annum, (iii) with respect to the Auction Multicurrency Tranche Revolving Credit Advances denominated in Euro, the applicable Euro LIBOR Rate plus the Applicable Euro Revolver LIBOR Margin per annum, (iv) with respect to the Auction Multicurrency Tranche Revolving Credit Advances denominated in Hong Kong Dollars, the Hong Kong Dollars LIBOR Rate plus the Applicable Hong Kong Dollars Revolver LIBOR Margin per annum, (v) with respect to the Incremental Revolving Credit Advances, the Dollar Index Rate plus the Applicable Incremental Dollar Revolver Index Margin per annum or, at the election of Borrower Representative, the applicable Dollar LIBOR Rate plus the Applicable Incremental Dollar Revolver LIBOR Margin per annum, (vi) with respect to Swing Line Advances denominated in Dollars, the Dollar Index Rate plus the Applicable Dollar Revolver Index Margin per annum, (vii) with respect to Swing Line Advances denominated in Sterling, the Sterling Index Rate plus the Applicable Sterling Revolver Index Margin per annum, (viii) with respect to Swing Line Advances denominated in Euro, the Euro Index Rate plus the Applicable Euro Revolver Index Margin per annum and (ix) with respect to Swing Line Advances denominated in Hong Kong Dollars, the Hong Kong Dollars Index Rate plus the Applicable Hong Kong Dollars Revolver Index Margin per annum.

The Applicable Margins shall be calculated based on the following grids:



	If the Average Monthly Usage is:	Level of Applicable Margins:
	≤ 25%	Level I
	>25% but ≤ 50%	Level II
	>50% but ≤ 75%	Level III
	>75%	Level IV



		Applicable Margins
		Level I		Level II		Level III		Level IV
	Applicable Auction Dollar Revolver Index Margin	0.75%		1.00%		1.25%		1.50%
	Applicable Auction Dollar Revolver LIBOR Margin	1.75%		2.00%		2.25%		2.50%
	Applicable Incremental Dollar Revolver Index Margin	2.75%
	Applicable Incremental Dollar Revolver LIBOR Margin	3.75%
	Applicable Sterling Revolver Index Margin	0.75%		1.00%		1.25%		1.50%
	Applicable Sterling Revolver LIBOR Margin	1.75%		2.00%		2.25%		2.50%
	Applicable Euro Revolver Index Margin	0.75%		1.00%		1.25%		1.50%
	Applicable Euro Revolver LIBOR Margin	1.75%		2.00%		2.25%		2.50%
	Applicable Hong Kong Dollars Revolver Index Margin	0.75%		1.00%		1.25%		1.50%
	Applicable Hong Kong Dollars Revolver LIBOR Margin	1.75%		2.00%		2.25%		2.50%
	Applicable L/C Margin	1.75%		2.00%		2.25%		2.50%

If the Average Monthly Usage is:			< 33%		>33% but ≤66%		>66%
Applicable Auction Unused Line Fee Margin			0.500%		0.375%		0.250%
Applicable Incremental Unused Line Fee Margin			0.625%

Adjustments in the Applicable Margins shall be implemented on the first day of each calendar month. Notwithstanding the foregoing, (i) the Average Monthly Usage shall be deemed to be in Level III (and, for purposes of determining the Applicable Auction Unused Line Fee Margin and the Applicable Incremental Unused Line Fee Margin, deemed to be < 33%) during the period from the Restatement Effective Date to, and including, September 30, 2014 and (ii) from and after the occurrence of an Event of Default and until the first Business Day following the cure or waiver thereof, no reduction in the Applicable Margins shall be implemented.

(b) If any payment on any Loan becomes due and payable on a day other than a Business Day, the maturity thereof will be extended to the next succeeding Business Day (except as set forth in the definition of LIBOR Period) and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension.

(c) All computations of Fees calculated on a per annum basis and interest on all Loans shall be made by the Administrative Agent on the basis of a 360-day year, in each case

for the actual number of days occurring in the period for which such interest and Fees are payable. The Dollar Index Rate, the Sterling Index Rate, the Euro Index Rate and the Hong Kong Dollars Index Rate are floating rates determined for each day. Each determination by the Administrative Agent of an interest rate and Fees hereunder shall be presumptive evidence of the correctness of such rates and Fees.

(d) So long as an Event of Default has occurred and is continuing under Section 8.1(a), (g) or (h), or so long as any other Event of Default has occurred and is continuing and the Administrative Agent shall have elected (or, by written request to the Administrative Agent, the Requisite Lenders shall have elected), which election in either case shall be confirmed by written notice from the Administrative Agent to Borrower Representative, the interest rates applicable to the Loans and the Letter of Credit Fees shall be increased by two percentage points (2%) per annum above the rates of interest or the rate of such Fees otherwise applicable hereunder (the “ Default Rate ”), and all outstanding Obligations shall bear interest at the Default Rate applicable to such Obligations. Interest and Letter of Credit Fees at the Default Rate shall accrue from the initial date of such Event of Default until that Event of Default is cured or waived and shall be payable upon demand.

(e) Subject to the conditions precedent set forth in Section 2.2 , Borrower Representative shall have the option to (i) request that any Revolving Credit Advance denominated in Dollars be made as a LIBOR Loan, (ii) convert at any time all or any portion of the outstanding Auction Revolving Loan denominated in Dollars or outstanding Incremental Revolving Credit Advances from Index Rate Loans to LIBOR Loans, (iii) convert any LIBOR Loan denominated in Dollars to an Index Rate Loan, subject to payment of LIBOR breakage costs in accordance with Section 1.14(b) if such conversion is made prior to the expiration of the LIBOR Period applicable thereto, or (iv) continue all or any portion of the outstanding Auction Revolving Loan or any outstanding Incremental Revolving Credit Advance as a LIBOR Loan upon the expiration of the applicable LIBOR Period and the succeeding LIBOR Period of that continued portion of the outstanding Auction Revolving Loan or such Incremental Revolving Credit Advances, as applicable, shall commence on the first day after the last day of the LIBOR Period of the portion of the outstanding Auction Revolving Loan or the Incremental Revolving Credit Advances, as applicable, to be continued. Any portion of the outstanding Auction Revolving Loan to be made or continued as, or converted into, a LIBOR Loan must be in a minimum amount of (i) if denominated in Dollars, $5,000,000 or an integral multiple of $1,000,000 in excess of such amount, (ii) if denominated in Sterling, £3,000,000 or an integral multiple of £500,000 in excess of such amount, (iii) if denominated in Euro, €3,000,000 or an integral multiple of €500,000 in excess of such amount or (iv) if denominated in Hong Kong Dollars, HK$40,000,000 or an integral multiple of HK$8,000,000 in excess of such amount. Any Incremental Revolving Credit Advance to be made or continued as, or converted into, a LIBOR Loan must be in a minimum amount of $5,000,000 or an integral multiple of $1,000,000 in excess of such amount. Any such election must be made by 11:00 a.m. (New York time) on the third Business Day prior to (1) the date of any proposed Revolving Credit Advance which is to be made as a LIBOR Loan, (2) the end of each LIBOR Period with respect to any LIBOR Loans to be continued as such, or (3) the date on which Borrower Representative wishes to convert any Index Rate Loan to a LIBOR Loan for a LIBOR Period designated by Borrower

Representative in such election. If no election is received with respect to a LIBOR Loan by 11:00 a.m. (New York time) on the third Business Day prior to the end of the LIBOR Period with respect thereto (or if a Default or an Event of Default has occurred and is continuing or if the additional conditions precedent set forth in Section 2.2 shall not have been satisfied), (i) if such LIBOR Loan is denominated in Dollars, such LIBOR Loan shall be converted to an Index Rate Loan at the end of its LIBOR Period and (ii) if such LIBOR Loan is denominated in a Foreign Currency, such LIBOR Loan shall be continued as a LIBOR Loan having a LIBOR Period of one month. Borrower Representative must make such election by notice to the Administrative Agent in writing, by telecopy or overnight courier, or Electronic Transmission. In the case of any conversion or continuation, such election must be made pursuant to a notice (a “ Notice of Conversion/Continuation ”) delivered in writing or by Electronic Transmission in the form of Exhibit 1.5(e) . Notwithstanding anything in this Section 1.5(e) or Agreement to the contrary, conversions and continuations of Index Rate Loans and LIBOR Loans hereunder shall not result in refinancings or repayments of such portions of the outstanding Auction Revolving Loan or Incremental Revolving Credit Advances, but only repricings of such continuously outstanding portions of the outstanding Auction Revolving Loan or Incremental Revolving Credit Advances, as applicable.

(f) Notwithstanding anything to the contrary set forth in this Section 1.5 , if a court of competent jurisdiction determines in a final order that the rate of interest payable hereunder exceeds the highest rate of interest permissible under law (the “ Maximum Lawful Rate ”), then so long as the Maximum Lawful Rate would be so exceeded, the rate of interest payable hereunder shall be equal to the Maximum Lawful Rate; provided , however, that if at any time thereafter the rate of interest payable hereunder is less than the Maximum Lawful Rate, Borrowers shall continue to pay interest hereunder at the Maximum Lawful Rate until such time as the total interest received by the Administrative Agent, on behalf of Lenders, is equal to the total interest that would have been received had the interest rate payable hereunder been (but for the operation of this paragraph) the interest rate payable since the Restatement Effective Date as otherwise provided in this Agreement. In no event shall the total interest received by any Lender pursuant to the terms hereof exceed the amount that such Lender could lawfully have received had the interest due hereunder been calculated for the full term hereof at the Maximum Lawful Rate.


1.6	Eligible Art Loans.

discovered by the Administrative Agent after the Restatement Effective Date; provided that, (i) for purposes of clarity, the Administrative Agent will not be required at any time to obtain any approval from any Lenders or any other Person(s) for the establishment, modification or elimination of any Reserves against Eligible Art Loans and (ii) any decreases to advance rates with respect to Eligible Art Loans made after the Restatement Effective Date shall only apply to Art Loans added to any Borrowing Base after the date of such decrease in the advance rates. Eligible Art Loans shall not include any Art Loan of any Borrower:

(a) with respect to which (i) such Borrower shall not have conducted (x) appropriate UCC, tax lien and judgment searches (or applicable equivalent) against the applicable Art Loan Debtor or (y) in the case of any Art Loan Debtor located in the United Kingdom or Hong Kong, appropriate bankruptcy, winding up and company searches against the applicable Art Loan Debtor or (ii) the results of such searches shall have indicated any material risk with respect to the applicable Art Loan Debtor or the Works of Art securing repayment of such Art Loan;

(b) with respect to which (i) such Art Loan and the related security interest are not governed by a loan and security agreement reasonably acceptable to the Administrative Agent in form and substance, or (ii) any material terms of the related loan and security agreement and/or any other related documentation are not binding and enforceable;

(c) with respect to which any payment under the related loan agreement (or any other Art Loan outstanding to such related Art Loan Debtor) has been deemed by such Borrower to be non-accrual;

(d) that is subject to any litigation challenging the validity or enforceability of such Art Loan or any related documentation, unless (i) such Borrower has notified the Administrative Agent of such litigation, and (ii) the Administrative Agent has determined in its reasonable judgment, pursuant to a written notice to such Borrower (not to be unreasonably withheld or delayed), that such litigation does not constitute good faith litigation;

(e) (i) that is not denominated in Dollars, Canadian Dollars, Hong Kong Dollars, Sterling, Euros, Swiss Francs or an Alternative Art Loan Currency, (ii) if such Art Loan is denominated in Hong Kong Dollars and owned by a Domestic Borrower or U.K. Borrower, unless the Administrative Agent shall have otherwise agreed, a Credit Party (if such Art Loan is owned by a U.K. Borrower) or a Domestic Credit Party (if such Art Loan is owned by a Domestic Borrower) shall have not entered into a Rate Management Transaction reasonably acceptable to the Administrative Agent (x) having a notional amount substantially equal to the outstanding principal balance of such Art Loan at all times until the maturity of such Art Loan and (y) directly mitigating the risk associated with changes in the exchange rate between Hong Kong Dollars and Dollars (in the case of any Art Loan owned by a Domestic Borrower) or Sterling (in the case of any Art Loan owned by a U.K. Borrower) at all times until the maturity of such Art Loan or (iii) if such Art Loan is denominated in an Alternative Art Loan Currency, unless the Administrative Agent shall have otherwise agreed, a Credit Party (in the case of any Foreign Borrower) or a Domestic Credit Party (in the case of any Domestic Borrower) shall have not entered into a Rate Management Transaction reasonably acceptable to the Administrative

Agent (x) having a notional amount substantially equal to the outstanding principal balance of such Art Loan at all times until the maturity of such Art Loan and (y) directly mitigating the risk associated with changes in the exchange rate between the currency in which such Art Loan is denominated and Dollars (in the case of any Art Loan owned by a Domestic Borrower) or Sterling (in the case of any Art Loan owned by a Foreign Borrower) at all times until the maturity of such Art Loan;

(f) that was not generated in the ordinary course of the applicable Borrower’s business;

(g) unless the Administrative Agent shall have otherwise agreed, that by its terms is not due and payable within 18 months; provided that, Art Loans that by their terms are due and payable after 18 months but within 24 months shall not be excluded as “Eligible Art Loans” pursuant to this clause to the extent the portion of the outstanding principal balance of such Art Loans included in any Borrowing Base, collectively with the portion of the outstanding principal balance of such “Art Loans” included in any “Borrowing Base” under the SFS Revolving Credit Agreement, does not exceed $250,000,000 in the aggregate;

(h) to the extent that any defense, counterclaim, setoff or dispute (other than any dispute described in clause (d) above or in clauses (h) or (i) of the definition of “Eligible Art Loan Collateral”) is asserted in writing (and reasonably determined by such Borrower not to be frivolous) as to repayment by the relevant Art Loan Debtor of such Art Loan or as to any failure by any Sotheby Entity to fund any unfunded commitment of such Sotheby Entity to make future Art Loans to the relevant Art Loan Debtor, unless (i) such Borrower has notified the Administrative Agent of such defense, counterclaim, setoff or dispute, and (ii) the Administrative Agent has determined in its reasonable judgment, pursuant to a written notice to such Borrower (not to be unreasonably withheld or delayed), that such defense, counterclaim, setoff or dispute is not asserted in good faith;

(i) that (i) is not subject to a first priority lien in favor of the Collateral Agent, on behalf of the Secured Parties, or (ii) is subject to any Lien of any Person other than the Collateral Agent, except Permitted Encumbrances;

(j) with respect to which the Art Loan Debtor is a director, officer, other employee or Affiliate of any Sotheby Entity, unless the Administrative Agent shall have determined, in its sole discretion, that such Art Loan shall constitute an Eligible Art Loan notwithstanding the provisions of this clause (j);

(k) unless the Administrative Agent shall have otherwise agreed in its reasonable credit judgment, that is the obligation of an Art Loan Debtor that is the United States government or a political subdivision thereof, or any state, county or municipality or department, agency or instrumentality thereof;

(l) that is not secured by Eligible Art Loan Collateral or to the extent by which the outstanding principal balance of such Art Loan exceeds sixty percent (60%) of the

aggregate Estimated Value of the Works of Art securing repayment of such Art Loan that constitute Eligible Art Loan Collateral;

(m) in the case of an Art Loan Debtor that is not an individual, such Borrower has not obtained confirmation of authorization of the incurrence of such Art Loan by such Person and the individuals executing documents on its behalf;

(n) with respect to which (i) a petition is filed by or against the related Art Loan Debtor under any bankruptcy law or any other federal, state or foreign (including any provincial) receivership, insolvency relief or other law or laws for the relief of debtors or (ii) the related Art Loan Debtor makes a general assignment for the benefit of creditors;

(o) to the extent any Sotheby Entity is liable for goods sold or services rendered by the applicable Art Loan Debtor to such Sotheby Entity, but only to the extent of the potential offset; provided that, without duplication of amounts described in the proviso of Section 1.8(m) or described in the proviso of Section 1.6(o) of the SFS Revolving Credit Agreement, if such potential offset arises from amounts payable by such Borrower to such Art Loan Debtor from any receivable then due and payable to such Borrower, as agent for such Art Loan Debtor, by a buyer of a Work of Art (other than the Work of Art securing any Art Loan) that was sold on consignment by such Borrower, as consignee, on behalf of such Art Loan Debtor, in its capacity as consignor, such potential offset shall be reduced by the amount of such receivable (net of any commissions, buyer’s premium and reimbursable expenses payable to any Sotheby Entity for such sale);

(p) with respect to which (i) any of the documentation evidencing such Art Loan is not in the possession of such Borrower or any Agent or (ii) any of the representations or warranties in this Agreement and the other Loan Documents pertaining to such Art Loan is untrue in any material respect (or, in the case of any representation or warranty already qualified by materiality, in any respect);

(q) to the extent such Art Loan exceeds any credit limit with respect to any Art Loan Debtor established by the Administrative Agent, in its reasonable credit judgment, taking into account the nature and value of the Works of Art securing such Art Loan and after consultation with the Borrower Representative;

(r) with respect to which the initial outstanding principal amount, if owned by a Domestic Borrower, is less than $100,000; or

(s) that is included in any “Borrowing Base” under the SFS Revolving Credit Agreement.


1.7	Eligible Art Inventory .

All of the Art Inventory owned by the Borrowers and reflected in the most recent Borrowing Base Certificate delivered by each Borrower to the Administrative Agent shall be “ Eligible Art Inventory ” for purposes of this Agreement, except any Art Inventory to which any

of the exclusionary criteria set forth below applies. The Administrative Agent shall have the right to establish, modify or eliminate Reserves against Eligible Art Inventory from time to time in its sole reasonable credit judgment. In addition, subject to Section 11.2(b) , the Administrative Agent reserves the right, at any time and from time to time after the Restatement Effective Date, to adjust of the criteria set forth below and to establish new criteria and to adjust advance rates with respect to Eligible Art Inventory, in its reasonable credit judgment reflecting changes in the salability or realization values of Art Inventory arising or discovered by the Administrative Agent after the Restatement Effective Date; provided that, (i) for purposes of clarity, the Administrative Agent will not be required at any time to obtain any approval from any Lenders or any other Person(s) for the establishment, modification or elimination of any Reserves against Eligible Art Inventory and (ii) any decreases to advance rates with respect to Eligible Art Inventory made after the Restatement Effective Date shall only apply to Art Inventory added to any Borrowing Base after the date of such decrease in the advance rates. Eligible Art Inventory shall not include any Art Inventory of any Borrower that:

(a) is owned by such Borrower as part of a joint venture or profit/loss sharing arrangement or otherwise is not owned solely by such Borrower, unless (i) the Administrative Agent shall have otherwise agreed, or (ii) such Borrower has ultimate control of the disposition of such Art Inventory, in which case such Art Inventory shall be eligible to constitute Eligible Art Inventory to the extent of such Borrower’s ownership interest therein;

(b) other than as permitted by clause (a) above, is not owned by such Borrower free and clear of all Liens and rights of any other Person, except the Liens in favor of the Collateral Agent, on behalf of the Secured Parties, and Permitted Encumbrances described in clause (e) of the definition thereof (subject to Reserves satisfactory to the Administrative Agent);

(c) (i) is not (x) located in a Permitted Inventory Country or (y) in transport between such countries or (ii) is located in a Permitted Inventory Country and such Borrower shall not have taken each action reasonably required by the Collateral Agent with respect to such Work of Art located in such Permitted Inventory Country in order to protect the interests of the Agents therein under the laws of such Permitted Inventory Country;

(d) is not held by such Borrower (i) at a location owned by a Sotheby Entity, or (ii) unless Reserves satisfactory to the Administrative Agent have been established (A) at a location in which a Sotheby Entity has obtained a leasehold interest with respect to which, unless otherwise agreed by the Administrative Agent, the lessor has executed a landlord waiver, in form and substance reasonably acceptable to the Administrative Agent, or (B) at a warehouse, storage facility or other third-party location (including, without limitation, the Geneva free port) with respect to which, unless otherwise agreed by the Administrative Agent, such third party has executed a bailee letter or similar agreement in form and substance reasonably acceptable to the Administrative Agent;

(e) is subject to any litigation challenging the rights of such Borrower in such Art Inventory, unless (i) such Borrower has notified the Administrative Agent of such litigation, and (ii) the Administrative Agent has determined in its reasonable judgment, pursuant to a

written notice to such Borrower (not to be unreasonably withheld or delayed), that such litigation does not constitute good faith litigation;

(f) is placed on consignment with any Person, unless (i) such consignment constitutes a Permitted Consignment with respect to such Art Inventory, or (ii)(x) such Borrower has notified the Administrative Agent of such consignment and (y) the Administrative Agent has determined in its reasonable judgment, pursuant to a written notice to such Borrower (not to be unreasonably withheld or delayed), that such Borrower has taken all actions reasonably required by the Administrative Agent with respect to such Art Inventory in order to protect the interests of the Agents therein under all applicable laws;

(g) is not subject to a first priority lien in favor of the Collateral Agent on behalf of the Secured Parties, subject to Permitted Encumbrances described in clause (e) of the definition thereof (subject to Reserves satisfactory to the Administrative Agent);

(h) if the value of such Art Inventory exceeds $250,000, has not been the subject of a search by such Borrower in the Art Loss Register (if applicable);

(i) breaches any of the representations or warranties pertaining to Art Inventory set forth in the Loan Documents; or

(j) constitutes Automobile Works of Art, unless (i) such Borrower or any other Credit Party has in its possession the related original Certificates of Title for such Automobile Works of Art or (ii) no Certificates of Title have been, or are required to be, issued with respect to such Automobile Works of Art by any applicable Governmental Authority.


1.8	Eligible Extended Term Art Receivables .

All of the Extended Term Art Receivables owned by each Borrower and reflected in the most recent Borrowing Base Certificate delivered by the Borrower Representative to the Administrative Agent shall be “ Eligible Extended Term Art Receivables ” for purposes of this Agreement, except any Extended Term Art Receivables to which any of the exclusionary criteria set forth below applies. The Administrative Agent shall have the right to establish, modify or eliminate Reserves against Eligible Extended Term Art Receivables from time to time in its sole reasonable credit judgment. In addition, subject to Section 11.2(b) , the Administrative Agent reserves the right, at any time and from time to time after the Restatement Effective Date, to adjust any of the criteria set forth below and to establish new criteria, and to adjust advance rates with respect to Eligible Extended Term Art Receivables, in its reasonable credit judgment, reflecting changes in the collectibility or realization values of such Extended Term Art Receivables arising or discovered by the Administrative Agent after the Restatement Effective Date; provided that, (i) for purposes of clarity, the Administrative Agent will not be required at any time to obtain any approval from any Lenders or any other Person(s) for the establishment, modification or elimination of any Reserves against Eligible Extended Term Art Receivables and (ii) any decreases to advance rates with respect to Eligible Extended Term Art Receivables made after the Restatement Effective Date shall only apply to Extended Term Art Receivables added to any Borrowing Base after the date of such decrease in the advance rates. Eligible Extended Term Art Receivables shall not include any Extended Term Art Receivable of any Borrower:

(a) with respect to which (i) such Extended Term Art Receivable and the related consignment are not governed by Extended Term Art Documentation reasonably acceptable to the Administrative Agent in form and substance, (ii) the related Extended Term Art Documentation is not governed under the laws of (x) the State of New York, (y) England and Wales, or (z) Hong Kong, (iii) any material terms of the related Extended Term Art Documentation and/or any other related documentation are not binding and enforceable or (iv) the related Extended Term Art Documentation or the related auction giving rise to such Extended Term Art Receivable shall not comply with the Extended Term Auction Procedural Requirements;

(b) with respect to which any payment under any Extended Term Art Documentation (or any other Extended Term Art Receivable which has the same Extended Term Art Debtor) has been deemed by such Borrower to be non-accrual;

(c) that is subject to any litigation challenging the validity or enforceability of such Extended Term Art Receivable, the related Extended Term Art Documentation or any other related documentation, unless (i) such Borrower has notified the Administrative Agent of such litigation, and (ii) the Administrative Agent has determined in its reasonable judgment, pursuant to a written notice to such Borrower (not to be unreasonably withheld or delayed), that such litigation does not constitute good faith litigation;

(d) that is payable in any currency other than Dollars, Hong Kong Dollars, Sterling or Euros;

(e) that was not generated in the ordinary course of the applicable Borrower’s business;

(f) unless the Administrative Agent shall have otherwise agreed, that (i) is past due or (ii) by its terms is not due and payable within one hundred twenty (120) calendar days following the date on which the auction giving rise to such Extended Term Art Receivable occurred;

(g) to the extent that any defense, counterclaim, setoff or dispute (other than any dispute described in clause (c) above or in clauses (i) or (j) of the definition of “Eligible Extended Term Art Collateral”) is asserted in writing (and reasonably determined by such Borrower not to be frivolous) as to repayment by the relevant Extended Term Art Debtor of such Extended Term Art Receivable or of any other Extended Term Art Receivable owed by such Extended Term Art Debtor, unless (i) such Borrower has notified the Administrative Agent of such defense, counterclaim, setoff or dispute, and (ii) the Administrative Agent has determined in its reasonable judgment, pursuant to a written notice to such Borrower (not to be unreasonably withheld or delayed), that such defense, counterclaim, setoff or dispute is not asserted in good faith;

(h) that (i) is not subject to a first priority lien in favor of the Collateral Agent, on behalf of the Secured Parties, or (ii) is subject to any Lien of any Person other than the Collateral Agent, except Permitted Encumbrances;

(i) with respect to which the Extended Term Art Debtor is a director, officer, other employee or Affiliate of any Sotheby Entity, unless the Administrative Agent shall have determined, in its sole discretion, that such Extended Term Art Receivable shall constitute an Eligible Extended Term Art Receivable notwithstanding the provisions of this clause (j) ;

(j) unless the Administrative Agent shall have otherwise agreed in its reasonable credit judgment, that is the obligation of an Extended Term Art Debtor that is the United States government or a political subdivision thereof, or any state, county or municipality or department, agency or instrumentality thereof;

(k) for which the underlying Work of Art does not constitute Eligible Extended Term Art Collateral;

(l) with respect to which (i) a petition is filed by or against the related Extended Term Art Debtor or Extended Term Art Consignor under any bankruptcy law or any other federal, state or foreign (including any provincial) receivership, insolvency relief or other law or laws for the relief of debtors or (ii) the related Extended Term Art Debtor or Extended Term Art Consignor makes a general assignment for the benefit of creditors;

(m) to the extent any Sotheby Entity is liable for goods sold or services rendered by the applicable Extended Term Art Debtor to such Sotheby Entity (or, if the related Extended Term Art Documentation is governed under the laws of the State of New York, the Extended Term Art Consignor), but only to the extent of the potential offset; provided that,

without duplication of the amount of any receivable described in the proviso of Section 1.6(o) of this Agreement or described in the proviso of Section 1.6(o) of the SFS Revolving Credit Agreement, if such potential offset arises from amounts payable by such Borrower to such Extended Term Art Debtor or Extended Term Art Consignor, as applicable, from any receivable then due and payable to such Borrower, as agent for such Extended Term Art Debtor or Extended Term Art Consignor, as applicable, by a buyer of a Work of Art (other than the Work of Art securing any Art Loan) that was sold on consignment by such Borrower, as consignee, on behalf of such Extended Term Art Debtor or Extended Term Art Consignor, as applicable, such potential offset shall be reduced by the amount of such receivable (net of any commissions, buyer’s premium and reimbursable expenses payable to any Sotheby Entity for such sale);

(n) with respect to which (i) any of the Extended Term Art Documentation or any other documentation evidencing such Extended Term Art Receivable is not in the possession of such Borrower or any Agent or (ii) any of the representations or warranties in this Agreement and the other Loan Documents pertaining to such Extended Term Art Receivable is untrue in any material respect (or, in the case of any representation or warranty already qualified by materiality, in any respect);

(o) to the extent such Extended Term Art Receivables exceeds any credit limit with respect to any Extended Term Art Debtor established by the Administrative Agent, in its reasonable credit judgment, taking into account the nature and value of the underlying Work of Art and after consultation with the Borrower Representative; or

(p) with respect to which the initial outstanding amount, if owned by a Domestic Borrower, is less than $100,000.


1.9	Cash Management Systems .

On and after the Restatement Effective Date, the Credit Parties will maintain until the Termination Date the cash management systems described in Annex C (the “ Cash Management Systems ”).


1.10	Fees .

(a) Borrowers shall pay to GE Capital an annual collateral monitoring fee equal to $100,000 per year payable annually in advance on each anniversary of the Closing Date prior to the Termination Date; provided that, the annual collateral monitoring fee payable hereunder shall be reduced on a dollar-for-dollar basis by any portion of the annual collateral monitoring fee paid to GE Capital pursuant to Section 1.10(a) of the SFS Revolving Credit Agreement.

(b)

(i) As additional compensation for the Auction Dollar Tranche Lenders, Borrowers shall pay to the Administrative Agent, for the ratable benefit of the Auction Dollar Tranche Lenders, in arrears, on the first Business Day of each month prior to the Auction

Commitment Termination Date and on the Auction Commitment Termination Date, a Fee for Borrowers’ non use of available funds in an amount in Dollars equal to the Applicable Auction Unused Line Fee Margin per annum (calculated on the basis of a 360 day year for actual days elapsed) multiplied by the difference between (x) the Maximum Auction Dollar Tranche Amount (as it may be increased or reduced from time to time) and (y) the average for the period of the daily closing balances of the aggregate Auction Dollar Tranche Revolving Loan and the Auction Dollar Tranche Swing Line Loan outstanding during the period for which such Fee is due.

(ii) As additional compensation for the Auction Multicurrency Tranche Lenders, Borrowers shall pay to the Administrative Agent, for the ratable benefit of the Auction Multicurrency Tranche Lenders, in arrears, on the first Business Day of each month prior to the Auction Commitment Termination Date and on the Auction Commitment Termination Date, a Fee for Borrowers’ non use of available funds in an amount in Dollars equal to the Applicable Auction Unused Line Fee Margin per annum (calculated on the basis of a 360 day year for actual days elapsed) multiplied by the difference between (x) the Maximum Auction Multicurrency Tranche Amount (as it may be increased or reduced from time to time) and (y) the average for the period of the daily closing balances of the aggregate Auction Multicurrency Tranche Revolving Loan and the Auction Multicurrency Tranche Swing Line Loan outstanding during the period for which such Fee is due.

(iii) As additional compensation for the Incremental Lenders, Borrowers shall pay to the Administrative Agent, for the ratable benefit of the Incremental Lenders, in arrears, on the first Business Day of each month prior to the Incremental Commitment Termination Date and on the Incremental Commitment Termination Date, a Fee for Borrowers’ non use of available funds in an amount in Dollars equal to the Applicable Incremental Unused Line Fee Margin per annum (calculated on the basis of a 360 day year for actual days elapsed) multiplied by the difference between (x) the Maximum Incremental Amount and (y) the average for the period of the daily closing balances of the aggregate outstanding principal amount of Incremental Revolving Credit Advances during the period for which such Fee is due.

(c) Borrowers shall pay to the Administrative Agent, for the ratable benefit of the Auction Lenders, the Letter of Credit Fee and other fees and amounts required by Annex B .


1.11	Receipt of Payments .

All payments (including prepayments) to be made by each Credit Party on account of principal, interest, fees and other amounts required hereunder shall be made without setoff, recoupment, counterclaim or deduction of any kind. Borrowers shall make each payment under this Agreement not later than 2:00 p.m. (New York time) on the day when due in immediately available funds in Dollars, Sterling, Euro or Hong Kong Dollars, as applicable, to the applicable Collection Account. For purposes of computing interest and Fees and determining Borrowing Availability as of any date, all payments shall be deemed received on the Business Day on which immediately available funds therefore are received in the Collection Account prior to 2:00 p.m. New York time. Payments received after 2:00 p.m. New York time on any Business

Day or on a day that is not a Business Day shall be deemed to have been received on the following Business Day.


1.12	Application and Allocation of Payments .

(a) So long as no Event of Default has occurred and is continuing, (i) payments matching specific scheduled payments then due shall be applied to those scheduled payments; (ii) voluntary prepayments shall be applied in accordance with the provisions of Section 1.3(a) ; and (iii) mandatory prepayments shall be applied as set forth in Section 1.3(d) or 1.3(e) , as applicable. All payments and prepayments applied to the Auction Revolving Loan shall be applied ratably to the portion thereof held by each Auction Lender as determined by its Pro Rata Share. All payments and prepayments applied to the Auction Dollar Tranche Revolving Loan shall be applied ratably to the portion thereof held by each Auction Dollar Tranche Lender as determined by its Pro Rata Share. All payments and prepayments applied to the Auction Multicurrency Tranche Revolving Loan shall be applied ratably to the portion thereof held by each Auction Multicurrency Tranche Lender as determined by its Pro Rata Share. All payments and prepayments applied to the outstanding Incremental Revolving Credit Advances shall be applied ratably to the portion thereof held by each Incremental Lender as determined by its Pro Rata Share. As to (x) any other payment, (y) all payments made when an Event of Default has occurred and is continuing or following the Auction Commitment Termination Date and (z) all proceeds of Collateral, each Borrower hereby irrevocably waives the right to direct the application of any and all such payments received from or on behalf of such Borrower and proceeds of Collateral, and all such payments and proceeds of Collateral shall be applied to amounts then due and payable in the following order, subject to the terms of the Collateral Documents:

in the case of payments or proceeds of Collateral of the Domestic Credit Parties:

(1) on a pro rata basis, (i) to Fees and reimbursable expenses of Agents hereunder and (ii) to “Fees” and reimbursable expenses of “Agents” under the SFS Revolving Credit Agreement;

(2) on a pro rata basis, (i) to interest on the Swing Line Loan outstanding to the Domestic Borrowers and (ii) to interest on the “Swing Line Loan” outstanding to the “Domestic Borrowers” (as each such term in this clause (ii) is defined in the SFS Revolving Credit Agreement);

(3) on a pro rata basis, (i) to principal payments on the Swing Line Loan outstanding to the Domestic Borrowers and (ii) to principal payments on the “Swing Line Loan” outstanding to the “Domestic Borrowers” (as each such term in this clause (ii) is defined in the SFS Revolving Credit Agreement);

(4) on a pro rata basis, (i) to interest on the Swing Line Loan outstanding to the Foreign Borrowers and (ii) to interest on the “Swing Line Loan” outstanding to the “Foreign Borrowers” (as each such term in this clause (ii) is defined in the SFS Revolving Credit Agreement);

(5) on a pro rata basis, (i) to principal payments on the Swing Line Loan outstanding to the Foreign Borrowers and (ii) to principal payments on the “Swing Line Loan” outstanding to the “Foreign Borrowers” (as each such term in this clause (ii) is defined in the SFS Revolving Credit Agreement);

(6) on a pro rata basis, (i) to interest on the Auction Revolving Loan outstanding to the Domestic Borrowers and (ii) to interest on the “Revolving Loan” outstanding to the “Domestic Borrowers” (as each such term in this clause (ii) is defined in the SFS Revolving Credit Agreement);

(7) on a pro rata basis, (i) to principal payments on the Auction Revolving Loan outstanding to the Domestic Borrowers and to provide cash collateral for Letter of Credit Obligations of the Domestic Borrowers in the manner described in Annex B and (ii) to principal payments on the “Revolving Loan” outstanding to the “Domestic Borrowers” and to provide cash collateral for “Letter of Credit Obligations” of the “Domestic Borrowers” in the manner described in Annex B to the SFS Revolving Credit Agreement (as each such term in this clause (ii) is defined in the SFS Revolving Credit Agreement);

(8) on a pro rata basis, (i) to interest on the Auction Revolving Loan outstanding to the Foreign Borrowers and (ii) to interest on the “Revolving Loan” outstanding to the “Foreign Borrowers” (as each such term in this clause (ii) is defined in the SFS Revolving Credit Agreement);

(9) on a pro rata basis, (i) to principal payments on the Auction Revolving Loan outstanding to the Foreign Borrowers and to provide cash collateral for Letter of Credit Obligations of the Foreign Borrowers in the manner described in Annex B and (ii) to principal payments on the “Revolving Loan” outstanding to the “Foreign Borrowers” and to provide cash collateral for “Letter of Credit Obligations” of the “Foreign Borrowers” in the manner described in Annex B to the SFS Revolving Credit Agreement (as each such term in this clause (ii) is defined in the SFS Revolving Credit Agreement);

(10) to interest on the outstanding Incremental Revolving Credit Advances outstanding to the Domestic Borrowers;

(11) to principal payments on the outstanding Incremental Revolving Credit Advances outstanding to the Domestic Borrowers;

(12) to interest on the outstanding Incremental Revolving Credit Advances outstanding to the Foreign Borrowers;

(13) to principal payments on the outstanding Incremental Revolving Credit Advances outstanding to the Foreign Borrowers;

(14) on a pro rata basis, (i) to all other Obligations (other than Obligations that constitute a Guaranty of the Obligations of the Foreign Credit Parties) owing by the Domestic Credit Parties, including expenses of Lenders in respect of Domestic Credit Parties to the extent reimbursable under Section 11.3 and (ii) to all other “Obligations” (other than “Obligations” that constitute a “Guaranty” of the “Obligations” of the “Foreign Credit Parties”) owing by the “Domestic Credit Parties,” including expenses of “Lenders” in respect of “Domestic Credit Parties” to the extent reimbursable under Section 11.3 under the SFS Revolving Credit Agreement (as each such term in this clause (ii) is defined in the SFS Revolving Credit Agreement);

(15) on a pro rata basis, (i) to all other Obligations, including expenses of Lenders to the extent reimbursable under Section 11.3 and (ii) to all other “Obligations”, including expenses of “Lenders” to the extent reimbursable under Section 11.3 under the SFS Revolving Credit Agreement (as each such term in this clause (ii) is defined in the SFS Revolving Credit Agreement);

(16) on a pro rata basis, (i) to amounts owing in respect of Bank Product and Hedging Obligations (other than Bank Product and Hedging Obligations that constitute a Guaranty of the Secured Obligations of the Foreign Credit Parties) owing by the Domestic Credit Parties and (ii) to amounts owing in respect of “Bank Product and Hedging Obligations” (other than “Bank Product and Hedging Obligations” that constitute a “Guaranty” of the “Secured Obligations” of the “Foreign Credit Parties”) owing by the “Domestic Credit Parties” under the SFS Revolving Credit Agreement (as each such term in this clause (ii) is defined in the SFS Revolving Credit Agreement); and

(17) on a pro rata basis, (i) to amounts owing in respect of all other Bank Product and Hedging Obligations and (ii) to amounts owing in respect of all other “Bank Product and Hedging Obligations” under the SFS Revolving Credit Agreement;

in the case of payments or proceeds of Collateral of the Foreign Credit Parties:

(1) on a pro rata basis, (i) to Fees and reimbursable expenses of Agents which are then due and payable pursuant to any of the Loan Documents in respect of the Revolving Loans made to the Foreign Borrowers hereunder and (ii) to “Fees” and reimbursable expenses of “Agents” which are then due and payable pursuant to any of the “Loan Documents” in respect of the “Revolving Loans” made to the Foreign Borrowers under the SFS Revolving Credit Agreement (as each such term in this clause (ii) is defined in the SFS Revolving Credit Agreement);

(2) on a pro rata basis, (i) to interest on the Swing Line Loan outstanding to the Foreign Borrowers and (ii) to interest on the “Swing Line Loan” outstanding to the “Foreign Borrowers” (as each such term in this clause (ii) is defined in the SFS Revolving Credit Agreement);

(3) on a pro rata basis, (i) to principal payments on the Swing Line Loan outstanding to the Foreign Borrowers and (ii) to principal payments on the “Swing Line Loan” outstanding to the “Foreign Borrowers” (as each such term in this clause (ii) is defined in the SFS Revolving Credit Agreement);

(4) on a pro rata basis, (i) to interest on the Auction Revolving Loan outstanding to the Foreign Borrowers and (ii) to interest on the “Revolving Loan” outstanding to the “Foreign Borrowers” (as each such term in this clause (ii) is defined in the SFS Revolving Credit Agreement);

(5) on a pro rata basis, (i) to principal payments on the Auction Revolving Loan outstanding to the Foreign Borrowers and to provide cash collateral for Letter of Credit Obligations of the Foreign Borrowers in the manner described in Annex B and (ii) to principal payments on the “Revolving Loan” outstanding to the “Foreign Borrowers” and to provide cash collateral for “Letter of Credit Obligations” of the “Foreign Borrowers” in the manner described in Annex B to the SFS Revolving Credit Agreement (as each such term in this clause (ii) is defined in the SFS Revolving Credit Agreement);

(6) to interest on the outstanding Incremental Revolving Credit Advances outstanding to the Foreign Borrowers;

(7) to principal payments on the outstanding Incremental Revolving Credit Advances outstanding to the Foreign Borrowers;

(8) on a pro rata basis, (i) to all other Obligations owing by the Foreign Credit Parties, including expenses of Lenders to the extent reimbursable under Section 11.3 and (ii) to all other “Obligations” owing by the “Foreign Credit Parties,” including expenses of “Lenders” in respect of “Foreign Credit Parties” to the extent reimbursable under Section 11.3 under the SFS Revolving Credit Agreement (as each such term in this clause (ii) is defined in the SFS Revolving Credit Agreement); and

(9) on a pro rata basis, (i) to amounts owing by the Foreign Credit Parties in respect of Bank Product and Hedging Obligations and (ii) to amounts owing by the “Foreign Credit Parties” in respect of “Bank Product and Hedging Obligations” under the SFS Revolving Credit Agreement (as each such term in this clause (ii) is defined in the SFS Revolving Credit Agreement);

provided that, notwithstanding the foregoing, with respect to any Guarantor, no proceeds of any guarantee made by such Guarantor and no proceeds of any Collateral of such Guarantor shall be applied to any Excluded Hedging Obligations of such Guarantor.

(b) Each Agent is authorized to, and at its sole election may, charge to the Auction Revolving Loan balance or the Incremental Revolving Credit Advance balance on behalf of each Borrower and cause to be paid all Fees, expenses, Charges, costs (including

insurance premiums in accordance with Section 5.4(a) ) and interest and principal, other than principal of the Auction Revolving Loan or Incremental Revolving Credit Advances, owing by Borrowers under this Agreement or any of the other Loan Documents if and to the extent Borrowers fail to pay promptly any such amounts as and when due, even if the Dollar Equivalent of the amount of such charges would exceed the applicable Borrowing Availability at such time; provided , such action shall not cause (i) the aggregate Auction Dollar Tranche Revolving Loan to exceed the Maximum Auction Dollar Tranche Amount, (ii) the Dollar Equivalent of the aggregate Auction Multicurrency Tranche Revolving Loan to exceed the Maximum Auction Multicurrency Tranche Amount or (iii) the aggregate outstanding amount of Incremental Revolving Credit Advances to exceed the Maximum Incremental Amount. At any Agent’s option and to the extent permitted by law, any charges so made shall constitute a Revolving Credit Advance made in the applicable currency and part of the Auction Dollar Tranche Revolving Loan, Auction Multicurrency Tranche Revolving Loan, or part of the other Incremental Revolving Credit Advances, as applicable, hereunder.


1.13	Loan Account and Accounting .

The Administrative Agent shall maintain a loan account (the “ Loan Account ”) on its books to record: all Revolving Credit Advances and Swing Line Advances, all payments made by Borrowers, and all other debits and credits as provided in this Agreement with respect to the Loans or any other Obligations. All entries in the Loan Account shall be made in accordance with the Administrative Agent’s customary accounting practices as in effect from time to time. The balance in the Loan Account, as recorded on the Administrative Agent’s most recent printout or other written statement, shall, absent manifest error, be presumptive evidence of the amounts due and owing to the Agents and Lenders by each Borrower; provided that any failure to so record or any error in so recording shall not limit or otherwise affect any Borrower’s duty to pay the Obligations. The Administrative Agent shall render to Borrower Representative a monthly accounting of transactions with respect to the Loans setting forth the balance of the Loan Account as to each Borrower for the immediately preceding month. Unless Borrower Representative notifies the Administrative Agent in writing of any objection to any such accounting (specifically describing the basis for such objection), within thirty (30) days after the date thereof, each and every such accounting shall be presumptive evidence of all matters reflected therein. Only those items expressly objected to in such notice shall be deemed to be disputed by Borrowers. Notwithstanding any provision herein contained to the contrary, any Lender may elect (which election may be revoked) to dispense with the issuance of Notes to that Lender and may rely on the Loan Account as evidence of the amount of Obligations from time to time owing to it.


1.14	Indemnity .

of investigation or defense, including those incurred upon any appeal) that may be instituted or asserted against or incurred by any such Indemnified Person as the result of credit having been extended, suspended or terminated under this Agreement and the other Loan Documents and the administration of such credit, and in connection with or arising out of the transactions contemplated hereunder and thereunder and any actions or failures to act in connection therewith, including any and all Environmental Liabilities and legal costs and expenses arising out of or incurred in connection with disputes between or among any parties to any of the Loan Documents (collectively, “ Indemnified Liabilities ”); provided , that no such Credit Party shall be liable for any indemnification to an Indemnified Person to the extent that any such suit, action, proceeding, claim, damage, loss, liability or expense results from that Indemnified Person’s gross negligence or willful misconduct as determined in a final, non-appealable judgment by a court of competent jurisdiction. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER. It is understood and agreed that, notwithstanding anything to the contrary set forth in this Section 1.14(a) , no Foreign Credit Party shall have any obligation to any Indemnified Person with respect to Indemnified Liabilities relating to Obligations of any Domestic Credit Party.

(b) To induce Lenders to provide the LIBOR Loan option on the terms provided herein, if (i) any LIBOR Loans are repaid in whole or in part prior to the last day of any applicable LIBOR Period (whether that repayment is made pursuant to any provision of this Agreement or any other Loan Document or occurs as a result of acceleration, by operation of law or otherwise); (ii) any Borrower shall default in payment when due of the principal amount of or interest on any LIBOR Loan; (iii) any Borrower shall fail to borrow, continue or convert a LIBOR Loan after it has given notice requesting the same in accordance herewith; (iv) any Borrower shall fail to make any prepayment of a LIBOR Loan after Borrower Representative has given a notice thereof in accordance herewith; or (v) any assignment shall occur pursuant to Section 1.17(d) , then Borrowers shall jointly and severally indemnify and hold harmless each Lender from and against all losses, costs and expenses resulting from or arising from any of the foregoing. Such indemnification shall include any loss (excluding loss of margin) or expense arising from the reemployment of funds obtained by it or from fees payable to terminate deposits from which such funds were obtained. For the purpose of calculating amounts payable to a Lender under this subsection, each Lender shall be deemed to have actually funded its portion of the relevant LIBOR Loan (or its participation interest in such LIBOR Loan) through the purchase of a deposit bearing interest at the Dollar LIBOR Rate, the Sterling LIBOR Rate, the Euro LIBOR Rate or the Hong Kong Dollars LIBOR Rate, as applicable, in an amount equal to the amount of such portion of such LIBOR Loan (or such participation, as applicable) and having a maturity comparable to the relevant LIBOR Period; provided , that each Lender may fund each of its interests in LIBOR Loans (or its participations in LIBOR Loans) in any manner it sees fit, and the foregoing assumption shall be utilized only for the calculation of amounts payable under this

subsection. This covenant shall survive the termination of this Agreement and the payment of the Notes and all other amounts payable hereunder. As promptly as practicable under the circumstances, each Lender shall provide Borrower Representative with its written calculation of all amounts payable pursuant to this Section 1.14(b) , and such calculation shall be binding on the parties hereto unless Borrower Representative shall object in writing within ten (10) Business Days of receipt thereof, specifying the basis for such objection in detail. It is understood and agreed that, notwithstanding anything to the contrary set forth in this Section 1.14(b) , no Foreign Credit Party shall have any obligation to any Lender with regard to any such losses, costs and expenses relating to Obligations of any Domestic Credit Party.


1.15	Access .

Each Credit Party shall, during normal business hours, from time to time upon three (3) Business Days’ prior notice as frequently as the Administrative Agent reasonably determines to be appropriate (except as otherwise provided): (a) provide the Administrative Agent and any of its officers, employees and agents access to its properties, facilities, advisors, officers and employees and to the Collateral (including, without limitation, in order to prepare an appraisal or similar report), (b) permit the Administrative Agent, and any of its officers, employees and agents, to inspect, audit and make extracts from any Sotheby Entity’s books and records, and (c) permit the Administrative Agent, and its officers, employees and agents, not more than two (2) times during any twelve-month period beginning on the date hereof or any anniversary thereof (unless an Event of Default has occurred and is continuing, in which case such limitation shall not apply), to inspect, review, evaluate, and make test verifications and counts of the Collateral of any Credit Party; provided , that (i) the Administrative Agent shall conduct at least one (1) field exam described in the foregoing clause (c) during each twelve-month period and (ii) unless an Event of Default has occurred and is continuing, not more than two such field exams during any twelve-month period shall be at the cost and expense of the Credit Parties. If an Event of Default has occurred and is continuing, each such Credit Party shall provide such access to the Agents and to each Lender at all times and without advance notice. Furthermore, so long as any Event of Default has occurred and is continuing, each Credit Party shall provide the Agents and each Lender with access to their suppliers and customers to the extent such access is within the rights and powers of such Credit Party. Each Credit Party shall make available to each Agent and its counsel reasonably promptly originals or copies of all books and records that such Agent may reasonably request. Each Credit Party shall deliver any document or instrument necessary for any Agent, as it may from time to time reasonably request, to obtain records from any service bureau or other Person that maintains records for such Credit Party, and shall maintain duplicate records or supporting documentation on media, including computer tapes and discs owned by such Credit Party. The Administrative Agent will give Lenders at least five (5) days’ prior written notice of regularly scheduled audits. Representatives of other Lenders may accompany the Administrative Agent’s representatives on regularly scheduled audits at no charge to Borrowers.


1.16	Taxes .

(a) Tax gross-up .

(i) Each Credit Party shall make all payments to be made by it under the Loan Documents without any Tax Deduction, unless a Tax Deduction is required by law.

(ii) The Borrower Representative shall promptly upon becoming aware that a Credit Party must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Administrative Agent accordingly. Similarly, a Lender shall notify the Administrative Agent promptly on becoming so aware in respect of any payment to that Lender pursuant to any Loan Document. If the Administrative Agent receives such notification from a Lender it shall promptly notify the Borrower Representative.

(iii) Subject to paragraph (iv) below, if a Tax Deduction is required by law to be made by any Credit Party, the amount of the payment due from such Credit Party shall be increased to an amount which (after making any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required.

(iv) A Credit Party is not required to make an increased payment to a Lender under paragraph (iii) above for a Tax Deduction in respect of tax imposed by the United Kingdom, Hong Kong or the United States of America (as the case may be) on a payment under the Loan Documents, if on the date on which the payment falls due:

(A) the payment could have been made to the relevant Lender without a Tax Deduction if the Lender had been a Qualifying Lender, but on that date that Lender is not or has ceased to be a Qualifying Lender other than as a result of any change after the date it became a Lender under this Agreement in (or in the interpretation, administration, or application of) any law or Treaty, or any published practice or concession of any relevant taxing authority;

(B) with respect to any payment to be made by a U.K. Credit Party, (i) the relevant Lender is a Qualifying Lender solely by virtue of paragraph (i)(B) of the definition of Qualifying Lender, (ii) an officer of H.M. Revenue & Customs has given (and not revoked) a direction (a “ Direction ”) under section 931 of the Income Tax Act 2007 of the United Kingdom which relates to that payment and that Lender has received from the Credit Party making the payment a certified copy of that Direction, and (iii) the payment could have been made to the relevant Lender without a Tax Deduction in the absence of that Direction;

(C) with respect to any payment to be made by a U.K. Credit Party, the relevant Lender is a Treaty Lender and the Credit Party making the payment is able to demonstrate that the payment could have been made to the Lender without the Tax Deduction had that Lender complied with its obligations under paragraph (vii) below;

(D) the relevant Lender is a Qualifying Lender solely by virtue of paragraph (i)(B) of the definition of Qualifying Lender and:


a.	the relevant Lender has not given a Tax Confirmation to the Borrower Representative (on behalf of the U.K. Credit Parties); and

the payment could have been made to the Lender without any Tax Deduction if the Lender had given a Tax Confirmation to the Borrower Representative (on behalf of the U.K. Credit Parties), on the basis that the Tax Confirmation would have enabled the U.K. Credit Parties to have formed a reasonable belief that the payment was an “excepted payment” for the purpose of section 930 of the Income Tax Act 2007;

(E) with respect to any payments to be made by a Domestic Credit Party, the Tax is (i) assessed on a Lender under (x) the law of the jurisdiction in which that Lender is incorporated or, if different, the jurisdiction (or jurisdictions) in which that Lender is treated as resident for tax purposes, (y) the law of the jurisdiction in which that Lender’s Lending Office is located in respect of amounts received or receivable in that jurisdiction or (z) the law of the jurisdiction with which that Lender and the jurisdiction have a present or former connection (other than such connection arising from any Lender having executed, delivered or performed its obligations or received a payment under, or enforced, any Loan Document) and (ii) imposed on or measured by net income with respect to that Lender or such Tax is a franchise tax or branch profits tax, or imposed in lieu of a net income Tax; or

(F) the payment is subject to U.S. federal withholding Taxes imposed under FATCA.

(v) If any Credit Party is required to make a Tax Deduction, such Credit Party shall make such Tax Deduction and any payment required in connection with such Tax Deduction within the time allowed and in the minimum amount required by law.

(vi) Within thirty days of making either a Tax Deduction or any payment required in connection with a Tax Deduction, the Credit Party making such Tax Deduction shall deliver to the Administrative Agent for the applicable Lender either a statement under section 975 of the Income Tax Act 2007 or other evidence reasonably satisfactory to such Lender that such Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority.

(vii) A Treaty Lender and a Credit Party which makes a payment to which that Treaty Lender is entitled shall cooperate in completing any procedural formalities necessary for that Credit Party to obtain authorization to make that payment without a Tax Deduction. The Administrative Agent has filed a syndicated loan scheme application form with H.M. Revenue & Customs. A Treaty Lender shall discharge its obligation under this provision if it provides to the Administrative Agent its DTTP number and jurisdiction of tax residence and

any other information required by the Administrative Agent to maintain the syndicated loan scheme application.

(viii) A U.K. Non-Bank Lender shall promptly notify the Administrative Agent who shall notify the U.K. Credit Parties if there is any change in the position from that set out in the Tax Confirmation.

(ix) Each Lender which becomes a party to this Agreement after the date of this Agreement (such Lender, a “ New Lender ”) shall indicate, in the Assignment Agreement which it executes on becoming a party, and for the benefit of the Administrative Agent and without liability to any Credit Party, which of the following categories it falls in:

(A) not a Qualifying Lender;

(B) a Qualifying Lender (other than a Treaty Lender); or

If a New Lender fails to indicate its status in accordance with this paragraph (ix) , then such New Lender shall be treated for the purposes of this Agreement (including by each U.K. Credit Party) as if it is not a Qualifying Lender until such time as it notifies the Administrative Agent which category applies (and the Administrative Agent, upon receipt of such notification, shall inform the Borrower Representative on behalf of the U.K. Credit Parties). For the avoidance of doubt, an Assignment Agreement shall not be invalidated by any failure of a Lender to comply with this paragraph (ix) .

(x) If a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the IRC, as applicable), such Lender shall deliver to Borrowers and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by Borrowers or the Administrative Agent, such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the IRC) and such additional documentation reasonably requested by Borrowers or the Administrative Agent as may be necessary for Borrowers and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (x) , “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

(xi) The parties hereto agree, for U.S. federal income tax purposes, to treat this Agreement as resulting in a “material modification” of the Existing Credit Agreement within the meaning of Section 1.1471-2T(b)(2)(iv) of the U.S. Treasury regulations and, consequently, on and after the Restatement Effective Date, to treat this Agreement and the loans hereunder for purposes of FATCA as not “grandfathered obligations” within the meaning of Section 1.1471-2(b)(2)(i) of the U.S. Treasury regulations.

(b) Tax indemnity .

(i) The Credit Parties shall (within three Business Days of demand by the Administrative Agent) pay (or procure payment) to a Protected Party an amount equal to the loss, liability or cost which that Protected Party determines will be or has been (directly or indirectly) suffered for or on account of Tax by that Protected Party in respect of any Loan Document.

(ii) Paragraph (b)(i) above shall not apply:

(A) with respect to any Tax (i) assessed on a Lender (x) under the law of the jurisdiction in which that Lender is incorporated or, if different, the jurisdiction (or jurisdictions) in which that Lender is treated as resident for tax purposes or (y) under the law of the jurisdiction in which that Lender’s Lending Office is located in respect of amounts received or receivable in that jurisdiction and (ii) imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) by that Lender; and

(B) to the extent a loss, liability or cost (i) is compensated for by an increased payment under Section 1.16(a) or (ii) would have been compensated for by an increased payment under Section 1.16(a) but was not so compensated solely because one of the exclusions in Section 1.16(a)(iv) applied.

(iii) A Protected Party making, or intending to make, a claim under paragraph (i) above shall promptly notify the Administrative Agent of the event which will give, or has given, rise to the claim, following which the Administrative Agent shall notify the Borrower Representative.

(iv) A Protected Party shall, on receiving a payment from a Credit Party under this Section 1.16(b) , notify the Administrative Agent.

(i) a Tax Credit is attributable either to an increased payment under Section 1.16(a) of which that Tax Payment forms part, or to that Tax Payment; and

(ii) that Lender has obtained, utilized and retained that Tax Credit,

the Lender shall pay an amount to the applicable Credit Party which that Lender determines will leave it (after that payment) in the same after-Tax position as it would have been in had the Tax Payment not been required to be made by such Credit Party. It is understood and agreed that, in the case of a US LLC Lender, references in this Section 1.16(c) to “Lender” include the related US Corporation.

(d) Stamp Taxes . The Credit Parties shall pay, and within three Business Days of demand, indemnify each Lender against any cost, loss, or liability that a Lender incurs in relation to all stamp, duty, registration and other similar Taxes payable in respect of the Loan Documents.

(e) Value Added Tax .

(i) All amounts expressed in the Loan Documents to be payable by any Credit Party to a Lender or any Agent which (in whole or in part) constitute the consideration for a supply or supplies for VAT purposes shall be deemed to be exclusive of VAT. If VAT is or becomes chargeable on any supply made by any Lender or any Agent to any Credit Party in connection with any Loan Document, such Credit Party shall pay to such Lender or Agent, as applicable, (in addition to and at the same time as paying the consideration for such supply) an amount equal to the amount of such VAT (and such Lender shall promptly provide an appropriate VAT invoice to the relevant Credit Party).

(ii) Where any Loan Document requires any Credit Party to reimburse or indemnify a Lender or any Agent for any cost or expense, such Credit Party shall reimburse or indemnify (as the case may be) such Lender or such Agent, as applicable, for the full amount of such cost or expense, including such part thereof as represents VAT, except to the extent that such Lender or such Agent, as applicable, reasonably determines that it is entitled to credit or repayment in respect of such VAT from the relevant tax authority.

(iii) Any reference in this Section 1.16(e) to any Credit Party shall, at any time when such Credit Party is treated as a member of a group for VAT purposes, include (where appropriate and unless the context otherwise requires) a reference to the representative member of such group at such time (the term “representative member” to have the same meaning as in the Value Added Tax Act 1994 of the United Kingdom).

(f) Lender Assignments . If:

(i) a Lender makes an assignment to an assignee of, or sells participations in, the Loan Documents or changes its Lending Office; and

(ii) as a result of circumstances existing at the date the assignment, participation or change occurs, a U.K. Credit Party would be obliged to make a payment to the new Lender or Lender acting through its new Lending Office under this Section 1.16,

then the new Lender or Lender acting through its new Lending Office is only entitled to receive payment under this Section 1.16 to the same extent as the existing Lender or Lender acting through its previous Lending Office would have been if the assignment, participation or change had not occurred.


1.17	Capital Adequacy; Increased Costs; Illegality .

(a) If any law, treaty, governmental (or quasi governmental) rule, regulation, guideline or order regarding capital adequacy, liquidity, reserve requirements or similar requirements or compliance by any Lender (including, as applicable, as L/C Issuer) with any request or directive regarding capital adequacy, liquidity, reserve requirements or similar requirements (whether or not having the force of law), in each case, adopted after the Restatement Effective Date, from any central bank or other Governmental Authority increases or would have the effect of increasing the amount of capital, reserves or other funds required to be maintained by such Lender and thereby reducing the rate of return on such Lender’s capital as a consequence of its obligations hereunder, then Borrowers shall from time to time upon demand by such Lender (with a copy of such demand to the Administrative Agent) pay to the Administrative Agent, for the account of such Lender, additional amounts sufficient to compensate such Lender for such reduction. A certificate as to the amount of that reduction and showing the basis of the computation thereof submitted by such Lender to Borrower Representative and to the Administrative Agent shall be presumptive evidence of the matters set forth therein.

(b) If, due to either (i) the introduction of or any change in any law or regulation (or any change in the interpretation thereof) or (ii) the compliance with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law), in each case adopted after the Restatement Effective Date, there shall be any increase in the cost to any Lender (including, as applicable, as L/C Issuer) or its Lending Office of agreeing to make or making, funding or maintaining any Loan or Letter of Credit, then Borrowers shall from time to time, upon demand by such Lender (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender additional amounts sufficient to compensate such Lender for such increased cost. A certificate as to the amount of such increased cost, submitted to Borrower Representative and to the Administrative Agent by such Lender, shall be presumptive evidence of the matters set forth therein. Each Lender agrees that, as promptly as practicable after it becomes aware of any circumstances referred to above which would result in any such increased cost, the affected Lender shall, to the extent not inconsistent with such Lender’s internal policies of general application, use reasonable commercial efforts to minimize costs and expenses incurred by it and payable to it by Borrowers pursuant to this Section 1.17(b) . For the avoidance of doubt, Sections 1.17(a) and 1.17(b) shall not apply to Taxes which shall be exclusively governed by Section 1.16 .

(c) (i) Notwithstanding anything to the contrary contained herein, if the introduction of or any change in any law or regulation (or any change in the interpretation thereof) shall make it unlawful, or any central bank or other Governmental Authority shall assert that it is unlawful, for any Lender or its Lending Office to agree to make or to make or to continue to fund or maintain any LIBOR Loan (or a participation interest in any LIBOR Loan), then, unless that Lender is able to make or to continue to fund or to maintain such LIBOR Loan (or participation interest, as applicable) at another branch or office of that Lender without, in that Lender’s reasonable opinion, materially adversely affecting it, its Loans or its participation interests in Loans or the income obtained therefrom, on notice thereof and demand therefor by such Lender to Borrower Representative through the Administrative Agent, (x) the obligation of such Lender to agree to make or to make or to continue to fund or maintain LIBOR Loans (or

participation interests in LIBOR Loans) shall terminate and (y) each Borrower shall forthwith prepay in full all outstanding LIBOR Loans owing by such Borrower to such Lender, together with interest accrued thereon, unless Borrower Representative on behalf of such Borrower, within five (5) Business Days after the delivery of such notice and demand, converts all LIBOR Loans into Index Rate Loans.

(i) If the Administrative Agent shall have determined in good faith that for any reason adequate and reasonable means do not exist for ascertaining the Dollar LIBOR Rate, the Sterling LIBOR Rate, the Euro LIBOR Rate or the Hong Kong Dollars LIBOR Rate, as applicable, for any requested LIBOR Period with respect to a proposed LIBOR Loan or that the Dollar LIBOR Rate, the Sterling LIBOR Rate, the Euro LIBOR Rate or the Hong Kong Dollars LIBOR Rate, as applicable, applicable pursuant to Section 1.5(a) for any requested LIBOR Period with respect to a proposed LIBOR Loan does not adequately and fairly reflect the cost to the Lenders of funding such Loan, the Administrative Agent will forthwith give notice of such determination to Borrower Representative and each Lender. Thereafter, the obligation of the Lenders to make or maintain LIBOR Loans hereunder shall be suspended until the Administrative Agent revokes such notice in writing. Upon receipt of such notice, Borrower Representative may revoke any Notice of Revolving Credit Advance, Swing Line Request, Letter of Credit Request or Notice of Conversion/Continuation then submitted by it. If Borrower Representative does not revoke such notice, Lenders shall make, convert or continue the Loans, as proposed by Borrower Representative, in the amount specified in the applicable notice submitted by Borrower Representative, but such Loans shall be made, converted or continued as Index Rate Loans.

(d) Within thirty (30) days after receipt by Borrower Representative of written notice and demand from any Lender (an “ Affected Lender ”) for payment of additional amounts or increased costs as provided in Sections 1.16(a), 1.17(a) or 1.17(b) , Borrower Representative may, at its option, notify the Administrative Agent and such Affected Lender of its intention to replace the Affected Lender. Borrower Representative may obtain, at Borrowers’ expense, a replacement Lender (“ Replacement Lender ”) for the Affected Lender, so long as (i) no Default or Event of Default has occurred and is continuing, and (ii) the Administrative Agent has consented to such replacement (such consent not to be unreasonably withheld or delayed if such Replacement Lender constitutes a Qualified Assignee). If Borrowers obtain a Replacement Lender within ninety (90) days following notice of their intention to do so, the Affected Lender must sell and assign its outstanding Loans, Letter of Credit Obligations and Commitments to such Replacement Lender for an amount equal to the outstanding principal balance of all Loans held by the Affected Lender and all accrued interest and Fees with respect thereto through the date of such sale and such assignment shall not require the payment of an assignment fee to the Administrative Agent; provided , that Borrowers shall have reimbursed such Affected Lender for the additional amounts or increased costs that it is entitled to receive under this Agreement through the date of such sale and assignment. Notwithstanding the foregoing, Borrowers shall not have the right to obtain a Replacement Lender if the Affected Lender rescinds its demand for increased costs or additional amounts within fifteen (15) days following its receipt of Borrowers’ notice of intention to replace such Affected Lender. Furthermore, if Borrowers give a notice of intention to replace and do not so replace such Affected Lender within ninety (90) days

thereafter, Borrowers’ rights under this Section 1.17(d) shall terminate with respect to such Affected Lender and Borrowers shall promptly pay all increased costs or additional amounts demanded by such Affected Lender pursuant to Sections 1.16(a), 1.17(a) and 1.17(b) . Notwithstanding the foregoing, with respect to a Lender that is a Non-Funding Lender or an Impacted Lender, the Administrative Agent may, but shall not be obligated to, obtain a Replacement Lender and execute an Assignment Agreement on behalf of such Non-Funding Lender or Impacted Lender at any time with three (3) Business Days’ prior notice to such Lender (unless notice is not practicable under the circumstances) and cause such Lender’s Loans, participations and Commitments to be sold and assigned, in whole or in part, at par.

(e) Notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States of America or foreign regulatory authorities, in each case in respect of this clause (ii) , pursuant to Basel III, shall, in each case, be deemed to be a change in regulation regarding capital adequacy or liquidity under Section 1.17(a) and/or a change in law under Section 1.17(b) , as applicable, regardless of the date enacted, adopted or issued.


1.18	Credit Support .

All Loans to each Domestic Borrower and all of the other Obligations of each Domestic Borrower arising under this Agreement and the other Loan Documents shall constitute one general obligation of the Domestic Borrowers secured, until the Termination Date, by all of the Collateral covered under the Domestic Collateral Documents. All Loans to each Foreign Borrower and all of the other Obligations of each Foreign Borrower arising under this Agreement and the other Loan Documents shall constitute one general obligation of both the Domestic Borrowers and the Foreign Borrowers secured, until the Foreign Obligations Termination Date, by all of the Collateral covered under the Collateral Documents.


1.19	Conversion to Dollars and Foreign Currency .

(a) Except as expressly set forth herein, all valuations or computations of monetary amounts set forth in this Agreement shall include the Dollar Equivalent of Sterling, Euro, Hong Kong Dollars or any other applicable currency. All currency conversions to be made under this Agreement shall be made in accordance with the following procedure:

(ii) Conversions to Dollars shall occur in accordance with prevailing exchange rates, as determined by the Administrative Agent in its reasonable discretion, on the applicable date.

(iii) Conversions to any Foreign Currency shall occur in accordance with prevailing exchange rates, as determined by the Administrative Agent, in its reasonable discretion, on the applicable date.

(iv) The Dollar Equivalent of each of the Revolving Credit Advances, Swing Line Advances and Letter of Credit Obligations denominated in currencies other than Dollars shall be re-calculated on (a) so long as the Maximum Auction Borrowing Availability equals or exceeds $5,000,000, the first Business Day of each month and (b) otherwise, the first Business Day of each week.

(b) All valuations or computations of monetary amounts set forth in any Borrowing Base Certificate, any Art Inventory Report, any Art Loan Receivables Report, any Extended Term Art Receivables Report or any other report, certificate, Financial Statement or other document delivered by any Credit Party to the Administrative Agent hereunder shall be made in accordance with GAAP and the ordinary business practices of the Credit Parties as of the Restatement Effective Date; provided , that any such report or document shall set forth the conversion factors used with respect to any foreign currencies.


1.20	Judgment Currency; Contractual Currency .

(a) If, for the purpose of obtaining or enforcing judgment against any Credit Party in any court in any jurisdiction, it becomes necessary to convert into any other currency (such other currency being hereinafter in this Section 1.20 referred to as the “ Judgment Currency ”) an amount due under any Loan Document in any currency (the “ Obligation Currency ”) other than the Judgment Currency, the conversion shall be made at the rate of exchange prevailing on the Business Day immediately preceding (i) the date of actual payment of the amount due, in the case of any proceeding in the courts of any jurisdiction that will give effect to such conversion being made on such date, or (ii) the date on which the judgment is given, in the case of any proceeding in the courts of any other jurisdiction (the applicable date as of which such conversion is made pursuant to this Section 1.20 being hereinafter referred to as the “ Judgment Conversion Date ”).

(b) If, in the case of any proceeding in the court of any jurisdiction referred to in Section 1.20(a) , there is a change in the rate of exchange prevailing between the Judgment Conversion Date and the date of actual receipt for value of the amount due, the applicable Credit Party shall pay such additional amount (if any, but in any event not a lesser amount) as may be necessary to ensure that the amount actually received in the Judgment Currency, when converted at the rate of exchange prevailing on the date of payment, will produce the amount of the Obligation Currency which could have been purchased with the amount of the Judgment Currency stipulated in the judgment or judicial order at the rate of exchange prevailing on the Judgment Conversion Date. Any amount due from a Credit Party under this Section 1.20(b) shall be due as a separate debt and shall not be affected by judgment being obtained for any other amounts due under or in respect of any of the Loan Documents.

(c) The term “rate of exchange” in this Section 1.20 means the rate of exchange at which the Administrative Agent would, on the relevant date at or about noon (New York City time), be able to sell the Obligation Currency against the Judgment Currency to prime banks.

(d) Any amount received or recovered by any Agent in respect of any sum expressed to be due to them (whether for itself or on behalf of any other person) from any Credit Party under this Agreement or under any of the other Loan Documents in a currency other than the currency (the “contractual currency”) in which such sum is so expressed to be due (whether as a result of, or from the enforcement of, any judgment or order of a court or tribunal of any jurisdiction, the winding-up of a Borrower or otherwise) shall only constitute a discharge of such Borrower to the extent of the amount of the contractual currency that such Agent is able, in accordance with its usual practice, to purchase with the amount of the currency so received or recovered on the date of receipt or recovery (or, if later, the first date on which such purchase is practicable). If the amount of the contractual currency so purchased is less than the amount of the contractual currency so expressed to be due, such Borrower shall indemnify such Agent against any loss sustained by it as a result, including the cost of making any such purchase other than losses resulting from the gross negligence or willful misconduct of the Person seeking such indemnification.


1.21	Currency of Account .

Dollars are the currency of account and payment for each and every sum at any time due from the Borrowers hereunder; provided , that:

(i) unless expressly provided elsewhere in this Agreement, each repayment of an Auction Revolving Credit Advance or a part thereof advanced in any Foreign Currency shall be made in such Foreign Currency;

(ii) each payment of interest in respect of principal, or any other sum, denominated in any Foreign Currency shall be made in such Foreign Currency;

(iii) each payment in respect of costs and expenses incurred in any Foreign Currency shall be made in such Foreign Currency; and

(iv) any other amount expressed to be payable in any Foreign Currency shall be paid in such Foreign Currency.

1.22

Extension of Incremental Maturity Date . The Borrower Representative may, at any time during the period which is no more than sixty (60) days or less than forty-five (45) days immediately preceding the then applicable Incremental Maturity Date (as such Incremental Maturity Date may have previously been extended pursuant to this Section 1.22 , the “ Existing Incremental Maturity Date ”), request that the then Existing Incremental Maturity Date be extended for a period of 365 days (or, if the 365 ^th day following the Existing Incremental Maturity Date is (x) not a Business Day, the immediately preceding Business Day or (y) later than the date specified in clause (a) of the definition of “Auction Commitment Termination Date,” the date specified in clause (a) of the definition of “Auction Commitment Termination Date”). Any such request shall be in writing and delivered to the Administrative Agent (for distribution to the

Incremental Lenders) and shall be subject to the following conditions: (a) none of the Incremental Lenders shall have any obligation to extend the Existing Incremental Maturity Date at any time, (b) Parent shall be required to pay each Incremental Lender renewing its Incremental Commitment a renewal fee of 0.25% of such Incremental Lender’s Incremental Commitment, (c) Incremental Lenders having, in the aggregate, not less than $5,000,000 of the Incremental Commitments must agree to the extension of the Existing Incremental Maturity Date in order for such extension to be effective and (d) no such extension shall be effective unless all outstanding Incremental Revolving Credit Advances and other Obligations (other than contingent Obligations as to which no claim has been asserted) owed to any Non-Extending Incremental Lender, in its capacity as an Incremental Lender, have been paid in full in immediately available funds on or prior to the Non-Extending Incremental Maturity Date. Each Incremental Lender shall respond to any such request by providing a response to the Borrower Representative and the Administrative Agent not later than thirty (30) days following receipt of such request by the Administrative Agent; provided , that a failure by any Incremental Lender to respond on or before such thirtieth (30 ^th ) day shall be deemed to be a rejection of the requested extension. The Incremental Commitments of all Non-Extending Incremental Lenders shall be terminated on the Non-Extending Incremental Maturity Date.

2. CONDITIONS PRECEDENT


2.1	Conditions to Effectiveness of Agreement and the Initial Loans .

The amendment and restatement of the Existing Credit Agreement contemplated hereby shall not be effective and no Lender shall be obligated to make any Loan or incur any Letter of Credit Obligations on the Restatement Effective Date, or to take, fulfill, or perform any other action hereunder, until the following conditions have been satisfied or provided for in a manner reasonably satisfactory to the Administrative Agent, or waived in writing by the Administrative Agent:

(a) Credit Agreement; Loan Documents . Each Loan Document delivered on the date hereof or counterparts thereof shall have been duly executed and delivered by Borrowers, each other Credit Party, each Agent and Lenders party thereto; and the Administrative Agent shall have received such documents, instruments, agreements and legal opinions as the Administrative Agent shall reasonably request in connection with the transactions contemplated by this Agreement and the other Loan Documents, including all those listed in the Closing Checklist attached hereto as Annex D , each in form and substance reasonably satisfactory to the Administrative Agent.

performance of this Agreement and the other Loan Documents and the consummation of the Related Transactions or (ii) an officer’s certificate in form and substance reasonably satisfactory to the Administrative Agent affirming that no such consents or approvals are required (other than those that have been obtained).

(c) Opening Availability . After giving effect to the consummation of the Related Transactions, any initial Revolving Credit Advances made to Borrowers and the incurrence of any initial Letter of Credit Obligations on the Restatement Effective Date, Borrowers shall have Aggregate Borrowing Availability of at least $150,000,000 as of the Restatement Effective Date.

(d) Payment of Fees . Borrowers shall have paid the Fees required to be paid on the Restatement Effective Date (including, without limitation, those specified in Section 1.10 ) and shall have reimbursed the Agents for all fees, costs and expenses of closing presented as of the Restatement Effective Date.

(e) SFS Revolving Credit Agreement . The Administrative Agent shall have received evidence satisfactory to it that the conditions precedent to the effectiveness of the amendment and restatement contemplated by the SFS Revolving Credit Agreement and the making of the initial loans and the issuance of any initial letters of credit under the SFS Revolving Credit Agreement (other than the satisfaction of the conditions precedent for the making of the initial Loans and the issuance of any initial Letters of Credit under this Agreement) have been satisfied (or waived in accordance with the terms thereof);

(f) Other Indebtedness . All Obligations and all Liens granted under the Loan Documents shall constitute permitted indebtedness and permitted Liens, as applicable, under the Senior Note Indenture.

(g) No Material Adverse Change . Since December 31, 2013, no event shall have occurred that results in or causes, or could reasonably be expected to result in or cause, a Material Adverse Effect.


2.2	Further Conditions to Each Loan .

Except as otherwise expressly provided herein, no Lender shall be obligated to fund any Advance, convert or continue any portion of the outstanding Revolving Loan as a LIBOR Loan or incur any Letter of Credit Obligation, if, as of the date thereof:

any Auction Dollar Tranche Letter of Credit Obligation), Majority in Interest of the Auction Multicurrency Tranche Lenders (in the case of the funding of any Auction Multicurrency Tranche Advance, conversion or continuation of any portion of the Auction Multicurrency Tranche Revolving Loan, or the incurrence of any Auction Multicurrency Tranche Letter of Credit Obligation) or Incremental Lenders (in the case of the funding of any Incremental Revolving Credit Advance or the conversion or continuation of any Incremental Revolving Credit Advance) have determined not to make such Advance, convert or continue any portion of the outstanding Revolving Loan as LIBOR Loan or incur such Letter of Credit Obligation as a result of the fact that such warranty or representation is untrue or incorrect in any material respect (or, in the case of any representation or warranty already qualified by materiality, in any respect);

(i) any Default or Event of Default has occurred and is continuing or would result after giving effect to any Advance, the incurrence of any Letter of Credit Obligation, or the conversion or continuation of any portion of the outstanding Revolving Loan into, or as, a LIBOR Loan, and the Majority in Interest of the Auction Dollar Tranche Lenders (in the case of the funding of any Auction Dollar Tranche Advance, conversion or continuation of any portion of the Auction Dollar Tranche Revolving Loan, or the incurrence of any Auction Dollar Tranche Letter of Credit Obligation), Auction Multicurrency Tranche Lenders (in the case of the funding of any Auction Multicurrency Tranche Advance, conversion or continuation of any portion of the Auction Multicurrency Tranche Revolving Loan, or the incurrence of any Auction Multicurrency Tranche Letter of Credit Obligation) or Incremental Lenders (in the case of the funding of any Incremental Revolving Credit Advance or the conversion or continuation of any Incremental Revolving Credit Advance) shall have determined not to make any Advance, convert or continue any portion of the outstanding Revolving Loan as a LIBOR Loan or incur any Letter of Credit Obligation as a result of that Default or Event of Default;

(j) after giving effect to any Advance (or the incurrence of any Letter of Credit Obligations), (i) the outstanding principal amount of the aggregate Auction Dollar Tranche Revolving Loan would exceed the Maximum Auction Dollar Tranche Amount less the then outstanding principal amount of the Auction Dollar Tranche Swing Line Loan, (ii) the Dollar Equivalent of the outstanding principal amount of the aggregate Auction Multicurrency Tranche Revolving Loan would exceed the Maximum Auction Multicurrency Tranche Amount less the then outstanding principal amount of the Auction Multicurrency Tranche Swing Line Loan, (iii) the aggregate outstanding principal balance of Incremental Revolving Credit Advances would exceed the Maximum Incremental Amount, (iv) the Dollar Equivalent of the aggregate outstanding principal balance of Auction Revolving Credit Advances and Swing Line Advances made to Domestic Borrowers and the Dollar Equivalent of the Letter of Credit Obligations incurred for the benefit of the Domestic Borrowers would, in the aggregate, exceed the Domestic Auction Borrowing Base, (v) the aggregate outstanding principal balance of Incremental Revolving Credit Advances made to Domestic Borrowers would, in the aggregate, exceed the Domestic Incremental Borrowing Base, (vi) the outstanding amount of the Auction Dollar Tranche Letter of Credit Obligations would exceed the Auction Dollar Tranche L/C Sublimit or the Dollar Equivalent of the outstanding amount of the Auction Multicurrency Tranche Letter of Credit Obligations would exceed the Auction Multicurrency Tranche L/C

Sublimit, (vii) the aggregate outstanding principal amount of the Auction Dollar Tranche Swing Line Loan would exceed Auction Dollar Tranche Swing Line Availability, (viii) the Dollar Equivalent of the aggregate outstanding principal amount of the Auction Multicurrency Tranche Swing Line Loan would exceed Auction Multicurrency Tranche Swing Line Availability, (ix) the Dollar Equivalent of the aggregate outstanding principal balance of Auction Revolving Credit Advances made to Foreign Borrowers and the Dollar Equivalent of the outstanding amount of the Letter of Credit Obligations incurred for the benefit of the Foreign Borrowers would, in the aggregate, exceed the Foreign Auction Borrowing Base, (x) the sum of (A) the Dollar Equivalent of the aggregate outstanding principal balance of Auction Revolving Credit Advances made to Foreign Borrowers and the Dollar Equivalent of the outstanding amount of the Letter of Credit Obligations incurred for the benefit of the Foreign Borrowers plus (B) the Dollar Equivalent of the aggregate outstanding principal balance of “Revolving Credit Advances” made to “Foreign Borrowers” and the Dollar Equivalent of the outstanding amount of the “Letter of Credit Obligations” incurred for the benefit of the “Foreign Borrowers” (as each such term in this clause (B) is defined in the SFS Revolving Credit Agreement) would, in the aggregate, exceed the Foreign Borrower Subfacility Limit or (xi) the aggregate outstanding principal balance of Incremental Revolving Credit Advances made to Foreign Borrowers would, in the aggregate, exceed the Foreign Incremental Borrowing Base; or

(k) notwithstanding the provisions of Annex F , the Borrowers shall not have delivered to the Administrative Agent a Borrowing Base Certificate, Art Inventory Report, Art Loan Receivables Report and Extended Term Art Receivables Report (accompanied in each case by such supporting detail and documentation as shall be requested by the Administrative Agent in its reasonable discretion), in each case prepared as of (i) with respect to any Advance to be made or Letter of Credit Obligation to be incurred during the first thirteen days of any Fiscal Month, the last of day of the second preceding Fiscal Month or (ii) with respect to any Advance to be made or Letter of Credit Obligation to be incurred during the remainder of any Fiscal Month, the last day of the preceding Fiscal Month.

The request and acceptance by any Borrower of the proceeds of any Advance, the incurrence of any Letter of Credit Obligations or the conversion or continuation of any portion of the outstanding Revolving Loan into, or as, a LIBOR Loan shall be deemed to constitute, as of the date thereof, (i) a representation and warranty by Borrowers that the conditions in this Section 2.2 have been satisfied and (ii) a reaffirmation by Borrowers of the cross-guaranty provisions set forth in Section 12 and of the granting and continuance of the Collateral Agent’s Liens, on behalf of itself and the other Secured Parties, pursuant to the Collateral Documents.

3. REPRESENTATIONS AND WARRANTIES

To induce Lenders to make the Loans and to incur Letter of Credit Obligations (and to purchase participation interests in the Loans and Letter of Credit Obligations hereunder), the Credit Parties, jointly and severally, make the following representations and warranties to each Agent and each Lender with respect to all Sotheby Entities, each and all of which shall survive the execution and delivery of this Agreement.


3.1	Corporate Existence; Compliance with Law .

(l) Each Credit Party (i) is a corporation, limited liability company or limited partnership (or, in the case of Sotheby’s U.K., an unlimited liability company) duly organized, validly existing and in good standing under the laws of its respective jurisdiction of incorporation or organization set forth in Disclosure Schedule (3.1) ; (ii) is duly qualified to conduct business and is in good standing in each other jurisdiction where its ownership or lease of property or the conduct of its business requires such qualification, except where the failure to be so qualified would not result in exposure to losses or liabilities which could reasonably be expected to have a Material Adverse Effect; (iii) has the requisite power and authority and the legal right to own, pledge, mortgage or otherwise encumber and operate its properties, to lease the property it operates under lease and to conduct its business as now conducted or proposed to be conducted; and (iv) is in compliance with its charter and bylaws or partnership or operating agreement, as applicable.

(m) Each Sotheby Entity (i) subject to specific representations regarding Environmental Laws, has and will maintain in full force and effect all material licenses (including, for the avoidance of doubt, a license under the Consumer Credit Act 1974 of the United Kingdom and the Consumer Credit Act 2006 of the United Kingdom (collectively, as each may be amended, extended or re-enacted from time to time, the “ CCA ”)), permits, consents, permissions, registrations, or approvals from or by, and has made all material filings with, and has given all notices to, all Governmental Authorities having jurisdiction, to the extent required, to enable such Sotheby Entity to carry on its business as currently conducted by it, to own its property and other assets, to extend Art Loans and generate Extended Term Art Receivables and to take security therefor; and (ii) subject to specific representations set forth herein regarding ERISA, Environmental Laws, tax and other laws, is in compliance with all applicable provisions of law, rule, regulation or guidance, except where the failure to comply, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.


3.2	Executive Offices, Collateral Locations, FEIN .

As of the Restatement Effective Date, each Domestic Credit Party’s name as it appears in official filings in its jurisdiction of incorporation or organization, jurisdiction of incorporation or organization, organization type, organization number, if any, issued by its jurisdiction incorporation or organization, and the current location of each Domestic Credit Party’s chief executive office and the warehouses and premises at which any Collateral is located are set forth in Disclosure Schedule (3.2) , none of such locations has changed within the four (4) months preceding the Restatement Effective Date and each Domestic Credit Party has only one jurisdiction of incorporation or organization. In addition, Disclosure Schedule (3.2) lists the federal employer identification number of each Domestic Credit Party.


3.3	Corporate Power, Authorization, Enforceable Obligations .

provision of any Sotheby Entity’s charter, bylaws or partnership or operating agreement as applicable; (d) do not violate any law or regulation, or any order or decree of any court or Governmental Authority; (e) do not conflict with or result in the breach or termination of, constitute a default under or accelerate or permit the acceleration of any performance required by, any indenture, mortgage, deed of trust, lease, agreement or other instrument to which any Sotheby Entity is a party or by which any Sotheby Entity or any of its property is bound, including, without limitation, the Senior Note Indenture, the Specified Debt Facility Documents or the York Avenue Lease Documents; (f) do not result in the creation or imposition of any Lien upon any of the property of any Sotheby Entity other than those in favor of the Collateral Agent, on behalf of itself and the other Secured Parties, pursuant to the Loan Documents; and (g) do not require the consent or approval of any Governmental Authority or any other Person. Each of the Loan Documents shall be duly executed and delivered by each Credit Party and each such Loan Document shall constitute a legal, valid and binding obligation of such Credit Party enforceable against it in accordance with its terms.


3.4	Financial Disclosures .

Except for the Projections, all Financial Statements concerning the Borrowers and their Subsidiaries that are referred to below (i) in the case of all Financial Statements concerning Parent and its Subsidiaries on a consolidated basis, have been prepared in accordance with GAAP consistently applied throughout the periods covered (except as disclosed therein and except, with respect to unaudited Financial Statements, for the absence of footnotes and normal year-end audit adjustments) and (ii) present fairly in all material respects the financial position of the Persons covered thereby as at the dates thereof and the results of their operations and cash flows for the periods then ended.

(t) Financial Statements . The following Financial Statements have been delivered on or prior to the date hereof:

(i) The audited consolidated (with respect to Parent and its Subsidiaries) balance sheets at December 31, 2012 and 2013 and the related consolidated statements of income and cash flows for the Fiscal Years then ended, which consolidated Financial Statements shall have been certified by Deloitte & Touche LLP, and the unaudited consolidating balance sheets and related consolidating statements of income of Parent and the Borrowers for such Fiscal Years.

(ii) The unaudited consolidated balance sheet at June 30, 2014, and the related statement(s) of income and cash flows of Parent and its Subsidiaries for the Fiscal
Quarter then ended, and the unaudited consolidating balance sheets and related consolidating statement of income of Parent and the Borrowers for such Fiscal Quarter.

and fair in light of current conditions and current facts known to the Borrowers and, as of the Restatement Effective Date, reflect the Borrowers’ good faith and reasonable estimates of the future financial performance of Parent and its Subsidiaries for the period set forth therein. The Projections are not a guaranty of future performance, and actual results may differ from the Projections.

(v) Debt Disclosure . As of the Restatement Effective Date, no Sotheby Entity is liable on any “Credit Facilities” (as defined in the Senior Note Indenture) other than pursuant to this Agreement and the SFS Revolving Credit Agreement.


3.5	Material Adverse Effect .

Since December 31, 2013, no event has occurred, that alone or together with other events, could reasonably be expected to have a Material Adverse Effect.


3.6	Ownership of Property; Liens .

As of the Restatement Effective Date, Disclosure Schedule (3.6) lists all of the real property owned, leased, subleased, occupied, or used by any Credit Party (the “ Real Estate ”) and discloses which Credit Party is the owner, lessee, licensee or occupier of such Real Estate. Except as a result of Permitted Encumbrances or Liens expressly permitted under Section 6.7(i) , each Credit Party owns good and marketable freehold or fee simple title to all of its owned Real Estate, and valid and marketable leasehold interests in all of its leased Real Estate. Disclosure Schedule (3.6) further describes any Real Estate with respect to which any Credit Party is a lessor, sublessor or assignor as of the Restatement Effective Date. Except as a result of Permitted Encumbrances, each Credit Party also has title to, or valid leasehold interests in, all of its personal property and assets. As of the Restatement Effective Date, none of the properties and assets of any Sotheby Entity are subject to any Liens other than Permitted Encumbrances, and there are no facts, circumstances or conditions known to any Sotheby Entity that may result in any Liens (including Liens arising under Environmental Laws) other than Liens expressly permitted pursuant to Section 6.7 . Disclosure Schedule (3.6) also describes any purchase options, rights of first refusal or other similar contractual rights pertaining to any Real Estate.


3.7	Labor Matters .

Except as set forth on Disclosure Schedule 3.7 , as of the Restatement Effective Date (a) there are no strikes, lockouts or slowdowns against any Credit Party pending or, to the knowledge of any Credit Party, threatened; (b) the hours worked by and payments made to employees of each Credit Party have not been in violation of the Fair Labor Standards Act or any other applicable Federal, state, local or foreign law dealing with such matters except where such violation could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect; (c) all material payments due from any Credit Party, or for which any claim may be made against any Credit Party, on account of wages and employee health and welfare insurance and other benefits, have been paid or accrued as a liability on the books of such Credit Party; and (d) there are no complaints, charges, claims or other causes of action against any Credit Party pending or, to the knowledge of any Credit Party, threatened to be filed

with any Governmental Authority or arbitrator based on, arising out of, in connection with, or otherwise relating to the employment or termination of employment by any Credit Party of any individual, which if adversely determined could reasonably be expected to have a Material Adverse Effect.


3.8	Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness .

Except as set forth in Disclosure Schedule (3.8) , as of the Restatement Effective Date, no Sotheby Entity has any Subsidiaries, is engaged in any joint venture or partnership with any other Person (other than Art Loan/Inventory Joint Ventures), or is an Affiliate of any other Person. All of the issued and outstanding Stock of each Sotheby Entity is owned by each of the Stockholders and in the amounts set forth in Disclosure Schedule (3.8) . Except as set forth in Disclosure Schedule (3.8) , there are no outstanding rights to purchase, options, warrants or similar rights or agreements pursuant to which any Sotheby Entity may be required to issue, sell, repurchase or redeem any of its Stock or other equity securities or any Stock or other equity securities of its Subsidiaries. All outstanding Indebtedness and Guaranteed Indebtedness of each Credit Party as of the Restatement Effective Date (except for the Obligations) is described in Section 6.3 (including Disclosure Schedule (6.3) ).


3.9	Government Regulation .

No Sotheby Entity is an “investment company” or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company,” as such terms are defined in the Investment Company Act of 1940. The making of the Loans by Lenders to Borrowers, the incurrence of the Letter of Credit Obligations on behalf of Borrowers and the application of the proceeds thereof and repayment thereof will not violate any provision of any such statute or any rule, regulation or order issued by the Securities and Exchange Commission.


3.10	Margin Regulations .

No Sotheby Entity is engaged, principally or as one of its important activities, in the business of purchasing or selling Margin Stock or extending credit for the purpose of purchasing or carrying Margin Stock. No Sotheby Entity owns any Margin Stock (other than Stock of Parent, to the extent it constitutes Margin Stock, in an amount that does not exceed 25% of the assets of the Credit Parties).


3.11	Taxes .

All Federal and other material tax returns, reports and statements, including information returns, required by any Governmental Authority to be filed by any Sotheby Entity have been filed, or will be timely filed, with the appropriate Governmental Authority, and all Charges have been paid excluding Charges or other amounts being contested in accordance with Section 5.2(b) and unless the failure to so file or pay could not reasonably be expected to result in a Material Adverse Effect. Disclosure Schedule (3.11) sets forth as of the Restatement Effective Date those taxable years for which any Sotheby Entity’s tax returns are currently being audited by the IRS or any other applicable Governmental Authority, and any assessments or

threatened assessments in connection with such audit, or otherwise currently outstanding where the amount of such assessments, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. Except as described in Disclosure Schedule (3.11) , as of the Restatement Effective Date, no Sotheby Entity has executed or filed with the IRS or any other Governmental Authority any agreement or other document extending, or having the effect of extending, the period for assessment or collection of any material Charges. None of the Sotheby Entities and their respective predecessors are liable for any Charges: (a) under any agreement (including any tax sharing agreements) or (b) to each Sotheby Entity’s knowledge, as a transferee. As of the Restatement Effective Date, no Sotheby Entity has agreed or been requested to make any adjustment under IRC Section 481(a), by reason of a change in accounting method or otherwise, which would reasonably be expected to have a Material Adverse Effect.


3.12	ERISA/U.K. Pension Plans .

(c) Disclosure Schedule (3.12(a) ) lists, as of the Restatement Effective Date, all Plans subject to Section 412 of the IRC or Section 302 of ERISA, including all Title IV Plans, all Multiemployer Plans, and all Retiree Welfare Plans. Copies of all such listed Plans, together with a copy of the latest form IRS/DOL 5500-series and related actuarial reports, as applicable, for each such Plan, have been made available to the Administrative Agent. Except with respect to Multiemployer Plans, each Qualified Plan has been determined by the IRS to qualify under Section 401(a) of the IRC, the trusts created thereunder have been determined to be exempt from tax under the provisions of Section 501(a) of the IRC, and nothing has occurred that would cause the loss of such qualification or tax exempt status. Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the IRC and its terms, including the timely filing of all reports required under the IRC or ERISA. Neither any Sotheby Entity nor ERISA Affiliate has failed to make any material contribution or pay any material amount due as required by either Section 412 of the IRC or Section 302 of ERISA or the terms of any such Plan. Neither any Sotheby Entity nor ERISA Affiliate has failed to make a contribution payment on or before the applicable due date which could result in the imposition of a lien under Section 430(k) of the IRC or Section 303(k) of ERISA. No “prohibited transaction,” as defined in Section 406 of ERISA and Section 4975 of the IRC, has occurred with respect to any Plan, that would subject any Sotheby Entity to a material tax on prohibited transactions imposed by Section 502(i) of ERISA or Section 4975 of the IRC.

(d) Except as set forth in Disclosure Schedule (3.12(a) ): (i) no Title IV Plan has any material Unfunded Pension Liability; (ii) no ERISA Event has occurred or is reasonably expected to occur; (iii) there are no pending, or to the knowledge of any Sotheby Entity, threatened material claims (other than claims for benefits in the normal course), sanctions, actions or lawsuits, asserted or instituted against any Plan or any Person as fiduciary or sponsor of any Plan; (iv) no Sotheby Entity or ERISA Affiliate has incurred or reasonably expects to incur any material liability as a result of a complete or partial withdrawal from a Multiemployer Plan; (v) within the last five years no Title IV Plan of any Sotheby Entity or ERISA Affiliate has been terminated, whether or not in a “standard termination” as that term is used in Section 4041 of ERISA, nor has any Title IV Plan of any Sotheby Entity or any ERISA Affiliate (determined at

any time within the last five years) with material Unfunded Pension Liabilities been transferred outside of the “controlled group” (within the meaning of Section 4001(a)(14) of ERISA) of any Sotheby Entity or ERISA Affiliate (determined at such time), (vi) except in the case of any ESOP, Stock of all Credit Parties and their ERISA Affiliates makes up, in the aggregate, no more than 10% of fair market value of the assets of any Plan measured on the basis of fair market value as of the latest valuation date of any Plan; and (vii) no liability under any Title IV Plan has been satisfied with the purchase of a contract from an insurance company that is not rated AAA by Standard & Poor’s Ratings Group or an equivalent rating by another nationally recognized rating agency.

(e) Disclosure Schedule (3.12(c) ) lists, as of the Restatement Effective Date, all pension plans or arrangements operating in the United Kingdom through which any Sotheby Entity currently contributes or could be required to contribute (the “ U.K. Pension Plans ”). There are no amounts which are treated under Section 75 of the Pensions Act 1995 of the United Kingdom as due to any other pension scheme operated in the United Kingdom in which any Sotheby Entity has been a participating employer. Disclosure Schedule (3.12(c) ) separately identifies which of the U.K. Pension Plans is a defined benefit plan and which is a defined contribution plan. All of the U.K. Pension Plans are registered pension schemes as defined in chapter 2 of part 4 of the Finance Act 2004 of the United Kingdom. There is no plan of any U.K. Credit Party (or, to the knowledge of the U.K. Credit Parties, of any other Person having the power to amend or terminate any U.K. Pension Plan) to amend or terminate any U.K. Pension Plan or otherwise do any act or omission so as to give rise to any claim by the trustees of that plan whether under the related trust deed or rules of that plan or under Section 75 of the Pensions Act 1995 of the United Kingdom. Contributions have been made to the U.K. Pension Plans as required under their relevant schedule of contributions and recovery plan (if any) in force from time to time as those terms are defined in Part 3 of the Pensions Act 2004 of the United Kingdom in all material respects. There are no facts or circumstances which may give rise to the Pensions Regulator issuing, or to the knowledge of any Sotheby Entity threatening to issue, a Financial Support Directive or a Contribution Notice with respect to any U.K. Pension Plans.


3.13	Litigation .

No action, claim, lawsuit, demand, investigation or proceeding is now pending or, to the knowledge of any Sotheby Entity, threatened against any Sotheby Entity, before any Governmental Authority or before any court or any arbitrator or panel of arbitrators (collectively, “ Litigation ”), (a) that challenges any Credit Party’s right or power to enter into or perform any of its obligations under the Loan Documents to which it is a party, or the validity or enforceability of any Loan Document or any action taken thereunder, or (b) that has a reasonable risk of being determined adversely to any Sotheby Entity and that, if so determined, could reasonably be expected to have a Material Adverse Effect. Except as set forth on Disclosure Schedule (3.13(a) ), as of the Restatement Effective Date there is no Litigation pending or, to any Sotheby Entity’s knowledge, threatened, that seeks damages in excess of $10,000,000 or injunctive relief against, or alleges criminal misconduct of, any Sotheby Entity.


3.14	Brokers .

Except as set forth on Disclosure Schedule 3.14 , no broker or finder brought about the obtaining, making or closing of the Loans, and no Sotheby Entity or Affiliate thereof has any obligation to any Person in respect of any finder’s or brokerage fees in connection therewith.


3.15	Intellectual Property .

As of the Restatement Effective Date, each Sotheby Entity owns or has rights to use all Intellectual Property necessary to continue to conduct its business as now conducted by it or presently proposed to be conducted by it, and each material License and each registration pending or registered Patent, Trademark and Copyright owned by the Credit Parties is listed, together with the related application or registration number, as applicable, and the owner thereof, in Disclosure Schedule (3.15) . Each Sotheby Entity conducts its business and affairs without infringement of or interference with any Intellectual Property of any other Person in any material respect. As of the Restatement Effective Date, except as set forth in Disclosure Schedule (3.15) , no Credit Party is aware of any material infringement claim by any other Person with respect to any Intellectual Property owned by the Credit Parties.


3.16	Full Disclosure .

No information contained in this Agreement, any of the other Loan Documents, Financial Statements or Collateral Reports or other written reports from time to time prepared by any Sotheby Entity and delivered hereunder or any written statement prepared by any Sotheby Entity and furnished by or on behalf of any Sotheby Entity to any Agent or any Lender pursuant to the terms of this Agreement (other than Projections, other forward-looking information and information of a general economic or industry-specific nature) contains or will, at the time of delivery thereof, contain any untrue statement of a material fact or omits or will omit to state a material fact necessary to make the statements contained herein or therein not misleading in light of the circumstances under which they were made. The Projections delivered hereunder are based upon the estimates and assumptions stated therein, all of which Borrowers believed at the time of delivery to be reasonable and fair in light of current conditions and current facts known to Borrowers as of such delivery date, and reflect Borrowers’ good faith and reasonable estimates of the future financial performance of Borrowers and of the other information projected therein for the period set forth therein. The Projections are not a guaranty of future performance and actual results may differ from those set forth in the Projections. The Liens granted to the Collateral Agent, on behalf of itself and the other Secured Parties, pursuant to the Collateral Documents will at all times be valid, fully perfected first priority security interests in the Collateral described therein (except as otherwise set forth in the Collateral Documents), subject, as to priority, only to Permitted Encumbrances that would be prior to Liens in favor of the Collateral Agent as a matter of law and as otherwise set forth in the Specified Debt Facility Intercreditor Agreement.


3.17	Environmental Matters .

(a) Except as set forth in Disclosure Schedule (3.17) , as of the Restatement Effective Date: (i) the owned Real Estate is, and, to the knowledge of the Credit Parties, the

leased Real Estate is, in each case, free of contamination from any Hazardous Material except for such contamination that would not adversely impact the value or marketability of such Real Estate and that would not result in Environmental Liabilities that could reasonably be expected to have a Material Adverse Effect; (ii) no Sotheby Entity has caused or suffered to occur any material Release of Hazardous Materials on, at, in, under, above, to, from or about any of its Real Estate; (iii) the Sotheby Entities are and have been in compliance with all Environmental Laws, except for such noncompliance that would not result in Environmental Liabilities which could reasonably be expected to have a Material Adverse Effect; (iv) the Sotheby Entities have obtained, and are in compliance with, all Environmental Permits required by Environmental Laws for the operations of their respective businesses as presently conducted or as proposed to be conducted, except where the failure to so obtain or comply with such Environmental Permits would not result in Environmental Liabilities that could reasonably be expected to have a Material Adverse Effect; (v) no Sotheby Entity is involved in operations or knows of any facts, circumstances or conditions, including any Releases of Hazardous Materials, that are likely to result in any Environmental Liabilities of such Sotheby Entity which could reasonably be expected to have a Material Adverse Effect; (vi) there is no Litigation arising under or related to any Environmental Laws, Environmental Permits or Hazardous Material that seeks damages, penalties, fines, costs or expenses that could reasonably be expected to have a Material Adverse Effect or injunctive relief against, or that alleges criminal misconduct by, any Sotheby Entity; (vii) no notice has been received by any Sotheby Entity identifying it as a “potentially responsible party” or requesting information under CERCLA or analogous state statutes, and to the knowledge of the Sotheby Entities, there are no facts, circumstances or conditions that may result in any Sotheby Entity being identified as a “potentially responsible party” under CERCLA or analogous state statutes; and (viii) the Sotheby Entities have made available to the Administrative Agent copies of all existing environmental reports, reviews and audits and all written information pertaining to actual or potential Environmental Liabilities, in each case relating to any Sotheby Entity.

(b) Each Credit Party hereby acknowledges and agrees that neither Agent (i) is now or has ever been in control of any of the Real Estate or any Credit Party’s affairs, and (ii) has the capacity through the provisions of the Loan Documents or otherwise to influence any Credit Party’s conduct with respect to the ownership, operation or management of any of its Real Estate or compliance with Environmental Laws or Environmental Permits.


3.18	Insurance .

Disclosure Schedule (3.18) lists all insurance policies of any nature maintained, as of the Restatement Effective Date, for current occurrences by each Credit Party.


3.19	Deposit .

Disclosure Schedule (3.19) lists all banks and other financial institutions at which any Credit Party maintains deposit or other accounts, and such Schedule correctly identifies the name, address and telephone number of each depository, the name in which the account is held, a description of the purpose of the account, the complete account number therefor and whether

such account contains amounts payable to consignors representing proceeds of the sale of consigned Works of Art.


3.20	[ Reserved ] .


3.21	Bonding; Licenses .

Except as set forth on Disclosure Schedule (3.21) or entered into in the ordinary course of business, as of the Restatement Effective Date, no Sotheby Entity is a party to or bound by any surety bond agreement or bonding requirement with respect to products or services sold by it or any trademark or patent license agreement with respect to products sold by it.


3.22	Solvency .

Both before and after giving effect to (a) the Loans and Letter of Credit Obligations to be made or incurred on the Restatement Effective Date or such other date as Loans and Letter of Credit Obligations requested hereunder are made or incurred, (b) the disbursement of the proceeds of such Loans pursuant to the instructions of Borrower Representative; (c) the consummation of the Related Transactions; and (d) the payment and accrual of all transaction costs in connection with the foregoing, Parent and its Subsidiaries, on a consolidated basis, are and will be Solvent.


3.23	Sale-Leasebacks .

No Sotheby Entity is a party to any sale-leaseback, synthetic lease or similar transaction involving any of its assets.


3.24	U.S. Sanctions, Money-Laundering and Terrorism Regulatory Matters .

(a) No Sotheby Entity or any Affiliate of any Sotheby Entity, nor, to their knowledge, any of their respective officers or directors or any of their respective brokers, investors or other agents acting or benefiting in any capacity in connection with Loans, is a Prohibited Person.

(b) No Sotheby Entity or any Affiliate of any Sotheby Entity, nor any of their respective officers or directors (i) to such Sotheby Entity’s knowledge, has conducted or will conduct any business or has engaged or will engage in any transaction or dealing with any Prohibited Person, including making or receiving any contribution of funds, goods or services to or for the benefit of any Prohibited Person, (ii) to such Sotheby Entity’s knowledge, has dealt or will deal in, or otherwise has engaged or will engage in any transaction relating to, any Prohibited Person or any property or interests in property blocked pursuant to the Executive Order or (iii) to their knowledge, has engaged or will engage in or has conspired or will conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the requirements or prohibitions set forth in the Executive Order or the PATRIOT Act.

(c) Each Sotheby Entity and its Affiliates, and, to their knowledge, their respective officers and directors are in full compliance with (i) the Trading with the Enemy Act, and each of the foreign assets control regulations, applicable orders and rules issued by, and recommendations of the U.S. Department of the Treasury and OFAC pursuant to IEEPA, and any other enabling legislation or executive order relating thereto, (ii) the PATRIOT Act and (iii) other federal or state laws relating to “ know your customer ”, anti-money laundering, sanctions or terrorism rules and regulations and any executive orders related thereto. No part of the proceeds of any Loan or Letter of Credit will be used directly or indirectly for (x) any payments to any government official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation in any material respect of the United States Foreign Corrupt Practices Act of 1977, or any applicable anti-corruption laws in other jurisdictions or (y) business activities related to Cuba, Iran, Myanmar, North Korea, Sudan, Crimea Region of Ukraine and Syria, or that are subject to sanctions imposed or administered by one of the sanctions bodies enumerated in clause (e) of the definition of “Prohibited Person”.

(d) Each Borrower has established an anti-money laundering and/or economic sanctions program and/or procedures in accordance with all applicable laws, rules and regulations of its own jurisdiction including, without limitation, where applicable, the PATRIOT Act. Each Borrower applies its anti-money laundering program and/or procedures to all Art Loan Debtors and Extended Term Art Debtors.

(e) Each Sotheby Entity has taken appropriate due diligence efforts to know, or has carried out appropriate customer due diligence in relation to, (i) each Art Loan Debtor to which it has advanced, or committed to advance, Art Loans and (ii) each Extended Term Art Debtor to which it has provided, or committed to provide, extended payment terms in connection with any Extended Term Art Receivable, in each case, including whether such Art Loan Debtor or Extended Term Art Debtor, as applicable, is a Prohibited Person. Each Sotheby Entity has taken appropriate due diligence efforts to know if any such Art Loan Debtor or Extended Term Art Debtor is a “Senior Foreign Political Figure” (as defined in the PATRIOT Act), a “Politically Exposed Person” (as defined in The Money Laundering Regulations 2007 of the United Kingdom) or a “politically exposed person” (as defined in The Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance of Hong Kong) and, to the extent that any Art Loan Debtor or Extended Term Art Debtor is a Senior Foreign Political Figure, a Politically Exposed Person or a politically exposed person (as aforementioned), has disclosed such information to the Administrative Agent.

(f) Each Borrower does not believe, and after appropriate due diligence, has no reason to believe, that any of its Art Loan Debtors or Extended Term Art Debtors is a “Prohibited Foreign Shell Bank” (as defined in the PATRIOT Act), or is named on any available lists of known or suspected terrorists, terrorist organizations or of other sanctioned person issued by the United States government and/or the government(s) of any jurisdiction(s) in which such Borrower is doing business.

(g) Each Sotheby Entity has adopted reasonable procedures in accordance with applicable law as of the Restatement Effective Date to elicit information that substantiates the statements contained in this Section 3.25 .


3.25	Lending and Auction Regulatory Matters .

(a) Except as set forth in Disclosure Schedule (3.13(a)) , each Credit Party that makes or owns Art Loans or Extended Term Art Receivables is in material compliance with, and each Art Loan and Extended Term Art Receivable has been made or generated, as applicable, and remains in material compliance with, all applicable provisions of federal, state, local and foreign laws imposed upon lenders with respect to consumer or commercial lending, usury or other limitations on interest, finance charges, or other charges, finance company or other lender licensing, consumer or commercial credit disclosure, consumer or commercial credit collection practices, and similar laws and regulations.

(b) Sotheby’s, Inc. and each other Credit Party that conducts auctions in the City of New York is in material compliance with, and each employee thereof who conducts auction in New York City maintains a valid license under, the City of New York’s Auctioneer Rules (Title 20, Chapter 2, Subchapter 13) and any applicable similar laws of other jurisdictions. Sotheby’s U.K. and each other Credit Party which conducts auctions in the United Kingdom is in material compliance with, and maintains valid licenses (if required) under, all laws, regulations and auctioneer’s licensing requirements applicable in the United Kingdom, if any. Sotheby’s H.K. and each other Credit Party which conducts auctions in Hong Kong is in material compliance with, and maintains valid licenses (if required) under, all laws, regulations and auctioneer’s licensing requirements applicable in Hong Kong, if any.

4. FINANCIAL STATEMENTS AND INFORMATION


4.1	Reports and Notices .

(a) Each Credit Party hereby agrees that from and after the Restatement Effective Date and until the Termination Date, it shall deliver to the Administrative Agent, the Collateral Agent and/or Lenders, as required, the Financial Statements, notices, Projections and other information at the times, to the Persons and in the manner set forth in Annex E .

(b) Each Credit Party hereby agrees that, from and after the Restatement Effective Date and until the Termination Date, it shall deliver the various Collateral Reports (including Borrowing Base Certificates in the form of Exhibit 4.1(A) , Art Loan Receivables Reports in the form of Exhibit 4.1(B) , Art Inventory Reports in the form of Exhibit 4.1(C) and Extended Term Art Receivables Reports in the form of Exhibit 4.1(D) ) at the times, to the Persons and in the manner set forth in Annex F and Section 2.2(d) .

5. AFFIRMATIVE COVENANTS

Each Credit Party jointly and severally agrees as to all Sotheby Entities that from and after the date hereof and until the Termination Date:


5.1	Maintenance of Existence and Conduct of Business .

Each Sotheby Entity shall: do or cause to be done all things necessary to preserve and keep in full force and effect its corporate, partnership, limited liability company or unlimited liability company existence and its material rights and franchises, except as otherwise permitted under Section 6.1 ; continue to conduct its business substantially as now conducted or as otherwise permitted hereunder; at all times maintain, preserve and protect all of its assets and properties used or useful in the conduct of its business, and keep the same in good repair, working order and condition in all material respects (taking into consideration ordinary wear and tear) and from time to time make, or cause to be made, all necessary or appropriate repairs, replacements and improvements thereto consistent with industry practices.


5.2	Payment of Charges .

(w) Subject to Section 5.2(b) , each Sotheby Entity shall pay and discharge or cause to be paid and discharged promptly all Charges payable by it, including (i) Charges imposed upon it, its income and profits, or any of its property (real, personal or mixed) and all Charges with respect to tax, social security and unemployment withholding with respect to its employees, (ii) lawful claims for labor, materials, supplies and services or otherwise, and (iii) all storage or rental charges payable to warehousemen or bailees, in each case, before any thereof shall become past due, in each case, except where the failure to pay or discharge such Charges would not result in aggregate liabilities in excess of $5,000,000.

(x) Each Sotheby Entity may in good faith contest, by appropriate proceedings, the validity or amount of any Charges or claims described in Section 5.2(a) ; provided , that (i) adequate reserves with respect to such contest are maintained on the books of such Sotheby Entity, in accordance with GAAP; (ii) no Lien shall be imposed to secure payment of such Charges (other than payments to warehousemen and/or bailees) that is superior to any of the Liens securing the Obligations and such contest is maintained and prosecuted continuously and with diligence and operates to suspend collection or enforcement of such Charges; (iii) none of the Collateral becomes subject to forfeiture or loss as a result of such contest; and (iv) such Sotheby Entity shall promptly pay or discharge such contested Charges or claims and all additional charges, interest, penalties and expenses, if any, if such contest is terminated or discontinued adversely to such Sotheby Entity.


5.3	Books and Records .

Each Sotheby Entity shall keep adequate books and records with respect to its business activities in which proper entries, reflecting all financial transactions, are made. Parent shall keep adequate books and records with respect to the business activities of Parent and its Subsidiaries on a consolidated basis in which proper entries, reflecting all financial transactions, are made in accordance with GAAP and on a basis consistent with the Financial Statements attached as Disclosure Schedule (3.4(a) ).


5.4	Insurance; Damage to or Destruction of Collateral .

(q) The Sotheby Entities shall, at their sole cost and expense, maintain policies of insurance with financially sound and reputable insurance companies in such amounts, and covering such risks, as is consistent with sound business practice and customary for their industry. In the case of the Credit Parties, such policies of insurance (or the loss payable and additional insured endorsements delivered to the Collateral Agent) shall contain provisions pursuant to which the insurer agrees to provide thirty (30) days prior written notice to the Collateral Agent in the event of any non-renewal, cancellation or amendment of any such insurance policy. If any Sotheby Entity at any time or times hereafter shall fail to obtain or maintain any of the policies of insurance required above, or to pay all premiums relating thereto, any Agent may at any time or times thereafter obtain and maintain such policies of insurance and pay such premiums and take any other action with respect thereto that such Agent deems advisable. Neither Agent shall have any obligation to obtain insurance for any Sotheby Entity or pay any premiums therefor. By doing so, neither Agent shall be deemed to have waived any Default or Event of Default arising from any Sotheby Entity’s failure to maintain such insurance or pay any premiums therefor. All sums so disbursed, including reasonable attorneys’ fees, court costs and other charges related thereto, shall be payable on demand by Borrowers to the applicable Agent and shall be additional Obligations hereunder secured by the Collateral.

(r) If reasonably requested by any Agent, each Sotheby Entity shall deliver to such Agent from time to time a report of a reputable insurance broker, reasonably satisfactory to such Agent, with respect to its insurance policies.

(s) Each Credit Party shall deliver to the Collateral Agent, in form and substance reasonably satisfactory to the Collateral Agent, endorsements to (i) all “All Risk,” Lender Single Interest (“LSI”) and Fine Arts property policies of insurance (including, to the extent permitted under the York Avenue Lease Documents and York Avenue Loan Documents, the business interruption insurance of such Credit Party), in each case, naming the Collateral Agent, on behalf of itself and the other Secured Parties, as a lender loss payee, and (ii) all general, automotive, and umbrella liability policies of insurance, in each case, naming the Collateral Agent, on behalf of itself and the other Secured Parties, as additional insured. Each Credit Party irrevocably makes, constitutes and appoints each Agent (and all officers, employees or agents designated by any Agent), so long as any Default or Event of Default has occurred and is continuing, as such Credit Party’s true and lawful agent and attorney in fact for the purpose of making, settling and adjusting claims under such “All Risk” property policies of insurance, endorsing the name of such Credit Party on any check or other item of payment for the proceeds of such “All Risk” policies of insurance and for making all determinations and decisions with respect to such “All Risk” policies of insurance. No Agent shall have any duty to exercise any rights or powers granted to it pursuant to the foregoing power-of-attorney. Borrower Representative shall promptly notify each Agent of any loss, damage, or destruction to the Collateral in the amount of $2,000,000 or more, whether or not covered by insurance. After deducting from the proceeds of insurance received with respect to any such loss, damage or destruction to the Collateral (i) the expenses incurred by any Agent in the collection or handling thereof, and (ii) amounts required to be paid to creditors (other than the Secured Parties) having Permitted Encumbrances, the Agents (A) shall apply any such proceeds to the reduction of the Obligations (and cash collateralization of Letter of Credit Obligations) and the

“Obligations” (and cash collateralization of “Letter of Credit Obligations”) (in each case, as defined in the SFS Revolving Credit Agreement) in accordance with Section 1.3(d) or (e) , as applicable, except to the extent that the applicable Credit Party has given notice of its intent to reinvest such proceeds in productive assets of a kind then used or usable in the business of a Credit Party, within one hundred eighty (180) days after the date of receipt of such proceeds; provided that the Borrower Representative notifies Collateral Agent of such Credit Party’s intent to reinvest and of the completion of such reinvestment at the time such proceeds are received and when such reinvestment occurs, respectively and (B) shall, to the extent such proceeds are not required to be applied to prepay the Obligations (and cash collateralization of Letter of Credit Obligations) and the “Obligations” (and cash collateralization of “Letter of Credit Obligations”) (in each case, as defined in the SFS Revolving Credit Agreement) pursuant to Section 1.3(c) , remit such proceeds to the applicable Credit Party.


5.5	Compliance with Laws .

Each Sotheby Entity shall comply with all federal, state, local and foreign laws, rules and regulations applicable to it, including those relating to ERISA, labor, money laundering, counter-terrorist financing, consumer or commercial lending (including, for the avoidance of doubt, the CCA and the rules and regulations from time to time in effect thereunder or in connection therewith), usury, limitations on interest, finance charges or other charges, finance company licensing, consumer or commercial credit disclosure, debt collection, auctioneers, Environmental Laws and Environmental Permits, except to the extent that the failure to comply, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.


5.6	Supplemental Disclosure .

From time to time as may be reasonably requested by the Administrative Agent (which request will not be made more frequently than once each year absent the occurrence and continuance of an Event of Default) or at Credit Parties’ election, the Credit Parties shall supplement each Disclosure Schedule hereto, or any representation herein or in any other Loan Document, with respect to any matter hereafter arising that, if existing or occurring at the date of this Agreement, would have been required to be set forth or described in such Disclosure Schedule or as an exception to such representation or that is necessary to correct any information in such Disclosure Schedule or representation which has been rendered inaccurate thereby (and, in the case of any supplements to any Disclosure Schedule, such Disclosure Schedule shall be appropriately marked to show the changes made therein); provided that (a) no such supplement to any such Disclosure Schedule or representation shall amend, supplement or otherwise modify any Disclosure Schedule or representation, or be or be deemed a waiver of any Default or Event of Default resulting from the matters disclosed therein, except as consented to by the Agents and Requisite Lenders in writing, and (b) no supplement shall be required or permitted as to representations and warranties that relate solely to the Restatement Effective Date.


5.7	Intellectual Property .

Each Sotheby Entity will conduct its business and affairs without infringement of or interference with any Intellectual Property of any other Person in any material respect and shall comply in all material respects with the terms of its Licenses.


5.8	Environmental Matters .

Each Sotheby Entity shall and shall cause each Person within its control to: (a) conduct its operations and keep and maintain its Real Estate in compliance with all Environmental Laws and Environmental Permits other than noncompliance that could not reasonably be expected to have a Material Adverse Effect; (b) implement any and all investigation, remediation, removal and response actions that are appropriate or necessary to maintain the value and marketability of the Real Estate or to otherwise comply with Environmental Laws and Environmental Permits pertaining to the presence, generation, treatment, storage, use, disposal, transportation or Release of any Hazardous Material on, at, in, under, above, to or from any of its Real Estate in all material respects; (c) notify the Administrative Agent promptly after such Sotheby Entity becomes aware of any violation of Environmental Laws or Environmental Permits or any Release on, at, in, under, above, to or from any Real Estate that is reasonably likely to result in Environmental Liabilities that could reasonably be expected to have a Material Adverse Effect; and (d) promptly forward to the Administrative Agent a copy of any order, notice, request for information or any communication or report received by such Sotheby Entity in connection with any such violation or Release or any other matter relating to any Environmental Laws or Environmental Permits that could reasonably be expected to result in Environmental Liabilities that could reasonably be expected to have a Material Adverse Effect, in each case whether or not the Environmental Protection Agency or any Governmental Authority has taken or threatened any action in connection with any such violation, Release or other matter. If the Administrative Agent at any time has a reasonable basis to believe that there may be a violation of any Environmental Laws or Environmental Permits by any Sotheby Entity or any Environmental Liability arising thereunder, or a Release of Hazardous Materials on, at, in, under, above, to or from any of its Real Estate, that, in each case, could reasonably be expected to have a Material Adverse Effect, then each Sotheby Entity shall, upon the Administrative Agent’s written request (i) cause the performance of such environmental audits including subsurface sampling of soil and groundwater, and preparation of such environmental reports, at Borrowers’ expense, as the Administrative Agent may from time to time reasonably request, subject to any leases, which shall be conducted by reputable environmental consulting firms reasonably acceptable to the Administrative Agent and shall be in form and substance reasonably acceptable to the Administrative Agent, and (ii) permit the Administrative Agent or its representatives to have access to all Real Estate for the purpose of conducting such environmental audits and testing as the Administrative Agent deems appropriate, including subsurface sampling of soil and groundwater. Borrowers shall reimburse the Administrative Agent for the costs of such audits and tests and the same will constitute a part of the Obligations secured hereunder.


5.9	Landlords’ Agreements, Bailee Letters and Real Estate Purchases .

With respect to each leased property indicated on Disclosure Schedule (3.6), each Credit Party shall use commercially reasonable efforts to obtain a landlord’s agreement, in form and substance reasonably satisfactory to the Administrative Agent, from the applicable lessor with respect to each such indicated locations. After the Restatement Effective Date, if any Credit Party proposes to lease during any Fiscal Year any real property locations or warehouse spaces (or renew an existing lease of any real property locations or warehouse spaces, or alter the use of any leased location to materially increase the Collateral stored or located at such location) where Collateral having a book value the Dollar Equivalent of which is greater than $1,000,000 in the aggregate will be stored or located, such Credit Party shall first notify the Administrative Agent thereof and, upon request of the Administrative Agent, provide to the Administrative Agent a landlord agreement or bailee letter, as appropriate, with respect to such location, in form and substance reasonably satisfactory to the Administrative Agent. Each Credit Party shall timely and fully pay and perform its obligations under all leases and other agreements with respect to each leased location or public warehouse where any Collateral is or may be located. To the extent otherwise permitted hereunder, if any Credit Party proposes to acquire a fee ownership interest in Real Estate after the Restatement Effective Date, such Credit Party shall first notify the Administrative Agent thereof and, upon request of the Administrative Agent, provide to the Administrative Agent a mortgage or deed of trust granting the Collateral Agent a first priority security interest on such Real Estate, together with environmental audits, mortgage title insurance commitment, real property survey, local counsel opinion(s), flood zone determinations, supplemental casualty insurance and flood insurance, and such other documents, instruments or agreements reasonably requested by the Administrative Agent, in each case, in form and substance reasonably satisfactory to the Administrative Agent.


5.10	Lending and Auction Regulatory Matters .

(f) Each Credit Party shall remain in material compliance with all applicable provisions of federal, state, local and foreign laws imposed upon lenders with respect to consumer or commercial lending, usury or other limitations on interest, finance charges or other charges, finance companies, finance company or other lender licensing, consumer or commercial credit disclosure, consumer or commercial credit collection practices, and similar laws and regulations.

(g) Sotheby’s, Inc. and each other Credit Party that conducts auctions in the City of New York shall remain in material compliance with, and maintain a valid license under, the City of New York’s Auctioneer Rules (Title 20, Chapter 2, Subchapter 13) and any applicable similar laws of other jurisdictions. Sotheby’s U.K. and each other Credit Party that conducts auctions in the United Kingdom shall remain in material compliance with, and maintain valid licenses under, all laws, regulations and auctioneer’s licensing requirements applicable in the United Kingdom, if any. Sotheby’s H.K. and each other Credit Party that conducts auctions in Hong Kong shall remain in material compliance with, and maintain valid licenses under, all laws, regulations and auctioneer’s licensing requirements applicable in Hong Kong, if any.


5.11	Further Assurances .

Each Credit Party agrees that it shall and shall cause each other Sotheby Entity to, at such Credit Party’s expense and upon the reasonable request of any Agent, duly execute and deliver, or cause to be duly executed and delivered, to such Agent such further instruments and do and cause to be done such further acts as may be necessary or proper in the reasonable opinion of such Agent to carry out more effectively the provisions and purposes of this Agreement and each Loan Document.


5.12	Art Loans, Art Inventory and Extended Term Art Receivables .

Each Borrower shall (a) in connection with the acquisition of each Work of Art as Art Inventory, conduct appropriate diligence with respect to such Work of Art (including, as applicable, searches of such Work of Art in the Art Loss Register) consistent with past practices and (b) in connection with each Art Loan made or to be made by it and in connection with each Extended Term Art Receivable generated or to be generated by it, (i) apply credit standards and loan to collateral value requirements, (ii) conduct appropriate diligence with respect to the applicable Work(s) of Art (including, as applicable, searches of such Work(s) of Art in the Art Loss Register), (iii) follow practices with respect to documentation, perfection and protection of security interests and (iv) follow practices with respect to classification of Art Loans and Extended Term Art Receivables as non-accrual, as such standards, requirements and practices are generally applied and followed in the Borrowers’ art lending business prior to the Restatement Effective Date.


5.13	Money-Laundering and Terrorism Regulatory Matters .

(f) Each Sotheby Entity shall remain in compliance in all material respects with all applicable orders, rules and regulations applicable to it, including those issued by the U.S. Department of the Treasury and OFAC pursuant to IEEPA, the PATRIOT Act, other legal requirements relating to sanctions, money laundering or terrorism and any executive orders related thereto.

(g) Each Sotheby Entity is advised that, by law, the Agents and the Lenders may be obligated to “freeze its account”, either by prohibiting additional Revolving Credit Advances or Letter of Credit Obligations, declining any withdrawal, redemption or transfer request(s) with respect to any deposit account under the control of either Agent or the Lenders and/or segregating assets, in compliance with government regulations, and the Agents and the Lenders may also be required to report such action to governmental or regulatory authorities, including OFAC.

its own jurisdiction to ensure that all required relevant documentation is retained, including identification related to such Art Loan Debtors or Extended Term Art Debtors, as applicable, in accordance with its anti-money laundering, counter-terrorist financing and/or economic sanctions program. Each Borrower shall adopt appropriate policies, procedures and internal controls to be compliant in all material respects with any additional laws, rules or regulations relating to money laundering and/or counter-terrorist financing, including the PATRIOT Act, to which it may become subject.

(i) Each Sotheby Entity shall take appropriate due diligence efforts to know, and appropriate customer due diligence in relation to, each Art Loan Debtor to which it shall advance, or commit to advance, Art Loans and each Extended Term Art Debtor to which it shall provide, or commit to provide, extended payment terms in connection with any Extended Term Art Receivable, including whether such Art Loan Debtor or Extended Term Art Debtor, as applicable, is a Prohibited Person. Each Sotheby Entity shall take appropriate due diligence efforts to know if any such Art Loan Debtor or Extended Term Art Debtor is a “Senior Foreign Political Figure” (as defined in the PATRIOT Act), a “Politically Exposed Person” (as defined in The Money Laundering Regulations 2007 of the United Kingdom) or a “politically exposed person” (as defined in The Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance of Hong Kong) and, to the extent that any investor is a Senior Foreign Political Figure, a Politically Exposed Person or a politically exposed person (as aforementioned), shall disclose such information to the Administrative Agent.

(j) Each Sotheby Entity will notify or report unusual or suspicious activity to the extent required by the laws or requirements of its own jurisdiction including, where applicable, the PATRIOT Act.

(k) Each Sotheby Entity shall deliver to the Agents any certification or other evidence requested from time to time by any Agent in its sole discretion, confirming such Sotheby Entity’s compliance with this Section 5.13 and the representations and warranties made by such Sotheby Entity pursuant to Section 3.25 .


5.14	Subsidiary Loan Documents .

Domestic Borrowers and the Foreign Borrowers, pursuant to such Collateral Documents as the Collateral Agent shall reasonably request and (iii) such Person shall deliver such organizational and authorization documentation and legal opinions as the Collateral Agent shall reasonably request, in each case in form and substance reasonably satisfactory to the Collateral Agent; provided , that, (x) so long as SPTC Delaware shall not create, incur, assume or permit to exist any Indebtedness or Guaranteed Indebtedness or any Lien on or with respect to any of its properties or assets (whether now owned or hereafter acquired), SPTC Delaware shall not be required to execute or become a party to any Loan Documents and its outstanding Stock shall not be required to be pledged, and (y) the York Avenue Owner shall not be required to execute or become a party to any Loan Documents and its outstanding Stock shall not be required to be pledged.

(b) Subject to Sections 5.14(d) and 5.14(e) , for each Person that is or becomes a direct Foreign Subsidiary of any Credit Party and is organized under the laws of England or Hong Kong, within fifteen (15) days (or such later date as the Collateral Agent may agree to in its sole discretion) of becoming such a Foreign Subsidiary, (i) such Person shall become party to this Agreement as a Credit Party by executing a joinder agreement hereto, and shall execute each of a Guaranty with respect to the Secured Obligations of the Foreign Borrowers and such Collateral Documents as the Collateral Agent shall reasonably request in support of the Secured Obligations of the Foreign Borrowers, in each case pursuant to the terms of each such agreement, (ii) if such Person is a direct Foreign Subsidiary of a Foreign Credit Party, 100% of the outstanding Stock of such Person owned by such Foreign Credit Party shall be pledged to the Collateral Agent, for the benefit of the Secured Parties, in support of the Secured Obligations of the Foreign Borrowers pursuant to such Collateral Documents as the Collateral Agent shall reasonably request, (iii) if such Person is a direct Foreign Subsidiary of a Domestic Credit Party, 65% of the outstanding Stock of such Person owned by such Domestic Credit Party shall be pledged to the Collateral Agent, for the benefit of the Secured Parties, in support of the Secured Obligations of the Domestic Borrowers and the Foreign Borrowers (or, in the case of the outstanding Stock of York UK Holdco International Limited, the Secured Obligations of solely the Foreign Borrowers) pursuant to such Collateral Documents as the Collateral Agent shall reasonably request and (iv) such Person shall deliver such organizational and authorization documentation and legal opinions as the Collateral Agent shall reasonably request, in each case in form and substance reasonably satisfactory to the Collateral Agent.

(c) Subject to Sections 5.14(d) and 5.14(e) , for each Person that is or becomes a direct Foreign Subsidiary of any Domestic Credit Party, and is organized under any jurisdiction other than England or Hong Kong, or is or becomes a direct Domestic Disregarded Person of a Domestic Credit Party, within fifteen (15) days (or such later date as the Collateral Agent may agree to in its sole discretion) of becoming such a Foreign Subsidiary or a Domestic Disregarded Person, (i) 65% of the outstanding Stock of such Person owned by such Domestic Credit Party shall be pledged to the Collateral Agent, for the benefit of the Secured Parties, in support of the Secured Obligations, pursuant to such Collateral Documents as the Collateral Agent shall reasonably request and (ii) such Person shall deliver such organizational and authorization documentation and legal opinions as the Collateral Agent shall reasonably request, in each case in form and substance reasonably satisfactory to the Collateral Agent.

(d) Notwithstanding anything to the contrary contained herein or in any other Loan Document:

(v) Subject to clause (iii) of this Section 5.14(d) , no Person that is a direct Foreign Subsidiary of another Foreign Subsidiary organized under a jurisdiction other than England or Hong Kong, shall be required to become subject to a pledge of its outstanding Stock or otherwise become a party to the Collateral Documents.

(vi) To the extent that the Collateral Agent determines in its sole discretion that (x) the cost is disproportionate to the benefit to be realized by the Collateral Agent and the other Secured Parties by obtaining a pledge of the outstanding Stock of any Person and/or a guarantee by, or security interest in, the assets of any Person or (y) the law of any jurisdiction prohibits (A) the outstanding Stock of any Person organized in such jurisdiction from becoming subject to a pledge thereof and/or (B) a guarantee by, or security interest in, the assets of any Person organized in such jurisdiction, such pledge of such Person’s outstanding Stock, such guarantee and/or such security interest shall not be required.

(vii) Subject to clause (ii) of this Section 5.14(d) , with respect to any Person listed on Schedule 5.14 , such Person’s Stock shall be pledged to the Collateral Agent, a security interest shall be granted to the Collateral Agent in the assets of such Person, and such Person shall be required to provide a guarantee, in each case, in accordance with the terms and conditions set forth on Schedule 5.14 .

(viii) If any Guaranty or Collateral is required to be provided pursuant to the terms of the SFS Revolving Credit Agreement to secure the “Secured Obligations” of the “Domestic Credit Parties” under the SFS Revolving Credit Agreement, such Guaranty or Collateral, as applicable, shall also be provided under this Agreement to secure the Secured Obligations of the Domestic Credit Parties. If any Guaranty or Collateral is required to be provided pursuant to the terms of the SFS Revolving Credit Agreement to secure the “Secured Obligations” of the “Foreign Credit Parties” under the SFS Revolving Credit Agreement, such Guaranty or Collateral, as applicable, shall also be provided under this Agreement to secure the Secured Obligations of the Foreign Credit Parties. For the avoidance of doubt, notwithstanding the foregoing, the Foreign Borrowers shall have no liability, direct or indirect, for the Secured Obligations of the Domestic Borrowers or the other Domestic Credit Parties hereunder or under any of the other Loan Documents.

(e) This Section 5.14 shall not apply to any Immaterial Subsidiary set forth on Disclosure Schedule (5.15) as of the Restatement Effective Date unless such Person shall have executed a Guaranty and such Collateral Documents as the Collateral Agent shall reasonably request.


5.15	Immaterial Subsidiaries .

Each Immaterial Subsidiary (i) as of the Restatement Effective Date, owns assets having a book value of which the Dollar Equivalent is less than $100,000 and (ii) had earnings during the 2013 Fiscal Year of which the Dollar Equivalent was less than $100,000.


5.16	York Avenue Transactions .

Except as set forth on Disclosure Schedule (5.16) , the York Avenue Lender has no recourse to Parent or any of its Subsidiaries or any assets of Parent or any of its Subsidiaries pursuant to the York Avenue Loan Agreement or any other York Avenue Loan Document.


5.17	Auction Guaranties .

Each Sotheby Entity shall comply with the provisions of the Auction Guaranty Side Letter.


5.18	Data Protection Matters .

To the extent and at all times that any Data Protection Laws will be applicable as a result of any Credit Party’s performance hereunder, such Credit Party shall comply in all material respects with all such Data Protection Laws including, without limitation, having obtained valid consents where necessary from any Persons whose Personal Data is provided in performance of this Agreement for (a) such Personal Data to be processed for the purposes required by each Credit Party in performance of this Agreement; (b) such Personal Data to be disclosed to any Agent or any Lender, or any agent or subcontractor of any Agent or any Lender, and to be processed by any Agent or any Lender for the purposes required in performance of this Agreement; and (c) the transfer of such Personal Data to any Agent or any Lender in a country outside of the European Economic Area. The form of any data protection consent shall be subject to prior approval of the Administrative Agent, who may require such amendments as it may consider necessary in order to comply with Data Protection Laws and who may require, upon reasonable prior notice, such other reasonable actions be taken by each Credit Party, including entering into the European Union’s standard contractual clauses for the transfer of personal data to third countries, to ensure compliance with Data Protection Laws. Each Credit Party shall not, by any act or omission, place any Agent or any Lender in breach of any Data Protection Laws.

6. NEGATIVE COVENANTS

Each Credit Party jointly and severally agrees as to all Sotheby Entities that from and after the date hereof until the Termination Date:


6.1	Mergers, Subsidiaries, Etc .

No Sotheby Entity shall directly or indirectly, by operation of law or otherwise, (a) acquire, liquidate or dissolve any Subsidiary or (b) merge with, consolidate with, acquire all or substantially all of the assets or Stock of, or otherwise combine with or acquire, any Person, except that any Sotheby Entity may merge with another Sotheby Entity; provided , that (i) Borrower Representative shall be the survivor of any such merger to which it is a party, (ii) any Borrower shall be the survivor of any such merger with any Sotheby Entity that is not a Borrower and (iii) any Guarantor shall be the survivor of any such merger with any Sotheby

Entity that is not a Credit Party; provided , further , that any Sotheby Entity may dissolve or liquidate any Subsidiary thereof that is not a Borrower.


6.2	Investments; Loans and Revolving Credit Advances .

Except as otherwise expressly permitted by this Section 6 , no Sotheby Entity shall make or permit to exist any investment in, or make, accrue or permit to exist loans or advances of money to, any Person, through the direct or indirect lending of money, holding of securities or otherwise, except that:

(a) Borrowers may hold investments comprised of notes payable, or stock or other securities issued by Account Debtors to any Borrower pursuant to negotiated agreements with respect to settlement of such Account Debtor’s Accounts in the ordinary course of business consistent with past practices;

(b) each Sotheby Entity may (i) maintain its existing investments in its Subsidiaries and joint ventures as of the Restatement Effective Date, (ii) make investments after the Restatement Effective Date in any Credit Party, or (iii) if such Sotheby Entity is not a Credit Party, make investments after the Restatement Effective Date in any other Sotheby Entity (other than any Immaterial Subsidiary);

(c) (i) any Borrower may enter into Art Loan/Inventory Joint Ventures and (ii) the Sotheby Entities may make investments after the Restatement Effective Date in joint ventures (other than Art Loan/Inventory Joint Ventures) and other Sotheby Entities (other than any Immaterial Subsidiary) to the extent investments in such other Sotheby Entities are not permitted pursuant to the foregoing clause (b) or Section 6.3(a)(vii) ); provided that, unless the Fixed Charge Coverage Ratio, as of the end of the most recently completed Fiscal Quarter for which the Agents and Lenders have received Financial Statements pursuant hereto, shall be equal to or greater than 1.15 to 1.00 (calculated on a pro forma basis as if such investments had occurred during such Fiscal Quarter), investments permitted pursuant to clause (ii) of this Section 6.2(c) shall not exceed the Dollar Equivalent of $20,000,000 in the aggregate at any time outstanding;

(d) so long as the Collateral Agent has not delivered an Activation Notice with respect to any Blocked Account of a Sotheby Entity and no Default or Event of Default has occurred and is continuing, such Sotheby Entity may make investments in Cash Equivalent Investments;

(e) subject to applicable regulatory authorizations, any Borrower may make, or commit to make, Art Loans and provide, or commit to provide, extended payment terms to Extended Term Art Debtors for purposes of generating Extended Term Art Receivables;

aggregate amount of any Capital Expenditures made by Parent and its Subsidiaries (other than the York Avenue Owner) during such Fiscal Year plus (ii) additional amounts to purchase and upgrade a headquarters building;

(g) the trustee of the grantor trust established for purposes of setting aside assets to meet obligations of Sotheby’s, Inc. under the Sotheby’s Deferred Benefits Compensation Plan may make investments in connection with such plan; and

(i) the Sotheby Entities may make other investments (other than in any Immaterial Subsidiary or the York Avenue Owner) not exceeding the lesser of (x) $35,000,000 and (y) the sum of $20,000,000 plus the aggregate amount of investments made by the Sotheby Entities pursuant to this Section 6.2(i) during the period commencing on the Restatement Effective Date and ending on the first anniversary thereof.


6.3	Indebtedness .

(t) No Sotheby Entity shall create, incur, assume or permit to exist any Indebtedness, except (without duplication):

(i) (A) the Senior Notes and (B) Indebtedness under the Specified Debt Facility;

(ii) obligations (contingent or otherwise) in respect of (A) any Permitted U.K. Real Estate Financing in an aggregate principal amount not to exceed 65% of the fair market value of the Specified U.K. Real Estate subject to such Permitted U.K. Real Estate Financing at the time such Permitted U.K. Real Estate Financing is consummated (as reasonably determined by the Administrative Agent), and any refinancings, extensions, replacements or renewals thereof or amendments or modifications thereto that do not have the effect of increasing the principal amount thereof to an aggregate principal amount greater than 65% of the fair market value of the Specified U.K. Real Estate subject to such financing at the time of such refinancing, extension, replacement, renewal, amendment or modification (as reasonably determined by the Administrative Agent), and that are otherwise on terms and conditions no less favorable in any material respect to any Sotheby Entity, any Agent or any Lender, as reasonably determined by the Administrative Agent, than the terms of the Permitted U.K. Real Estate Financing being refinanced, extended, replaced, renewed, amended or modified and (B) any Rate Management Transaction entered into in connection therewith; provided , that such Rate Management Transaction is entered into in the ordinary course of business and not for purposes of speculation;

and that are otherwise on terms and conditions no less favorable in any material respect to any Sotheby Entity, any Agent or any Lender, as reasonably determined by the Administrative Agent, than the terms of the York Avenue Loan Documents being refinanced, extended, replaced, renewed, amended or modified and (B) any Rate Management Transaction entered into in connection therewith; provided , that such Rate Management Transaction is entered into in the ordinary course of business and not for purposes of speculation;

(iv) Indebtedness secured by purchase money security interests and Capital Leases permitted in Section 6.7(e) ;

(v) the Loans and the other Secured Obligations;

(vi) existing Indebtedness described in Disclosure Schedule (6.3) and refinancings thereof or amendments or modifications thereto that do not have the effect of increasing the principal amount thereof or reducing the average life thereof and that are otherwise on terms and conditions no less favorable in any material respect to any Sotheby Entity, any Agent or any Lender, as determined by the Administrative Agent, than the terms of the Indebtedness being refinanced, amended or modified;

(vii) Indebtedness consisting of intercompany loans and advances made by any Sotheby Entity to any other Sotheby Entity (other than any Immaterial Subsidiary); provided , that: (A) in the case of any intercompany loan or advance owing to any Credit Party, any Sotheby Entity receiving the proceeds of such loan or advance shall have executed and delivered to the applicable Credit Party within fifteen (15) days (or such later date as the Administrative Agent may agree to in its sole discretion) after receiving the proceeds thereof, a demand note (collectively, the “ Intercompany Notes ”) to evidence any such intercompany Indebtedness owing at any time by such Sotheby Entity, which Intercompany Notes shall be in form and substance reasonably satisfactory to the Administrative Agent and shall be pledged and delivered to the Collateral Agent pursuant to the applicable Collateral Document as additional collateral security for the applicable Secured Obligations; (B) each Sotheby Entity shall record all intercompany transactions on its books and records in a manner reasonably satisfactory to the Administrative Agent; (C) the obligations of each Credit Party under any such intercompany loans and advances shall be subordinated to the Obligations of such Credit Party hereunder and under the other Loan Documents in a manner reasonably satisfactory to the Administrative Agent; (D) with respect to any intercompany loan or advance made after the Restatement Effective Date, at the time any such intercompany loan or advance is made by any Sotheby Entity to any other Sotheby Entity and after giving effect thereto, (i) each such Sotheby Entity shall be Solvent or (ii)(x) such intercompany loan or advance shall be made in the ordinary course of business, (y) if the Sotheby Entity making such intercompany loan or advance is a Credit Party, such Credit Party shall be Solvent and (z) the Sotheby Entity receiving such intercompany loan or advance shall have no Funded Debt (except as permitted hereby) other than intercompany loans or advances outstanding to other Sotheby Entities; and (E) no Default or Event of Default would occur and be continuing after giving effect to any such proposed intercompany loan or advance;

(viii) Indebtedness arising in respect of surety bonds, guaranties and letters of credit with respect to obligations of the Foreign Subsidiaries incurred in the ordinary course of business that are not Funded Debt;

(ix) Indebtedness arising under Rate Management Transactions; provided , that such Rate Management Transactions are (or were) entered into in the ordinary course of such Sotheby Entity’s business for the purpose of mitigating risks associated with liabilities, commitments, investments, assets, earnings or properties held or reasonably anticipated by such Sotheby Entity and not for purposes of speculation;

(x) Indebtedness arising under overdraft credit lines extended to various Sotheby Entities in the ordinary course of business, which indebtedness arising under overdraft credit lines extended to the Credit Parties shall not at any time exceed, in the aggregate at any one time outstanding, the lesser of (A) $15,000,000 and (B) the aggregate amount of overdraft credit lines extended to the Credit Parties at such time; and

(xi) Other Indebtedness in an aggregate principal amount not exceeding $15,000,000 at any one time outstanding.

(u) No Sotheby Entity shall, directly or indirectly, voluntarily purchase, redeem, defease or prepay any principal of, premium, if any, interest or other amount payable in respect of any Indebtedness prior to its scheduled maturity, other than (i) the Obligations; (ii) Indebtedness secured by a Permitted Encumbrance if the asset securing such Indebtedness has been sold or otherwise disposed of in accordance with Section 6.8; (iii) Indebtedness permitted by Section 6.3(a)(vi) upon any refinancing thereof in accordance with Section 6.3(a)(vi); (iv) Indebtedness incurred pursuant to repayment by any Sotheby Entity of intercompany loans and advances outstanding to any Sotheby Entity, (v) so long as (x) no Default or Event of Default has occurred and is continuing or would occur as a result thereof, and (y) Parent shall have provided to the Administrative Agent prior to the date thereof pro forma financial statements demonstrating that the Fixed Charge Coverage Ratio, as of the end of the most recently completed Fiscal Quarter for which the Agents and Lenders have received Financial Statements pursuant hereto, shall be equal to or greater than 1.15 to 1.00 (calculated on a pro forma basis as if such purchase had occurred during such Fiscal Quarter), purchases, redemptions, defeasances or prepayments of the Senior Notes by Parent; (vi) so long as no Revolving Loans are outstanding hereunder and no “Revolving Loans” are outstanding under the SFS Revolving Credit Agreement as of the date of any such transaction, any purchases, redemptions, defeasances or prepayments of the Senior Notes or Indebtedness under the Specified Debt Facility; and (vii) purchases, redemptions, defeasances or prepayments of Indebtedness under the Specified Debt Facility, (x) with the proceeds of any sale or other disposition of any asset (including (A) commissions on such sale or disposition or (B) proceeds of any such asset arising as a result of casualty or condemnation) subject to a Lien securing Indebtedness under the Specified Debt Facility on a first priority basis or (y) to the extent that, both immediately before and after giving pro forma effect thereto, (A) no Event of Default shall have occurred and be continuing and (B) the Liquidity Amount shall be at least $175,000,000.


6.4	Employee Loans and Affiliate Transactions .

(a) Except as disclosed in Disclosure Schedule 6.4(a) , no Sotheby Entity shall enter into or be a party to any transaction with any other Sotheby Entity or any Affiliate thereof except in the ordinary course of and pursuant to the reasonable requirements of such Sotheby Entity’s business and, in the case of any transaction with any Affiliate thereof (other than another Sotheby Entity), upon fair and reasonable terms that are no less favorable to such Sotheby Entity than would be obtained in a comparable arm’s length transaction with a Person not an Affiliate of such Sotheby Entity.

(b) No Sotheby Entity shall enter into any lending or borrowing transaction with any employees of any Sotheby Entity, except (i) loans to its respective employees in the ordinary course of business consistent with past practices for travel and entertainment expenses, relocation costs and similar purposes and stock option financing, up to a maximum of a Dollar Equivalent of $2,500,000 in the aggregate at any one time outstanding, (ii) Art Loans to employees of any Sotheby Entity in the ordinary course of business pursuant to fair and reasonable terms that are no less favorable to such Sotheby Entity making such Art Loan than would be obtained in a comparable arm’s length transaction with a Person not an employee of, or otherwise affiliated with, any Sotheby Entity, up to a maximum of a Dollar Equivalent of $25,000,000 in the aggregate at any one time outstanding and (iii) other loans to its respective employees, up to a maximum of a Dollar Equivalent of $7,500,000 in the aggregate at any one time outstanding.


6.5	Capital Structure and Business .

If all or part of a Sotheby Entity’s Stock is pledged to the Collateral Agent, that Sotheby Entity shall not issue additional Stock unless, upon issuance thereof, such Stock is immediately pledged (and any related security certificates delivered) by the holder thereof to the Collateral Agent pursuant to the applicable Collateral Documents. No Sotheby Entity shall amend its charter or bylaws in a manner that would adversely affect any Agent or any Lender or such Sotheby Entity’s duty or ability to repay the Obligations. No Sotheby Entity shall engage in any business other than the businesses currently engaged in by it or businesses reasonably related thereto.


6.6	Guaranteed Indebtedness .

No Sotheby Entity shall create, incur, assume or permit to exist any Guaranteed Indebtedness except (a) by endorsement of instruments or items of payment for deposit to the general account of any Sotheby Entity, and (b) for Guaranteed Indebtedness incurred for the benefit of any other Sotheby Entity if the primary obligation with respect thereto is not prohibited by this Agreement.


6.7	Liens .

No Sotheby Entity shall create, incur, assume or permit to exist any Lien on or with respect to its Accounts or any of its other properties or assets (whether now owned or hereafter acquired) except for:

(a) Permitted Encumbrances;

(b) Liens created pursuant to the York Avenue Loan Documents or on properties or assets not constituting Collateral and securing the obligations permitted under Section 6.3(a)(iii) ;

(c) Liens (i) in existence on the date hereof, (ii) if such property or assets are owned by a Credit Party, summarized on Disclosure Schedule (6.7) and (iii) securing the Indebtedness described on Disclosure Schedule (6.3) and refinancings, extensions and renewals thereof, including extensions or renewals of any such Liens; provided , that the principal amount of the Indebtedness so secured is not increased and the Lien does not attach to any other property;

(d) Liens securing payment of obligations described in Section 6.3(a)(iv) ; provided , that such Liens shall not attach to any property other than cash on deposit with, or under the control of, the holder of such Indebtedness;

(e) Liens created after the date hereof by conditional sale or other title retention agreements (including Capital Leases) or in connection with purchase money Indebtedness with respect to Equipment and Fixtures acquired by any Sotheby Entity in the ordinary course of business, involving the incurrence of an aggregate amount of purchase money Indebtedness and Capital Lease Obligations of not more than a Dollar Equivalent of $3,000,000 outstanding at any one time for all such Liens ( provided that such Liens attach only to the assets subject to such purchase money debt and such Indebtedness is incurred within forty-five (45) days following such purchase and does not exceed 100% of the purchase price of the subject assets);

(f) Liens securing Indebtedness permitted pursuant to Section 6.3(a)(ix) ; provided , that such obligations are secured solely with cash and Cash Equivalent Investments;

(g) licenses and sublicenses permitted pursuant to Section 6.8(g) ;

(h) Liens not otherwise permitted above on (i) cash and Cash Equivalents or (ii) assets not constituting Collateral, in each case, so long as the aggregate amount of obligations secured by such Liens does not exceed $20,000,000; and

(i) Liens on any Specified U.K. Real Estate or other properties or assets not constituting Collateral and securing Indebtedness permitted pursuant to clause (ii) of Section 6.3(a) ;

any of its properties or other assets in favor of the Collateral Agent, on behalf of itself and the other Secured Parties, as additional collateral for the applicable Secured Obligations, except (x) agreements entered into in connection with any Permitted U.K. Real Estate Financing that prohibit Liens upon any Specified U.K. Real Estate subject to such Permitted U.K. Real Estate Financing, (y) as set forth in the Specified Debt Facility Documents and (z) operating leases, Capital Leases, Licenses or agreements relating to purchase money Indebtedness which prohibit Liens upon the assets that are subject thereto.


6.8	Sale of Stock and Assets .

No Sotheby Entity shall sell, transfer, convey, assign or otherwise dispose of any of its properties or other assets, including the Stock of any of its Subsidiaries (whether in a public or a private offering or otherwise) or any of its Accounts, other than (a) the sale of Inventory in the ordinary course of business, (b) the sale or other disposition by a Sotheby Entity of Equipment or Fixtures that are obsolete or no longer used or useful in such Sotheby Entity’s business and having a book value not exceeding the Dollar Equivalent of $4,000,000 in the aggregate in any Fiscal Year; (c) the sale or other disposition of other assets having a book value not exceeding the Dollar Equivalent of $5,000,000 in the aggregate in any Fiscal Year; (d) the sale or other disposition of any asset by a Credit Party to any other Credit Party; (e) the sale or other disposition of any asset by any Sotheby Entity that is not a Credit Party to any other Sotheby Entity; (f) licenses or sublicenses granted to others in the ordinary course of business which do not (i) interfere in any material respect with the business of the Sotheby Entities or (ii) secure any Indebtedness; (g) the disposition of any Specified U.K. Real Estate pursuant to a Permitted U.K. Real Estate Financing; and (h) the sale or other disposition of any asset (including the proceeds of any such asset arising as a result of casualty or condemnation) subject to a Lien securing Indebtedness under the Specified Debt Facility on a first priority basis.


6.9	ERISA .

No Sotheby Entity shall, or shall cause or permit any ERISA Affiliate to, cause or permit to occur (i) an event that could result in the imposition of a Lien under Section 430 of the IRC or Section 303 or 4068 of ERISA or (ii) an ERISA Event to the extent such ERISA Event would reasonably be expected to result in taxes, penalties and other liabilities in an aggregate amount in excess of $5,000,000 in the aggregate.


6.10	Financial Covenants .

Borrowers shall not breach or fail to comply with any of the Financial Covenants.


6.11	Hazardous Materials .

No Sotheby Entity shall cause or permit a Release of any Hazardous Material on, at, in, under, above, to or from any of the Real Estate where such Release would (a) violate in any respect, or form the basis for any Environmental Liabilities under, any Environmental Laws or Environmental Permits, except as could not reasonably be expected to have a Material

Adverse Effect or (b) otherwise materially adversely impact the value or marketability of any of the Real Estate or any of the Collateral.


6.12	Sale Leasebacks .

No Sotheby Entity shall engage in any sale leaseback, synthetic lease or similar transaction involving any of its assets, except any Permitted U.K. Real Estate Financing.


6.13	Restricted Payments .

No Sotheby Entity shall make any Restricted Payment, except:

(a) intercompany loans and advances between Sotheby Entities to the extent permitted by Sections 6.2 and 6.3 ;

(b) dividends and distributions by Subsidiaries of any Sotheby Entity paid to such Sotheby Entity;

(d) payments of principal and interest of intercompany loans and advances made in accordance with Section 6.3 ;

(e) if (i) no Event of Default has occurred and is continuing or would occur as a result thereof, (ii) either (A) so long as no Revolving Loans are outstanding hereunder and no “Revolving Loans” are outstanding under the SFS Revolving Credit Agreement as of the date of any Repurchase, both before and after giving effect thereto or (B) Parent has provided to the Administrative Agent, prior to the date that any Repurchase Period is announced (which notice shall be delivered to the Administrative Agent no earlier than thirty (30) days prior to the commencement of such Repurchase Period, and no later than three (3) Business Days prior to the commencement of such Repurchase Period), a written notice setting forth (1) the proposed start and end dates of such Repurchase Period (which shall not exceed eighteen (18) months), (2) the aggregate maximum Dollar amount to be paid in consideration of all Repurchases to occur during such Repurchase Period, and (3) pro forma financial statements demonstrating that the Fixed Charge Coverage Ratio, calculated for the four Fiscal Quarter period which, as of the date of such notice to the Administrative Agent, is most recently completed and for which the Agents and Lenders have received Financial Statements pursuant hereto, shall be equal to or greater than 1.15 to 1.00 (calculated on a pro forma basis as if such aggregate maximum Dollar amount of Repurchases to occur during such Repurchase Period had occurred during such period), and (iii) after giving effect to each Repurchase, Margin Stock shall not constitute more than 25% of the assets of the Credit Parties, Parent may make Repurchases during such Repurchase Period; provided that, if clause (ii)(A) of this Section 6.13(e) is inapplicable, such Repurchases shall be conducted in accordance with the notice delivered pursuant to clause (ii)(B) of this Section 6.13(e) ;

(f) if no Event of Default has occurred and is continuing or would occur as a result thereof, Parent may make dividends or distributions on its Stock in an aggregate amount (the “ Maximum Distribution Amount ”) not to exceed, in any Fiscal Quarter, the lesser of (i) $0.15 per share of Stock and (ii) $13,400,000; provided that, if Parent shall have provided to the Administrative Agent prior to the date thereof pro forma financial statements demonstrating that the Fixed Charge Coverage Ratio, as of the end of the most recently completed Fiscal Quarter for which the Agents and Lenders have received Financial Statements pursuant hereto, shall be equal to or greater than the level specified in paragraph (b) of Annex G with respect to such Fiscal Quarter (calculated on a pro forma basis as if such dividend or distribution had occurred during such Fiscal Quarter; provided that to the extent such pro forma calculation would otherwise include dividends or distributions made by Parent in five Fiscal Quarters, such pro forma calculation shall only include dividends or distributions made by Parent in the four Fiscal Quarters in which the highest aggregate amount of dividends or distributions were made), Parent may make dividends or distributions on its Stock in excess of the Maximum Distribution Amount;

(g) Parent may make Repurchases and pay other dividends or distributions on its Stock so long as, both before and after giving effect thereto, (i) no Event of Default has occurred and is continuing, (ii) the Aggregate Borrowing Availability equals or exceeds $100,000,000 and (iii) the Liquidity Amount equals or exceeds $200,000,000; provided that, if no Revolving Loans are outstanding hereunder and no “Revolving Loans” are outstanding under the SFS Revolving Credit Agreement, Parent may make Repurchases and pay dividends or distributions on its Stock so long as, both before and after giving effect thereto, (i) no Event of Default has occurred and is continuing and (ii) the Liquidity Amount equals or exceeds $200,000,000;

(h) Parent may declare and make dividend payments or other distributions payable solely in its Stock; and

(i) Parent may, from time to time on or prior to the fifth anniversary of the Restatement Effective Date, make Repurchases in an aggregate amount for all Repurchases made in reliance on this subsection (i) not to exceed $150,000,000, so long as (i) the aggregate amount of such Repurchases made during any Fiscal Year does not exceed $40,000,000 and (ii) both before and after giving effect to any such Repurchase, no Event of Default has occurred and is continuing.


6.14	Change of Corporate Name, State of Incorporation or Location; Change of Fiscal Year.

least thirty (30) days (or such shorter period as the Administrative Agent shall consent to in writing) prior written notice to the Administrative Agent and after the Administrative Agent’s written acknowledgment that any reasonable action requested by the Administrative Agent in connection therewith, including to continue the perfection of any Liens in favor of the Collateral Agent, on behalf of the Secured Parties, in any Collateral, has been completed or taken; provided , that any such new location shall be in the continental United States. No Foreign Borrower shall change its jurisdiction of incorporation or organization or incorporate or organize in any additional jurisdictions, in each case, without at least thirty (30) days (or such shorter period as the Administrative Agent shall consent to in writing) prior written notice to the Administrative Agent and after the Administrative Agent’s written acknowledgment that any reasonable action requested by the Administrative Agent in connection therewith, including to continue the perfection of any Liens in favor of the Collateral Agent, on behalf of the Secured Parties, in any Collateral, has been completed or taken. No Sotheby Entity shall change its Fiscal Year.


6.15	No Impairment of Intercompany Transfers .

No Sotheby Entity shall directly or indirectly enter into or become bound by any agreement, instrument, indenture or other obligation (other than this Agreement and the other Loan Documents) that could directly or indirectly restrict, prohibit or require the consent of any Person with respect to the payment of dividends or distributions or the making or repayment of intercompany loans by a Subsidiary of any Sotheby Entity to any Sotheby Entity or between Sotheby Entities.


6.16	Real Estate Purchases.

No Credit Party shall purchase or acquire or commit to purchase or acquire a fee simple or freehold ownership interest in real estate (a) with an aggregate purchase price in excess of the Dollar Equivalent of $50,000,000 or (b) that would cause the purchase prices of all such purchases by all Credit Parties since the Restatement Effective Date to exceed, in aggregate, the Dollar Equivalent of $100,000,000.


6.17	Changes Relating to Material Contracts .

No Sotheby Entity shall (a) change or amend the terms of the Senior Notes or the Senior Note Indenture in a manner materially adverse to the Lenders, (b) change or amend any York Avenue Lease Document in a manner adverse to the interests of any Agent or any Lender in any material respect or (c) except as set forth on Disclosure Schedule (5.16) , permit the York Avenue Lender to have recourse to Parent or any of its Subsidiaries, or any assets of Parent or any of its Subsidiaries, pursuant to the York Avenue Loan Agreement or any other York Avenue Loan Document; provided that, no change or amendment described in the foregoing clause (a) shall: (i) increase the interest rate on the Senior Notes; (ii) accelerate the dates upon which payments of principal or interest are due under the Senior Notes; (iii) increase the principal amount of the Senior Notes above the original principal amount thereof; (iv) change any event of default, in a manner adverse to the Credit Parties, or add or make more restrictive any covenant

with respect to the Senior Notes or (v) change the redemption or prepayment provisions of the Senior Notes.


6.18	Use of Proceeds .

No Sotheby Entity shall use any portion of the Loan proceeds, directly or indirectly, to purchase or carry Margin Stock (other than Stock of Parent, to the extent it constitutes Margin Stock, repurchased in accordance with Section 6.13 ) or repay or otherwise refinance Indebtedness of any Sotheby Entity or others incurred to purchase or carry Margin Stock. No Sotheby Entity shall own any Margin Stock (other than Stock of Parent, to the extent it constitutes Margin Stock, in an amount that does not exceed 25% of the assets of the Credit Parties).

7. TERM


7.1	Termination .

The financing arrangements contemplated hereby shall be in effect until the Auction Commitment Termination Date, and the Loans and all other Obligations shall be automatically due and payable in full on such date.


7.2	Survival of Obligations Upon Termination of Financing Arrangements .

Except as otherwise expressly provided for in the Loan Documents, no termination or cancellation (regardless of cause or procedure) of any financing arrangement under this Agreement shall in any way affect or impair the obligations, duties and liabilities of the Credit Parties or the rights of the Agents and the Lenders relating to any unpaid portion of the Loans or any other Obligations, due or not due, liquidated, contingent or unliquidated, or any transaction or event occurring prior to such termination, or any transaction or event, the performance of which is required after the Incremental Commitment Termination Date and the Auction Commitment Termination Date. Except as otherwise expressly provided herein or in any other Loan Document, all undertakings, agreements, covenants, warranties and representations of or binding upon the Credit Parties, and all rights of each Agent and each Lender, all as contained in the Loan Documents, shall not terminate or expire, but rather shall survive any such termination or cancellation and shall continue in full force and effect until the Termination Date; provided , that the provisions of Section 11 , the payment obligations under Sections 1.16 and 1.17 , and the indemnities contained in the Loan Documents shall survive the Termination Date.

8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES


8.1	Events of Default .

The occurrence of any one or more of the following events (regardless of the reason therefor) shall constitute an “ Event of Default ” hereunder:

(v) Any Borrower (i) fails to make any payment of principal of, or interest on, or Fees owing in respect of, the Loans or any of the other Obligations when due and payable, or (ii) fails to pay or reimburse any Agent or Lenders for any expense reimbursable hereunder or under any other Loan Document within ten (10) days following the Administrative Agent’s demand for such reimbursement or payment of expenses.

(w) Any Sotheby Entity fails or neglects to perform, keep or observe any of the provisions of Section 1.4, 1.9, 1.15, 5.4(a), 5.17 or 6 , or any of the provisions set forth in Annex C or G , respectively.

(x) Any Borrower fails or neglects to perform, keep or observe any of the provisions of Section 4.1 or any provisions set forth in Annexes E or F , respectively, and the same shall remain unremedied for five (5) Business Days or more.

(y) Any Sotheby Entity fails or neglects to perform, keep or observe any other provision of this Agreement or of any of the other Loan Documents (other than any provision embodied in or covered by any other clause of this Section 8.1 ) and the same shall remain unremedied for twenty (20) days or more.

(z) A default or breach occurs under any Material Indebtedness Contract that is not cured within any applicable grace period therefor, and such default or breach (i) involves the failure to make any payment when due in respect of any Indebtedness or Guaranteed Indebtedness evidenced by such Material Indebtedness Contract, or (ii) causes, or permits any holder of Indebtedness or Guaranteed Indebtedness evidenced by such Material Indebtedness Contract or a trustee to cause, Indebtedness or Guaranteed Indebtedness evidenced by such Material Indebtedness Contract to become due prior to its stated maturity or prior to its regularly scheduled dates of payment, or cash collateral in respect thereof to be demanded, in each case, regardless of whether such right is exercised, by such holder or trustee.

(aa) Any information contained in any Borrowing Base Certificate is untrue or incorrect in any respect (other than (i) inadvertent, immaterial errors not exceeding $5,000,000 (or, if such inaccuracy results from a single error with respect to an individual Art Loan, individual item of Art Inventory or individual Extended Term Art Receivable, $10,000,000) in the aggregate in any Borrowing Base Certificate, (ii) errors understating either Borrowing Base or (iii) inadvertent errors occurring when Aggregate Borrowing Availability continues to exceed $15,000,000 after giving effect to the correction of such errors), or any representation or warranty herein or in any Loan Document or in any written statement, report, Financial Statement or certificate (other than a Borrowing Base Certificate) made or delivered to any Agent or any Lender by any Credit Party is untrue or incorrect in any material respect as of the date when made or deemed made.

(bb) A case or proceeding is commenced against any Sotheby Entity (other than an Immaterial Subsidiary) seeking a decree or order in respect of such Sotheby Entity (i) under the Bankruptcy Code, or any other applicable federal, state or foreign bankruptcy or other similar law, (ii) appointing a custodian, receiver, administrator, liquidator, assignee, trustee or sequestrator (or similar official) for such Sotheby Entity or for any substantial part of any such

Sotheby Entity’s assets, or (iii) ordering the winding up or liquidation of the affairs of such Sotheby Entity, and such case or proceeding shall remain undismissed or unstayed for sixty (60) days or more or a decree or order granting the relief sought in such case or proceeding is granted by a court of competent jurisdiction.

(cc) Any Sotheby Entity (other than an Immaterial Subsidiary) (i) files a petition seeking relief under the Bankruptcy Code, or any other applicable federal, state or foreign bankruptcy or other similar law, (ii) consents to or fails to contest in a timely and appropriate manner the institution of proceedings thereunder or the filing of any such petition or the appointment of or taking possession by a custodian, receiver, administrator, liquidator, assignee, trustee or sequestrator (or similar official) for such Sotheby Entity or for any substantial part of any such Sotheby Entity’s assets, (iii) makes an assignment for the benefit of creditors, (iv) takes any action in furtherance of any of the foregoing; or (v) admits in writing its inability to, or is generally unable to, pay its debts as such debts become due.

(dd) A final judgment or judgments for the payment of money in excess of a Dollar Equivalent of $20,000,000 in the aggregate at any time are outstanding against one or more of the Sotheby Entities (which judgments are not covered by insurance policies as to which liability has been accepted by the insurance carrier), and the same are not, within thirty (30) days (or, in the case of any Sotheby Entity that is not Parent, a Domestic Subsidiary or a Foreign Subsidiary organized under the laws of England, sixty (60) days) after the entry thereof, discharged or execution thereof stayed or bonded pending appeal, or such judgments are not discharged prior to the expiration of any such stay.

(ee) Any material provision of any Loan Document for any reason ceases to be valid, binding and enforceable in accordance with its terms (or any Sotheby Entity shall challenge the enforceability of any Loan Document or shall assert in writing, or engage in any action or inaction based on any such assertion, that any provision of any of the Loan Documents has ceased to be or otherwise is not valid, binding and enforceable in accordance with its terms), or any Lien created under any Loan Document ceases to be a valid and perfected first priority Lien (except as otherwise permitted herein or therein) in any of the Collateral purported to be covered thereby.

(ff) Any Change of Control occurs.

(gg) Any Sotheby Entity or the York Avenue Owner violates any of the covenants contained in the York Avenue Loan Documents relating to the single purpose entity status of the York Avenue Owner or its corporate separateness from Parent and its Subsidiaries and such violation results in recourse liability to Parent or any Subsidiary thereof.


8.2	Remedies .

of Credit Obligations shall be made or incurred in the Administrative Agent’s sole discretion (or in the sole discretion of the Requisite Lenders, if such suspension occurred at their direction) so long as such Default or Event of Default is continuing; or (ii) reduce the Auction Commitment or Incremental Commitment from time to time.

(d) If any Event of Default has occurred and is continuing, any Agent may (and at the written request of the Requisite Lenders shall), without notice: (i) terminate the Revolving Loan facility with respect to further Advances or the incurrence of further Letter of Credit Obligations; (ii) reduce the Auction Commitment or Incremental Commitment from time to time; (iii) declare all or any portion of the Obligations, including all or any portion of any Loan, to be forthwith due and payable, and require that the Letter of Credit Obligations be cash collateralized in the manner set forth in Annex B , all without presentment, demand, protest or further notice of any kind, all of which are expressly waived by Borrowers and each other Credit Party; or (iv) exercise any rights and remedies provided to such Agent under the Loan Documents or at law or equity, including all remedies provided under the Code; provided , that upon the occurrence of an Event of Default specified in Sections 8.1(g) or (h) , the Auction Commitments and Incremental Commitments shall be immediately terminated and all of the Obligations, including the aggregate Revolving Loan, shall become immediately due and payable without declaration, notice or demand by any Person.


8.3	Waivers by Credit Parties .

Except as otherwise provided for in this Agreement or by applicable law, each Credit Party waives (including for purposes of Section 12 ): (a) presentment, demand and protest and notice of presentment, dishonor, notice of intent to accelerate, notice of acceleration, protest, default, nonpayment, maturity, release, compromise, settlement, extension or renewal of any or all Loan Documents, (b) all rights to notice and a hearing prior to any Agent’s taking possession or control of, or to any Agent’s replevy, attachment or levy upon, the Collateral or any bond or security that might be required by any court prior to allowing any Agent to exercise any of its remedies, except as may be required by applicable law, and (c) the benefit of all valuation, appraisal, marshaling and exemption laws.

9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT


9.1	Assignment and Participations .

such partial assignment, require the assignee Lender to have Commitments in an amount at least equal to $5,000,000 and the assigning Lender to retain Commitments in an amount at least equal to $5,000,000; (iii) include a payment to the Administrative Agent of an assignment fee of $3,500; (iv) to the extent such assignment is an assignment of the Auction Revolving Loan or any Auction Commitments, also require an assignment of a ratable interest in, and the assignee Lender shall be required to be assigned a ratable share in the “Loans” and “Commitments” under, the SFS Revolving Credit Agreement and (v) so long as no Event of Default has occurred and is continuing, require the consent of Borrower Representative, which shall not be unreasonably withheld or delayed and shall be deemed to have been given unless an objection is delivered to the Administrative Agent within ten (10) Business Days after notice of such proposed assignment is delivered to Borrower Representative; provided that (x) no such consent shall be required for an assignment to a Qualified Assignee and (y) the Borrower Representative’s refusal to consent to an assignment to any Person that constitutes a vulture fund, distressed debt purchaser or similar institution whose primary business consists of purchasing or investing in Persons that are highly financially distressed and insolvent or imminently insolvent shall not be deemed to be unreasonable. No Agent shall have any responsibility for ensuring that minimum Commitment amounts described in clause (ii) of the immediately preceding sentence are maintained or for determining whether an assignee of any Lender is a Qualified Assignee. In addition, no Agent shall have any liability in the event any Loans or Commitments (or any interest therein) are assigned to a Qualified Assignee without the consent of the Borrower Representative. Lenders shall be required at all times to maintain equal Pro Rata Shares of Auction Commitments hereunder and the “Commitments” under the SFS Revolving Credit Agreement. Notwithstanding anything herein to the contrary, no Lender may assign or otherwise transfer all or any part of its interest in the Obligations to any natural person or to any Borrower or any of its Affiliates. The Agents’ refusal to consent to an assignment by a Non-Funding Lender who is a Non-Funding Lender due to clause (a) of the definition of Non-Funding Lender (unless in connection with such assignment, such Non-Funding Lender cures, or causes the cure of, its Non-Funding Lender status as contemplated in Section 9.9(d)(v) ) shall not be deemed to be unreasonable. The Agents’ refusal to consent to an assignment by any Lender to any Person that would be a Non-Funding Lender or an Impacted Lender, or the imposition of conditions or limitations (including limitations on voting) upon assignments to such Persons, shall not be deemed to be unreasonable. In the case of an assignment by a Lender under this Section 9.1 , the assignee shall have, to the extent of such assignment, the same rights, benefits and obligations as all other Lenders hereunder. The assigning Lender shall be relieved of its obligations hereunder with respect to its Commitments or assigned portion thereof from and after the date of such assignment. Each Borrower hereby acknowledges and agrees that any assignment shall give rise to a direct obligation of Borrowers to the assignee and that the assignee shall be considered to be a “Lender”. In all instances, each Lender’s liability to make Loans or purchase participation interests therein hereunder shall be several and not joint and shall be limited to such Lender’s Pro Rata Share of the applicable Commitment. In the event any Agent or any Lender assigns or otherwise transfers all or any part of its interest in the Obligations, any such Agent or any such Lender shall so notify Borrowers and Borrowers shall, upon the request of such Agent or such Lender, execute new Notes in exchange for the Notes, if any, being assigned. Notwithstanding the foregoing provisions of this Section 9.1(a) , any Lender may at any time pledge its interest in the Obligations and such Lender’s rights under this Agreement and the other Loan Documents to

(A) any federal reserve bank (pursuant to Regulation A of the Federal Reserve Board), without notice to the Administrative Agent, (B) any central bank having authority over such Lender, with notice to the Administrative Agent or (C) any holder of, or trustee for the benefit of the holders of, such Lender’s Indebtedness or equity securities, with notice to the Administrative Agent; provided , however , that no such federal reserve bank, central bank, holder or trustee, whether because of such grant or assignment or any foreclosure thereon (unless such foreclosure is made through an assignment in accordance with the other provisions of this Section 9.1 ), shall be entitled to any rights of such Lender hereunder and no such Lender shall be relieved of any of its obligations hereunder or under any other Loan Document. In addition, notwithstanding the foregoing provisions of this Section 9.1(a) , any Lender that is an investment fund may assign its interest in the Obligations and such Lender’s rights under this Agreement and the other Loan Documents to another investment fund managed by the same investment advisor.

(f) The Administrative Agent, acting solely for this purpose as a non-fiduciary agent of the Borrowers, shall maintain at its address referred to in Annex I a copy of each Assignment Agreement delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts (and stated interest) of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”). The entries in the Register shall be conclusive absent manifest error, and Borrowers, the Agents and Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(g) Any participation by a Lender of all or any part of its Commitments shall be made with the understanding that all amounts payable by Borrowers hereunder shall be determined as if that Lender had not sold such participation, and that the holder of any such participation shall not be entitled to require such Lender to take or omit to take any action hereunder except actions directly affecting (i) any reduction in the principal amount of, or interest rate or Fees payable with respect to, any Loan in which such holder participates, (ii) any extension of the scheduled amortization of the principal amount of any Loan in which such holder participates or the final maturity date thereof, and (iii) any release of the Collateral Agent’s Lien on all or substantially all of the Collateral (other than in accordance with the terms of this Agreement, the Collateral Documents or the other Loan Documents). Each of the Borrowers agrees that each participant shall be entitled to the benefits of Sections 1.14 , 1.16 (as it applied in relation to U.S. tax only), 1.17 and 9.8 (subject to the requirements and limitations therein, including the requirements under Section 1.16 (it being understood that the documentation required in order to constitute a Qualifying Lender and the documentation required under Section 1.16 shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (a) of this Section; provided that such participant shall not be entitled to receive any greater payment under Section 1.16 , with respect to any participation, than its participating Lender would have been entitled to receive. Except as set forth in the preceding sentence no Credit Party shall have any obligation or duty to any participant. Neither any Agent nor any Lender (other than the Lender

selling a participation) shall have any duty to any participant and may continue to deal solely with the Lender selling a participation as if no such sale had occurred.

(h) Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of Borrowers, maintain a register on which it enters the name and address of each participant and the principal amounts (and stated interest) of each participant’s interest in the Loans or other obligations under the Loan Documents (the “ Participant Register ”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any participant or any information relating to a participant’s interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person other than the Administrative Agent except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, no Agent shall have any responsibility for maintaining a Participant Register.

(i) Except as expressly provided in this Section 9.1 , no Lender shall, as between Borrowers and that Lender, or the Agents and that Lender, be relieved of any of its obligations hereunder as a result of any sale, assignment, transfer or negotiation of, or granting of participation in, all or any part of the Loans, the Notes or other Obligations owed to such Lender.

(j) Each Credit Party shall assist any Lender permitted to sell assignments or participations under this Section 9.1 as reasonably required to enable the assigning or selling Lender to effect any such assignment or participation, including the execution and delivery of any and all agreements, notes and other documents and instruments as shall be requested and, if requested by the Administrative Agent, the preparation of informational materials for, and the participation of management in meetings with, potential assignees or participants. Each Credit Party shall certify the correctness, completeness and accuracy of all descriptions of the Sotheby Entities and their respective affairs contained in any selling materials provided by them and all other information provided by them and included in such materials, except that the Projections shall only be certified by Borrowers as having been prepared by Borrowers in compliance with the representations contained in Section 3.4(b) .

(k) Any Lender may furnish any information concerning Sotheby Entities in the possession of such Lender from time to time to assignees and participants (including prospective assignees and participants); provided that, except in the case of a Lender that pledges its interest in the Obligations and such Lender’s rights under this Agreement and the other Loan Documents pursuant to Section 9.1(a)(A) or Section 9.1(a)(B), such Lender shall obtain from assignees or participants confidentiality covenants substantially equivalent to those contained in Section 11.8 .

(l) So long as no Event of Default has occurred and is continuing, no Lender shall assign or sell participations in any portion of its Loans or Commitment to a potential

Lender or participant, if, as of the date of the proposed assignment or sale, the assignee Lender or participant would be subject to capital adequacy or similar requirements under Section 1.17(a) , increased costs under Section 1.17(b) , an inability to fund LIBOR Loans under Section 1.17(c) , or withholding taxes in accordance with Section 1.16(a) .

(m) Notwithstanding anything to the contrary contained herein, any Lender (a “ Granting Lender ”), may grant to a special purpose funding vehicle (an “ SPC ”), identified as such in writing by the Granting Lender to the Administrative Agent and Borrowers, the option to provide to Borrowers all or any part of any Loans that such Granting Lender would otherwise be obligated to make to Borrowers pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to make any Loan; and (ii) if an SPC elects not to exercise such option or otherwise fails to provide all or any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof. The making of a Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if such Loan were made by such Granting Lender. No SPC shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Lender). Any SPC may (i) with notice to, but without the prior written consent of, Borrowers and the Administrative Agent and without paying any processing fee therefor assign all or a portion of its interests in any Loans to the Granting Lender or to any financial institutions (consented to by Borrowers and the Administrative Agent) providing liquidity and/or credit support to or for the account of such SPC to support the funding or maintenance of Loans and (ii) disclose on a confidential basis any non-public information relating to its Loans to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPC. This Section 9.1(i) may not be amended without the prior written consent of each Granting Lender, all or any of whose Loans are being funded by an SPC at the time of such amendment. For the avoidance of doubt, the Granting Lender shall for all purposes, including without limitation, the approval of any amendment or waiver of any provision of any Loan Document or the obligation to pay any amount otherwise payable by the Granting Lender under the Loan Documents, continue to be the Lender of record hereunder.


9.2	Appointment of the Administrative Agent and the Collateral Agent .

expressly set forth in this Agreement and the other Loan Documents, no Agent shall have any duty to disclose, and shall not be liable for failure to disclose, any information relating to any Sotheby Entity or any of their respective Subsidiaries or any Account Debtor that is communicated to or obtained by GE Capital or any of its Affiliates in any capacity. Neither any Agent nor any of its Affiliates nor any of their respective officers, directors, employees, agents or representatives shall be liable to any Secured Party for any action taken or omitted to be taken by it hereunder or under any other Loan Document, or in connection herewith or therewith, except for damages caused by its or their own gross negligence or willful misconduct as determined in a final, non-appealable judgment by a court of competent jurisdiction.

If any Agent shall request instructions from Requisite Lenders, the Majority in Interest of any class of Lenders, the Supermajority in Interest of any class of Lenders, the Supermajority Lenders or all affected Lenders with respect to any act or action (including failure to act) in connection with this Agreement or any other Loan Document, then such Agent shall be entitled to refrain from such act or taking such action unless and until such Agent shall have received instructions from Requisite Lenders, the Majority in Interest of any class of Lenders, the Supermajority in Interest of any class of Lenders, the Supermajority Lenders, or all affected Lenders, as the case may be, and such Agent shall not incur liability to any Person by reason of so refraining. Each Agent shall be fully justified in failing or refusing to take any action hereunder or under any other Loan Document (a) if such action would, in the opinion of such Agent, be contrary to law or the terms of this Agreement or any other Loan Document, (b) if such action would, in the opinion of such Agent, expose such Agent to Environmental Liabilities or (c) if such Agent shall not first be indemnified to its satisfaction against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. Without limiting the foregoing, no Secured Party shall have any right of action whatsoever against any Agent as a result of any Agent acting or refraining from acting hereunder or under any other Loan Document in accordance with the instructions of Requisite Lenders, the Majority in Interest of any class of Lenders, the Supermajority in Interest of any class of Lenders, the Supermajority Lenders or all affected Lenders, as applicable.

In its capacity, the Collateral Agent is a “representative” of the Secured Parties within the meaning of the term “secured party” as defined in the UCC. Each Lender and the Administrative Agent authorizes the Collateral Agent to enter into each of the Collateral Documents to which it is a party and to take all action contemplated by such documents in accordance with the terms thereof. Subject to Section 9.8 , each Lender agrees that no Secured Party (other than the Collateral Agent) shall have the right individually to seek to realize upon the security granted by any Collateral Document, it being understood and agreed that such rights and remedies may be exercised solely by the Collateral Agent for the benefit of the Secured Parties upon the terms of the Collateral Documents. In the event that any Collateral is hereafter pledged by any Person as collateral security for the Secured Obligations, the Collateral Agent is hereby authorized, and hereby granted a power of attorney, to execute and deliver on behalf of the Secured Parties any Loan Documents necessary or appropriate to grant and perfect a Lien on such Collateral in favor of the Collateral Agent on behalf of the Secured Parties.


9.3	Agents’ Reliance, Etc .

Neither any Agent nor any of its Affiliates nor any of their respective directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement or the other Loan Documents, except for damages caused by its or their own gross negligence or willful misconduct as determined in a final, non-appealable judgment by a court of competent jurisdiction. Without limiting the generality of the foregoing, each Agent: (a) may treat the payee of any Note as the holder thereof until such Agent receives written notice of the assignment or transfer thereof signed by such payee and in form reasonably satisfactory to such Agent; (b) may consult with legal counsel, independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts; (c) makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations made in or in connection with this Agreement or the other Loan Documents; (d) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement or the other Loan Documents on the part of any Credit Party or to inspect the Collateral (including the books and records) of any Credit Party; (e) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; and (f) shall incur no liability under or in respect of this Agreement or the other Loan Documents by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopy, telegram, cable or telex) believed by it to be genuine and signed or sent by the proper party or parties.


9.4	GE Capital and Affiliates .

With respect to its Commitments hereunder, GE Capital shall have the same rights and powers under this Agreement and the other Loan Documents as any other Lender and may exercise the same as though it were not an Agent; and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated, include GE Capital in its individual capacity. GE Capital and its Affiliates may lend money to, invest in, and generally engage in any kind of business with, any Sotheby Entity, any of their Affiliates and any Person who may do business with or own securities of any Sotheby Entity or any such Affiliate, all as if GE Capital were not an Agent and without any duty to account therefor to Lenders. GE Capital and its Affiliates may accept fees and other consideration from any Sotheby Entity for services in connection with this Agreement or otherwise without having to account for the same to Lenders. Each Lender acknowledges the potential conflict of interest between GE Capital as a Lender holding disproportionate interests in the Loans and GE Capital as the Administrative Agent and the Collateral Agent.


9.5	Lender Credit Decision .

Each Lender also acknowledges that it will, independently and without reliance upon any Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. Each Lender acknowledges the potential conflict of interest of each other Lender as a result of Lenders holding disproportionate interests in the Loans, and expressly consents to, and waives any claim based upon, such conflict of interest.


9.6	Indemnification .

Lenders agree to indemnify the Agents (to the extent not reimbursed by Credit Parties and without limiting the obligations of Credit Parties hereunder), ratably according to their respective Pro Rata Shares, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against any Agent in any way relating to or arising out of this Agreement or any other Loan Document or any action taken or omitted to be taken by any Agent in connection therewith; provided , that no Lender shall be liable to any Agent for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Agent’s gross negligence or willful misconduct as determined in a final, non-appealable judgment by a court of competent jurisdiction. Without limiting the foregoing, each Lender agrees to reimburse the Agents promptly upon demand for its ratable share of any out-of-pocket expenses (including reasonable counsel fees) incurred by any Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement and each other Loan Document, to the extent that any such Agent is not reimbursed for such expenses by Credit Parties.

9.7 Successor Agents . Any Agent may resign at any time by giving not less than thirty (30) days’ prior written notice thereof to Lenders and Borrower Representative. Upon any such resignation, the Requisite Lenders shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Requisite Lenders and shall have accepted such appointment within thirty (30) days after the resigning Agent’s giving notice of resignation, then the resigning Agent may, on behalf of Lenders, appoint a successor Agent, which shall be a Lender (if a Lender is willing to accept such appointment), or otherwise shall be a commercial bank or financial institution or a subsidiary of a commercial bank or financial institution if such commercial bank or financial institution is organized under the laws of the United States of America or of any State thereof and has a combined capital and surplus of at least $300,000,000. If no successor Agent has been appointed pursuant to the foregoing, within thirty (30) days after the date such notice of resignation was given by the resigning Agent, such resignation shall become effective and the Requisite Lenders shall thereafter perform all the duties of such Agent, hereunder until such time, if any, as the Requisite Lenders appoint a successor Agent as provided above. Any successor Agent appointed by Requisite Lenders hereunder shall be subject to the approval of Borrower Representative, such approval not to be unreasonably withheld or delayed; provided that such approval shall not be required if a Default or an Event of Default has occurred and is continuing. Upon the acceptance of any appointment

as Administrative Agent or Collateral Agent, as applicable, hereunder by a successor Agent, such successor Agent shall succeed to and become vested with all the rights, powers, privileges and duties of the resigning Agent. Upon the earlier of the acceptance of any appointment as Administrative Agent or Collateral Agent, as applicable, hereunder by a successor Agent or the effective date of the resigning Agent’s resignation, the resigning Agent shall be discharged from its duties and obligations under this Agreement and the other Loan Documents, except that any indemnity rights or other rights in favor of such resigning Agent shall continue. After any resigning Agent’s resignation hereunder, the provisions of this Section 9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was acting as Administrative Agent or Collateral Agent, as applicable, under this Agreement and the other Loan Documents.


9.8	Setoff and Sharing of Payments .

In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, upon the occurrence and during the continuance of any Event of Default and subject to Section 9.9(g) , each Lender is hereby authorized at any time or from time to time, without prior notice to any Credit Party or to any Person other than the Agents, any such notice being hereby expressly waived, to offset and to appropriate and to apply any and all balances held by it at any of its offices for the account of any Credit Party (regardless of whether such balances are then due to such Credit Party) and any other properties or assets at any time held or owing by that Lender or that holder to or for the credit or for the account of any Credit Party against and on account of any of the Obligations that are not paid when due; provided , that (i) the Lender exercising such offset rights shall give notice thereof to the affected Credit Party promptly after exercising such rights, and (ii) any balances, properties or assets of a Foreign Credit Party shall be offset, appropriated or applied only to or against the Obligations of the Foreign Credit Parties. Any Lender exercising a right of setoff or otherwise receiving any payment on account of the Obligations in excess of its Pro Rata Share thereof shall purchase for cash (and the other Lenders or holders shall sell) such participations in each such other Lender’s or holder’s Pro Rata Share of the Obligations as would be necessary to cause such Lender to share the amount so offset or otherwise received with each other Lender or holder in accordance with their respective Pro Rata Shares (other than offset rights exercised by any Lender with respect to Sections 1.14, 1.16 or 1.17 ). Each Auction Dollar Tranche Lender’s obligation under this Section 9.8 shall be in addition to and not in limitation of its obligations to purchase a participation in an amount equal to its Pro Rata Share of the Auction Dollar Tranche Swing Line Loan under Section 1.1 . Each Auction Multicurrency Tranche Lender’s obligation under this Section 9.8 shall be in addition to and not in limitation of its obligations to purchase a participation in an amount equal to its Pro Rata Share of the Auction Multicurrency Tranche Swing Line Loan under Section 1.1 . Each Credit Party agrees, to the fullest extent permitted by law, that (a) any Lender may exercise its right to offset with respect to amounts in excess of its Pro Rata Share of the Obligations and may sell participations in such amounts so offset to other Lenders and holders and (b) any Lender so purchasing a participation in the Loans made or other Obligations held by other Lenders or holders may exercise all rights of offset, bankers’ lien, counterclaim or similar rights with respect to such participation as fully as if such Lender or holder were a direct holder of the Loans and the other Obligations in the amount of such participation. Notwithstanding the foregoing, if all or any portion of the offset amount or

payment otherwise received is thereafter recovered from the Lender that has exercised the right of offset, the purchase of participations by that Lender shall be rescinded and the purchase price restored without interest. If a Non-Funding Lender receives any payment described in the second sentence of this Section 9.8 , such Lender shall turn over such payments to the Collateral Agent in an amount that would satisfy the cash collateral requirements set forth in Section 9.9(d) .


9.9	Advances; Payments; Non-Funding Lenders; Information; Actions in Concert .

(l) Revolving Credit Advances; Payments .

(i) Auction Lenders shall refund or participate in the Swing Line Loan in accordance with clauses (iii), (iv) and (v) of Section 1.1(c) . If (i) the Swing Line Lender declines to make a Swing Line Advance, (ii) the Auction Dollar Tranche Swing Line Availability is zero, (iii) the Auction Multicurrency Tranche Swing Line Availability is zero or (iv) the Administrative Agent shall receive a Notice of Revolving Credit Advance in respect of a Revolving Credit Advance to be made as a LIBOR Loan, the Administrative Agent shall notify Lenders, promptly after receipt of a Notice of Revolving Credit Advance and in any event prior to 1:00 p.m. (New York time) on the date such Notice of Revolving Credit Advance is received, by telecopy, telephone or other similar form of transmission.

(ii) In the case of any Auction Dollar Tranche Revolving Credit Advance, each Auction Dollar Tranche Lender shall make the amount of such Lender’s Pro Rata Share of such Auction Dollar Tranche Revolving Credit Advance available to the Administrative Agent in same day funds in Dollars by wire transfer to the Administrative Agent’s account as set forth in Annex H not later than 3:00 p.m. (New York time) on the requested funding date, in the case of an Index Rate Loan, and not later than 11:00 a.m. (New York time) on the requested funding date, in the case of a LIBOR Loan. In the case of any Auction Multicurrency Tranche Revolving Credit Advance, each Auction Multicurrency Tranche Lender shall make the amount of such Lender’s Pro Rata Share of such Auction Multicurrency Tranche Revolving Credit Advance available to the Administrative Agent in same day funds in the currency in which such Auction Multicurrency Tranche Revolving Credit Advance is denominated by wire transfer to the Administrative Agent’s account as set forth in Annex H not later than 3:00 p.m. (New York time) on the requested funding date, in the case of an Index Rate Loan, and not later than 11:00 a.m. (New York time) on the requested funding date, in the case of a LIBOR Loan. In the case of any Incremental Revolving Credit Advance, each Incremental Lender shall make the amount of such Lender’s Pro Rata Share of such Incremental Revolving Credit Advance available to the Administrative Agent in same day funds in Dollars by wire transfer to the Administrative Agent’s account as set forth in Annex H not later than 3:00 p.m. (New York time) on the requested funding date, in the case of an Index Rate Loan, and not later than 11:00 a.m. (New York time) on the requested funding date, in the case of a LIBOR Loan. After receipt of such wire transfers (or, in the Administrative Agent’s sole discretion, before receipt of such wire transfers), subject to the terms hereof, the Administrative Agent shall make the requested Revolving Credit Advance to Borrower. All payments by each Lender pursuant to this Section 9.9(a) shall be made without setoff, counterclaim or deduction of any kind.

(iii) On each Business Day (each, a “ Settlement Date ”), the Administrative Agent shall advise each Lender by telephone or telecopy of the amount to be disbursed to such Person in accordance with this Section 9.9(a)(iii) . Provided that each Lender has funded all payments or Advances required to be made by it and has purchased all participations required to be purchased by it under this Agreement and the other Loan Documents as of such Settlement Date, the Administrative Agent shall pay to each Lender such Lender’s Pro Rata Share of principal, interest and Fees received by the Administrative Agent from the Borrowers on such Settlement Date (or, in the case of amounts denominated in a Foreign Currency, (x) with respect to principal, on the date one Business Day prior to such Settlement Date and (y) with respect to all other amounts, on the date two (2) Business Days prior to such Settlement Date) (as determined in accordance with Section 1.11 ) for the benefit of Lenders with respect to each applicable Loan. Such payments shall be made by wire transfer to such Lender’s account (as specified by such Lender in Annex H or the applicable Assignment Agreement) not later than 5:00 p.m. (New York time) on each Settlement Date.

(m) Availability of Lender’s Pro Rata Share . The Administrative Agent may assume that, on each funding date, (i) each Auction Dollar Tranche Lender will make its Pro Rata Share of each Auction Dollar Tranche Revolving Credit Advance being funded on such funding date available to the Administrative Agent, (ii) each Auction Multicurrency Tranche Lender will make its Pro Rata Share of each Auction Multicurrency Tranche Revolving Credit Advance being funded on such funding date available to the Administrative Agent and (iii) each Incremental Lender will make its Pro Rata Share of each Incremental Revolving Credit Advance being funded on such funding date available to the Administrative Agent. If such Pro Rata Share is not, in fact, paid to the Administrative Agent by such Lender when due, the Administrative Agent will be entitled to recover such amount on demand from such Lender, without setoff, counterclaim or deduction of any kind. If any Lender fails to pay the amount of its Pro Rata Share forthwith upon the Administrative Agent’s demand, the Administrative Agent shall promptly notify Borrower Representative and Borrowers shall immediately repay such amount to the Administrative Agent. Nothing in this Section 9.9(b) or elsewhere in this Agreement or the other Loan Documents shall be deemed to require any Agent to advance funds on behalf of any Lender or to relieve any Lender from its obligation to fulfill its Commitments or obligations hereunder or to prejudice any rights that Borrowers may have against any Lender as a result of any default by such Lender hereunder. To the extent that any Agent advances funds to any Borrower on behalf of any Lender and is not reimbursed therefor on the same Business Day as such Advance is made, such Agent shall be entitled to retain for its account all interest accrued on such Advance until reimbursed by the applicable Lender.

(n) Return of Payments .

(i) If any Agent pays an amount to a Lender under this Agreement in the belief or expectation that a related payment has been or will be received by such Agent from Borrowers and such related payment is not received by such Agent, then such Agent will be entitled to recover such amount from such Lender on demand without setoff, counterclaim or deduction of any kind.

(ii) If any Agent determines at any time that any amount received by such Agent under this Agreement must be returned to any Borrower or paid to any other Person pursuant to any insolvency law or otherwise, then, notwithstanding any other term or condition of this Agreement or any other Loan Document, such Agent will not be required to distribute any portion thereof to any Lender. In addition, each Lender will repay to each Agent on demand any portion of such amount that such Agent has distributed to such Lender, together with interest at such rate, if any, as such Agent is required to pay to any Borrower or such other Person, without setoff, counterclaim or deduction of any kind.

(o) Non-Funding Lenders .

(i) Responsibility . The failure of any Non-Funding Lender to make any Revolving Credit Advance, Letter of Credit Obligation or any payment required by it, or to make any payment required by it hereunder, or to fund any purchase of any participation to be made or funded by it on the date specified therefor shall not relieve any other Lender (each such other Lender, an “ Other Lender ”) of its obligations to make such loan, fund the purchase of any such participation, or make any other payment required hereunder on such date, and neither any Agent nor, other than as expressly set forth herein, any other Lender shall be responsible for the failure of any Non-Funding Lender to make a loan, fund the purchase of a participation or make any other payment required hereunder.

(ii) Reallocation .

(A) If any Auction Dollar Tranche Lender is a Non-Funding Lender, all or a portion of such Non-Funding Lender’s Auction Dollar Tranche Letter of Credit Obligations (unless such Lender is the L/C Issuer that issued such Letter of Credit), and reimbursement obligations with respect to Auction Dollar Tranche Swing Loans shall, at the Administrative Agent’s election at any time or upon any L/C Issuer’s or the Swing Line Lender’s written request delivered to the Administrative Agent (whether before or after the occurrence of any Default or Event of Default), be reallocated to and assumed or funded by the Auction Dollar Tranche Lenders that are not Non-Funding Lenders or Impacted Lenders pro rata in accordance with their Pro Rata Shares of the aggregate Auction Dollar Tranche Commitments of all Lenders (calculated as if the Non-Funding Lender’s Pro Rata Share was reduced to zero and each other Lender’s Pro Rata Share of the Auction Dollar Tranche Commitments had been increased proportionately); provided , that no Lender shall be reallocated any such amounts or be required to fund any amounts that would cause the sum of its outstanding Auction Dollar Tranche Revolving Credit Advances, outstanding Auction Dollar Tranche Letter of Credit Obligations, amounts of its participations in Auction Dollar Tranche Swing Line Advances, and its pro rata share of

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unparticipated amounts in Auction Dollar Tranche Swing Line Advances to exceed its Auction Dollar Tranche Commitments. At any time any Auction Dollar Tranche Lender is a Non-Funding Lender, at the Administrative Agent’s election at any time or upon any L/C Issuer’s or the Swing Line Lender’s written request delivered to the Administrative Agent (whether before or after the occurrence of any Default or Event of Default), participating interests in any newly made Auction Dollar Tranche Swing Line Loan or any newly issued or modified Auction Dollar Tranche Letter of Credit will be allocated among Non-Funding Lenders that constitute Auction Dollar Tranche Lenders in a manner consistent with this Section 9.9(d)(ii)(A) .

(B) If any Auction Multicurrency Tranche Lender is a Non-Funding Lender, all or a portion of such Non-Funding Lender’s Auction Multicurrency Tranche Letter of Credit Obligations (unless such Lender is the L/C Issuer that issued such Letter of Credit), and reimbursement obligations with respect to Auction Multicurrency Tranche Swing Loans shall, at the Administrative Agent’s election at any time or upon any L/C Issuer’s or the Swing Line Lender’s written request delivered to the Administrative Agent (whether before or after the occurrence of any Default or Event of Default), be reallocated to and assumed or funded by the Auction Multicurrency Tranche Lenders that are not Non-Funding Lenders or Impacted Lenders pro rata in accordance with their Pro Rata Shares of the aggregate Auction Multicurrency Tranche Commitments of all Lenders (calculated as if the Non-Funding Lender’s Pro Rata Share was reduced to zero and each other Lender’s Pro Rata Share of the Auction Multicurrency Tranche Commitments had been increased proportionately); provided , that no Lender shall be reallocated any such amounts or be required to fund any amounts that would cause the sum of its outstanding Auction Multicurrency Tranche Revolving Credit Advances, outstanding Auction Multicurrency Tranche Letter of Credit Obligations, amounts of its participations in Auction Multicurrency Tranche Swing Line Advances, and its pro rata share of unparticipated amounts in Auction Multicurrency Tranche Swing Line Advances to exceed its Auction Multicurrency Tranche Commitments. At any time any Auction Multicurrency Tranche Lender is a Non-Funding Lender, at the Administrative Agent’s election at any time or upon any L/C Issuer’s or the Swing Line Lender’s written request delivered to the Administrative Agent (whether before or after the occurrence of any Default or Event of Default), participating interests in any newly made Auction Multicurrency Tranche Swing Line Loan or any newly issued or

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modified Auction Multicurrency Tranche Letter of Credit will be allocated among Non-Funding Lenders that constitute Auction Multicurrency Tranche Lenders in a manner consistent with this Section 9.9(d)(ii)(B) .

(iii) Voting Rights . Notwithstanding anything set forth herein to the contrary, including Section 9.1 , a Non-Funding Lender shall not have any voting or consent rights under or with respect to any Loan Document or constitute a “Lender” (or be, or have its Loans, participations and Commitments, included in the determination of “Requisite Lenders,” “Majority in Interest,” “Supermajority in Interest,” “Supermajority Lenders” or “Lenders directly affected” pursuant to Section 11.2 ) for any voting or consent rights under or with respect to any Loan Document; provided , that (A) the Commitment of a Non-Funding Lender may not be increased, extended or reinstated, (B) the principal of a Non-Funding Lender’s Loans may not be reduced or forgiven and (C) the interest rate applicable to Obligations owing to a Non-Funding Lender may not be reduced in such a manner that by its terms affects such Non-Funding Lender more adversely than other Lenders, in each case without the consent of such Non-Funding Lender. Moreover, for the purposes of determining Requisite Lenders, Majority in Interest of any class of Lenders, Supermajority in Interest of any class of Lenders, or Supermajority Lenders, the Loans, participations and Commitments held by Non-Funding Lenders shall be excluded from the total Loans, participations and Commitments outstanding.

(iv) Borrower Payments to a Non-Funding Lender . Each Agent shall be authorized to use all payments received by such Agent for the benefit of any Non-Funding Lender pursuant to this Agreement to pay in full the Aggregate Excess Funding Amount to the appropriate Secured Parties. Following such payment in full of the Aggregate Excess Funding Amount, the Collateral Agent shall be entitled to hold such funds as cash collateral in a non-interest bearing account up to an amount equal to such Non-Funding Lender’s unfunded Commitment and to use such amount to pay such Non-Funding Lender’s funding obligations hereunder until the Obligations are paid in full in cash, all Letter of Credit Obligations have been discharged or cash collateralized and all Commitments have been terminated. Upon any such unfunded obligations owing by a Non-Funding Lender becoming due and payable, the Agents shall be authorized to use such cash collateral to make such payment on behalf of such Non-Funding Lender. With respect to such Non-Funding Lender’s failure to fund Auction Dollar Tranche Revolving Credit Advances or purchase participations in Auction Dollar Tranche Letters of Credit or Auction Dollar Tranche Letter of Credit Obligations, any amounts applied by any Agent to satisfy such funding shortfalls shall be deemed to constitute an Auction Dollar Tranche Revolving Credit Advance or amount of the participation required to be funded and, if necessary to effectuate the foregoing, the other Auction Dollar Tranche Lenders shall be deemed to have sold, and such Non-Funding Lender shall be deemed to have purchased, Auction Dollar Tranche Revolving Credit Advances or participation interests from the other Auction Dollar Tranche Lenders until such time as the aggregate amount of the Auction Dollar Tranche Revolving Credit Advances and participations in Auction Dollar Tranche Letters of Credit and Auction Dollar Tranche Letter of Credit Obligations are held by the Auction Dollar Tranche Lenders in accordance with their Pro Rata Shares of the aggregate Auction Dollar Tranche Commitments of the Lenders. With respect to such Non-Funding Lender’s failure to fund Auction Multicurrency

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Tranche Revolving Credit Advances or purchase participations in Auction Multicurrency Tranche Letters of Credit or Auction Multicurrency Tranche Letter of Credit Obligations, any amounts applied by any Agent to satisfy such funding shortfalls shall be deemed to constitute an Auction Multicurrency Tranche Revolving Credit Advance or amount of the participation required to be funded and, if necessary to effectuate the foregoing, the other Auction Multicurrency Tranche Lenders shall be deemed to have sold, and such Non-Funding Lender shall be deemed to have purchased, Auction Multicurrency Tranche Revolving Credit Advances or participation interests from the other Auction Multicurrency Tranche Lenders until such time as the aggregate amount of the Auction Multicurrency Tranche Revolving Credit Advances and participations in Auction Multicurrency Tranche Letters of Credit and Auction Multicurrency Tranche Letter of Credit Obligations are held by the Auction Multicurrency Tranche Lenders in accordance with their Pro Rata Shares of the aggregate Auction Multicurrency Tranche Commitments of the Lenders. With respect to such Non-Funding Lender’s failure to fund Incremental Revolving Credit Advances, any amounts applied by any Agent to satisfy such funding shortfalls shall be deemed to constitute an Incremental Revolving Credit Advance and, if necessary to effectuate the foregoing, the other Incremental Lenders shall be deemed to have sold, and such Non-Funding Lender shall be deemed to have purchased, Incremental Revolving Credit Advances from the other Incremental Lenders until such time as the aggregate amount of the Incremental Revolving Credit Advances are held by the Incremental Lenders in accordance with their Pro Rata Shares of the aggregate Incremental Commitments of the Lenders. Any amounts owing by a Non-Funding Lender to any Agent which are not paid when due shall accrue interest at the interest rate applicable during such period to Index Rate Loans. In the event that any Agent is holding cash collateral of a Non-Funding Lender that cures pursuant to clause (v) below or ceases to be a Non-Funding Lender pursuant to the definition of Non-Funding Lender, such Agent shall return the unused portion of such cash collateral to such Lender. The “ Aggregate Excess Funding Amount ” of a Non-Funding Lender shall be the aggregate amount of (A) all unpaid obligations owing by such Lender to the Agents, L/C Issuers, Swing Line Lender and other Lenders under the Loan Documents, including such Lender’s pro rata share of (x) if such Lender is an Auction Dollar Tranche Lender, all Auction Dollar Tranche Revolving Credit Advances, Auction Dollar Tranche Letter of Credit Obligations and Auction Dollar Tranche Swing Line Loans, (y) if such Lender is an Auction Multicurrency Tranche Lender, all Auction Multicurrency Tranche Revolving Credit Advances, Auction Multicurrency Tranche Letter of Credit Obligations and Auction Multicurrency Tranche Swing Line Loans or (z) if such Lender is an Incremental Lender, all Incremental Revolving Credit Advances plus , without duplication, (B) all amounts of such Non-Funding Lender’s Commitment reallocated to other Lenders pursuant to Section 9.9(d)(ii) .

(v) Cure . A Lender may cure its status as a Non-Funding Lender under clause (a) of the definition of Non-Funding Lender if such Lender (A) fully pays to the Administrative Agent, on behalf of the applicable Secured Parties, the Aggregate Excess Funding Amount, plus all interest due thereon and (B) timely funds the next Revolving Credit Advance required to be funded by such Lender or makes the next reimbursement required to be made by such Lender. Any such cure shall not relieve any Lender from liability for breaching its contractual obligations hereunder.

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(vi) Fees . A Lender that is a Non-Funding Lender pursuant to clause (a) of the definition of Non-Funding Lender shall not earn and shall not be entitled to receive, and the Borrowers shall not be required to pay, such Lender’s portion of the Fee set forth in Section 1.10(b) during the time such Lender is a Non-Funding Lender pursuant to clause (a) thereof. In the event that any reallocation of Letter of Credit Obligations occurs pursuant to Section 9.9(d)(ii) , during the period of time that such reallocation remains in effect, the Letter of Credit Fee payable with respect to such reallocated portion shall be payable to (A) all Auction Dollar Tranche Lenders or Auction Multicurrency Tranche Lenders, as applicable, based on their pro rata share of such reallocation or (B) to the L/C Issuer for any remaining portion not reallocated to any other Lenders.

(p) [Reserved] .

(q) Dissemination of Information . The Administrative Agent shall use reasonable efforts to provide Lenders with any notice of Default or Event of Default received by the Administrative Agent from, or delivered by the Administrative Agent to, any Credit Party, with notice of any Event of Default of which the Administrative Agent has actually become aware and with notice of any action taken by the Administrative Agent following any Event of Default; provided , that the Administrative Agent shall not be liable to any Lender for any failure to do so, except to the extent that such failure is attributable to the Administrative Agent’s gross negligence or willful misconduct as determined in a final, non-appealable judgment by a court of competent jurisdiction. Lenders acknowledge that Borrowers are required to provide Financial Statements and Collateral Reports to Lenders in accordance with Annexes E and F hereto and agree that the Administrative Agent shall have no duty to provide the same to Lenders.

(r) Actions in Concert . Anything in this Agreement to the contrary notwithstanding, each Lender hereby agrees with each other Lender that no Lender shall take any action to protect or enforce its rights arising out of this Agreement or any other Loan Document (including exercising any rights of setoff) without first obtaining the prior written consent of the Agents and Requisite Lenders, it being the intent of Lenders that any such action to protect or enforce rights under this Agreement and the Notes shall be taken in concert and at the direction or with the consent of the Agents or Requisite Lenders.

(s) Procedures . The Administrative Agent is hereby authorized by each Credit Party and each other Secured Party to establish procedures (and to amend such procedures from time to time) to facilitate administration and servicing of the Loans and other matters incidental thereto. Without limiting the generality of the foregoing, the Administrative Agent is hereby authorized to establish procedures to make available or deliver, or to accept, notices, documents and similar items on, by posting to or submitting and/or completion on, E-Systems.

9.10 Release of Guarantors or Collateral . Each Lender hereby authorizes the Collateral Agent to release the following:

(a) any Subsidiary of any Sotheby Entity from its guaranty of any Obligation of any Credit Party if all of the Stock of such Subsidiary owned by any Credit Party is sold in a sale permitted under the Loan Documents (including pursuant to a waiver or consent), to the

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extent that, after giving effect to such sale, such Subsidiary would not be required to guaranty any Obligations pursuant to any Loan Documents; and

(b) any Lien held by the Collateral Agent for the benefit of the Secured Parties against (i) any Collateral that is sold by a Credit Party in a sale permitted by the Loan Documents (including pursuant to a valid waiver or consent), and (ii) all of the Collateral and all Loan Parties, upon satisfaction of the conditions for such release pursuant to Section 11.2(f) .

Each Lender hereby authorizes the Collateral Agent, and the Collateral Agent hereby agrees, upon receipt of reasonable advance notice from the Borrower Representative, to execute and deliver or file such documents and to perform other actions reasonably necessary to release the guaranties and Liens when and as directed in this Section 9.10 .

10. SUCCESSORS AND ASSIGNS


10.1	Successors and Assigns .

This Agreement and the other Loan Documents shall be binding on and shall inure to the benefit of each Credit Party, the Agents, Lenders and their respective successors and assigns (including, in the case of any Credit Party, a debtor-in-possession on behalf of such Credit Party), except as otherwise provided herein or therein. No Credit Party may assign, transfer, hypothecate or otherwise convey its rights, benefits, obligations or duties hereunder or under any of the other Loan Documents without the prior express written consent of the Agents and Lenders. Any such purported assignment, transfer, hypothecation or other conveyance by any Credit Party without the prior express written consent of the Agents and Lenders shall be void. The terms and provisions of this Agreement are for the purpose of defining the relative rights and obligations of each Credit Party, the Agents and Lenders with respect to the transactions contemplated hereby and no Person shall be a third party beneficiary of any of the terms and provisions of this Agreement or any of the other Loan Documents.

11. MISCELLANEOUS


11.1	Complete Agreement; Modification of Agreement .

The Loan Documents constitute the complete agreement between the parties with respect to the subject matter thereof and may not be modified, altered or amended except as set forth in Section 11.2 . Any letter of interest, commitment letter, fee letter or confidentiality agreement, if any, between any Credit Party and any Agent or any Lender or any of their respective Affiliates, predating this Agreement and relating to a financing of substantially similar form, purpose or effect shall be superseded by this Agreement.


11.2	Amendments and Waivers .

(c) Except for actions expressly permitted to be taken by any Agent, no amendment, modification, termination or waiver of any provision of this Agreement or any other Loan Document, or any consent to any departure by any Credit Party therefrom, shall in any

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event be effective unless the same shall be in writing and signed by the Administrative Agent and Borrowers, and by Requisite Lenders, Supermajority in Interest of a class of Lenders, Supermajority Lenders and/or all affected Lenders, as applicable. Except as set forth in clauses (b), (c) and (d) below, all such amendments, modifications, terminations or waivers requiring the consent of any Lenders shall require the written consent of Requisite Lenders.

(d) No amendment, modification, termination or waiver of or consent with respect to any provision of this Agreement or any other Loan Document shall: (i) increase the percentage advance rates set forth in the definition of “Domestic Auction Borrowing Base” or “Foreign Auction Borrowing Base,” unless in writing and signed by the Administrative Agent and the Supermajority Lenders, (ii) increase the percentage advance rates set forth in the definition of “Domestic Incremental Borrowing Base” or “Foreign Incremental Borrowing Base,” unless in writing and signed by the Administrative Agent, the Supermajority in Interest of the Auction Lenders, and the Supermajority in Interest of the Incremental Lenders, (iii) modify any criteria set forth in Section 1.6 , 1.7 or 1.8 in a manner that has the effect of increasing any applicable Borrowing Availability, unless in writing and signed by the Administrative Agent and the Supermajority Lenders or (iv) increase the Foreign Borrower Subfacility Limit, unless in writing and signed by the Administrative Agent and the Supermajority Lenders.

(e) No amendment, modification, termination or waiver with respect to any provision of this Agreement or any other Loan Document shall, unless in writing and signed by the Administrative Agent and each Lender directly affected thereby: (i) increase the principal amount of any Lender’s Commitment; (ii) reduce the principal of, rate of interest on or Fees payable with respect to any Loan or Letter of Credit Obligations of any affected Lender (except that (A) any amendment or modification of any financial covenant in this Agreement (or defined terms used in such financial covenant in this Agreement) or (B) any amendment modifying the definition of “Default Rate” (or amendment modifying Section 1.5(d) for purposes of modifying the definition of “Default Rate”) or any waiver of any obligation of the Credit Parties to pay interest or Letter of Credit Fees at the Default Rate shall not, in either case, constitute a reduction in the rate of interest or Fees for purposes of this clause (ii)); (iii) extend any scheduled payment date (other than payment dates of mandatory prepayments under Sections 1.3(b)(iii) and (iv) ) or final maturity date of the principal amount of any Loan of any affected Lender; (iv) waive, forgive, defer, extend or postpone any payment of interest or Fees as to any affected Lender; (v) release all or substantially all the value of any Guaranty (other than in connection with any sale of assets by a Sotheby Entity (A) permitted pursuant to Section 6.8 or (B) consented to by Requisite Lenders or Supermajority Lenders, as applicable, pursuant to this Section 11.2 ) or, except as otherwise permitted herein or in the other Loan Documents, release, or permit any Credit Party to sell or otherwise dispose of, all or substantially all of the Collateral (which action shall be deemed to directly affect all Lenders and the L/C Issuer); (vi) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Loans that shall be required for Lenders or any of them to take any action hereunder; (vii) amend or waive Section 1.12(a) ; (viii) amend or waive this Section 11.2 or the definitions of the terms “Majority in Interest,” “Supermajority in Interest,” “Requisite Lenders” or “Supermajority Lenders” insofar as such definitions affect the substance of this Section 11.2 , (ix) amend the definition of “Pro Rata Share” or (x) designate a new “Borrower” hereunder. Furthermore, no amendment,

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modification, termination or waiver affecting the rights or duties of the Administrative Agent, the Collateral Agent or L/C Issuer under this Agreement or any other Loan Document, including any release of any Guaranty or Collateral requiring a writing signed by all Lenders and, in the case of the L/C Issuer, any increase in the L/C Sublimit, shall be effective unless in writing and signed by the Administrative Agent, the Collateral Agent or L/C Issuer, as the case may be, in addition to Lenders required hereinabove to take such action. Each amendment, modification, termination or waiver shall be effective only in the specific instance and for the specific purpose for which it was given. No amendment, modification, termination or waiver shall be required for any Agent to take additional Collateral pursuant to any Loan Document. No amendment, modification, termination or waiver of any provision of any Note shall be effective without the written concurrence of the holder of that Note. No notice to or demand on any Sotheby Entity in any case shall entitle such Sotheby Entity or any other Sotheby Entity to any other or further notice or demand in similar or other circumstances. Any amendment, modification, termination, waiver or consent effected in accordance with this Section 11.2 shall be binding upon each holder of the Notes at the time outstanding and each future holder of the Notes.

(f) No amendment, modification or waiver of this Agreement or any Loan Document resulting in any Bank Product and Hedging Obligations becoming unsecured (other than releases of Liens permitted in accordance with the terms hereof) shall be effective without the written consent of such holder of Bank Product and Hedging Obligations or, in the case of Bank Product and Hedging Obligations provided or arranged by GE Capital or an Affiliate of GE Capital, GE Capital.

(g) If, in connection with any proposed amendment, modification, waiver or termination (a “ Proposed Change ”):

(i) requiring the consent of all affected Lenders, the consent of Requisite Lenders is obtained, but the consent of other Lenders whose consent is required is not obtained (any such Lender whose consent is not obtained as described in this clause (i) and in clauses (ii) and (iii) below being referred to as a “ Non-Consenting Lender ”);

(ii) requiring the consent of Supermajority Lenders, the consent of Requisite Lenders is obtained, but the consent of Supermajority Lenders is not obtained; or

(iii) requiring the consent of Supermajority in Interest of any class of Lenders, the consent of the Majority in Interest of such class of Lenders is obtained, but the consent of Supermajority in Interest of such class of Lenders is not obtained;

then, so long as neither Agent is a Non-Consenting Lender, at Borrower Representative’s request, the Administrative Agent or a Person reasonably acceptable to the Administrative Agent shall have the right with the Administrative Agent’s consent and in the Administrative Agent’s sole discretion (but shall have no obligation) to purchase from such Non-Consenting Lenders, and such Non-Consenting Lenders agree that they shall, upon the Administrative Agent’s request, sell and assign to the Administrative Agent or such Person, all of the Loans and Commitments of such Non-Consenting Lenders for an amount equal to the principal balance of all Loans held by the Non-Consenting Lenders and all accrued interest and Fees with respect thereto through the

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date of sale, such purchase and sale to be consummated pursuant to an executed Assignment Agreement.

(h) Upon (i) payment in full in cash and performance of all of the Obligations and Bank Product and Hedging Obligations, but excluding contingent Obligations, (ii) termination of the Commitments, (iii) deposit of cash collateral (or, as an alternative to cash collateral in the case of any Letter of Credit Obligation, receipt by the Collateral Agent of a back-up letter of credit) with respect to all contingent Obligations (excluding contingent Obligations (other than Letter of Credit Obligations) as to which no claim has been asserted), in amounts and on terms and conditions and with parties reasonably satisfactory to the Collateral Agent and each Indemnified Person that is or may be owed such Obligations and (iv) a release of all claims against the Agents and Lenders, and so long as no suits, actions, proceedings or claims are pending or threatened against any Indemnified Person asserting any damages, losses or liabilities that are Indemnified Liabilities, the Collateral Agent shall deliver to Borrowers termination statements, mortgage releases and other documents necessary or appropriate to evidence the termination of the Liens securing payment of the Obligations.


11.3	Fees and Expenses .

Borrowers shall reimburse (i) each Agent for all fees, costs and expenses (including the reasonable fees and expenses of all of its counsel, advisors, consultants and auditors) and (ii) each Agent (and, with respect to clauses (b), (c) and (d) below, all Lenders) for all fees, costs and expenses, including the reasonable fees, costs and expenses of counsel or other advisors (including environmental and management consultants and appraisers), incurred in connection with the negotiation, preparation and filing and/or recordation of the Loan Documents and incurred in connection with:

(a) any amendment, modification or waiver of, consent with respect to, or termination of, any of the Loan Documents or advice in connection with the syndication and administration of the Loans made pursuant hereto or its rights hereunder or thereunder;

(b) any litigation, contest, dispute, suit, proceeding or action (whether instituted by any Agent, any Lender, any Sotheby Entity or any other Person and whether as a party, witness or otherwise) in any way relating to the Collateral, any of the Loan Documents or any other agreement to be executed or delivered in connection herewith or therewith, including any litigation, contest, dispute, suit, case, proceeding or action, and any appeal or review thereof, in connection with a case commenced by or against any or all of the Sotheby Entities or any other Person that may be obligated to any Agent or any Lender by virtue of the Loan Documents; including any such litigation, contest, dispute, suit, proceeding or action arising in connection with any work-out or restructuring of the Loans during the pendency of one or more Events of Default; provided , that in the case of reimbursement of counsel for Lenders other than the Agents, such reimbursement shall be limited to one counsel for all such Lenders; provided , further, that no Person shall be entitled to reimbursement under this clause (b) in respect of any litigation, contest, dispute, suit, proceeding or action to the extent any of the foregoing results from such Person’s gross negligence or willful misconduct as determined in a final, non-appealable judgment by a court of competent jurisdiction;

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(c) any attempt to enforce any remedies of any Agent against any or all of the Credit Parties or any other Person that may be obligated to any Agent or any Lender by virtue of any of the Loan Documents, including any such attempt to enforce any such remedies in the course of any work-out or restructuring of the Loans during the pendency of one or more Events of Default; provided , that in the case of reimbursement of counsel for Lenders other than the Agents, such reimbursement shall be limited to one counsel for all such Lenders;

(d) any workout or restructuring of the Loans during the pendency of one or more Events of Default; provided , that in the case of reimbursement of counsel for Lenders other than the Agents, such reimbursement shall be limited to one counsel for all such Lenders; and

(e) efforts to (i) monitor the Loans or any of the other Obligations, (ii) evaluate, observe or assess any of the Sotheby Entities or their respective affairs, and (iii) verify, protect, evaluate, assess, appraise, collect, sell, liquidate or otherwise dispose of any of the Collateral;

including, as to each of clauses (a) through (e) above, all reasonable attorneys’ and other professional and service providers’ fees arising from such services and other advice, assistance or other representation, including those in connection with any appellate proceedings, and all expenses, costs, charges and other fees incurred by such counsel and others in connection with or relating to any of the events or actions described in this Section 11.3 , all of which shall be payable, on demand, by Borrowers to the Agents. Without limiting the generality of the foregoing, such expenses, costs, charges and fees may include: fees, costs and expenses of accountants, environmental advisors, appraisers, investment bankers, management and other consultants and paralegals; court costs and expenses; photocopying and duplication expenses; court reporter fees, costs and expenses; long distance telephone charges; air express charges; telegram or telecopy charges; secretarial overtime charges; and expenses for travel, lodging and food paid or incurred in connection with the performance of such legal or other advisory services.


11.4	No Waiver .

Any Agent’s or any Lender’s failure, at any time or times, to require strict performance by the Sotheby Entities of any provision of this Agreement or any other Loan Document shall not waive, affect or diminish any right of such Agent or such Lender thereafter to demand strict compliance and performance herewith or therewith. Any suspension or waiver of an Event of Default shall not suspend, waive or affect any other Event of Default whether the same is prior or subsequent thereto and whether the same or of a different type. Subject to the provisions of Section 11.2 , none of the undertakings, agreements, warranties, covenants and representations of any Sotheby Entity contained in this Agreement or any of the other Loan Documents and no Default or Event of Default by any Sotheby Entity shall be deemed to have been suspended or waived by any Agent or any Lender, unless such waiver or suspension is by an instrument in writing signed by an officer of or other authorized employee of applicable Agent and the applicable required Lenders, and directed to Borrowers specifying such suspension or waiver.

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11.5	Remedies .

The Agents’ and Lenders’ rights and remedies under this Agreement shall be cumulative and nonexclusive of any other rights and remedies that any Agent or any Lender may have under any other agreement, including the other Loan Documents, by operation of law or otherwise. Recourse to the Collateral shall not be required.


11.6	Severability .

Wherever possible, each provision of this Agreement and the other Loan Documents shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement or any other Loan Document shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity without invalidating the remainder of such provision or the remaining provisions of this Agreement or such other Loan Document.


11.7	Conflict of Terms .

Except as otherwise provided in this Agreement or any of the other Loan Documents by specific reference to the applicable provisions of this Agreement, if any provision contained in this Agreement conflicts with any provision in any of the other Loan Documents, the provision contained in this Agreement shall govern and control.


11.8	Confidentiality .

(f) Confidential Information . Each Agent, each L/C Issuer, and each Lender agree to use commercially reasonable efforts (equivalent to the efforts such Agent, such L/C Issuer or such Lender applies to maintaining the confidentiality of its own confidential information) to maintain as confidential all confidential information provided to them by the Sotheby Entities and designated as confidential for a period of two (2) years following receipt thereof, except that any Agent, any L/C Issuer and any Lender may disclose such information (i) to Persons employed or engaged by such Agent, such L/C Issuer or such Lender, or such Agent’s, L/C Issuer’s or Lender’s Affiliates; (ii) to any bona fide assignee or participant or potential assignee or participant that has agreed to be bound by provisions substantially similar to the provisions of this Section 11.8 (and any such bona fide assignee or participant or potential assignee or participant may disclose such information to Persons employed or engaged by them as described in clause (i) above); (iii) as required or requested by any Governmental Authority or reasonably believed by such Agent, such L/C Issuer or such Lender to be compelled by any court decree, subpoena or legal or administrative order or process; (iv) as, on the advice of such Agent’s, such L/C Issuer’s or such Lender’s counsel, is required by law; (v) in connection with the exercise of any right or remedy under the Loan Documents or in connection with any Litigation to which such Agent, such L/C Issuer or such Lender is a party; or (vi) that ceases to be confidential through no fault of any Agent, any L/C Issuer or any Lender. Furthermore, each Credit Party releases any Agent, any L/C Issuer and any Lender from the applicable banking secrecy obligations with regard to the Loan Documents and to any information directly or indirectly relating to the credit relations described in this Agreement to the extent as required for

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the execution, performance and administration of the Loan Documents, and/or for due exercise of the respective rights or fulfillment of the respective obligations by any Agent, any L/C Issuer or any Lender and authorizes the respective party to forward data within its respective jurisdiction and abroad.

(g) Tombstones; League Tables . Each Credit Party consents to the publication by any Agent or any Lender of any press releases, tombstones, advertising or other promotional materials (including, without limitation, via any Electronic Transmission) relating to the financing transactions contemplated by this Agreement using such Credit Party’s name, logo or trademark. Such Agent or such Lender shall provide a draft of any such press release, advertising or other material to Borrower Representative for review and comment prior to the publication thereof. Each Lender hereby consents to the disclosure by each Agent, each Lead Arranger and each Bookrunner of information necessary or customary for inclusion in league table measurements.

(h) Distribution of Materials to Lenders and L/C Issuers . The Credit Parties acknowledge and agree that the Loan Documents and all reports, notices, communications and other information or materials provided or delivered by, or on behalf of, the Credit Parties hereunder (collectively, the “ Borrower Materials ”) may be disseminated by, or on behalf of, any Agent, and made available, to the Lenders and the L/C Issuers by posting such Borrower Materials on an E-System. The Credit Parties authorize each Agent to download copies of their logos from its website and post copies thereof on an E-System.


11.9	GOVERNING LAW .

EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH PARTY HERETO HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK COUNTY, CITY OF NEW YORK, NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE CREDIT PARTIES, THE AGENTS AND LENDERS PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS; PROVIDED , THAT THE AGENTS, THE LENDERS AND THE CREDIT PARTIES ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK COUNTY; PROVIDED FURTHER , THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE ANY AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE

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COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF SUCH AGENT. EACH PARTY HERETO EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH PARTY HERETO HEREBY WAIVES ANY OBJECTION THAT SUCH PARTY MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH PARTY HERETO HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH PARTY AT THE ADDRESS SET FORTH IN ANNEX H OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH PARTY’S ACTUAL RECEIPT THEREOF OR FIVE (5) DAYS AFTER DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID.


11.10	Notices .

(e) Addresses . All notices and other communications required or expressly authorized to be made by this Agreement shall be, (i) in the case of the Borrowers and the Agents addressed to the applicable address(es) set forth on Annex I and (ii) in the case of the Lenders, addressed to the applicable address(es) set forth on the applicable signature page hereto, or addressed to such other address as shall be notified in writing (A) in the case of the Borrower Representative, the Agents and the Swing Line Lender, to the other parties hereto and (B) in the case of all other parties, to Borrower Representative and the Administrative Agent. Each Lender shall notify the Administrative Agent in writing of any changes in the address to which notices to such Lender should be directed, of addresses of its Lending Office, of payment instructions in respect of all payments to be made to it hereunder and of such other administrative information as the Administrative Agent shall reasonably request.

(f) Delivery . All notices and other communications required or expressly authorized to be made by this Agreement shall be delivered in writing. For purposes of this Agreement, “writing” shall include any Electronic Transmission (including posting such notice to Intralinks® (to the extent such system is available and set up by or at the direction of the Administrative Agent prior to posting) in an appropriate location by uploading such notice, demand, request, direction or other communication to www.intralinks.com, faxing such notice to 866-545-6600 with an appropriate bar-code fax coversheet or using such other means of posting to Intralinks® as may be available and reasonably acceptable to the Administrative Agent prior to such posting, or posting or submitting such notice via any other E-System approved by or set up by or at the direction of the Administrative Agent). Notwithstanding anything herein to the contrary, transmissions made by Electronic Transmission shall be permitted only if such transmission is delivered in compliance with procedures of the Administrative Agent applicable at the time and previously communicated to the Borrower Representative.

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(g) Effectiveness . All communications described in clause (a) above and all other notices, demands, requests and other communications made in connection with this Agreement shall be effective and be deemed to have been received (i) if delivered by hand, upon personal delivery, (ii) if delivered by overnight courier service, one (1) Business Day after delivery to such courier service, (iii) if delivered by mail, three (3) Business Days after deposit in the mail, (iv) if delivered by facsimile or E-Fax, upon sender’s receipt of confirmation of proper transmission, and (v) if delivered by Electronic Transmission (other than an E-Fax), on the later of the date of transmission thereof and the date access to such Electronic Transmission is given to the recipient thereof in accordance with the standard procedures applicable to the relevant E-System; provided , however , that no communications to the Administrative Agent pursuant to Article I shall be effective until received by the Administrative Agent.

(h) Electronic Transmissions; E-Systems . Each of the Agents, the Lenders, each Credit Party and each of their Related Persons, is authorized (but not required) to transmit, post or otherwise make or communicate, in its sole discretion, Electronic Transmissions in connection with any Loan Document and the transactions contemplated therein. Each Credit Party and each Secured Party hereto acknowledges and agrees that the use of Electronic Transmissions is not necessarily secure and that there are risks associated with such use, including risks of interception, disclosure and abuse and each indicates it assumes and accepts such risks by hereby authorizing the transmission of Electronic Transmissions. All uses of an E-System shall be governed by and subject to, in addition to this Section 11.10 , the separate terms, conditions and privacy policy posted or referenced in such E-System (or such terms, conditions and privacy policy as may be updated from time to time, including on such E-System) and related contractual obligations executed by the Administrative Agent and Credit Parties in connection with the use of such E-System. Each of the Borrowers, the other Credit Parties and the Secured Parties agrees that the Administrative Agent has no responsibility for maintaining or providing any equipment, software, services or any testing required in connection with any Electronic Transmission or otherwise required for any E-System. The posting, completion and/or submission by any Credit Party of any communication pursuant to an E-System shall constitute a representation and warranty by the Credit Parties that any representation, warranty, certification or other similar statement required by the Loan Documents to be provided, given or made by a Credit Party in connection with any such communication is true, correct and complete in all material respects except as expressly noted in such communication or E-System.

(i) LIMITATION ON LIABILITY . ALL E-SYSTEMS AND ELECTRONIC TRANSMISSIONS SHALL BE PROVIDED “AS IS” AND “AS AVAILABLE”. NONE OF THE AGENTS, ANY LENDER OR ANY OF THEIR RELATED PERSONS WARRANTS THE ACCURACY, ADEQUACY OR COMPLETENESS OF ANY E-SYSTEMS OR ELECTRONIC TRANSMISSION AND DISCLAIMS ALL LIABILITY FOR ERRORS OR OMISSIONS THEREIN. NO WARRANTY OF ANY KIND IS MADE BY THE AGENTS, ANY LENDER OR ANY OF THEIR RELATED PERSONS IN CONNECTION WITH ANY E‑SYSTEMS OR ELECTRONIC COMMUNICATION, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD-PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS.

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(j) Signatures . Subject to the provisions of this Section 11.10 , no Electronic Transmission shall be denied legal effect merely because it is made electronically, each E‑Signature on any such Electronic Transmission shall be deemed sufficient to satisfy any requirement for a “signature” and each such Electronic Transmission shall be deemed sufficient to satisfy any requirement for a “writing”, in each case including pursuant to any Loan Document, any applicable provision of any Code, the federal Uniform Electronic Transactions Act, the Electronic Signatures in Global and National Commerce Act and any substantive or procedural law governing such subject matter. Each such Electronic Transmission that is not readily capable of bearing either a signature or a reproduction of a signature may be signed, and shall be deemed signed, by attaching to, or logically associating with such Electronic Transmission, an E-Signature, upon which the Agents, each other Secured Party and each Credit Party may rely and assume the authenticity thereof. Each such Electronic Transmission containing a signature, a reproduction of a signature or an E-Signature shall, for all intents and purposes, have the same effect and weight as a signed paper original. Each party hereto or beneficiary hereto agrees not to contest the validity or enforceability of any Electronic Transmission or E-Signature on any such Electronic Transmission under the provisions of any applicable law requiring certain documents to be in writing or signed; provided , however , that nothing herein shall limit such party’s or beneficiary’s right to contest whether any Electronic Transmission or E-Signature has been altered after transmission.


11.11	Section Titles .

The Section titles and Table of Contents contained in this Agreement are and shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto.


11.12	Counterparts; Facsimile Signature .

This Agreement may be executed in any number of counterparts and by different parties in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Signature pages may be detached from multiple separate counterparts and attached to a single counterpart. Delivery of an executed signature page of this Agreement by facsimile transmission or Electronic Transmission shall be as effective as delivery of a manually executed counterpart hereof.


11.13	WAIVER OF JURY TRIAL .

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RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG THE AGENTS, THE LENDERS AND ANY CREDIT PARTY ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.


11.14	Press Releases and Related Matters .

Each Credit Party executing this Agreement agrees that neither it nor its Affiliates will in the future issue any press releases or other public disclosure using the name of GE Capital or its affiliates or referring to this Agreement or the other Loan Documents without the prior written consent of GE Capital (not to be unreasonably withheld) unless (and only to the extent that) such Credit Party or Affiliate is required to do so under law and then, in any event, such Credit Party or Affiliate will consult with GE Capital before issuing such press release or other public disclosure. Each Credit Party consents to the publication by any Agent or any Lender of advertising material relating to the financing transactions contemplated by this Agreement using any Borrower’s name, logo or trademark. Each Agent consents to the disclosure by the Credit Parties in their public securities filings and Financial Statements of the identity and role of such Agent under this Agreement. Each Agent reserves the right to provide to industry trade organizations information necessary and customary for inclusion in league table measurements.


11.15	Reinstatement .

This Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against any Credit Party for liquidation or reorganization, should any Credit Party become insolvent or make an assignment for the benefit of any creditor or creditors or should a receiver or trustee be appointed for all or any significant part of any Credit Party’s assets, and shall continue to be effective or to be reinstated, as the case may be, if at any time payment and performance of the Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise (including pursuant to any settlement entered into by a Secured Party in its discretion), all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.


11.16	Advice of Counsel .

Each of the parties represents to each other party hereto that it has discussed this Agreement and, specifically, the provisions of Sections 11.9 and 11.13 , with its counsel.


11.17	No Strict Construction .

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The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement.


11.18	PATRIOT Act .

Each Lender that is subject to the PATRIOT Act and each Agent (for itself and not on behalf of any Lender) hereby notifies Borrowers that pursuant to the requirements of the PATRIOT Act, it is required to obtain, verify and record information that identifies Borrowers, which information includes the name and address of each Borrower and other information that will allow such Lender or such Agent, as applicable, to identify such Borrower in accordance with the PATRIOT Act. Each Borrower shall, promptly following a request by any Agent or any Lender, provide all documentation and other information that such Agent or such Lender requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the PATRIOT Act.


11.19	Creditor-Debtor Relationship .

Any Agent, any Lender or any of their respective Affiliates may have economic interests that conflict with those of the Credit Parties, their equity holders and/or their Affiliates. The relationship between each Agent, each Lender, and each L/C Issuer, on the one hand, and the Credit Parties, on the other hand, is solely that of creditor and debtor. No Secured Party has any fiduciary relationship or duty to any Credit Party arising out of or in connection with, and there is no agency, tenancy or joint venture relationship between the Secured Parties and the Credit Parties by virtue of, any Loan Document or any transaction contemplated therein.

11.20

Restatement . The parties to this Agreement agree that, upon the satisfaction or waiver of each of the conditions precedent set forth in Section 2.1 hereof, on the Restatement Effective Date, the terms and provisions of the Existing Credit Agreement shall be and hereby are amended, superseded and restated in their entirety by the terms and provisions of this Agreement. This Agreement is not intended to and shall not constitute a novation. Upon the effectiveness of this Agreement, all loans made and obligations incurred under the Existing Credit Agreement which are outstanding on the Restatement Effective Date shall continue as Loans and Obligations under (and shall be governed by the terms of) this Agreement and the other Loan Documents. Without limiting the foregoing, upon the effectiveness hereof: (a) all references in the “Loan Documents” (as defined in the Existing Credit Agreement) to the Existing Credit Agreement shall be deemed to refer to this Agreement, (b) Letters of Credit which remain outstanding on the Restatement Effective Date shall continue as Letters of Credit under (and shall be governed by the terms of) this Agreement, (c) all obligations constituting “Obligations” with any Lender or any Affiliate of any Lender which are outstanding on

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the Restatement Effective Date shall continue as Obligations under this Agreement and the other Loan Documents, (d) the liens and security interests in favor of the Collateral Agent for the benefit of the Secured Parties securing payment of the Secured Obligations (and all filings with any Governmental Authority in connection therewith) are in all respects continuing and in full force and effect with respect to all Secured Obligations, (e) the Administrative Agent shall, in consultation with the Borrower Representative, make such reallocations, sales, assignments or other relevant actions in respect of each Lender’s credit and loan exposure under the Existing Credit Agreement as are necessary in the judgment of the Administrative Agent in order that each such Lender’s Loans hereunder reflect such Lender’s Pro Rata Share of the Loans on the Restatement Effective Date, (f) the Credit Parties hereby agree to compensate each Lender for any and all losses, costs and expenses incurred by such Lender in connection with the sale and assignment of any LIBOR Loans and such reallocation described above, in each case on the terms and in the manner set forth in Section 1.14(b) of the Existing Credit Agreement and (g) each of the Credit Parties reaffirms the terms and conditions of the Loan Documents executed by it and acknowledges and agrees that each Loan Document executed by it remains in full force and effect and is hereby ratified, reaffirmed and confirmed.


11.21	New Borrowers . Each of the New Borrowers hereby accedes to this Agreement as a Borrower and agrees to be bound by all of the terms, provisions and conditions of this Agreement (including, without limitation, the provisions of Section 12 hereto).

12. CROSS-GUARANTY


12.1	Cross-Guaranty .

Each Domestic Borrower hereby agrees that such Domestic Borrower is jointly and severally liable for, and hereby absolutely and unconditionally guarantees to the Agents and Lenders and their respective successors and assigns, the full and prompt payment (whether at stated maturity, by acceleration or otherwise) and performance of, all Secured Obligations owed or hereafter owing to the Agents and Lenders by each other Domestic Borrower and each Foreign Borrower. Each Foreign Borrower hereby agrees that such Foreign Borrower is jointly and severally liable for, and hereby absolutely and unconditionally guarantees to the Agents and Lenders and their respective successors and assigns, the full and prompt payment (whether at stated maturity, by acceleration or otherwise) and performance of, all Secured Obligations owed or hereafter owing to the Agents and Lenders by each other Foreign Borrower; it being understood that the Foreign Borrowers shall have no liability, direct or indirect, for the Secured Obligations of the Domestic Borrowers or the other Domestic Credit Parties hereunder or under any of the Loan Documents. Each Borrower agrees that its guaranty obligation hereunder is a continuing guaranty of payment and performance and not of collection, that its obligations under

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this Section 12 shall not be discharged until payment and performance, in full, of the Secured Obligations (in the case of any Domestic Borrower) or the Secured Obligations of the Foreign Borrowers (in the case of any Foreign Borrower) has occurred, and that its obligations under this Section 12 shall be absolute and unconditional, irrespective of, and unaffected by,

(i) the genuineness, validity, regularity, enforceability or any future amendment of, or change in, this Agreement, any other Loan Document or any other agreement, document or instrument to which any Borrower is or may become a party;

(j) the absence of any action to enforce this Agreement (including this Section 12 ) or any other Loan Document or the waiver or consent by the Agents and Lenders with respect to any of the provisions thereof;

(k) the existence, value or condition of, or failure to perfect its Lien against, any security for the Secured Obligations or any action, or the absence of any action, by the Agents and Lenders in respect thereof (including the release of any such security);

(l) the insolvency of any Sotheby Entity; or

(m) any other action or circumstances that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor.

Each Domestic Borrower shall be regarded, and shall be in the same position, as principal debtor with respect to the Secured Obligations guaranteed hereunder. Each Foreign Borrower shall be regarded, and shall be in the same position, as principal debtor with respect to the Secured Obligations of the other Foreign Borrower guaranteed hereunder.


12.2	Waivers by Borrowers .

Each Borrower expressly waives all rights it may have now or in the future under any statute, or at common law, or at law or in equity, or otherwise, to compel the Agents or Lenders to marshal assets or to proceed in respect of the Secured Obligations guaranteed hereunder by such Borrower against any other Credit Party, any other party or against any security for the payment and performance of such Secured Obligations before proceeding against, or as a condition to proceeding against, such Borrower. It is agreed among each Borrower, the Agents and Lenders that the foregoing waivers are of the essence of the transaction contemplated by this Agreement and the other Loan Documents and that, but for the provisions of this Section 12 and such waivers, the Agents and Lenders would decline to enter into this Agreement.


12.3	Benefit of Guaranty .

Each Borrower agrees that the provisions of this Section 12 are for the benefit of the Agents and Lenders and their respective successors, transferees, endorsees and assigns, and nothing herein contained shall impair, as between any other Borrower and the Agents or Lenders, the obligations of such other Borrower under the Loan Documents.

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12.4	Waiver of Subrogation, Etc .

Notwithstanding anything to the contrary in this Agreement or in any other Loan Document, and except as set forth in the Domestic Guaranty and Security Agreement, each Borrower hereby expressly and irrevocably waives any and all rights at law or in equity to subrogation, reimbursement, exoneration, contribution, indemnification or set off and any and all defenses available to a surety, guarantor or accommodation co-obligor. Each Borrower acknowledges and agrees that this waiver is intended to benefit the Agents and Lenders and shall not limit or otherwise affect such Borrower’s liability hereunder or the enforceability of this Section 12 , and that the Agents, Lenders and their respective successors and assigns are intended third party beneficiaries of the waivers and agreements set forth in this Section 12.4 .


12.5	Subordination by Credit Parties .

Each Credit Party agrees that any and all claims of such Credit Party against any other Borrower or any Guarantor (each an “ Obligor ”) with respect to any “Intercompany Indebtedness” (as hereinafter defined), any endorser, obligor or any other guarantor of all or any part of the Secured Obligations, or against any of its properties shall be subordinate and subject in right of payment to the prior payment, in full and in cash, of all Secured Obligations of (i) in the case of the Foreign Credit Parties, such Obligors that are Foreign Credit Parties and (ii) in the case of the Domestic Credit Parties, the Borrowers and the Guarantors, in each case now existing or hereafter arising, including, without limitation, all such Secured Obligations arising after the filing of a petition in bankruptcy under the Bankruptcy Code, regardless of whether or not allowed under such case or proceeding; provided , however , that Intercompany Indebtedness may be repaid in the ordinary course of the Credit Parties’ businesses; provided , further , however , that following the occurrence and continuance of an Event of Default and the Collateral Agent’s notice to the Credit Parties of the Collateral Agent’s exercise of its rights under this paragraph, all such payments with respect to the Intercompany Indebtedness shall be paid directly to the Collateral Agent for application to the Secured Obligations in accordance with the terms of the Loan Documents. Notwithstanding any right of any Credit Party to ask, demand, sue for, take or receive any payment from any Obligor, all rights, liens and security interests of such Credit Party, whether now or hereafter arising and howsoever existing, in any assets of any other Obligor shall be and are subordinated to the rights of the Agents and the Lenders in those assets, it being understood and agreed that the Agents and the Lenders shall have no right to use assets of an Obligor that constitutes a Foreign Credit Party in support of Secured Obligations of the Domestic Credit Parties. No Credit Party shall have any right to possession of any such asset or to foreclose upon any such asset, whether by judicial action or otherwise, until the Termination Date (in the case of the assets of any Obligor that is a Domestic Credit Party) or the Foreign Obligations Termination Date (in the case of the assets of any Obligor that is a Foreign Credit Party). If all or any part of the assets of any Obligor, or the proceeds thereof, are subject to any distribution, division or application to the creditors of such Obligor, whether partial or complete, voluntary or involuntary, and whether by reason of liquidation, bankruptcy, arrangement, receivership, assignment for the benefit of creditors or any analogous procedure or step in any jurisdiction or any other action or proceeding, or if the business of any such Obligor is dissolved or if substantially all of the assets of any such Obligor are sold, then, and in any such event (such

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events being herein referred to as an “ Insolvency Event” ), any payment or distribution of any kind or character, either in cash, securities or other property, which shall be payable or deliverable upon or with respect to any indebtedness of any Obligor to any Credit Party (“ Intercompany Indebtedness ”) shall be paid or delivered directly to the Collateral Agent for application to the Secured Obligations in accordance with the Loan Documents (but limited, in the case of any Foreign Credit Party, to the Secured Obligations of the Foreign Borrowers). Should any payment, distribution, security or instrument or proceeds thereof be received by the applicable Credit Party upon or with respect to such Intercompany Indebtedness after any Insolvency Event and prior to the Termination Date (in the case of any Intercompany Indebtedness of a Domestic Credit Party) or the Foreign Obligations Termination Date (in the case of any Intercompany Indebtedness of a Foreign Credit Party), such Credit Party shall receive and hold the same in trust, as trustee, for the benefit of the Agents and the Lenders and shall forthwith deliver the same to the Collateral Agent in precisely the form received (except for the endorsement or assignment of such Credit Party where necessary), for application to the Secured Obligations in accordance with the Loan Documents (but limited, in the case of any Foreign Credit Party, to the Secured Obligations of the Foreign Borrowers), and, until so delivered, the same shall be held in trust by such Credit Party as the property of the Agents and the Lenders. If any such Credit Party fails to make any such endorsement or assignment to any Agent, such Agent or any of its officers or employees is irrevocably authorized to make the same. Each Credit Party agrees that until the Termination Date (in the case of any claim against an Obligor that is a Domestic Credit Party) or the Foreign Obligations Termination Date (in the case of any claim against an Obligor that is a Foreign Credit Party), such Credit Party will not assign or transfer to any Person (other than the Collateral Agent, a Credit Party or another Guarantor in accordance with the terms of the Loan Documents) any claim such Credit Party has or may have against any Obligor. It is understood and agreed that, notwithstanding anything to the contrary set forth in this Section 12.5 , no Foreign Credit Party shall have any obligation to any Agent or any Lender with respect to any Secured Obligations of any Domestic Credit Party.


12.6	Election of Remedies .

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such Borrower. In the event any Agent or any Lender shall bid at any foreclosure or trustee’s sale or at any private sale permitted by law or the Loan Documents, such Agent or such Lender may bid all or less than the amount of the Secured Obligations and the amount of such bid need not be paid by such Agent or such Lender but shall be credited against the Secured Obligations. The amount of the successful bid at any such sale, whether any Agent, any Lender or any other party is the successful bidder, shall be conclusively deemed to be the fair market value of the Collateral and the difference between such bid amount and the remaining balance of the Secured Obligations shall be conclusively deemed to be the amount of the Secured Obligations guaranteed by the applicable Borrowers under this Section 12 , notwithstanding that any present or future law or court decision or ruling may have the effect of reducing the amount of any deficiency claim to which any Agent or any Lender might otherwise be entitled but for such bidding at any such sale.


12.7	Liability Cumulative .

The liability of Borrowers under this Section 12 is in addition to and shall be cumulative with all liabilities of each Borrower to the Agents and Lenders under this Agreement and the other Loan Documents to which such Borrower is a party or in respect of any Secured Obligations or obligation of the other Borrowers, without any limitation as to amount, unless the instrument or agreement evidencing or creating such other liability specifically provides to the contrary.

[ Remainder of page intentionally left blank. ]

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IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first written above.



SOTHEBY’S , a Delaware corporation	OATSHARE LIMITED


By: /s/ Michael L. Gillis	By: /s/ Clive Lord
Name: Michael L. Gillis	Name: Clive Lord
Title: Vice President and Treasurer	Title: Director

SOTHEBY’S, INC.	SOTHEBY’S , a company registered in England


By: /s/ Michael L. Gillis	By: /s/ Clive Lord
Name: Michael L. Gillis	Name: Clive Lord
Title: Vice President and Treasurer	Title: Director

SOTHEBY’S FINANCIAL SERVICES, INC.	SOTHEBY’S HONG KONG LIMITED
SOTHEBY’S FINANCIAL SERVICES CALIFORNIA, INC.
OBERON, INC.	By: /s/ Henry Li
SOTHEBY’S VENTURES, LLC	Name: Henry Li
SOTHEBY’S FINANCIAL SERVICES LIMITED	Title: Director

By: /s/ Michael L. Gillis
Name: Michael L. Gillis
Title: Vice President and Treasurer

Signature Page to Amended and Restated Credit Agreement

(Auction Revolving Credit Facility)



	GENERAL ELECTRIC CAPITAL CORPORATION , as Administrative Agent, Collateral Agent, and a Lender


	By: /s/ Dritar Vinca
	Dritar Vinca
	Duly Authorized Signatory

Signature Page to Amended and Restated Credit Agreement

(Auction Revolving Credit Facility)

[OTHER LENDERS], as a Lender

By:

Name:

Title:

Address for notices:



Attn:
Facsimile:

Lending office:

Signature Page to Amended and Restated Credit Agreement

(Auction Revolving Credit Facility)

The following Persons are signatories to this Agreement in their capacity as Credit Parties and not as Borrowers.

SOTHEBY’S FINE ART HOLDINGS, INC.

SOTHEBY’S RES, INC.

SPTC, INC.

SOTHEBY PARKE BERNET, INC.

YORK AVENUE DEVELOPMENT, INC.

SOTHEBY’S THAILAND, INC.

SOTHEBY’S HOLDINGS INTERNATIONAL, INC.

SOTHEBY’S NEVADA, INC.

SOTHEBYS.COM LLC

SOTHEBYS.COM AUCTIONS, INC.

SIBS, LLC

72ND AND YORK, INC.

THETA, INC.

CATALOGUE DISTRIBUTION COMPANY LIMITED

NOORTMAN MASTER PAINTINGS LTD.

SOTHEBY’S SHIPPING LIMITED

YORK UK HOLDCO INTERNATIONAL LIMITED

YORK HOLDINGS INTERNATIONAL, INC.

By: /s/ Michael L. Gillis

Name: Michael L. Gillis

Title: Vice President and Treasurer

SOTHEBY’S WINE HONG KONG LIMITED

By: /s/ Henry Li

Name: Henry Li

Title: Director

Signature Page to Amended and Restated Credit Agreement

(Auction Revolving Credit Facility)

ANNEX A ( Recitals )
to
CREDIT AGREEMENT

DEFINITIONS

Capitalized terms used in the Loan Documents shall have (unless otherwise provided elsewhere in the Loan Documents) the following respective meanings, and all references to Sections, Exhibits, Schedules or Annexes in the following definitions shall refer to Sections, Exhibits, Schedules or Annexes of or to the Agreement:

“ Acceptable Cash Equivalents ” has the meaning ascribed to it in Annex B .

“ Account Debtor ” means any Person who may become obligated to any Sotheby Entity under, with respect to, or on account of, an Account (including, without limitation, an Art Loan or Extended Term Art Receivable), Chattel Paper or General Intangibles (including a payment intangible).

“ Accounting Changes ” has the meaning ascribed thereto in Annex G .

“ Accounts ” means all “accounts,” as such term is defined in the Code, now owned or hereafter acquired by any Sotheby Entity, including (a) all accounts receivable, other receivables, book debts and other forms of obligations (other than forms of obligations evidenced by Chattel Paper or Instruments), (including any such obligations that may be characterized as an account under the Code), (b) all of each Sotheby Entity’s rights in, to and under all purchase orders or receipts for goods or services, (c) all of each Sotheby Entity’s rights to any goods represented by any of the foregoing (including unpaid sellers’ rights of rescission, replevin, reclamation and stoppage in transit and rights to returned, reclaimed or repossessed goods), (d) all rights to payment due to any Sotheby Entity for property sold, leased, licensed, assigned or otherwise disposed of, for a policy of insurance issued or to be issued, for a secondary obligation incurred or to be incurred, for energy provided or to be provided, for the use or hire of a vessel under a charter or other contract, arising out of the use of a credit card or charge card, or for services rendered or to be rendered by such Sotheby Entity or in connection with any other transaction (whether or not yet earned by performance on the part of such Sotheby Entity), (e) all health care insurance receivables and (f) all collateral security of any kind, given by any Account Debtor or any other Person with respect to any of the foregoing.

“ Activation Event ” shall mean, as of any date when the aggregate Revolving Loan then outstanding and the aggregate Swing Line Loan then outstanding, in the aggregate, shall be greater than zero, the occurrence of either of the following: (i) an Event of Default shall have occurred and shall have been continuing for at least three (3) Business Days as of such date or (ii) the Liquidity Amount shall be less than $133,500,000 as of such date.

“ Activation Notice ” means a notice from the Collateral Agent given to a Relationship Bank on or after the occurrence of an Activation Event pursuant to a Blocked Account Agreement, under which Blocked Account Agreement such Relationship Bank shall

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have agreed to honor instructions solely received from the Collateral Agent concerning the related Blocked Account(s) upon the receipt of such notice.

“ Administrative Agent ” means GE Capital, in its capacity as Administrative Agent, or its successor appointed pursuant to Section 9.7(a) .

“ Advance ” means any Auction Dollar Tranche Revolving Credit Advance, Auction Multicurrency Tranche Revolving Credit Advance, Incremental Revolving Credit Advance, Auction Dollar Tranche Swing Line Advance or Auction Multicurrency Tranche Swing Line Advance, as the context may require.

“ Affiliate ” means, with respect to any Person, (a) each Person that, directly or indirectly, owns or Controls, whether beneficially, or as a trustee, guardian or other fiduciary, 5% or more of the Stock having ordinary voting power in the election of directors of such Person, (b) each Person that Controls, is Controlled by or is under common Control with such Person, (c) each of such Person’s executive officers (as such term is defined in the rules of the Securities and Exchange Commission), directors, joint venturers and partners and (d) in the case of Borrowers, the immediate family members, spouses and lineal descendants of individuals who are Affiliates of any Borrower; provided , however , that the term “ Affiliate ” shall specifically exclude each Agent and each Lender.

“ Agents ” means, collectively, the Administrative Agent and the Collateral Agent.

“ Agreement ” means the Amended and Restated Credit Agreement, dated as of the Restatement Effective Date, by and among the Borrowers, the other Sotheby Entities party thereto, GE Capital, as the Administrative Agent, the Collateral Agent and a Lender, and the other Lenders from time to time party thereto, as the same may be amended, supplemented, restated or otherwise modified from time to time.

“ Aggregate Borrowing Availability ” means, as of any date of determination, the lesser of (a) an amount equal to (i) the Maximum Auction Amount plus the Maximum Incremental Amount plus the “Maximum Amount” under the SFS Revolving Credit Agreement minus (ii) the sum of the aggregate Revolving Loan then outstanding plus the aggregate “Revolving Loan” then outstanding under the SFS Revolving Credit Agreement minus (iii) the sum of the aggregate Swing Line Loan then outstanding plus the aggregate “Swing Line Loan” then outstanding under the SFS Revolving Credit Agreement and (b) an amount equal to the sum of (i) the Domestic Auction Borrowing Availability as of such date plus (ii) the Domestic Incremental Borrowing Availability as of such date plus (iii) the Foreign Auction Borrowing Availability as of such date plus (iv) the Foreign Incremental Borrowing Availability as of such date plus (v) the “Domestic Borrowing Availability” as of such date under the SFS Revolving Credit Agreement plus (vi) the “Foreign Borrowing Availability” as of such date under the SFS Revolving Credit Agreement.

“ Alternative Art Loan Currency ” means any currency approved by the Administrative Agent (other than Dollars, Canadian Dollars, Hong Kong Dollars, Sterling, Euros or Swiss Francs); provided , that no currency shall be an Alternative Art Loan Currency if it is not

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freely transferable and freely convertible into Dollars, Hong Kong Dollars and Sterling in the London foreign exchange market as determined by the Administrative Agent.

“ Alternative L/C Currency ” means any currency approved by the L/C Issuer with respect to the incurrence of Letter of Credit Obligations in such currency (other than Dollars, Hong Kong Dollars, Sterling, Euros or Swiss Francs); provided , that no currency shall be an Alternative L/C Currency if it is not freely transferable and freely convertible into Dollars, Sterling and Hong Kong Dollars in the London foreign exchange market as determined by the L/C Issuer.

“ Amendment No. 1 Effective Date ” means June 15, 2015.

“ Appendices ” has the meaning ascribed to it in the recitals to the Agreement.

“ Applicable Auction Dollar Revolver Index Margin ” means the per annum interest rate margin from time to time in effect and payable in addition to the Dollar Index Rate applicable to the Auction Revolving Loan, as determined by reference to Section 1.5(a) .

“ Applicable Auction Dollar Revolver LIBOR Margin ” means the per annum interest rate from time to time in effect and payable in addition to the Dollar LIBOR Rate applicable to the Auction Revolving Loan, as determined by reference to Section 1.5(a) .

“ Applicable Auction Unused Line Fee Margin ” means the per annum fee from time to time in effect and payable with respect to unused available funds in accordance with Section 1.10(b) , as such fee is determined by reference to Section 1.5(a) .

“ Applicable Euro Revolver Index Margin ” means the per annum interest rate margin from time to time in effect and payable in addition to the Euro Index Rate applicable to the Auction Revolving Loan, as determined by reference to Section 1.5(a) .

“ Applicable Euro Revolver LIBOR Margin ” means the per annum interest rate from time to time in effect and payable in addition to the Euro LIBOR Rate applicable to the Auction Revolving Loan, as determined by reference to Section 1.5(a) .

“ Applicable Hong Kong Dollar Revolver Index Margin ” means the per annum interest rate margin from time to time in effect and payable in addition to the Hong Kong Dollar Index Rate applicable to Swing Line Loans, as determined by reference to Section 1.5(a) .

“ Applicable Hong Kong Dollar Revolver LIBOR Margin ” means the per annum interest rate from time to time in effect and payable in addition to the Hong Kong Dollar LIBOR Rate applicable to the Auction Revolving Loan, as determined by reference to Section 1.5(a) .

“ Applicable Incremental Dollar Revolver Index Margin ” means the per annum interest rate margin payable in addition to the Dollar Index Rate applicable to the Incremental Revolving Credit Advances, as set forth in Section 1.5(a) .

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“ Applicable Incremental Dollar Revolver LIBOR Margin ” means the per annum interest rate payable in addition to the Dollar LIBOR Rate applicable to the Incremental Revolving Credit Advances, as set forth in Section 1.5(a) .

“ Applicable Incremental Unused Line Fee Margin ” means the per annum fee payable with respect to unused available funds in accordance with Section 1.10(b) , as set forth in Section 1.5(a) .

“ Applicable L/C Margin ” means the per annum fee from time to time in effect and payable with respect to outstanding Letter of Credit Obligations, as determined by reference to Section 1.5(a) .

“ Applicable Margins ” means collectively the Applicable L/C Margin, the Applicable Auction Unused Line Fee Margin, the Applicable Incremental Unused Line Fee Margin, the Applicable Auction Dollar Revolver Index Margin, the Applicable Auction Dollar Revolver LIBOR Margin, the Applicable Incremental Dollar Revolver Index Margin, the Applicable Incremental Dollar Revolver LIBOR Margin, the Applicable Sterling Revolver Index Margin, the Applicable Sterling Revolver LIBOR Margin, the Applicable Euro Revolver Index Margin, the Applicable Euro Revolver LIBOR Margin, the Applicable Hong Kong Dollar Revolver Index Margin and the Applicable Hong Kong Dollar Revolver LIBOR Margin.

“ Applicable Sterling Revolver Index Margin ” means the per annum interest rate margin from time to time in effect and payable in addition to the Sterling Index Rate applicable to Swing Line Loans, as determined by reference to Section 1.5(a) .

“ Applicable Sterling Revolver LIBOR Margin ” means the per annum interest rate from time to time in effect and payable in addition to the Sterling LIBOR Rate applicable to the Auction Revolving Loan, as determined by reference to Section 1.5(a) .

“ Approved Fund ” means, with respect to any Lender, any Person (other than a natural Person) that (a) (i) is engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of business or (ii) temporarily warehouses loans for any Lender or any Person described in clause (i) above and (b) is administered or managed by (i) such Lender, (ii) any Affiliate of such Lender or (iii) any Person (other than an individual) or any Affiliate of any Person (other than an individual) that administers or manages such Lender.

“ Art Inventory ” means all Inventory of Borrowers consisting of Works of Art.

“ Art Inventory Report ” means a report to be delivered from time to time by Borrowers in the form attached to the Agreement as Exhibit 4.1(C) .

“ Art Loan Debtor ” means an Account Debtor liable on an Art Loan.

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“ Art Loan/Inventory Joint Ventures ” means any joint ventures, profit/loss sharing arrangements, or similar contractual arrangements entered into by any Borrower in the ordinary course of business in connection with any Art Inventory or Art Loan.

“ Art Loan Receivables Report ” means a report to be delivered from time to time by the Borrowers in the form attached to the Agreement as Exhibit 4.1(B) .

“ Art Loans ” shall mean loans made by the Borrowers to customers of Parent and its Subsidiaries to finance the purchase or carrying of, or in anticipation of the potential sale of, or secured by, Works of Art.

“ Art Loss Register ” means The Art Loss Register, a computerized international database which captures information about lost and stolen art, antiques and collectibles.

“ Assignment Agreement ” has the meaning ascribed to it in Section 9.1(a) .

“ Auction Advances ” means, collectively, Auction Dollar Tranche Advances and Auction Multicurrency Tranche Advances.

“ Auction Commitments ” means, collectively, the Auction Dollar Tranche Commitments and the Auction Multicurrency Tranche Commitments.

“ Auction Commitment Termination Date ” means the earliest of (a) August 22, 2020, (b) the date of termination of the Auction Lenders’ obligations to make Auction Advances and to incur Letter of Credit Obligations or permit existing Auction Advances and Letter of Credit Obligations to remain outstanding pursuant to Section 8.2(b) , (c) the date of (i) indefeasible prepayment in full by Borrowers of the Auction Loans and all other outstanding Obligations and the cancellation and return (or stand-by guarantee) of all Letters of Credit or the cash collateralization of all Letter of Credit Obligations pursuant to Annex B and (ii) the permanent reduction of all Auction Commitments to zero dollars ($0) and (d) the “Commitment Termination Date” (as defined in the SFS Revolving Credit Agreement).

“ Auction Dollar Tranche Advance ” means any Auction Dollar Tranche Revolving Credit Advance or Auction Dollar Tranche Swing Line Advance, as the context may require.

“ Auction Dollar Tranche Commitments ” means (a) as to any Lender, the commitment of such Lender to make Auction Dollar Tranche Revolving Credit Advances, incur Auction Dollar Tranche Letter of Credit Obligations or purchase participations therein as set forth on Annex J to the Agreement or in the most recent Assignment Agreement executed by such Lender (including without duplication the Swing Line Lender’s Auction Dollar Tranche Swing Line Commitment as a subset of its Auction Dollar Tranche Commitment) and (b) as to all Lenders, the aggregate commitment of all Lenders to make Auction Dollar Tranche Revolving Credit Advances, incur Auction Dollar Tranche Letter of Credit Obligations or purchase participations therein (including without duplication the Swing Line Lender’s Auction Dollar Tranche Swing Line Commitment as a subset of its Auction Dollar Tranche Commitment), which aggregate commitment shall be Two Hundred Million Dollars ($200,000,000) on the Amendment

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No. 1 Effective Date, in each case, as such amount may be reduced or adjusted from time to time in accordance with the Agreement.

“ Auction Dollar Tranche Lenders ” means, as of any date, Lenders having an Auction Dollar Tranche Commitment as of such date or, if the Auction Dollar Tranche Commitments have terminated or expired, Lenders holding any Auction Dollar Tranche Loans as of such date.

“ Auction Dollar Tranche Letter of Credit Obligations ” means all outstanding obligations incurred by the Administrative Agent and Auction Dollar Tranche Lenders at the request of Borrower Representative, whether direct or indirect, contingent or otherwise, due or not due, in connection with the issuance of Auction Dollar Tranche Letters of Credit by GE Capital or another L/C Issuer or the purchase of a participation as set forth in Annex B with respect to any Auction Dollar Tranche Letter of Credit. The amount of such Auction Dollar Tranche Letter of Credit Obligations shall equal the maximum amount that may be payable at such time or at any time thereafter by the Auction Dollar Tranche Lenders thereupon or pursuant thereto.

“ Auction Dollar Tranche Letters of Credit ” means documentary or standby letters of credit issued for the account of any Borrower (and any Subsidiary thereof that may be a co-applicant on any such Letter of Credit) by any L/C Issuer, and bankers’ acceptances issued by any Borrower, for which the Administrative Agent and Auction Dollar Tranche Lenders have incurred Auction Dollar Tranche Letter of Credit Obligations.

“ Auction Dollar Tranche Loans ” means the Auction Dollar Tranche Revolving Loan and the Auction Dollar Tranche Swing Line Loan.

“ Auction Dollar Tranche Revolving Credit Advance ” has the meaning ascribed to it in Section 1.1(a)(i) .

“ Auction Dollar Tranche Revolving Loan ” and “ Auction Dollar Tranche Revolving Loan Outstandings ” mean, at any time, the sum of (i) the aggregate amount of Auction Dollar Tranche Revolving Credit Advances outstanding to the Borrowers plus (ii) the aggregate Auction Dollar Tranche Letter of Credit Obligations incurred on behalf of the Borrowers. Unless the context otherwise requires, references to the outstanding principal balance of the Auction Dollar Tranche Revolving Loan shall include the outstanding balance of Auction Dollar Tranche Letter of Credit Obligations.

“ Auction Dollar Tranche Swing Line Advance ” has the meaning ascribed to it in Section 1.1(c)(i) .

“ Auction Dollar Tranche Swing Line Availability ” means, as of any date of determination, the least of (a) the Auction Dollar Tranche Swing Line Commitment, (b) an amount equal to (i) the Maximum Dollar Tranche Amount minus (ii) the aggregate Auction Dollar Tranche Revolving Loan then outstanding and (c) an amount equal to (i) the Domestic Auction Borrowing Base as of such date minus (ii) the aggregate outstanding principal balance

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of the Auction Revolving Credit Advances made to the Domestic Borrowers as of such date minus (iii) the aggregate principal balance of Auction Multicurrency Tranche Swing Line Advances outstanding to the Borrowers minus (iv) the Dollar Equivalent of the aggregate Letter of Credit Obligations incurred on behalf of the Domestic Borrowers as of such date.

“ Auction Dollar Tranche Swing Line Commitment ” means the commitment of the Swing Line Lender to make Auction Dollar Tranche Swing Line Advances as set forth on Annex J to the Agreement, which commitment constitutes a subfacility of the Auction Dollar Tranche Commitment.

“ Auction Dollar Tranche Swing Line Loan ” means, as the context may require, at any time, the aggregate amount of Auction Dollar Tranche Swing Line Advances outstanding to any Borrower or to all Borrowers.

“ Auction Guaranty Side Letter ” shall mean that certain amended and restated letter agreement, by and among the Administrative Agent, the “Administrative Agent” under the SFS Revolving Credit Agreement and the Credit Parties, dated as of the Restatement Effective Date, relating to auction guaranties, as the same may be amended, restated, supplemented or otherwise modified from time to time.

“ Auction Lenders ” means, collectively, the Auction Dollar Tranche Lenders and the Auction Multicurrency Tranche Lenders.

“ Auction Loans ” means the Auction Revolving Loan and the Swing Line Loan.

“ Auction Multicurrency Tranche Advance ” means any Auction Multicurrency Tranche Revolving Credit Advance or Auction Multicurrency Tranche Swing Line Advance, as the context may require.

“ Auction Multicurrency Tranche Commitments ” means (a) as to any Lender, the commitment of such Lender to make Auction Multicurrency Tranche Revolving Credit Advances, incur Auction Multicurrency Tranche Letter of Credit Obligations or purchase participations therein as set forth on Annex J to the Agreement or in the most recent Assignment Agreement executed by such Lender (including without duplication the Swing Line Lender’s Auction Multicurrency Tranche Swing Line Commitment as a subset of its Auction Multicurrency Tranche Commitment) and (b) as to all Lenders, the aggregate commitment of all Lenders to make Auction Multicurrency Tranche Revolving Credit Advances, incur Auction Multicurrency Tranche Letter of Credit Obligations or purchase participations therein (including without duplication the Swing Line Lender’s Auction Multicurrency Tranche Swing Line Commitment as a subset of its Auction Multicurrency Tranche Commitment), which aggregate commitment shall be Fifty Million Dollars ($50,000,000) on the Amendment No. 1 Effective Date, in each case, as such amount may be reduced or adjusted from time to time in accordance with the Agreement.

“ Auction Multicurrency Tranche Lenders ” means, as of any date, Lenders having an Auction Multicurrency Tranche Commitment as of such date or, if the Auction Multicurrency

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Tranche Commitments have terminated or expired, Lenders holding any Auction Multicurrency Tranche Loans as of such date.

“ Auction Multicurrency Tranche Letter of Credit Obligations ” means all outstanding obligations incurred by the Administrative Agent and Auction Multicurrency Tranche Lenders at the request of Borrower Representative, whether direct or indirect, contingent or otherwise, due or not due, in connection with the issuance of Auction Multicurrency Tranche Letters of Credit by GE Capital or another L/C Issuer or the purchase of a participation as set forth in Annex B with respect to any Auction Multicurrency Tranche Letter of Credit. The amount of such Auction Multicurrency Tranche Letter of Credit Obligations shall equal the maximum amount that may be payable at such time or at any time thereafter by the Auction Multicurrency Tranche Lenders thereupon or pursuant thereto.

“ Auction Multicurrency Tranche Letters of Credit ” means documentary or standby letters of credit issued for the account of any Borrower (and any Subsidiary thereof that may be a co-applicant on any such Letter of Credit) by any L/C Issuer, and bankers’ acceptances issued by any Borrower, for which the Administrative Agent and Auction Multicurrency Tranche Lenders have incurred Auction Multicurrency Tranche Letter of Credit Obligations.

“ Auction Multicurrency Tranche Loans ” means the Auction Multicurrency Tranche Revolving Loan and the Auction Multicurrency Tranche Swing Line Loan.

“ Auction Multicurrency Tranche Revolving Credit Advance ” has the meaning ascribed to it in Section 1.1(a)(i) .

“ Auction Multicurrency Tranche Revolving Loan ” and “ Auction Multicurrency Tranche Revolving Loan Outstandings ” mean, at any time, the sum of (i) the Dollar Equivalent of the aggregate amount of Auction Multicurrency Tranche Revolving Credit Advances outstanding to the Borrowers plus (ii) the Dollar Equivalent of the aggregate Auction Multicurrency Tranche Letter of Credit Obligations incurred on behalf of the Borrowers. Unless the context otherwise requires, references to the outstanding principal balance of the Auction Multicurrency Tranche Revolving Loan shall include the outstanding balance of Auction Multicurrency Tranche Letter of Credit Obligations.

“ Auction Multicurrency Tranche Swing Line Advance ” has the meaning ascribed to it in Section 1.1(c)(i) .

“ Auction Multicurrency Tranche Swing Line Availability ” means, as of any date of determination, the least of (a) the Auction Multicurrency Tranche Swing Line Commitment, (b) an amount equal to (i) the Maximum Multicurrency Tranche Amount minus (ii) the aggregate Auction Multicurrency Tranche Revolving Loan then outstanding and (c) an amount equal to (i) the Domestic Auction Borrowing Base as of such date minus (ii) the aggregate outstanding principal balance of the Auction Revolving Credit Advances made to the Domestic Borrowers as of such date minus (iii) the aggregate principal balance of Auction Dollar Tranche Swing Line Advances outstanding to the Borrowers minus (iv) the Dollar Equivalent of the aggregate Letter of Credit Obligations incurred on behalf of the Domestic Borrowers as of such date.

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“ Auction Multicurrency Tranche Swing Line Commitment ” means the commitment of the Swing Line Lender to make Auction Multicurrency Tranche Swing Line Advances as set forth on Annex J to the Agreement, which commitment constitutes a subfacility of the Auction Multicurrency Tranche Commitment.

“ Auction Multicurrency Tranche Swing Line Loan ” means, as the context may require, at any time, the aggregate amount of Auction Multicurrency Tranche Swing Line Advances outstanding to any Borrower or to all Borrowers.

“ Auction Revolving Credit Advance ” means an Auction Dollar Tranche Revolving Credit Advance or an Auction Multicurrency Tranche Revolving Credit Advance.

“ Auction Revolving Loan ” and “ Auction Revolving Loan Outstandings ” mean, at any time, the sum of the Auction Dollar Tranche Revolving Loan plus the Auction Multicurrency Tranche Revolving Loan.

“ Auction Revolving Note ” has the meaning ascribed to it in Section 1.1(a)(ii) .

“ Automobile Work of Art ” means Work of Art that constitutes one or more automobiles.

“ Automobile Work of Art Component ” means the sum of, without duplication, of:

(i) (A) to the extent included in the product of the calculation of clause (a) of the definition of “Domestic Auction Borrowing Base,” the Dollar Equivalent of the aggregate outstanding principal balance of all Eligible Art Loans secured by Automobile Works of Art plus (B) to the extent included in the product of the calculation of clause (a) of the definition of “Domestic Borrowing Base” in the SFS Revolving Credit Agreement, the Dollar Equivalent of the aggregate outstanding principal balance of all “Eligible Art Loans” (as defined in the SFS Revolving Credit Agreement) secured by “Automobile Works of Art” (as defined in the SFS Revolving Credit Agreement), plus

(ii) (A) to the extent included in the product of the calculation of clause (a) of the definition of “Foreign Auction Borrowing Base,” the Dollar Equivalent of the aggregate outstanding principal balance of all Eligible Art Loans secured by Automobile Works of Art plus (B) to the extent included in the product of the calculation of clause (a) of the definition of “Foreign Borrowing Base” in the SFS Revolving Credit Agreement, the Dollar Equivalent of the aggregate outstanding principal balance of all “Eligible Art Loans” (as defined in the SFS Revolving Credit Agreement) secured by “Automobile Works of Art” (as defined in the SFS Revolving Credit Agreement) plus

(iii) to the extent included in the product of the calculation thereof, the Domestic Eligible Art Inventory Component attributable to Automobile Works of Art plus

(iv) to the extent included in the product of the calculation thereof, the Foreign Auction Art Inventory Component attributable to Automobile Works of Art plus

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(v) to the extent included in the product of the calculation thereof, the Domestic Incremental Art Inventory Component attributable to Automobile Works of Art plus

(vi) to the extent included in the product of the calculation thereof, the Foreign Incremental Art Inventory Component attributable to Automobile Works of Art plus

(vii) to the extent included in the product of the calculation thereof, the Domestic Eligible Extended Term Art Component attributable to the Extended Term Art Purchase Price in respect of Automobile Works of Art plus

(viii) to the extent included in the product of the calculation thereof, the Foreign Eligible Extended Term Art Component attributable to the Extended Term Art Purchase Price in respect of Automobile Works of Art.

“ Available Domestic Art Loan Balance ” means the Dollar Equivalent of the aggregate outstanding principal balance of all Eligible Art Loans owned by Domestic Borrowers minus (a) the amount, if any, by which the Dollar Equivalent of the aggregate outstanding principal balance of all Eligible Venture Loans owned by Domestic Borrowers, collectively with the Dollar Equivalent of the aggregate outstanding principal balance of all “Eligible Venture Loans” owned by the “Domestic Borrowers” under the SFS Revolving Credit Agreement, exceeds $60,000,000 minus (b) the amount, if any, by which the Dollar Equivalent of the outstanding principal balance of Unhedged Domestic Art Loans exceeds 25% of the Dollar Equivalent of the aggregate outstanding principal balance of all Eligible Art Loans owned by the Domestic Borrowers.

“ Available Foreign Art Loan Balance ” means the Dollar Equivalent of the aggregate outstanding principal balance of all Eligible Art Loans owned by Foreign Borrowers minus (a) the amount, if any, by which the Dollar Equivalent of the aggregate outstanding principal balance of all Eligible Venture Loans owned by Foreign Borrowers, collectively with the Dollar Equivalent of the aggregate outstanding principal balance of all “Eligible Venture Loans” owned by the “Foreign Borrowers” under the SFS Revolving Credit Agreement, exceeds an amount equal to $60,000,000 less the Dollar Equivalent of the outstanding principal balance of Eligible Venture Loans included in the Available Domestic Art Loan Balance minus (b) the amount, if any, by which the Dollar Equivalent of the sum of the outstanding principal balance of Unhedged Hong Kong Art Loans and Unhedged U.K. Art Loans exceeds 25% of the Dollar Equivalent of the aggregate outstanding principal balance of all Eligible Art Loans owned by the Foreign Borrowers.

“ Average Monthly Usage ” means, as of any date of determination, average daily Usage for the immediately preceding calendar month.

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terminations or assignments of any Rate Management Transactions and (iii) any and all Bank Products; provided that, notwithstanding the foregoing, Excluded Hedging Obligations shall not constitute Bank Product and Hedging Obligations.

“ Bank Products ” means any of the following services provided to any Sotheby Entity: (i) commercial credit card services, (ii) cash management and other treasury management services (including, without limitation, controlled disbursements, automated clearinghouse transactions, return items, and interstate depository network services) and (iii) foreign exchange related services.

“ Bankruptcy Code ” means the provisions of Title 11 of the United States Code, 11 U.S.C. §§101 et seq .

“ Blocked Accounts ” has the meaning ascribed to it in Annex C .

“ Blocked Account Agreement ” has the meaning ascribed to it in Annex C .

“ Borrower Representative ” means Parent, in its capacity as Borrower Representative pursuant to the provisions of Sections 1.1(d) and 1.2 .

“ Borrowers ” has the meaning ascribed thereto in the preamble to the Agreement.

“ Borrowing Availability ” means any of the Domestic Auction Borrowing Availability, the Domestic Incremental Borrowing Availability, the Foreign Auction Borrowing Availability or the Foreign Incremental Borrowing Availability, as the context may require.

“ Borrowing Base ” means any of the Domestic Auction Borrowing Base, Domestic Incremental Borrowing Base, the Foreign Auction Borrowing Base or the Foreign Incremental Borrowing Base, as the context may require.

“ Borrowing Base Certificate ” means a certificate to be executed and delivered from time to time by the Borrowers in the form attached to the Agreement as Exhibit 4.1(A) .

“ Business Day ” means any day that is not a Saturday, a Sunday or a day on which banks are required or permitted to be closed in the State of New York and in reference to LIBOR Loans shall mean any such day that is also a LIBOR Business Day.

“ CAM Agreement ” means the Collection Allocation Mechanism Agreement, dated as of the date hereof, among the Administrative Agent, each Auction Lender and each “Lender” under the SFS Revolving Credit Agreement, it being understood and agreed that no Credit Party shall be a party to such agreement or have any rights or obligations thereunder, nor shall the consent of any Credit Party be required with respect to any aspect thereof.

“ Canadian Dollars ” means the lawful currency of Canada.

“ Capital Expenditures ” means, with respect to any Person, all expenditures (by the expenditure of cash or the incurrence of Indebtedness) by such Person during any measuring

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period for any fixed assets or improvements or for replacements, substitutions or additions thereto that have a useful life of more than one year and that are required to be capitalized under GAAP.

“ Capital Lease ” means, with respect to any Person, any lease of any property (whether real, personal or mixed) by such Person as lessee that, in accordance with GAAP, would be required to be classified and accounted for as a capital lease on a balance sheet of such Person.

“ Capital Lease Obligation ” means, with respect to any Capital Lease of any Person, the amount of the obligation of the lessee thereunder that, in accordance with GAAP, would appear on a balance sheet of such lessee in respect of such Capital Lease.

“ Cash Collateral Account ” has the meaning ascribed to it in Annex B .

“ Cash Equivalent Investments ” means (i) marketable direct obligations issued or unconditionally guaranteed by the United States of America or any agency thereof or, in the case of any Foreign Subsidiary, guaranteed by any other member country of O.E.C.D. or any agency thereof, in each case maturing within one year from the date of acquisition thereof, (ii) commercial paper or other marketable debt securities maturing no more than one year from the date of creation thereof and currently having the highest rating obtainable from either Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc., (iii) certificates of deposit maturing no more than one year from the date of creation thereof issued by (A) any Lender or (B) any commercial banks incorporated under the laws of the United States of America or, in the case of any Foreign Subsidiary, under the laws of any other member country of O.E.C.D., each having combined capital, surplus and undivided profits of not less than $300,000,000 and having a senior unsecured rating of “A” or better by an internationally recognized rating agency or an equivalent rating from a nationally recognized rating agency of the country in which such commercial bank is incorporated (an “ A Rated Bank ”), (iv) time deposits maturing no more than thirty (30) days from the date of creation thereof with (A) any Lender or (B) A Rated Banks, (v) mutual funds that invest primarily in one or more of the investments described in clauses (i) through (iv) above and currently have an investment grade rating from either Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc. and (vi) time deposits maturing no more than thirty (30) days from the date of creation thereof with any commercial bank, so long as such deposits are fully-insured by the Federal Deposit Insurance Corporation on terms reasonably acceptable to the Administrative Agent.

“ Cash Management Systems ” has the meaning ascribed to it in Section 1.9 .

“ CCA” has the meaning ascribed to it in Section 3.1(b) .

“ Certificate of Title ” means, with respect to any Automobile Work of Art, the related certificate of title, certificate of registration, and/or other document issued by any applicable Governmental Authority evidencing title for such Automobile Work of Art.

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“ CFC ” means a Person that is a controlled foreign corporation under Section 957 of the IRC.

“ Change of Control ” means either of the following: (a) any person or group of persons (within the meaning of the Securities Exchange Act of 1934) shall have acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934) of 30% or more of the aggregate ordinary voting power represented by all of the issued and outstanding shares of capital Stock of Parent; or (b) during any period of twelve consecutive calendar months, individuals who at the beginning of such period constituted the board of directors of Parent (together with any new directors whose election by the board of directors of Parent or whose nomination for election by the Stockholders of Parent was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason other than death or disability to constitute a majority of the directors then in office.

“ Charges ” means all federal, state, county, city, municipal, local, foreign or other governmental taxes (including taxes owed to the PBGC at the time due and payable), levies, assessments, charges, liens, claims or encumbrances upon or relating to (a) the Collateral, (b) the Obligations, (c) the employees, payroll, income or gross receipts of any Sotheby Entity, (d) any Sotheby Entity’s ownership or use of any properties or other assets, or (e) any other aspect of any Sotheby Entity’s business.

“ Chattel Paper ” means any “chattel paper,” as such term is defined in the Code, including electronic chattel paper, now owned or hereafter acquired by any Sotheby Entity.

“ Closing Checklist ” means the schedule, including all appendices, exhibits or schedules thereto, listing certain documents and information to be delivered in connection with the Agreement, the other Loan Documents and the transactions contemplated thereunder, substantially in the form attached hereto as Annex D .

“ Closing Date ” means February 13, 2014.

“ Code ” means the Uniform Commercial Code as the same may, from time to time, be enacted and in effect in the State of New York; provided , that to the extent that the Code is used to define any term herein or in any Loan Document and such term is defined differently in different Articles or Divisions of the Code, the definition of such term contained in Article or Division 9 shall govern; provided further , that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect to, any Agent’s or any Lender’s Lien on any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of New York, the term “ Code ” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority or remedies and for purposes of definitions related to such provisions.

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“ Collateral ” means the property covered by the Domestic Collateral Documents and the Foreign Collateral Documents and any other property, real or personal, tangible or intangible, now existing or hereafter acquired, that may at any time be or become subject to a security interest or Lien in favor of the Collateral Agent, for the benefit of the Secured Parties, to secure the Secured Obligations.

“ Collateral Agent ” means GE Capital, in its capacity as Collateral Agent for the Secured Parties, or its successor appointed pursuant to Section 9.7(a) .

“ Collateral Documents ” means the Domestic Collateral Documents, the Foreign Collateral Documents and the Specified Debt Facility Intercreditor Agreement.

“ Collateral Reports ” means the reports with respect to the Collateral referred to in Annex F .

“ Collection Account ” means (i) with respect to payments in Dollars, that certain account of the Administrative Agent, account number 50279513 in the name of the Administrative Agent at Deutsche Bank Trust Company Americas in New York, New York ABA No. 021 001 033, (ii) with respect to payments in Sterling, account number 00282596 in the name of the Administrative Agent at Barclays Bank plc in London, (iii) with respect to payments in Euro, account number 1766039 in the name of the Administrative Agent at Deutsche Bank AG in Frankfurt, Germany or (iv) with respect to payments in Hong Kong Dollars, account number 502110182002 in the name of the Administrative Agent at HSBC Bank plc in Hong Kong, or in each case such other account as may be specified in writing by the Administrative Agent as the “Collection Account” for the applicable payments.

“ Commitments ” means (a) as to any Lender, the commitment of such Lender to make Auction Revolving Credit Advances, make Incremental Revolving Credit Advances, incur Letter of Credit Obligations or purchase participations therein as set forth on Annex J to the Agreement or in the most recent Assignment Agreement executed by such Lender (including without duplication the Swing Line Lender’s Auction Dollar Tranche Swing Line Commitment as a subset of its Auction Dollar Tranche Commitment and the Swing Line Lender’s Auction Multicurrency Tranche Swing Line Commitment as a subset of its Auction Multicurrency Tranche Commitment) and (b) as to all Lenders, the aggregate commitment of all Lenders to make Auction Revolving Credit Advances, make Incremental Revolving Credit Advances, incur Letter of Credit Obligations or purchase participations therein (including without duplication the Swing Line Lender’s Auction Dollar Tranche Swing Line Commitment as a subset of its Auction Dollar Tranche Commitment and the Swing Line Lender’s Auction Multicurrency Tranche Swing Line Commitment as a subset of its Auction Multicurrency Tranche Commitment), which aggregate commitment shall be Three Hundred Million Dollars ($300,000,000) on the Amendment No. 1 Effective Date, as such amount may be reduced or adjusted from time to time in accordance with the Agreement.

“ Commodity Exchange Act ” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.

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“ Compliance Certificate ” has the meaning ascribed to it in Annex E .

“ Contracts ” means all “contracts,” as such term is defined in the Code, now owned or hereafter acquired by any Sotheby Entity, in any event, including all contracts, undertakings, or agreements (other than rights evidenced by Chattel Paper, Documents or Instruments) in or under which any Sotheby Entity may now or hereafter have any right, title or interest, including any agreement relating to the terms of payment or the terms of performance of any Account.

“ Contribution Notice ” means a notice issued by the Pensions Regulator in accordance with section 38 of the Pensions Act 2004 (as amended) of the United Kingdom.

“ Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“ Copyright License ” means any and all rights now owned or hereafter acquired by any Sotheby Entity under any written agreement granting any right to use any Copyright or Copyright registration.

“ Copyright Security Agreements ” means the Copyright Security Agreements made in favor of the Collateral Agent, on behalf of itself and the other Secured Parties, by each applicable Credit Party.

“ Copyrights ” means all of the following now owned or hereafter adopted or acquired by any Sotheby Entity: (a) all copyrights and General Intangibles of like nature (whether registered or unregistered), all registrations and recordings thereof, and all applications in connection therewith, including all registrations, recordings and applications in the United States Copyright Office or in any similar office or agency of the United States, any state or territory thereof, or any other country or any political subdivision thereof, and (b) all reissues, extensions or renewals thereof.

“ Credit Party ” means any Borrower or any Guarantor, and “ Credit Parties ” shall mean all such Persons, collectively.

“ Current Fiscal Year ” has the meaning ascribed to it in Annex G.

“ Data Protection Laws ” means any applicable data protection or privacy laws or regulations including all laws and regulations implementing in the United Kingdom the European Union’s Data Protection Directive 95/46/EC and the European Union's Privacy and Electronic Communications Directive 2002/58/EC.

“ Default ” means any event that, with the passage of time or notice or both, would, unless cured or waived, become an Event of Default.

“ Default Rate ” has the meaning ascribed to it in Section 1.5(d) .

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“ Deposit Accounts ” means all “deposit accounts” as such term is defined in the Code, now or hereafter held in the name of any Credit Party.

“ Direction ” has the meaning ascribed to it in Section 1.16(a) .

“ Disclosure Schedules ” means the Schedules prepared by Borrowers and denominated as Disclosure Schedules (1.4) through (6.7) in the table of contents to the Agreement.

“ Disregarded Domestic Person ” means any direct or indirect Domestic Subsidiary that is treated as a disregarded entity for U.S. federal income tax purposes, substantially all of the assets of which consist of the Stock of one or more Foreign Subsidiaries or other such disregarded entities holding such assets.

“ Documents ” means all “documents,” as such term is defined in the Code, now owned or hereafter acquired by any Credit Party, wherever located.

“ Dollar Equivalent ” means, with respect to any amount denominated in Dollars, such amount of Dollars, and with respect to any amount denominated in a currency other than Dollars, the amount of Dollars, as of any date of determination, into which such other currency (as the context may require) can be converted in accordance with Section 1.19 .

“ Dollar Index Rate ” means, for any day, a rate per annum equal to the highest of (a) the rate last quoted by The Wall Street Journal as the “Prime Rate” in the United States or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as determined by the Administrative Agent) or in any similar release by the Federal Reserve Board (as determined by the Administrative Agent), (b) the sum of 0.50% per annum and the Federal Funds Rate, and (c) the sum of (x) the Dollar LIBOR Rate, as defined herein, calculated for each such day based on a LIBOR Period of three months determined two (2) Business Days prior to such day plus (y) the excess of the Applicable Dollar Revolver LIBOR Margin over the Applicable Dollar Revolver Index Margin, in each instance, as of such day. Any change in the Dollar Index Rate due to a change in any of the foregoing shall be effective on the effective date of such change in the “bank prime loan” rate, the Federal Funds Rate or the Dollar LIBOR Rate for a LIBOR Period of three months.

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annum, as determined by the Administrative Agent (rounded upwards, if necessary, to the nearest 1/100 of 1%) at which deposits of Dollars in immediately available funds are offered at 11:00 A.M. (London, England time) two (2) Business Days prior to the first day in such LIBOR Period by major financial institutions reasonably satisfactory to the Administrative Agent in the London interbank market for a LIBOR Period of the applicable duration for the applicable principal amount on such date of determination. Notwithstanding the foregoing, the “Dollar LIBOR Rate” shall be deemed to be zero if the rate otherwise calculated pursuant to this definition would result in a rate less than zero.

“ Dollars ” or “ $ ” means lawful currency of the United States of America.

“ Domestic Auction Borrowing Availability ” means, as of any date of determination, the lesser of (a) an amount equal to (i) the Maximum Auction Amount minus (ii) the aggregate Auction Revolving Loan then outstanding minus (iii) the aggregate Swing Line Loan then outstanding and (b) an amount equal to (i) the Domestic Auction Borrowing Base as of such date minus (ii) the aggregate outstanding principal balance of the Auction Revolving Credit Advances and Swing Line Advances made to Domestic Borrowers as of such date minus (iii) the Dollar Equivalent of the aggregate Letter of Credit Obligations incurred for the benefit of the Domestic Borrowers as of such date.

“ Domestic Auction Borrowing Base ” means, as of any date of determination, an amount equal to (a) 85% of the Available Domestic Art Loan Balance as of such date plus (b) the Domestic Eligible Art Inventory Component as of such date plus (c) the Domestic Eligible Extended Term Art Component as of such date plus (d) the Domestic Auction Trademark Component as of such date minus (e) Reserves established by the Administrative Agent at such time; provided that, in no event shall the Automobile Work of Art Component exceed $50,000,000.

“ Domestic Auction Trademark Component ” means, as of any date of determination, an amount specified by the Borrower Representative in the most recent Borrowing Base Certificate as the “Domestic Auction Trademark Component”; provided that, in no event shall the sum of (a) the Domestic Auction Trademark Component as of such date plus (b) the Foreign Auction Trademark Component as of such date plus (c) the “Domestic Trademark Component” (as defined in the SFS Revolving Credit Agreement) as of such date plus (d) the “Foreign Trademark Component” (as defined in the SFS Revolving Credit Agreement) as of such date exceed the lesser of (i) the Maximum Trademark Component and (ii) $100,000,000.

“ Domestic Borrowers ” has the meaning ascribed to it in the preamble to the Agreement.

“ Domestic Collateral Documents ” means the Domestic Guaranty and Security Agreement, the Trademark Security Agreements, the Copyright Security Agreements, all Local Law Collateral Documents and all similar agreements entered into by the Domestic Credit Parties or First-Tier Foreign Subsidiaries guaranteeing payment of the Obligations or granting a Lien upon property as security for payment of the Secured Obligations.

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“ Domestic Credit Parties ” means each Domestic Borrower and each Domestic Subsidiary Guarantor.

“ Domestic Eligible Art Inventory Component ” means, as of any date of determination, an amount equal to 50% of the value of Eligible Art Inventory of the Domestic Borrowers as of such date, valued at the lower of cost and market value (determined in accordance with GAAP).

“ Domestic Eligible Extended Term Art Component ” means, as of any date of determination, an amount equal to the lesser of (a) 75% of the Extended Term Art Purchase Price (to the extent any buyer’s premium or any taxes are included in the calculation thereof, net of any buyer’s premium and any taxes (including, without limitation, VAT)) with respect to Eligible Extended Term Art Receivables of the Domestic Borrowers as of such date and (b) an amount equal to (i) $150,000,000 minus (ii) the Foreign Eligible Extended Term Art Component as of such date.

“ Domestic Guaranty and Security Agreement ” means that certain Amended and Restated Guaranty and Security Agreement, dated as of the Restatement Effective Date, executed by each Domestic Credit Party in favor of the Collateral Agent, for the benefit of the Secured Parties.

“ Domestic Incremental Art Inventory Component ” means, as of any date of determination, an amount equal to 20% of the value of Eligible Art Inventory of the Domestic Borrowers as of such date, valued at the lower of cost and market value (determined in accordance with GAAP).

“ Domestic Incremental Borrowing Availability ” means, as of any date of determination, the lesser of (a) an amount equal to (i) the Maximum Incremental Amount minus (ii) the aggregate outstanding principal amount of Incremental Revolving Credit Advances and (b) an amount equal to (i) the Domestic Incremental Borrowing Base as of such date minus (ii) the aggregate outstanding principal amount of Incremental Revolving Credit Advances made to Domestic Borrowers as of such date.

“ Domestic Incremental Borrowing Base ” means, as of any date of determination, an amount equal to (a) the Domestic Incremental Art Inventory Component as of such date plus (b) the Domestic Incremental Trademark Component as of such date minus (c) Reserves established by the Administrative Agent at such time; provided that, in no event shall the Automobile Work of Art Component exceed $50,000,000.

“ Domestic Incremental Trademark Component ” means, as of any date of determination, an amount specified by the Borrower Representative in the most recent Borrowing Base Certificate as the “Domestic Incremental Trademark Component”; provided that, in no event shall the sum of (a) the Domestic Incremental Trademark Component as of such date plus (b) the Foreign Incremental Trademark Component as of such date exceed the lesser of (i) the Maximum Trademark Component and (ii) $10,000,000.

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“ Domestic Subsidiary ” means any Subsidiary of Parent incorporated or organized under the laws of the United States of America, any state thereof or the District of Columbia.

“ Domestic Subsidiary Guarantor ” means a Domestic Subsidiary that does not constitute a Domestic Borrower or an Immaterial Subsidiary, and is a Credit Party on the Restatement Effective Date or is required to become, and becomes, a Credit Party pursuant to Section 5.14 of the Agreement.

“ Due-to-Consignor Amount ” means, on any date of determination, the aggregate amount of cash received and held by all Sotheby Entities that is payable to consignors as of such day as a result of the sale of such consignors’ Works of Art by a Sotheby Entity (net of the aggregate outstanding amount of all principal, accrued interest and other related amounts as of such day with respect to any Art Loans secured by such Works of Art).

“ Due-to-Consignor Disbursement Account ” means such account as Borrower Representative and the Administrative Agent may agree upon from time to time pursuant to a written agreement.

“ Due-to-Consignor Reserve ” means, at any time, a reserve equal to the SFS/Auction Ratable Share of the positive difference, if any, of (a) 100% of the amounts payable to consignors in respect of consigned items sold to third parties by the Sotheby Entities at such time minus (b) an amount equal to, without duplication (i) the aggregate balance of accounts receivable (other than any account receivable included in any Borrowing Base or any “Borrowing Base” under the SFS Revolving Credit Agreement) of the Sotheby Entities (determined in accordance with GAAP) at such time plus (ii) the aggregate amount of cash of the Sotheby Entities (as determined in accordance with GAAP) at such time minus (iii) the amount of such cash subject to a Lien (or held in a deposit or securities account subject to a Lien) in favor of any Person other than (x) the Collateral Agent or (y) a consignor to whom such cash is due to be paid in respect of the sale of a Work of Art consigned by such Person to the Sotheby Entities for sale minus (iv) without duplication of the foregoing clause (b)(iii) , the amount of such cash subject to any restriction on withdrawal from the deposit or securities account in which such cash is held minus (v) the aggregate amount of any dividends or distributions publicly declared, but not yet made, by Parent at such time.

“ Due-to-Consignor Statement ” has the meaning ascribed to it in Annex E .

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period, (v) the amount of any deduction to consolidated net income as a result of any grant of any Stock (including restricted stock and stock options), (vi) fees, premiums, expenses and other transaction costs incurred in connection with the Specified Debt Facility Documents, and (vii) other non-recurring expenses which either (A) do not represent a cash item in such fiscal period or any future period (in each case, of or by Parent and its Subsidiaries for such fiscal period) or (B) do not exceed $25,000,000 (or, solely for the period commencing on the Restatement Effective Date and ending on the first anniversary thereof, $40,000,000) in the aggregate (when added to all other amounts determined under this subclause (B) ), in each case, to the extent included in the calculation of consolidated net income of such Persons for such period in accordance with GAAP, but without duplication. For purposes of this definition, the following items shall be excluded in determining consolidated net income of such Persons: (1) the income (or deficit) of any other Person accrued prior to the date it became a Subsidiary of, or was merged or consolidated into, any such Person or any of such Persons’ Subsidiaries; (2) the income (or deficit) of any other Person (other than a Subsidiary) in which any such Person has an ownership interest, except to the extent any such income has actually been received by such Person in the form of cash dividends or distributions; (3) the undistributed earnings of any Subsidiary of any such Person to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is not at the time permitted by the terms of any contractual obligation or requirement of law applicable to such Subsidiary; (4) any net gain from the collection of the proceeds of life insurance policies; (5) any net gain or loss arising from the acquisition of any securities, or the extinguishment, under GAAP, of any Indebtedness, of any such Person; (6) in the case of a successor to any such Person by consolidation or merger or as a transferee of its assets, any earnings of such successor prior to such consolidation, merger or transfer of assets; and (7) any deferred credit representing the excess of equity in any Subsidiary of any such Person at the date of acquisition of such Subsidiary over the cost to such Person of the investment in such Subsidiary.

“ E-Fax ” means any system used to receive or transmit faxes electronically.

“ Electronic Transmission ” means each document, instruction, authorization, file, information and any other communication transmitted, posted or otherwise made or communicated by e-mail or E-Fax, or otherwise to or from an E-System or other equivalent service.

“ Eligible Art Loan ” has the meaning ascribed to it in Section 1.6 .

“ Eligible Art Loan Collateral ” shall mean, with respect to any Art Loan of any Borrower, a Work of Art:

(a) in which such Borrower has a first priority security interest securing repayment of such Art Loan that is perfected in each applicable jurisdiction (i) by the filing of a financing statement pursuant to the UCC, (ii) by physical possession of such Work of Art by such Borrower or its agent at all times or (iii) solely in the case of Automobile Work of Art registered in the United States of America (or any state thereof), by notation of such Borrower’s security interest on the “certificate of title” (as defined in Section 9-102(a)(10) of the UCC) for such Automobile Work of Art;

(b) unless otherwise agreed to by the Administrative Agent, with respect to which, if such Borrower has a security interest in such Work of Art that is perfected by physical possession

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by a Person acting as an agent of such Borrower (which Person may be another Sotheby Entity) or otherwise in the physical possession of any Person other than such Borrower, (i) such Person has executed a bailee letter or similar agreement in form and substance reasonably acceptable to the Administrative Agent, (ii) Reserves satisfactory to the Administrative Agent have been established, or (iii) other arrangements have been entered into, in form and substance reasonably acceptable to the Administrative Agent;

(c) that is (i) (x) located in a Permitted Art Loan Country or (y) in transport between such countries and (ii) if located in a Permitted Art Loan Country, such Borrower shall have taken all actions reasonably required by the Collateral Agent with respect to such Work of Art in order to protect the interests of such Borrower and the Agents therein under the laws of such Permitted Art Loan Country;

(d) that, if held by such Borrower, is held (i) at a location owned by a Sotheby Entity, or (ii) unless Reserves satisfactory to Agent have been established (A) at a location in which a Sotheby Entity has obtained a leasehold interest with respect to which, unless otherwise agreed by Agent, the lessor has executed a landlord waiver, in form and substance reasonably acceptable to Agent, or (B) at a warehouse, storage facility or other third-party location (including, without limitation, the Geneva free port, but not including the location of any agent described in paragraph (b) of this definition) with respect to which, unless otherwise agreed by Agent, such third party has executed a bailee letter or similar agreement in form and substance reasonably acceptable to Agent;

(e) that is (i) in the physical possession of such Borrower, (ii) in the physical possession of an agent described in paragraph (b) of this definition or (iii) in the case of Work of Art physically located in the United States, unless Reserves satisfactory to Agent have been established, in the actual physical possession of the applicable Art Loan Debtor at a location owned by such Art Loan Debtor;

(f) that is (i) adequately insured by such Borrower or the applicable Art Loan Debtor and (ii) if such Work of Art is insured by the applicable Art Loan Debtor, subject to a valid loss payable endorsement in favor of such Borrower with respect to such Work of Art;

(g) with respect to which the applicable Art Loan Debtor is not the original artist or creator;

(h) with respect to which the validity, enforceability, perfection or priority of such Borrower’s security interest in such Work of Art is not subject to any litigation, other than litigation with respect to which (i) such Borrower has notified Agent of such litigation, and (ii) Agent has determined in its reasonable judgment, pursuant to a written notice to such Borrower (not to be unreasonably withheld or delayed), that such litigation does not have a material risk of being determined adversely to such Borrower;

(i) with respect to which the rights of the related Art Loan Debtor in such Work of Art are not subject to litigation, unless (i) such Borrower notifies the Administrative Agent of such litigation, and (ii) the Administrative Agent has determined in its reasonable judgment, pursuant to a written notice to such Borrower (not to be unreasonably withheld or delayed), that such litigation does not have a material risk of being determined adversely to such Borrower;

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(j) that does not constitute Work of Art (i) securing any “Art Loan” included in any “Borrowing Base” under the SFS Revolving Credit Agreement or (ii) in respect of any Extended Term Art Receivable included in any Borrowing Base;

(k) if the value of such Work of Art exceeds $250,000, has been the subject of a search by such Borrower in the Art Loss Register (if applicable) and is not listed in the Art Loss Register; and

(m) to the extent constituting Automobile Work of Art, with respect to which such Borrower or any other Credit Party shall have in its possession the original Certificate of Title for such Automobile Work of Art (unless no Certificate of Title has been, or is required to be, issued with respect to such Automobile Work of Art by any applicable Governmental Authority).

“ Eligible Art Inventory ” has the meaning ascribed to it in Section 1.7 .

“ Eligible Extended Term Art Receivables ” has the meaning ascribed to it in Section 1.8 .

“ Eligible Extended Term Art Collateral ” shall mean, with respect to any Extended Term Art Receivable of any Borrower, a Work of Art:

(a) if the related Extended Term Art Documentation is governed under the laws of the State of New York, for which any one of the following is satisfied: (i) such Borrower has title to such Work of Art, free and clear of any Liens (other than those in favor of the Collateral Agent, those in favor of the related Extended Term Art Debtor pursuant to the related Extended Term Art Documentation, or Permitted Encumbrances described in clause (e)(ii) of the definition thereof), (ii) such Borrower has a first priority security interest in such Work of Art securing repayment of such Extended Term Art Receivable, which security interest is perfected in each applicable jurisdiction or (iii) the related Extended Term Art Consignor has title to such Work of Art, free and clear of any Liens (other than those in favor of the Collateral Agent, those in favor of the related Extended Term Art Debtor pursuant to the related Extended Term Art Documentation, or Permitted Encumbrances described in clause (e)(ii) of the definition thereof) and, in the case of this clause (iii) , such Borrower has the right, without consent or other action of such Extended Term Art Consignor, to exercise (to the extent of the principal amount of such Extended Term Art Receivable) any and all rights of such Extended Term Art Consignor against the related Extended Term Art Debtor, including, without limitation, the right to transfer title (on behalf of such Extended Term Art Consignor) to a third-party purchaser upon default of such Extended Term Art Debtor free and clear of any Liens;

(b) if the Extended Term Art Documentation is governed under the laws of England and Wales or Hong Kong, for which such Borrower has title, free and clear of any Liens (other than those in favor of the Collateral Agent, those in favor of the related Extended Term Art Debtor pursuant to the related Extended Term Art Documentation, or Permitted Encumbrances described in clause (e)(ii) of the definition thereof);

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(d) that, if in the physical possession of such Borrower, is held (i) at a location owned by a Sotheby Entity or (ii) unless Reserves satisfactory to the Administrative Agent have been established (A) at a location in which a Sotheby Entity has obtained a leasehold interest with respect to which, unless otherwise agreed by the Administrative Agent, the lessor has executed a landlord waiver, in form and substance reasonably acceptable to the Administrative Agent, or (B) at a warehouse, storage facility or other third-party location (including, without limitation, the Geneva free port, but not including the location of any agent described in paragraph (e) of this definition) with respect to which, unless otherwise agreed by the Administrative Agent, such third party has executed a bailee letter or similar agreement in form and substance reasonably acceptable to the Administrative Agent;

(e) unless otherwise agreed to by the Administrative Agent, if such Work of Art is in the physical possession of such Borrower’s agent, (i) such agent has executed a bailee letter or similar agreement in form and substance reasonably acceptable to the Administrative Agent, (ii) Reserves satisfactory to the Administrative Agent have been established or (iii) other arrangements have been entered into, in form and substance reasonably acceptable to the Administrative Agent;

(f) that is (i) (x) located in a Permitted Extended Term Art Country or (y) in transport between such countries and (ii) if located in a Permitted Extended Term Art Country, such Borrower shall have taken all actions reasonably required by the Collateral Agent with respect to such Work of Art in order to protect the interests of such Borrower and the Agents therein under the laws of such Permitted Extended Term Art Country;

(g) that is adequately insured by such Borrower;

(h) with respect to which the applicable Extended Term Art Debtor is not the original artist or creator;

(i) if the Extended Term Art Documentation is governed under the laws of the State of New York and such Borrower has a security interest in such Work of Art, with respect to which the validity, enforceability, perfection or priority of such Borrower’s security interest in such Work of Art is not subject to any litigation, other than litigation with respect to which (i) such Borrower has notified the Administrative Agent of such litigation, and (ii) the Administrative Agent has determined in its reasonable judgment, pursuant to a written notice to such Borrower (not to be unreasonably withheld or delayed), that such litigation does not have a material risk of being determined adversely to such Borrower;

(j) with respect to which the rights, if any, of the related Extended Term Art Consignor or Extended Term Art Debtor in such Work of Art are not subject to litigation, unless (i) such Borrower notifies the Administrative Agent of such litigation, and (ii) the Administrative Agent has determined in its reasonable judgment, pursuant to a written notice to such Borrower (not to be unreasonably withheld or delayed), that such litigation does not have a material risk of being determined adversely to such Borrower;

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(k) that does not constitute Work of Art securing any Art Loan included in any Borrowing Base or any “Borrowing Base” under the SFS Revolving Credit Agreement;

(l) if the value of such Work of Art exceeds $250,000, has been the subject of a search by such Borrower in the Art Loss Register (if applicable) and is not listed in the Art Loss Register; and

“ Eligible Venture Loan ” means a Venture Loan that is an Eligible Art Loan.

“ Environmental Laws ” means all applicable federal, state, local and foreign laws, statutes, ordinances, codes, rules, standards and regulations, now or hereafter in effect, and any applicable judicial or administrative interpretation thereof, including any applicable judicial or administrative order, consent decree, order or judgment, imposing liability or standards of conduct for or relating to the regulation and protection of human health, safety, the environment and natural resources (including ambient air, surface water, groundwater, wetlands, land surface or subsurface strata, wildlife, aquatic species and vegetation). Environmental Laws include the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C. §§ 9601 et seq .) (“ CERCLA ”); the Hazardous Materials Transportation Authorization Act of 1994 (49 U.S.C. §§ 5101 et seq .); the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. §§ 136 et seq .); the Solid Waste Disposal Act (42 U.S.C. §§ 6901 et seq .); the Toxic Substance Control Act (15 U.S.C. §§ 2601 et seq .); the Clean Air Act (42 U.S.C. §§ 7401 et seq .); the Federal Water Pollution Control Act (33 U.S.C. §§ 1251 et seq .); the Occupational Safety and Health Act (29 U.S.C. §§ 651 et seq .); and the Safe Drinking Water Act (42 U.S.C. §§ 300(f) et seq .), and any and all regulations promulgated thereunder, and all analogous state, local and foreign counterparts or equivalents and any transfer of ownership notification or approval statutes.

“ Environmental Liabilities ” means, with respect to any Person, all liabilities, obligations, responsibilities, response, remedial and removal costs, investigation and feasibility study costs, capital costs, operation and maintenance costs, losses, damages, punitive damages, property damages, natural resource damages, consequential damages, treble damages, costs and expenses (including all reasonable fees, disbursements and expenses of counsel, experts and consultants), fines, penalties, sanctions and interest incurred as a result of or related to any claim, suit, action, investigation, proceeding or demand by any Person, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute or common law, arising under or related to any Environmental Laws, Environmental Permits, or in connection with any Release or threatened Release or presence of a Hazardous Material whether on, at, in, under or from any real or personal property.

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“ Environmental Permits ” means all permits, licenses, authorizations, certificates, approvals or registrations required for the operations of any Sotheby Entity by any Governmental Authority under any Environmental Laws.

“ Equipment ” means all “equipment,” as such term is defined in the Code, now owned or hereafter acquired by any Credit Party, wherever located and, in any event, including all such Credit Party’s machinery and equipment, including processing equipment, conveyors, machine tools, data processing and computer equipment, including embedded software and peripheral equipment and all engineering, processing and manufacturing equipment, office machinery, furniture, materials handling equipment, tools, attachments, accessories, automotive equipment, trailers, trucks, forklifts, molds, dies, stamps, motor vehicles, rolling stock and other equipment of every kind and nature, trade fixtures and fixtures not forming a part of real property, together with all additions and accessions thereto, replacements therefor, all parts therefor, all substitutes for any of the foregoing, fuel therefor, and all manuals, drawings, instructions, warranties and rights with respect thereto, and all products and proceeds thereof and condemnation awards and insurance proceeds with respect thereto.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any regulations promulgated thereunder.

“ ERISA Affiliate ” means, with respect to any Sotheby Entity, any trade or business (whether or not incorporated) that, together with such Sotheby Entity, are treated as a single employer within the meaning of Sections 414(b), (c), (m) or (o) of the IRC.

“ ERISA Event ” means, with respect to any Sotheby Entity or any ERISA Affiliate, (a) any event described in Section 4043(c) of ERISA with respect to a Title IV Plan; (b) the withdrawal of any Sotheby Entity or ERISA Affiliate from a Title IV Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (c) the complete or partial withdrawal of any Sotheby Entity or any ERISA Affiliate from any Multiemployer Plan; (d) the filing of a notice of intent to terminate a Title IV Plan or the treatment of a plan amendment as a termination under Section 4041 of ERISA; (e) the institution of proceedings to terminate a Title IV Plan or Multiemployer Plan by the PBGC; (f) the failure by any Sotheby Entity or ERISA Affiliate to make when due required contributions to a Multiemployer Plan or Title IV Plan unless such failure is cured within thirty (30) days; (g) any other event or condition that would reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Title IV Plan or Multiemployer Plan or for the imposition of liability under Section 4069 or 4212(c) of ERISA; (h) the termination of a Multiemployer Plan under Section 4041A of ERISA or the reorganization or insolvency of a Multiemployer Plan under Section 4241 or 4245 of ERISA; or (i) the loss of a Qualified Plan’s qualification or tax exempt status; or (j) the termination of a Plan described in Section 4064 of ERISA.

“ ESOP ” means a Plan that is intended to satisfy the requirements of Section 4975(e)(7) of the IRC.

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“ Estimated Value ” means, as of any date of determination, with respect to any Work of Art, the most recent estimate of value of such Work of Art, as determined from time to time by the applicable Borrower in accordance with Section 5.12 .

“ E-Signature ” means the process of attaching to or logically associating with an Electronic Transmission an electronic symbol, encryption, digital signature or process (including the name or an abbreviation of the name of the party transmitting the Electronic Transmission) with the intent to sign, authenticate or accept such Electronic Transmission.

“ E-System ” means any electronic system approved by the Administrative Agent, including Intralinks® and ClearPar® and any other Internet or extranet-based site, whether such electronic system is owned, operated or hosted by the Administrative Agent, any of its Related Persons or any other Person, providing for access to data protected by passcodes or other security system.

“ Euro ” means the single currency of the Participating Member States.

“ Euro Index Rate ” means, for any day, the higher of (a) a floating rate equal to the rate publicly quoted from time to time by The Wall Street Journal as the “prime rate” for the Eurozone (or, if The Wall Street Journal ceases quoting a rate of the type described, the prime rate for Euro generally posted by the Eurozone’s largest banks) and (b) 1.00% per annum. Each change in any interest rate provided for in the Agreement based upon the Euro Index Rate shall take effect at the time of such change in the Euro Index Rate.

“ Euro LIBO Rate ” means for each LIBOR Period with respect to a LIBOR Loan denominated in Euro, the offered rate per annum for deposits of Euro for such LIBOR Period that appears on Reuters Screen LIBOR01 Page (or any successor or substitute page of such service, or any successor to or substitute for such service, providing rate quotations comparable to those currently provided on such page of such service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to deposits in Euro in the London interbank market) as of 11:00 A.M. (London, England time) two (2) Business Days prior to the first day in such LIBOR Period. If the offered rate described in the foregoing sentence does not exist, such rate will be the rate of interest per annum, as determined by the Administrative Agent (rounded upwards, if necessary, to the nearest 1/100 of 1%) at which deposits of Euro in immediately available funds are offered at 11:00 A.M. (London, England time) two (2) Business Days prior to the first day in such LIBOR Period by major financial institutions reasonably satisfactory to the Administrative Agent in the London interbank market for a LIBOR Period of the applicable duration for the applicable principal amount on such date of determination. Notwithstanding the foregoing, the “Euro LIBO Rate” shall be deemed to be zero if the rate otherwise calculated pursuant to this definition would result in a rate less than zero.

“ Event of Default ” has the meaning ascribed to it in Section 8.1 .

“ Excluded Accounts ” means, collectively, any Due-to-Consignor Disbursement Accounts, payroll accounts, zero balance accounts and Deposit Accounts of the Credit Parties

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with aggregate balances that do not collectively exceed $200,000 for more than seven (7) consecutive Business Days at any time.

“ Excluded Hedging Obligation ” means, with respect to any Guarantor, any Guaranty Hedging Obligation if, and to the extent that, all or a portion of the guarantee of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Guaranty Hedging Obligation (or any guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the guarantee of such Guarantor or the grant of such security interest becomes effective with respect to such Guaranty Hedging Obligation. If a Guaranty Hedging Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Guaranty Hedging Obligation that is attributable to swaps for which such guarantee or security interest is or becomes illegal.

“ Executive Order ” means Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, and relating to Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism.

“ Existing Credit Agreement ” has the meaning assigned to it in the recitals to the Agreement.

“ Extended Term Art Consignor ” has the meaning assigned to such term in the definition of “Extended Term Art Receivables”.

“ Extended Term Art Debtor ” has the meaning assigned to such term in the definition of “Extended Term Art Receivables”.

“ Extended Term Art Documentation ” means, with respect to any Extended Term Art Receivable, collectively, the related consignment agreement, conditions of business for buyers (if applicable), conditions of business for sellers (if applicable), conditions of sale and terms of guarantee (if applicable), and extended payment term agreements.

“ Extended Term Art Purchase Price ” means, with respect to any Extended Term Art Receivable, the total purchase price for the underlying Work of Art that is agreed upon by the related Extended Term Art Debtor.

“ Extended Term Art Receivable ” means a receivable payable by a buyer arising from the auction sale of consigned Works of Art (such buyer, an “ Extended Term Art Debtor ”), which receivable is owing to a Borrower pursuant to extended payment terms offered by such Borrower to such Extended Term Art Debtor after such Borrower’s payment of the related Extended Term Art Purchase Price (net of any amounts owed to such Borrower) to the consignor of such Work of Art (such consignor, an “ Extended Term Art Consignor ”).

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“ Extended Term Art Receivables Report ” means a report to be delivered from time to time by the Borrowers in the form attached to the Agreement as Exhibit 4.1(D) .

“ Extended Term Auction Procedural Requirements ” means, with respect to any Extended Term Art Receivable of a Borrower, collectively, the following requirements:

(a) under the terms of the related conditions of business for buyers or conditions of sale and terms of guarantee, as applicable, and the other related Extended Term Art Documentation, title to the underlying Work of Art must not transfer to the winning bidder unless such Borrower has received the Extended Term Art Purchase Price in cleared funds;

(b) if the related Extended Term Art Documentation is governed under the laws of the State of New York, (i) under the terms of the related consignment agreement (x) if such Borrower pays any portion of the net sale proceeds for the related Work of Art to the related Extended Term Art Consignor and such Borrower has not collected payment of such amount that such Borrower paid to such Extended Term Art Consignor, simultaneously with such payment made by such Borrower to such Extended Term Art Consignor, such Extended Term Art Consignor shall have assigned any and all rights it has against the related Extended Term Art Debtor (to the extent of such payment) to such Borrower and (y) the related Extended Term Art Consignor shall be required to execute any document such Borrower reasonably requests to evidence such assignment and (ii) the related conditions of sale and terms of guarantee must be (x) printed on the back of the sale catalogue for the related auction and (y) included in the pre-sale announcement;

(c) if the related Extended Term Art Documentation is governed under the laws of England and Wales or Hong Kong, (i) the conditions of business for buyers must be (x) displayed in a reasonably conspicuous manner in the applicable sale location or (y) made available to the related Extended Term Art Debtor in a manner approved by the Administrative Agent in writing and (ii) under the terms of the conditions of business for sellers, if the related Extended Term Art Debtor fails to pay the applicable Extended Term Art Purchase Price but such Borrower agrees to remit to the related Extended Term Art Consignor an amount equal to the applicable Extended Term Art Purchase Price (net of amounts owed to such Borrower), ownership of the related Work of Art shall have passed to such Borrower, and such Borrower shall have the benefit of all of such Extended Term Art Consignor’s representations, warranties and indemnities set out in such conditions of business for sellers; and

(d) the related Extended Term Art Debtor must have agreed, pursuant to a paddle registration form, absentee/telephone bidding form and/or online registration form, as applicable, to be bound by the related conditions of business of buyers or the conditions of sale and terms of guarantee, as applicable.

“ Fair Labor Standards Act ” means the Fair Labor Standards Act, 29 U.S.C. §201 et seq .

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“ FATCA ” means Sections 1471 through 1474 of the IRC, as of the date of the Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with) and any current or future regulations or official interpretations thereof, and any agreements entered into pursuant to Section 1471(b)(1) of the IRC and any intergovernmental agreements entered into pursuant thereto.

“ Federal Funds Rate ” means, for any day, a floating rate equal to the weighted average of the rates on overnight Federal funds transactions among members of the Federal Reserve System, as determined by the Administrative Agent in its sole discretion, which determination shall be final, binding and conclusive (absent manifest error).

“ Federal Reserve Board ” means the Board of Governors of the Federal Reserve System.

“ Fees ” means any and all fees payable to any Agent or any Lender pursuant to the Agreement or any of the other Loan Documents.

“ Financial Covenant Compliance Period ” means each period (i) commencing on any date on which (a)(1) the average daily Aggregate Borrowing Availability for the previous thirty (30) consecutive Business Days shall be less than $133,500,000 and (2) the average daily Liquidity Amount for the previous thirty (30) consecutive Business Days shall be less than $235,000,000, or (b) Aggregate Borrowing Availability shall be less than $110,000,000 on such date (unless the outstanding principal balance of the Revolving Loan shall be zero on such date) and (ii) continuing until the first date occurring at least thirty (30) Business Days after the commencement of such period that does not satisfy any of the criteria set forth in the foregoing clause (i).

“ Financial Covenants ” means the financial covenants set forth in Annex G .

“ Financial Officer ” means, with respect to any Person, the Chief Financial Officer, Treasurer or Controller thereof or another officer thereof of similar seniority and responsibility.

“ Financial Statements ” means the consolidated and consolidating income statements, statements of cash flows and balance sheets of Borrowers delivered in accordance with Section 3.4 and Annex E .

“ Financial Support Direction ” means a direction issued by the Pensions Regulator in accordance with section 43 of the Pensions Act 2004 (as amended) of the United Kingdom.

“ First-Tier Foreign Subsidiary ” means each Foreign Subsidiary with respect to which any one or more of the Domestic Credit Parties directly owns or Controls more than 50% of such Foreign Subsidiary’s issued and outstanding Stock.

“ Fiscal Month ” means any of the monthly accounting periods of Parent.

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“ Fiscal Quarter ” means any of the quarterly accounting periods of Parent ending on March 31, June 30, September 30 or December 31 of each year.

“ Fiscal Year ” means any of the annual accounting periods of Parent ending on December 31 of each year.

“ Fixed Charges ” means, with respect to Parent and its Subsidiaries, on a consolidated basis, for any fiscal period, an amount equal to (a) the aggregate of all Interest Expense with respect to such period plus (b) scheduled payments of principal with respect to Indebtedness during such period, other than (i) any balloon, bullet or similar principal payment payable on the maturity date under the Specified Debt Facility Documents that repays the outstanding principal amount thereunder in full and (ii) any principal payments of any Incremental Revolving Credit Advances payable on the Incremental Maturity Date (and any principal payments made to any Non-Extending Incremental Lenders on any Non-Extending Incremental Maturity Date), plus (c) dividends and distributions on the Stock of Parent paid in cash, payments with respect to purchases of any Senior Notes and Repurchases, in each case, during such period (other than any special dividends or distributions permitted under Section 6.13(j) of the Agreement), minus (d) (i) discounts and any upfront fees on the Senior Notes and (ii) the amounts owed under the York Avenue Loan Agreement or the Specified Debt Facility Documents, in each case, to the extent included as Interest Expense during such period on a non-cash basis minus (e) amounts included in Interest Expense for such period in respect of amortization of (i) closing fees incurred in conjunction with this Agreement and (ii) interest accrued on amounts payable on the unfunded senior management benefit plan of Parent and its Subsidiaries, in each case, of or by Parent and its Subsidiaries on a consolidated basis for such period.

“ Fixed Charge Coverage Ratio ” means, with respect to Parent and its Subsidiaries, on a consolidated basis, for any four Fiscal Quarter period, the ratio of (I) the sum of (a) EBITDA for each of such four Fiscal Quarters minus (b) Capital Expenditures during such four Fiscal Quarters minus (c) cash income taxes paid during such Fiscal Quarters net of income tax refunds to (II) the aggregate Fixed Charges for such four Fiscal Quarters.

“ Fixtures ” means all “fixtures” as such term is defined in the Code, now owned or hereafter acquired by any Sotheby Entity.

“ Foreign Auction Art Inventory Component ” means, as of any date of determination, an amount equal to 50% of the value of Eligible Art Inventory of the Foreign Borrowers as of such date, valued at the lower of cost and market value (determined in accordance with GAAP).

“ Foreign Auction Borrowing Availability ” means, as of any date of determination, the lesser of (a) an amount equal to (i) the Maximum Auction Amount minus (ii) the aggregate Auction Revolving Loan then outstanding minus (iii) the aggregate Swing Line Loan then outstanding and (b) an amount equal to (i) the lesser of (x) an amount equal to the Foreign Borrower Subfacility Limit minus the SFS Foreign Borrower Obligations and (y) the Foreign Auction Borrowing Base as of such date minus (ii) the Dollar Equivalent of the aggregate outstanding principal balance of Auction Revolving Credit Advances and Swing Line Advances

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made to Foreign Borrowers as of such date minus (iii) the Dollar Equivalent of the aggregate Letter of Credit Obligations incurred for the benefit of the Foreign Borrowers as of such date.

“ Foreign Auction Borrowing Base ” means, as of any date of determination, an amount equal to (a) 85% of the Available Foreign Art Loan Balance as of such date plus (b) the Foreign Auction Art Inventory Component as of such date plus (c) the Foreign Eligible Extended Term Art Component as of such date plus (d) the Foreign Auction Trademark Component as of such date minus (e) Reserves established by the Administrative Agent at such time; provided that, in no event shall the Automobile Work of Art Component exceed $50,000,000.

“ Foreign Auction Trademark Component ” means, as of any date of determination, an amount specified by the Borrower Representative in the most recent Borrowing Base Certificate as the “Foreign Auction Trademark Component”; provided that, in no event shall the sum of (a) the Domestic Auction Trademark Component as of such date plus (b) the Foreign Auction Trademark Component as of such date plus (c) the “Domestic Trademark Component” (as defined in the SFS Revolving Credit Agreement) as of such date plus (d) the “Foreign Trademark Component” (as defined in the SFS Revolving Credit Agreement) as of such date exceed the lesser of (i) the Maximum Trademark Component and (ii) $100,000,000.

“ Foreign Borrowers ” has the meaning ascribed to it in the preamble to the Agreement.

“ Foreign Borrower Subfacility Limit ” means $200,000,000, as such amount may be reduced pursuant to Section 1.3(a) .

“ Foreign Collateral Documents ” means the deeds of assignment and charge and charges over shares executed by the Foreign Credit Parties, and all similar agreements entered into by the Foreign Credit Parties guaranteeing payment of the Obligations of the Foreign Borrowers, or granting a Lien upon property as security for payment of the Secured Obligations of the Foreign Credit Parties.

“ Foreign Credit Parties ” means the Foreign Borrowers and the Foreign Subsidiary Guarantors.

“ Foreign Currency ” means Sterling, Euro and Hong Kong Dollars.

“ Foreign Eligible Extended Term Art Component ” means, as of any date of determination, an amount equal to the lesser of (a) 75% of the Extended Term Art Purchase Price (to the extent any buyer’s premium or any taxes are included in the calculation thereof, net of any buyer’s premium and any taxes (including, without limitation, VAT)) with respect to Eligible Extended Term Art Receivables of the Foreign Borrowers as of such date and (b) $150,000,000, or such lower amount as shall be specified by the Borrower Representative in the most recent Borrowing Base Certificate.

“ Foreign Incremental Art Inventory Component ” means, as of any date of determination, an amount equal to 20% of the value of Eligible Art Inventory of the Foreign

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Borrowers as of such date, valued at the lower of cost and market value (determined in accordance with GAAP).

“ Foreign Incremental Borrowing Availability ” means, as of any date of determination, the lesser of (a) an amount equal to (i) the Maximum Incremental Amount minus (ii) the aggregate outstanding principal balance of the Incremental Revolving Credit Advances as of such date and (b) an amount equal to (i) the Foreign Incremental Borrowing Base as of such date minus (ii) the aggregate outstanding principal balance of the Incremental Revolving Credit Advances made to Foreign Borrowers as of such date.

“ Foreign Incremental Borrowing Base ” means, as of any date of determination, an amount equal to (a) the Foreign Incremental Art Inventory Component as of such date plus (b) the Foreign Incremental Trademark Component as of such date minus (c) Reserves established by the Administrative Agent at such time; provided that, in no event shall the Automobile Work of Art Component exceed $50,000,000.

“ Foreign Incremental Trademark Component ” means, as of any date of determination, an amount specified by the Borrower Representative in the most recent Borrowing Base Certificate as the “Foreign Incremental Trademark Component”; provided that, in no event shall the sum of (a) the Domestic Incremental Trademark Component as of such date plus (b) the Foreign Incremental Trademark Component as of such date exceed the lesser of (i) the Maximum Trademark Component and (ii) $10,000,000.

“ Foreign Obligations Termination Date ” means the date on which (a) all Loans to the Foreign Borrowers have been indefeasibly repaid in full, (b) all other Obligations of the Foreign Borrowers have been completely discharged, (c) all Letter of Credit Obligations incurred on behalf of the Foreign Borrowers have been cash collateralized, canceled or backed by standby letters of credit in accordance with Annex B and (d) the Auction Commitment Termination Date shall have occurred.

“ Foreign Subsidiary ” means any Subsidiary of Parent that is not a Domestic Subsidiary.

“ Foreign Subsidiary Guarantors ” means, collectively, (a) each Subsidiary of Parent organized under the laws of England that is not a Foreign Borrower or an Immaterial Subsidiary and (b) each Sotheby Entity organized under the laws of Hong Kong that is not a Foreign Borrower or an Immaterial Subsidiary and is a direct Subsidiary of any Credit Party, in each case, that is a Credit Party on the Restatement Effective Date or is required to become, and becomes, a Credit Party pursuant to Section 5.14 .

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of long term debt, revolving credit and short term debt extendible beyond one year at the option of the debtor, and also including, in the case of Borrowers, the Obligations and, without duplication, Guaranteed Indebtedness consisting of guaranties of Funded Debt of other Persons.

“ GAAP ” means generally accepted accounting principles in the United States of America consistently applied, as such term is further defined in Annex G to the Agreement.

“ GE Capital ” means General Electric Capital Corporation, a Delaware corporation.

“ General Intangibles ” means all “general intangibles,” as such term is defined in the Code, now owned or hereafter acquired by any Sotheby Entity, including all right, title and interest that such Sotheby Entity may now or hereafter have in or under any Contract, all payment intangibles, customer lists, Licenses, Copyrights, Trademarks, Patents, and all applications therefor and reissues, extensions or renewals thereof, rights in Intellectual Property, interests in partnerships, joint ventures and other business associations, licenses, permits, copyrights, trade secrets, proprietary or confidential information, inventions (whether or not patented or patentable), technical information, procedures, designs, knowledge, know how, software, data bases, data, skill, expertise, experience, processes, models, drawings, materials and records, goodwill (including the goodwill associated with any Trademark or Trademark License), all rights and claims in or under insurance policies (including insurance for fire, damage, loss and casualty, whether covering personal property, real property, tangible rights or intangible rights, all liability, life, key man and business interruption insurance, and all unearned premiums), uncertificated securities, choses in action, deposit, checking and other bank accounts, rights to receive tax refunds and other payments, rights to receive dividends, distributions, cash, Instruments and other property in respect of or in exchange for pledged Stock and Investment Property, rights of indemnification, all books and records, correspondence, credit files, invoices and other papers, including without limitation all tapes, cards, computer runs and other papers and documents in the possession or under the control of such Sotheby Entity or any computer bureau or service company from time to time acting for such Sotheby Entity.

“ Goods ” means all “goods” as defined in the Code, now owned or hereafter acquired by any Sotheby Entity, wherever located, including embedded software to the extent included in “goods” as defined in the Code, manufactured homes, standing timber that is cut and removed for sale and unborn young of animals.

“ Governmental Authority ” means any nation or government, any state or other political subdivision thereof, and any agency, department or other entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

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obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency or any balance sheet condition of the primary obligor, (c) purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, (d) protect the beneficiary of such arrangement from loss (other than product warranties given in the ordinary course of business) or (e) indemnify the owner of such primary obligation against loss in respect thereof. The amount of any Guaranteed Indebtedness at any time shall be deemed to be an amount equal to the lesser at such time of (x) the stated or determinable amount of the primary obligation in respect of which such Guaranteed Indebtedness is incurred and (y) the maximum amount for which such Person may be liable pursuant to the terms of the instrument embodying such Guaranteed Indebtedness, or, if not stated or determinable, the maximum reasonably anticipated liability (assuming full performance) in respect thereof.

“ Guaranties ” means, collectively, the guaranty of the Domestic Subsidiary Guarantors in the Domestic Guaranty and Security Agreement and any other guaranty executed by any Guarantor in favor of the Collateral Agent, for the benefit of the Secured Parties, in respect of all or a portion of the Obligations.

“ Guarantors ” means the Domestic Subsidiary Guarantors, the Foreign Subsidiary Guarantors and each other Person, if any, that executes a guaranty or other similar agreement in favor of the Collateral Agent, for the benefit of the Secured Parties, in connection with the transactions contemplated by the Agreement and the other Loan Documents.

“ Guaranty Hedging Obligation ” means, with respect to any Guarantor, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.

“ Hazardous Material ” means any substance, material or waste that is regulated by, or forms the basis of liability now or hereafter under, any Environmental Laws, including any material or substance that is (a) defined as a “solid waste,” “hazardous waste,” “hazardous material,” “hazardous substance,” “extremely hazardous waste,” “restricted hazardous waste,” “pollutant,” “contaminant,” “hazardous constituent,” “special waste,” “toxic substance” or other similar term or phrase under any Environmental Laws, or (b) petroleum or any fraction or by product thereof, asbestos, polychlorinated biphenyls (PCB’s), or any radioactive substance.

“ Hong Kong ” means the Hong Kong Special Administrative Region of the People’s Republic of China.

“ Hong Kong Dollar Equivalent ” means, with respect to any amount denominated in Hong Kong Dollars, such amount of Hong Kong Dollars, and with respect to any amount denominated in a currency other than Hong Kong Dollars, the amount of Hong Kong Dollars, as of any date of determination, into which such other currency (as the context may require) can be converted in accordance with Section 1.19 .

“ Hong Kong Dollars ” or “ HK$ ” means the lawful currency of Hong Kong.

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“ Hong Kong Dollars Index Rate ” means, for any day, the higher of (a) a floating rate equal to the prime rate for Hong Kong Dollars quoted by The Hongkong and Shanghai Banking Corporation Limited or such other financial institution as may be selected by the Administrative Agent in consultation with the Borrower Representative from time to time and (b) 1.00% per annum.

“ Hong Kong Dollars LIBOR Rate ” means, for each LIBOR Period with respect to a LIBOR Loan denominated in Hong Kong Dollars, the rate designated as “FIXING@11:00” (or any other designation which may from time to time replace that designation or, if no such designation appears, the arithmetic average (rounded upwards, if necessary, to the nearest 1/100 of 1%) of the displayed rates for such LIBOR Period) for such LIBOR Period appearing under the heading “HONG KONG INTERBANK OFFERED RATES (HK DOLLAR)” on page HKABHIBOR on Thomson Reuters Services (or any successor or substitute page of such service, or any successor to or substitute for such service, providing rate quotations comparable to those currently provided on such page of such service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to deposits in Hong Kong Dollars in the Hong Kong interbank market). If the offered rate described in the foregoing sentence does not exist, such rate will be the rate of interest per annum, as determined by the Administrative Agent (rounded upwards, if necessary, to the nearest 1/100 of 1%) at which deposits of Hong Kong Dollars in immediately available funds are offered at 11:00 A.M. (Hong Kong time) on the first day of such LIBOR Period by major financial institutions reasonably satisfactory to the Administrative Agent in the Hong Kong interbank market for a LIBOR Period of the applicable duration for the applicable principal amount on such date of determination. Notwithstanding the foregoing, the “Hong Kong Dollars LIBOR Rate” shall be deemed to be zero if the rate otherwise calculated pursuant to this definition would result in a rate less than zero.

“ IEEPA ” means the International Emergency Economic Power Act, 50 U.S.C. § 1701 et. seq.

“ Immaterial Subsidiary ” means (a) any Domestic Subsidiary or any Foreign Subsidiary organized under the laws of England, in each case listed on Disclosure Schedule (5.15) , unless such entity shall have executed a Guaranty and such Collateral Documents as the Administrative Agent shall reasonably request or (b) for purposes of Section 8.1(g) or (h) , any Sotheby Entity that (i) is not a Credit Party, (ii) owns assets having a book value of which the Dollar Equivalent is less than $100,000 and (iii) had earnings during the most recently completed Fiscal Year of which the Dollar Equivalent was less than $100,000.

“ Impacted Lender ” means any Lender that fails to provide the Administrative Agent, within three (3) Business Days following the Administrative Agent’s written request, satisfactory assurance that such Lender will not become a Non-Funding Lender.

“ Incremental Commitments ” means (a) as to any Lender, the commitment of such Lender to make Incremental Revolving Credit Advances as set forth on Annex J to the Agreement or in the most recent Assignment Agreement executed by such Lender and (b) as to all Lenders, the aggregate commitment of all Lenders to make Incremental Revolving Credit

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Advances, which aggregate commitment shall be Fifty Million Dollars ($50,000,000) on the Amendment No. 1 Effective Date, in each case, as such amount may be reduced from time to time in accordance with the Agreement.

“ Incremental Commitment Termination Date ” means the earliest of (a) Incremental Maturity Date, (b) the Auction Commitment Termination Date, (c) the date of termination of the Incremental Lenders’ obligations to make Incremental Revolving Credit Advances and (d) the date of (i) indefeasible prepayment in full by Borrowers of the outstanding Incremental Revolving Credit Advances and all other outstanding Obligations owing to the Incremental Lenders and (ii) the permanent reduction of all Incremental Commitments to zero dollars ($0).

“ Incremental Lenders ” means, as of any date, Lenders having an Incremental Commitment as of such date or, if the Incremental Commitments have terminated or expired, Lenders holding any Incremental Revolving Credit Advances as of such date.

“ Incremental Maturity Date ” means August 22, 2016, or such later date to which the Incremental Maturity Date may be extended from time to time in accordance with Section 1.22 of the Agreement.

“ Incremental Revolving Note ” has the meaning ascribed to it in Section 1.1(b)(ii) .

“ Indebtedness ” means, with respect to any Person, without duplication, (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property payment for which is deferred 6 months or more, but excluding obligations to trade creditors incurred in the ordinary course of business that are unsecured and not overdue by more than 6 months unless being contested in good faith, (b) all reimbursement and other obligations with respect to letters of credit, bankers’ acceptances and surety bonds, whether or not matured, (c) all obligations evidenced by notes, bonds, debentures or similar instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all Capital Lease Obligations and the present value (discounted at the Dollar Index Rate as in effect on the Restatement Effective Date) of future rental payments under all synthetic leases, (f) all obligations of such Person under commodity purchase or option agreements or other commodity price hedging arrangements, in each case whether contingent or matured, (g) all obligations of such Person under any foreign exchange contract, currency swap agreement, interest rate swap, cap or collar agreement or other similar agreement or arrangement designed to alter the risks of that Person arising from fluctuations in currency values or interest rates, in each case whether contingent or matured, (h) all Indebtedness referred to above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in property or other assets (including accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness, and (i) the Obligations.

“ Indemnified Liabilities ” has the meaning ascribed to it in Section 1.14 .

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“ Indemnified Person ” has the meaning ascribed to in Section 1.14 .

“ Index Rate Loan ” means the Swing Line Loan or any portion of the Revolving Loan bearing interest by reference to the Dollar Index Rate, the Euro Index Rate, the Sterling Index Rate or the Hong Kong Index Rate, as applicable.

“ Insolvency Event ” has the meaning ascribed to in Section 12.5 .

“ Instruments ” means all “instruments,” as such term is defined in the Code, now owned or hereafter acquired by any Sotheby Entity, wherever located, and, in any event, including all certificated securities, all certificates of deposit, and all promissory notes and other evidences of indebtedness, other than instruments that constitute, or are a part of a group of writings that constitute, Chattel Paper.

“ Intellectual Property ” means any and all Licenses, Patents, Copyrights, Trademarks, and the goodwill associated with such Trademarks.

“ Intercompany Indebtedness ” has the meaning ascribed to in Section 12.5 .

“ Interest Expense ” means, with respect to any Person for any fiscal period, the sum of (a) all interest, premium payments, debt discount, fees, charges and related expenses in connection with borrowed money (excluding capitalized interest) or in connection with the deferred purchase price of the assets, in each case, to the extent treated as interest in accordance with GAAP and (b) the portion of rent expense under Capital Leases that is treated as interest in accordance with GAAP, in each case, of or by Parent and its Subsidiaries for such fiscal period.

“ Interest Income ” means, with respect to Parent and its Subsidiaries, on a consolidated basis, for any fiscal period, an amount equal to the consolidated interest income of such Persons for such period, determined in accordance with GAAP.

“ Interest Payment Date ” means (a) as to any Index Rate Loan, the first Business Day of each month to occur while such Loan is outstanding, and (b) as to any LIBOR Loan, the last day of the applicable LIBOR Period; provided , that in the case of any LIBOR Period greater than three months in duration, interest shall be payable at three-month intervals and on the last day of such LIBOR Period; provided , further , that, in addition to the foregoing, each of (i) the date upon which all of the Commitments have been terminated and the Loans have been paid in full, (ii) the Auction Commitment Termination Date, (iii) solely with respect to interest that has then accrued in respect of Incremental Revolving Credit Advances, the date upon which all of the Incremental Commitments have been terminated and the Incremental Revolving Credit Advances have been paid in full, (iv) solely with respect to interest that has then accrued in respect of Incremental Revolving Credit Advances, the Incremental Commitment Termination Date and (v) solely with respect to interest that has then accrued in respect of Incremental Revolving Credit Advances made by Non-Extending Incremental Lenders, the applicable Non-Extending Incremental Maturity Date, in each case, shall be deemed to be an “Interest Payment Date” under the Agreement.

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“ Inventory ” means all “inventory,” as such term is defined in the Code, now owned or hereafter acquired by any Sotheby Entity, wherever located, and in any event including inventory, merchandise, goods and other personal property that are held by or on behalf of any Sotheby Entity for sale or lease or are furnished or are to be furnished under a contract of service, or that constitute raw materials, work in process, finished goods, returned goods, or materials or supplies of any kind, nature or description used or consumed or to be used or consumed in such Sotheby Entity’s business or in the processing, production, packaging, promotion, delivery or shipping of the same, including all supplies and embedded software.

“ Investment Property ” means all “investment property” as such term is defined in the Code now owned or hereafter acquired by any Sotheby Entity, wherever located, including (i) all securities, whether certificated or uncertificated, including stocks, bonds, interests in limited liability companies, partnership interests, treasuries, certificates of deposit, and mutual fund shares; (ii) all securities entitlements of any Sotheby Entity, including the rights of any Sotheby Entity to any securities account and the financial assets held by a securities intermediary in such securities account and any free credit balance or other money owing by any securities intermediary with respect to that account; (iii) all securities accounts of any Sotheby Entity; (iv) all commodity contracts of any Sotheby Entity; and (v) all commodity accounts held by any Sotheby Entity.

“ IRC ” means the Internal Revenue Code of 1986 and all regulations promulgated thereunder.

“ IRS ” means the Internal Revenue Service.

“ Judgment Conversion Date ” has the meaning ascribed to it in Section 1.20(a) .

“ Judgment Currency ” has the meaning ascribed to it in Section 1.20(a) .

“ L/C Issuer ” has the meaning ascribed to it in Annex B .

“ L/C Sublimit ” means, at any time, the sum of the Auction Dollar Tranche L/C Sublimit at such time plus the Auction Multicurrency Tranche L/C Sublimit at such time.

“ Lenders ” means, collectively, the Auction Lenders and Incremental Lenders.

“ Lending Office ” means, with respect to any Lender, the office or offices of such Lender specified as its “Lending Office” beneath its name on the applicable signature page hereto or to the applicable Assignment Agreement, or such other office or offices of such Lender as it may from time to time notify the Borrower Representative and the Administrative Agent.

“ Letters of Credit ” means, collectively, Auction Dollar Tranche Letters of Credit and Auction Multicurrency Tranche Letters of Credit.

“ Letter of Credit Fee ” has the meaning ascribed to it in Annex B .

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“ Letter of Credit Obligations ” means, collectively, the Auction Dollar Tranche Letter of Credit Obligations and the Auction Multicurrency Tranche Letter of Credit Obligations.

“ Letter of Credit Request ” has the meaning ascribed to it in Annex B .

“ Letter-of-Credit Rights ” means “letter-of-credit rights” as such term is defined in the Code, now owned or hereafter acquired by any Sotheby Entity, including rights to payment or performance under a letter of credit, whether or not such Sotheby Entity, as beneficiary, has demanded or is entitled to demand payment or performance.

“ LIBOR Business Day ” means a Business Day on which banks in the City of London (and, in the case of LIBOR Loans denominated in Hong Kong Dollars, in Hong Kong) are generally open for interbank or foreign exchange transactions (and, in the case of LIBOR Loans denominated in Euro, on which the TARGET2 payment system is open for the settlement of payments in Euro).

“ LIBOR Loan ” means any portion of the Revolving Loan bearing interest by reference to a Dollar LIBOR Rate, a Euro LIBO Rate, a Sterling LIBOR Rate or a Hong Kong Dollars LIBOR Rate, as applicable.

“ LIBOR Period ” means, with respect to any LIBOR Loan, each period commencing on a LIBOR Business Day selected by Borrower Representative pursuant to the Agreement and ending one, two or three months thereafter, as selected by Borrower Representative’s irrevocable notice to the Administrative Agent as set forth in Section 1.5(e) ; provided , that the foregoing provision relating to LIBOR Periods is subject to the following:

(a) if any LIBOR Period would otherwise end on a day that is not a LIBOR Business Day, such LIBOR Period shall be extended to the next succeeding LIBOR Business Day unless the result of such extension would be to carry such LIBOR Period into another calendar month in which event such LIBOR Period shall end on the immediately preceding LIBOR Business Day;

(b) any LIBOR Period that would otherwise extend beyond the Commitment Termination Date shall end two (2) LIBOR Business Days prior to such date;

(c) any LIBOR Period that begins on the last LIBOR Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such LIBOR Period) shall end on the last LIBOR Business Day of a calendar month; and

(d) Borrower Representative shall select LIBOR Periods so that there shall be no more than fifteen (15) separate LIBOR Loans in existence at any one time.

“ License ” means any Copyright License, Patent License, Trademark License or other license of rights or interests now held or hereafter acquired by any Sotheby Entity.

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“ Lien ” means any mortgage or deed of trust, pledge, hypothecation, assignment, deposit arrangement, lien, charge, claim, security interest, easement or encumbrance, or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any lease or title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement perfecting a security interest under the Code or comparable law of any jurisdiction).

“ Liquidity Amount ” means, as of any date of determination, the sum of (a) the Aggregate Borrowing Availability as of such date and (b) the Unrestricted Cash Amount as of such date.

“ Litigation ” has the meaning ascribed to it in Section 3.13(a) .

“ Loan Account ” has the meaning ascribed to it in Section 1.13 .

“ Loan Documents ” means the Agreement, the Notes, the Collateral Documents, the Master Standby Agreement, the Master Documentary Agreement, the Auction Guaranty Side Letter, and all other agreements, instruments, documents and certificates identified in the Closing Checklist executed and delivered to, or in favor of, any Agent or any Lenders and including all other fee letters, pledges, powers of attorney, consents, assignments, contracts, notices, letter of credit agreements and all other written matter whether heretofore, now or hereafter executed by or on behalf of any Credit Party, or any employee of any Credit Party, and delivered to any Agent or any Lender in connection with the Agreement or the transactions contemplated thereby. Any reference in the Agreement or any other Loan Document to a Loan Document shall include all appendices, exhibits or schedules thereto, and all amendments, restatements, supplements or other modifications thereto, and shall refer to the Agreement or such Loan Document as the same may be in effect at any and all times such reference becomes operative.

“ Loans ” means the Revolving Loan and the Swing Line Loan.

“ Local Law Collateral Documents ” means, in respect of any property or asset owned by the Borrowers or any other Credit Party, in each case contemplated to be pledged by the terms of the Loan Documents for the benefit of the Secured Parties, all documents reasonably necessary to grant and perfect, under the laws of the jurisdiction of organization of such Credit Party (or a First-Tier Foreign Subsidiary), the security interest granted or contemplated to be granted, pursuant to the Loan Documents, together with an opinion of local counsel qualified in such jurisdiction of organization or registration, as applicable, in form and substance reasonably satisfactory to the Agents.

“ Majority in Interest ” means, at any time, (a) in the case of Auction Lenders, Lenders having, in the aggregate, greater than 50% of the sum of the Auction Commitments of all Lenders plus the “Commitments” of all Lenders under the SFS Revolving Credit Agreement (or, if the Auction Commitment Termination Date has occurred, Lenders holding in the aggregate, greater than 50% of the sum of the aggregate outstanding amount of all Auction Loans held by the Lenders plus the aggregate outstanding amount of all “Loans” held by the “Lenders”

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under the SFS Revolving Credit Agreement), (b) in the case of Auction Dollar Tranche Lenders, Lenders having, in the aggregate, greater than 50% of the sum of the Auction Dollar Tranche Commitments of all Lenders (or, if the Auction Commitment Termination Date has occurred, Lenders holding in the aggregate, greater than 50% of the aggregate outstanding amount of all Auction Dollar Tranche Loans held by the Lenders), (c) in the case of Auction Multicurrency Tranche Lenders, Lenders having, in the aggregate, greater than 50% of the sum of the Auction Multicurrency Tranche Commitments of all Lenders (or, if the Auction Commitment Termination Date has occurred, Lenders holding in the aggregate, greater than 50% of the sum of the aggregate outstanding amount of all Auction Multicurrency Tranche Loans held by the Lenders) and (d) in the case of Incremental Lenders, Lenders having, in the aggregate, greater than 50% of the Incremental Commitments of all Lenders (or, if the Incremental Commitment Termination Date has occurred, Lenders holding in the aggregate, greater than 50% of the aggregate outstanding amount of all Incremental Revolving Credit Advances held by the Lenders).

“ Margin Stock ” means “margin stock” as such term is defined in Regulation T, U or X of the Federal Reserve Board.

“ Master Documentary Agreement ” means the Amended and Restated Master Agreement for Documentary Letters of Credit dated as of the Restatement Effective Date among Borrowers, as applicants, and GE Capital, as issuer.

“ Master Standby Agreement ” means the Amended and Restated Master Agreement for Standby Letters of Credit dated as of the Restatement Effective Date among Borrowers, as applicants, and GE Capital, as issuer.

“ Material Adverse Effect ” means a material adverse effect on (a) the business, assets, operations or financial or other condition of the Sotheby Entities considered as a whole, (b) any Borrower’s ability to pay any of the Loans or any of the other Obligations in accordance with the terms of the Agreement, (c) the Collateral (including Works of Art securing repayment of Art Loans) or the Collateral Agent’s Liens, on behalf of itself and the other Secured Parties, on the Collateral or the priority of such Liens, or (d) any Agent’s or any Lender’s rights and remedies under the Agreement and the other Loan Documents.

“ Material Indebtedness Contracts ” means, collectively, (a) the SFS Revolving Credit Agreement, (b) the Senior Note Indenture and the Senior Notes, (c) the Specified Debt Facility Documents, (d) the York Avenue Loan Agreement and (e) any other contract, agreement or other instrument to which any Sotheby Entity is a party evidencing any Indebtedness or Guaranteed Indebtedness (other than the Obligations) of such Sotheby Entity having a Dollar Equivalent in excess of $20,000,000 in the aggregate (including (x) undrawn committed or available amounts and (y) amounts owing to all creditors under any combined or syndicated credit arrangements).

“ Maximum Auction Amount ” means, as of any date of determination, the sum of the Maximum Auction Dollar Tranche Amount as of such date plus the Maximum Auction Multicurrency Tranche Amount as of such date.

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“ Maximum Auction Borrowing Availability ” means, as of any date of determination, the lesser of (a) an amount equal to (i) the Maximum Auction Amount minus (ii) the aggregate Auction Revolving Loan then outstanding minus (iii) the aggregate Swing Line Loan then outstanding and (b) an amount equal to the sum of (i) the Domestic Auction Borrowing Availability as of such date plus (ii) the Foreign Auction Borrowing Availability as of such date.

“ Maximum Auction Dollar Tranche Amount ” means, as of any date of determination, an amount equal to the Auction Dollar Tranche Commitments of all Lenders as of such date.

“ Maximum Auction Multicurrency Tranche Amount ” means, as of any date of determination, an amount equal to the Auction Multicurrency Tranche Commitments of all Lenders as of such date.

“ Maximum Distribution Amount ” has the meaning assigned to it in Section 6.13(g) .

“ Maximum Incremental Amount ” means, as of any date of determination, an amount equal to the Incremental Commitments of all Lenders as of such date.

“ Maximum Lawful Rate ” has the meaning assigned to it in Section 1.5(f) .

“ Maximum Trademark Component ” means, as of any date of determination, an amount equal to 85% of the appraised distressed fair market value of all Trademarks of the Credit Parties on a consolidated basis, as determined by the Administrative Agent based on the most recent Trademark appraisal ordered by the Administrative Agent.

“ Multiemployer Plan ” means a “multiemployer plan” as defined in Sections 3(37) or 4001(a)(3) of ERISA, and to which any Sotheby Entity or ERISA Affiliate is making, is obligated to make or has made or been obligated to make, contributions on behalf of participants who are or were employed by any of them.

“ New Borrowers ” means, collectively, SFS Inc., SFS California, Oberon, Ventures LLC, and SFS Ltd.

“ New Lender ” has the meaning ascribed to it in Section 1.16(a)(ix) .

“ Non-Extending Incremental Lender ” has the meaning set forth in the definition of “Non-Extending Incremental Maturity Date” in this Annex A .

“ Non-Extending Incremental Maturity Date ” means, if any Existing Incremental Maturity Date is extended in accordance with Section 1.22 but one or more Incremental Lenders have rejected (or deemed to have rejected) the Borrower Representative’s request for such extension (such Incremental Lenders, the “ Non-Extending Incremental Lenders ”), such Existing Incremental Maturity Date without giving effect to such extension.

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“ Non-Funding Lender ” means any Lender that has (a) failed to fund any payments required to be made by it under the Loan Documents within two (2) Business Days after any such payment is due (excluding expense and similar reimbursements that are subject to good faith disputes) unless such Lender notifies the Administrative Agent and the Borrower Representative in writing that such failure is the result of such Lender’s reasonable determination that one or more conditions precedent to funding specified in such notice has not been satisfied, (b) given written notice (and the Administrative Agent has not received a revocation in writing), to a Borrower, any Agent, any Lender, or any L/C Issuer or has otherwise publicly announced (and the Administrative Agent has not received notice of a public retraction) that such Lender believes it will fail to fund payments or purchases of participations required to be funded by it under the Loan Documents or one or more other syndicated credit facilities or (c) any Lender that has (i) become subject to a voluntary or involuntary case under the Bankruptcy Code or any similar bankruptcy laws, (ii) a custodian, conservator, receiver or similar official appointed for it or any substantial part of such Person’s assets, or (iii) made a general assignment for the benefit of creditors, been liquidated, or otherwise been adjudicated as, or determined by any Governmental Authority having regulatory authority over such Person or its assets to be, insolvent or bankrupt, and for clause (c), the Administrative Agent has determined that such Lender is reasonably likely to fail to fund any payments required to be made by it under the Loan Documents.

“ Notes ” means, collectively, the Auction Revolving Notes, the Incremental Revolving Notes and the Swing Line Notes.

“ Notice of Conversion/Continuation ” has the meaning ascribed to it in Section 1.5(e) .

“ Notice of Auction Revolving Credit Advance ” has the meaning ascribed to it in Section 1.1(a)(i) .

“ Notice of Incremental Revolving Credit Advance ” has the meaning ascribed to it in Section 1.1(b)(i) .

“ Notice of Revolving Credit Advance ” means a Notice of Auction Revolving Credit Advance or a Notice of Incremental Revolving Credit Advance, as the context may imply.

“ Oatshare ” has the meaning ascribed to it in the preamble to the Agreement.

“ Oberon ” has the meaning ascribed to it in the preamble to the Agreement.

“ Obligation Currency ” has the meaning ascribed to it in Section 1.20(a) .

“ Obligations ” means all loans, advances, debts, liabilities and obligations for the performance of covenants, tasks or duties or for payment of monetary amounts (whether or not such performance is then required or contingent, or such amounts are liquidated or determinable) owing by any Credit Party to any Agent, any Lender or any L/C Issuer, and all covenants and duties regarding such amounts, of any kind or nature, present or future, whether or not evidenced

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by any note, agreement, letter of credit agreement or other instrument, arising under the Agreement or any of the other Loan Documents. This term includes all principal, interest (including all interest that accrues after the commencement of any case or proceeding by or against any Credit Party in bankruptcy, whether or not allowed in such case or proceeding), Fees, expenses, attorneys’ fees and any other sum chargeable to any Credit Party under the Agreement or any of the other Loan Documents. This term does not include any Bank Product and Hedging Obligations.

“ Obligor ” has the meaning ascribed to it in Section 12.5 .

“ O.E.C.D. ” means the Organisation for Economic Co-operation and Development as contemplated by the Convention on the Organisation for Economic Co-operation and Development of December 14, 1960, as amended from time to time.

“ OFAC ” means the U.S. Department of Treasury’s Office of Foreign Asset Control.

“ Overadvance ” has the meaning ascribed to it in Section 1.1(a)(iii) .

“ Parent ” has the meaning ascribed to it in the preamble to the Agreement.

“ Participant Register ” has the meaning ascribed to it in Section 9.1(d) .

“ Participating Member State ” means any member state of the European Union that has the Euro as its lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union.

“ Patent License ” means rights under any written agreement now owned or hereafter acquired by any Sotheby Entity granting any right with respect to any invention on which a Patent is in existence.

“ Patents ” means all of the following in which any Sotheby Entity now holds or hereafter acquires any interest: (a) all letters patent of the United States or of any other country, all registrations and recordings thereof, and all applications for letters patent of the United States or of any other country, including registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State, or any other country, and (b) all reissues, continuations, continuations in part or extensions thereof.

“ PATRIOT Act ” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56) (The USA PATRIOT Act).

“ PBGC ” means the Pension Benefit Guaranty Corporation.

“ Pension Plan ” means a Plan described in Section 3(2) of ERISA.

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“ Permitted Art Loan Country ” means (a) the United States of America, (b) England, (c) Wales, (d) Hong Kong and (e) any other country with respect to which the Collateral Agent, in its sole discretion in consultation with the Lenders, shall have determined (and notified the Borrowers in writing) that Works of Art securing repayment of an Art Loan may be located in such country without causing such Works of Art to fail to constitute Eligible Art Loan Collateral pursuant to clause (c) of the definition thereof, it being understood that the Collateral Agent may withdraw such determination at any time in its sole discretion with respect to any country (other than the United States of America, England, Wales and Hong Kong) and thereafter such country shall not constitute a Permitted Art Loan Country.

“ Permitted Consignment ” means a “consignment” (as defined in Section 9-102(a)(20) of the UCC) governed under the laws of the United States of America (or any State thereof) of Art Inventory by a Borrower to a Person, with respect to which consignment, such Borrower has taken all of the following actions:

(i) conducted UCC searches against such Person in all applicable jurisdictions;

(j) filed a UCC-1 financing statement in the applicable jurisdiction, naming such Borrower as consignor and such Person as consignee, and providing an adequate description of such Art Inventory for the collateral description;

(k) if applicable, taken all actions required pursuant to, and otherwise satisfied the requirements set forth in, Section 9-324(b) of the UCC in order to maintain a security interest in such Art Inventory that has priority over all conflicting security interests in such Art Inventory;

(l) provided evidence to the Administrative Agent, in form and substance reasonably satisfactory to the Administrative Agent, of such Borrower’s completion of the actions described in clauses (a) through (c), as applicable, of this definition; and

(m) taken any additional actions reasonably requested by the Administrative Agent from time to time with respect to such Art Inventory within ten (10) Business Days (or such later date as the Administrative Agent shall consent to in writing) of the Administrative Agent’s request therefor in order to protect the interests of the Collateral Agent therein under all applicable laws.

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carriers’, warehousemen’s, suppliers’ or other similar possessory liens arising in the ordinary course of business and securing liabilities in an outstanding aggregate amount not in excess of a Dollar Equivalent of $2,500,000 at any time, so long as such Liens attach only to Inventory or (ii) solely for purposes of Sections 1.6 , 1.7 , 1.8 , 3.6 and 6.7 and the definition of “Eligible Extended Term Art Collateral,” Liens securing Indebtedness under the Specified Debt Facility, so long as such Liens are subject to an intercreditor agreement (the “ Specified Debt Facility Intercreditor Agreement ”) entered into between the Agents and the administrative agent under the Specified Debt Facility and in form and substance reasonably satisfactory to the Agents, which shall provide that the Liens securing Indebtedness under the Specified Debt Facility shall be junior in priority to the Liens securing the Secured Obligations, except with respect to any Collateral which is purchased or financed solely with the proceeds of the Specified Debt Facility, in which case the Liens securing Indebtedness under the Specified Debt Facility may be senior to the Liens securing the Secured Obligations solely with respect to the Collateral so purchased or financed; (f) deposits securing, or in lieu of, surety, appeal or customs bonds in proceedings to which any Sotheby Entity is a party; (g) any attachment or judgment lien not constituting an Event of Default under Section 8.1(i) ; (h) zoning restrictions, easements, licenses, or other restrictions on the use of any Real Estate or other minor irregularities in title (including leasehold title) thereto, so long as the same do not materially impair the use, value, or marketability of such Real Estate; (i) any Lien in favor of a consignor on a segregated deposit account established for the benefit of such consignor and into which only proceeds of Works of Art consigned by such consignor to a Sotheby Entity for sale (including such Sotheby Entity’s commissions on such sales) are deposited; provided , that if such consignor is an Art Loan Debtor, such Lien shall constitute a “Permitted Encumbrance” only if an agreement among the applicable Borrower, such consignor and the applicable account bank expressly states that amounts received in such deposit account shall be transferred first, without any further consent of any Person, to the applicable Borrower until the related Art Loan is repaid in full prior to any such amounts being transferred to such consignor; (j) presently existing or hereafter created Liens in favor of the Collateral Agent, on behalf of Secured Parties, pursuant to the Loan Documents and the “Loan Documents” under the SFS Revolving Credit Agreement; (k) other than with respect to any Blocked Account or Cash Collateral Account, any lien or banker’s right of set-off or combination of accounts arising by operation of law or in accordance with standard terms of banking; (l) Liens expressly permitted under clauses (c) and (d) of Section 6.7 of the Agreement, and (m) Liens arising in the ordinary course of business in favor of consignors securing Works of Art of such consignors that are consigned to a Sotheby Entity for sale.

“ Permitted Extended Term Art Country ” means (a) the United States of America, (b) England, (c) Wales, (d) Hong Kong and (e) any other country with respect to which the Collateral Agent, in its sole discretion in consultation with Lenders, shall have determined (and notified the Borrowers in writing) that Works of Art with respect to Extended Term Art Receivables may be located in such country without causing such Works of Art to fail to constitute Eligible Extended Term Art Collateral pursuant to clause (f) of the definition thereof, it being understood that the Collateral Agent may withdraw such determination at any time in its sole discretion with respect to any country (other than the United States of America, England, Wales and Hong Kong) and thereafter such country shall not constitute a Permitted Extended Term Art Country.

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“ Permitted Inventory Country ” means (a) the United States of America, (b) England, (c) Wales, (d) Hong Kong and (e) any other country with respect to which the Collateral Agent, in its sole discretion in consultation with Lenders, shall have determined (and notified the Borrowers in writing) that Art Inventory may be located in such country without causing such Art Inventory to fail to constitute Eligible Art Inventory pursuant to Section 1.7(c) , it being understood that the Collateral Agent may withdraw such determination at any time in its sole discretion with respect to any country (other than the United States, England, Wales and Hong Kong) and thereafter such country shall not constitute a Permitted Inventory Country.

“ Permitted U.K. Real Estate Financing ” means any mortgage financing, sale leaseback, synthetic lease or similar transaction in respect of any Specified U.K. Real Estate.

“ Person ” means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, limited liability company, institution, public benefit corporation, other entity or government (whether federal, state, county, city, municipal, local, foreign, or otherwise, including any instrumentality, division, agency, body or department thereof).

“ Personal Data ” shall have the same meaning set forth in the Data Protection Laws.

“ Plan ” means, at any time, an “employee benefit plan”, as defined in Section 3(3) of ERISA, that any Sotheby Entity or ERISA Affiliate maintains, contributes to or has an obligation to contribute to or has maintained, contributed to or had an obligation to contribute to at any time within the past 7 years on behalf of participants who are or were employed by any Sotheby Entity or ERISA Affiliate. “Plan” shall not include any pension or retirement plan or arrangement operating in the United Kingdom.

“ Proceeds ” means “proceeds,” as such term is defined in the Code, including (a) any and all proceeds of any insurance, indemnity, warranty or guaranty payable to any Sotheby Entity from time to time with respect to any of the Collateral, (b) any and all payments (in any form whatsoever) made or due and payable to any Sotheby Entity from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Collateral by any Governmental Authority (or any Person acting under color of governmental authority), (c) any claim of any Sotheby Entity against third parties (i) for past, present or future infringement of any Patent or Patent License, or (ii) for past, present or future infringement or dilution of any Copyright, Copyright License, Trademark or Trademark License, or for injury to the goodwill associated with any Trademark or Trademark License, (d) any recoveries by any Sotheby Entity against third parties with respect to any litigation or dispute concerning any of the Collateral including claims arising out of the loss or nonconformity of, interference with the use of, defects in, or infringement of rights in, or damage to, Collateral, (e) all amounts collected on, or distributed on account of, other Collateral, including dividends, interest, distributions and Instruments with respect to Investment Property and pledged Stock, and (f) any and all other amounts, rights to payment or other property acquired upon the sale, lease, license, exchange or other disposition of Collateral and all rights arising out of Collateral.

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“ Prohibited Person ” means any Person:

(a) listed in the Annex to, or otherwise subject to the provisions of, the Executive Order;

(b) that is owned or controlled by, or acting for or on behalf of, any person or entity that is listed in the Annex to, or is otherwise subject to the provisions of, the Executive Order;

(c) with whom any Agent or any Lender is prohibited from dealing or otherwise engaging in any transaction by any terrorism or money laundering legal requirements, including the PATRIOT Act and the Executive Order;

(d) that commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Order;

(e) that is named as a “specifically designated national (SDN)” on the most current list published by OFAC at its official website (http://www.treas.gov.ofac/t11sdn.pdf) or at any replacement website or other replacement official publication of such list or is named on any other U.S. or foreign government or regulatory list (including, without limitation, any sanctions list administered by the United Nations (“UN”), the European Union (“EU”), the State Secretariat for Economic Affairs of Switzerland (“SECO”), the Swiss Directorate of International Law (“DIL”), the United States Treasury Department’s Office of Foreign Assets Control (“OFAC”), Her Majesty’s Treasury of the United Kingdom (“HMT”), the Hong Kong Monetary Authority (“HKMA”) or the Monetary Authority of Singapore (“MAS”));

(f) that is covered by IEEPA, OFAC or any other law, regulation or executive order relating to the imposition of economic sanctions against any country, region or individual pursuant to United States law or United Nations resolution, including any entity located in such a country or region or an individual who is a citizen or resident of, or located in such a country or region; or

(g) that is an affiliate (including any principal, officer, immediate family member or close associate) of a person or entity described in one or more of clauses (a) – (f) of this definition.

“ Projections ” means Parent’s forecasted consolidated: (a) balance sheets; (b) profit and loss statements; and (c) cash flow statements, in each case prepared on a basis consistent with the historical Financial Statements of Parent, together with appropriate supporting details and a statement of underlying assumptions.

“ Pro Rata Share ” means with respect to all matters relating to any Lender:

(a) in respect of the Auction Dollar Tranche Commitment, (i) prior to the Auction Commitment Termination Date, the percentage obtained by dividing (x) the

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Auction Dollar Tranche Commitment of that Lender by (y) the aggregate Auction Dollar Tranche Commitments of all Lenders, and (ii) on and after the Auction Commitment Termination Date, the percentage obtained by dividing (x) the sum of (A) the aggregate outstanding principal balance of the Auction Dollar Tranche Revolving Loan held by that Lender by (y) the outstanding principal balance of the Auction Dollar Tranche Revolving Loan held by all Lenders;

(b) in respect of the Auction Multicurrency Tranche Commitment, (i) prior to the Auction Commitment Termination Date, the percentage obtained by dividing (x) the Auction Multicurrency Tranche Commitment of that Lender by (y) the aggregate Auction Multicurrency Tranche Commitments of all Lenders, and (ii) on and after the Auction Commitment Termination Date, the percentage obtained by dividing (x) the Dollar Equivalent of the aggregate outstanding principal balance of the Auction Multicurrency Tranche Revolving Loan held by that Lender by (y) the Dollar Equivalent of the outstanding principal balance of the Auction Multicurrency Tranche Revolving Loan held by all Lenders;

(c) in respect of the Auction Commitment, (i) prior to the Auction Commitment Termination Date, the percentage obtained by dividing (x) the Auction Commitment of that Lender by (y) the aggregate Auction Commitments of all Lenders, and (ii) on and after the Auction Commitment Termination Date, the percentage obtained by dividing (x) the Dollar Equivalent of the aggregate outstanding principal balance of the Auction Revolving Loan held by that Lender by (y) the Dollar Equivalent of the outstanding principal balance of the Auction Revolving Loan held by all Lenders;

(d) in respect of the Incremental Commitment, (i) prior to the Incremental Commitment Termination Date, the percentage obtained by dividing (x) the Incremental Commitment of that Lender by (y) the aggregate Incremental Commitments of all Lenders, and (ii) on and after the Incremental Commitment Termination Date, the percentage obtained by dividing (x) the aggregate outstanding principal balance of the Incremental Revolving Credit Advances held by that Lender by (y) the outstanding principal balance of the Incremental Revolving Credit Advances held by all Lenders; and

(e) in respect of all Commitments or all Obligations, (i) prior to the Incremental Commitment Termination Date or the Auction Commitment Termination Date, the percentage obtained by dividing (x) the Commitments of that Lender by (y) the aggregate Commitments of all Lenders, (ii) on and after the Incremental Commitment Termination Date but prior to the Auction Commitment Termination Date, the percentage obtained by dividing (x) the sum of (A) the aggregate outstanding principal balance of the Incremental Revolving Credit Advances held by that Lender plus (B) the Auction Dollar Tranche Commitments of that Lender plus (C) the Auction Multicurrency Tranche Commitments of that Lender by (y) the sum of (A) the aggregate outstanding principal balance of the Incremental Revolving Credit Advances held by all Lenders plus (B) the aggregate Auction Dollar Tranche Commitments of all Lenders plus (C) the aggregate Auction Multicurrency Tranche Commitments of all Lenders, and (iii) on and after the

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Auction Commitment Termination Date, the percentage obtained by dividing (x) the sum of (A) the aggregate outstanding principal balance of the Incremental Revolving Credit Advances held by that Lender plus (B) the aggregate outstanding principal balance of the Auction Dollar Tranche Revolving Loan held by that Lender plus (C) the Dollar Equivalent of the aggregate outstanding principal balance of the Auction Multicurrency Tranche Revolving Loan held by that Lender by (y) the sum of (A) the aggregate outstanding principal balance of the Incremental Revolving Credit Advances held by all Lenders plus (B) the outstanding principal balance of the Auction Dollar Tranche Revolving Loan held by all Lenders plus (C) the Dollar Equivalent of the outstanding principal balance of the Auction Multicurrency Tranche Revolving Loan held by all Lenders;

in each case as any such percentages may be adjusted by assignments permitted pursuant to Section 9.1 or other adjustments to the Commitments pursuant to the Agreement.

“ Protected Party ” means a Lender which is or will be subject to any liability or required to make any payment, for or on account of Tax in relation to a sum received or receivable (or any sum deemed for the purposes of Tax to be received or receivable) under any Loan Document.

“ Qualified Assignee ” means any existing Lender (other than a Non-Funding Lender or an Impacted Lender) or any Affiliate or Approved Fund of any existing Lender (other than a Non-Funding Lender or an Impacted Lender); provided that, notwithstanding the foregoing, for purposes of this definition, no vulture fund, distressed debt purchaser or similar institution whose primary business consists of purchasing or investing in Persons that are highly financially distressed and insolvent or imminently insolvent shall constitute an Affiliate or Approved Fund of any existing Lender.

“ Qualifying Lender ” means:


(i)	in respect of a payment made by a U.K. Credit Party, a Lender which is beneficially entitled to interest or other amounts payable to that Lender in respect of an advance under this Agreement or the other Loan Documents and is:

(A) a Lender:

(1)

in respect of an advance made under this Agreement or the other Loan Documents by a Person that was a bank (as defined for the purpose of Section 879 of the Income Tax Act 2007 of the United Kingdom) at the time that that advance was made and which is a bank (as defined for the purpose of section 879 of the Income Tax Act 2007 of the United Kingdom) and would be within the charge to United Kingdom corporation tax as respects any payments of interest made in respect of that advance apart from Section

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18A of the Corporation Tax Act 2009 of the United Kingdom; or


(2)	in respect of an advance made under this Agreement or the other Loan Documents by a Person that was a bank (as defined for the purpose of Section 879 of the Income Tax Act 2007 of the United Kingdom) at the time that that advance was made and which is within the charge to United Kingdom corporation tax as respects any payments of interest made in respect of that advance; or


(B)	a Lender which is:


(1)	a company resident in the United Kingdom for United Kingdom tax purposes;


(2)	a partnership each member of which is:


(a)	a company resident in the United Kingdom for United Kingdom tax purposes; or

(b)

a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account in computing its chargeable profits (within the meaning of section 19 of the Corporation Tax Act 2009 of the United Kingdom) the whole of any share of interest (or other amounts) payable in respect of that advance that falls to it by reason of Part 17 of the Corporation Tax Act 2009 of the United Kingdom;


(3)	a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account interest payable in respect of that advance in computing its chargeable profits (within the meaning of section 19 of the Corporation Tax Act 2009 of the United Kingdom); or


(C)	a Treaty Lender with respect to the United Kingdom.


(ii)	in respect of a payment made by a Domestic Credit Party, a Lender which is:


(A)	created or organized under the laws of the United States of America or of any state (including the District of Columbia)

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thereof; provided , that such Lender has delivered (in a timely fashion and without undue delay and from time to time thereafter upon the reasonable request of Borrowers or the Administrative Agent, shall deliver) to Borrower Representative and the Administrative Agent two original copies of IRS Form W-9 (or successor form) properly prepared and executed;

(B)

a Treaty Lender with respect to the United States of America that is entitled to receive payments under any Loan Document without deduction or withholding of any United States federal income Taxes, provided such Lender has delivered (in a timely fashion and without undue delay and from time to time thereafter upon the reasonable request of Borrowers or the Administrative Agent, shall deliver) to Borrower Representative and the Administrative Agent two duly completed original copies of IRS Form W-8BEN or IRS Form W-8BEN-E (or any successor form) providing that it is a resident of a foreign country with which the United States of America has an income tax treaty and claiming eligibility for benefits of an income tax treaty to which the United States of America is a party and a complete exemption from U.S. withholding tax under such treaty; or

(C)

entitled to receive payments under any Loan Document without deduction or withholding of any United States federal income Taxes as a result of such payments being effectively connected with the conduct by such Lender of a trade or business within the United States of America, provided such Lender has delivered (in a timely fashion and without undue delay and from time to time thereafter upon the reasonable request of Borrowers or the Administrative Agent, shall deliver) to the Credit Party Representative and the Administrative Agent two original copies of either (1) IRS Form W-8ECI (or any successor form) certifying that the payments made pursuant to any Loan Document are effectively connected with the conduct by that Lender of a trade or business within the United States of America or (2) such other applicable form prescribed by the IRS certifying as to such Lender’s entitlement to exemption from United States withholding tax with respect to all payments to be made to such Lender under any Loan Document.

(iii) in respect of a payment made by a Credit Party organized under the laws of Hong Kong, a Lender which is:


(A)	created or organized under the laws of Hong Kong or a company that is resident in Hong Kong for Hong Kong tax purposes;

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(B)	a Treaty Lender with respect to Hong Kong that is entitled to receive payments under any Loan Document without deduction or withholding of any Hong Kong profits taxes;

(C)

entitled to receive payments under any Loan Document without deduction or withholding of any Hong Kong profits taxes, provided such Lender has delivered (in a timely fashion and without undue delay and from time to time upon the reasonable request of Borrowers and the Administrative Agent, shall deliver) to the Borrower Representative and the Administrative Agent any applicable forms certifying to such Lender’s entitlement to exemption from Hong Kong withholding tax with respect to all payments to be made to such Lender under any Loan Document.

Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify Borrowers and the Administrative Agent in writing of its legal inability to do so.

“ Qualified Plan ” means a Pension Plan that is intended to be tax qualified under Section 401(a) of the IRC.

“ Rate Management Transaction ” means any transaction (including an agreement with respect thereto) now existing or hereafter entered by a Sotheby Entity that is a rate swap, basis swap, forward rate transaction, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, forward transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of these transactions) or any combination thereof, whether linked to one or more interest rates, foreign currencies, or equity prices.

“ Real Estate ” has the meaning ascribed to it in Section 3.6 .

“ Refunded Dollar Tranche Swing Line Loan ” has the meaning ascribed to it in Section 1.1(c)(iii) .

“ Refunded Multicurrency Tranche Swing Line Loan ” has the meaning ascribed to it in Section 1.1(c)(iii) .

“ Refunded Foreign Currency Swing Line Loan ” has the meaning ascribed to it in Section 1.1(c)(iv) .

“ Related Persons ” means, with respect to any Person, each Affiliate of such Person and each director, officer, employee, agent, trustee, representative, attorney, accountant and each insurance, environmental, legal, financial and other advisor and other consultants and agents of or to such Person or any of its Affiliates.

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“ Related Transactions ” means (i) the execution and delivery of the SFS Revolving Credit Agreement, (ii) the “Loans” and “Letter of Credit Obligations” to be made or incurred on the Restatement Effective Date under the SFS Revolving Credit Agreement, (iii) the disbursement of the proceeds of such “Loans” under the SFS Revolving Credit Agreement pursuant to the instructions of the “Borrower Representative” thereunder and (iv) the payment of all fees, costs and expenses in connection with each of the foregoing.

“ Relationship Bank ” has the meaning ascribed to it in Annex C .

“ Release ” means any release, threatened release, spill, emission, leaking, pumping, pouring, emitting, emptying, escape, injection, deposit, disposal, discharge, dispersal, dumping, leaching or migration of Hazardous Material in the indoor or outdoor environment.

“ Register ” has the meaning ascribed to it in Section 9.1(b) .

“ Replacement Lender ” has the meaning ascribed to it in Section 1.17(d) .

“ Repurchase ” means a repurchase by Parent of the Stock of Parent on any date.

“ Repurchase Period ” means the period of time during which a Repurchase or a series of Repurchases may occur, as reflected in a written notice thereof from Parent to the Administrative Agent pursuant to Section 6.13(e) .

“ Requisite Lenders ” means, collectively, (a) prior to the Incremental Commitment Termination Date or the Auction Commitment Termination Date, Lenders having, in the aggregate, more than 50% of the sum of the Commitments of all Lenders plus the “Commitments” of all “Lenders” under the SFS Revolving Credit Agreement, (b) on and after the Incremental Commitment Termination Date but prior to the Auction Commitment Termination Date, Lenders holding in the aggregate, greater than 50% of (i) the sum of the Auction Commitments of all the Lenders plus the sum of the “Commitments” of all the “Lenders” under the SFS Revolving Credit Agreement and (ii) the aggregate outstanding principal balance of the Incremental Revolving Credit Advances held by all Lenders, and (c) on and after the Auction Commitment Termination Date, Lenders holding in the aggregate, greater than 50% of (i) the aggregate outstanding amount of all Loans held by the Lenders and (ii) the aggregate outstanding amount of all “Loans” held by the “Lenders” under the SFS Revolving Credit Agreement.

“ Reserves ” means the Due-to-Consignor Reserve and such other reserves against Eligible Art Loans, Eligible Extended Term Art Receivables, Eligible Art Inventory, Domestic Auction Borrowing Availability, Domestic Incremental Borrowing Availability, Foreign Auction Borrowing Availability or Foreign Incremental Borrowing Availability that the Administrative Agent may, in its sole reasonable credit judgment, establish from time to time. Without limiting the generality of the foregoing, Reserves established to ensure the payment of accrued Interest Expenses, Indebtedness, Bank Product and Hedging Obligations or other scheduled liabilities shall be deemed to be a reasonable exercise of the Administrative Agent’s credit judgment. For purposes of clarity, the Administrative Agent will not be required at any time to obtain any

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approval from any Sotheby Entity, any Lenders or any other Person(s) for the establishment, modification or elimination of any Reserves (other than the Due-to-Consignor Reserve).

“ Restatement Effective Date ” means August 22, 2014.

“ Restricted Payment ” means, with respect to any Sotheby Entity (a) the declaration or payment of any dividend or the incurrence of any liability to make any other payment or distribution of cash or other property or assets in respect of Stock; (b) any payment on account of the purchase, redemption, defeasance, sinking fund or other retirement of such Sotheby Entity’s Stock or any other payment or distribution made in respect thereof, either directly or indirectly; (c) any payment made to redeem, purchase, repurchase or retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire Stock of such Sotheby Entity now or hereafter outstanding; (d) any payment of a claim for the rescission of the purchase or sale of, or for material damages arising from the purchase or sale of, any shares of such Sotheby Entity’s Stock or of a claim for reimbursement, indemnification or contribution arising out of or related to any such claim for damages or rescission; (e) any payment, loan, contribution, or other transfer of funds or other property to any Stockholder of Parent other than (i) payments of compensation in the ordinary course of business to Stockholders who are employees of such Person and (ii) payments made in connection with the consignment of property for sale in the ordinary course of business; and (f) any payment of management fees (or other fees of a similar nature) by a Borrower or Guarantor to any Stockholder of such Person or its Affiliates that is not a Borrower or Guarantor unless (i) such fees are paid in the ordinary course of business of such Borrower or Guarantor, as applicable, and (ii) such payment is not made following the occurrence and during the continuance of an Event of Default.

“ Retiree Welfare Plan ” means, at any time, a welfare plan (within the meaning of Section 3(1) of ERISA) that provides for continuing coverage or benefits for any participant or any beneficiary of a participant after such participant’s termination of employment, other than continuation coverage provided pursuant to Section 4980B of the IRC or other similar state law and at the sole expense of the participant or the beneficiary of the participant.

“ Revolving Credit Advance ” means an Auction Dollar Tranche Revolving Credit Advance, an Auction Multicurrency Tranche Revolving Credit Advance or an Incremental Revolving Credit Advance, as the context may imply.

“ Revolving Loan ” and “ Revolving Loan Outstandings ” mean, at any time, the sum of (i) the Dollar Equivalent of the aggregate amount of all Auction Revolving Credit Advances and Incremental Revolving Credit Advances outstanding to the Borrowers plus (ii) the Dollar Equivalent of the aggregate Letter of Credit Obligations incurred on behalf of the Borrowers. Unless the context otherwise requires, references to the outstanding principal balance of the Revolving Loan shall include the outstanding balance of Letter of Credit Obligations.

“ Secured Obligations ” means, collectively, (i) the Obligations, (ii) the “Obligations” (as defined in the SFS Revolving Credit Agreement), (iii) the Bank Product and

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Hedging Obligations and (iv) the “Bank Product and Hedging Obligations” (as defined in the SFS Revolving Credit Agreement).

“ Secured Parties ” means the holders of the Secured Obligations from time to time (including, without limitation, each holder of Bank Product and Hedging Obligations and their respective assignees).

“ Senior Note Indenture ” means that certain Indenture, dated as of September 27, 2012, governing the Senior Notes.

“ Senior Notes ” means Parent’s 5.25% Senior Notes due October 1, 2022, in an aggregate principal amount outstanding on the date hereof of $300,000,000, issued pursuant to the Senior Note Indenture.

“ SFS/Auction Ratable Share ” means, at any time, the sum of the Auction Revolving Loan at such time plus the outstanding balance of the Swing Line Loan at such time as a percentage of the sum of (a) the sum of the Auction Revolving Loan at such time plus the outstanding balance of the Swing Line Loan at such time plus (b) the sum of the “Revolving Loan” (as defined in the SFS Revolving Credit Agreement) at such time plus the outstanding balance of the “Swing Line Loan” (as defined in the SFS Revolving Credit Agreement) at such time.

“ SFS California ” has the meaning ascribed to it in the preamble to the Agreement.

“ SFS Foreign Borrower Obligations ” means, at any time, the sum of (a) the Dollar Equivalent of the outstanding principal balance of the “Revolving Credit Advances” made to the “Foreign Borrowers” under the SFS Revolving Credit Agreement plus (b) the Dollar Equivalent of the aggregate amount of all “Letter of Credit Obligations” incurred for the benefit of the Foreign Borrowers under the SFS Revolving Credit Agreement.

“ SFS Inc. ” has the meaning ascribed to it in the preamble to the Agreement.

“ SFS Ltd. ” has the meaning ascribed to it in the preamble to the Agreement.

“ SFS Revolving Credit Agreement ” means that certain Amended and Restated Credit Agreement, dated as of the date hereof, by and among Sotheby’s Financial Services, Inc., Sotheby’s Financial Services California, Inc., Sotheby’s, Inc., Oberon, Inc., Sotheby’s Ventures, LLC, Sotheby’s Financial Services Limited, Sotheby’s U.K. and Sotheby’s H.K., as the Borrowers, the other Credit Parties party thereto, the Lenders from time to time party thereto, and GE Capital, as the Administrative Agent and the Collateral Agent.

“ Software ” means all “software” as such term is defined in the Code, now owned or hereafter acquired by any Sotheby Entity, other than software embedded in any category of Goods, including all computer programs and all supporting information provided in connection with a transaction related to any program.

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“ Solvent ” means (i) with respect to any Person other than a Foreign Subsidiary organized under the laws of England or Hong Kong, on a particular date, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person; (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured; (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature; and (d) such Person is not engaged in a business or transaction, and is not about to engage in a business or transaction, for which such Person’s property would constitute an unreasonably small capital and (ii) with respect to any Foreign Subsidiary organized under the laws of England or Hong Kong, on a particular date, (a) such Foreign Subsidiary is unable, or has admitted its inability, to pay its debts as they fall due, has suspended making payments on any of its debts or, by reason of actual or anticipated financial difficulties, has commenced negotiations with one or more of its creditors with a view to rescheduling any of its indebtedness, (b) the value of the assets of such Foreign Subsidiary is less than its liabilities (taking into account contingent and prospective liabilities) or (c) a moratorium has been declared in respect of any indebtedness of such Foreign Subsidiary. The amount of contingent liabilities (such as litigation, guaranties and pension plan liabilities) at any time shall be computed as the amount that, in light of all the facts and circumstances existing at the time, represents the amount that can be reasonably be expected to become an actual or matured liability.

“ Sotheby Entities ” means, collectively, Parent, each other Borrower, each “Borrower” under the SFS Revolving Credit Agreement and each of their respective Subsidiaries.

“ Sotheby’s Deferred Benefits Compensation Plan ” means the Sotheby’s Deferred Benefits Compensation Plan, dated as of January 1, 2007.

“ Sotheby’s H.K. ” has the meaning ascribed to it in the preamble to the Agreement.

“ Sotheby’s, Inc. ” has the meaning ascribed to it in the preamble to the Agreement.

“ Sotheby’s U.K. ” has the meaning ascribed to it in the preamble to the Agreement.

“ Specified Debt Facility ” means one or more credit facilities designated by Parent to the Administrative Agent in writing as the “Specified Debt Facility,” in an aggregate principal amount not to exceed $300,000,000.

“ Specified Debt Facility Documents ” means, collectively, the credit agreements evidencing the Specified Debt Facility and all other agreements, instruments, documents and certificates executed and/or delivered in connection therewith, as the same may be amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof and of the Specified Debt Facility Intercreditor Agreement.

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“ Specified Debt Facility Intercreditor Agreement ” has the meaning ascribed to it in clause (e)(ii) of the definition of “Permitted Encumbrances” in Annex A .

“ Specified Related Person ” has the meaning ascribed to it in Annex C .

“ Specified U.K. Real Estate ” means any Real Estate located in England that any U.K. Credit Party has a fee simple interest in as of the Restatement Effective Date.

“ SPTC Delaware ” means SPTC Delaware LLC, a Delaware limited liability company, and each other “Eligible SPV” (as such term is defined in the SPTC Delaware Trademark License Agreement).

“ SPTC Delaware Trademark License Agreement ” means the Trademark License Agreement dated as of February 17, 2004 and entered into by and among SPTC, Inc., as licensor, Parent, as guarantor, Monticello Licensee Corporation, as licensee, and Cendant Corporation, as guarantor.

“ Sterling ” or “ £ ” means the lawful currency of Great Britain and Northern Ireland.

“ Sterling Equivalent ” means, with respect to any amount denominated in Sterling, such amount of Sterling, and with respect to any amount denominated in a currency other than Sterling, the amount of Sterling, as of any date of determination, into which such other currency (as the context may require) can be converted in accordance with Section 1.19.

“ Sterling Index Rate ” means, for any day, the higher of (a) a floating rate equal to the rate publicly quoted from time to time by The Wall Street Journal as the “prime rate” for Britain (or, if The Wall Street Journal ceases quoting a rate of the type described, the prime rate for Sterling generally posted by Britain’s largest banks) and (b) 1.00% per annum. Each change in any interest rate provided for in the Agreement based upon the Sterling Index Rate shall take effect at the time of such change in the Sterling Index Rate.

“ Sterling LIBOR Rate ” means for each LIBOR Period with respect to a LIBOR Loan denominated in Sterling, the offered rate per annum for deposits of Sterling for such LIBOR Period that appears on pages LIBOR01 or LIBOR02 of the Reuters screen (or any successor or substitute page of such service, or any successor to or substitute for such service, providing rate quotations comparable to those currently provided on such page of such service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to deposits in Sterling in the London interbank market) as of 11:00 A.M. (London, England time) on the first day of such LIBOR Period. If the offered rate described in the foregoing sentence does not exist, such rate will be the rate of interest per annum, as determined by the Administrative Agent (rounded upwards, if necessary, to the nearest 1/100 of 1%) at which deposits of Sterling in immediately available funds are offered at 11:00 A.M. (London, England time) on the first day of such LIBOR Period by major financial institutions reasonably satisfactory to the Administrative Agent in the London interbank market for a LIBOR Period of the applicable duration for the applicable principal amount on such date

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of determination. Notwithstanding the foregoing, the “Sterling LIBOR Rate” shall be deemed to be zero if the rate otherwise calculated pursuant to this definition would result in a rate less than zero.

“ Stock ” means all shares, options, warrants, general or limited partnership interests, membership interests or other equivalents (regardless of how designated) of or in a corporation, partnership, limited liability company or equivalent entity whether voting or nonvoting, including common stock, preferred stock or any other “equity security” (as such term is defined in Rule 3a11 1 of the General Rules and Regulations promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934).

“ Stockholder ” means, with respect to any Person, each holder of Stock of such Person.

“ Subsidiary ” means, with respect to any Person, (a) any corporation of which an aggregate of more than 50% of the outstanding Stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, Stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, owned legally or beneficially by such Person or one or more Subsidiaries of such Person, or with respect to which any such Person has the right to vote or designate the vote of 50% or more of such Stock whether by proxy, agreement, operation of law or otherwise, and (b) any partnership or limited liability company in which such Person and/or one or more Subsidiaries of such Person shall have an interest (whether in the form of voting or participation in profits or capital contribution) of more than 50% or of which any such Person is a general partner or may exercise the powers of a general partner. Unless the context otherwise requires, each reference to a Subsidiary shall be a reference to a Subsidiary of a Borrower. Notwithstanding the foregoing, the York Avenue Owner shall not be deemed to be a Subsidiary of Parent or any of its Subsidiaries for purposes of this Agreement other than with respect to Section 4 , Section 6.10 , Sections 8.1(e) , (g) , (h) and (i) and Annex E and paragraphs (b) and (c) of Annex G .

“ Supermajority in Interest ” means, at any time, (a) in the case of Auction Lenders, Lenders having, in the aggregate, 75% or more of the sum of the Auction Commitments of all Lenders plus the “Commitments” of all Lenders under the SFS Revolving Credit Agreement (or, if the Auction Commitment Termination Date has occurred, Lenders holding in the aggregate, 75% or more of the sum of the aggregate outstanding amount of all Auction Loans held by the Lenders plus the aggregate outstanding amount of all “Loans” held by the “Lenders” under the SFS Revolving Credit Agreement) and (b) in the case of Incremental Lenders, Lenders having, in the aggregate, 75% or more of the Incremental Commitments of all Lenders (or, if the Incremental Commitment Termination Date has occurred, Lenders holding in the aggregate, 75% or more of the aggregate outstanding amount of all Incremental Revolving Credit Advances held by the Lenders).

“ Supermajority Lenders ” means, collectively, (a) prior to the Incremental Commitment Termination Date or the Auction Commitment Termination Date, Lenders having, in the aggregate, 75% or more of the sum of the Commitments of all Lenders plus the

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“Commitments” of all “Lenders” under the SFS Revolving Credit Agreement, (b) on and after the Incremental Commitment Termination Date but prior to the Auction Commitment Termination Date, Lenders holding in the aggregate, 75% or more of (i) the sum of the Auction Commitments of all the Lenders plus the sum of the “Commitments” of all the “Lenders” under the SFS Revolving Credit Agreement and (ii) the aggregate outstanding principal balance of the Incremental Revolving Credit Advances held by all Lenders, and (c) on and after the Auction Commitment Termination Date, Lenders holding in the aggregate, 75% or more of (i) the aggregate outstanding amount of all Loans held by the Lenders and (ii) the aggregate outstanding amount of all “Loans” held by the “Lenders” under the SFS Revolving Credit Agreement.

“ Supporting Obligations ” means all “supporting obligations” as such term is defined in the Code, including letters of credit and guaranties issued in support of Accounts, Chattel Paper, Documents, General Intangibles, Instruments, or Investment Property.

“ Swing Line Advances ” has the meaning ascribed to it in Section 1.1(c)(i) .

“ Swing Line Lender ” means GE Capital.

“ Swing Line Loan ” means, at any time, the sum of the Auction Dollar Tranche Swing Line Loan at such time plus the Auction Multicurrency Tranche Swing Line Loan at such time.

“ Swing Line Note ” has the meaning ascribed to it in Section 1.1(c)(ii) .

“ Swing Line Request ” has the meaning ascribed to it in Section 1.1(c)(i) .

“ Swiss Franc ” means the lawful currency of Switzerland.

“ Tax ” means taxes, levies, imposts, deductions, duties, Charges or withholdings imposed by any Governmental Authority, and all liabilities with respect thereto, including any penalty or interest payable in connection with any failure to pay or delay in paying any of the same.

“ Tax Confirmation ” means a confirmation by a Lender that the person beneficially entitled to interest or other amounts payable to that Lender under this Agreement or the other Loan Documents is:

(a) a company resident in the United Kingdom for United Kingdom tax purposes;

(b) a partnership each member of which is (i) a company so resident in the United Kingdom or (ii) a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account in computing its chargeable profits (within the meaning of section 19 of the Corporation Tax Act 2009 of the United Kingdom) the whole of any share of that interest or other amount payable that falls to it by reason of Part 17 of the Corporation Tax Act 2009 of the United Kingdom; or

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(c) a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account that interest or other amount payable in computing the chargeable profits (within the meaning of section 19 of the Corporation Tax Act 2009 of the United Kingdom) of that company.

“ Tax Credit ” means a credit against, relief or remission for, or repayment of, any Tax.

“ Tax Deduction ” means a deduction or withholding for or on account of Tax from a payment under any Loan Document.

“ Tax Payment ” means either the increase in a payment made by a Credit Party to a Lender under Section 1.16(a) or a payment under Section 1.16(b) .

“ Termination Date ” means the date on which (a) the Loans have been indefeasibly repaid in full, (b) all other Obligations under the Agreement and the other Loan Documents have been completely discharged, (c) all Letter of Credit Obligations have been cash collateralized, canceled or backed by standby letters of credit in accordance with Annex B , and (d) the Auction Commitment Termination Date shall have occurred.

“ Title IV Plan ” means a Pension Plan (other than a Multiemployer Plan), that is subject to Title IV of ERISA or Section 412 of the IRC, and that any Sotheby Entity or ERISA Affiliate maintains, contributes to or has an obligation to contribute to on behalf of participants who are or were employed by any of them.

“ Trademark License ” means rights under any written agreement now owned or hereafter acquired by any Sotheby Entity granting any right to use any Trademark.

“ Trademark Security Agreements ” means the Trademark Security Agreements made in favor of the Collateral Agent, on behalf of the Secured Parties, by each applicable Credit Party.

“ Trademarks ” means all of the following now owned or hereafter existing or adopted or acquired by any Sotheby Entity: (a) all trademarks, trade names, corporate names, business names, trade styles, service marks, logos, other source or business identifiers, prints and labels on which any of the foregoing have appeared or appear, designs and general intangibles of like nature (whether registered or unregistered), all registrations and recordings thereof, and all applications in connection therewith, including registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States, any state or territory thereof, or any other country or any political subdivision thereof; (b) all reissues, extensions or renewals thereof; and (c) all goodwill associated with or symbolized by any of the foregoing.

“ Transfer Account ” has the meaning ascribed thereto in Annex C .

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“ Treaty ” has the meaning ascribed to it in the definition of “Treaty State”.

“ Treaty Lender ” means a Lender which:

(a) is treated as a resident of a Treaty State for the purposes of a Treaty;

(b) in the case of a U.S. source interest payment made by a Domestic Credit Party, is the beneficial owner of the payment within the meaning of the income tax treaty between the United States and the country of the Lender’s residence referred to in clause (a) above and meets the requirement of the provisions dealing with limitation on benefits if such treaty contains such a provision;

(c) does not carry on a business in the jurisdiction in which the applicable Credit Party is resident through a permanent establishment to which that Lender’s participation in the Loans is attributable; and

(d) is entitled, under the terms of the relevant Treaty (subject to the completion of any necessary procedural formalities), to claim full exemption from tax on interest;

but, in the case of a UK source interest payment made by a U.K. Credit Party, if a Lender:


(A)	is a limited liability company organized in the United States and disregarded for United States federal income tax purposes (a “ US LLC Lender ”);


(B)	is a party to this Agreement at the date of this Agreement (or, in relation to a Lender which becomes a party to this Agreement after the date of this Agreement, the Borrower Representative has approved the Lender for the purposes of this paragraph (B));

(C)

is wholly owned (directly) by a single person which is incorporated in the United States and not disregarded for United States federal income tax purposes (a “ US Corporation ”) (such that the interest payment in question is treated for United States federal income tax purposes as the income of the US Corporation) and which would, if it were itself a Lender, fall within the definition of a Treaty Lender by virtue of the application of the income tax treaty between the United States and the United Kingdom, and no arrangements exist that would result in any change to the direct ownership of the US LLC Lender; and

(D)

has duly completed and filed form US/Company 2002 (or replacement form) with H.M. Revenue & Customs (applying for relief at source) (and has provided a copy of that application and any related subsequent correspondence to the Borrower Representative) and (without limiting the foregoing) has provided to H.M Revenue & Customs the name and address of the US Corporation and assurances required by H.M. Revenue & Customs regarding the monitoring and notification of membership of the US LLC and has complied in all other respects with HMRC Double Taxation Guidance Note 3 (or replacement guidance),

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the US LLC Lender shall be regarded as a “Treaty Lender” at any time if at that time the US Corporation which wholly owns (directly) the US LLC Lender would fall within the definition of a “Treaty Lender” if it were itself a Lender; provided that (i) the US LLC Lender shall not be regarded as a “Treaty Lender” at any point before the first Interest Payment Date that falls at least 3 months after the date of this Agreement; and (ii) the US LLC shall cease to be regarded as a “Treaty Lender” with effect from the day on which H.M. Revenue & Customs indicates that it does not intend to issue a direction under Regulation 2 of the Double Taxation Relief (Taxes on Income) (General) Regulations 1970 (SI 1970/488) in relation to UK source interest payments to the US LLC.

“ Treaty State ” means a jurisdiction having a double taxation agreement (a “ Treaty ”) with the United Kingdom, Hong Kong or the United States of America (as the case may be) which makes provision for full exemption from tax imposed by the United Kingdom, Hong Kong or the United States of America (as the case may be) on interest.

“ UCC ” means the Uniform Commercial Code as in effect from time to time in each applicable jurisdiction.

“ U.K. Borrowers ” has the meaning ascribed thereto in the preamble to the Agreement.

“ U.K. Credit Parties ” means, collectively, the U.K. Borrowers and the U.K. Subsidiary Guarantors.

“ U.K. Non-Bank Lender ” means where a Lender becomes a party to this Agreement after the Restatement Effective Date, a Lender that gives a Tax Confirmation in the Assignment Agreement that it executes on becoming a party to this Agreement.

“ U.K. Pension Plans ” has the meaning ascribed to it in Section 3.12(c) .

“ U.K. Subsidiary Guarantors ” means each Subsidiary of Parent organized under the laws of England that is not a U.K. Borrower or an Immaterial Subsidiary, and is a Credit Party on the Restatement Effective Date or is required to become a Credit Party pursuant to Section 5.14 .

“ Unfunded Pension Liability ” means, at any valuation date, the aggregate amount, if any, of the sum of (a) the amount by which the present value of all accrued benefits under each Title IV Plan exceeds the fair market value of all assets of such Title IV Plan allocable to such benefits in accordance with Title IV of ERISA, all determined as of the most recent valuation date for each such Title IV Plan using the actuarial assumptions for funding purposes in effect under such Title IV Plan, and (b) for a period of five (5) years following a transaction which might reasonably be expected to be covered by Section 4069 of ERISA, the liabilities (whether or not accrued) that could be avoided by any Sotheby Entity or any ERISA Affiliate as a result of such transaction.

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“ Unhedged Domestic Art Loan ” means an Eligible Art Loan owned by a Domestic Borrower (i) that is denominated in Sterling, Canadian Dollars, Euros or Swiss Francs and (ii) unless the Administrative Agent shall otherwise agree, with respect to which such Domestic Borrower shall not have entered into a Rate Management Transaction reasonably acceptable to the Administrative Agent (x) having a notional amount substantially equal to the outstanding principal balance of such Art Loan at all times until the maturity of such Art Loan and (y) directly mitigating the risk associated with changes in the exchange rate between the currency in which such Art Loan is denominated and Dollars at all times until the maturity of such Art Loan.

“ Unhedged Hong Kong Art Loan ” means an Eligible Art Loan owned by Sotheby’s H.K. (i) that is denominated in Dollars, Canadian Dollars, Euros or Swiss Francs and (ii) unless the Administrative Agent shall otherwise agree, with respect to which Sotheby’s H.K. shall not have entered into a Rate Management Transaction reasonably acceptable to the Administrative Agent (x) having a notional amount substantially equal to the outstanding principal balance of such Art Loan at all times until the maturity of such Art Loan and (y) directly mitigating the risk associated with changes in the exchange rate between the currency in which such Art Loan is denominated and Hong Kong Dollars at all times until the maturity of such Art Loan.

“ Unhedged U.K. Art Loan ” means an Eligible Art Loan owned by a U.K. Borrower (i) that is denominated in Dollars, Canadian Dollars, Euros or Swiss Francs and (ii) unless the Administrative Agent shall otherwise agree, with respect to which such U.K. Borrower shall not have entered into a Rate Management Transaction reasonably acceptable to the Administrative Agent (x) having a notional amount substantially equal to the outstanding principal balance of such Art Loan at all times until the maturity of such Art Loan and (y) directly mitigating the risk associated with changes in the exchange rate between the currency in which such Art Loan is denominated and Sterling at all times until the maturity of such Art Loan.

“ Unrestricted Cash Amount ” means, as of any date of determination, the greater of (a) zero and (b) the aggregate amount of cash of the Credit Parties as of such date (determined in accordance with GAAP), excluding (without duplication) any cash (i) owing to consignors in respect of Works of Art consigned by such Persons to the Credit Parties for sale, (ii) subject to a Lien (or held in a deposit or securities account subject to a Lien) in favor of any Person other than the Collateral Agent and (iii) subject to any restriction on withdrawal from the deposit or securities account in which such cash is being held.

“ Usage ” means, as of any date, an amount (stated as a percentage) equal to (a) the outstanding principal balance of the Revolving Loan and Swing Line Loan as of the end of the preceding Business Day (after giving effect to Advances funded or Letters of Credit incurred, or any payments made, on such preceding Business Day) divided by (b) the sum of the Maximum Auction Amount plus the Maximum Incremental Amount.

“ US Corporation ” has the meaning set forth in the definition of “Treaty Lender” in this Annex A .

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“ US LLC Lender ” has the meaning set forth in the definition of “Treaty Lender” in this Annex A .

“ VAT ” means:

(a) any tax imposed in compliance with the Council Directive of 28 November 2006 on the common system of value added tax (EC Directive 2006/112); and

(b) any other tax of a similar nature, whether imposed in a member state of the European Union in substitution for, or levied in addition to, such tax referred to in clause (a) of this definition, or imposed elsewhere.

“ Venture Loan ” means an Art Loan made to finance the purchase of a Work of Art in conjunction with a dealer, which art is being purchased for resale pursuant to a profit and loss sharing agreement with the dealer.

“ Ventures LLC ” has the meaning ascribed to it in the preamble to the Agreement.

“ Welfare Plan ” means a Plan described in Section 3(1) of ERISA.

“ Work of Art ” shall mean any item of Goods of a type purchased, sold or taken as collateral for an Art Loan or an Extended Term Art Receivable, or consigned to the Credit Parties for sale, in each case in the ordinary course of the Credit Parties’ business.

“ Working Time Regulations ” means the Working Time Regulations 1998 (as amended) of the United Kingdom implementing the Council Directive 93/104/EC and Council Directive 94/33/EC of the European Union.

“ York Avenue Lease ” means that certain Lease, dated February 7, 2003, between York Avenue Owner (as successor to 1334 York Avenue L.P.), as landlord, and Sotheby’s, Inc., as tenant, as amended, restated, supplemented or otherwise modified from time to time.

“ York Avenue Lease Documents ” means the York Avenue Lease, the York Avenue Lease Guaranty and each document executed in connection therewith or otherwise related thereto.

“ York Avenue Lease Guaranty ” means that certain Guaranty of Lease, dated as of June 20, 2006, by Parent and York Avenue Owner (as successor to 1334 York Avenue L.P.), as amended, restated, supplemented or otherwise modified from time to time.

“ York Avenue Lender ” means the “Lender” as defined in the York Avenue Loan Agreement.

“ York Avenue Loan Agreement ” means that certain Loan Agreement, dated as of June 22, 2005, between the York Avenue Owner (as successor to 1334 York Avenue L.P.) and Bank of America, N.A., as amended, restated, supplemented or otherwise modified from time to time.

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“ York Avenue Loan Documents ” means the York Avenue Loan Agreement and all documents executed in connection therewith or otherwise related thereto.

“ York Avenue Owner ” means 1334 York, LLC, a Delaware limited liability company.

Rules of construction with respect to accounting terms used in the Agreement or the other Loan Documents shall be as set forth in Annex G . All other undefined terms contained in any of the Loan Documents shall, unless the context indicates otherwise, have the meanings provided for by the Code to the extent the same are used or defined therein; in the event that any term is defined differently in different Articles or Divisions of the Code, the definition contained in Article or Division 9 shall control. Unless otherwise specified, references in the Agreement or any of the Appendices to a Section, subsection or clause refer to such Section, subsection or clause as contained in the Agreement. The words “herein,” “hereof” and “hereunder” and other words of similar import refer to the Agreement as a whole, including all Annexes, Exhibits and Schedules, as the same may from time to time be amended, restated, modified or supplemented, and not to any particular section, subsection or clause contained in the Agreement or any such Annex, Exhibit or Schedule. Unless the context requires otherwise, any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, restated, supplemented or otherwise modified (subject to any restrictions on such amendments, restatements, supplements or modifications set forth in any of the Loan Documents).

Wherever from the context it appears appropriate, each term stated in either the singular or plural shall include the singular and the plural, and pronouns stated in the masculine, feminine or neuter gender shall include the masculine, feminine and neuter genders. The words “including”, “includes” and “include” shall be deemed to be followed by the words “without limitation”; the word “or” is not exclusive; references to Persons include their respective successors and assigns (to the extent and only to the extent permitted by the Loan Documents) or, in the case of governmental Persons, Persons succeeding to the relevant functions of such Persons; and all references to statutes and related regulations shall include any amendments of the same and any successor statutes and regulations. Whenever any provision in any Loan Document refers to the knowledge (or an analogous phrase) of any Sotheby Entity, such words are intended to signify that such Sotheby Entity has actual knowledge or awareness of a particular fact or circumstance or that such Sotheby Entity, if it had exercised reasonable diligence, would have known or been aware of such fact or circumstance. Unless otherwise set forth therein, for purposes of Section 1.16 (and the definitions of the capitalized terms used therein), a reference to “determines” or “determined” shall mean a determination made in the absolute discretion of the person making the determination.

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ANNEX B ( Section 1.2 )
to
CREDIT AGREEMENT

LETTERS OF CREDIT

(a) Issuance .

(iii) Subject to the terms and conditions of the Agreement, the Administrative Agent and Auction Dollar Tranche Lenders agree to incur, from time to time prior to the Auction Commitment Termination Date, upon the request of Borrower Representative on behalf of the applicable Borrower (and any Subsidiary that may be a co-applicant therewith) and for such Borrower’s (and such Subsidiary’s, as applicable) account, Auction Dollar Tranche Letter of Credit Obligations by causing Letters of Credit denominated in Dollars to be issued by GE Capital or a Subsidiary thereof or a bank or other legally authorized Person selected by or acceptable to the Administrative Agent in its sole discretion (and consented to by such Person) (each, an “ L/C Issuer ”) for such Borrower’s account and guaranteed by the Administrative Agent; provided , that if the L/C Issuer is a Lender, then such Letters of Credit shall not be guaranteed by the Administrative Agent but rather each Auction Dollar Tranche Lender shall, subject to the terms and conditions hereinafter set forth, purchase (or be deemed to have purchased) risk participations in all such Letters of Credit issued with the written consent of the Administrative Agent, as more fully described in paragraph (b)(ii) below. The aggregate amount of all such Auction Dollar Tranche Letter of Credit Obligations shall not at any time exceed the lesser of (i) an amount equal to Sixty Million Dollars ($60,000,000) less the aggregate “Dollar Tranche Letter of Credit Obligations” (as defined in the SFS Revolving Credit Agreement) (such amount, the “ Auction Dollar Tranche L/C Sublimit ”) and (ii) the Maximum Auction Dollar Tranche Amount less the aggregate outstanding principal balance of the Auction Dollar Tranche Revolving Credit Advances and the Auction Dollar Tranche Swing Line Loan.

(iv) Subject to the terms and conditions of the Agreement, the Administrative Agent and Auction Multicurrency Tranche Lenders agree to incur, from time to time prior to the Auction Commitment Termination Date, upon the request of Borrower Representative on behalf of the applicable Borrower (and any Subsidiary that may be a co-applicant therewith) and for such Borrower’s (and such Subsidiary’s, as applicable) account, Auction Multicurrency Tranche Letter of Credit Obligations by causing Letters of Credit denominated in Dollars, Sterling, Euros, Swiss Francs, Hong Kong Dollars or any Alternative L/C Currency to be issued by an L/C Issuer for such Borrower’s account and guaranteed by the Administrative Agent; provided , that if the L/C Issuer is a Lender, then such Letters of Credit shall not be guaranteed by the Administrative Agent but rather each Lender shall, subject to the terms and conditions hereinafter set forth, purchase (or be deemed to have purchased) risk participations in all such Letters of Credit issued with the written consent of the Administrative Agent, as more fully described in paragraph (b)(ii) below. The Dollar Equivalent of the aggregate amount of all such Auction Multicurrency Tranche Letter of Credit Obligations shall not at any time exceed the lesser of (i) an amount equal to Fifteen Million Dollars ($15,000,000) less the aggregate “Multicurrency Tranche Letter of Credit Obligations” (as defined in the SFS

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Revolving Credit Agreement) (such amount, the “ Auction Multicurrency Tranche L/C Sublimit ”) and (ii) the Maximum Multicurrency Tranche Amount less the Dollar Equivalent of the aggregate outstanding principal balance of the Auction Multicurrency Tranche Revolving Credit Advances and the Auction Multicurrency Tranche Swing Line Loan.

(v) The Dollar Equivalent of the aggregate amount of all Letter of Credit Obligations incurred for the benefit of the Domestic Borrowers shall not at any time exceed the Domestic Auction Borrowing Base less the aggregate outstanding principal balance of the Auction Revolving Credit Advances and Swing Line Advances made to Domestic Borrowers. The Dollar Equivalent of the aggregate amount of all Letter of Credit Obligations incurred for the benefit of the Foreign Borrowers shall not at any time exceed an amount equal to the Foreign Borrowing Base less the Dollar Equivalent of the outstanding principal balance of the Auction Revolving Credit Advances made to the Foreign Borrowers. The sum of (i) the Dollar Equivalent of the aggregate amount of all Letter of Credit Obligations incurred for the benefit of the Foreign Borrowers plus (ii) the Dollar Equivalent of the outstanding principal balance of the Auction Revolving Credit Advances made to the Foreign Borrowers plus (iii) SFS Foreign Borrower Obligations shall not at any time exceed the Foreign Borrower Subfacility Limit. No Letter of Credit shall have an expiry date that is more than one year following the date of issuance thereof, unless otherwise determined by the Administrative Agent, in its sole discretion (including with respect to customary evergreen provisions), and neither the Administrative Agent nor Lenders shall be under any obligation to incur Letter of Credit Obligations in respect of, or purchase risk participations in, any Letter of Credit having an expiry date that is later than the Auction Commitment Termination Date.

(b) Auction Revolving Credit Advances Automatic; Participations .

(i) In the event that the Administrative Agent or any Auction Dollar Tranche Lender shall make any payment on or pursuant to any Auction Dollar Tranche Letter of Credit Obligation incurred for the benefit of a Borrower, regardless of whether a Default or Event of Default has occurred and is continuing and notwithstanding any Borrower’s failure to satisfy the conditions precedent set forth in Section 2 , such payment shall then be deemed automatically to constitute an Auction Dollar Tranche Revolving Credit Advance to the applicable Borrower under Section 1.1(a) of the Agreement in Dollars in an amount equal to the Dollar Equivalent of such payment as of the date thereof, and each Auction Dollar Tranche Lender shall be obligated to pay its Pro Rata Share thereof in accordance with the Agreement.

(ii) In the event that the Administrative Agent or any Auction Multicurrency Tranche Lender shall make any payment on or pursuant to any Auction Multicurrency Tranche Letter of Credit Obligation incurred for the benefit of any Borrower, regardless of whether a Default or Event of Default has occurred and is continuing and notwithstanding any Borrower’s failure to satisfy the conditions precedent set forth in Section 2 , such payment shall then be deemed automatically to constitute an Auction Multicurrency Tranche Revolving Credit Advance to the applicable Borrower under Section 1.1(a) of the Agreement in Dollars (if the applicable Borrower is a Domestic Borrower), in Sterling (if the applicable Borrower is a U.K. Borrower) or Hong Kong Dollars (if the applicable Borrower is

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Sotheby’s H.K.) in an amount equal to the Dollar Equivalent, Sterling Equivalent or Hong Kong Dollar Equivalent, as applicable, of such payment as of the date thereof, and each Auction Multicurrency Tranche Lender shall be obligated to pay its Pro Rata Share thereof in accordance with the Agreement.

(iii) The failure of any Auction Lender to make available to the Administrative Agent for the Administrative Agent’s own account its Pro Rata Share of any such Auction Revolving Credit Advance or payment by the Administrative Agent under or in respect of a Letter of Credit shall not relieve any other Lender of its obligation hereunder to make available to the Administrative Agent its Pro Rata Share thereof, but neither any Lender shall be responsible for the failure of any other Lender to make available such Person’s share of any such payment.

(iv) If it shall be illegal or unlawful for any Borrower to incur Auction Dollar Tranche Revolving Credit Advances as contemplated by paragraph (b)(i) above because of an Event of Default described in Sections 8.1(g) or (h) or otherwise or if it shall be illegal or unlawful for any Auction Dollar Tranche Lender to be deemed to have assumed a ratable share of the reimbursement obligations owed to an L/C Issuer, or if the L/C Issuer is an Auction Lender, then (A) immediately and without further action whatsoever, each Auction Dollar Tranche Lender shall be deemed to have irrevocably and unconditionally purchased from the Administrative Agent (or such L/C Issuer, as the case may be) an undivided interest and participation equal to such Auction Lender’s Pro Rata Share (based on its Auction Dollar Tranche Commitments) of the Auction Dollar Tranche Letter of Credit Obligations in respect of all Auction Dollar Tranche Letters of Credit then outstanding for the benefit of the Borrowers and (B) thereafter, immediately upon issuance of any Auction Dollar Tranche Letter of Credit for the benefit of any Borrower, each Auction Dollar Tranche Lender shall be deemed to have irrevocably and unconditionally purchased from the Administrative Agent (or such L/C Issuer, as the case may be) an undivided interest and participation equal to such Auction Dollar Tranche Lender’s Pro Rata Share (based on the Auction Dollar Tranche Commitments) of the Auction Dollar Tranche Letter of Credit Obligations with respect to such Auction Dollar Tranche Letter of Credit on the date of such issuance. Each Auction Dollar Tranche Lender shall fund its participation in all payments made under any Auction Dollar Tranche Letters of Credit issued for the benefit of a Borrower, in the same manner as provided in the Agreement with respect to Auction Dollar Tranche Revolving Credit Advances, each of which Auction Dollar Tranche Revolving Credit Advances shall be in an amount equal to the Dollar Equivalent of such payment as of the date thereof.

(v) If it shall be illegal or unlawful for any Borrower to incur Auction Multicurrency Tranche Revolving Credit Advances as contemplated by paragraph (b)(ii) above because of an Event of Default described in Sections 8.1(g) or (h) or otherwise or if it shall be illegal or unlawful for any Auction Multicurrency Tranche Lender to be deemed to have assumed a ratable share of the reimbursement obligations owed to an L/C Issuer, or if the L/C Issuer is an Auction Multicurrency Tranche Lender, then (A) immediately and without further action whatsoever, each Auction Multicurrency Tranche Lender shall be deemed to have irrevocably and unconditionally purchased from the Administrative Agent (or such L/C Issuer, as the case

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may be) an undivided interest and participation equal to such Auction Multicurrency Tranche Lender’s Pro Rata Share (based on the Auction Multicurrency Tranche Commitments) of the Auction Multicurrency Tranche Letter of Credit Obligations in respect of all Auction Multicurrency Tranche Letters of Credit then outstanding for the benefit of the Borrowers and (B) thereafter, immediately upon issuance of any Auction Multicurrency Tranche Letter of Credit for the benefit of a Borrower, each Auction Multicurrency Tranche Lender shall be deemed to have irrevocably and unconditionally purchased from the Administrative Agent (or such L/C Issuer, as the case may be) an undivided interest and participation equal to such Auction Multicurrency Tranche Lender’s Pro Rata Share (based on the Auction Multicurrency Tranche Commitments) of the Auction Multicurrency Tranche Letter of Credit Obligations with respect to such Auction Multicurrency Tranche Letter of Credit on the date of such issuance. Each Auction Multicurrency Tranche Lender shall fund its participation in all payments made under any Auction Multicurrency Tranche Letters of Credit in the same manner as provided in the Agreement with respect to Auction Multicurrency Tranche Revolving Credit Advances, each of which Auction Multicurrency Tranche Revolving Credit Advances shall be in an amount equal to the Dollar Equivalent (if such Borrower is a Domestic Borrower), Sterling Equivalent (if such Borrower is a U.K. Borrower) or Hong Kong Dollar Equivalent (if such Borrower is Sotheby’s H.K.) of such payment as of the date thereof.

(i) If Borrowers are required to provide cash collateral for any Letter of Credit Obligations pursuant to the Agreement, including Section 8.2 of the Agreement, prior to the Auction Commitment Termination Date, each Borrower will pay to the Collateral Agent for the ratable benefit of itself and the other Secured Parties, with respect to each Letter of Credit outstanding for the benefit of such Borrower, cash or cash equivalents acceptable to the Administrative Agent (“ Acceptable Cash Equivalents ”) in the currency in which such Letter of Credit is denominated in an amount equal to 105% of the maximum amount then available to be drawn under such Letter of Credit. Such funds or Acceptable Cash Equivalents shall be held by the Collateral Agent in a cash collateral account (each, a “ Cash Collateral Account ”) maintained at a bank or financial institution acceptable to the Collateral Agent. Each Cash Collateral Account shall be in the name of the applicable Borrower(s) and shall be pledged to, and subject to the control of, the Collateral Agent, on behalf of itself and the other Secured Parties, in a manner satisfactory to the Collateral Agent.

(ii) If any Letter of Credit Obligations, whether or not then due and payable, shall for any reason be outstanding on the Auction Commitment Termination Date, Borrowers shall either (A) provide cash collateral therefor in the manner described above, or (B) cause all such Letters of Credit and guaranties thereof, if any, to be canceled and returned, or (C) deliver a stand-by letter (or letters) of credit in guaranty of such Letter of Credit Obligations, which stand-by letter (or letters) of credit shall be of like tenor, currency and duration (plus thirty (30) additional days) as, and in an amount equal to 105% of, the aggregate maximum amount then available to be drawn under, the Letters of Credit to which such outstanding Letter of Credit Obligations relate and shall be issued by a Person, and shall be subject to such terms and conditions, as are be satisfactory to the Collateral Agent in its sole discretion.

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(iii) From time to time after funds are deposited in the Cash Collateral Account by any Borrower, whether before or after the Auction Commitment Termination Date, the Collateral Agent may apply such funds or Acceptable Cash Equivalents then held in the Cash Collateral Account to the payment of any amounts, and in such order as the Collateral Agent may elect, as shall be or shall become due and payable by such Borrower to the Secured Parties with respect to such Letter of Credit Obligations of such Borrower and, upon the satisfaction in full of all Letter of Credit Obligations of such Borrower, to any other Secured Obligations then due and payable.

(iv) No Borrower nor any Person claiming on behalf of or through any Borrower shall have any right to withdraw any of the funds or Acceptable Cash Equivalents held in the Cash Collateral Account, except that upon the termination of all Letter of Credit Obligations and the payment of all amounts payable by Borrowers to the Secured Parties in respect thereof, any funds remaining in the Cash Collateral Account shall be applied to other Secured Obligations then due and owing and upon payment in full of such Secured Obligations, any remaining amount shall be paid to Borrowers or as otherwise required by law. Interest earned on deposits in the Cash Collateral Account shall be held as additional collateral.

(d) Fees and Expenses . Each Borrower agrees to pay to the Administrative Agent for the benefit of the Auction Dollar Tranche Lenders, as compensation for Auction Dollar Tranche Letter of Credit Obligations incurred hereunder for the benefit of such Borrower, (i) all costs and expenses incurred by the Administrative Agent or any Auction Dollar Tranche Lender on account of such Auction Dollar Tranche Letter of Credit Obligations, and (ii) for each month during which any such Auction Dollar Tranche Letter of Credit Obligation shall remain outstanding, a fee in Dollars in an amount equal to the Applicable L/C Margin from time to time in effect multiplied by the Dollar Equivalent of the maximum amount available from time to time to be drawn under each applicable Auction Dollar Tranche Letter of Credit. Each Borrower agrees to pay to the Administrative Agent for the benefit of the Auction Multicurrency Tranche Lenders, as compensation for Auction Multicurrency Tranche Letter of Credit Obligations incurred hereunder for the benefit of such Borrower, (i) all costs and expenses incurred by the Administrative Agent or any Auction Multicurrency Tranche Lender on account of such Auction Multicurrency Tranche Letter of Credit Obligations, and (ii) for each month during which any such Auction Multicurrency Tranche Letter of Credit Obligation shall remain outstanding, a fee in Dollars in an amount equal to the Applicable L/C Margin from time to time in effect multiplied by the Dollar Equivalent of the maximum amount available from time to time to be drawn under each applicable Auction Multicurrency Tranche Letter of Credit. The foregoing fees (collectively, the “ Letter of Credit Fee ”) shall be paid to the Administrative Agent for the benefit of the Auction Dollar Tranche Lenders or Auction Multicurrency Tranche Lenders, as applicable, in arrears, on the first Business Day of each month and on the Auction Commitment Termination Date. In addition, Borrowers shall pay to any L/C Issuer, on demand, such fees, charges and expenses of such L/C Issuer in respect of the issuance, negotiation, acceptance, amendment, transfer and payment of such Letter of Credit or otherwise payable pursuant to the application and related documentation under which such Letter of Credit is issued.

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(e) Request for Incurrence of Letter of Credit Obligations . Borrower Representative shall give the Administrative Agent at least two (2) Business Days’ prior notice to request the incurrence of any Letter of Credit Obligation. Such notice shall be made in writing substantially in the form of Exhibit B-1 or in any other written form reasonably acceptable to the L/C Issuer (each, a “ Letter of Credit Request ”). The notice shall be accompanied by the form of the Letter of Credit (which shall be acceptable to the L/C Issuer) and a completed Application for Letter of Credit in the form of Exhibit B . Notwithstanding anything contained herein to the contrary, Letter of Credit applications by Borrower Representative and approvals by the Administrative Agent and the L/C Issuer may be made and transmitted pursuant to electronic codes and security measures mutually agreed upon and established by and among Borrower Representative, the Administrative Agent and the L/C Issuer.

(f) Obligation Absolute . The obligation of Borrowers to reimburse the Administrative Agent and the Auction Lenders for payments made with respect to any Letter of Credit Obligation shall be absolute, unconditional and irrevocable, without necessity of presentment, demand, protest or other formalities, and the obligations of each Auction Lender to make payments to the Administrative Agent with respect to Letters of Credit shall be unconditional and irrevocable. Such obligations of Borrowers and Lenders shall be paid strictly in accordance with the terms hereof under all circumstances including the following:

(i) any lack of validity or enforceability of any Letter of Credit or the Agreement or the other Loan Documents or any other agreement;

(ii) the existence of any claim, setoff, defense or other right that any Borrower or any of their respective Affiliates or any Auction Lender may at any time have against a beneficiary or any transferee of any Letter of Credit (or any Persons or entities for whom any such transferee may be acting), the Administrative Agent, any Auction Lender, or any other Person, whether in connection with the Agreement, the Letter of Credit, the transactions contemplated herein or therein or any unrelated transaction (including any underlying transaction between any Borrower or any of their respective Affiliates and the beneficiary for which the Letter of Credit was procured);

(iii) any draft, demand, certificate or any other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect;

(iv) payment by the Administrative Agent (except as otherwise expressly provided in paragraph (g)(ii)(C) below) or any L/C Issuer under any Letter of Credit or guaranty thereof against presentation of a demand, draft or certificate or other document that does not comply with the terms of such Letter of Credit or such guaranty;

(v) any other circumstance or event whatsoever, that is similar to any of the foregoing; or

(vi) the fact that a Default or an Event of Default has occurred and is continuing.

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(g) Indemnification; Nature of Lenders’ Duties .

(i) In addition to amounts payable as elsewhere provided in the Agreement, Borrowers hereby agree to pay and to protect, indemnify, and save harmless each Agent and each Auction Lender from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable attorneys’ fees and allocated costs of internal counsel) that any Agent or any Auction Lender may incur or be subject to as a consequence, direct or indirect, of (A) the issuance of any Letter of Credit or guaranty thereof, or (B) the failure of any Agent or any Auction Lender seeking indemnification or of any L/C Issuer to honor a demand for payment under any Letter of Credit or guaranty thereof as a result of any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or Governmental Authority, in each case other than to the extent solely as a result of the gross negligence or willful misconduct of such Agent or such Auction Lender (as determined by a court of competent jurisdiction in a final, non-appealable judgment). It is understood and agreed that, notwithstanding anything to the contrary herein, no Foreign Credit Party shall have any obligation hereunder with respect to any indemnification liabilities that are Obligations of any Domestic Credit Party.

(ii) As between any Agent and any Auction Lender and Borrowers, Borrowers assume all risks of the acts and omissions of, or misuse of any Letter of Credit by beneficiaries, of any Letter of Credit. In furtherance and not in limitation of the foregoing, to the fullest extent permitted by law, neither any Agent nor any Auction Lender shall be responsible for: (A) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document issued by any party in connection with the application for and issuance of any Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (B) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, that may prove to be invalid or ineffective for any reason; (C) failure of the beneficiary of any Letter of Credit to comply fully with conditions required in order to demand payment under such Letter of Credit; provided , that in the case of any payment by any Agent under any Letter of Credit or guaranty thereof, such Agent shall be liable to the extent such payment was made solely as a result of its gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final, non-appealable judgment) in determining that the demand for payment under such Letter of Credit or guaranty thereof complies on its face with any applicable requirements for a demand for payment under such Letter of Credit or guaranty thereof; (D) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they may be in cipher; (E) errors in interpretation of technical terms; (F) any loss or delay in the transmission or otherwise of any document required in order to make a payment under any Letter of Credit or guaranty thereof or of the proceeds thereof; (G) the credit of the proceeds of any drawing under any Letter of Credit or guaranty thereof; and (H) any consequences arising from causes beyond the control of any Agent or any Auction Lender. None of the above shall affect, impair, or prevent the vesting of any of any Agent’s or any Auction Lender’s rights or powers hereunder or under the Agreement.

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(iii) Nothing contained herein shall be deemed to limit or to expand any waivers, covenants or indemnities made by Borrowers in favor of any L/C Issuer in any letter of credit application, reimbursement agreement or similar document, instrument or agreement between or among Borrowers and such L/C Issuer, including a Master Standby Agreement or Master Documentary Agreement entered into with the Administrative Agent.

(n) (h) Non-Funding Lender; Impacted Lender . Notwithstanding anything else to the contrary herein, if any Auction Dollar Tranche Lender is a Non-Funding Lender or Impacted Lender, no L/C Issuer shall be obligated to issue any Auction Dollar Tranche Letter of Credit unless (i) the Non-Funding Lender or Impacted Lender has been replaced in accordance with Section 1.17(d) or 9.1 , (ii) the Auction Dollar Tranche Letter of Credit Obligations of such Non-Funding Lender or Impacted Lender have been cash collateralized, (iii) the Auction Dollar Tranche Commitments of the other Auction Dollar Tranche Lenders have been increased by an amount sufficient to satisfy the Administrative Agent that all future Auction Dollar Tranche Letter of Credit Obligations will be covered by all Auction Dollar Tranche Lenders that are not Non-Funding Lenders or Impacted Lenders, or (iv) the Auction Dollar Tranche Letter of Credit Obligations of such Non-Funding Lender or Impacted Lender have been reallocated to other Auction Dollar Tranche Lenders in a manner consistent with Section 9.9(d)(ii) . Notwithstanding anything else to the contrary herein, if any Auction Multicurrency Tranche Lender is a Non-Funding Lender or Impacted Lender, no L/C Issuer shall be obligated to issue any Auction Multicurrency Tranche Letter of Credit unless (i) the Non-Funding Lender or Impacted Lender has been replaced in accordance with Section 1.17(d) or 9.1 , (ii) the Auction Multicurrency Tranche Letter of Credit Obligations of such Non-Funding Lender or Impacted Lender have been cash collateralized, (iii) the Auction Multicurrency Tranche Commitments of the other Auction Multicurrency Tranche Lenders have been increased by an amount sufficient to satisfy the Administrative Agent that all future Auction Multicurrency Tranche Letter of Credit Obligations will be covered by all Auction Multicurrency Tranche Lenders that are not Non-Funding Lenders or Impacted Lenders, or (iv) the Auction Multicurrency Tranche Letter of Credit Obligations of such Non-Funding Lender or Impacted Lender have been reallocated to other Auction Multicurrency Tranche Lenders in a manner consistent with Section 9.9(d)(ii) .

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ANNEX C ( Section 1.9 )
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CREDIT AGREEMENT

CASH MANAGEMENT SYSTEM

Each Sotheby Entity shall, and shall cause its Subsidiaries to, establish and maintain the Cash Management Systems described below:

(a) Each Credit Party shall (i) cause each of its Deposit Accounts (other than any Excluded Account) to be subject to a tri-party blocked account agreement or similar agreement or notice (each such tri-party blocked account agreement, similar agreement or notice, a “ Blocked Account Agreement ”, and each such Deposit Account subject to a Blocked Account Agreement, a “ Blocked Account ”) among, if applicable, the financial institution at which such Deposit Account is maintained (each, a “ Relationship Bank ”), such Credit Party, and the Collateral Agent, for the benefit of itself and the other Secured Parties, which Blocked Account Agreement shall be in form and substance reasonably acceptable to the Collateral Agent, and (ii) deposit or cause to be deposited, and cause the other Sotheby Entities to deposit or cause to be deposited, promptly, and in any event no later than the first Business Day after the date of receipt thereof, all cash, checks, drafts or other similar items of payment relating to or constituting Collateral into one or more Blocked Accounts, other than any such cash, checks, drafts or items of payment held in an Excluded Account.

(b) Following the occurrence of any Activation Event, the Collateral Agent may (and, at the direction of Requisite Lenders, shall) deliver an Activation Notice to any or all Relationship Banks with respect to any or all Blocked Accounts, and each Relationship Bank that has received an Activation Notice shall be instructed to transfer, on each Business Day, all amounts on deposit in all applicable Blocked Accounts to one or more accounts specified by the Collateral Agent (such accounts, collectively, the “ Transfer Account ”).

(c) Following the transfer of funds to the Transfer Account on each Business Day pursuant to clause (b) above, the Collateral Agent shall (unless the Collateral Agent decides otherwise in its sole discretion) transfer, on each Business Day, from the Transfer Account (i) to the applicable Collection Account (or such other Blocked Account as the Collateral Agent shall agree), all amounts in the Transfer Account other than such amounts as may be identified by the Collateral Agent, in its reasonable estimation, that represent any portion of the Due-to-Consignor Amount as of such Business Day, and (ii) to the applicable Due-to-Consignor Disbursement Account, all amounts in the Transfer Account as may be identified by the Collateral Agent, in its reasonable estimation, that represent any portion of the Due-to-Consignor Amount as of such Business Day.

(d) So long as no Default or Event of Default has occurred and is continuing or the Administrative Agent shall have otherwise agreed, the Borrowers may amend Disclosure Schedule (3.19) to add or replace a Relationship Bank or Blocked Account; provided , that within thirty (30) days (or such later date as the Administrative Agent may agree to in its sole discretion) of the opening of any such account by any Credit Party, the applicable Credit Party,

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such bank and the Collateral Agent, if applicable, shall have entered into a Blocked Account Agreement with respect to such account, in form and substance reasonably acceptable to the Collateral Agent.

(e) The Borrowers shall close any of their Blocked Accounts (and establish replacement accounts in accordance with clause (d) above) promptly and in any event within thirty (30) days following notice from the Administrative Agent that the creditworthiness of any Relationship Bank holding such an account is no longer acceptable in the Administrative Agent’s reasonable judgment, or as promptly as practicable and in any event within sixty (60) days following notice from the Administrative Agent that the operating performance, funds transfer or availability procedures or performance with respect to accounts of the Relationship Bank holding such accounts or the Administrative Agent’s liability under any Blocked Account Agreement with respect to such Relationship Bank is no longer acceptable in the Administrative Agent’s reasonable judgment.

(f) The Blocked Accounts shall be cash collateral accounts, with all cash, checks and other similar items of payment in such accounts securing payment of some or all of the Loans and other Secured Obligations in accordance with the applicable Collateral Document, and in which each applicable Borrower shall have granted a security interest to the Collateral Agent, on behalf of itself and the other Secured Parties, pursuant to the applicable Collateral Document.

(g) All amounts deposited in any Collection Account shall be deemed received by the Administrative Agent in accordance with Section 1.11 and shall be applied (and allocated) by the Administrative Agent in accordance with Section 1.12 . In no event shall any amount be so applied unless and until such amount shall have been credited in immediately available funds to the applicable Collection Account.

(h) Each Borrower shall and shall cause its Affiliates, officers, employees, agents, directors or other Persons acting for or in concert with such Borrower (each, a “ Specified Related Person ”) to (i) hold in trust for the Collateral Agent, for the benefit of itself and the other Secured Parties, all checks, cash and other items of payment delivered by the applicable Art Loan Debtor (other than any Due-to-Consignor Amounts) or Extended Term Art Debtor and received by such Borrower or any such Specified Related Person in respect of any Art Loan or Extended Term Art Receivable or delivered by the applicable purchaser and received by such Borrower or any such Specified Related Person in respect of the sale or disposition of any Art Inventory and (ii) within one (1) Business Day after receipt by such Borrower or any such Specified Related Person of any such checks, cash or other items of payment, deposit the same into a Blocked Account of such Borrower. Each Borrower on behalf of itself and each Specified Related Person thereof acknowledges and agrees that all cash, checks or other items of payment constituting proceeds of Art Loans, Art Inventory or Extended Term Art Receivables (other than any Due-to-Consignor Amounts) are part of the Collateral. Following delivery of an Activation Notice, proceeds of the sale or other disposition of any Art Loans, Art Inventory or Extended Term Art Receivables shall be deposited directly to the applicable Blocked Account within two (2) Business Days after the receipt thereof by any Sotheby Entity.

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ANNEX D ( Section 2.1(a ))
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CREDIT AGREEMENT

See attached.

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ANNEX E ( Section 4.1(a))
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CREDIT AGREEMENT

FINANCIAL STATEMENTS AND PROJECTIONS -- REPORTING

Borrowers shall deliver or cause to be delivered in writing or by Electronic Transmission:

(a) Monthly Financials . To the Administrative Agent and Lenders, within thirty (30) days after the end of each Fiscal Month beginning with the Fiscal Month ending July 31, 2014 (or within forty-five (45) days (or sixty-five (65) days for December) after the end of each Fiscal Month ending on or about the last day of each June, September, December, January and March thereafter), financial information regarding Borrowers and their Subsidiaries, certified by a Financial Officer of Borrower Representative, consisting of consolidated (with respect to Parent and its Subsidiaries) and consolidating (i) unaudited balance sheets as of the close of such Fiscal Month and the related statements of income and (consolidated) cash flows (relating solely to depreciation, amortization and capital expenditures) for that portion of the Fiscal Year ending as of the close of such Fiscal Month; (ii) unaudited statements of income, if available, on a consolidated basis for such Fiscal Month, setting forth in comparative form the figures for the corresponding period in the prior year, all prepared in accordance with GAAP (subject to normal year-end adjustments); (iii) a calculation of the Due-to-Consignor Amount as of the last day of that Fiscal Month, which calculation shall separately identify (A) the aggregate amount of cash received and held by all Sotheby Entities that is payable to consignors as of such day as a result of the sale of such consignors’ Works of Art by a Sotheby Entity, and (B) the aggregate outstanding amount of all principal, accrued interest, and other related amounts as of such day with respect to any Art Loans secured by such Works of Art, and (iv) a calculation of the aggregate unfunded commitment of the Borrowers to make future Art Loans as of the last day of that Fiscal Month. Such financial information shall be accompanied by the certification of a Financial Officer of Borrower Representative (i) that such financial information presents fairly (in the case of the consolidated Financial Statements with respect to Parent and its Subsidiaries, in accordance with GAAP (subject to normal year-end adjustments)) the financial position and results of operations of Borrowers and their Subsidiaries, on a consolidated (with respect to Parent and its Subsidiaries) and consolidating basis, in each case as at the end of such Fiscal Month and for that portion of the Fiscal Year then ended, (ii) if the Revolving Loan Outstandings and the outstanding balance of the Swing Line Loan, in the aggregate, are greater than zero as of the last day of such Fiscal Month, (x) setting forth the Unrestricted Cash Amount and Liquidity Amount as of the end of such Fiscal Month and (y) that no Financial Covenant Compliance Period commenced during such Fiscal Month or, if a Financial Covenant Compliance Period commenced during such Fiscal Month, describing the date and cause of such commencement, (iii) that any other information presented is true, correct and complete in all material respects and (iv) that there was no Default or Event of Default in existence as of such time or, if a Default or Event of Default has occurred and is continuing, describing the nature thereof and all efforts undertaken to cure such Default or Event of Default.

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(b) Quarterly Financials . To the Administrative Agent and Lenders, within forty-five (45) days after the end of each Fiscal Quarter, consolidated (with respect to Parent and its Subsidiaries) and consolidating financial information, certified by a Financial Officer of Borrower Representative, including (i) unaudited balance sheets as of the close of such Fiscal Quarter and the related statements of income and (consolidated) cash flow for that portion of the Fiscal Year ending as of the close of such Fiscal Quarter and (ii) unaudited statements of income for such Fiscal Quarter, in each case setting forth in comparative form the figures for the corresponding period in the prior year. All such consolidated Financial Statements shall be prepared in accordance with GAAP (subject to normal year-end adjustments). Such financial information shall be accompanied by (A) during any Financial Covenant Compliance Period, a statement substantially in the form of Exhibit C (each, a “ Compliance Certificate ”) showing the calculations used in determining compliance with each of the Financial Covenants that is tested on a quarterly basis and (B) a certification of a Financial Officer of Borrower Representative (i) that such financial information presents fairly (in the case of the consolidated Financial Statements with respect to Parent and its Subsidiaries, in accordance with GAAP (subject to normal year-end adjustments)) the financial position, results of operations and statements of cash flows of Borrowers and their Subsidiaries, on both a consolidated (with respect to Parent and its Subsidiaries) and consolidating basis, as at the end of such Fiscal Quarter and for that portion of the Fiscal Year then ended, (ii) setting forth the Unrestricted Cash Amount and Liquidity Amount as of the end of such Fiscal Quarter, (iii) that no Financial Covenant Compliance Period commenced during such Fiscal Quarter or, if a Financial Covenant Compliance Period commenced during such Fiscal Quarter, describing the date and cause of such commencement, (iv) any other information presented is true, correct and complete in all material respects and (v) that there was no Default or Event of Default in existence as of such time or, if a Default or Event of Default has occurred and is continuing, describing the nature thereof and all efforts undertaken to cure such Default or Event of Default.

(c) Operating Plan . To the Administrative Agent and Lenders, as soon as available, but not later than forty-five (45) days after the end of each Fiscal Year, an annual operating plan for Parent and its Subsidiaries on a consolidated basis for the following Fiscal Year, which (i) includes a statement of all of the material assumptions on which such plan is based, (ii) includes quarterly balance sheets, income statements and statements of cash flows for the following year and (iii) integrates sales, gross profits, operating expenses, operating profit, cash flow projections, Domestic Auction Borrowing Availability, Domestic Incremental Borrowing Availability, Foreign Auction Borrowing Availability and Foreign Incremental Borrowing Availability projections, all prepared on the same basis and in similar detail as that on which operating results are reported (and in the case of cash flow projections, representing management’s good faith estimates of future financial performance based on historical performance), and including plans for personnel, Capital Expenditures and facilities. The income statements contained in such annual operating plan shall be approved by the Board of Directors of Parent.

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balance sheets, statements of income and (consolidated) statements of retained earnings and cash flows, setting forth in comparative form in each case the figures for the previous Fiscal Year, which Financial Statements shall be prepared in accordance with GAAP and certified without qualification, by an independent certified public accounting firm of national standing or otherwise acceptable to the Administrative Agent. Such Financial Statements shall be accompanied by (i) a statement prepared in reasonable detail showing the calculations used in determining compliance with each of the Financial Covenants, (ii) a report from such accounting firm to the effect that, in connection with their audit examination, nothing has come to their attention to cause them to believe that a Default or Event of Default has occurred with respect to the Financial Covenants (or specifying those Defaults and Events of Default that they became aware of), it being understood that such audit examination extended only to accounting matters and that no special investigation was made with respect to the existence of Defaults or Events of Default, and (iii) the certification of a Financial Officer of Borrowers that (x) such financial information presents fairly (in the case of the consolidated Financial Statements with respect to Parent and its Subsidiaries, in accordance with GAAP) the financial position, results of operations and statements of cash flows of Borrowers and their Subsidiaries, on both a consolidated (with respect to Parent and its Subsidiaries) and consolidating basis, as at the end of such Fiscal Year and for the period then ended, and (y) there was no Default or Event of Default in existence as of such time or, if a Default or Event of Default has occurred and is continuing, describing the nature thereof and all efforts undertaken to cure such Default or Event of Default.

(e) Initial Compliance Certificate . To the Administrative Agent and Lenders, within two (2) Business Days of the commencement of any Financial Covenant Compliance Period, to the extent a Compliance Certificate has not already been delivered with respect to such Financial Covenant Compliance Period pursuant to clause (b) above, a Compliance Certificate, certified by a Financial Officer of Borrower Representative, showing the calculations used in determining compliance with each of the Financial Covenants that is tested on a quarterly basis.

(e) Management Letters . To the Administrative Agent, within five (5) Business Days after receipt thereof by Parent, copies of all management letters, exception reports or similar letters or reports received by Parent from its independent certified public accountants, except to the extent such accountants shall restrict the ability of Parent to deliver such documents to the Administrative Agent.

(f) Default Notices . To the Administrative Agent and Lenders, as soon as practicable, and in any event within five (5) Business Days after an executive officer of any Borrower has actual knowledge of the existence of any Default, Event of Default or other event that has had a Material Adverse Effect, telephonic or telecopied notice specifying the nature of such Default or Event of Default or other event, including the anticipated effect thereof, which notice, if given telephonically, shall be promptly confirmed in writing on the next Business Day.

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week thereafter and (ii) on each Business Day on which a Default or Event of Default has occurred and is continuing or on which the Liquidity Amount shall be less than $70,000,000, a statement (such statement, a “ Due-to-Consignor Statement ”) certified by a Financial Officer of Borrower Representative, providing a calculation of the Due-to-Consignor Amount as of the date on which such statement is delivered, which calculation shall separately identify (i) the aggregate amount of cash received and held by all Sotheby Entities that is payable to consignors as of such Business Day as a result of the sale of such consignors’ Works of Art by a Sotheby Entity, and (ii) the aggregate outstanding amount of all principal, accrued interest, and other related amounts as of such Business Day with respect to any Art Loans secured by such Works of Art.

(h) SEC Filings and Press Releases . To the Administrative Agent and Lenders, promptly upon their becoming available, copies of: (i) all Financial Statements, reports, notices and proxy statements made publicly available by Parent to its security holders; (ii) all regular and periodic reports and all registration statements and prospectuses, if any, filed by Parent with any securities exchange or with the Securities and Exchange Commission or any governmental or private regulatory authority in any jurisdiction; and (iii) all press releases and other statements made available by Parent to the public concerning material changes or developments in the business of any such Person.

(i) Debt and Equity Notices . To the Administrative Agent, as soon as practicable, copies of all material written notices given or received by any Sotheby Entity or the York Avenue Owner with respect to the Senior Notes, the York Avenue Lease, the York Avenue Loan Agreement or the Specified Debt Facility, and, within two (2) Business Days after any Sotheby Entity obtains knowledge of any matured or unmatured event of default with respect to the Senior Notes, the York Avenue Lease, the York Avenue Loan Agreement or the Specified Debt Facility, notice of such event of default.

(j) Supplemental Schedules . To the Administrative Agent, supplemental disclosures, if any, required by Section 5.6 .

(k) Litigation . To the Administrative Agent in writing, as soon as practicable upon learning thereof, notice of any Litigation commenced or threatened in writing against any Sotheby Entity that (i) seeks damages in excess of $10,000,000, (ii) seeks injunctive relief that could reasonably be expected to have a Material Adverse Effect, (iii) alleges criminal misconduct by any Sotheby Entity, (iv) alleges the violation of any law regarding, or seeks remedies in connection with, any Environmental Liabilities or (v) alleges, or seeks remedies in connection with, any violation of any antitrust law or similar law of any jurisdiction (in each case, other than any such Litigation that (x) is not commenced or threatened by a Governmental Authority and (y) has been reasonably determined by the applicable Sotheby Entity to be frivolous and without merit). To the Administrative Agent in writing, as soon as practicable upon learning thereof, notice of any Litigation commenced or threatened against any Plan, its fiduciaries or its assets or against any Sotheby Entity or ERISA Affiliate in connection with any Plan.

(l) Insurance Notices . To the Administrative Agent, disclosure of losses or casualties required by Section 5.4 .

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(m) Lease Default Notices . To the Administrative Agent, (i) within two (2) Business Days after receipt thereof, copies of any and all default notices received under or with respect to any leased location or public warehouse where Collateral (including any Work of Art securing repayment of any Art Loan or in respect of any Extended Term Art Receivable) is located, and (ii) such other notices or documents as the Administrative Agent may reasonably request.

(n) Hedging Agreements . To the Administrative Agent, within five (5) Business Days after its request therefor, copies of any interest rate, commodity or currency hedging agreements or amendments thereto entered into by any Sotheby Entity.

(o) U.K. Pension Plans . To the Administrative Agent in writing, promptly upon learning thereof, notice of (i) any Litigation commenced or threatened against any Sotheby Entity in relation to the U.K. Pensions Plans or (ii) any requirement to materially increase funding levels of the U.K. Pension Plans.

(p) Unfunded Commitments . To the Administrative Agent in writing, promptly upon the occurrence thereof, (i) any failure by any Sotheby Entity to fund any unfunded commitment to make future Art Loans upon satisfaction of the conditions precedent to such funding obligation or (ii) any dispute between any Sotheby Entity and any Art Loan Debtor regarding the obligation of any Sotheby Entity to make an Art Loan pursuant to any such unfunded commitment.

(q) Other Documents . To the Agents and Lenders, such other financial and other information respecting any Sotheby Entity’s business or financial condition as the any Agent or any Lender shall from time to time reasonably request.

(r) Liquidity Amount . At any time the Aggregate Borrowing Availability shall be less than $133,500,000, promptly upon the reasonable request of the Administrative Agent, a certification of a Financial Officer of Borrower Representative (i) setting forth the Unrestricted Cash Amount and Liquidity Amount as of the date specified in such request (which date shall be a Business Day no earlier than one Business Day after the date of such request) and (ii) that no Financial Covenant Compliance Period has commenced since the previous such certification or, if a Financial Covenant Compliance Period has commenced, describing the date and cause of such commencement.

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ANNEX F ( Section 4.1(b) )
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CREDIT AGREEMENT

COLLATERAL REPORTS

Borrowers shall deliver or cause to be delivered the following:

(a) To the Administrative Agent, upon its request, and in any event no less frequently than fourteen (14) days (or if the 14 ^th day of any Fiscal Month is not a Business Day, the next succeeding Business Day) after the end of (i) if the Revolving Loan Outstandings and the outstanding balance of the Swing Line Loan, in the aggregate, are greater than zero as of the last day of such Fiscal Month, each Fiscal Month or (ii) otherwise, each Fiscal Quarter, each of the following reports, each of which shall be prepared by the Borrowers as of the last day of the immediately preceding Fiscal Month or Fiscal Quarter, as applicable, or the date two (2) days prior to the date of any such request:

(i) a Borrowing Base Certificate, accompanied by such supporting detail and documentation as shall be requested by the Administrative Agent in its reasonable discretion;

(ii) an Art Inventory Report, accompanied by such supporting detail and documentation as shall be requested by the Administrative Agent in its reasonable discretion;

(iii) an Art Loan Receivables Report, accompanied by such supporting detail and documentation as shall be requested by Administrative Agent in its reasonable discretion; and

(iv) an Extended Term Art Receivables Report, accompanied by such supporting detail and documentation as shall be requested by the Administrative Agent in its reasonable discretion;

provided that, without limiting the foregoing, the Borrowers’ may, in their sole discretion, deliver the foregoing (or the complete Eligible Art Loan component thereof) on a more frequent basis.

(b) To the Administrative Agent, in connection with any inspection or audit pursuant to Section 1.15 of the Agreement and, otherwise, within five (5) Business Days (or such later date as the Administrative Agent shall consent to in writing) of its request:

(i) a reconciliation of the Art Inventory Report, Art Loans Receivables Report and Extended Term Art Receivables Report to the most recent Borrowing Base Certificate, general ledger and monthly Financial Statements delivered pursuant to Annex E , in each case accompanied by such supporting detail and documentation as shall be requested by the Administrative Agent in its reasonable discretion;

F-1

(ii) a reconciliation of the outstanding Loans as set forth in the monthly Loan Account statement provided by the Administrative Agent to each Borrower’s general ledger and monthly Financial Statements delivered pursuant to Annex E , in each case accompanied by such supporting detail and documentation as shall be requested by the Administrative Agent in its reasonable discretion;

(c) To the Administrative Agent, at the time of delivery of each of the quarterly Financial Statements delivered pursuant to Annex E , a list of any applications for the registration of any Patent, Trademark or Copyright filed by any Credit Party with the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency in the prior Fiscal Quarter, except any Trademark registered by a Sotheby Entity at the direction of the purchaser of Sotheby’s International Realty, Inc., a Michigan corporation, as contemplated by Disclosure Schedule (3.15) .

(d) Each Borrower, at its own expense, shall make available to the Administrative Agent upon reasonable request the results of each physical verification, if any, that such Borrower or any of its Subsidiaries may in their discretion have made, or caused any other Person to have made on their behalf, of all or any portion of the Collateral (including, without limitation, any Works of Art securing repayment of Art Loans, Works of Art in respect of Extended Term Art Receivables and any Art Inventory) (and, if a Default or an Event of Default has occurred and is continuing, each Borrower shall, upon the request of the Administrative Agent, conduct, and deliver the results of, such physical verifications as the Administrative Agent may require).

(e) Such other reports, statements and reconciliations with respect to the Borrowing Bases, Collateral or Obligations of any or all of the Credit Parties as the Administrative Agent shall from time to time request in its reasonable discretion.

F-2

ANNEX G ( Section 6.10 )
to
CREDIT AGREEMENT

FINANCIAL COVENANTS

Borrowers shall not breach or fail to comply with any of the following financial covenants, each of which shall be calculated in accordance with GAAP consistently applied:

(a) Maximum Capital Expenditures . During each Fiscal Year, Parent and its Subsidiaries on a consolidated basis shall not make Capital Expenditures (other than (i) portions of such Capital Expenditures financed by the Lenders hereunder and (ii) amounts used to purchase and upgrade a headquarters building) during such Fiscal Year in excess of $50,000,000.

(b) Minimum Fixed Charge Coverage Ratio . During each Financial Covenant Compliance Period, Parent and its Subsidiaries shall have on a consolidated basis at the end of the most recently ended Fiscal Quarter for which Financial Statements are required to be delivered to the Administrative Agent and Lenders pursuant to Annex E , a Fixed Charge Coverage Ratio for the four Fiscal-Quarter period then ended of not less than 1.15:1.00.

(c) Minimum EBITDA . During each Financial Covenant Compliance Period, Parent and its Subsidiaries shall have on a consolidated basis at the end of the most recently ended Fiscal Quarter for which Financial Statements are required to be delivered to the Administrative Agent and Lenders pursuant to Annex E , EBITDA for the 12-month period then ended of not less than $100,000,000.

Unless otherwise specifically provided herein, any accounting term used in the Agreement shall have the meaning customarily given such term in accordance with GAAP, and all financial computations hereunder shall be computed in accordance with GAAP consistently applied. That certain items or computations are explicitly modified by the phrase “in accordance with GAAP” shall in no way be construed to limit the foregoing. If any “Accounting Changes” (as defined below) occur and such changes result in a change in the calculation of the financial covenants, standards or terms used in the Agreement or any other Loan Document, then Borrowers, the Administrative Agent and Lenders agree to enter into negotiations in order to amend such provisions of the Agreement so as to equitably reflect such Accounting Changes with the desired result that the criteria for evaluating Borrowers’ and their Subsidiaries’ financial condition shall be the same after such Accounting Changes as if such Accounting Changes had not been made; provided , however , that the agreement of Requisite Lenders to any required amendments of such provisions shall be sufficient to bind all Lenders. “ Accounting Changes ” means (i) changes in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants (or successor thereto or any agency with similar functions), (ii) changes in accounting principles concurred in by any Borrower’s certified public accountants; (iii) purchase accounting adjustments under A.P.B. 16 or 17 and EITF 88-16, and the application of the accounting principles set forth in FASB 109, including the establishment of

G-1

reserves pursuant thereto and any subsequent reversal (in whole or in part) of such reserves; and (iv) the reversal of any reserves established as a result of purchase accounting adjustments. All such adjustments resulting from expenditures made subsequent to the Restatement Effective Date (including capitalization of costs and expenses or payment of pre-Restatement Effective Date liabilities) shall be treated as expenses in the period the expenditures are made and deducted as part of the calculation of EBITDA in such period. If the Administrative Agent, Borrowers and Requisite Lenders agree upon the required amendments, then after appropriate amendments have been executed and the underlying Accounting Change with respect thereto has been implemented, any reference to GAAP contained in the Agreement or in any other Loan Document shall, only to the extent of such Accounting Change, refer to GAAP, consistently applied after giving effect to the implementation of such Accounting Change. If the Administrative Agent, Borrowers and Requisite Lenders cannot agree upon the required amendments within thirty (30) days following the date of implementation of any Accounting Change, then all Financial Statements delivered and all calculations of financial covenants and other standards and terms in accordance with the Agreement and the other Loan Documents shall be prepared, delivered and made without regard to the underlying Accounting Change. For purposes of Section 8.1 , a breach of a Financial Covenant contained in this Annex G shall be deemed to have occurred as of any date of determination by the Administrative Agent or as of the last day of any specified measurement period, regardless of when the Financial Statements reflecting such breach are delivered to the Administrative Agent. Notwithstanding any other provision contained in the Agreement, all terms of an accounting or financial nature used in the Agreement shall be construed, and all computations of amounts and ratios referred to in Section 6 of the Agreement or this Annex G shall be made, without giving effect to (i) any election under Accounting Standards Codification 825-10 (or any other Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of any Sotheby Entity at “fair value” and (ii) any change to, or modification of, GAAP which would require the capitalization of leases that are characterized as (or would have been characterized as) “operating leases” as of the Restatement Effective Date.

G-2

ANNEX I ( Section 11.10 )
to
CREDIT AGREEMENT

NOTICE ADDRESSES

(A) If to any Agent or GE Capital, at

General Electric Capital Corporation
401 Merritt Seven

Norwalk, Connecticut 06851

Attention: Sotheby’s Account Manager
Telecopier No.: (203) 749-4307

Telephone No.: (203) 956-3640

with a copy to:

General Electric Capital Corporation
401 Merritt Seven
Norwalk, Connecticut 06851
Attention: Corporate Counsel - Commercial Finance
Telecopier No.: (203) 567-8215

Telephone No.: (203) 956-4379

(B) If to any Borrower, to Borrower Representative, at

Sotheby’s
1334 York Avenue
New York, NY 10021
Attention: Chief Financial Officer
Telecopier No.: (212) 606-7372

Telephone No.: (212) 606-7107

with a copy to:

Sotheby’s
1334 York Avenue
New York, NY 10021
Attention: General Counsel
Telecopier No.: (212) 606-7574
Telephone No.: (212) 894-1439

I-1

ANNEX J (from Annex A - Commitments definition )
to
CREDIT AGREEMENT



Lender	Auction Dollar Tranche Commitment		Auction Multicurrency Tranche Commitment		Incremental Commitment
General Electric Capital Corporation		$23,314,412.84		$8,529,258.47		$11,323,529.40
JPMorgan Chase Bank, N.A.	24,927,359.62		9,119,332.99		0.00
HSBC Bank PLC	7,122,102.75		2,605,523.71		0.00
HSBC Bank USA, National Association	8,902,628.43		3,256,904.64		12,500,000.00
ING LLC	13,825,258.27		5,057,781.32		2,941,176.49
RBS Citizens, N.A.	10,683,154.12		3,908,285.57		0.00
Goldman Sachs Bank USA	7,017,365.94		2,567,207.19		10,735,294.11
Credit Suisse AG	7,748,847.79		2,834,809.80		3,600,000.00
NYCB Specialty Finance Company, LLC	9,727,626.46		0.00		0.00
Santander Bank, N.A.	7,122,102.75		2,605,523.71		0.00
Comerica Bank	5,697,682.20		2,084,418.97		0.00
People's United Bank	7,509,727.63		0.00		1,400,000.00
Bank of America, N.A.	4,985,471.92		1,823,866.60		0.00
EverBank	6,809,338.52		0.00		0.00
Investors Bank	6,536,964.98		0.00		1,400,000.00
The PrivateBank and Trust Company	5,505,836.58		0.00		1,700,000.00
Israel Discount Bank of New York	4,073,842.77		1,490,359.56		3,400,000.00
Amalgamated Bank	4,863,813.23		0.00		0.00
CIT Finance LLC	4,863,813.23		0.00		0.00
The Huntington National Bank	4,863,813.23		0.00		0.00
Rockland Trust Company	4,863,813.23		0.00		0.00
SunTrust Bank	3,561,051.37		1,302,761.86		0.00
T.D. Bank, N.A.	4,863,813.23		0.00		0.00
Bank Leumi USA	4,273,261.65		1,563,314.23		0.00
Webster Business Credit Corporation	3,418,609.32		1,250,651.38		1,000,000.00
Flushing Bank	2,918,287.94		0.00		0.00
Total		$200,000,000.00		$50,000,000.00		$50,000,000.00

EXHIBIT 1.1(a)(i)
to
CREDIT AGREEMENT
FORM OF NOTICE OF AUCTION REVOLVING CREDIT ADVANCE

GENERAL ELECTRIC CAPITAL CORPORATION
as Agent under the Credit Agreement referred to below

_______________ __, ____

Re: Sotheby’s

Reference is made to the Amended and Restated Credit Agreement, dated as of August 22, 2014 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among the Borrowers, Sotheby’s, as Borrower Representative, the “Credit Parties” party thereto, the Lenders and L/C Issuers party thereto and General Electric Capital Corporation, as administrative agent for such Lenders and L/C Issuers and as collateral agent. Capitalized terms used herein without definition are used as defined in the Credit Agreement.

The Borrower Representative, on behalf of Borrowers identified below, hereby gives you irrevocable notice, pursuant to Section 1.1(a) of the Credit Agreement of its request of an Auction Revolving Credit Advance (the “ Proposed Advance ”) under the Credit Agreement and, in that connection, sets forth the following information:

The date of the Proposed Advance is __________, ____ (the “ Funding Date ”).

Borrower: ________

[The aggregate principal amount of requested Auction Dollar Tranche Revolving Loans by this Borrower is $_________, of which $________ consists of Index Rate Loans and $________ consists of LIBOR Loans having an initial LIBOR Period of ______ months.]

[The aggregate principal amount of requested Auction Multicurrency Tranche Revolving Loans by this Borrower is [$][£][HK$][€]_________, of which [$][£][HK$][€]________ consists of Index Rate Loans and [$][£][HK$][€]________ consists of LIBOR Loans having an initial LIBOR Period of ______ months.]

[Borrower: ________

The undersigned hereby certifies that, except as set forth on Schedule A attached hereto, the following statements are true on the date hereof and will be true on the Funding Date, both before and after giving effect to the Proposed Advance and any other Loan to be made or Letter of Credit to be issued on or before the Funding Date:

(A) the representations and warranties of the Credit Parties set forth in the Credit Agreement and in the other Loan Documents are true and correct in all material respects (or, in the case of any representation or warranty already qualified by materiality, in all respects) on and as of the date hereof, except to the extent that such representations and

warranties specifically refer to an earlier date, in which case they were true and correct in all material respects as of such earlier date;

(B) no Default or Event of Default under the Credit Agreement has occurred and is continuing;

(C) the outstanding principal amount of the aggregate Auction Dollar Tranche Revolving Loan will not exceed the Maximum Auction Dollar Tranche Amount less the then outstanding principal amount of the Auction Dollar Tranche Swing Line Loan, (ii) the Dollar Equivalent of the outstanding principal amount of the aggregate Auction Multicurrency Tranche Revolving Loan will not exceed the Maximum Auction Multicurrency Tranche Amount less the then outstanding principal amount of the Auction Multicurrency Tranche Swing Line Loan, (iii) the aggregate outstanding principal balance of Incremental Revolving Credit Advances will not exceed the Maximum Incremental Amount, (iv) the Dollar Equivalent of the aggregate outstanding principal balance of Auction Revolving Credit Advances and Swing Line Advances made to Domestic Borrowers and the Dollar Equivalent of the Letter of Credit Obligations incurred for the benefit of the Domestic Borrowers will not, in the aggregate, exceed the Domestic Auction Borrowing Base, (v) the aggregate outstanding principal balance of Incremental Revolving Credit Advances made to Domestic Borrowers will not, in the aggregate, exceed the Domestic Incremental Borrowing Base, (vi) the outstanding amount of the Auction Dollar Tranche Letter of Credit Obligations will not exceed the Auction Dollar Tranche L/C Sublimit or the Dollar Equivalent of the outstanding amount of the Auction Multicurrency Tranche Letter of Credit Obligations will not exceed the Auction Multicurrency Tranche L/C Sublimit, (vii) the aggregate outstanding principal amount of the Auction Dollar Tranche Swing Line Loan will not exceed Auction Dollar Tranche Swing Line Availability, (viii) the Dollar Equivalent of the aggregate outstanding principal amount of the Auction Multicurrency Tranche Swing Line Loan will not exceed Auction Multicurrency Tranche Swing Line Availability, (ix) the Dollar Equivalent of the aggregate outstanding principal balance of Auction Revolving Credit Advances made to Foreign Borrowers and the Dollar Equivalent of the outstanding amount of the Letter of Credit Obligations incurred for the benefit of the Foreign Borrowers will not, in the aggregate, exceed the Foreign Auction Borrowing Base, (x) the sum of (A) the Dollar Equivalent of the aggregate outstanding principal balance of Auction Revolving Credit Advances made to Foreign Borrowers and the Dollar Equivalent of the outstanding amount of the Letter of Credit Obligations incurred for the benefit of the Foreign Borrowers plus (B) the Dollar Equivalent of the aggregate outstanding principal balance of “Revolving Credit Advances” made to “Foreign Borrowers” and the Dollar Equivalent of the outstanding amount of the “Letter of Credit Obligations” incurred for the benefit of the “Foreign Borrowers” (as each such term in this clause (B) is defined in the SFS Revolving Credit Agreement) will not, in the aggregate, exceed the Foreign Borrower Subfacility Limit or (xi) the aggregate outstanding principal balance of Incremental Revolving Credit Advances made to Foreign Borrowers will not, in the aggregate, exceed the Foreign Incremental Borrowing Base; and

(D) as of the date of this notice and after giving effect to the making of the Proposed Advance, Parent shall be in compliance with Section 4.03 of the Senior Note Indenture.

IN WITNESS WHEREOF, Borrower Representative has caused this Notice of Auction Revolving Credit Advance to be executed and delivered on behalf of the applicable Borrower(s) by its duly authorized officer as of the date first set forth above.

SOTHEBY’S, as the Borrower Representative

By:         /s/ Michael L. Gillis
    Name: Michael L. Gillis
    Title: Vice President and Treasurer

EXHIBIT 1.1(b)(i)
to
CREDIT AGREEMENT
FORM OF NOTICE OF INCREMENTAL REVOLVING CREDIT ADVANCE

GENERAL ELECTRIC CAPITAL CORPORATION
as Agent under the Credit Agreement referred to below

_______________ __, ____

Re: Sotheby’s

The Borrower Representative, on behalf of Borrowers identified below, hereby gives you irrevocable notice, pursuant to Section 1.1(b)(i) of the Credit Agreement of its request of an Incremental Revolving Credit Advance (the “ Proposed Advance ”) under the Credit Agreement and, in that connection, sets forth the following information:

The date of the Proposed Advance is __________, ____ (the “ Funding Date ”).

Borrower: ________

The aggregate principal amount of requested Incremental Revolving Loans by this Borrower is $_________, of which $________ consists of Index Rate Loans and $________ consists of LIBOR Loans having an initial LIBOR Period of ______ months.]

[Borrower: ________

[The aggregate principal amount of requested Incremental Revolving Loans by this Borrower is $_________, of which $________ consists of Index Rate Loans and $________ consists of LIBOR Loans having an initial LIBOR Period of ______ months.]

(B) no Default or Event of Default under the Credit Agreement has occurred and is continuing;

Dollar Equivalent of the outstanding principal amount of the aggregate Auction Multicurrency Tranche Revolving Loan will not exceed the Maximum Auction Multicurrency Tranche Amount less the then outstanding principal amount of the Auction Multicurrency Tranche Swing Line Loan, (iii) the aggregate outstanding principal balance of Incremental Revolving Credit Advances will not exceed the Maximum Incremental Amount, (iv) the Dollar Equivalent of the aggregate outstanding principal balance of Auction Revolving Credit Advances and Swing Line Advances made to Domestic Borrowers and the Dollar Equivalent of the Letter of Credit Obligations incurred for the benefit of the Domestic Borrowers will not, in the aggregate, exceed the Domestic Auction Borrowing Base, (v) the aggregate outstanding principal balance of Incremental Revolving Credit Advances made to Domestic Borrowers will not, in the aggregate, exceed the Domestic Incremental Borrowing Base, (vi) the outstanding amount of the Auction Dollar Tranche Letter of Credit Obligations will not exceed the Auction Dollar Tranche L/C Sublimit or the Dollar Equivalent of the outstanding amount of the Auction Multicurrency Tranche Letter of Credit Obligations will not exceed the Auction Multicurrency Tranche L/C Sublimit, (vii) the aggregate outstanding principal amount of the Auction Dollar Tranche Swing Line Loan will not exceed Auction Dollar Tranche Swing Line Availability, (viii) the Dollar Equivalent of the aggregate outstanding principal amount of the Auction Multicurrency Tranche Swing Line Loan will not exceed Auction Multicurrency Tranche Swing Line Availability, (ix) the Dollar Equivalent of the aggregate outstanding principal balance of Auction Revolving Credit Advances made to Foreign Borrowers and the Dollar Equivalent of the outstanding amount of the Letter of Credit Obligations incurred for the benefit of the Foreign Borrowers will not, in the aggregate, exceed the Foreign Auction Borrowing Base, (x) the sum of (A) the Dollar Equivalent of the aggregate outstanding principal balance of Auction Revolving Credit Advances made to Foreign Borrowers and the Dollar Equivalent of the outstanding amount of the Letter of Credit Obligations incurred for the benefit of the Foreign Borrowers plus (B) the Dollar Equivalent of the aggregate outstanding principal balance of “Revolving Credit Advances” made to “Foreign Borrowers” and the Dollar Equivalent of the outstanding amount of the “Letter of Credit Obligations” incurred for the benefit of the “Foreign Borrowers” (as each such term in this clause (B) is defined in the SFS Revolving Credit Agreement) will not, in the aggregate, exceed the Foreign Borrower Subfacility Limit or (xi) the aggregate outstanding principal balance of Incremental Revolving Credit Advances made to Foreign Borrowers will not, in the aggregate, exceed the Foreign Incremental Borrowing Base; and

(D) as of the date of this notice and after giving effect to the making of the Proposed Advance, Parent shall be in compliance with Section 4.03 of the Senior Note Indenture.

IN WITNESS WHEREOF, Borrower Representative has caused this Notice of Incremental Revolving Credit Advance to be executed and delivered on behalf of the applicable Borrower(s) by its duly authorized officer as of the date first set forth above.

SOTHEBY’S, as the Borrower Representative

By: /s/ Michael L. Gillis
Name: Michael L. Gillis Title: Vice President and Treasuer

EXHIBIT 1.1(c)(i)
to
CREDIT AGREEMENT
FORM OF SWING LINE LOAN REQUEST

GENERAL ELECTRIC CAPITAL CORPORATION
as Administrative Agent under the Credit Agreement referred to below

_________ __, ____

Re: Sotheby’s, a Delaware corporation (“ Parent ”), Sotheby’s, Inc., a New York corporation (“ Sotheby’s, Inc. ”), Sotheby’s Financial Services, Inc., a Nevada corporation (“ SFS Inc. ”), Sotheby’s Financial Services California, Inc. (“ SFS California ”), Oberon, Inc., a Delaware corporation (“ Oberon ”), Sotheby’s Ventures, LLC, a New York limited liability company (“ Ventures LLC ” and, collectively with Parent, Sotheby’s Inc., SFS Inc., SFS California and Oberon, the “ Domestic Borrowers ”), Oatshare Limited, a company registered in England (“ Oatshare ”), Sotheby’s Financial Services Limited, a company registered in England (“ SFS Ltd. ”), Sotheby’s, a company registered in England (“ Sotheby’s U.K. ”), and Sotheby’s Hong Kong Limited, a company incorporated in Hong Kong (“ Sotheby’s H.K. ” and, collectively with Oatshare, SFS Ltd. and Sotheby’s U.K., the “ Foreign Borrowers ” and, collectively with the Domestic Borrowers, the “ Borrowers ”)

Reference is made to the Amended and Restated Credit Agreement, dated as of August 22, 2014 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among the Borrowers, the other Persons named therein as Credit Parties, General Electric Capital Corporation, as Administrative Agent, Collateral Agent and a Lender and the other Persons signatory thereto from time to time as Lenders. C apitalized terms used herein but not otherwise defined herein shall have the respective meanings ascribed to such terms in the Credit Agreement.

The Borrower Representative, on behalf of the Borrowers, hereby gives you irrevocable notice pursuant to Section 1.1(c)(i) of the Credit Agreement that it requests Swing Line Advances under the Credit Agreement (the “ Proposed Advance ”) and, in connection therewith, sets for the following information:

A. The date of the Proposed Advance is __________, ____ (the “ Funding Date ”).

B. The aggregate principal amount of Proposed Advance is [$][£][HK$][€]_________.

C. The Proposed Advance is an [Auction Dollar][Auction Multicurrency] Tranche Swing Line Advance.

behalf of itself and the other Secured Parties, pursuant to the Collateral Documents; and (iii) represents and warrants that, as of the date of this notice and after giving effect to the making of the Proposed Advance, Parent shall be in compliance with Section 4.03 of the Senior Note Indenture .

Sincerely,

SOTHEBY’S,

as Borrower Representative

By: _ /s/ Michael L. Gillis _

Name: Michael L . Gillis _

Title: _Vice President and Treasurer

EXHIBIT 10.4

ATTACHMENT B

Conformed SFS Credit Agreement incorporating

Amendment No. 1 dated June 15, 2015

AMENDED AND RESTATED

CREDIT AGREEMENT

Dated as of August 22, 2014

among

SOTHEBY’S, INC.,

SOTHEBY’S FINANCIAL SERVICES, INC.,

SOTHEBY’S FINANCIAL SERVICES CALIFORNIA, INC.,

OBERON, INC.,

SOTHEBY’S VENTURES, LLC,
SOTHEBY’S,

a company registered in England,

SOTHEBY’S FINANCIAL SERVICES LIMITED,

and

SOTHEBY’S HONG KONG LIMITED
as Borrowers,

THE OTHER CREDIT PARTIES SIGNATORY HERETO,
as Credit Parties,

THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders,

GENERAL ELECTRIC CAPITAL CORPORATION,
as Administrative Agent, Collateral Agent and a Lender

and

GE CAPITAL MARKETS, INC., J.P. MORGAN SECURITIES LLC and HSBC BANK USA, N.A.
as Joint Lead Arrangers and Joint Bookrunners

SFS Revolving Credit Facility

TABLE OF CONTENTS

Page


1.	AMOUNT AND TERMS OF CREDIT 2


1.1	Credit Facilities . 2


1.2	Letters of Credit . 9


1.3	Prepayments; Commitment Reductions . 10


1.4	Use of Proceeds . 18


1.5	Interest and Applicable Margins . 18


1.6	Eligible Art Loans . 21


1.7	[Reserved] . 24


1.8	[Reserved] 24


1.9	Cash Management Systems . 24


1.10	Fees . 24


1.11	Receipt of Payments . 25


1.12	Application and Allocation of Payments . 25


1.13	Loan Account and Accounting . 27


1.14	Indemnity . 28


1.15	Access . 29


1.16	Taxes . 30


1.17	Capital Adequacy; Increased Costs; Illegality . 34


1.18	Credit Support . 37


1.19	Conversion to Dollars and Foreign Currency . 37


1.20	Judgment Currency; Contractual Currency . 37


1.21	Currency of Account . 38


2.	CONDITIONS PRECEDENT 39


2.1	Conditions to Effectiveness of Agreement and the Initial Loans . 39


2.2	Further Conditions to Each Loan . 40


3.	REPRESENTATIONS AND WARRANTIES 42


3.1	Corporate Existence; Compliance with Law . 42


3.2	Executive Offices, Collateral Locations, FEIN . 42


3.3	Corporate Power, Authorization, Enforceable Obligations . 43


3.4	Financial Disclosures . 43


3.5	Material Adverse Effect . 44


3.6	Ownership of Property; Liens . 44


3.7	Labor Matters . 44


3.8	Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness . 45


3.9	Government Regulation . 45


3.10	Margin Regulations . 45


3.11	Taxes . 45


3.12	ERISA/U.K. Pension Plans . 46


3.13	Litigation . 47


3.14	Brokers . 48


3.15	Intellectual Property . 48


3.16	Full Disclosure . 48


3.17	Environmental Matters . 49


3.18	Insurance . 49


3.19	Deposit . 49


3.20	[ Reserved ] . 50


3.21	Bonding; Licenses . 50


3.22	Solvency . 50


3.23	Sale-Leasebacks . 50


3.24	U.S. Money-Laundering and Terrorism Regulatory Matters . 50


3.25	Lending and Auction Regulatory Matters . 52


4.	FINANCIAL STATEMENTS AND INFORMATION 52


4.1	Reports and Notices . 52


5.	AFFIRMATIVE COVENANTS 52


5.1	Maintenance of Existence and Conduct of Business . 52


5.2	Payment of Charges . 53


5.3	Books and Records . 53


5.4	Insurance; Damage to or Destruction of Collateral . 53


5.5	Compliance with Laws . 55


5.6	Supplemental Disclosure . 55

iii


5.7	Intellectual Property . 55


5.8	Environmental Matters . 55


5.9	Landlords’ Agreements, Bailee Letters and Real Estate Purchases . 56


5.10	Lending and Auction Regulatory Matters . 57


5.11	Further Assurances . 57


5.12	Art Loans . 57


5.13	Money-Laundering and Terrorism Regulatory Matters . 58


5.14	Subsidiary Loan Documents . 59


5.15	Immaterial Subsidiaries . 61


5.16	York Avenue Transactions . 61


5.17	Auction Guaranties . 61


5.18	Data Protection Matters . 61


6.	NEGATIVE COVENANTS 62


6.1	Mergers, Subsidiaries, Etc . 62


6.2	Investments; Loans and Revolving Credit Advances . 62


6.3	Indebtedness . 63


6.4	Employee Loans and Affiliate Transactions . 66


6.5	Capital Structure and Business . 66


6.6	Guaranteed Indebtedness . 66


6.7	Liens . 66


6.8	Sale of Stock and Assets . 68


6.9	ERISA . 68


6.10	Financial Covenants . 68


6.11	Hazardous Materials . 68


6.12	Sale Leasebacks . 68


6.13	Restricted Payments . 69


6.14	Change of Corporate Name, State of Incorporation or Location; Change of Fiscal Year. 70


6.15	No Impairment of Intercompany Transfers . 71


6.16	Real Estate Purchases . 71


6.17	Changes Relating to Material Contracts . 71


6.18	Use of Proceeds . 71


7.	TERM 72


7.1	Termination . 72


7.2	Survival of Obligations Upon Termination of Financing Arrangements . 72


8.	EVENTS OF DEFAULT; RIGHTS AND REMEDIES 72


8.1	Events of Default . 72


8.2	Remedies . 74


8.3	Waivers by Credit Parties . 75


9.	ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT 75


9.1	Assignment and Participations . 75


9.2	Appointment of the Administrative Agent and the Collateral Agent . 78


9.3	Agents’ Reliance, Etc . 80


9.4	GE Capital and Affiliates . 80


9.5	Lender Credit Decision . 81


9.6	Indemnification . 81


9.7	Successor Agents . 81


9.8	Setoff and Sharing of Payments . 82


9.9	Advances; Payments; Non-Funding Lenders; Information; Actions in Concert . 83


9.10	Release of Guarantors or Collateral . 88


10.	SUCCESSORS AND ASSIGNS 88


10.1	Successors and Assigns . 88


11.	MISCELLANEOUS 89


11.1	Complete Agreement; Modification of Agreement . 89


11.2	Amendments and Waivers . 89


11.3	Fees and Expenses . 91


11.4	No Waiver . 92


11.5	Remedies . 93


11.6	Severability . 93


11.7	Conflict of Terms . 93


11.8	Confidentiality . 93


11.9	GOVERNING LAW . 94


11.10	Notices . 95


11.11	Section Titles . 97


11.12	Counterparts; Facsimile Signature . 97


11.13	WAIVER OF JURY TRIAL . 97


11.14	Press Releases and Related Matters . 98


11.15	Reinstatement . 98


11.16	Advice of Counsel . 98


11.17	No Strict Construction . 99


11.18	PATRIOT Act . 99


11.19	Creditor-Debtor Relationship . 99


11.20	Restatement 99


12.	CROSS-GUARANTY 100


12.1	Cross-Guaranty . 100


12.2	Waivers by Borrowers . 101


12.3	Benefit of Guaranty . 101


12.4	Waiver of Subrogation, Etc . 101


12.5	Subordination by Credit Parties . 102


12.6	Election of Remedies . 103


12.7	Liability Cumulative . 104

vii

INDEX OF APPENDICES




Annex A (Recitals)	-	Definitions
Annex B ( Section 1.2 )	-	Letters of Credit
Annex C ( Section 1.9 )	-	Cash Management System
Annex D ( Section 2.1(a) )	-	Closing Checklist
Annex E ( Section 4.1(a) )	-	Financial Statements and Projections -- Reporting
Annex F ( Section 4.1(b) )	-	Collateral Reports
Annex G ( Section 6.10 )	-	Financial Covenants
Annex H ( Section 9.9(a) )	-	Lenders’ Wire Transfer Information
Annex I ( Section 11.10 )	-	Notice Addresses
Annex J (from Annex A -	-
Commitments definition)		Commitments as of Amendment No. 1 Effective Date

Exhibit 1.1(a)(i)	-	Form of Notice of Revolving Credit Advance
Exhibit 1.1(a)(ii)-A	-	Form of Dollar Tranche Revolving Note (Domestic Borrowers)
Exhibit 1.1(a)(ii)-B	-	Form of Dollar Tranche Revolving Note (Foreign Borrowers)
Exhibit 1.1(a)(ii)-C	-	Form of Multicurrency Tranche Revolving Note (Domestic Borrowers)
Exhibit 1.1(a)(ii)-D	-	Form of Multicurrency Tranche Revolving Note (Foreign Borrowers)
Exhibit 1.1(b)(i)	-	Form of Swing Line Loan Request
Exhibit 1.1(b)(ii)-A	-	Form of Swing Line Note (Domestic Borrowers)
Exhibit 1.1(b)(ii)-B	-	Form of Swing Line Note (Foreign Borrowers)
Exhibit 1.5(e)	-	Form of Notice of Conversion/Continuation
Exhibit 4.1(A)	-	Form of Borrowing Base Certificate
Exhibit 4.1(B)	-	Form of Art Loan Receivables Report
Exhibit 9.1(a)	-	Form of Assignment Agreement
Exhibit B-1	-	Form of Letter of Credit Request
Exhibit B-2	-	Application for Letter of Credit
Exhibit C	-	Form of Compliance Certificate

Schedule 1.1	-	Agents’ Representatives
Schedule 5.14	-	Subsidiary Loan Documents
Disclosure Schedule 3.1	-	Type of Entity; State of Organization
Disclosure Schedule 3.2	-	Executive Offices, Collateral Locations, FEIN
Disclosure Schedule 3.4(a)	-	Financial Statements
Disclosure Schedule 3.6	-	Real Estate and Leases
Disclosure Schedule 3.7	-	Labor Matters

viii



Disclosure Schedule 3.8	-	Ventures, Subsidiaries and Affiliates; Outstanding Stock
Disclosure Schedule 3.11	-	Tax Matters
Disclosure Schedule 3.12(a)	-	ERISA Plans
Disclosure Schedule 3.12(c)	-	U.K. Pension Plans
Disclosure Schedule 3.13(a)	-	Litigation
Disclosure Schedule 3.14	-	Brokers
Disclosure Schedule 3.15	-	Intellectual Property
Disclosure Schedule 3.17	-	Hazardous Materials
Disclosure Schedule 3.18	-	Insurance
Disclosure Schedule 3.19	-	Deposit and Disbursement Accounts
Disclosure Schedule 3.21	-	Bonds; Patent, Trademark Licenses
Disclosure Schedule 5.15	-	Immaterial Subsidiaries
Disclosure Schedule 5.16	-	York Avenue Lender Recourse
Disclosure Schedule 6.3	-	Indebtedness
Disclosure Schedule 6.4(a)	-	Transactions with Affiliates
Disclosure Schedule 6.7	-	Existing Liens

This AMENDED AND RESTATED CREDIT AGREEMENT (this “ Agreement ”), dated as of August 22, 2014, among Sotheby’s, Inc., a New York corporation (“ Sotheby’s, Inc. ”), Sotheby’s Financial Services, Inc., a Nevada corporation (“ SFS Inc. ”), Sotheby’s Financial Services California, Inc., a Nevada corporation (“ SFS California ”), Oberon, Inc., a Delaware corporation (“ Oberon ”), Sotheby’s Ventures, LLC, a New York limited liability company (“ Ventures LLC ” and, collectively with Sotheby’s, Inc., SFS Inc., SFS California and Oberon, the “ Domestic Borrowers ”), Sotheby’s, a company registered in England (“ Sotheby’s U.K. ”), Sotheby’s Financial Services Limited, a company registered in England (“ SFS Ltd. ” and, collectively with Sotheby’s U.K., the “ U.K. Borrowers ”), and Sotheby’s Hong Kong Limited, a company incorporated in Hong Kong (“ Sotheby’s H.K. ” and, collectively with the U.K. Borrowers, the “ Foreign Borrowers ”; the Domestic Borrowers and the Foreign Borrowers collectively being referred to herein as the “ Borrowers ”); the other Credit Parties signatory hereto; General Electric Capital Corporation, a Delaware corporation (in its individual capacity, “ GE Capital ”), for itself, as a Lender and as Administrative Agent and Collateral Agent for the Secured Parties, and the other Lenders signatory hereto from time to time.

RECITALS

WHEREAS, the Borrowers, the Credit Parties, the Agents and certain Lenders are parties to that certain Credit Agreement, dated as of February 13, 2014 (the “ Existing Credit Agreement ”);

WHEREAS, it is also the intent of the Borrowers and the “Guarantors” (each as referred to and defined in the Existing Credit Agreement) to confirm that all obligations under the “Loan Documents” (as referred to and defined in the Existing Credit Agreement) shall continue in full force and effect as modified and/or restated by the Loan Documents (as referred to and defined herein); and

WHEREAS, capitalized terms used in this Agreement shall have the meanings ascribed to them in Annex A and, for purposes of this Agreement and the other Loan Documents, the rules of construction set forth in Annex A shall govern. All Annexes, Disclosure Schedules,

Exhibits and other attachments (collectively, “ Appendices ”) hereto, or expressly identified to this Agreement, are incorporated herein by reference, and taken together with this Agreement, shall constitute but a single agreement. These Recitals shall be construed as part of the Agreement.

1. AMOUNT AND TERMS OF CREDIT


1.1	Credit Facilities .

(a) Revolving Credit Facility .

(i) Subject to the terms and conditions hereof, (a) each Dollar Tranche Lender agrees to make available, from time to time until the Commitment Termination Date, its Pro Rata Share of advances (each, a “ Dollar Tranche Revolving Credit Advance ”) in Dollars to the Borrowers and (b) except as otherwise provided in the last two sentences of this paragraph, each of the Multicurrency Tranche Lenders agrees to make available, from time to time until the Commitment Termination Date, its Pro Rata Share of advances (each a “ Multicurrency Tranche Revolving Credit Advance ”) in Dollars or Foreign Currencies to the Borrowers. The Pro Rata Share of the aggregate Dollar Tranche Revolving Loan of any Dollar Tranche Lender shall not at any time exceed its separate Dollar Tranche Commitment. The Pro Rata Share of the aggregate Multicurrency Tranche Revolving Loan of any Multicurrency Tranche Lender shall not at any time exceed its separate Multicurrency Tranche Commitment. The obligations of each Lender to make Loans or purchase participation interests therein under this Agreement shall be several and not joint. Until the Commitment Termination Date, Borrowers may borrow, repay and reborrow under this Section 1.1(a) ; provided , that (i) the Dollar Equivalent of the amount of any Revolving Credit Advance to be made at any time to a Domestic Borrower shall not exceed the Domestic Borrowing Availability at such time and (ii) the Dollar Equivalent of the amount of any Revolving Credit Advance to be made at any time to a Foreign Borrower shall not exceed the Foreign Borrowing Availability at such time. The Dollar Equivalent of each outstanding Revolving Credit Advance, Swing Line Advance and Letter of Credit Obligation shall be recalculated hereunder on each date on which it shall be necessary to determine the Revolving Loan Outstandings, as determined by the Administrative Agent in its sole discretion; provided , that the Administrative Agent shall recalculate the Dollar Equivalent of the Revolving Loan Outstandings at least one time each calendar month and otherwise in accordance with Section 1.19 . Domestic Borrowing Availability or Foreign Borrowing Availability, or both, may be reduced by Reserves imposed by the Administrative Agent in its sole reasonable credit judgment. Each Revolving Credit Advance shall be made upon Borrower Representative’s irrevocable (subject to Section 1.17(c) ) written notice delivered to one of the representatives of the Administrative Agent identified in Schedule 1.1 at the address specified therein. Any such notice must be given no later than (x) 11:00 a.m. (New York time) on the Business Day of the proposed Revolving Credit Advance, in the case of an Index Rate Loan in Dollars or (y) 11:00 a.m. (New York time) on the date which is three (3) Business Days prior to the proposed Revolving Credit Advance, in the case of a LIBOR Loan. Each such notice (a “ Notice of Revolving Credit

Advance ”) must be given in writing (by telecopy or overnight courier) or Electronic Transmission substantially in the form of Exhibit 1.1(a)(i) or in any other written form reasonably acceptable to the Administrative Agent, and shall include the information required in such Exhibit and such other information as may be required by the Administrative Agent. If any Borrower desires to have any Revolving Credit Advance be made as a LIBOR Loan, Borrower Representative must comply with Section 1.5(e) . A Multicurrency Tranche Revolving Credit Advance may not be drawn in a Foreign Currency if the Administrative Agent determines at any time prior to 12:00 p.m. (New York time) on the date of such proposed Multicurrency Tranche Revolving Credit Advance that by reason of any change in currency availability, unusual instability in currency exchange rates or exchange controls it is, or will be, impracticable for such Multicurrency Tranche Revolving Credit Advance to be made in such Foreign Currency. In such event, the proposed Multicurrency Tranche Revolving Credit Advance shall be made in Dollars.

(ii) If requested by any Lender, each Borrower shall execute and deliver to such Lender a note to evidence the Dollar Tranche Commitment or Multicurrency Tranche Commitment, as applicable, of, and Dollar Tranche Revolving Credit Advances or Multicurrency Tranche Revolving Credit Advances, as applicable, made by, that Lender. Each note shall be in the principal amount of the Dollar Tranche Commitment or Multicurrency Tranche Commitment, as applicable, of the applicable Lender, dated the Restatement Effective Date (or such later date as such Lender becomes party to this Agreement pursuant to Section 9.1(a) or modifies its Dollar Tranche Commitment or Multicurrency Tranche Commitment, as applicable, pursuant to Section 9.1(a) ) and substantially in the form of Exhibit 1.1(a)(ii)-A (in the case of Dollar Tranche Lenders and the Domestic Borrowers), Exhibit 1.1(a)(ii)-B (in the case of Dollar Tranche Lenders and the Foreign Borrowers), Exhibit 1.1(a)(ii)-C (in the case of Multicurrency Tranche Lenders and the Domestic Borrowers) or Exhibit 1.1(a)(ii)-D (in the case of Multicurrency Tranche Lenders and the Foreign Borrowers) (each a “ Revolving Note ” and, collectively, the “ Revolving Notes ”). Each Revolving Note shall represent the joint and several obligation of the applicable Borrowers to pay the amount of the applicable Lender’s Dollar Tranche Commitment or Multicurrency Tranche Commitment, as applicable, or, if less, such Lender’s Pro Rata Share of the aggregate unpaid principal amount of all Dollar Tranche Revolving Credit Advances or Multicurrency Tranche Revolving Credit Advances, as applicable, made to the Borrowers, together with interest thereon as prescribed in Section 1.5 . The entire unpaid balance of the aggregate Revolving Loan and all other non-contingent Obligations shall be immediately due and payable in full in immediately available funds on the Commitment Termination Date.

(iii) Anything in this Agreement to the contrary notwithstanding, at the request of Borrower Representative, in its discretion the Administrative Agent may (but shall have absolutely no obligation to), make Dollar Tranche Revolving Credit Advances or Multicurrency Tranche Revolving Credit Advances (i) to Domestic Borrowers on behalf of Lenders in amounts that cause the sum of (a) the Dollar Equivalent of the aggregate outstanding balance of the Revolving Credit Advances and Swing Line Advances outstanding to the Domestic Borrowers plus (b) the Dollar Equivalent of the outstanding amount of Letter of Credit Obligations incurred for the benefit of any Domestic Borrowers to exceed the Domestic

Borrowing Base or (ii) to Foreign Borrowers on behalf of the Lenders in amounts that cause the sum of (a) the Dollar Equivalent of the aggregate outstanding balance of the Revolving Credit Advances and Swing Line Advances outstanding to the Foreign Borrowers plus (b) the Dollar Equivalent of the outstanding amount of Letter of Credit Obligations incurred for the benefit of any Foreign Borrowers to exceed the Foreign Borrowing Base (any such excess Revolving Credit Advances are herein referred to collectively as “ Overadvances ”); provided , that (A) no such event or occurrence shall cause or constitute a waiver of the Administrative Agent’s, Swing Line Lender’s or Lenders’ right to refuse to make any further Overadvances, Swing Line Advances or Revolving Credit Advances, or incur any Letter of Credit Obligations, as the case may be, at any time that an Overadvance exists and (B) no Overadvance shall result in a Default or Event of Default based on Borrowers’ failure to comply with Section 1.3(b)(ii) for so long as the Administrative Agent permits such Overadvance to be outstanding, but solely with respect to the amount of such Overadvance. In addition, Overadvances may be made even if the conditions to lending set forth in Section 2.2 have not been met. All Overadvances shall constitute Index Rate Loans (in the case of Overadvances denominated in Dollars) or LIBOR Loans having a one-month LIBOR Period (in the case of Overadvances denominated in any Foreign Currency), shall bear interest at the Default Rate and shall be payable on the earlier of demand or the Commitment Termination Date. Except as otherwise provided in Section 1.12(b) , the authority of the Administrative Agent to make Overadvances that constitute Dollar Tranche Revolving Credit Advances is limited to an aggregate amount not to exceed a Dollar Equivalent of $68,500,000 at any time, shall not cause the aggregate Dollar Tranche Revolving Loan to exceed the Maximum Dollar Tranche Amount, and may be revoked prospectively by a written notice to the Administrative Agent signed by the Majority in Interest of the Dollar Tranche Lenders; provided further , that Overadvances that constitute Dollar Tranche Revolving Credit Advances made other than for the purpose of protecting or preserving the Collateral shall not remain outstanding for more than sixty (60) days without the written consent of the Majority in Interest of the Dollar Tranche Lenders. Except as otherwise provided in Section 1.12(b) , the authority of the Administrative Agent to make Overadvances that constitute Multicurrency Tranche Revolving Credit Advances is limited to an aggregate amount not to exceed a Dollar Equivalent of $35,000,000 at any time, shall not cause the Dollar Equivalent of the aggregate Multicurrency Tranche Revolving Loan to exceed the Maximum Multicurrency Tranche Amount, and may be revoked prospectively by a written notice to the Administrative Agent signed by the Majority in Interest of the Multicurrency Tranche Lenders; provided further, that Overadvances that constitute Multicurrency Tranche Revolving Credit Advances made other than for the purpose of protecting or preserving the Collateral shall not remain outstanding for more than sixty (60) days without the written consent of the Majority in Interest of the Multicurrency Tranche Lenders. The Administrative Agent shall use commercially reasonable efforts to provide notice to Lenders following the making of an Overadvance (unless one or more Overadvances are already outstanding as of the date of such Overadvance).

(iv) From the Restatement Effective Date until the date that is 180 days prior to the date set forth in clause (a) of the definition of “Commitment Termination Date”, the Borrowers may request that any additional Person(s) may become party hereto as a Lender and provide additional Dollar Tranche Commitments or Multicurrency Tranche Commitments or any Lender may agree in its sole discretion to increase its Dollar Tranche Commitment or

Multicurrency Tranche Commitment (any such Person or Lender, an “ Increase Lender ”) pursuant to a joinder agreement (an “ Increase Joinder ”) in form and substance reasonably acceptable to the Administrative Agent; provided that (A) the sum of (x) the aggregate amount of all such additional Commitments or increases in the Commitments of the Increase Lenders under this Section 1.1(a)(iv) plus (y) the aggregate amount of all additional “Auction Commitments” or increases in the “Auction Commitments” of the “Increase Lenders” under Section 1.1(a)(iv) of the Auction Revolving Credit Agreement, does not exceed $150,000,000, (B) no Default or Event of Default has occurred and is continuing and (C) after giving effect to any such additional Commitments or increases in Commitments, each Lender shall maintain equal Pro Rata Shares of Commitments hereunder and the “Auction Commitments” under the Auction Revolving Credit Agreement. The Increase Joinder may, without the consent of any other Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent and the Borrowers, to effect the provisions of this Section 1.1(a)(iv) . The consent of the Administrative Agent (not to be unreasonably withheld or delayed in the case of any Qualified Assignee) shall be required prior to the addition of any Person as a Lender or the increase of the Commitment of any Lender pursuant to this Section 1.1(a)(iv) . Each applicable Borrower shall pay any LIBOR breakage costs due to any existing Lender in accordance with Section 1.14(b) (with any payment to any existing Lender in respect of the assignment of any principal amount of any Loan pursuant to this Section 1.1(a)(iv) being treated as a repayment of a Loan for purposes of such Section 1.14(b) ). Nothing contained in this Section 1.1(a)(iv) shall constitute, or otherwise be deemed to be, a commitment on the part of any Lender to increase its Commitment hereunder at any time.

(b) Swing Line Facility .

(i) The Administrative Agent shall notify the Swing Line Lender upon the Administrative Agent’s receipt of any Notice of Revolving Credit Advance in respect of a Dollar Tranche Revolving Credit Advance or Multicurrency Tranche Revolving Credit Advance (a) to be denominated in Dollars and to bear interest by reference to the Dollar Index Rate or (b) in the case of a Multicurrency Tranche Revolving Credit Advance, (i) to be denominated in Sterling and to bear interest by reference to the Sterling Index Rate, (ii) to be denominated in Euro and to bear interest by reference to the Euro Index Rate or (iii) to be denominated in Hong Kong Dollars and to bear interest by reference to the Hong Kong Dollars Index Rate. Subject to the terms and conditions hereof, the Swing Line Lender may, but shall have no duty to, in accordance with any such notice, make available from time to time until the Commitment Termination Date advances in respect of such Dollar Tranche Revolving Credit Advance (each, a “ Dollar Tranche Swing Line Advance ”) or such Multicurrency Tranche Revolving Credit Advance (each, a “ Multicurrency Tranche Swing Line Advance ”; Dollar Tranche Swing Line Advances and Multicurrency Tranche Swing Line Advances are collectively referred to herein as “Swing Line Advances”), as applicable, to the Borrowers. The provisions of this Section 1.1(b) shall not relieve Lenders of their obligations to make Revolving Credit Advances under Section 1.1(a) ; provided , that if the Swing Line Lender makes a Swing Line Advance pursuant to any such notice, such Swing Line Advance shall be in lieu of any Revolving Credit Advance that otherwise may be made by the applicable Lenders pursuant to such notice. The aggregate amount of Dollar Tranche Swing Line Advances outstanding shall not exceed at any time the

Dollar Tranche Swing Line Availability as of such time and the aggregate amount of Multicurrency Tranche Swing Line Advances outstanding shall not exceed at any time the Multicurrency Tranche Swing Line Availability as of such time. Until the Commitment Termination Date, the Borrowers may from time to time borrow, repay and reborrow under this Section 1.1(b) . Each Swing Line Advance shall be made in a writing substantially in the form of Exhibit 1.1(b)(i) or in any other written form reasonably acceptable to the Swing Line Lender (a “ Swing Line Request ”). Any such notice must be given no later than (x) 3:00 p.m. (New York time) on the Business Day of the proposed Swing Line Advance, in the case of a Swing Line Advance in Dollars or (y) 10:00 a.m. (New York time) on the date which is (A) two (2) Business Days prior to the proposed Swing Line Advance, in the case of a Swing Line Advance denominated in Sterling or Euro and (B) three (3) Business Days prior to the proposed Swing Line Advance, in the case of a Swing Line Advance denominated in Hong Kong Dollars. Unless the Swing Line Lender has received at least one Business Day’s prior written notice from the Majority in Interest of the Dollar Tranche Lenders instructing it not to make a Dollar Tranche Swing Line Advance, the Swing Line Lender shall, notwithstanding the failure of any condition precedent set forth in Sections 2.2 , be entitled to fund that Dollar Tranche Swing Line Advance, and to have each Dollar Tranche Lender make Dollar Tranche Revolving Credit Advances in accordance with Section 1.1(b)(iii) or purchase participating interests in accordance with Section 1.1(b)(v) . Unless the Swing Line Lender has received at least one Business Day’s prior written notice from the Majority in Interest of the Multicurrency Tranche Lenders instructing it not to make a Multicurrency Tranche Swing Line Advance, the Swing Line Lender shall, notwithstanding the failure of any condition precedent set forth in Sections 2.2 , be entitled to fund that Multicurrency Tranche Swing Line Advance, and to have each Multicurrency Tranche Lender make Multicurrency Tranche Revolving Credit Advances in accordance with Section 1.1(b)(iii) or 1.1(b)(iv) , as applicable, or purchase participating interests in accordance with Section 1.1(b)(v) . If any Lender shall fail to make available to the Administrative Agent its Pro Rata Share of any Revolving Credit Advance in accordance with Section 1.1(b)(iii) or 1.1(b)(iv) , as applicable, Borrowers shall repay the outstanding principal amount of the portion of the Swing Line Loan then outstanding due to such failure upon demand therefor by the Administrative Agent.

(ii) If requested by the Swing Line Lender, each Borrower shall execute and deliver to the Swing Line Lender a promissory note to evidence the Dollar Tranche Swing Line Commitment and the Multicurrency Tranche Swing Line Commitment. Such note shall be in the principal amount of the Dollar Tranche Swing Line Commitment or Multicurrency Tranche Swing Line Commitment, as applicable, of the Swing Line Lender, dated the Restatement Effective Date and substantially in the form of Exhibit 1.1(b)(ii)-A (in the case of Dollar Tranche Swing Line Commitment ) or Exhibit 1.1(b)(ii)-B (in the case of Multicurrency Tranche Swing Line Commitment ) (each, a “Swing Line Note” and, collectively, the “ Swing Line Notes ”). Each Swing Line Note shall represent the joint and several obligation of the applicable Borrowers to pay the amount of the Dollar Tranche Swing Line Commitment or Multicurrency Tranche Swing Line Commitment, as applicable, or, if less, the aggregate unpaid principal amount of all Dollar Tranche Swing Line Advances or Multicurrency Tranche Swing Line Advances , as applicable, made to the Borrowers together with interest thereon as prescribed in Section 1.5 . The entire unpaid balance of the Swing Line Loan and all other noncontingent

Obligations shall be immediately due and payable in full in immediately available funds on the Commitment Termination Date if not sooner paid in full.

(iii) The Swing Line Lender, at any time and from time to time no less frequently than once weekly, shall on behalf of the Borrower Representative (and the Borrower Representative hereby irrevocably authorizes the Swing Line Lender to so act on its behalf) request (x) in the case of any outstanding Dollar Tranche Swing Line Loan, each Dollar Tranche Lender (including the Swing Line Lender) to make available to the Borrowers its Pro Rata Share of a Dollar Tranche Revolving Credit Advance equal to the principal amount of the portion of the Dollar Tranche Swing Line Loan outstanding on the date such notice is given (the “ Refunded Dollar Tranche Swing Line Loan ”) and (y) in the case of any outstanding Multicurrency Tranche Swing Line Loan denominated in Dollars , each Multicurrency Tranche Lender (including the Swing Line Lender) to make available to the Borrowers its Pro Rata Share of a Multicurrency Tranche Revolving Credit Advance in Dollars equal to the principal amount of the portion of the Multicurrency Tranche Swing Line Loan outstanding on the date such notice is given (the “ Refunded Multicurrency Tranche Dollar Swing Line Loan ”). Unless any of the events described in Sections 8.1(g) or 8.1(h) has occurred (in which event the procedures of Section 1.1(b)(v) shall apply) and regardless of whether the conditions precedent set forth in this Agreement to the making of a Revolving Credit Advance are then satisfied, (x) in the case of a Refunded Dollar Tranche Swing Line Loan, each Dollar Tranche Lender shall disburse directly to the Administrative Agent its Pro Rata Share of such Dollar Tranche Revolving Credit Advance on behalf of the Swing Line Lender prior to 3:00 p.m. (New York time) in immediately available funds in Dollars on the Business Day next succeeding the date that notice is given and (y) in the case of a Refunded Multicurrency Tranche Dollar Swing Line Loan, each Multicurrency Tranche Lender shall disburse directly to the Administrative Agent its Pro Rata Share of such Multicurrency Tranche Revolving Credit Advance on behalf of the Swing Line Lender prior to 3:00 p.m. (New York time) in immediately available funds in Dollars on the Business Day next succeeding the date that notice is given. The proceeds of each such Revolving Credit Advance shall be immediately paid to the Swing Line Lender and applied to repay the Refunded Dollar Tranche Swing Line Loan or Refunded Multicurrency Tranche Dollar Swing Line Loan, as applicable .

(iv) The Swing Line Lender, at any time and from time to time no less frequently than once weekly, shall on behalf of the Borrower Representative (and the Borrower Representative hereby irrevocably authorizes the Swing Line Lender to so act on its behalf) request each Multicurrency Tranche Lender (including the Swing Line Lender, as applicable) to make available to the Borrowers its Pro Rata Share of a Multicurrency Tranche Revolving Credit Advance in a Foreign Currency equal to the principal amount of the portion of the Multicurrency Tranche Swing Line Loan denominated in such Foreign Currency and outstanding on the date such notice is given (the “ Refunded Foreign Currency Swing Line Loan ”). Unless any of the events described in Sections 8.1(g) or 8.1(h) has occurred (in which event the procedures of Section 1.1(b)(v) shall apply) and regardless of whether the conditions precedent set forth in this Agreement to the making of a Revolving Credit Advance are then satisfied, each Multicurrency Tranche Lender shall disburse directly to the Administrative Agent its Pro Rata Share of such Multicurrency Tranche Revolving Credit Advance on behalf of the Swing Line

Lender prior to 3:00 p.m. (New York time) in immediately available funds in such Foreign Currency on the second Business Day next succeeding the date that notice is given. The proceeds of each such Multicurrency Tranche Revolving Credit Advance shall be immediately paid to the Swing Line Lender and applied to repay the Refunded Foreign Currency Swing Line Loan.

(v) If, prior to refunding a portion of the Swing Line Loan with a Revolving Credit Advance pursuant to Section 1.1(b)(iii) or 1.1(b)(iv) , one of the events described in Sections 8.1(g) or 8.1(h) has occurred, then, subject to the provisions of Section 1.1(b)(vi) below:

(A) in the case of any Dollar Tranche Swing Line Advance, each Dollar Tranche Lender shall, on the date such Dollar Tranche Revolving Credit Advance was to have been made pursuant to Section 1.1(b)(iii) , purchase from the Swing Line Lender an undivided participation interest in the Dollar Tranche Swing Line Loan in an amount equal to its Pro Rata Share of such portion of the Dollar Tranche Swing Line Loan. Upon request, each Dollar Tranche Lender shall promptly transfer to the Swing Line Lender, in immediately available funds in Dollars, the amount of each such participation interest;

(B) in the case of any portion of the Multicurrency Tranche Swing Line Loan denominated in Dollars, each Multicurrency Tranche Lender shall, on the date such Multicurrency Tranche Revolving Credit Advance was to have been made pursuant to Section 1.1(b)(iii) , purchase from the Swing Line Lender an undivided participation interest in the Multicurrency Tranche Swing Line Loan in an amount equal to its Pro Rata Share of such portion of the Multicurrency Tranche Swing Line Loan. Upon request, each Multicurrency Tranche Lender shall promptly transfer to the Swing Line Lender, in immediately available funds in Dollars, the amount of each such participation interest; and

(C) in the case of any portion of the Multicurrency Tranche Swing Line Loan denominated in a Foreign Currency, each Multicurrency Tranche Lender shall, on the date such Multicurrency Tranche Revolving Credit Advance was to have been made pursuant to Section 1.1(b)(iv) , purchase from the Swing Line Lender an undivided participation interest in the Multicurrency Tranche Swing Line Loan in an amount equal to its Pro Rata Share of such portion of the Multicurrency Tranche Swing Line Loan. Upon request, each Multicurrency Tranche Lender shall promptly transfer to the Swing Line Lender, in immediately available funds in such Foreign Currency, the amount of each such participation interest.

(vi) Each Lender’s obligation to make Revolving Credit Advances in accordance with Sections 1.1(b)(iii) and 1.1(b)(iv) and to purchase participation interests in accordance with Section 1.1(b)(v) shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right that such Lender may have against the Swing Line Lender, any Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of any Default or Event of Default; (C) any inability of any Borrower to satisfy the conditions precedent to borrowing set forth in

this Agreement at any time or (D) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing. If any Lender does not make available to the Administrative Agent or the Swing Line Lender, as applicable, the amount required pursuant to Sections 1.1(b)(iii), 1.1(b)(iv) or 1.1(b)(v) , as the case may be, the Swing Line Lender shall be entitled to recover such amount on demand from such Lender, together with interest thereon for each day from the date of non-payment until such amount is paid in full (x) in the case of any portion of the Swing Line Loan denominated in Dollars, at the Federal Funds Rate for the first two Business Days and at the Dollar Index Rate thereafter or (y) in the case of any portion of the Swing Line Loan denominated in a Foreign Currency, at the Sterling Index Rate, Euro Index Rate or the Hong Kong Dollars Index Rate, as applicable.

(c) Reliance on Notices; Appointment of Borrower Representative . The Administrative Agent shall be entitled to rely upon, and shall be fully protected in relying upon, any Notice of Revolving Credit Advance, Swing Line Request, Letter of Credit Request, Notice of Conversion/Continuation or similar notice believed by the Administrative Agent to be genuine. The Administrative Agent may assume that each Person executing and delivering any notice in accordance herewith was duly authorized, unless the responsible individual acting thereon for the Administrative Agent has actual knowledge to the contrary. Each Borrower hereby designates Parent as its representative and agent on its behalf for the purposes of issuing Notices of Revolving Credit Advances and Notices of Conversion/Continuation, giving instructions with respect to the disbursement of the proceeds of the Loans, selecting interest rate options, requesting Letters of Credit, giving and receiving all other notices and consents hereunder or under any of the other Loan Documents and taking all other actions (including in respect of compliance with covenants) on behalf of any Borrower or Borrowers under the Loan Documents. Borrower Representative hereby accepts such appointment. The Administrative Agent and each Lender may regard any notice or other communication pursuant to any Loan Document from Borrower Representative as a notice or communication from all Borrowers, and may give any notice or communication required or permitted to be given to any Borrower or Borrowers hereunder to Borrower Representative on behalf of such Borrower or Borrowers. Each Borrower agrees that each notice, election, representation and warranty, covenant, agreement and undertaking made on its behalf by Borrower Representative shall be deemed for all purposes to have been made by such Borrower and shall be binding upon and enforceable against such Borrower to the same extent as if the same had been made directly by such Borrower.

(d) Branches and Affiliates of Lenders . Each Lender at its option may make any Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan (and in the case of an Affiliate, the provisions of Sections 1.14(b) , 1.16 and 1.17 shall apply to such Affiliate to the same extent as to such Lender); provided that any exercise of such option shall not affect the obligation of the relevant Borrower to repay such Loan in accordance with the terms of this Agreement.


1.2	Letters of Credit .


1.3	Prepayments; Commitment Reductions .

(a) Voluntary Prepayments; Reductions in Commitments .

(i) Borrower Representative shall notify the Administrative Agent (and, in the case of prepayment of a Swing Line Loan, the Swing Line Lender) by telephone confirmed in writing of any prepayment of a Loan hereunder (i) in the case of a LIBOR Loan, not later than 4:00 p.m. (New York time) on the date which is three (3) Business Days before the date of such prepayment, and (ii) in the case of an Index Rate Loan, not later than 11:00 a.m. (New York time) on the date of such prepayment. Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Loan or portion thereof to be prepaid. Promptly following receipt of any such notice, the Administrative Agent shall provide notice to Lenders thereof. Each partial prepayment of any Loan shall be in a minimum amount of (i) if denominated in Dollars, $5,000,000 or an integral multiple of $1,000,000 in excess of such amount, (ii) if denominated in Sterling, £3,000,000 or an integral multiple of £500,000 in excess of such amount, (iii) if denominated in Euro, €3,000,000 or an integral multiple of €500,000 in excess of such amount or (iv) if denominated in Hong Kong Dollars, HK$40,000,000 or an integral multiple of HK$8,000,000 in excess of such amount.

(ii) Borrowers may at any time, on at least five (5) days’ prior written notice by Borrower Representative to the Administrative Agent of the intent of the Borrowers to effect such a reduction and at least two (2) days’ prior written notice by Borrower Representative to the Administrative Agent of the exact date on which such reduction shall occur, permanently reduce (but not terminate) the Dollar Tranche Commitment or Multicurrency Tranche Commitment; provided , that (A) any such reduction shall be in a minimum amount of $5,000,000 and integral multiples of $1,000,000 in excess of such amount, (B) the Dollar Tranche Commitment shall not be reduced to an amount less than the greater of (i) $100,000,000, and (ii) the sum of (x) the aggregate Dollar Tranche Revolving Loan then outstanding and (y) the Dollar Tranche Swing Line Loan then outstanding, (C) the Multicurrency Tranche Commitment shall not be reduced to an amount less than the greater of (i) $37,500,000 and (ii) the sum of (x) the Dollar Equivalent of the amount of the aggregate Multicurrency Tranche Revolving Loan then outstanding and (y) the Dollar Equivalent of the Multicurrency Tranche Swing Line Loan then outstanding and (D) after giving effect to such reductions, Borrowers shall comply with Sections 1.3(b)(i) and (ii) . In addition, Borrowers may at any time, on at least seven (7) days’ prior written notice by Borrower Representative to the Administrative Agent of the intent of the Borrowers to effect such a termination and at least two (2) days’ prior written notice by Borrower Representative to the Administrative Agent of the exact date on which such termination shall occur, terminate the Commitment; provided , that upon such termination, all Loans and other Obligations shall be immediately due and payable in full and all Letter of Credit Obligations shall be cash collateralized or otherwise satisfied in accordance with

Annex B hereto. Any reduction or termination of the Commitment must be accompanied by the payment of any LIBOR funding breakage costs in accordance with Section 1.14(b) . Upon any such reduction or termination of the Commitment, each Borrower’s right to request Revolving Credit Advances, or request that Letter of Credit Obligations be incurred on its behalf, or request Swing Line Advances, shall simultaneously be permanently reduced or terminated, as the case may be; provided , that a permanent reduction of the Commitment such that the sum of the Dollar Tranche Commitment plus the Multicurrency Tranche Commitment is less than $175,000,000 after giving effect thereto shall require a corresponding pro rata reduction in the Foreign Borrower Subfacility Limit and the L/C Sublimit to the extent of such reduction below $175,000,000.

(b) Mandatory Prepayments .

(i)

(A) If at any time the aggregate outstanding balance of the Dollar Tranche Revolving Loan and the Dollar Tranche Swing Line Loan exceeds the Maximum Dollar Tranche Amount, Borrowers shall immediately repay the aggregate outstanding Dollar Tranche Revolving Credit Advances and Dollar Tranche Swing Line Advances to the extent required to eliminate such excess. If any such excess remains after repayment in full of the aggregate outstanding Dollar Tranche Revolving Credit Advances and Dollar Tranche Swing Line Advances, Borrowers shall provide cash collateral for the Dollar Tranche Letter of Credit Obligations in the manner set forth in Annex B to the extent of such remaining excess.

(B) If at any time the Dollar Equivalent of the aggregate outstanding balance of the Multicurrency Tranche Revolving Loan and the Multicurrency Tranche Swing Line Loan exceeds the Maximum Multicurrency Tranche Amount, Borrowers shall immediately repay the aggregate outstanding Multicurrency Tranche Revolving Credit Advances and Multicurrency Tranche Swing Line Advances to the extent required to eliminate such excess. If any such excess remains after repayment in full of the aggregate outstanding Multicurrency Tranche Revolving Credit Advances and Multicurrency Tranche Swing Line Advances, Borrowers shall provide cash collateral for the Multicurrency Tranche Letter of Credit Obligations in the manner set forth in Annex B to the extent of such remaining excess.

(C) If at any time the sum of (i) the Dollar Equivalent of the aggregate outstanding principal balance of Revolving Credit Advances and Swing Line Advances outstanding to the Foreign Borrowers plus (ii) the Dollar Equivalent of the outstanding Letter

of Credit Obligations incurred on behalf of the Foreign Borrowers, in the aggregate plus (iii) the “Dollar Equivalent” of the aggregate outstanding principal balance of “Auction Revolving Credit Advances” and “Swing Line Advances” outstanding to the “Foreign Borrowers” (as each such term in this clause (iii) is defined in the Auction Revolving Credit Agreement) plus (iv) the “Dollar Equivalent” of the outstanding “Letter of Credit Obligations” incurred on behalf of the “Foreign Borrowers” (as each such term in this clause (iv) is defined in the Auction Revolving Credit Agreement), in the aggregate exceeds the Foreign Borrower Subfacility Limit, the Foreign Borrowers shall, at the Administrative Agent’s request, immediately repay (or cause to be repaid) such Revolving Credit Advances and Swing Line Advances and/or “Auction Revolving Credit Advances” and “Swing Line Advances” under the Auction Revolving Credit Agreement to the extent required to eliminate such excess. If any such excess remains after repayment in full of the aggregate outstanding principal balance of such Revolving Credit Advances and Swing Line Advances and/or “Auction Revolving Credit Advances” and “Swing Line Advances” under the Auction Revolving Credit Agreement, the Foreign Borrowers shall, at the Administrative Agent’s request, provide (or cause to be provided) cash collateral for such Letter of Credit Obligations and/or “Letter of Credit Obligations” under the Auction Revolving Credit Agreement in the manner set forth in Annex B or Annex B to the Auction Revolving Credit Agreement, as applicable, to the extent of such remaining excess.

(ii)

(A) If at any time the Dollar Equivalent of the aggregate outstanding balance of the Revolving Credit Advances and Swing Line Advances outstanding to the Domestic Borrowers and the Dollar Equivalent of the Letter of Credit Obligations incurred on behalf of the Domestic Borrowers, in the aggregate, exceed the Domestic Borrowing Base, the Domestic Borrowers shall immediately repay such outstanding Revolving Credit Advances and Swing Line Advances to the extent required to eliminate such excess. If any such excess remains after repayment in full of such outstanding Revolving Credit Advances and Swing Line Advances, the Domestic Borrowers shall provide cash collateral for such Letter of Credit Obligations in the manner set forth in Annex B to the extent of such remaining excess.

(B) If at any time the Dollar Equivalent of the aggregate outstanding balance of the Revolving Credit Advances and Swing Line Advances outstanding to the Foreign Borrowers and the Dollar Equivalent of the Letter of Credit Obligations incurred on behalf of the Foreign Borrowers, in the aggregate, exceed the Dollar Equivalent of the Foreign Borrowing Base, the Foreign Borrowers shall immediately repay such outstanding Revolving Credit Advances and Swing Line Advances to the extent required to eliminate such excess. If any such excess remains after repayment in full of the aggregate outstanding principal balance of such Revolving Credit Advances and Swing Line Advances, the Foreign Borrowers shall, at the Administrative Agent’s request, provide cash collateral for such Letter of Credit Obligations in the manner set forth in Annex B to the extent of such remaining excess.

Notwithstanding the foregoing, any Overadvance made pursuant to Section 1.1(a)(iii) shall be repaid in accordance with Section 1.1(a)(iii) .

(iii) Subject to Section 1.3(c) and without duplication of mandatory prepayment obligations set forth in Section 1.3(b)(iii) of the Auction Revolving Credit Agreement, within three (3) Business Days after receipt by any Sotheby Entity of any cash proceeds of any asset disposition, the applicable Borrower (which is the Borrower that received such cash proceeds or, if such cash proceeds are received by a Sotheby Entity other than a Borrower, which is the Borrower that is the most direct holder of Stock of such Sotheby Entity) shall prepay the Obligations (and cash collateralize the Letter of Credit Obligations, as applicable) and the “Obligations” (and cash collateralize the “Letter of Credit Obligations”, as applicable) (in each case, as defined in the Auction Revolving Credit Agreement) in an aggregate amount equal to such proceeds, after the following amounts are deducted from the aggregate amount of all such proceeds: (1) commissions and other reasonable and customary transaction costs, fees and expenses properly attributable to such transaction and payable by Sotheby Entities in connection therewith (in each case, paid to non-Affiliates), (2) transfer taxes, (3) amounts payable to holders of senior Liens on such asset (to the extent such Liens constitute Permitted Encumbrances hereunder), if any, and (4) an appropriate reserve for income taxes in accordance with GAAP in connection therewith. Any such prepayment of the Obligations (and cash collateralization of Letter of Credit Obligations) and the “Obligations” (and cash collateralization of “Letter of Credit Obligations”) (in each case, as defined in the Auction Revolving Credit Agreement) shall be applied in accordance with Section 1.3(d) or (e) , as applicable. The following shall not be subject to mandatory prepayment under this clause (iii) : (1) proceeds of dispositions permitted under Section 6.8 and (2) asset disposition proceeds with respect to Equipment or Fixtures that are reinvested in Equipment or Fixtures within one hundred and eighty (180) days of receipt thereof; provided , that the Borrower Representative notifies the Administrative Agent of its intent to reinvest at the time such proceeds are received and when such reinvestment occurs.

(iv) Subject to Section 1.3(c) and without duplication of mandatory prepayment obligations set forth in Section 1.3(b)(iv) of the Auction Revolving Credit Agreement, if any Sotheby Entity issues Stock to any entity other than another Sotheby Entity, no later than the fifth (5 ^th ) Business Day following the date of receipt of any cash proceeds thereof, the applicable Borrower (which is the Borrower that received such cash proceeds or, if such cash proceeds are received by a Sotheby Entity other than a Borrower, which is the Borrower that is the most direct holder of Stock of such Sotheby Entity) shall prepay the Obligations (and cash collateralize Letter of Credit Obligations, as applicable) and the “Obligations” (and cash collateralize the “Letter of Credit Obligations,” as applicable) (in each case, as defined in the Auction Revolving Credit Agreement) in an aggregate amount equal to all such proceeds, after the following amounts are deducted from the aggregate amount of all such proceeds: (1) underwriting discounts, (2) commissions and (3) other reasonable costs paid to non-Affiliates in connection therewith. Any such prepayment of the Obligations (and cash collateralization of Letter of Credit Obligations) and the “Obligations” (and cash collateralization of “Letter of Credit Obligations”) (in each case, as defined in the Auction Revolving Credit Agreement) shall be applied in accordance with Section 1.3(d) or (e) , as applicable. The following shall not be subject to prepayment under this clause (iv) : (1) proceeds of Stock issuances of Parent, (2) proceeds of Stock issuances to employees of any Sotheby Entity and (3) proceeds of Stock issuances up to the Dollar Equivalent of $10,000,000 in the aggregate for any Fiscal Year.

(c) Adjustments to Mandatory Prepayment Amounts . The Borrowers shall be required to make any prepayment of the Obligations (and cash collateralization of Letter of Credit Obligations) otherwise payable pursuant to Sections 1.3(b)(iii), 1.3(b)(iv) or 5.4 only to the extent that the amount of such prepayment exceeds (i) in the case of the Domestic Borrowers, the Domestic Borrowing Availability as of the date of such required prepayment or (ii) in the case of the Foreign Borrowers, the Foreign Borrowing Availability as of the date of such required prepayment, in each case as set forth in a Borrowing Base Certificate most recently delivered as of the date of such required prepayment. In addition, if, after giving effect to the previous sentence, any Foreign Borrower shall be required to make a prepayment pursuant to Sections 1.3(b)(iii), 1.3(b)(iv) or 5.4 in excess of the outstanding principal balance of the Revolving Credit Advances and Swing Line Advances outstanding to the Foreign Borrowers and the Letter of Credit Obligations incurred on behalf of the Foreign Borrowers, in the aggregate, as of such date, then the Domestic Borrowers shall be jointly and severally liable to make a prepayment of the Loans (and cash collateralize the Letter of Credit Obligations) (in addition to any prepayment made by such Foreign Borrower pursuant to Sections 1.3(b)(iii), 1.3(b)(iv) or 5.4 , as applicable) in an amount equal to (i) the amount of such excess minus (ii) the Domestic Borrowing Availability as of the date of such required prepayment as set forth in a Borrowing Base Certificate delivered to the Administrative Agent. To the extent any proceeds from any event that would otherwise give rise to a mandatory prepayment are not required to be used to make a prepayment of Obligations (and cash collateralization of Letter of Credit Obligations) under this Agreement as a result of this Section 1.3(c) , the amount of such proceeds that would otherwise be applied in accordance with Section 1.3(d) or (e) , as applicable, to the payment of the “Obligations” (and cash collateralization of “Letter of Credit Obligations”) (in each case, as defined in the Auction Revolving Credit Agreement) shall be increased on a non-pro rata basis

such that such amount shall include the maximum portion of such unused proceeds that can be used to make a mandatory prepayment under the Auction Revolving Credit Agreement after giving effect to Section 1.3(c) of the Auction Revolving Credit Agreement.

(d) Application of Mandatory Prepayments by Domestic Borrowers . Subject to the other terms set forth herein, in the Auction Revolving Credit Agreement, and in the Collateral Documents, any prepayments made by any Domestic Borrower pursuant to Sections 1.3(b)(iii) or (iv) or Section 5.4 shall be applied as follows:

(ii) second , to interest then due and payable on “Incremental Revolving Credit Advances” outstanding to the “Domestic Borrowers” (as each such term in this clause (ii) is defined in the Auction Revolving Credit Agreement);

(iii) third , to the principal balance of the “Incremental Revolving Credit Advances” outstanding to the “Domestic Borrowers” until the same have been paid in full (as each such term in this clause (iii) is defined in the Auction Revolving Credit Agreement);

(iv) fourth , to interest then due and payable on “Incremental Revolving Credit Advances” outstanding to the “Foreign Borrowers” (as each such term in this clause (iv) is defined in the Auction Revolving Credit Agreement);

(v) fifth , to the principal balance of the “Incremental Revolving Credit Advances” outstanding to the “Foreign Borrowers” until the same have been paid in full (as each such term in this clause (v) is defined in the Auction Revolving Credit Agreement);

(viii) eighth , on a pro rata basis (x) to interest then due and payable on Revolving Credit Advances outstanding to the Domestic Borrowers and (y) to interest then due and payable on “Auction Revolving Credit Advances” outstanding to the “Domestic

Borrowers” (as each such term in this clause (y) is defined in the Auction Revolving Credit Agreement);

(ix) ninth , on a pro rata basis, (x) to the principal balance of Revolving Credit Advances outstanding to the Domestic Borrowers until the same have been paid in full and (y) to the principal balance of “Auction Revolving Credit Advances” outstanding to the “Domestic Borrowers” until the same have been paid in full (as each such term in this clause (y) is defined in the Auction Revolving Credit Agreement);

(x) tenth , on a pro rata basis, (x) to any Letter of Credit Obligations incurred on behalf of the Domestic Borrowers to provide cash collateral therefor in the manner set forth in Annex B , until all such Letter of Credit Obligations have been fully cash collateralized in the manner set forth in Annex B and (y) to any “Letter of Credit Obligations” incurred on behalf of the “Domestic Borrowers” to provide cash collateral therefor in the manner set forth in Annex B to the Auction Revolving Credit Agreement, until all such “Letter of Credit Obligations” have been fully cash collateralized in the manner set forth in Annex B to the Auction Revolving Credit Agreement (as each such term in this clause (y) is defined in the Auction Revolving Credit Agreement);

(xiv) fourteenth , on a pro rata basis (x) to interest then due and payable on Revolving Credit Advances outstanding to the Foreign Borrowers and (y) to interest then due and payable on “Auction Revolving Credit Advances” outstanding to the “Foreign Borrowers” (as each such term in this clause (y) is defined in the Auction Revolving Credit Agreement);

(xv) fifteenth , on a pro rata basis, (x) to the principal balance of Revolving Credit Advances outstanding to the Foreign Borrowers until the same have been paid in full and (y) to the principal balance of “Auction Revolving Credit Advances” outstanding to

the “Foreign Borrowers” until the same have been paid in full (as each such term in this clause (y) is defined in the Auction Revolving Credit Agreement);

(xvi) sixteenth , on a pro rata basis, (x) to any Letter of Credit Obligations incurred on behalf of the Foreign Borrowers to provide cash collateral therefor in the manner set forth in Annex B , until all such Letter of Credit Obligations have been fully cash collateralized in the manner set forth in Annex B and (y) to any “Letter of Credit Obligations” incurred on behalf of the “Foreign Borrowers” to provide cash collateral therefor in the manner set forth in Annex B to the Auction Revolving Credit Agreement, until all such “Letter of Credit Obligations” have been fully cash collateralized in the manner set forth in Annex B to the Auction Revolving Credit Agreement (as each such term in this clause (y) is defined in the Auction Revolving Credit Agreement); and

The Commitment shall not be permanently reduced by the amount of any such prepayments.

(e) Application of Mandatory Prepayments by Foreign Borrowers . Subject to the other terms set forth herein, in the Auction Revolving Credit Agreement, and in the Collateral Documents, any prepayments made by any Foreign Borrower pursuant to Sections 1.3(b)(iii) or (iv) or Section 5.4 shall be applied as follows:

(ii) second , to interest then due and payable on “Incremental Revolving Credit Advances” outstanding to the “Foreign Borrowers” (as each such term in this clause (ii) is defined in the Auction Revolving Credit Agreement);

(iii) third , to the principal balance of the “Incremental Revolving Credit Advances” outstanding to the “Foreign Borrowers” until the same have been paid in full (as each such term in this clause (iii) is defined in the Auction Revolving Credit Agreement);

(vi) sixth , on a pro rata basis (x) to interest then due and payable on Revolving Credit Advances outstanding to the Foreign Borrowers and (y) to interest then due and payable on “Auction Revolving Credit Advances” outstanding to the “Foreign Borrowers” (as each such term in this clause (y) is defined in the SFS Revolving Credit Agreement);

(vii) seventh , on a pro rata basis, (x) to the principal balance of Revolving Credit Advances outstanding to the Foreign Borrowers until the same have been paid in full and (y) to the principal balance of “Auction Revolving Credit Advances” outstanding to the “Foreign Borrowers” until the same have been paid in full (as each such term in this clause (y) is defined in the Auction Revolving Credit Agreement);

(viii) eighth , on a pro rata basis, (x) to any Letter of Credit Obligations incurred on behalf of the Foreign Borrowers to provide cash collateral therefor in the manner set forth in Annex B , until all such Letter of Credit Obligations have been fully cash collateralized in the manner set forth in Annex B and (y) to any “Letter of Credit Obligations” incurred on behalf of the “Foreign Borrowers” to provide cash collateral therefor in the manner set forth in Annex B to the Auction Revolving Credit Agreement, until all such “Letter of Credit Obligations” have been fully cash collateralized in the manner set forth in Annex B to the Auction Revolving Credit Agreement (as each such term in this clause (y) is defined in the Auction Revolving Credit Agreement); and

Neither the Commitment nor the Foreign Borrower Subfacility Limit shall be permanently reduced by the amount of any such prepayments.


1.4	Use of Proceeds .

Borrowers shall utilize the proceeds of the Loans solely for the financing of Borrowers’ and their Subsidiaries’ working capital and other general corporate needs.


1.5	Interest and Applicable Margins .

(a) Borrowers shall pay interest to the Administrative Agent, for the ratable benefit of Lenders in accordance with the various Loans being made by each Lender, in arrears on each applicable Interest Payment Date, at the following rates: (i) with respect to the Revolving Credit Advances denominated in Dollars, the Dollar Index Rate plus the Applicable Dollar Revolver Index Margin per annum or, at the election of Borrower Representative, the applicable Dollar LIBOR Rate plus the Applicable Dollar Revolver LIBOR Margin per annum, (ii) with respect to the Multicurrency Tranche Revolving Credit Advances denominated in Sterling, the applicable Sterling LIBOR Rate plus the Applicable Sterling Revolver LIBOR Margin per annum, (iii) with respect to the Multicurrency Tranche Revolving Credit Advances denominated in Euro, the applicable Euro LIBOR Rate plus the Applicable Euro Revolver LIBOR Margin per annum, (iv) with respect to the Multicurrency Tranche Revolving Credit Advances denominated in Hong Kong Dollars, the Hong Kong Dollars LIBOR Rate plus the Applicable Hong Kong Dollars Revolver LIBOR Margin per annum, (v) with respect to Swing Line Advances denominated in Dollars, the Dollar Index Rate plus the Applicable Dollar Revolver Index Margin per annum, (vi) with respect to Swing Line Advances denominated in Sterling, the Sterling Index Rate plus the Applicable Sterling Revolver Index Margin per annum, (vii) with respect to Swing Line Advances denominated in Euro, the Euro Index Rate plus the Applicable Euro Revolver Index Margin per annum and (viii) with respect to Swing Line Advances denominated in Hong Kong Dollars, the Hong Kong Dollars Index Rate plus the Applicable Hong Kong Dollars Revolver Index Margin per annum.

The Applicable Margins shall be calculated based on the following grids:



	If the Average Monthly Usage is:	Level of Applicable Margins:
	≤ 25%	Level I
	>25% but ≤ 50%	Level II
	>50% but ≤ 75%	Level III
	>75%	Level IV



		Applicable Margins
		Level I		Level II		Level III		Level IV
	Applicable Dollar Revolver Index Margin	0.75%		1.00%		1.25%		1.50%
	Applicable Dollar Revolver LIBOR Margin	1.75%		2.00%		2.25%		2.50%
	Applicable Sterling Revolver Index Margin	0.75%		1.00%		1.25%		1.50%
	Applicable Sterling Revolver LIBOR Margin	1.75%		2.00%		2.25%		2.50%
	Applicable Euro Revolver Index Margin	0.75%		1.00%		1.25%		1.50%
	Applicable Euro Revolver LIBOR Margin	1.75%		2.00%		2.25%		2.50%
	Applicable Hong Kong Dollars Revolver Index Margin	0.75%		1.00%		1.25%		1.50%
	Applicable Hong Kong Dollars Revolver LIBOR Margin	1.75%		2.00%		2.25%		2.50%
	Applicable L/C Margin	1.75%		2.00%		2.25%		2.50%

If the Average Monthly Usage is:			< 33%		>33% but ≤66%		>66%
Applicable Unused Line Fee Margin			0.500%		0.375%		0.250%

Adjustments in the Applicable Margins shall be implemented on the first day of each calendar month. Notwithstanding the foregoing, (i) the Average Monthly Usage shall be deemed to be in Level III (and, for purposes of determining the Applicable Unused Line Fee Margin, deemed to be >66%) during the period from the Restatement Effective Date to, and including, September 30, 2014 and (ii) from and after the occurrence of an Event of Default and until the first Business Day following the cure or waiver thereof, no reduction in the Applicable Margins shall be implemented.

(c) All computations of Fees calculated on a per annum basis and interest on all Loans shall be made by the Administrative Agent on the basis of a 360-day year, in each case for the actual number of days occurring in the period for which such interest and Fees are payable. The Dollar Index Rate, the Sterling Index Rate, the Euro Index Rate and the Hong Kong Dollars Index Rate are floating rates determined for each day. Each determination by the Administrative Agent of an interest rate and Fees hereunder shall be presumptive evidence of the correctness of such rates and Fees.

(e) Subject to the conditions precedent set forth in Section 2.2 , Borrower Representative shall have the option to (i) request that any Revolving Credit Advance denominated in Dollars be made as a LIBOR Loan, (ii) convert at any time all or any portion of the outstanding Revolving Loan denominated in Dollars from Index Rate Loans to LIBOR Loans, (iii) convert any LIBOR Loan denominated in Dollars to an Index Rate Loan, subject to payment of LIBOR breakage costs in accordance with Section 1.14(b) if such conversion is made prior to the expiration of the LIBOR Period applicable thereto, or (iv) continue all or any portion of the outstanding Revolving Loan as a LIBOR Loan upon the expiration of the applicable LIBOR Period and the succeeding LIBOR Period of that continued portion of the outstanding Revolving Loan shall commence on the first day after the last day of the LIBOR Period of the portion of the outstanding Revolving Loan to be continued. Any portion of the outstanding Revolving Loan to be made or continued as, or converted into, a LIBOR Loan must be in a minimum amount of (i) if denominated in Dollars, $5,000,000 or an integral multiple of $1,000,000 in excess of such amount, (ii) if denominated in Sterling, £3,000,000 or an integral multiple of £500,000 in excess of such amount, (iii) if denominated in Euro, €3,000,000 or an integral multiple of €500,000 in excess of such amount or (iv) if denominated in Hong Kong Dollars, HK$40,000,000 or an integral multiple of HK$8,000,000 in excess of such amount. Any such election must be made by 11:00 a.m. (New York time) on the third Business Day prior to (1) the date of any proposed Revolving Credit Advance which is to be made as a LIBOR Loan, (2) the end of each LIBOR Period with respect to any LIBOR Loans to be continued as such, or (3) the date on which Borrower Representative wishes to convert any Index Rate Loan to a LIBOR Loan for a LIBOR Period designated by Borrower Representative in such election. If no election is received with respect to a LIBOR Loan by 11:00 a.m. (New York time) on the third Business Day prior to the end of the LIBOR Period with respect thereto (or if a Default or an Event of Default has occurred and is continuing or if the additional conditions precedent set forth in Section 2.2 shall not have been satisfied), (i) if such LIBOR Loan is denominated in Dollars, such LIBOR Loan shall be converted to an Index Rate Loan at the end of its LIBOR Period and (ii) if such LIBOR Loan is denominated in a Foreign Currency, such LIBOR Loan shall be continued as a LIBOR Loan having a LIBOR Period of one month. Borrower Representative must make such election by notice to the Administrative Agent in writing, by telecopy or overnight courier, or Electronic Transmission. In the case of any conversion or continuation, such election must be made pursuant to a notice (a “ Notice of Conversion/Continuation ”) delivered in writing or by Electronic Transmission in the form of Exhibit 1.5(e) .

Notwithstanding anything in this Section 1.5(e) or Agreement to the contrary, conversions and continuations of Index Rate Loans and LIBOR Loans hereunder shall not result in refinancings or repayments of such portions of the outstanding Revolving Loan, but only repricings of such continuously outstanding portions of the outstanding Revolving Loan.


1.6	Eligible Art Loans .

All of the Art Loans owned by each Borrower and reflected in the most recent Borrowing Base Certificate delivered by the Borrower Representative to the Administrative Agent shall be “ Eligible Art Loans ” for purposes of this Agreement, except any Art Loans to which any of the exclusionary criteria set forth below applies. The Administrative Agent shall have the right to establish, modify or eliminate Reserves against Eligible Art Loans from time to time in its sole reasonable credit judgment. In addition, subject to Section 11.2(b) , the Administrative Agent reserves the right, at any time and from time to time after the Restatement Effective Date, to adjust any of the criteria set forth below and to establish new criteria, and to adjust advance rates with respect to Eligible Art Loans, in its reasonable credit judgment, reflecting changes in the collectibility or realization values of such Art Loans arising or discovered by the Administrative Agent after the Restatement Effective Date; provided that, (i) for purposes of clarity, the Administrative Agent will not be required at any time to obtain any approval from any Lenders or any other Person(s) for the establishment, modification or elimination of any Reserves against Eligible Art Loans and (ii) any decreases to advance rates with respect to Eligible Art Loans made after the Restatement Effective Date shall only apply to Art Loans added to any Borrowing Base after the date of such decrease in the advance rates. Eligible Art Loans shall not include any Art Loan of any Borrower:

risk with respect to the applicable Art Loan Debtor or the Works of Art securing repayment of such Art Loan;

(c) with respect to which any payment under the related loan agreement (or any other Art Loan outstanding to such related Art Loan Debtor) has been deemed by such Borrower to be non-accrual;

(f) that was not generated in the ordinary course of the applicable Borrower’s business;

Loans” pursuant to this clause to the extent the portion of the outstanding principal balance of such Art Loans included in any Borrowing Base, collectively with the portion of the outstanding principal balance of such “Art Loans” included in any “Borrowing Base” under the Auction Revolving Credit Agreement, does not exceed $250,000,000 in the aggregate;

(l) that is not secured by Eligible Art Loan Collateral or to the extent by which the outstanding principal balance of such Art Loan exceeds sixty percent (60%) of the aggregate Estimated Value of the Works of Art securing repayment of such Art Loan that constitute Eligible Art Loan Collateral;

(o) to the extent any Sotheby Entity is liable for goods sold or services rendered by the applicable Art Loan Debtor to such Sotheby Entity, but only to the extent of the

potential offset; provided that, without duplication of amounts described in the proviso of Section 1.6(o) or 1.8(m) of the Auction Revolving Credit Agreement, if such potential offset arises from amounts payable by such Borrower to such Art Loan Debtor, from any receivable then due and payable to such Borrower, as agent for such Art Loan Debtor, by a buyer of a Work of Art (other than the Work of Art securing any Art Loan) that was sold on consignment by such Borrower, as consignee, on behalf of such Art Loan Debtor, in its capacity as consignor, such potential offset shall be reduced by the amount of such receivable (net of any commissions, buyer’s premium and reimbursable expenses payable to any Sotheby Entity for such sale);

(r) with respect to which the initial outstanding principal amount, if owned by a Domestic Borrower, is less than $100,000; or

(s) that is included in any “Borrowing Base” under the Auction Revolving Credit Agreement.


1.7	[Reserved] .


1.8	[Reserved] .


1.9	Cash Management Systems .

On and after the Restatement Effective Date, the Credit Parties will maintain until the Termination Date the cash management systems described in Annex C (the “ Cash Management Systems ”).


1.10	Fees .

(b) As additional compensation for the Dollar Tranche Lenders, Borrowers shall pay to the Administrative Agent, for the ratable benefit of the Dollar Tranche Lenders, in

arrears, on the first Business Day of each month prior to the Commitment Termination Date and on the Commitment Termination Date, a Fee for Borrowers’ non use of available funds in an amount in Dollars equal to the Applicable Unused Line Fee Margin per annum (calculated on the basis of a 360 day year for actual days elapsed) multiplied by the difference between (x) the Maximum Dollar Tranche Amount (as it may be increased or reduced from time to time) and (y) the average for the period of the daily closing balances of the aggregate Dollar Tranche Revolving Loan and the Dollar Tranche Swing Line Loan outstanding during the period for which such Fee is due.

(c) As additional compensation for the Multicurrency Tranche Lenders, Borrowers shall pay to the Administrative Agent, for the ratable benefit of the Multicurrency Tranche Lenders, in arrears, on the first Business Day of each month prior to the Commitment Termination Date and on the Commitment Termination Date, a Fee for Borrowers’ non use of available funds in an amount in Dollars equal to the Applicable Unused Line Fee Margin per annum (calculated on the basis of a 360 day year for actual days elapsed) multiplied by the difference between (x) the Maximum Multicurrency Tranche Amount (as it may be increased or reduced from time to time) and (y) the average for the period of the daily closing balances of the aggregate Multicurrency Tranche Revolving Loan and the Multicurrency Tranche Swing Line Loan outstanding during the period for which such Fee is due.

(d) Borrowers shall pay to the Administrative Agent, for the ratable benefit of Lenders, the Letter of Credit Fee and other fees and amounts required by Annex B .


1.11	Receipt of Payments .


1.12	Application and Allocation of Payments .

ratably to the portion thereof held by each Dollar Tranche Lender as determined by its Pro Rata Share. All payments and prepayments applied to the Multicurrency Tranche Revolving Loan shall be applied ratably to the portion thereof held by each Multicurrency Tranche Lender as determined by its Pro Rata Share. As to (x) any other payment, (y) all payments made when an Event of Default has occurred and is continuing or following the Commitment Termination Date and (z) all proceeds of Collateral, each Borrower hereby irrevocably waives the right to direct the application of any and all such payments received from or on behalf of such Borrower and proceeds of Collateral, and all such payments and proceeds of Collateral shall be applied to amounts then due and payable in the following order, subject to the terms of the Collateral Documents:

in the case of payments or proceeds of Collateral of the Domestic Credit Parties:

(1) on a pro rata basis, (i) to Fees and reimbursable expenses of Agents hereunder and (ii) to “Fees” and reimbursable expenses of “Agents” under the Auction Revolving Credit Agreement;

(6) on a pro rata basis, (i) to interest on the Revolving Loan outstanding to the Domestic Borrowers and (ii) to interest on the “Auction Revolving Loan” outstanding to the “Domestic Borrowers” (as each such term in this clause (ii) is defined in the Auction Revolving Credit Agreement);

(7) on a pro rata basis, (i) to principal payments on the Revolving Loan outstanding to the Domestic Borrowers and to provide cash collateral for Letter of Credit Obligations of the Domestic Borrowers in the manner described in Annex B and (ii) to principal payments on the “Auction Revolving Loan” outstanding to

the “Domestic Borrowers” and to provide cash collateral for “Letter of Credit Obligations” of the “Domestic Borrowers” in the manner described in Annex B to the Auction Revolving Credit Agreement (as each such term in this clause (ii) is defined in the Auction Revolving Credit Agreement);

(8) on a pro rata basis, (i) to interest on the Revolving Loan outstanding to the Foreign Borrowers and (ii) to interest on the “Auction Revolving Loan” outstanding to the “Foreign Borrowers” (as each such term in this clause (ii) is defined in the Auction Revolving Credit Agreement);

(9) on a pro rata basis, (i) to principal payments on the Revolving Loan outstanding to the Foreign Borrowers and to provide cash collateral for Letter of Credit Obligations of the Foreign Borrowers in the manner described in Annex B and (ii) to principal payments on the “Auction Revolving Loan” outstanding to the “Foreign Borrowers” and to provide cash collateral for “Letter of Credit Obligations” of the “Foreign Borrowers” in the manner described in Annex B to the Auction Revolving Credit Agreement (as each such term in this clause (ii) is defined in the Auction Revolving Credit Agreement);

(10) on a pro rata basis, (i) to all other Obligations (other than Obligations that constitute a Guaranty of the Obligations of the Foreign Credit Parties) owing by the Domestic Credit Parties, including expenses of Lenders in respect of Domestic Credit Parties to the extent reimbursable under Section 11.3 and (ii) to all other “Obligations” (other than “Obligations” that constitute a “Guaranty” of the “Obligations” of the “Foreign Credit Parties”) owing by the “Domestic Credit Parties,” including expenses of “Lenders” in respect of “Domestic Credit Parties” to the extent reimbursable under Section 11.3 under the Auction Revolving Credit Agreement (as each such term in this clause (ii) is defined in the Auction Revolving Credit Agreement);

(11) on a pro rata basis, (i) to all other Obligations, including expenses of Lenders to the extent reimbursable under Section 11.3 and (ii) to all other “Obligations”, including expenses of “Lenders” to the extent reimbursable under Section 11.3 under the Auction Revolving Credit Agreement (as each such term in this clause (ii) is defined in the Auction Revolving Credit Agreement);

(12) on a pro rata basis, (i) to amounts owing in respect of Bank Product and Hedging Obligations (other than Bank Product and Hedging Obligations that constitute a Guaranty of the Secured Obligations of the Foreign Credit Parties) owing by the Domestic Credit Parties and (ii) to amounts owing in respect of “Bank Product and Hedging Obligations” (other than “Bank Product and Hedging Obligations” that constitute a “Guaranty” of the “Secured Obligations” of the “Foreign Credit Parties”) owing by the “Domestic Credit Parties” under the Auction Revolving Credit Agreement (as each such term in this clause (ii) is defined in the Auction Revolving Credit Agreement); and

(13) on a pro rata basis, (i) to amounts owing in respect of all other Bank Product and Hedging Obligations and (ii) to amounts owing in respect of all other “Bank Product and Hedging Obligations” under the Auction Revolving Credit Agreement;

in the case of payments or proceeds of Collateral of the Foreign Credit Parties:

(1) on a pro rata basis, (i) to Fees and reimbursable expenses of Agents which are then due and payable pursuant to any of the Loan Documents in respect of the Revolving Loans made to the Foreign Borrowers hereunder and (ii) to “Fees” and reimbursable expenses of “Agents” which are then due and payable pursuant to any of the “Loan Documents” in respect of the “Revolving Loans” made to the Foreign Borrowers under the Auction Revolving Credit Agreement (as each such term in this clause (ii) is defined in the Auction Revolving Credit Agreement);

(4) on a pro rata basis, (i) to interest on the Revolving Loan outstanding to the Foreign Borrowers and (ii) to interest on the “Auction Revolving Loan” outstanding to the “Foreign Borrowers” (as each such term in this clause (ii) is defined in the Auction Revolving Credit Agreement);

(5) on a pro rata basis, (i) to principal payments on the Revolving Loan outstanding to the Foreign Borrowers and to provide cash collateral for Letter of Credit Obligations of the Foreign Borrowers in the manner described in Annex B and (ii) to principal payments on the “Auction Revolving Loan” outstanding to the “Foreign Borrowers” and to provide cash collateral for “Letter of Credit Obligations” of the “Foreign Borrowers” in the manner described in Annex B to the Auction Revolving Credit Agreement (as each such term in this clause (ii) is defined in the Auction Revolving Credit Agreement);

(6) on a pro rata basis, (i) to all other Obligations owing by the Foreign Credit Parties, including expenses of Lenders to the extent reimbursable under Section 11.3 and (ii) to all other “Obligations” owing by the “Foreign Credit Parties,” including expenses of “Lenders” in respect of “Foreign Credit Parties” to the extent reimbursable under Section 11.3 under the Auction Revolving Credit Agreement (as each such term in this clause (ii) is defined in the Auction Revolving Credit Agreement); and

(7) on a pro rata basis, (i) to amounts owing by the Foreign Credit Parties in respect of Bank Product and Hedging Obligations and (ii) to amounts owing by the “Foreign Credit Parties” in respect of “Bank Product and Hedging Obligations” under the Auction Revolving Credit Agreement (as each such term in this clause (ii) is defined in the Auction Revolving Credit Agreement);

(b) Each Agent is authorized to, and at its sole election may, charge to the Revolving Loan balance on behalf of each Borrower and cause to be paid all Fees, expenses, Charges, costs (including insurance premiums in accordance with Section 5.4(a) ) and interest and principal, other than principal of the Revolving Loan, owing by Borrowers under this Agreement or any of the other Loan Documents if and to the extent Borrowers fail to pay promptly any such amounts as and when due, even if the Dollar Equivalent of the amount of such charges would exceed the applicable Borrowing Availability at such time; provided , such action shall not cause (i) the aggregate Dollar Tranche Revolving Loan to exceed the Maximum Dollar Tranche Amount or (ii) the Dollar Equivalent of the aggregate Multicurrency Tranche Revolving Loan to exceed the Maximum Multicurrency Tranche Amount. At any Agent’s option and to the extent permitted by law, any charges so made shall constitute a Revolving Credit Advance made in the applicable currency and part of the Dollar Tranche Revolving Loan or Multicurrency Tranche Revolving Loan, as applicable, hereunder.


1.13	Loan Account and Accounting .

Lender and may rely on the Loan Account as evidence of the amount of Obligations from time to time owing to it.


1.14	Indemnity .

(a) Each Credit Party shall jointly and severally indemnify and hold harmless each of the Agents, Lenders, and their respective Affiliates, and each such Person’s respective officers, directors, employees, attorneys, agents and representatives (each, an “ Indemnified Person ”), from and against any and all suits, actions, proceedings, claims, damages, losses, liabilities and expenses (including reasonable attorneys’ fees and disbursements and other costs of investigation or defense, including those incurred upon any appeal) that may be instituted or asserted against or incurred by any such Indemnified Person as the result of credit having been extended, suspended or terminated under this Agreement and the other Loan Documents and the administration of such credit, and in connection with or arising out of the transactions contemplated hereunder and thereunder and any actions or failures to act in connection therewith, including any and all Environmental Liabilities and legal costs and expenses arising out of or incurred in connection with disputes between or among any parties to any of the Loan Documents (collectively, “ Indemnified Liabilities ”); provided , that no such Credit Party shall be liable for any indemnification to an Indemnified Person to the extent that any such suit, action, proceeding, claim, damage, loss, liability or expense results from that Indemnified Person’s gross negligence or willful misconduct as determined in a final, non-appealable judgment by a court of competent jurisdiction. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER. It is understood and agreed that, notwithstanding anything to the contrary set forth in this Section 1.14(a) , no Foreign Credit Party shall have any obligation to any Indemnified Person with respect to Indemnified Liabilities relating to Obligations of any Domestic Credit Party.

arising from the reemployment of funds obtained by it or from fees payable to terminate deposits from which such funds were obtained. For the purpose of calculating amounts payable to a Lender under this subsection, each Lender shall be deemed to have actually funded its portion of the relevant LIBOR Loan (or its participation interest in such LIBOR Loan) through the purchase of a deposit bearing interest at the Dollar LIBOR Rate, the Sterling LIBOR Rate, the Euro LIBOR Rate or the Hong Kong Dollars LIBOR Rate, as applicable, in an amount equal to the amount of such portion of such LIBOR Loan (or such participation, as applicable) and having a maturity comparable to the relevant LIBOR Period; provided , that each Lender may fund each of its interests in LIBOR Loans (or its participations in LIBOR Loans) in any manner it sees fit, and the foregoing assumption shall be utilized only for the calculation of amounts payable under this subsection. This covenant shall survive the termination of this Agreement and the payment of the Notes and all other amounts payable hereunder. As promptly as practicable under the circumstances, each Lender shall provide Borrower Representative with its written calculation of all amounts payable pursuant to this Section 1.14(b) , and such calculation shall be binding on the parties hereto unless Borrower Representative shall object in writing within ten (10) Business Days of receipt thereof, specifying the basis for such objection in detail. It is understood and agreed that, notwithstanding anything to the contrary set forth in this Section 1.14(b) , no Foreign Credit Party shall have any obligation to any Lender with regard to any such losses, costs and expenses relating to Obligations of any Domestic Credit Party.


1.15	Access .

to obtain records from any service bureau or other Person that maintains records for such Credit Party, and shall maintain duplicate records or supporting documentation on media, including computer tapes and discs owned by such Credit Party. The Administrative Agent will give Lenders at least five (5) days’ prior written notice of regularly scheduled audits. Representatives of other Lenders may accompany the Administrative Agent’s representatives on regularly scheduled audits at no charge to Borrowers.


1.16	Taxes .

(a) Tax gross-up .

(i) Each Credit Party shall make all payments to be made by it under the Loan Documents without any Tax Deduction, unless a Tax Deduction is required by law.

(D) the relevant Lender is a Qualifying Lender solely by virtue of paragraph (i)(B) of the definition of Qualifying Lender and:


a.	the relevant Lender has not given a Tax Confirmation to the Borrower Representative (on behalf of the U.K. Credit Parties); and

(F) the payment is subject to U.S. federal withholding Taxes imposed under FATCA.

Lender that such Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority.

(viii) A U.K. Non-Bank Lender shall promptly notify the Administrative Agent who shall notify the U.K. Credit Parties if there is any change in the position from that set out in the Tax Confirmation.

(A) not a Qualifying Lender;

(B) a Qualifying Lender (other than a Treaty Lender); or

purposes of this clause (x) , “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

(b) Tax indemnity .

(ii) Paragraph (b)(i) above shall not apply:

(iv) A Protected Party shall, on receiving a payment from a Credit Party under this Section 1.16(b) , notify the Administrative Agent.

(i) a Tax Credit is attributable either to an increased payment under Section 1.16(a) of which that Tax Payment forms part, or to that Tax Payment; and

(ii) that Lender has obtained, utilized and retained that Tax Credit,

(e) Value Added Tax .

(f) Lender Assignments . If:

(i) a Lender makes an assignment to an assignee of, or sells participations in, the Loan Documents or changes its Lending Office; and


1.17	Capital Adequacy; Increased Costs; Illegality .

must sell and assign its outstanding Loans, Letter of Credit Obligations and Commitments to such Replacement Lender for an amount equal to the outstanding principal balance of all Loans held by the Affected Lender and all accrued interest and Fees with respect thereto through the date of such sale and such assignment shall not require the payment of an assignment fee to the Administrative Agent; provided , that Borrowers shall have reimbursed such Affected Lender for the additional amounts or increased costs that it is entitled to receive under this Agreement through the date of such sale and assignment. Notwithstanding the foregoing, Borrowers shall not have the right to obtain a Replacement Lender if the Affected Lender rescinds its demand for increased costs or additional amounts within fifteen (15) days following its receipt of Borrowers’ notice of intention to replace such Affected Lender. Furthermore, if Borrowers give a notice of intention to replace and do not so replace such Affected Lender within ninety (90) days thereafter, Borrowers’ rights under this Section 1.17(d) shall terminate with respect to such Affected Lender and Borrowers shall promptly pay all increased costs or additional amounts demanded by such Affected Lender pursuant to Sections 1.16(a), 1.17(a) and 1.17(b) . Notwithstanding the foregoing, with respect to a Lender that is a Non-Funding Lender or an Impacted Lender, the Administrative Agent may, but shall not be obligated to, obtain a Replacement Lender and execute an Assignment Agreement on behalf of such Non-Funding Lender or Impacted Lender at any time with three (3) Business Days’ prior notice to such Lender (unless notice is not practicable under the circumstances) and cause such Lender’s Loans, participations and Commitments to be sold and assigned, in whole or in part, at par.


1.18	Credit Support .


1.19	Conversion to Dollars and Foreign Currency .

(a) Except as expressly set forth herein, all valuations or computations of monetary amounts set forth in this Agreement shall include the Dollar Equivalent of Sterling,

Euro, Hong Kong Dollars or any other applicable currency. All currency conversions to be made under this Agreement shall be made in accordance with the following procedure:

(ii) Conversions to Dollars shall occur in accordance with prevailing exchange rates, as determined by the Administrative Agent, in its reasonable discretion, on the applicable date.

(iii) Conversions to any Foreign Currency shall occur in accordance with prevailing exchange rates, as determined by the Administrative Agent in its reasonable discretion, on the applicable date.

(iv) The Dollar Equivalent of each of the Revolving Credit Advances, Swing Line Advances and Letter of Credit Obligations denominated in currencies other than Dollars shall be re-calculated on (a) so long as the Maximum Borrowing Availability equals or exceeds $5,000,000, the first Business Day of each month and (b) otherwise, the first Business Day of each week.

(b) All valuations or computations of monetary amounts set forth in any Borrowing Base Certificate, any Art Loan Receivables Report or any other report, certificate, Financial Statement or other document delivered by any Credit Party to the Administrative Agent hereunder shall be made in accordance with GAAP and the ordinary business practices of the Credit Parties as of the Restatement Effective Date; provided , that any such report or document shall set forth the conversion factors used with respect to any foreign currencies.


1.20	Judgment Currency; Contractual Currency .

Judgment Conversion Date. Any amount due from a Credit Party under this Section 1.20(b) shall be due as a separate debt and shall not be affected by judgment being obtained for any other amounts due under or in respect of any of the Loan Documents.


1.21	Currency of Account .

Dollars are the currency of account and payment for each and every sum at any time due from the Borrowers hereunder; provided , that:

(i) unless expressly provided elsewhere in this Agreement, each repayment of a Revolving Credit Advance or a part thereof advanced in any Foreign Currency shall be made in such Foreign Currency;

(ii) each payment of interest in respect of principal, or any other sum, denominated in any Foreign Currency shall be made in such Foreign Currency;

(iii) each payment in respect of costs and expenses incurred in any Foreign Currency shall be made in such Foreign Currency; and

(iv) any other amount expressed to be payable in any Foreign Currency shall be paid in such Foreign Currency.

2. CONDITIONS PRECEDENT


2.1	Conditions to Effectiveness of Agreement and the Initial Loans .

(b) Approvals . The Administrative Agent shall have received (i) satisfactory evidence that the Sotheby Entities have obtained all required consents and approvals of all Persons including all requisite Governmental Authorities, to the execution, delivery and performance of this Agreement and the other Loan Documents and the consummation of the Related Transactions or (ii) an officer’s certificate in form and substance reasonably satisfactory to the Administrative Agent affirming that no such consents or approvals are required (other than those that have been obtained).

(e) Auction Revolving Credit Agreement . The Administrative Agent shall have received evidence satisfactory to it that the conditions precedent to the effectiveness of the amendment and restatement contemplated by the Auction Revolving Credit Agreement and the making of the initial loans and the issuance of any initial letters of credit under the Auction Revolving Credit Agreement (other than the satisfaction of the conditions precedent for the making of the initial Loans and the issuance of any initial Letters of Credit under this Agreement) have been satisfied (or waived in accordance with the terms thereof);

(f) Other Indebtedness . All Obligations and all Liens granted under the Loan Documents shall constitute permitted indebtedness and permitted Liens, as applicable, under the Senior Note Indenture.

(g) No Material Adverse Change . Since December 31, 2013, no event shall have occurred that results in or causes, or could reasonably be expected to result in or cause, a Material Adverse Effect.


2.2	Further Conditions to Each Loan .

(h) any representation or warranty by any Credit Party contained herein or in any other Loan Document is untrue or incorrect in any material respect (or, in the case of any representation or warranty already qualified by materiality, in any respect) as of such date (or in the case of a representation or warranty that is expressly made as of an earlier date, is untrue or incorrect as of such earlier date), except for changes therein expressly permitted or expressly contemplated by this Agreement, and the Majority in Interest of the Dollar Tranche Lenders (in the case of the funding of any Dollar Tranche Advance, conversion or continuation of any portion of the Dollar Tranche Revolving Loan, or the incurrence of any Dollar Tranche Letter of Credit Obligation) or Majority in Interest of the Multicurrency Tranche Lenders (in the case of the funding of any Multicurrency Tranche Advance, conversion or continuation of any portion of the Multicurrency Tranche Revolving Loan, or the incurrence of any Multicurrency Tranche Letter of Credit Obligation) have determined not to make such Advance, convert or continue any portion of the outstanding Revolving Loan as LIBOR Loan or incur such Letter of Credit Obligation as a result of the fact that such warranty or representation is untrue or incorrect in any material respect (or, in the case of any representation or warranty already qualified by materiality, in any respect);

(i) any Default or Event of Default has occurred and is continuing or would result after giving effect to any Advance, the incurrence of any Letter of Credit Obligation, or the conversion or continuation of any portion of the outstanding Revolving Loan into, or as, a LIBOR Loan, and the Majority in Interest of the Dollar Tranche Lenders (in the case of the funding of any Dollar Tranche Advance, conversion or continuation of any portion of the Dollar Tranche Revolving Loan, or the incurrence of any Dollar Tranche Letter of Credit Obligation) or Multicurrency Tranche Lenders (in the case of the funding of any Multicurrency Tranche Advance, conversion or continuation of any portion of the Multicurrency Tranche Revolving Loan, or the incurrence of any Multicurrency Tranche Letter of Credit Obligation) shall have determined not to make any Advance, convert or continue any portion of the outstanding Revolving Loan as a LIBOR Loan or incur any Letter of Credit Obligation as a result of that Default or Event of Default;

(j) after giving effect to any Advance (or the incurrence of any Letter of Credit Obligations), (i) the outstanding principal amount of the aggregate Dollar Tranche Revolving Loan would exceed the Maximum Dollar Tranche Amount less the then outstanding principal amount of the Dollar Tranche Swing Line Loan, (ii) the Dollar Equivalent of the outstanding principal amount of the aggregate Multicurrency Tranche Revolving Loan would exceed the Maximum Multicurrency Tranche Amount less the then outstanding principal amount

of the Multicurrency Tranche Swing Line Loan, (iii) the Dollar Equivalent of the aggregate outstanding principal balance of Revolving Credit Advances and Swing Line Advances made to Domestic Borrowers and the Dollar Equivalent of the Letter of Credit Obligations incurred for the benefit of the Domestic Borrowers would, in the aggregate, exceed the Domestic Borrowing Base, (iv) the outstanding amount of the Dollar Tranche Letter of Credit Obligations would exceed the Dollar Tranche L/C Sublimit or the Dollar Equivalent of the outstanding amount of the Multicurrency Tranche Letter of Credit Obligations would exceed the Multicurrency Tranche L/C Sublimit, (v) the aggregate outstanding principal amount of the Dollar Tranche Swing Line Loan would exceed Dollar Tranche Swing Line Availability, (vi) the Dollar Equivalent of the aggregate outstanding principal amount of the Multicurrency Tranche Swing Line Loan would exceed Multicurrency Tranche Swing Line Availability, (vii) the Dollar Equivalent of the aggregate outstanding principal balance of Revolving Credit Advances made to Foreign Borrowers and the Dollar Equivalent of the outstanding amount of the Letter of Credit Obligations incurred for the benefit of the Foreign Borrowers would, in the aggregate, exceed the Foreign Borrowing Base or (viii) the sum of (A) the Dollar Equivalent of the aggregate outstanding principal balance of Revolving Credit Advances made to Foreign Borrowers and the Dollar Equivalent of the outstanding amount of the Letter of Credit Obligations incurred for the benefit of the Foreign Borrowers plus (B) the Dollar Equivalent of the aggregate outstanding principal balance of “Auction Revolving Credit Advances” made to “Foreign Borrowers” and the Dollar Equivalent of the outstanding amount of the “Letter of Credit Obligations” incurred for the benefit of the “Foreign Borrowers” (as each such term in this clause (B) is defined in the Auction Revolving Credit Agreement) would, in the aggregate, exceed the Foreign Borrower Subfacility Limit; or

(k) notwithstanding the provisions of Annex F , the Borrowers shall not have delivered to the Administrative Agent a Borrowing Base Certificate and Art Loan Receivables Report (accompanied in each case by such supporting detail and documentation as shall be requested by the Administrative Agent in its reasonable discretion), in each case prepared as of (i) with respect to any Advance to be made or Letter of Credit Obligation to be incurred during the first thirteen days of any Fiscal Month, the last of day of the second preceding Fiscal Month or (ii) with respect to any Advance to be made or Letter of Credit Obligation to be incurred during the remainder of any Fiscal Month, the last day of the preceding Fiscal Month.

3. REPRESENTATIONS AND WARRANTIES

To induce Lenders to make the Loans and to incur Letter of Credit Obligations (and to purchase participation interests in the Loans and Letter of Credit Obligations hereunder),

the Credit Parties, jointly and severally, make the following representations and warranties to each Agent and each Lender with respect to all Sotheby Entities, each and all of which shall survive the execution and delivery of this Agreement.


3.1	Corporate Existence; Compliance with Law .

(m) Each Sotheby Entity (i) subject to specific representations regarding Environmental Laws, has and will maintain in full force and effect all material licenses (including, for the avoidance of doubt, a license under the Consumer Credit Act 1974 of the United Kingdom and the Consumer Credit Act 2006 of the United Kingdom (collectively, as each may be amended, extended or re-enacted from time to time, the “ CCA ”)), permits, consents, permissions, registrations, or approvals from or by, and has made all material filings with, and has given all notices to, all Governmental Authorities having jurisdiction, to the extent required, to enable such Sotheby Entity to carry on its business as currently conducted by it, to own its property and other assets, to extend Art Loans and to take security therefor; and (ii) subject to specific representations set forth herein regarding ERISA, Environmental Laws, tax and other laws, is in compliance with all applicable provisions of law, rule, regulation or guidance, except where the failure to comply, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.


3.2	Executive Offices, Collateral Locations, FEIN .


3.3	Corporate Power, Authorization, Enforceable Obligations .

The execution, delivery and performance by each Credit Party of the Loan Documents to which it is a party and the creation of all Liens provided for therein: (a) are within such Person’s power; (b) have been duly authorized by all necessary corporate, limited liability company, limited partnership or unlimited liability company action; (c) do not contravene any provision of any Sotheby Entity’s charter, bylaws or partnership or operating agreement as applicable; (d) do not violate any law or regulation, or any order or decree of any court or Governmental Authority; (e) do not conflict with or result in the breach or termination of, constitute a default under or accelerate or permit the acceleration of any performance required by, any indenture, mortgage, deed of trust, lease, agreement or other instrument to which any Sotheby Entity is a party or by which any Sotheby Entity or any of its property is bound, including, without limitation, the Senior Note Indenture, the Specified Debt Facility Documents or the York Avenue Lease Documents; (f) do not result in the creation or imposition of any Lien upon any of the property of any Sotheby Entity other than those in favor of the Collateral Agent, on behalf of itself and the other Secured Parties, pursuant to the Loan Documents; and (g) do not require the consent or approval of any Governmental Authority or any other Person. Each of the Loan Documents shall be duly executed and delivered by each Credit Party and each such Loan Document shall constitute a legal, valid and binding obligation of such Credit Party enforceable against it in accordance with its terms.


3.4	Financial Disclosures .

(t) Financial Statements . The following Financial Statements have been delivered on or prior to the date hereof:

(u) Projections . The Projections delivered on or prior to the date hereof have been prepared by the Borrowers in light of the past operations of their businesses and reflect projections for the 2014 Fiscal Year. The Projections are based upon the same accounting principles as those used in the preparation of the financial statements described above and the estimates and assumptions stated therein, all of which the Borrowers believe to be reasonable and fair in light of current conditions and current facts known to the Borrowers and, as of the Restatement Effective Date, reflect the Borrowers’ good faith and reasonable estimates of the future financial performance of Parent and its Subsidiaries for the period set forth therein. The Projections are not a guaranty of future performance, and actual results may differ from the Projections.


3.5	Material Adverse Effect .

Since December 31, 2013, no event has occurred, that alone or together with other events, could reasonably be expected to have a Material Adverse Effect.


3.6	Ownership of Property; Liens .


3.7	Labor Matters .

Material Adverse Effect; (c) all material payments due from any Credit Party, or for which any claim may be made against any Credit Party, on account of wages and employee health and welfare insurance and other benefits, have been paid or accrued as a liability on the books of such Credit Party; and (d) there are no complaints, charges, claims or other causes of action against any Credit Party pending or, to the knowledge of any Credit Party, threatened to be filed with any Governmental Authority or arbitrator based on, arising out of, in connection with, or otherwise relating to the employment or termination of employment by any Credit Party of any individual, which if adversely determined could reasonably be expected to have a Material Adverse Effect.


3.8	Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness .


3.9	Government Regulation .


3.10	Margin Regulations .


3.11	Taxes .

Charges have been paid excluding Charges or other amounts being contested in accordance with Section 5.2(b) and unless the failure to so file or pay could not reasonably be expected to result in a Material Adverse Effect. Disclosure Schedule (3.11) sets forth as of the Restatement Effective Date those taxable years for which any Sotheby Entity’s tax returns are currently being audited by the IRS or any other applicable Governmental Authority, and any assessments or threatened assessments in connection with such audit, or otherwise currently outstanding where the amount of such assessments, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. Except as described in Disclosure Schedule (3.11) , as of the Restatement Effective Date, no Sotheby Entity has executed or filed with the IRS or any other Governmental Authority any agreement or other document extending, or having the effect of extending, the period for assessment or collection of any material Charges. None of the Sotheby Entities and their respective predecessors are liable for any Charges: (a) under any agreement (including any tax sharing agreements) or (b) to each Sotheby Entity’s knowledge, as a transferee. As of the Restatement Effective Date, no Sotheby Entity has agreed or been requested to make any adjustment under IRC Section 481(a), by reason of a change in accounting method or otherwise, which would reasonably be expected to have a Material Adverse Effect.


3.12	ERISA/U.K. Pension Plans .

of any Plan; (iv) no Sotheby Entity or ERISA Affiliate has incurred or reasonably expects to incur any material liability as a result of a complete or partial withdrawal from a Multiemployer Plan; (v) within the last five years no Title IV Plan of any Sotheby Entity or ERISA Affiliate has been terminated, whether or not in a “standard termination” as that term is used in Section 4041 of ERISA, nor has any Title IV Plan of any Sotheby Entity or any ERISA Affiliate (determined at any time within the last five years) with material Unfunded Pension Liabilities been transferred outside of the “controlled group” (within the meaning of Section 4001(a)(14) of ERISA) of any Sotheby Entity or ERISA Affiliate (determined at such time), (vi) except in the case of any ESOP, Stock of all Credit Parties and their ERISA Affiliates makes up, in the aggregate, no more than 10% of fair market value of the assets of any Plan measured on the basis of fair market value as of the latest valuation date of any Plan; and (vii) no liability under any Title IV Plan has been satisfied with the purchase of a contract from an insurance company that is not rated AAA by Standard & Poor’s Ratings Group or an equivalent rating by another nationally recognized rating agency.


3.13	Litigation .

(a) ), as of the Restatement Effective Date there is no Litigation pending or, to any Sotheby Entity’s knowledge, threatened, that seeks damages in excess of $10,000,000 or injunctive relief against, or alleges criminal misconduct of, any Sotheby Entity.


3.14	Brokers .


3.15	Intellectual Property .


3.16	Full Disclosure .

Collateral Agent as a matter of law and as otherwise set forth in the Specified Debt Facility Intercreditor Agreement.


3.17	Environmental Matters .

(a) Except as set forth in Disclosure Schedule (3.17) , as of the Restatement Effective Date: (i) the owned Real Estate is, and, to the knowledge of the Credit Parties, the leased Real Estate is, in each case, free of contamination from any Hazardous Material except for such contamination that would not adversely impact the value or marketability of such Real Estate and that would not result in Environmental Liabilities that could reasonably be expected to have a Material Adverse Effect; (ii) no Sotheby Entity has caused or suffered to occur any material Release of Hazardous Materials on, at, in, under, above, to, from or about any of its Real Estate; (iii) the Sotheby Entities are and have been in compliance with all Environmental Laws, except for such noncompliance that would not result in Environmental Liabilities which could reasonably be expected to have a Material Adverse Effect; (iv) the Sotheby Entities have obtained, and are in compliance with, all Environmental Permits required by Environmental Laws for the operations of their respective businesses as presently conducted or as proposed to be conducted, except where the failure to so obtain or comply with such Environmental Permits would not result in Environmental Liabilities that could reasonably be expected to have a Material Adverse Effect; (v) no Sotheby Entity is involved in operations or knows of any facts, circumstances or conditions, including any Releases of Hazardous Materials, that are likely to result in any Environmental Liabilities of such Sotheby Entity which could reasonably be expected to have a Material Adverse Effect; (vi) there is no Litigation arising under or related to any Environmental Laws, Environmental Permits or Hazardous Material that seeks damages, penalties, fines, costs or expenses that could reasonably be expected to have a Material Adverse Effect or injunctive relief against, or that alleges criminal misconduct by, any Sotheby Entity; (vii) no notice has been received by any Sotheby Entity identifying it as a “potentially responsible party” or requesting information under CERCLA or analogous state statutes, and to the knowledge of the Sotheby Entities, there are no facts, circumstances or conditions that may result in any Sotheby Entity being identified as a “potentially responsible party” under CERCLA or analogous state statutes; and (viii) the Sotheby Entities have made available to the Administrative Agent copies of all existing environmental reports, reviews and audits and all written information pertaining to actual or potential Environmental Liabilities, in each case relating to any Sotheby Entity.


3.18	Insurance .

Disclosure Schedule (3.18) lists all insurance policies of any nature maintained, as of the Restatement Effective Date, for current occurrences by each Credit Party.


3.19	Deposit .


3.20	[ Reserved ] .


3.21	Bonding; Licenses .


3.22	Solvency .


3.23	Sale-Leasebacks .

No Sotheby Entity is a party to any sale-leaseback, synthetic lease or similar transaction involving any of its assets.


3.24	U.S. Money-Laundering and Terrorism Regulatory Matters .

Order or (iii) to their knowledge, has engaged or will engage in or has conspired or will conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the requirements or prohibitions set forth in the Executive Order or the PATRIOT Act.

(e) Each Sotheby Entity has taken appropriate due diligence efforts to know, or has carried out appropriate customer due diligence in relation to, each Art Loan Debtor to which it has advanced, or committed to advance, Art Loans, including whether such Art Loan Debtor is a Prohibited Person. Each Sotheby Entity has taken appropriate due diligence efforts to know if any such Art Loan Debtor is a “Senior Foreign Political Figure” (as defined in the PATRIOT Act), a “Politically Exposed Person” (as defined in The Money Laundering Regulations 2007 of the United Kingdom) or a “politically exposed person” (as defined in The Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance of Hong Kong) and, to the extent that any Art Loan Debtor is a Senior Foreign Political Figure, a Politically Exposed Person or a politically exposed person (as aforementioned), has disclosed such information to the Administrative Agent.

(f) Each Borrower does not believe, and after appropriate due diligence, has no reason to believe, that any of its Art Loan Debtors is a “Prohibited Foreign Shell Bank” (as defined in the PATRIOT Act), or is named on any available lists of known or suspected terrorists, terrorist organizations or of other sanctioned person issued by the United States government and/or the government(s) of any jurisdiction(s) in which such Borrower is doing business.


3.25	Lending and Auction Regulatory Matters .

(a) Except as set forth in Disclosure Schedule (3.13(a)) , each Credit Party that makes or owns Art Loans is in material compliance with, and each Art Loan has been made or generated, as applicable, and remains in material compliance with, all applicable provisions of federal, state, local and foreign laws imposed upon lenders with respect to consumer or commercial lending, usury or other limitations on interest, finance charges, or other charges, finance company or other lender licensing, consumer or commercial credit disclosure, consumer or commercial credit collection practices, and similar laws and regulations.

4. FINANCIAL STATEMENTS AND INFORMATION


4.1	Reports and Notices .

(b) Each Credit Party hereby agrees that, from and after the Restatement Effective Date and until the Termination Date, it shall deliver the various Collateral Reports (including Borrowing Base Certificates in the form of Exhibit 4.1(A) and Art Loan Receivables Reports in the form of Exhibit 4.1(B) ) at the times, to the Persons and in the manner set forth in Annex F and Section 2.2(d) .

5. AFFIRMATIVE COVENANTS

Each Credit Party jointly and severally agrees as to all Sotheby Entities that from and after the date hereof and until the Termination Date:


5.1	Maintenance of Existence and Conduct of Business .


5.2	Payment of Charges .


5.3	Books and Records .


5.4	Insurance; Damage to or Destruction of Collateral .

(a) The Sotheby Entities shall, at their sole cost and expense, maintain policies of insurance with financially sound and reputable insurance companies in such amounts,

and covering such risks, as is consistent with sound business practice and customary for their industry. In the case of the Credit Parties, such policies of insurance (or the loss payable and additional insured endorsements delivered to the Collateral Agent) shall contain provisions pursuant to which the insurer agrees to provide thirty (30) days prior written notice to the Collateral Agent in the event of any non-renewal, cancellation or amendment of any such insurance policy. If any Sotheby Entity at any time or times hereafter shall fail to obtain or maintain any of the policies of insurance required above, or to pay all premiums relating thereto, any Agent may at any time or times thereafter obtain and maintain such policies of insurance and pay such premiums and take any other action with respect thereto that such Agent deems advisable. Neither Agent shall have any obligation to obtain insurance for any Sotheby Entity or pay any premiums therefor. By doing so, neither Agent shall be deemed to have waived any Default or Event of Default arising from any Sotheby Entity’s failure to maintain such insurance or pay any premiums therefor. All sums so disbursed, including reasonable attorneys’ fees, court costs and other charges related thereto, shall be payable on demand by Borrowers to the applicable Agent and shall be additional Obligations hereunder secured by the Collateral.

(b) If reasonably requested by any Agent, each Sotheby Entity shall deliver to such Agent from time to time a report of a reputable insurance broker, reasonably satisfactory to such Agent, with respect to its insurance policies.

(c) Each Credit Party shall deliver to the Collateral Agent, in form and substance reasonably satisfactory to the Collateral Agent, endorsements to (i) all “All Risk,” Lender Single Interest (“LSI”) and Fine Arts property policies of insurance (including, to the extent permitted under the York Avenue Lease Documents and York Avenue Loan Documents, the business interruption insurance of such Credit Party), in each case, naming the Collateral Agent, on behalf of itself and the other Secured Parties, as a lender loss payee, and (ii) all general, automotive, and umbrella liability policies of insurance, in each case, naming the Collateral Agent, on behalf of itself and the other Secured Parties, as additional insured. Each Credit Party irrevocably makes, constitutes and appoints each Agent (and all officers, employees or agents designated by any Agent), so long as any Default or Event of Default has occurred and is continuing, as such Credit Party’s true and lawful agent and attorney in fact for the purpose of making, settling and adjusting claims under such “All Risk” property policies of insurance, endorsing the name of such Credit Party on any check or other item of payment for the proceeds of such “All Risk” policies of insurance and for making all determinations and decisions with respect to such “All Risk” policies of insurance. No Agent shall have any duty to exercise any rights or powers granted to it pursuant to the foregoing power-of-attorney. Borrower Representative shall promptly notify each Agent of any loss, damage, or destruction to the Collateral in the amount of $2,000,000 or more, whether or not covered by insurance. After deducting from the proceeds of insurance received with respect to any such loss, damage or destruction to the Collateral (i) the expenses incurred by any Agent in the collection or handling thereof, and (ii) amounts required to be paid to creditors (other than the Secured Parties) having Permitted Encumbrances, the Agents (A) shall apply any such proceeds to the reduction of the Obligations (and cash collateralization of Letter of Credit Obligations) and the “Obligations” (and cash collateralization of “Letter of Credit Obligations”) (in each case, as defined in the Auction Revolving Credit Agreement) in accordance with Section 1.3(d) or (e) , as

applicable, except to the extent that the applicable Credit Party has given notice of its intent to reinvest such proceeds in productive assets of a kind then used or usable in the business of a Credit Party, within one hundred eighty (180) days after the date of receipt of such proceeds; provided that the Borrower Representative notifies Collateral Agent of such Credit Party’s intent to reinvest and of the completion of such reinvestment at the time such proceeds are received and when such reinvestment occurs, respectively and (B) shall, to the extent such proceeds are not required to be applied to prepay the Obligations (and cash collateralization of Letter of Credit Obligations) and the “Obligations” (and cash collateralization of “Letter of Credit Obligations”) (in each case, as defined in the Auction Revolving Credit Agreement) pursuant to Section 1.3(c) , remit such proceeds to the applicable Credit Party.


5.5	Compliance with Laws .


5.6	Supplemental Disclosure .


5.7	Intellectual Property .


5.8	Environmental Matters .


5.9	Landlords’ Agreements, Bailee Letters and Real Estate Purchases .

(or renew an existing lease of any real property locations or warehouse spaces, or alter the use of any leased location to materially increase the Collateral stored or located at such location) where Collateral having a book value the Dollar Equivalent of which is greater than $1,000,000 in the aggregate will be stored or located, such Credit Party shall first notify the Administrative Agent thereof and, upon request of the Administrative Agent, provide to the Administrative Agent a landlord agreement or bailee letter, as appropriate, with respect to such location, in form and substance reasonably satisfactory to the Administrative Agent. Each Credit Party shall timely and fully pay and perform its obligations under all leases and other agreements with respect to each leased location or public warehouse where any Collateral is or may be located. To the extent otherwise permitted hereunder, if any Credit Party proposes to acquire a fee ownership interest in Real Estate after the Restatement Effective Date, such Credit Party shall first notify the Administrative Agent thereof and, upon request of the Administrative Agent, provide to the Administrative Agent a mortgage or deed of trust granting the Collateral Agent a first priority security interest on such Real Estate, together with environmental audits, mortgage title insurance commitment, real property survey, local counsel opinion(s), flood zone determinations, supplemental casualty insurance and flood insurance, and such other documents, instruments or agreements reasonably requested by the Administrative Agent, in each case, in form and substance reasonably satisfactory to the Administrative Agent.


5.10	Lending and Auction Regulatory Matters .


5.11	Further Assurances .


5.12	Art Loans .

Each Borrower shall, in connection with each Art Loan made or to be made by it, (a) apply credit standards and loan to collateral value requirements, (b) conduct appropriate diligence with respect to the applicable Work(s) of Art (including, as applicable, searches of such Work(s) of Art in the Art Loss Register), (c) follow practices with respect to documentation, perfection and protection of security interests and (d) follow practices with respect to classification of Art Loans as non-accrual, as such standards, requirements and practices are generally applied and followed in the Borrowers’ art lending business prior to the Restatement Effective Date.


5.13	Money-Laundering and Terrorism Regulatory Matters .

(h) Each Borrower shall maintain an anti-money laundering, counter-terrorist financing and/or economic sanctions program and/or procedures in accordance with all applicable laws, rules and regulations of its own jurisdiction including, without limitation, where applicable, the PATRIOT Act, the Money Laundering Regulations 2007 of the United Kingdom and the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance (Cap. 615 of the laws of Hong Kong). Each Borrower shall apply its anti-money laundering and counter-terrorist financing program and/or procedures to all Art Loan Debtors and shall take appropriate steps in accordance with the laws of its own jurisdiction to ensure that all required relevant documentation is retained, including identification related to such Art Loan Debtors in accordance with its anti-money laundering, counter-terrorist financing and/or economic sanctions program. Each Borrower shall adopt appropriate policies, procedures and internal controls to be compliant in all material respects with any additional laws, rules or regulations relating to money laundering and/or counter-terrorist financing, including the PATRIOT Act, to which it may become subject.

(i) Each Sotheby Entity shall take appropriate due diligence efforts to know, and appropriate customer due diligence in relation to, each Art Loan Debtor to which it shall advance, or commit to advance, Art Loans, including whether such Art Loan Debtor is a Prohibited Person. Each Sotheby Entity shall take appropriate due diligence efforts to know if

any such Art Loan Debtor is a “Senior Foreign Political Figure” (as defined in the PATRIOT Act), a “Politically Exposed Person” (as defined in The Money Laundering Regulations 2007 of the United Kingdom) or a “politically exposed person” (as defined in The Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance of Hong Kong) and, to the extent that any investor is a Senior Foreign Political Figure, a Politically Exposed Person or a politically exposed person (as aforementioned), shall disclose such information to the Administrative Agent.

(j) Each Sotheby Entity will notify or report unusual or suspicious activity to the extent required by the laws or requirements of its own jurisdiction including, where applicable, the PATRIOT Act.


5.14	Subsidiary Loan Documents .

(a) Subject to Sections 5.14(d) and 5.14(e) , for each Person (other than a Disregarded Domestic Person) that is or becomes a direct Domestic Subsidiary of a Domestic Credit Party (which shall, for purposes of clarity, include all Domestic Subsidiaries (other than Disregarded Domestic Persons), whether direct or indirect, of a Domestic Credit Party, so long as such Domestic Subsidiaries are not direct or indirect Subsidiaries of one or more Foreign Subsidiaries of such Domestic Credit Party), within fifteen (15) days (or such later date as the Collateral Agent may agree to in its sole discretion) of becoming such a Domestic Subsidiary, (i) such Person shall become party to this Agreement as a Credit Party by executing a joinder agreement hereto, and shall execute joinder agreements to the Domestic Guaranty and Security Agreement and such further Collateral Documents as the Collateral Agent shall reasonably request, in each case pursuant to the terms of each such agreement, (ii) 100% of the outstanding Stock of such Person owned by such Domestic Credit Party shall be pledged to the Collateral Agent, for the benefit of the Secured Parties, in support of the Secured Obligations of each of the Domestic Borrowers and the Foreign Borrowers, pursuant to such Collateral Documents as the Collateral Agent shall reasonably request and (iii) such Person shall deliver such organizational and authorization documentation and legal opinions as the Collateral Agent shall reasonably request, in each case in form and substance reasonably satisfactory to the Collateral Agent; provided , that, (x) so long as SPTC Delaware shall not create, incur, assume or permit to exist any Indebtedness or Guaranteed Indebtedness or any Lien on or with respect to any of its properties or assets (whether now owned or hereafter acquired), SPTC Delaware shall not be required to execute or become a party to any Loan Documents and its outstanding Stock shall not be required to be pledged, and (y) the York Avenue Owner shall not be required to execute or become a party to any Loan Documents and its outstanding Stock shall not be required to be pledged.

(b) Subject to Sections 5.14(d) and 5.14(e) , for each Person that is or becomes a direct Foreign Subsidiary of any Credit Party and is organized under the laws of England or

Hong Kong, within fifteen (15) days (or such later date as the Collateral Agent may agree to in its sole discretion) of becoming such a Foreign Subsidiary, (i) such Person shall become party to this Agreement as a Credit Party by executing a joinder agreement hereto, and shall execute each of a Guaranty with respect to the Secured Obligations of the Foreign Borrowers and such Collateral Documents as the Collateral Agent shall reasonably request in support of the Secured Obligations of the Foreign Borrowers, in each case pursuant to the terms of each such agreement, (ii) if such Person is a direct Foreign Subsidiary of a Foreign Credit Party, 100% of the outstanding Stock of such Person owned by such Foreign Credit Party shall be pledged to the Collateral Agent, for the benefit of the Secured Parties, in support of the Secured Obligations of the Foreign Borrowers pursuant to such Collateral Documents as the Collateral Agent shall reasonably request, (iii) if such Person is a direct Foreign Subsidiary of a Domestic Credit Party, 65% of the outstanding Stock of such Person owned by such Domestic Credit Party shall be pledged to the Collateral Agent, for the benefit of the Secured Parties, in support of the Secured Obligations of the Domestic Borrowers and the Foreign Borrowers (or, in the case of the outstanding Stock of York UK Holdco International Limited, the Secured Obligations of solely the Foreign Borrowers) pursuant to such Collateral Documents as the Collateral Agent shall reasonably request and (iv) such Person shall deliver such organizational and authorization documentation and legal opinions as the Collateral Agent shall reasonably request, in each case in form and substance reasonably satisfactory to the Collateral Agent.

(d) Notwithstanding anything to the contrary contained herein or in any other Loan Document:

becoming subject to a pledge thereof and/or (B) a guarantee by, or security interest in, the assets of any Person organized in such jurisdiction, such pledge of such Person’s outstanding Stock, such guarantee and/or such security interest shall not be required.

(viii) If any Guaranty or Collateral is required to be provided pursuant to the terms of the Auction Revolving Credit Agreement to secure the “Secured Obligations” of the “Domestic Credit Parties” under the Auction Revolving Credit Agreement, such Guaranty or Collateral, as applicable, shall also be provided under this Agreement to secure the Secured Obligations of the Domestic Credit Parties. If any Guaranty or Collateral is required to be provided pursuant to the terms of the Auction Revolving Credit Agreement to secure the “Secured Obligations” of the “Foreign Credit Parties” under the Auction Revolving Credit Agreement, such Guaranty or Collateral, as applicable, shall also be provided under this Agreement to secure the Secured Obligations of the Foreign Credit Parties. For the avoidance of doubt, notwithstanding the foregoing, the Foreign Borrowers shall have no liability, direct or indirect, for the Secured Obligations of the Domestic Borrowers or the other Domestic Credit Parties hereunder or under any of the other Loan Documents.


5.15	Immaterial Subsidiaries .


5.16	York Avenue Transactions .


5.17	Auction Guaranties .

Each Sotheby Entity shall comply with the provisions of the Auction Guaranty Side Letter.


5.18	Data Protection Matters .

6. NEGATIVE COVENANTS

Each Credit Party jointly and severally agrees as to all Sotheby Entities that from and after the date hereof until the Termination Date:


6.1	Mergers, Subsidiaries, Etc .


6.2	Investments; Loans and Revolving Credit Advances .

(e) subject to applicable regulatory authorizations, any Borrower may make, or commit to make, Art Loans and provide, or commit to provide, extended payment terms to “Extended Term Art Debtors” for purposes of generating “Extended Term Art Receivables” (as each such term is defined in the Auction Revolving Credit Agreement);

(f) the Sotheby Entities may make investments in York Avenue Owner in an aggregate amount in any Fiscal Year not in excess of the sum of (i) the amount of Capital Expenditures permitted under paragraph (a) of Annex G for such Fiscal Year, less the aggregate amount of any Capital Expenditures made by Parent and its Subsidiaries (other than the York Avenue Owner) during such Fiscal Year plus (ii) additional amounts to purchase and upgrade a headquarters building;

(h) the Sotheby Entities may make other investments (other than in any Immaterial Subsidiary or the York Avenue Owner) not exceeding the lesser of (x) $35,000,000 and (y) the sum of $20,000,000 plus the aggregate amount of investments made by the Sotheby Entities pursuant to this Section 6.2(h) during the period commencing on the Restatement Effective Date and ending on the first anniversary thereof.


6.3	Indebtedness .

(d) No Sotheby Entity shall create, incur, assume or permit to exist any Indebtedness, except (without duplication):

(i) (A) the Senior Notes and (B) Indebtedness under the Specified Debt Facility;

(iii) obligations (contingent or otherwise) under (A) the York Avenue Loan Documents and any refinancings, extensions, replacements or renewals thereof or amendments or modifications thereto that do not have the effect of increasing the principal amount thereof to an aggregate principal amount greater than 65% of the fair market value of the real property subject to such financing at the time of such refinancing, extension, replacement, renewal, amendment or modification (as reasonably determined by the Administrative Agent) and that are otherwise on terms and conditions no less favorable in any material respect to any Sotheby Entity, any Agent or any Lender, as reasonably determined by the Administrative Agent, than the terms of the York Avenue Loan Documents being refinanced, extended, replaced, renewed, amended or modified and (B) any Rate Management Transaction entered into in connection therewith; provided , that such Rate Management Transaction is entered into in the ordinary course of business and not for purposes of speculation;

(iv) Indebtedness secured by purchase money security interests and Capital Leases permitted in Section 6.7(e) ;

(v) the Loans and the other Secured Obligations;

otherwise on terms and conditions no less favorable in any material respect to any Sotheby Entity, any Agent or any Lender, as determined by the Administrative Agent, than the terms of the Indebtedness being refinanced, amended or modified;

(xi) Other Indebtedness in an aggregate principal amount not exceeding $15,000,000 at any one time outstanding.

(e) No Sotheby Entity shall, directly or indirectly, voluntarily purchase, redeem, defease or prepay any principal of, premium, if any, interest or other amount payable in respect of any Indebtedness prior to its scheduled maturity, other than (i) the Obligations; (ii) Indebtedness secured by a Permitted Encumbrance if the asset securing such Indebtedness has been sold or otherwise disposed of in accordance with Section 6.8 ; (iii) Indebtedness permitted by Section 6.3(a)(vi) upon any refinancing thereof in accordance with Section 6.3(a)(vi) ; (iv) Indebtedness incurred pursuant to repayment by any Sotheby Entity of intercompany loans and advances outstanding to any Sotheby Entity, (v) so long as (x) no Default or Event of Default has occurred and is continuing or would occur as a result thereof, and (y) Parent shall have provided to the Administrative Agent prior to the date thereof pro forma financial statements demonstrating that the Fixed Charge Coverage Ratio, as of the end of the most recently completed Fiscal Quarter for which the Agents and Lenders have received Financial Statements pursuant hereto, shall be equal to or greater than 1.15 to 1.00 (calculated on a pro forma basis as if such purchase had occurred during such Fiscal Quarter), purchases, redemptions, defeasances or prepayments of the Senior Notes by Parent; (vi) so long as no Revolving Loans are outstanding hereunder and no “Revolving Loans” are outstanding under the Auction Revolving Credit Agreement as of the date of any such transaction, any purchases, redemptions, defeasances or prepayments of the Senior Notes or Indebtedness under the Specified Debt Facility; and (vii) purchases, redemptions, defeasances or prepayments of Indebtedness under the Specified Debt Facility, (x) with the proceeds of any sale or other disposition of any asset (including (A) commissions on such sale or disposition or (B) proceeds of any such asset arising as a result of casualty or condemnation) subject to a Lien securing Indebtedness under the Specified Debt Facility on a first priority basis or (y) to the extent that, both immediately before and after giving pro forma effect thereto, (A) no Event of Default shall have occurred and be continuing and (B) the Liquidity Amount shall be at least $175,000,000.


6.4	Employee Loans and Affiliate Transactions .

reasonable terms that are no less favorable to such Sotheby Entity making such Art Loan than would be obtained in a comparable arm’s length transaction with a Person not an employee of, or otherwise affiliated with, any Sotheby Entity, up to a maximum of a Dollar Equivalent of $25,000,000 in the aggregate at any one time outstanding and (iii) other loans to its respective employees, up to a maximum of a Dollar Equivalent of $7,500,000 in the aggregate at any one time outstanding.


6.5	Capital Structure and Business .


6.6	Guaranteed Indebtedness .


6.7	Liens .

(a) Permitted Encumbrances;

(b) Liens created pursuant to the York Avenue Loan Documents or on properties or assets not constituting Collateral and securing the obligations permitted under Section 6.3(a)(iii) ;

(f) Liens securing Indebtedness permitted pursuant to Section 6.3(a)(ix) ; provided , that such obligations are secured solely with cash and Cash Equivalent Investments;

(g) licenses and sublicenses permitted pursuant to Section 6.8(g) ;

(i) Liens on any Specified U.K. Real Estate or other properties or assets not constituting Collateral and securing Indebtedness permitted pursuant to clause (ii) of Section 6.3(a) ;

provided that, except as set forth in clause (i) of this Section 6.7 , no Foreign Credit Party shall create, incur, assume or permit to exist any Lien on or with respect to its Real Estate other than Permitted Encumbrances described in clauses (a) , (g) or (h) of the definition thereof. In addition, no Credit Party shall become a party to any agreement, note, indenture or instrument, or take any other action after the Restatement Effective Date that would prohibit the creation of a Lien on any of its properties or other assets in favor of the Collateral Agent, on behalf of itself and the other Secured Parties, as additional collateral for the applicable Secured Obligations, except (x) agreements entered into in connection with any Permitted U.K. Real Estate Financing that prohibit Liens upon any Specified U.K. Real Estate subject to such Permitted U.K. Real Estate Financing, (y) as set forth in the Specified Debt Facility Documents and (z) operating leases, Capital Leases, Licenses or agreements relating to purchase money Indebtedness which prohibit Liens upon the assets that are subject thereto.


6.8	Sale of Stock and Assets .

the ordinary course of business, (b) the sale or other disposition by a Sotheby Entity of Equipment or Fixtures that are obsolete or no longer used or useful in such Sotheby Entity’s business and having a book value not exceeding the Dollar Equivalent of $4,000,000 in the aggregate in any Fiscal Year; (c) the sale or other disposition of other assets having a book value not exceeding the Dollar Equivalent of $5,000,000 in the aggregate in any Fiscal Year; (d) the sale or other disposition of any asset by a Credit Party to any other Credit Party; (e) the sale or other disposition of any asset by any Sotheby Entity that is not a Credit Party to any other Sotheby Entity; (f) licenses or sublicenses granted to others in the ordinary course of business which do not (i) interfere in any material respect with the business of the Sotheby Entities or (ii) secure any Indebtedness; (g) the disposition of any Specified U.K. Real Estate pursuant to a Permitted U.K. Real Estate Financing and (h) the sale or other disposition of any asset (including the proceeds of any such asset arising as a result of casualty or condemnation) subject to a Lien securing Indebtedness under the Specified Debt Facility on a first priority basis.


6.9	ERISA .


6.10	Financial Covenants .

Borrowers shall not breach or fail to comply with any of the Financial Covenants.


6.11	Hazardous Materials .


6.12	Sale Leasebacks .

No Sotheby Entity shall engage in any sale leaseback, synthetic lease or similar transaction involving any of its assets, except any Permitted U.K. Real Estate Financing.


6.13	Restricted Payments .

No Sotheby Entity shall make any Restricted Payment, except:

(a) intercompany loans and advances between Sotheby Entities to the extent permitted by Sections 6.2 and 6.3 ;

(b) dividends and distributions by Subsidiaries of any Sotheby Entity paid to such Sotheby Entity;

(d) payments of principal and interest of intercompany loans and advances made in accordance with Section 6.3 ;

(e) if (i) no Event of Default has occurred and is continuing or would occur as a result thereof, (ii) either (A) so long as no Revolving Loans are outstanding hereunder and no “Revolving Loans” are outstanding under the Auction Revolving Credit Agreement as of the date of any Repurchase, both before and after giving effect thereto or (B) Parent has provided to the Administrative Agent, prior to the date that any Repurchase Period is announced (which notice shall be delivered to the Administrative Agent no earlier than thirty (30) days prior to the commencement of such Repurchase Period, and no later than three (3) Business Days prior to the commencement of such Repurchase Period), a written notice setting forth (1) the proposed start and end dates of such Repurchase Period (which shall not exceed eighteen (18) months), (2) the aggregate maximum Dollar amount to be paid in consideration of all Repurchases to occur during such Repurchase Period, and (3) pro forma financial statements demonstrating that the Fixed Charge Coverage Ratio, calculated for the four Fiscal Quarter period which, as of the date of such notice to the Administrative Agent, is most recently completed and for which the Agents and Lenders have received Financial Statements pursuant hereto, shall be equal to or greater than 1.15 to 1.00 (calculated on a pro forma basis as if such aggregate maximum Dollar amount of Repurchases to occur during such Repurchase Period had occurred during such period), and (iii) after giving effect to each Repurchase, Margin Stock shall not constitute more than 25% of the assets of the Credit Parties, Parent may make Repurchases during such Repurchase Period; provided that, if clause (ii)(A) of this Section 6.13(e) is inapplicable, such Repurchases shall be conducted in accordance with the notice delivered pursuant to clause (ii)(B) of this Section 6.13(e) ;

make dividends or distributions on its Stock in excess of the Maximum Distribution Amount;

(g) Parent may make Repurchases and pay other dividends or distributions on its Stock so long as, both before and after giving effect thereto, (i) no Event of Default has occurred and is continuing, (ii) the Aggregate Borrowing Availability equals or exceeds $100,000,000 and (iii) the Liquidity Amount equals or exceeds $200,000,000; provided that, if no Revolving Loans are outstanding hereunder and no “Revolving Loans” are outstanding under the Auction Revolving Credit Agreement, Parent may make Repurchases and pay dividends or distributions on its Stock so long as, both before and after giving effect thereto, (i) no Event of Default has occurred and is continuing and (ii) the Liquidity Amount equals or exceeds $200,000,000;

(h) Parent may declare and make dividend payments or other distributions payable solely in its Stock; and


6.14	Change of Corporate Name, State of Incorporation or Location; Change of Fiscal Year.

No Domestic Credit Party shall (a) change its name as it appears in official filings in the state of its incorporation or other organization, (b) change its chief executive office or principal place of business or the location of its records concerning the Collateral, (c) change the type of entity that it is, (d) change its organization identification number, if any, issued by its state of incorporation or other organization, or (e) change its jurisdiction of incorporation or organization or incorporate or organize in any additional jurisdictions, in each case, without at least thirty (30) days (or such shorter period as the Administrative Agent shall consent to in writing) prior written notice to the Administrative Agent and after the Administrative Agent’s written acknowledgment that any reasonable action requested by the Administrative Agent in connection therewith, including to continue the perfection of any Liens in favor of the Collateral Agent, on behalf of the Secured Parties, in any Collateral, has been completed or taken; provided , that any such new location shall be in the continental United States. No Foreign Borrower shall change its jurisdiction of incorporation or organization or incorporate or organize in any additional jurisdictions, in each case, without at least thirty (30) days (or such shorter period as the Administrative Agent shall consent to in writing) prior written notice to the Administrative Agent and after the Administrative Agent’s written acknowledgment that any reasonable action requested by the Administrative Agent in connection therewith, including to continue the perfection of any Liens in favor of the Collateral Agent, on behalf of the Secured Parties, in any Collateral, has been completed or taken. No Sotheby Entity shall change its Fiscal Year.


6.15	No Impairment of Intercompany Transfers .


6.16	Real Estate Purchases .


6.17	Changes Relating to Material Contracts .

No Sotheby Entity shall (a) change or amend the terms of the Senior Notes or the Senior Note Indenture in a manner materially adverse to the Lenders, (b) change or amend any York Avenue Lease Document in a manner adverse to the interests of any Agent or any Lender in any material respect or (c) except as set forth on Disclosure Schedule (5.16), permit the York Avenue Lender to have recourse to Parent or any of its Subsidiaries, or any assets of Parent or any of its Subsidiaries, pursuant to the York Avenue Loan Agreement or any other York Avenue Loan Document; provided that, no change or amendment described in the foregoing clause (a) shall: (i) increase the interest rate on the Senior Notes; (ii) accelerate the dates upon which payments of principal or interest are due under the Senior Notes; (iii) increase the principal amount of the Senior Notes above the original principal amount thereof; (iv) change any event of default, in a manner adverse to the Credit Parties, or add or make more restrictive any covenant with respect to the Senior Notes or (v) change the redemption or prepayment provisions of the Senior Notes.


6.18	Use of Proceeds .

7. TERM


7.1	Termination .

The financing arrangements contemplated hereby shall be in effect until the Commitment Termination Date, and the Loans and all other Obligations shall be automatically due and payable in full on such date.


7.2	Survival of Obligations Upon Termination of Financing Arrangements .

Except as otherwise expressly provided for in the Loan Documents, no termination or cancellation (regardless of cause or procedure) of any financing arrangement under this Agreement shall in any way affect or impair the obligations, duties and liabilities of the Credit Parties or the rights of the Agents and the Lenders relating to any unpaid portion of the Loans or any other Obligations, due or not due, liquidated, contingent or unliquidated, or any transaction or event occurring prior to such termination, or any transaction or event, the performance of which is required after the Commitment Termination Date. Except as otherwise expressly provided herein or in any other Loan Document, all undertakings, agreements, covenants, warranties and representations of or binding upon the Credit Parties, and all rights of each Agent and each Lender, all as contained in the Loan Documents, shall not terminate or expire, but rather shall survive any such termination or cancellation and shall continue in full force and effect until the Termination Date; provided , that the provisions of Section 11 , the payment obligations under Sections 1.16 and 1.17 , and the indemnities contained in the Loan Documents shall survive the Termination Date.

8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES


8.1	Events of Default .

The occurrence of any one or more of the following events (regardless of the reason therefor) shall constitute an “ Event of Default ” hereunder:

(f) Any Borrower (i) fails to make any payment of principal of, or interest on, or Fees owing in respect of, the Loans or any of the other Obligations when due and payable, or (ii) fails to pay or reimburse any Agent or Lenders for any expense reimbursable hereunder or under any other Loan Document within ten (10) days following the Administrative Agent’s demand for such reimbursement or payment of expenses.

(g) Any Sotheby Entity fails or neglects to perform, keep or observe any of the provisions of Section 1.4 , 1.9 , 1.15 , 5.4(a) , 5.17 or 6 , or any of the provisions set forth in Annex C or G , respectively.

(h) Any Borrower fails or neglects to perform, keep or observe any of the provisions of Section 4.1 or any provisions set forth in Annexes E or F , respectively, and the same shall remain unremedied for five (5) Business Days or more.

(i) Any Sotheby Entity fails or neglects to perform, keep or observe any other provision of this Agreement or of any of the other Loan Documents (other than any provision embodied in or covered by any other clause of this Section 8.1 ) and the same shall remain unremedied for twenty (20) days or more.

(j) A default or breach occurs under any Material Indebtedness Contract that is not cured within any applicable grace period therefor, and such default or breach (i) involves the failure to make any payment when due in respect of any Indebtedness or Guaranteed Indebtedness evidenced by such Material Indebtedness Contract, or (ii) causes, or permits any holder of Indebtedness or Guaranteed Indebtedness evidenced by such Material Indebtedness Contract or a trustee to cause, Indebtedness or Guaranteed Indebtedness evidenced by such Material Indebtedness Contract to become due prior to its stated maturity or prior to its regularly scheduled dates of payment, or cash collateral in respect thereof to be demanded, in each case, regardless of whether such right is exercised, by such holder or trustee.

(k) Any information contained in any Borrowing Base Certificate is untrue or incorrect in any respect (other than (i) inadvertent, immaterial errors not exceeding $5,000,000 (or, if such inaccuracy results from a single error with respect to an individual Art Loan, $10,000,000) in the aggregate in any Borrowing Base Certificate, (ii) errors understating either Borrowing Base or (iii) inadvertent errors occurring when Aggregate Borrowing Availability continues to exceed $15,000,000 after giving effect to the correction of such errors), or any representation or warranty herein or in any Loan Document or in any written statement, report, Financial Statement or certificate (other than a Borrowing Base Certificate) made or delivered to any Agent or any Lender by any Credit Party is untrue or incorrect in any material respect as of the date when made or deemed made.

(l) A case or proceeding is commenced against any Sotheby Entity (other than an Immaterial Subsidiary) seeking a decree or order in respect of such Sotheby Entity (i) under the Bankruptcy Code, or any other applicable federal, state or foreign bankruptcy or other similar law, (ii) appointing a custodian, receiver, administrator, liquidator, assignee, trustee or sequestrator (or similar official) for such Sotheby Entity or for any substantial part of any such Sotheby Entity’s assets, or (iii) ordering the winding up or liquidation of the affairs of such Sotheby Entity, and such case or proceeding shall remain undismissed or unstayed for sixty (60) days or more or a decree or order granting the relief sought in such case or proceeding is granted by a court of competent jurisdiction.

(m) Any Sotheby Entity (other than an Immaterial Subsidiary) (i) files a petition seeking relief under the Bankruptcy Code, or any other applicable federal, state or foreign bankruptcy or other similar law, (ii) consents to or fails to contest in a timely and appropriate manner the institution of proceedings thereunder or the filing of any such petition or the appointment of or taking possession by a custodian, receiver, administrator, liquidator, assignee, trustee or sequestrator (or similar official) for such Sotheby Entity or for any substantial part of any such Sotheby Entity’s assets, (iii) makes an assignment for the benefit of creditors, (iv) takes any action in furtherance of any of the foregoing; or (v) admits in writing its inability to, or is generally unable to, pay its debts as such debts become due.

(n) A final judgment or judgments for the payment of money in excess of a Dollar Equivalent of $20,000,000 in the aggregate at any time are outstanding against one or more of the Sotheby Entities (which judgments are not covered by insurance policies as to which liability has been accepted by the insurance carrier), and the same are not, within thirty (30) days

(or, in the case of any Sotheby Entity that is not Parent, a Domestic Subsidiary or a Foreign Subsidiary organized under the laws of England, sixty (60) days) after the entry thereof, discharged or execution thereof stayed or bonded pending appeal, or such judgments are not discharged prior to the expiration of any such stay.

(o) Any material provision of any Loan Document for any reason ceases to be valid, binding and enforceable in accordance with its terms (or any Sotheby Entity shall challenge the enforceability of any Loan Document or shall assert in writing, or engage in any action or inaction based on any such assertion, that any provision of any of the Loan Documents has ceased to be or otherwise is not valid, binding and enforceable in accordance with its terms), or any Lien created under any Loan Document ceases to be a valid and perfected first priority Lien (except as otherwise permitted herein or therein) in any of the Collateral purported to be covered thereby.

(p) Any Change of Control occurs.

(q) Any Sotheby Entity or the York Avenue Owner violates any of the covenants contained in the York Avenue Loan Documents relating to the single purpose entity status of the York Avenue Owner or its corporate separateness from Parent and its Subsidiaries and such violation results in recourse liability to Parent or any Subsidiary thereof.


8.2	Remedies .

(c) If any Event of Default has occurred and is continuing, the Administrative Agent may (and at the written request of the Requisite Lenders shall), without notice, (i) suspend the Revolving Loan facility with respect to additional Advances and/or the incurrence of additional Letter of Credit Obligations, whereupon any additional Advances and additional Letter of Credit Obligations shall be made or incurred in the Administrative Agent’s sole discretion (or in the sole discretion of the Requisite Lenders, if such suspension occurred at their direction) so long as such Default or Event of Default is continuing; or (ii) reduce the Commitment from time to time.

(d) If any Event of Default has occurred and is continuing, any Agent may (and at the written request of the Requisite Lenders shall), without notice: (i) terminate the Revolving Loan facility with respect to further Advances or the incurrence of further Letter of Credit Obligations; (ii) reduce the Commitment from time to time; (iii) declare all or any portion of the Obligations, including all or any portion of any Loan, to be forthwith due and payable, and require that the Letter of Credit Obligations be cash collateralized in the manner set forth in Annex B , all without presentment, demand, protest or further notice of any kind, all of which are expressly waived by Borrowers and each other Credit Party; or (iv) exercise any rights and remedies provided to such Agent under the Loan Documents or at law or equity, including all remedies provided under the Code; provided , that upon the occurrence of an Event of Default specified in Sections 8.1(g) or (h) , the Commitments shall be immediately terminated and all of the Obligations, including the aggregate Revolving Loan, shall become immediately due and payable without declaration, notice or demand by any Person.


8.3	Waivers by Credit Parties .

9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT


9.1	Assignment and Participations .

(e) Subject to the terms of this Section 9.1 , any Lender may make an assignment to an assignee of, or sell participations in, at any time or times, the Loan Documents, the Loans, the Letter of Credit Obligations and any Commitment or any portion thereof or interest therein, including any Lender’s rights, title, interests, remedies, powers or duties thereunder. Any assignment by a Lender shall: (i) require the consent of the Administrative Agent (which consent shall not be required in the case of a Qualified Assignee and shall not be unreasonably withheld or delayed) and the execution of (x) an assignment agreement (an “ Assignment Agreement ”) substantially in the form attached hereto as Exhibit 9.1(a) and otherwise in form and substance reasonably satisfactory to, and acknowledged by, the Administrative Agent and (y) a counterpart to the CAM Agreement; (ii) after giving effect to any such partial assignment, require the assignee Lender to have Commitments in an amount at least equal to $5,000,000 and the assigning Lender to retain Commitments in an amount at least equal to $5,000,000; (iii) include a payment to the Administrative Agent of an assignment fee of $3,500; (iv) also require an assignment of a ratable interest in, and the assignee Lender shall be required to be assigned a ratable share in the “Auction Loans” and “Auction Commitments” under, the Auction Revolving Credit Agreement and (v) so long as no Event of Default has occurred and is continuing, require the consent of Borrower Representative, which shall not be unreasonably withheld or delayed and shall be deemed to have been given unless an objection is delivered to the Administrative Agent within ten (10) Business Days after notice of such proposed assignment is delivered to Borrower Representative; provided that (x) no such consent shall be required for an assignment to a Qualified Assignee and (y) the Borrower Representative’s refusal to consent to an assignment to any Person that constitutes a vulture fund, distressed debt purchaser or similar institution whose primary business consists of purchasing or investing in Persons that are highly financially distressed and insolvent or imminently insolvent shall not be deemed to be unreasonable. No Agent shall have any responsibility for ensuring that minimum Commitment amounts described in clause (ii) of the immediately preceding sentence are maintained or for determining whether an assignee of any Lender is a Qualified Assignee. In addition, no Agent shall have any liability in the event any Loans or Commitments (or any interest therein) are assigned to a Qualified Assignee without the consent of the Borrower

Representative. Lenders shall be required at all times to maintain equal Pro Rata Shares of the Commitments hereunder and the “Auction Commitments” under the Auction Revolving Credit Agreement. Notwithstanding anything herein to the contrary, no Lender may assign or otherwise transfer all or any part of its interest in the Obligations to any natural person or to any Borrower or any of its Affiliates. The Agents’ refusal to consent to an assignment by a Non-Funding Lender who is a Non-Funding Lender due to clause (a) of the definition of Non-Funding Lender (unless in connection with such assignment, such Non-Funding Lender cures, or causes the cure of, its Non-Funding Lender status as contemplated in Section 9.9(d)(v) ) shall not be deemed to be unreasonable. The Agents’ refusal to consent to an assignment by any Lender to any Person that would be a Non-Funding Lender or an Impacted Lender, or the imposition of conditions or limitations (including limitations on voting) upon assignments to such Persons, shall not be deemed to be unreasonable. In the case of an assignment by a Lender under this Section 9.1 , the assignee shall have, to the extent of such assignment, the same rights, benefits and obligations as all other Lenders hereunder. The assigning Lender shall be relieved of its obligations hereunder with respect to its Commitments or assigned portion thereof from and after the date of such assignment. Each Borrower hereby acknowledges and agrees that any assignment shall give rise to a direct obligation of Borrowers to the assignee and that the assignee shall be considered to be a “Lender”. In all instances, each Lender’s liability to make Loans or purchase participation interests therein hereunder shall be several and not joint and shall be limited to such Lender’s Pro Rata Share of the applicable Commitment. In the event any Agent or any Lender assigns or otherwise transfers all or any part of its interest in the Obligations, any such Agent or any such Lender shall so notify Borrowers and Borrowers shall, upon the request of such Agent or such Lender, execute new Notes in exchange for the Notes, if any, being assigned. Notwithstanding the foregoing provisions of this Section 9.1(a) , any Lender may at any time pledge its interest in the Obligations and such Lender’s rights under this Agreement and the other Loan Documents to (A) any federal reserve bank (pursuant to Regulation A of the Federal Reserve Board), without notice to the Administrative Agent, (B) any central bank having authority over such Lender, with notice to the Administrative Agent or (C) any holder of, or trustee for the benefit of the holders of, such Lender’s Indebtedness or equity securities, with notice to the Administrative Agent; provided , however , that no such federal reserve bank, central bank, holder or trustee, whether because of such grant or assignment or any foreclosure thereon (unless such foreclosure is made through an assignment in accordance with the other provisions of this Section 9.1 ), shall be entitled to any rights of such Lender hereunder and no such Lender shall be relieved of any of its obligations hereunder or under any other Loan Document. In addition, notwithstanding the foregoing provisions of this Section 9.1(a) , any Lender that is an investment fund may assign its interest in the Obligations and such Lender’s rights under this Agreement and the other Loan Documents to another investment fund managed by the same investment advisor.

hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(g) Any participation by a Lender of all or any part of its Commitments shall be made with the understanding that all amounts payable by Borrowers hereunder shall be determined as if that Lender had not sold such participation, and that the holder of any such participation shall not be entitled to require such Lender to take or omit to take any action hereunder except actions directly affecting (i) any reduction in the principal amount of, or interest rate or Fees payable with respect to, any Loan in which such holder participates, (ii) any extension of the scheduled amortization of the principal amount of any Loan in which such holder participates or the final maturity date thereof, and (iii) any release of the Collateral Agent’s Lien on all or substantially all of the Collateral (other than in accordance with the terms of this Agreement, the Collateral Documents or the other Loan Documents). Each of the Borrowers agrees that each participant shall be entitled to the benefits of Sections 1.14, 1.16 (as it applied in relation to U.S. tax only), 1.17 and 9.8 (subject to the requirements and limitations therein, including the requirements under Section 1.16 (it being understood that the documentation required in order to constitute a Qualifying Lender and the documentation required under Section 1.16 shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (a) of this Section; provided that such participant shall not be entitled to receive any greater payment under Section 1.16 , with respect to any participation, than its participating Lender would have been entitled to receive. Except as set forth in the preceding sentence no Credit Party shall have any obligation or duty to any participant. Neither any Agent nor any Lender (other than the Lender selling a participation) shall have any duty to any participant and may continue to deal solely with the Lender selling a participation as if no such sale had occurred.

(i) Except as expressly provided in this Section 9.1 , no Lender shall, as between Borrowers and that Lender, or the Agents and that Lender, be relieved of any of its

obligations hereunder as a result of any sale, assignment, transfer or negotiation of, or granting of participation in, all or any part of the Loans, the Notes or other Obligations owed to such Lender.

(l) So long as no Event of Default has occurred and is continuing, no Lender shall assign or sell participations in any portion of its Loans or Commitment to a potential Lender or participant, if, as of the date of the proposed assignment or sale, the assignee Lender or participant would be subject to capital adequacy or similar requirements under Section 1.17(a) , increased costs under Section 1.17(b) , an inability to fund LIBOR Loans under Section 1.17(c) , or withholding taxes in accordance with Section 1.16(a) .

support to or for the account of such SPC to support the funding or maintenance of Loans and (ii) disclose on a confidential basis any non-public information relating to its Loans to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPC. This Section 9.1(i) may not be amended without the prior written consent of each Granting Lender, all or any of whose Loans are being funded by an SPC at the time of such amendment. For the avoidance of doubt, the Granting Lender shall for all purposes, including without limitation, the approval of any amendment or waiver of any provision of any Loan Document or the obligation to pay any amount otherwise payable by the Granting Lender under the Loan Documents, continue to be the Lender of record hereunder.


9.2	Appointment of the Administrative Agent and the Collateral Agent .

GE Capital is hereby appointed to act on behalf of all Secured Parties as the Administrative Agent and the Collateral Agent under this Agreement and the other Loan Documents. The provisions of this Section 9.2 are solely for the benefit of the Agents and the other Secured Parties and no Sotheby Entity nor any other Person shall have any rights as a third party beneficiary of any of the provisions hereof. In performing its functions and duties under this Agreement and the other Loan Documents, each Agent shall act solely as an agent of the Secured Parties and does not assume and shall not be deemed to have assumed any obligation toward or relationship of agency or trust with or for any Sotheby Entity or any other Person. Each Agent shall have no duties or responsibilities except for those expressly set forth in this Agreement and the other Loan Documents. Except as expressly set forth in the Foreign Collateral Documents, the duties of each Agent shall be mechanical and administrative in nature and no Agent shall have, or be deemed to have, by reason of this Agreement, any other Loan Document or otherwise a fiduciary relationship in respect of any Secured Party. Except as expressly set forth in this Agreement and the other Loan Documents, no Agent shall have any duty to disclose, and shall not be liable for failure to disclose, any information relating to any Sotheby Entity or any of their respective Subsidiaries or any Account Debtor that is communicated to or obtained by GE Capital or any of its Affiliates in any capacity. Neither any Agent nor any of its Affiliates nor any of their respective officers, directors, employees, agents or representatives shall be liable to any Secured Party for any action taken or omitted to be taken by it hereunder or under any other Loan Document, or in connection herewith or therewith, except for damages caused by its or their own gross negligence or willful misconduct as determined in a final, non-appealable judgment by a court of competent jurisdiction.

If any Agent shall request instructions from Requisite Lenders, the Majority in Interest of any class of Lenders, the Supermajority Lenders or all affected Lenders with respect to any act or action (including failure to act) in connection with this Agreement or any other Loan Document, then such Agent shall be entitled to refrain from such act or taking such action unless and until such Agent shall have received instructions from Requisite Lenders, the Majority in Interest of any class of Lenders, the Supermajority Lenders, or all affected Lenders, as the case may be, and such Agent shall not incur liability to any Person by reason of so refraining. Each Agent shall be fully justified in failing or refusing to take any action hereunder or under any other Loan Document (a) if such action would, in the opinion of such Agent, be contrary to law or the terms of this Agreement or any other Loan Document, (b) if such action would, in the

opinion of such Agent, expose such Agent to Environmental Liabilities or (c) if such Agent shall not first be indemnified to its satisfaction against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. Without limiting the foregoing, no Secured Party shall have any right of action whatsoever against any Agent as a result of any Agent acting or refraining from acting hereunder or under any other Loan Document in accordance with the instructions of Requisite Lenders, the Majority in Interest of any class of Lenders, the Supermajority Lenders or all affected Lenders, as applicable.

In its capacity, the Collateral Agent is a “representative” of the Secured Parties within the meaning of the term “secured party” as defined in the UCC. Each Lender and the Administrative Agent authorizes the Collateral Agent to enter into each of the Collateral Documents to which it is a party and to take all action contemplated by such documents in accordance with the terms thereof. Subject to Section 9.8, each Lender agrees that no Secured Party (other than the Collateral Agent) shall have the right individually to seek to realize upon the security granted by any Collateral Document, it being understood and agreed that such rights and remedies may be exercised solely by the Collateral Agent for the benefit of the Secured Parties upon the terms of the Collateral Documents. In the event that any Collateral is hereafter pledged by any Person as collateral security for the Secured Obligations, the Collateral Agent is hereby authorized, and hereby granted a power of attorney, to execute and deliver on behalf of the Secured Parties any Loan Documents necessary or appropriate to grant and perfect a Lien on such Collateral in favor of the Collateral Agent on behalf of the Secured Parties.


9.3	Agents’ Reliance, Etc .

other instrument or writing (which may be by telecopy, telegram, cable or telex) believed by it to be genuine and signed or sent by the proper party or parties.


9.4	GE Capital and Affiliates .


9.5	Lender Credit Decision .

Each Lender acknowledges that it has, independently and without reliance upon any Agent or any other Lender and based on the Financial Statements referred to in Section 3.4(a) and such other documents and information as it has deemed appropriate, made its own credit and financial analysis of the Sotheby Entities and its own decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon any Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. Each Lender acknowledges the potential conflict of interest of each other Lender as a result of Lenders holding disproportionate interests in the Loans, and expressly consents to, and waives any claim based upon, such conflict of interest.


9.6	Indemnification .

reasonable counsel fees) incurred by any Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement and each other Loan Document, to the extent that any such Agent is not reimbursed for such expenses by Credit Parties.


9.7	Successor Agents .

Any Agent may resign at any time by giving not less than thirty (30) days’ prior written notice thereof to Lenders and Borrower Representative. Upon any such resignation, the Requisite Lenders shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Requisite Lenders and shall have accepted such appointment within thirty (30) days after the resigning Agent’s giving notice of resignation, then the resigning Agent may, on behalf of Lenders, appoint a successor Agent, which shall be a Lender (if a Lender is willing to accept such appointment), or otherwise shall be a commercial bank or financial institution or a subsidiary of a commercial bank or financial institution if such commercial bank or financial institution is organized under the laws of the United States of America or of any State thereof and has a combined capital and surplus of at least $300,000,000. If no successor Agent has been appointed pursuant to the foregoing, within thirty (30) days after the date such notice of resignation was given by the resigning Agent, such resignation shall become effective and the Requisite Lenders shall thereafter perform all the duties of such Agent, hereunder until such time, if any, as the Requisite Lenders appoint a successor Agent as provided above. Any successor Agent appointed by Requisite Lenders hereunder shall be subject to the approval of Borrower Representative, such approval not to be unreasonably withheld or delayed; provided that such approval shall not be required if a Default or an Event of Default has occurred and is continuing. Upon the acceptance of any appointment as Administrative Agent or Collateral Agent, as applicable, hereunder by a successor Agent, such successor Agent shall succeed to and become vested with all the rights, powers, privileges and duties of the resigning Agent. Upon the earlier of the acceptance of any appointment as Administrative Agent or Collateral Agent, as applicable, hereunder by a successor Agent or the effective date of the resigning Agent’s resignation, the resigning Agent shall be discharged from its duties and obligations under this Agreement and the other Loan Documents, except that any indemnity rights or other rights in favor of such resigning Agent shall continue. After any resigning Agent’s resignation hereunder, the provisions of this Section 9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was acting as Administrative Agent or Collateral Agent, as applicable, under this Agreement and the other Loan Documents.


9.8	Setoff and Sharing of Payments .

of whether such balances are then due to such Credit Party) and any other properties or assets at any time held or owing by that Lender or that holder to or for the credit or for the account of any Credit Party against and on account of any of the Obligations that are not paid when due; provided , that (i) the Lender exercising such offset rights shall give notice thereof to the affected Credit Party promptly after exercising such rights, and (ii) any balances, properties or assets of a Foreign Credit Party shall be offset, appropriated or applied only to or against the Obligations of the Foreign Credit Parties. Any Lender exercising a right of setoff or otherwise receiving any payment on account of the Obligations in excess of its Pro Rata Share thereof shall purchase for cash (and the other Lenders or holders shall sell) such participations in each such other Lender’s or holder’s Pro Rata Share of the Obligations as would be necessary to cause such Lender to share the amount so offset or otherwise received with each other Lender or holder in accordance with their respective Pro Rata Shares (other than offset rights exercised by any Lender with respect to Sections 1.14, 1.16 or 1.17 ). Each Dollar Tranche Lender’s obligation under this Section 9.8 shall be in addition to and not in limitation of its obligations to purchase a participation in an amount equal to its Pro Rata Share of the Dollar Tranche Swing Line Loan under Section 1.1 . Each Multicurrency Tranche Lender’s obligation under this Section 9.8 shall be in addition to and not in limitation of its obligations to purchase a participation in an amount equal to its Pro Rata Share of the Multicurrency Tranche Swing Line Loan under Section 1.1 . Each Credit Party agrees, to the fullest extent permitted by law, that (a) any Lender may exercise its right to offset with respect to amounts in excess of its Pro Rata Share of the Obligations and may sell participations in such amounts so offset to other Lenders and holders and (b) any Lender so purchasing a participation in the Loans made or other Obligations held by other Lenders or holders may exercise all rights of offset, bankers’ lien, counterclaim or similar rights with respect to such participation as fully as if such Lender or holder were a direct holder of the Loans and the other Obligations in the amount of such participation. Notwithstanding the foregoing, if all or any portion of the offset amount or payment otherwise received is thereafter recovered from the Lender that has exercised the right of offset, the purchase of participations by that Lender shall be rescinded and the purchase price restored without interest. If a Non-Funding Lender receives any payment described in the second sentence of this Section 9.8 , such Lender shall turn over such payments to the Collateral Agent in an amount that would satisfy the cash collateral requirements set forth in Section 9.9(d) .


9.9	Advances; Payments; Non-Funding Lenders; Information; Actions in Concert .

(l) Revolving Credit Advances; Payments .

(i) Lenders shall refund or participate in the Swing Line Loan in accordance with clauses (iii), (iv) and (v) of Section 1.1(b) . If (i) the Swing Line Lender declines to make a Swing Line Advance, (ii) the Dollar Tranche Swing Line Availability is zero, (iii) the Multicurrency Tranche Swing Line Availability is zero or (iv) the Administrative Agent shall receive a Notice of Revolving Credit Advance in respect of a Revolving Credit Advance to be made as a LIBOR Loan, the Administrative Agent shall notify Lenders, promptly after receipt of a Notice of Revolving Credit Advance and in any event prior to 1:00 p.m. (New York time) on

the date such Notice of Revolving Credit Advance is received, by telecopy, telephone or other similar form of transmission.

(ii) In the case of any Dollar Tranche Revolving Credit Advance, each Dollar Tranche Lender shall make the amount of such Lender’s Pro Rata Share of such Dollar Tranche Revolving Credit Advance available to the Administrative Agent in same day funds in Dollars by wire transfer to the Administrative Agent’s account as set forth in Annex H not later than 3:00 p.m. (New York time) on the requested funding date, in the case of an Index Rate Loan, and not later than 11:00 a.m. (New York time) on the requested funding date, in the case of a LIBOR Loan. In the case of any Multicurrency Tranche Revolving Credit Advance, each Multicurrency Tranche Lender shall make the amount of such Lender’s Pro Rata Share of such Multicurrency Tranche Revolving Credit Advance available to the Administrative Agent in same day funds in the currency in which such Multicurrency Tranche Revolving Credit Advance is denominated by wire transfer to the Administrative Agent’s account as set forth in Annex H not later than 3:00 p.m. (New York time) on the requested funding date, in the case of an Index Rate Loan, and not later than 11:00 a.m. (New York time) on the requested funding date, in the case of a LIBOR Loan. After receipt of such wire transfers (or, in the Administrative Agent’s sole discretion, before receipt of such wire transfers), subject to the terms hereof, the Administrative Agent shall make the requested Revolving Credit Advance to Borrower. All payments by each Lender pursuant to this Section 9.9(a) shall be made without setoff, counterclaim or deduction of any kind.

(iii) On each Business Day (each, a “ Settlement Date ”), the Administrative Agent shall advise each Lender by telephone or telecopy of the amount to be disbursed to such Person in accordance with this Section 9.9(a)(iii) . Provided that each Lender has funded all payments or Advances required to be made by it and has purchased all participations required to be purchased by it under this Agreement and the other Loan Documents as of such Settlement Date, the Administrative Agent shall pay to each Lender, such Lender’s Pro Rata Share of principal, interest and Fees received by the Administrative Agent from the Borrowers on such Settlement Date (or, in the case of amounts denominated in a Foreign Currency, (x) with respect to principal, on the date one (1) Business Day prior to such Settlement Date and (y) with respect to all other amounts, on the date two (2) Business Days prior to such Settlement Date) (as determined in accordance with Section 1.11 ) for the benefit of Lenders with respect to each applicable Loan. Such payments shall be made by wire transfer to such Lender’s account (as specified by such Lender in Annex H or the applicable Assignment Agreement) not later than 5:00 p.m. (New York time) on each Settlement Date.

(m) Availability of Lender’s Pro Rata Share . The Administrative Agent may assume that, on each funding date, (i) each Dollar Tranche Lender will make its Pro Rata Share of each Dollar Tranche Revolving Credit Advance being funded on such funding date available to the Administrative Agent and (ii) each Multicurrency Tranche Lender will make its Pro Rata Share of each Multicurrency Tranche Revolving Credit Advance being funded on such funding date available to the Administrative Agent. If such Pro Rata Share is not, in fact, paid to the Administrative Agent by such Lender when due, the Administrative Agent will be entitled to recover such amount on demand from such Lender, without setoff, counterclaim or deduction of

any kind. If any Lender fails to pay the amount of its Pro Rata Share forthwith upon the Administrative Agent’s demand, the Administrative Agent shall promptly notify Borrower Representative and Borrowers shall immediately repay such amount to the Administrative Agent. Nothing in this Section 9.9(b) or elsewhere in this Agreement or the other Loan Documents shall be deemed to require any Agent to advance funds on behalf of any Lender or to relieve any Lender from its obligation to fulfill its Commitments or obligations hereunder or to prejudice any rights that Borrowers may have against any Lender as a result of any default by such Lender hereunder. To the extent that any Agent advances funds to any Borrower on behalf of any Lender and is not reimbursed therefor on the same Business Day as such Advance is made, such Agent shall be entitled to retain for its account all interest accrued on such Advance until reimbursed by the applicable Lender.

(n) Return of Payments .

(o) Non-Funding Lenders .

(ii) Reallocation .

(A) If any Dollar Tranche Lender is a Non-Funding Lender, all or a portion of such Non-Funding Lender’s Dollar Tranche Letter of Credit Obligations (unless such Lender is the L/C Issuer that

issued such Letter of Credit), and reimbursement obligations with respect to Dollar Tranche Swing Loans shall, at the Administrative Agent’s election at any time or upon any L/C Issuer’s or the Swing Line Lender’s written request delivered to the Administrative Agent (whether before or after the occurrence of any Default or Event of Default), be reallocated to and assumed or funded by the Dollar Tranche Lenders that are not Non-Funding Lenders or Impacted Lenders pro rata in accordance with their Pro Rata Shares of the aggregate Dollar Tranche Commitments of all Lenders (calculated as if the Non-Funding Lender’s Pro Rata Share was reduced to zero and each other Lender’s Pro Rata Share of the Dollar Tranche Commitments had been increased proportionately); provided , that no Lender shall be reallocated any such amounts or be required to fund any amounts that would cause the sum of its outstanding Dollar Tranche Revolving Credit Advances, outstanding Dollar Tranche Letter of Credit Obligations, amounts of its participations in Dollar Tranche Swing Line Advances, and its pro rata share of unparticipated amounts in Dollar Tranche Swing Line Advances to exceed its Dollar Tranche Commitments. At any time any Dollar Tranche Lender is a Non-Funding Lender, at the Administrative Agent’s election at any time or upon any L/C Issuer’s or the Swing Line Lender’s written request delivered to the Administrative Agent (whether before or after the occurrence of any Default or Event of Default), participating interests in any newly made Dollar Tranche Swing Line Loan or any newly issued or modified Dollar Tranche Letter of Credit will be allocated among Non-Funding Lenders that constitute Dollar Tranche Lenders in a manner consistent with this Section 9.9(d)(ii)(A) .

(B) If any Multicurrency Tranche Lender is a Non-Funding Lender, all or a portion of such Non-Funding Lender’s Multicurrency Tranche Letter of Credit Obligations (unless such Lender is the L/C Issuer that issued such Letter of Credit), and reimbursement obligations with respect to Multicurrency Tranche Swing Loans shall, at the Administrative Agent’s election at any time or upon any L/C Issuer’s or the Swing Line Lender’s written request delivered to the Administrative Agent (whether before or after the occurrence of any Default or Event of Default), be reallocated to and assumed or funded by the Multicurrency Tranche Lenders that are not Non-Funding Lenders or Impacted Lenders pro rata in accordance with their Pro Rata Shares of the aggregate Multicurrency Tranche Commitments of all Lenders (calculated as if the Non-Funding Lender’s Pro Rata Share was reduced to zero and each other Lender’s Pro Rata Share of the Multicurrency Tranche Commitments had been increased

proportionately); provided , that no Lender shall be reallocated any such amounts or be required to fund any amounts that would cause the sum of its outstanding Multicurrency Tranche Revolving Credit Advances, outstanding Multicurrency Tranche Letter of Credit Obligations, amounts of its participations in Multicurrency Tranche Swing Line Advances, and its pro rata share of unparticipated amounts in Multicurrency Tranche Swing Line Advances to exceed its Multicurrency Tranche Commitments. At any time any Multicurrency Tranche Lender is a Non-Funding Lender, at the Administrative Agent’s election at any time or upon any L/C Issuer’s or the Swing Line Lender’s written request delivered to the Administrative Agent (whether before or after the occurrence of any Default or Event of Default), participating interests in any newly made Multicurrency Tranche Swing Line Loan or any newly issued or modified Multicurrency Tranche Letter of Credit will be allocated among Non-Funding Lenders that constitute Multicurrency Tranche Lenders in a manner consistent with this Section 9.9(d)(ii)(B) .

(iii) Voting Rights . Notwithstanding anything set forth herein to the contrary, including Section 9.1 , a Non-Funding Lender shall not have any voting or consent rights under or with respect to any Loan Document or constitute a “Lender” (or be, or have its Loans, participations and Commitments, included in the determination of “Requisite Lenders”, “Majority in Interest”, “Supermajority Lenders” or “Lenders directly affected” pursuant to Section 11.2 ) for any voting or consent rights under or with respect to any Loan Document; provided, that (A) the Commitment of a Non-Funding Lender may not be increased, extended or reinstated (B) the principal of a Non-Funding Lender’s Loans may not be reduced or forgiven and (C) the interest rate applicable to Obligations owing to a Non-Funding Lender may not be reduced in such a manner that by its terms affects such Non-Funding Lender more adversely than other Lenders, in each case without the consent of such Non-Funding Lender. Moreover, for the purposes of determining Requisite Lenders, Majority in Interest of any class of Lenders or Supermajority Lenders, the Loans, participations and Commitments held by Non-Funding Lenders shall be excluded from the total Loans, participations and Commitments outstanding.

Funding Lender. With respect to such Non-Funding Lender’s failure to fund Dollar Tranche Revolving Credit Advances or purchase participations in Dollar Tranche Letters of Credit or Dollar Tranche Letter of Credit Obligations, any amounts applied by any Agent to satisfy such funding shortfalls shall be deemed to constitute a Dollar Tranche Revolving Credit Advance or amount of the participation required to be funded and, if necessary to effectuate the foregoing, the other Dollar Tranche Lenders shall be deemed to have sold, and such Non-Funding Lender shall be deemed to have purchased, Dollar Tranche Revolving Credit Advances or participation interests from the other Dollar Tranche Lenders until such time as the aggregate amount of the Dollar Tranche Revolving Credit Advances and participations in Dollar Tranche Letters of Credit and Dollar Tranche Letter of Credit Obligations are held by the Dollar Tranche Lenders in accordance with their Pro Rata Shares of the aggregate Dollar Tranche Commitments of the Lenders. With respect to such Non-Funding Lender’s failure to fund Multicurrency Tranche Revolving Credit Advances or purchase participations in Multicurrency Tranche Letters of Credit or Multicurrency Tranche Letter of Credit Obligations, any amounts applied by any Agent to satisfy such funding shortfalls shall be deemed to constitute a Multicurrency Tranche Revolving Credit Advance or amount of the participation required to be funded and, if necessary to effectuate the foregoing, the other Multicurrency Tranche Lenders shall be deemed to have sold, and such Non-Funding Lender shall be deemed to have purchased, Multicurrency Tranche Revolving Credit Advances or participation interests from the other Multicurrency Tranche Lenders until such time as the aggregate amount of the Multicurrency Tranche Revolving Credit Advances and participations in Multicurrency Tranche Letters of Credit and Multicurrency Tranche Letter of Credit Obligations are held by the Multicurrency Tranche Lenders in accordance with their Pro Rata Shares of the aggregate Multicurrency Tranche Commitments of the Lenders. Any amounts owing by a Non-Funding Lender to any Agent which are not paid when due shall accrue interest at the interest rate applicable during such period to Index Rate Loans. In the event that any Agent is holding cash collateral of a Non-Funding Lender that cures pursuant to clause (v) below or ceases to be a Non-Funding Lender pursuant to the definition of Non-Funding Lender, such Agent shall return the unused portion of such cash collateral to such Lender. The “ Aggregate Excess Funding Amount ” of a Non-Funding Lender shall be the aggregate amount of (A) all unpaid obligations owing by such Lender to the Agents, L/C Issuers, Swing Line Lender and other Lenders under the Loan Documents, including such Lender’s pro rata share of (x) if such Lender is a Dollar Tranche Lender, all Dollar Tranche Revolving Credit Advances, Dollar Tranche Letter of Credit Obligations and Dollar Tranche Swing Line Loans and (y) if such Lender is a Multicurrency Tranche Lender, all Multicurrency Tranche Revolving Credit Advances, Multicurrency Tranche Letter of Credit Obligations and Multicurrency Tranche Swing Line Loans plus , without duplication, (B) all amounts of such Non-Funding Lender’s Commitment reallocated to other Lenders pursuant to Section 9.9(d)(ii) .

(vi) Fees . A Lender that is a Non-Funding Lender pursuant to clause (a) of the definition of Non-Funding Lender shall not earn and shall not be entitled to receive, and the Borrowers shall not be required to pay, such Lender’s portion of the Fee set forth in Section 1.10(b) during the time such Lender is a Non-Funding Lender pursuant to clause (a) thereof. In the event that any reallocation of Letter of Credit Obligations occurs pursuant to Section 9.9(d)(ii) , during the period of time that such reallocation remains in effect, the Letter of Credit Fee payable with respect to such reallocated portion shall be payable to (A) all Dollar Tranche Lenders or Multicurrency Tranche Lenders, as applicable, based on their pro rata share of such reallocation or (B) to the L/C Issuer for any remaining portion not reallocated to any other Lenders.

(p) [Reserved] .

9.10 Release of Guarantors or Collateral . Each Lender hereby authorizes the Collateral Agent to release the following:

extent that, after giving effect to such sale, such Subsidiary would not be required to guaranty any Obligations pursuant to any Loan Documents; and

10. SUCCESSORS AND ASSIGNS


10.1	Successors and Assigns .

11. MISCELLANEOUS


11.1	Complete Agreement; Modification of Agreement .


11.2	Amendments and Waivers .

event be effective unless the same shall be in writing and signed by the Administrative Agent and Borrowers, and by Requisite Lenders, Supermajority Lenders and/or all affected Lenders, as applicable. Except as set forth in clauses (b), (c) and (d) below, all such amendments, modifications, terminations or waivers requiring the consent of any Lenders shall require the written consent of Requisite Lenders.

(e) No amendment, modification, termination or waiver with respect to any provision of this Agreement or any other Loan Document shall, unless in writing and signed by the Administrative Agent and each Lender directly affected thereby: (i) increase the principal amount of any Lender’s Commitment; (ii) reduce the principal of, rate of interest on or Fees payable with respect to any Loan or Letter of Credit Obligations of any affected Lender (except that (A) any amendment or modification of any financial covenant in this Agreement (or defined terms used in such financial covenant in this Agreement) or (B) any amendment modifying the definition of “Default Rate” (or amendment modifying Section 1.5(d) for purposes of modifying the definition of “Default Rate”) or any waiver of any obligation of the Credit Parties to pay interest or Letter of Credit Fees at the Default Rate shall not, in either case, constitute a reduction in the rate of interest or Fees for purposes of this clause (ii)); (iii) extend any scheduled payment date (other than payment dates of mandatory prepayments under Sections 1.3(b)(iii) and (iv) ) or final maturity date of the principal amount of any Loan of any affected Lender; (iv) waive, forgive, defer, extend or postpone any payment of interest or Fees as to any affected Lender; (v) release all or substantially all the value of any Guaranty (other than in connection with any sale of assets by a Sotheby Entity (A) permitted pursuant to Section 6.8 or (B) consented to by Requisite Lenders or Supermajority Lenders, as applicable, pursuant to this Section 11.2 ) or, except as otherwise permitted herein or in the other Loan Documents, release, or permit any Credit Party to sell or otherwise dispose of, all or substantially all of the Collateral (which action shall be deemed to directly affect all Lenders and the L/C Issuer); (vi) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Loans that shall be required for Lenders or any of them to take any action hereunder; (vii) amend or waive Section 1.12(a) ; (viii) amend or waive this Section 11.2 or the definitions of the terms “Majority in Interest”, “Requisite Lenders” or “Supermajority Lenders” insofar as such definitions affect the substance of this Section 11.2 , (ix) amend the definition of “Pro Rata Share” or (x) designate a new “Borrower” hereunder. Furthermore, no amendment, modification, termination or waiver affecting the rights or duties of the Administrative Agent, the Collateral Agent or L/C Issuer under this Agreement or any other Loan Document, including any release of any Guaranty or Collateral requiring a writing signed by all Lenders and, in the case of the L/C Issuer, any

increase in the L/C Sublimit, shall be effective unless in writing and signed by the Administrative Agent, the Collateral Agent or L/C Issuer, as the case may be, in addition to Lenders required hereinabove to take such action. Each amendment, modification, termination or waiver shall be effective only in the specific instance and for the specific purpose for which it was given. No amendment, modification, termination or waiver shall be required for any Agent to take additional Collateral pursuant to any Loan Document. No amendment, modification, termination or waiver of any provision of any Note shall be effective without the written concurrence of the holder of that Note. No notice to or demand on any Sotheby Entity in any case shall entitle such Sotheby Entity or any other Sotheby Entity to any other or further notice or demand in similar or other circumstances. Any amendment, modification, termination, waiver or consent effected in accordance with this Section 11.2 shall be binding upon each holder of the Notes at the time outstanding and each future holder of the Notes.

(g) If, in connection with any proposed amendment, modification, waiver or termination (a “ Proposed Change ”):

(i) requiring the consent of all affected Lenders, the consent of Requisite Lenders is obtained, but the consent of other Lenders whose consent is required is not obtained (any such Lender whose consent is not obtained as described in this clause (i) and in clause (ii) below being referred to as a “ Non-Consenting Lender ”); or

(ii) requiring the consent of Supermajority Lenders, the consent of Requisite Lenders is obtained, but the consent of Supermajority Lenders is not obtained;

up letter of credit) with respect to all contingent Obligations (excluding contingent Obligations (other than Letter of Credit Obligations) as to which no claim has been asserted), in amounts and on terms and conditions and with parties reasonably satisfactory to the Collateral Agent and each Indemnified Person that is or may be owed such Obligations and (iv) a release of all claims against the Agents and Lenders, and so long as no suits, actions, proceedings or claims are pending or threatened against any Indemnified Person asserting any damages, losses or liabilities that are Indemnified Liabilities, the Collateral Agent shall deliver to Borrowers termination statements, mortgage releases and other documents necessary or appropriate to evidence the termination of the Liens securing payment of the Obligations.


11.3	Fees and Expenses .

Borrowers shall reimburse (i) each Agent for all fees, costs and expenses (including the reasonable fees and expenses of all of its counsel, advisors, consultants and auditors) and (ii) each Agent (and, with respect to clauses (b) , (c) and (d) below, all Lenders) for all fees, costs and expenses, including the reasonable fees, costs and expenses of counsel or other advisors (including environmental and management consultants and appraisers), incurred in connection with the negotiation, preparation and filing and/or recordation of the Loan Documents and incurred in connection with:


11.4	No Waiver .


11.5	Remedies .


11.6	Severability .


11.7	Conflict of Terms .


11.8	Confidentiality .

(f) Confidential Information. Each Agent, each L/C Issuer, and each Lender agree to use commercially reasonable efforts (equivalent to the efforts such Agent, such L/C Issuer or such Lender applies to maintaining the confidentiality of its own confidential information) to maintain as confidential all confidential information provided to them by the Sotheby Entities and designated as confidential for a period of two (2) years following receipt thereof, except that any Agent, any L/C Issuer and any Lender may disclose such information (i) to Persons employed or engaged by such Agent, such L/C Issuer or such Lender, or such Agent’s, L/C Issuer’s or Lender’s Affiliates; (ii) to any bona fide assignee or participant or potential assignee or participant that has agreed to be bound by provisions substantially similar to the provisions of this Section 11.8 (and any such bona fide assignee or participant or potential assignee or participant may disclose such information to Persons employed or engaged by them as described in clause (i) above); (iii) as required or requested by any Governmental Authority or reasonably believed by such Agent, such L/C Issuer or such Lender to be compelled by any court decree, subpoena or legal or administrative order or process; (iv) as, on the advice of such Agent’s, such L/C Issuer’s or such Lender’s counsel, is required by law; (v) in connection with the exercise of any right or remedy under the Loan Documents or in connection with any Litigation to which such Agent, such L/C Issuer or such Lender is a party; or (vi) that ceases to be confidential through no fault of any Agent, any L/C Issuer or any Lender. Furthermore, each Credit Party releases any Agent, any L/C Issuer and any Lender from the applicable banking secrecy obligations with regard to the Loan Documents and to any information directly or indirectly relating to the credit relations described in this Agreement to the extent as required for the execution, performance and administration of the Loan Documents, and/or for due exercise of the respective rights or fulfillment of the respective obligations by any Agent, any L/C Issuer or any Lender and authorizes the respective party to forward data within its respective jurisdiction and abroad.

(g) Tombstones; League Tables. Each Credit Party consents to the publication by any Agent or any Lender of any press releases, tombstones, advertising or other promotional

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materials (including, without limitation, via any Electronic Transmission) relating to the financing transactions contemplated by this Agreement using such Credit Party’s name, logo or trademark. Such Agent or such Lender shall provide a draft of any such press release, advertising or other material to Borrower Representative for review and comment prior to the publication thereof. Each Lender hereby consents to the disclosure by each Agent, each Lead Arranger and each Bookrunner of information necessary or customary for inclusion in league table measurements.

(h) Distribution of Materials to Lenders and L/C Issuers. The Credit Parties acknowledge and agree that the Loan Documents and all reports, notices, communications and other information or materials provided or delivered by, or on behalf of, the Credit Parties hereunder (collectively, the “Borrower Materials”) may be disseminated by, or on behalf of, any Agent, and made available, to the Lenders and the L/C Issuers by posting such Borrower Materials on an E-System. The Credit Parties authorize each Agent to download copies of their logos from its website and post copies thereof on an E-System.


11.9	GOVERNING LAW .

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THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH PARTY HERETO HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH PARTY AT THE ADDRESS SET FORTH IN ANNEX H OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH PARTY’S ACTUAL RECEIPT THEREOF OR FIVE (5) DAYS AFTER DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID.


11.10	Notices .

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transmission, and (v) if delivered by Electronic Transmission (other than an E-Fax), on the later of the date of transmission thereof and the date access to such Electronic Transmission is given to the recipient thereof in accordance with the standard procedures applicable to the relevant E-System; provided, however, that no communications to the Administrative Agent pursuant to Article I shall be effective until received by the Administrative Agent.

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Document, any applicable provision of any Code, the federal Uniform Electronic Transactions Act, the Electronic Signatures in Global and National Commerce Act and any substantive or procedural law governing such subject matter. Each such Electronic Transmission that is not readily capable of bearing either a signature or a reproduction of a signature may be signed, and shall be deemed signed, by attaching to, or logically associating with such Electronic Transmission, an E-Signature, upon which the Agents, each other Secured Party and each Credit Party may rely and assume the authenticity thereof. Each such Electronic Transmission containing a signature, a reproduction of a signature or an E-Signature shall, for all intents and purposes, have the same effect and weight as a signed paper original. Each party hereto or beneficiary hereto agrees not to contest the validity or enforceability of any Electronic Transmission or E-Signature on any such Electronic Transmission under the provisions of any applicable law requiring certain documents to be in writing or signed; provided , however , that nothing herein shall limit such party’s or beneficiary’s right to contest whether any Electronic Transmission or E-Signature has been altered after transmission.


11.11	Section Titles .


11.12	Counterparts; Facsimile Signature .


11.13	WAIVER OF JURY TRIAL .

BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG THE AGENTS, THE LENDERS AND ANY CREDIT PARTY ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS

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AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.


11.14	Press Releases and Related Matters .


11.15	Reinstatement .


11.16	Advice of Counsel .

Each of the parties represents to each other party hereto that it has discussed this Agreement and, specifically, the provisions of Sections 11.9 and 11.13 , with its counsel.


11.17	No Strict Construction .

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11.18	PATRIOT Act .


11.19	Creditor-Debtor Relationship .

11.20

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continuing and in full force and effect with respect to all Secured Obligations, (e) the Administrative Agent shall, in consultation with the Borrower Representative, make such reallocations, sales, assignments or other relevant actions in respect of each Lender’s credit and loan exposure under the Existing Credit Agreement as are necessary in the judgment of the Administrative Agent in order that each such Lender’s Loans hereunder reflect such Lender’s Pro Rata Share of the Loans on the Restatement Effective Date, (f) the Credit Parties hereby agree to compensate each Lender for any and all losses, costs and expenses incurred by such Lender in connection with the sale and assignment of any LIBOR Loans and such reallocation described above, in each case on the terms and in the manner set forth in Section 1.14(b) of the Existing Credit Agreement and (g) each of the Credit Parties reaffirms the terms and conditions of the Loan Documents executed by it and acknowledges and agrees that each Loan Document executed by it remains in full force and effect and is hereby ratified, reaffirmed and confirmed.

12. CROSS-GUARANTY


12.1	Cross-Guaranty .

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(l) the insolvency of any Sotheby Entity; or

(m) any other action or circumstances that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor.


12.2	Waivers by Borrowers .


12.3	Benefit of Guaranty .


12.4	Waiver of Subrogation, Etc .

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not limit or otherwise affect such Borrower’s liability hereunder or the enforceability of this Section 12 , and that the Agents, Lenders and their respective successors and assigns are intended third party beneficiaries of the waivers and agreements set forth in this Section 12.4 .


12.5	Subordination by Credit Parties .

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Insolvency Event and prior to the Termination Date (in the case of any Intercompany Indebtedness of a Domestic Credit Party) or the Foreign Obligations Termination Date (in the case of any Intercompany Indebtedness of a Foreign Credit Party), such Credit Party shall receive and hold the same in trust, as trustee, for the benefit of the Agents and the Lenders and shall forthwith deliver the same to the Collateral Agent in precisely the form received (except for the endorsement or assignment of such Credit Party where necessary), for application to the Secured Obligations in accordance with the Loan Documents (but limited, in the case of any Foreign Credit Party, to the Secured Obligations of the Foreign Borrowers), and, until so delivered, the same shall be held in trust by such Credit Party as the property of the Agents and the Lenders. If any such Credit Party fails to make any such endorsement or assignment to any Agent, such Agent or any of its officers or employees is irrevocably authorized to make the same. Each Credit Party agrees that until the Termination Date (in the case of any claim against an Obligor that is a Domestic Credit Party) or the Foreign Obligations Termination Date (in the case of any claim against an Obligor that is a Foreign Credit Party), such Credit Party will not assign or transfer to any Person (other than the Collateral Agent, a Credit Party or another Guarantor in accordance with the terms of the Loan Documents) any claim such Credit Party has or may have against any Obligor. It is understood and agreed that, notwithstanding anything to the contrary set forth in this Section 12.5 , no Foreign Credit Party shall have any obligation to any Agent or any Lender with respect to any Secured Obligations of any Domestic Credit Party.


12.6	Election of Remedies .

If any Agent or any Lender may, under applicable law, proceed to realize its benefits under any of the Loan Documents giving such Agent or such Lender a Lien upon any Collateral, whether owned by any Borrower or by any other Person, either by judicial foreclosure or by non judicial sale or enforcement, such Agent or such Lender may, at its sole option, determine which of its remedies or rights it may pursue without affecting any of its rights and remedies under this Section 12 . If, in the exercise of any of its rights and remedies, any Agent or any Lender shall forfeit any of its rights or remedies, including its right to enter a deficiency judgment against any Borrower or any other Person, whether because of any applicable laws pertaining to “election of remedies” or the like, each Borrower hereby consents to such action by such Agent or such Lender and waives any claim based upon such action, even if such action by such Agent or such Lender shall result in a full or partial loss of any rights of subrogation that each Borrower might otherwise have had but for such action by such Agent or such Lender. Any election of remedies that results in the denial or impairment of the right of any Agent or any Lender to seek a deficiency judgment against any Borrower shall not impair any other Borrower’s obligation to pay the full amount of the Secured Obligations guaranteed hereunder by such Borrower. In the event any Agent or any Lender shall bid at any foreclosure or trustee’s sale or at any private sale permitted by law or the Loan Documents, such Agent or such Lender may bid all or less than the amount of the Secured Obligations and the amount of such bid need not be paid by such Agent or such Lender but shall be credited against the Secured Obligations. The amount of the successful bid at any such sale, whether any Agent, any Lender or any other party is the successful bidder, shall be conclusively deemed to be the fair market value of the Collateral and the difference between such bid amount and the remaining balance of the Secured Obligations shall be conclusively deemed to be the amount of the Secured Obligations

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guaranteed by the applicable Borrowers under this Section 12 , notwithstanding that any present or future law or court decision or ruling may have the effect of reducing the amount of any deficiency claim to which any Agent or any Lender might otherwise be entitled but for such bidding at any such sale.


12.7	Liability Cumulative .

[ Remainder of page intentionally left blank. ]

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IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first written above.



SOTHEBY’S, INC.	SOTHEBY’S FINANCIAL SERVICES LIMITED


By: /s/ Michael L. Gillis	By: /s/ Michael L. Gillis
Name: Michael L. Gillis	Name: Michael L. Gillis
Title: Vice President and Treasurer	Title: Vice President and Treasurer

SOTHEBY’S FINANCIAL SERVICES, INC. SOTHEBY’S FINANCIAL SERVICES CALIFORNIA, INC. OBERON, INC. SOTHEBY’S VENTURES, LLC	SOTHEBY’S , a company registered in England


By: /s/ Michael L. Gillis	By: /s/ Clive Lord
Name: Michael L. Gillis	Name: Clive Lord
Title: Vice President and Treasurer	Title: Director

	SOTHEBY’S HONG KONG LIMITED

	By: /s/ Henry Li
	Name: Henry Li
	Title: Director

Signature Page to Amended and Restated Credit Agreement

(SFS Revolving Credit Facility)



	GENERAL ELECTRIC CAPITAL CORPORATION , as Administrative Agent, Collateral Agent, and a Lender


	By: /s/ Dritar Vinca
	Dritar Vinca
	Duly Authorized Signatory

Signature Page to Amended and Restated Credit Agreement

(SFS Revolving Credit Facility)

[OTHER LENDERS], as a Lender

By:

Name:

Title:

Address for notices:



Attn:
Facsimile:

Lending office:

Signature Page to Amended and Restated Credit Agreement

(SFS Revolving Credit Facility)

The following Persons are signatories to this Agreement in their capacity as Credit Parties and not as Borrowers.



SOTHEBY’S ,	SOTHEBY’S FINE ART HOLDINGS, INC.
a Delaware corporation	SPTC, INC.
	SOTHEBY PARKE BERNET, INC.
By: /s/ Michael L. Gillis	SOTHEBY’S RES, INC.
Name: Michael L. Gillis	SOTHEBY’S THAILAND, INC.
Title: Vice President and Treasurer	SOTHEBY’S HOLDINGS INTERNATIONAL, INC.
	SOTHEBY’S NEVADA, INC.
OATSHARE LIMITED	SOTHEBYS.COM LLC
	SOTHEBYS.COM AUCTIONS, INC.
	SIBS, LLC
By: /s/ Clive Lord	72ND AND YORK, INC.
Name: Clive Lord	THETA, INC.
Title: Director	CATALOGUE DISTRIBUTION COMPANY LIMITED
	NOORTMAN MASTER PAINTINGS LTD.
	SOTHEBY’S SHIPPING LIMITED YORK UK HOLDCO INTERNATIONAL LIMITED YORK HOLDINGS INTERNATIONAL, INC. YORK AVENUE DEVELOPMENT, INC.


	By: /s/ Michael L. Gillis
	Name: Michael L. Gillis
	Title: Vice President and Treasurer

	SOTHEBY’S WINE HONG KONG LIMITED


	By: /s/ Henry Li
	Name: Henry Li
	Title: Director

Signature Page to Amended and Restated Credit Agreement

(SFS Revolving Credit Facility)

ANNEX A ( Recitals )
to
CREDIT AGREEMENT

DEFINITIONS

“ Acceptable Cash Equivalents ” has the meaning ascribed to it in Annex B .

“ Account Debtor ” means any Person who may become obligated to any Sotheby Entity under, with respect to, or on account of, an Account (including, without limitation, an Art Loan), Chattel Paper or General Intangibles (including a payment intangible).

“ Accounting Changes ” has the meaning ascribed thereto in Annex G .

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have agreed to honor instructions solely received from the Collateral Agent concerning the related Blocked Account(s) upon the receipt of such notice.

“ Administrative Agent ” means GE Capital, in its capacity as Administrative Agent, or its successor appointed pursuant to Section 9.7(a) .

“ Advance ” means any Dollar Tranche Revolving Credit Advance, Multicurrency Tranche Revolving Credit Advance, Dollar Tranche Swing Line Advance or Multicurrency Tranche Swing Line Advance, as the context may require.

“ Agents ” means, collectively, the Administrative Agent and the Collateral Agent.

“ Aggregate Borrowing Availability ” means, as of any date of determination, the lesser of (a) an amount equal to (i) the Maximum Amount plus the “Maximum Auction Amount” under the Auction Revolving Credit Agreement plus the “Maximum Incremental Amount” under the Auction Revolving Credit Agreement minus (ii) the sum of the aggregate Revolving Loan then outstanding plus the aggregate “Revolving Loan” then outstanding under the Auction Revolving Credit Agreement minus (iii) the sum of the aggregate Swing Line Loan then outstanding plus the aggregate “Swing Line Loan” then outstanding under the Auction Revolving Credit Agreement and (b) an amount equal to the sum of (i) the Domestic Borrowing Availability as of such date plus (ii) the Foreign Borrowing Availability as of such date plus (iii) the “Domestic Auction Borrowing Availability” as of such date under the Auction Revolving Credit Agreement plus (iv) the “Domestic Incremental Borrowing Availability” as of such date under the Auction Revolving Credit Agreement plus (v) the “Foreign Auction Borrowing Availability” as of such date under the Auction Revolving Credit Agreement plus (vi) the “Foreign Incremental Borrowing Availability” as of such date under the Auction Revolving Credit Agreement.

“ Alternative Art Loan Currency ” means any currency approved by the Administrative Agent (other than Dollars, Canadian Dollars, Hong Kong Dollars, Sterling, Euros

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or Swiss Francs); provided , that no currency shall be an Alternative Art Loan Currency if it is not freely transferable and freely convertible into Dollars, Hong Kong Dollars and Sterling in the London foreign exchange market as determined by the Administrative Agent.

“ Amendment No. 1 Effective Date ” means June 15, 2015.

“ Appendices ” has the meaning ascribed to it in the recitals to the Agreement.

“ Applicable Dollar Revolver Index Margin ” means the per annum interest rate margin from time to time in effect and payable in addition to the Dollar Index Rate applicable to the Revolving Loan, as determined by reference to Section 1.5(a) .

“ Applicable Dollar Revolver LIBOR Margin ” means the per annum interest rate from time to time in effect and payable in addition to the Dollar LIBOR Rate applicable to the Revolving Loan, as determined by reference to Section 1.5(a) .

“ Applicable Euro Revolver Index Margin ” means the per annum interest rate margin from time to time in effect and payable in addition to the Euro Index Rate applicable to the Revolving Loan, as determined by reference to Section 1.5(a) .

“ Applicable Euro Revolver LIBOR Margin ” means the per annum interest rate from time to time in effect and payable in addition to the Euro LIBOR Rate applicable to the Revolving Loan, as determined by reference to Section 1.5(a) .

“ Applicable Hong Kong Dollar Revolver LIBOR Margin ” means the per annum interest rate from time to time in effect and payable in addition to the Hong Kong Dollar LIBOR Rate applicable to the Revolving Loan, as determined by reference to Section 1.5(a) .

“ Applicable L/C Margin ” means the per annum fee from time to time in effect and payable with respect to outstanding Letter of Credit Obligations, as determined by reference to Section 1.5(a) .

“ Applicable Margins ” means collectively the Applicable L/C Margin, the Applicable Unused Line Fee Margin, the Applicable Dollar Revolver Index Margin, the Applicable Dollar Revolver LIBOR Margin, the Applicable Sterling Revolver Index Margin, the Applicable Sterling Revolver LIBOR Margin, the Applicable Euro Revolver Index Margin, the

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Applicable Euro Revolver LIBOR Margin, the Applicable Hong Kong Dollar Revolver Index Margin and the Applicable Hong Kong Dollar Revolver LIBOR Margin.

“ Applicable Sterling Revolver LIBOR Margin ” means the per annum interest rate from time to time in effect and payable in addition to the Sterling LIBOR Rate applicable to the Revolving Loan, as determined by reference to Section 1.5(a) .

“ Applicable Unused Line Fee Margin ” means the per annum fee from time to time in effect and payable with respect to unused available funds in accordance with Section 1.10(b) , as such fee is determined by reference to Section 1.5(a) .

“ Art Inventory ” means all Inventory of Borrowers consisting of Works of Art.

“ Art Loan Debtor ” means an Account Debtor liable on an Art Loan.

“ Art Loan Receivables Report ” means a report to be delivered from time to time by the Borrowers in the form attached to the Agreement as Exhibit 4.1(B) .

“ Art Loss Register ” means The Art Loss Register, a computerized international database which captures information about lost and stolen art, antiques and collectibles.

“ Assignment Agreement ” has the meaning ascribed to it in Section 9.1(a) .

“ Auction Foreign Borrower Obligations ” means, at any time, the sum of (a) the Dollar Equivalent of the outstanding principal balance of the “Auction Revolving Credit Advances” made to the “Foreign Borrowers” under the Auction Revolving Credit Agreement plus (b) the Dollar Equivalent of the aggregate amount of all “Letter of Credit Obligations”

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incurred for the benefit of the Foreign Borrowers under the Auction Revolving Credit Agreement.

“ Auction Guaranty Side Letter ” shall mean that certain amended and restated letter agreement, by and among the Administrative Agent, the “Administrative Agent” under the Auction Revolving Credit Agreement and the Credit Parties, dated as of the Restatement Effective Date, relating to auction guaranties, as the same may be amended, restated, supplemented or otherwise modified from time to time.

“ Auction Revolving Credit Agreement ” means that certain Amended and Restated Credit Agreement, dated as of the date hereof, by and among Parent, Sotheby’s, Inc., SFS Inc., SFS California, Oberon, Ventures LLC, Oatshare Limited, Sotheby’s U.K. and Sotheby’s H.K., as the Borrowers, the other Credit Parties party thereto, the Lenders from time to time party thereto, and GE Capital, as the Administrative Agent and the Collateral Agent.

“ Automobile Work of Art ” means Work of Art that constitutes one or more automobiles.

“ Automobile Work of Art Component ” means the sum of, without duplication, of:

(i) (A) to the extent included in the product of the calculation of clause (a) of the definition of “Domestic Borrowing Base,” the Dollar Equivalent of the aggregate outstanding principal balance of all Eligible Art Loans secured by Automobile Works of Art plus (B) to the extent included in the product of the calculation of clause (a) of the definition of “Domestic Auction Borrowing Base” in the Auction Revolving Credit Agreement, the Dollar Equivalent of the aggregate outstanding principal balance of all “Eligible Art Loans” (as defined in the Auction Revolving Credit Agreement) secured by “Automobile Works of Art” (as defined in the Auction Revolving Credit Agreement), plus

(ii) (A) to the extent included in the product of the calculation of clause (a) of the definition of “Foreign Borrowing Base,” the Dollar Equivalent of the aggregate outstanding principal balance of all Eligible Art Loans secured by Automobile Works of Art plus (B) to the extent included in the product of the calculation of clause (a) of the definition of “Foreign Auction Borrowing Base” in the Auction Revolving Credit Agreement, the Dollar Equivalent of the aggregate outstanding principal balance of all “Eligible Art Loans” (as defined in the Auction Revolving Credit Agreement) secured by “Automobile Works of Art” (as defined in the Auction Revolving Credit Agreement) plus

(iii) to the extent included in the product of the calculation thereof, the “Domestic Eligible Art Inventory Component” (as defined in the Auction Revolving Credit Agreement) attributable to Automobile Works of Art plus

(iv) to the extent included in the product of the calculation thereof, the “Foreign Art Inventory Component” (as defined in the Auction Revolving Credit Agreement) attributable to Automobile Works of Art plus

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(v) to the extent included in the product of the calculation thereof, the “Domestic Incremental Art Inventory Component” (as defined in the Auction Revolving Credit Agreement) attributable to Automobile Works of Art plus

(vi) to the extent included in the product of the calculation thereof, the “Foreign Incremental Art Inventory Component” (as defined in the Auction Revolving Credit Agreement) attributable to Automobile Works of Art plus

(vii) to the extent included in the product of the calculation thereof, the “Domestic Eligible Extended Term Art Component” (as defined in the Auction Revolving Credit Agreement) attributable to the “Extended Term Art Purchase Price” (as defined in the Auction Revolving Credit Agreement) in respect of Automobile Works of Art plus

(viii) to the extent included in the product of the calculation thereof, the “Foreign Eligible Extended Term Art Component” (as defined in the Auction Revolving Credit Agreement) attributable to the “Extended Term Art Purchase Price” (as defined in the Auction Revolving Credit Agreement) in respect of Automobile Works of Art.

“ Available Domestic Art Loan Balance ” means the Dollar Equivalent of the aggregate outstanding principal balance of all Eligible Art Loans owned by Domestic Borrowers minus (a) the amount, if any, by which the Dollar Equivalent of the aggregate outstanding principal balance of all Eligible Venture Loans owned by Domestic Borrowers, collectively with the Dollar Equivalent of the aggregate outstanding principal balance of all “Eligible Venture Loans” owned by the “Domestic Borrowers” under the Auction Revolving Credit Agreement, exceeds $60,000,000 minus (b) the amount, if any, by which the Dollar Equivalent of the outstanding principal balance of Unhedged Domestic Art Loans exceeds 25% of the Dollar Equivalent of the aggregate outstanding principal balance of all Eligible Art Loans owned by the Domestic Borrowers.

“ Available Foreign Art Loan Balance ” means the Dollar Equivalent of the aggregate outstanding principal balance of all Eligible Art Loans owned by Foreign Borrowers minus (a) the amount, if any, by which the Dollar Equivalent of the aggregate outstanding principal balance of all Eligible Venture Loans owned by Foreign Borrowers, collectively with the Dollar Equivalent of the aggregate outstanding principal balance of all “Eligible Venture Loans” owned by the “Foreign Borrowers” under the Auction Revolving Credit Agreement, exceeds an amount equal to $60,000,000 less the Dollar Equivalent of the outstanding principal balance of Eligible Venture Loans included in the Available Domestic Art Loan Balance minus (b) the amount, if any, by which the Dollar Equivalent of the sum of the outstanding principal balance of Unhedged Hong Kong Art Loans and Unhedged U.K. Art Loans exceeds 25% of the Dollar Equivalent of the aggregate outstanding principal balance of all Eligible Art Loans owned by the Foreign Borrowers.

“ Average Monthly Usage ” means, as of any date of determination, average daily Usage for the immediately preceding calendar month.

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“ Bank Product and Hedging Obligations ” means any and all obligations of any Sotheby Entity, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), to any Lender or any affiliate of any Lender under or in respect of (i) any and all Rate Management Transactions, (ii) any and all cancellations, buy backs, reversals, terminations or assignments of any Rate Management Transactions and (iii) any and all Bank Products; provided that, notwithstanding the foregoing, Excluded Hedging Obligations shall not constitute Bank Product and Hedging Obligations.

“ Bankruptcy Code ” means the provisions of Title 11 of the United States Code, 11 U.S.C. §§101 et seq .

“ Blocked Accounts ” has the meaning ascribed to it in Annex C .

“ Blocked Account Agreement ” has the meaning ascribed to it in Annex C .

“ Borrower Representative ” means Parent, in its capacity as Borrower Representative pursuant to the provisions of Sections 1.1(c) and 1.2 .

“ Borrowers ” has the meaning ascribed thereto in the preamble to the Agreement.

“ Borrowing Availability ” means either the Domestic Borrowing Availability or the Foreign Borrowing Availability, as the context may require.

“ Borrowing Base ” means either the Domestic Borrowing Base or the Foreign Borrowing Base, as the context may require.

“ Borrowing Base Certificate ” means a certificate to be executed and delivered from time to time by the Borrowers in the form attached to the Agreement as Exhibit 4.1(A) .

“ CAM Agreement ” means the Collection Allocation Mechanism Agreement, dated as of the date hereof, among the Administrative Agent, each Lender and each “Auction Lender” under the Auction Revolving Credit Agreement, it being understood and agreed that no Credit Party shall be a party to such agreement or have any rights or obligations thereunder, nor shall the consent of any Credit Party be required with respect to any aspect thereof.

“ Canadian Dollars ” means the lawful currency of Canada.

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“ Capital Expenditures ” means, with respect to any Person, all expenditures (by the expenditure of cash or the incurrence of Indebtedness) by such Person during any measuring period for any fixed assets or improvements or for replacements, substitutions or additions thereto that have a useful life of more than one year and that are required to be capitalized under GAAP.

“ Cash Collateral Account ” has the meaning ascribed to it in Annex B .

“ Cash Management Systems ” has the meaning ascribed to it in Section 1.9 .

“ CCA ” has the meaning ascribed to it in Section 3.1(b) .

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“ CFC ” means a Person that is a controlled foreign corporation under Section 957 of the IRC.

“ Chattel Paper ” means any “chattel paper,” as such term is defined in the Code, including electronic chattel paper, now owned or hereafter acquired by any Sotheby Entity.

“ Closing Date ” means February 13, 2014.

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“ Collateral Agent ” means GE Capital, in its capacity as Collateral Agent for the Secured Parties, or its successor appointed pursuant to Section 9.7(a) .

“ Collateral Documents ” means the Domestic Collateral Documents, the Foreign Collateral Documents and the Specified Debt Facility Intercreditor Agreement.

“ Collateral Reports ” means the reports with respect to the Collateral referred to in Annex F .

“ Commitments ” means (a) as to any Lender, the commitment of such Lender to make Revolving Credit Advances, incur Letter of Credit Obligations or purchase participations therein as set forth on Annex J to the Agreement or in the most recent Assignment Agreement executed by such Lender (including without duplication the Swing Line Lender’s Dollar Tranche Swing Line Commitment as a subset of its Dollar Tranche Commitment and the Swing Line Lender’s Multicurrency Tranche Swing Line Commitment as a subset of its Multicurrency Tranche Commitment) and (b) as to all Lenders, the aggregate commitment of all Lenders to make Revolving Credit Advances, incur Letter of Credit Obligations or purchase participations therein (including without duplication the Swing Line Lender’s Dollar Tranche Swing Line Commitment as a subset of its Dollar Tranche Commitment and the Swing Line Lender’s Multicurrency Tranche Swing Line Commitment as a subset of its Multicurrency Tranche Commitment), which aggregate commitment shall be One Billion Thirty-Five Million Dollars ($1,035,000,000) on the Amendment No. 1 Effective Date, as such amount may be reduced or adjusted from time to time in accordance with the Agreement.

“ Commitment Termination Date ” means the earliest of (a) August 22, 2020, (b) the date of termination of Lenders’ obligations to make Advances and to incur Letter of Credit Obligations or permit existing Advances and Letter of Credit Obligations to remain outstanding pursuant to Section 8.2(b) , (c) the date of (i) indefeasible prepayment in full by Borrowers of the Loans and all other outstanding Obligations and the cancellation and return (or stand-by

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guarantee) of all Letters of Credit or the cash collateralization of all Letter of Credit Obligations pursuant to Annex B and (ii) the permanent reduction of all Commitments to zero dollars ($0) and (d) the “Auction Commitment Termination Date” (as defined in the Auction Revolving Credit Agreement).

“ Commodity Exchange Act ” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.

“ Compliance Certificate ” has the meaning ascribed to it in Annex E .

“ Contribution Notice ” means a notice issued by the Pensions Regulator in accordance with section 38 of the Pensions Act 2004 (as amended) of the United Kingdom.

“ Copyright License ” means any and all rights now owned or hereafter acquired by any Sotheby Entity under any written agreement granting any right to use any Copyright or Copyright registration.

“ Credit Party ” means any Borrower or any Guarantor, and “ Credit Parties ” shall mean all such Persons, collectively.

“ Current Fiscal Year ” has the meaning ascribed to it in Annex G .

“ Data Protection Laws ” means any applicable data protection or privacy laws or regulations including all laws and regulations implementing in the United Kingdom the

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European Union’s Data Protection Directive 95/46/EC and the European Union's Privacy and Electronic Communications Directive 2002/58/EC.

“ Default ” means any event that, with the passage of time or notice or both, would, unless cured or waived, become an Event of Default.

“ Default Rate ” has the meaning ascribed to it in Section 1.5(d) .

“ Deposit Accounts ” means all “deposit accounts” as such term is defined in the Code, now or hereafter held in the name of any Credit Party.

“ Direction ” has the meaning ascribed to it in Section 1.16(a) .

“ Disclosure Schedules ” means the Schedules prepared by Borrowers and denominated as Disclosure Schedules (1.4) through (6.7) in the table of contents to the Agreement.

“ Documents ” means all “documents,” as such term is defined in the Code, now owned or hereafter acquired by any Credit Party, wherever located.

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“ Dollar LIBOR Rate ” means for each LIBOR Period with respect to a LIBOR Loan denominated in Dollars, the offered rate per annum for deposits of Dollars for such LIBOR Period that appears on Reuters Screen LIBOR01 Page (or any successor or substitute page of such service, or any successor to or substitute for such service, providing rate quotations comparable to those currently provided on such page of such service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to deposits in Dollars in the London interbank market) as of 11:00 A.M. (London, England time) two (2) Business Days prior to the first day in such LIBOR Period. If the offered rate described in the foregoing sentence does not exist, such rate will be the rate of interest per annum, as determined by the Administrative Agent (rounded upwards, if necessary, to the nearest 1/100 of 1%) at which deposits of Dollars in immediately available funds are offered at 11:00 A.M. (London, England time) two (2) Business Days prior to the first day in such LIBOR Period by major financial institutions reasonably satisfactory to the Administrative Agent in the London interbank market for a LIBOR Period of the applicable duration for the applicable principal amount on such date of determination. Notwithstanding the foregoing, the “Dollar LIBOR Rate” shall be deemed to be zero if the rate otherwise calculated pursuant to this definition would result in a rate less than zero.

“ Dollar Tranche Advance ” means any Dollar Tranche Revolving Credit Advance or Dollar Tranche Swing Line Advance, as the context may require.

“ Dollar Tranche Commitments ” means (a) as to any Lender, the commitment of such Lender to make Dollar Tranche Revolving Credit Advances, incur Dollar Tranche Letter of Credit Obligations or purchase participations therein as set forth on Annex J to the Agreement or in the most recent Assignment Agreement executed by such Lender (including without duplication the Swing Line Lender’s Dollar Tranche Swing Line Commitment as a subset of its Dollar Tranche Commitment) and (b) as to all Lenders, the aggregate commitment of all Lenders to make Dollar Tranche Revolving Credit Advances, incur Dollar Tranche Letter of Credit Obligations or purchase participations therein (including without duplication the Swing Line Lender’s Dollar Tranche Swing Line Commitment as a subset of its Dollar Tranche Commitment), which aggregate commitment shall be Six Hundred Eighty-Five Million Dollars ($685,000,000) on the Amendment No. 1 Effective Date, in each case, as such amount may be reduced or adjusted from time to time in accordance with the Agreement.

“ Dollar Tranche Lenders ” means, as of any date, Lenders having a Dollar Tranche Commitment as of such date or, if the Dollar Tranche Commitments have terminated or expired, Lenders holding any Dollar Tranche Loans as of such date.

“ Dollar Tranche Letter of Credit Obligations ” means all outstanding obligations incurred by the Administrative Agent and Dollar Tranche Lenders at the request of Borrower Representative, whether direct or indirect, contingent or otherwise, due or not due, in connection with the issuance of Dollar Tranche Letters of Credit by GE Capital or another L/C Issuer or the purchase of a participation as set forth in Annex B with respect to any Dollar Tranche Letter of Credit. The amount of such Dollar Tranche Letter of Credit Obligations shall equal the

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maximum amount that may be payable at such time or at any time thereafter by the Dollar Tranche Lenders thereupon or pursuant thereto.

“ Dollar Tranche Letters of Credit ” means documentary or standby letters of credit issued for the account of any Borrower (and any Subsidiary thereof that may be a co-applicant on any such Letter of Credit) by any L/C Issuer, and bankers’ acceptances issued by any Borrower, for which the Administrative Agent and Dollar Tranche Lenders have incurred Dollar Tranche Letter of Credit Obligations.

“ Dollar Tranche Loans ” means the Dollar Tranche Revolving Loan and the Dollar Tranche Swing Line Loan.

“ Dollar Tranche Revolving Credit Advance ” has the meaning ascribed to it in Section 1.1(a)(i).

“ Dollar Tranche Revolving Loan ” and “ Dollar Tranche Revolving Loan Outstandings ” mean, at any time, the sum of (i) the aggregate amount of Dollar Tranche Revolving Credit Advances outstanding to the Borrowers plus (ii) the aggregate Dollar Tranche Letter of Credit Obligations incurred on behalf of the Borrowers. Unless the context otherwise requires, references to the outstanding principal balance of the Dollar Tranche Revolving Loan shall include the outstanding balance of Dollar Tranche Letter of Credit Obligations.

“ Dollar Tranche Swing Line Advance ” has the meaning ascribed to it in Section 1.1(b)(i).

“ Dollar Tranche Swing Line Availability ” means, as of any date of determination, the least of (a) the Dollar Tranche Swing Line Commitment, (b) an amount equal to (i) the Maximum Dollar Tranche Amount minus (ii) the aggregate Dollar Tranche Revolving Loan then outstanding and (c) an amount equal to (i) the Domestic Borrowing Base as of such date minus (ii) the aggregate outstanding principal balance of the Revolving Credit Advances made to the Domestic Borrowers as of such date minus (iii) the aggregate principal balance of Multicurrency Tranche Swing Line Advances outstanding to the Borrowers minus (iv) the Dollar Equivalent of the aggregate Letter of Credit Obligations incurred on behalf of the Domestic Borrowers as of such date.

“ Dollar Tranche Swing Line Commitment ” means the commitment of the Swing Line Lender to make Dollar Tranche Swing Line Advances as set forth on Annex J to the Agreement, which commitment constitutes a subfacility of the Dollar Tranche Commitment.

“ Dollar Tranche Swing Line Loan ” means, as the context may require, at any time, the aggregate amount of Dollar Tranche Swing Line Advances outstanding to any Borrower or to all Borrowers.

“ Dollars ” or “ $ ” means lawful currency of the United States of America.

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“ Domestic Borrowers ” has the meaning ascribed to it in the preamble to the Agreement.

“ Domestic Borrowing Availability ” means, as of any date of determination, the lesser of (a) an amount equal to (i) the Maximum Amount minus (ii) the aggregate Revolving Loan then outstanding minus (iii) the aggregate Swing Line Loan then outstanding and (b) an amount equal to (i) the Domestic Borrowing Base as of such date minus (ii) the aggregate outstanding principal balance of the Revolving Credit Advances and Swing Line Advances made to Domestic Borrowers as of such date minus (iii) the Dollar Equivalent of the aggregate Letter of Credit Obligations incurred for the benefit of the Domestic Borrowers as of such date.

“ Domestic Borrowing Base ” means, as of any date of determination, an amount equal to (a) 85% of the Available Domestic Art Loan Balance as of such date plus (b) the Domestic Trademark Component as of such date minus (c) Reserves established by the Administrative Agent at such time; provided that, in no event shall the Automobile Work of Art Component exceed $50,000,000.

“ Domestic Credit Parties ” means each Domestic Borrower and each Domestic Subsidiary Guarantor.

“ Domestic Subsidiary ” means any Subsidiary of Parent incorporated or organized under the laws of the United States of America, any state thereof or the District of Columbia.

“ Domestic Trademark Component ” means, as of any date of determination, an amount specified by the Borrower Representative in the most recent Borrowing Base Certificate as the “Domestic Trademark Component”; provided that, in no event shall the sum of (a) the Domestic Trademark Component as of such date plus (b) the Foreign Trademark Component as of such date plus (c) the “Domestic Auction Trademark Component” (as defined in the Auction Revolving Credit Agreement) as of such date plus (d) the “Foreign Auction Trademark

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Component” (as defined in the Auction Revolving Credit Agreement) as of such date exceed the lesser of (i) the Maximum Trademark Component and (ii) $100,000,000.

“ Due-to-Consignor Disbursement Account ” means such account as Borrower Representative and the Administrative Agent may agree upon from time to time pursuant to a written agreement.

“ Due-to-Consignor Reserve ” means, at any time, a reserve equal to the SFS/Auction Ratable Share of the positive difference, if any, of (a) 100% of the amounts payable to consignors in respect of consigned items sold to third parties by the Sotheby Entities at such time minus (b) an amount equal to, without duplication (i) the aggregate balance of accounts receivable (other than any account receivable included in any Borrowing Base or any “Borrowing Base” under the Auction Revolving Credit Agreement) of the Sotheby Entities (determined in accordance with GAAP) at such time plus (ii) the aggregate amount of cash of the Sotheby Entities (as determined in accordance with GAAP) at such time minus (iii) the amount of such cash subject to a Lien (or held in a deposit or securities account subject to a Lien) in favor of any Person other than (x) the Collateral Agent or (y) a consignor to whom such cash is due to be paid in respect of the sale of a Work of Art consigned by such Person to the Sotheby Entities for sale minus (iv) without duplication of the foregoing clause (b)(iii) , the amount of such cash subject to any restriction on withdrawal from the deposit or securities account in which such cash is held minus (v) the aggregate amount of any dividends or distributions publicly declared, but not yet made, by Parent at such time.

“ Due-to-Consignor Statement ” has the meaning ascribed to it in Annex E .

“ EBITDA ” means, with respect to Parent and its Subsidiaries, on a consolidated basis, for any fiscal period, without duplication, an amount equal to (a) consolidated net income of such Persons for such period determined in accordance with GAAP, minus (b) the sum of (i) income tax credits, (ii) gain from extraordinary items for such period and (iii) any non-recurring non-cash gains, in each case, to the extent included in the calculation of consolidated net income of such Persons for such period in accordance with GAAP, but without duplication, plus (c) the sum of (i) the provision for income taxes with respect to such fiscal period, (ii) Interest Expense (plus, without duplication, any interest expense of the “Borrowers” under the Auction Revolving Credit Agreement characterized as operating expense under GAAP) with respect to such period, (iii) loss from extraordinary items for such period, (iv) depreciation and amortization for such period, (v) the amount of any deduction to consolidated net income as a result of any grant of any Stock (including restricted stock and stock options), (vi) fees, premiums, expenses and other transaction costs incurred in connection with the Specified Debt Facility Documents, and (vii) other non-recurring expenses which either (A) do not represent a cash item in such fiscal period or any future period (in each case, of or by Parent and its Subsidiaries for such fiscal period) or

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(B) do not exceed $25,000,000 (or, solely for the period commencing on the Restatement Effective Date and ending on the first anniversary thereof, $40,000,000) in the aggregate (when added to all other amounts determined under this subclause (B) ), in each case, to the extent included in the calculation of consolidated net income of such Persons for such period in accordance with GAAP, but without duplication. For purposes of this definition, the following items shall be excluded in determining consolidated net income of such Persons: (1) the income (or deficit) of any other Person accrued prior to the date it became a Subsidiary of, or was merged or consolidated into, any such Person or any of such Persons’ Subsidiaries; (2) the income (or deficit) of any other Person (other than a Subsidiary) in which any such Person has an ownership interest, except to the extent any such income has actually been received by such Person in the form of cash dividends or distributions; (3) the undistributed earnings of any Subsidiary of any such Person to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is not at the time permitted by the terms of any contractual obligation or requirement of law applicable to such Subsidiary; (4) any net gain from the collection of the proceeds of life insurance policies; (5) any net gain or loss arising from the acquisition of any securities, or the extinguishment, under GAAP, of any Indebtedness, of any such Person; (6) in the case of a successor to any such Person by consolidation or merger or as a transferee of its assets, any earnings of such successor prior to such consolidation, merger or transfer of assets; and (7) any deferred credit representing the excess of equity in any Subsidiary of any such Person at the date of acquisition of such Subsidiary over the cost to such Person of the investment in such Subsidiary.

“ E-Fax ” means any system used to receive or transmit faxes electronically.

“ Eligible Art Loan ” has the meaning ascribed to it in Section 1.6 .

“ Eligible Art Loan Collateral ” shall mean, with respect to any Art Loan of any Borrower, a Work of Art:

(b) unless otherwise agreed to by the Administrative Agent, with respect to which, if such Borrower has a security interest in such Work of Art that is perfected by physical possession by a Person acting as an agent of such Borrower (which Person may be another Sotheby Entity) or otherwise in the physical possession of any Person other than such Borrower, (i) such Person has executed a bailee letter or similar agreement in form and substance reasonably acceptable to the

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Administrative Agent, (ii) Reserves satisfactory to the Administrative Agent have been established, or (iii) other arrangements have been entered into, in form and substance reasonably acceptable to the Administrative Agent;

(g) with respect to which the applicable Art Loan Debtor is not the original artist or creator;

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(j) that does not constitute Work of Art (i) securing any “Art Loan” included in any “Borrowing Base” under the Auction Revolving Credit Agreement or (ii) in respect of any “Extended Term Art Receivable” included in any “Borrowing Base” under the Auction Revolving Credit Agreement;

(k) if the value of such Work of Art exceeds $250,000, has been the subject of a search by such Borrower in the Art Loss Register (if applicable) and is not listed in the Art Loss Register; and

(l) to the extent constituting Automobile Work of Art, with respect to which such Borrower or any other Credit Party shall have in its possession the original Certificate of Title for such Automobile Work of Art (unless no Certificate of Title has been, or is required to be, issued with respect to such Automobile Work of Art by any applicable Governmental Authority).

“ Eligible Venture Loan ” means a Venture Loan that is an Eligible Art Loan.

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“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any regulations promulgated thereunder.

“ ESOP ” means a Plan that is intended to satisfy the requirements of Section 4975(e)(7) of the IRC.

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“ Euro ” means the single currency of the Participating Member States.

“ Event of Default ” has the meaning ascribed to it in Section 8.1 .

“ Excluded Accounts ” means, collectively, any Due-to-Consignor Disbursement Accounts, payroll accounts, zero balance accounts and Deposit Accounts of the Credit Parties

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with aggregate balances that do not collectively exceed $200,000 for more than seven (7) consecutive Business Days at any time.

“ Existing Credit Agreement ” has the meaning assigned to it in the recitals to the Agreement.

“ Fair Labor Standards Act ” means the Fair Labor Standards Act, 29 U.S.C. §201 et seq .

“ Federal Reserve Board ” means the Board of Governors of the Federal Reserve System.

“ Fees ” means any and all fees payable to any Agent or any Lender pursuant to the Agreement or any of the other Loan Documents.

“ Financial Covenant Compliance Period ” means each period (i) commencing on any date on which (a)(1) the average daily Aggregate Borrowing Availability for the previous

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thirty (30) consecutive Business Days shall be less than $133,500,000 and (2) the average daily Liquidity Amount for the previous thirty (30) consecutive Business Days shall be less than $235,000,000, or (b) Aggregate Borrowing Availability shall be less than $110,000,000 on such date (unless the outstanding principal balance of the Revolving Loan shall be zero on such date) and (ii) continuing until the first date occurring at least thirty (30) Business Days after the commencement of such period that does not satisfy any of the criteria set forth in the foregoing clause (i).

“ Financial Covenants ” means the financial covenants set forth in Annex G .

“ Financial Officer ” means, with respect to any Person, the Chief Financial Officer, Treasurer or Controller thereof or another officer thereof of similar seniority and responsibility.

“ Financial Support Direction ” means a direction issued by the Pensions Regulator in accordance with section 43 of the Pensions Act 2004 (as amended) of the United Kingdom.

“ Fiscal Month ” means any of the monthly accounting periods of Parent.

“ Fiscal Quarter ” means any of the quarterly accounting periods of Parent ending on March 31, June 30, September 30 or December 31 of each year.

“ Fiscal Year ” means any of the annual accounting periods of Parent ending on December 31 of each year.

“ Fixed Charges ” means, with respect to Parent and its Subsidiaries, on a consolidated basis, for any fiscal period, an amount equal to (a) the aggregate of all Interest Expense with respect to such period plus (b) scheduled payments of principal with respect to Indebtedness during such period, other than (i) any balloon, bullet or similar principal payment payable on the maturity date under the Specified Debt Facility Documents that repays the outstanding principal amount thereunder in full and (ii) any principal payments of any “Incremental Revolving Credit Advances” (as defined in the Auction Revolving Credit Agreement) payable on the “Incremental Maturity Date” (as defined in the Auction Revolving Credit Agreement) (and any principal payments made to any “Non-Extending Incremental Lenders” (as defined in the Auction Revolving Credit Agreement) on any “Non-Extending Incremental Maturity Date” (as defined in the Auction Revolving Credit Agreement)), plus (c) dividends and distributions on the Stock of Parent paid in cash, payments with respect to purchases of any Senior Notes, and Repurchases, in each case, during such period (other than any special dividends or distributions permitted under Section 6.13(j) of

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the Agreement), minus (d) discounts and any upfront fees on the Senior Notes and the amounts owed under the York Avenue Loan Agreement or the Specified Debt Facility Documents, in each case, to the extent included as Interest Expense during such period on a non-cash basis minus (e) amounts included in Interest Expense for such period in respect of amortization of (i) closing fees incurred in conjunction with this Agreement and (ii) interest accrued on amounts payable on the unfunded senior management benefit plan of Parent and its Subsidiaries, in each case, of or by Parent and its Subsidiaries on a consolidated basis for such period.

“ Fixtures ” means all “fixtures” as such term is defined in the Code, now owned or hereafter acquired by any Sotheby Entity.

“ Foreign Borrower Subfacility Limit ” means $200,000,000, as such amount may be reduced pursuant to Section 1.3(a) .

“ Foreign Borrowers ” has the meaning ascribed to it in the preamble to the Agreement.

“ Foreign Borrowing Availability ” means, as of any date of determination, the lesser of (a) an amount equal to (i) the Maximum Amount minus (ii) the aggregate Revolving Loan then outstanding minus (iii) the aggregate Swing Line Loan then outstanding and (b) an amount equal to (i) the lesser of (x) an amount equal to the Foreign Borrower Subfacility Limit minus the Auction Foreign Borrower Obligations and (y) the Foreign Borrowing Base as of such date minus (ii) the Dollar Equivalent of the aggregate outstanding principal balance of the Revolving Credit Advances and Swing Line Advances made to Foreign Borrowers as of such date minus (iii) the Dollar Equivalent of the aggregate Letter of Credit Obligations incurred for the benefit of the Foreign Borrowers as of such date.

“ Foreign Borrowing Base ” means, as of any date of determination, an amount equal to (a) 85% of the Available Foreign Art Loan Balance as of such date plus (b) the Foreign Trademark Component as of such date minus (c) Reserves established by the Administrative Agent at such time; provided that, in no event shall the Automobile Work of Art Component exceed $50,000,000.

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“ Foreign Credit Parties ” means the Foreign Borrowers and the Foreign Subsidiary Guarantors.

“ Foreign Currency ” means Sterling, Euro and Hong Kong Dollars.

“ Foreign Subsidiary ” means any Subsidiary of Parent that is not a Domestic Subsidiary.

“ Foreign Trademark Component ” means, as of any date of determination, an amount specified by the Borrower Representative in the most recent Borrowing Base Certificate as the “Foreign Trademark Component”; provided that, in no event shall the sum of (a) the Domestic Trademark Component as of such date plus (b) the Foreign Trademark Component as of such date plus (c) the “Domestic Auction Trademark Component” (as defined in the Auction Revolving Credit Agreement) as of such date plus (d) the “Foreign Auction Trademark Component” (as defined in the Auction Revolving Credit Agreement) as of such date exceed the lesser of (i) the Maximum Trademark Component and (ii) $100,000,000.

“ Funded Debt ” means, with respect to any Person, without duplication, all Indebtedness for borrowed money evidenced by notes, bonds, debentures, or similar evidences of Indebtedness that by its terms matures more than one year from, or is directly or indirectly renewable or extendible at such Person’s option under a revolving credit or similar agreement obligating the lender or lenders to extend credit over a period of more than one year from the date of creation thereof, and specifically including Capital Lease Obligations, current maturities of long term debt, revolving credit and short term debt extendible beyond one year at the option of the debtor, and also including, in the case of Borrowers, the Obligations and, without duplication, Guaranteed Indebtedness consisting of guaranties of Funded Debt of other Persons.

“ GAAP ” means generally accepted accounting principles in the United States of America consistently applied, as such term is further defined in Annex G to the Agreement.

“ GE Capital ” means General Electric Capital Corporation, a Delaware corporation.

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“ Guaranteed Indebtedness ” means as to any Person, any obligation of such Person guaranteeing, providing comfort or otherwise supporting any Indebtedness, lease, dividend, or other obligation (including, without limitation, any obligation described in Section 6.3(a)(vii) ) (the “ primary obligation ”) of any other Person (the “ primary obligor ”) in any manner, including any obligation or arrangement of such Person to (a) purchase or repurchase any such primary obligation, (b) advance or supply funds (i) for the purchase or payment of any such primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency or any balance sheet condition of the primary obligor, (c) purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, (d) protect the beneficiary of such arrangement from loss (other than product warranties given in the ordinary course of business) or (e) indemnify the owner of such primary obligation against loss in respect thereof. The amount of any Guaranteed Indebtedness at any time shall be deemed to be an amount equal to the lesser at such time of (x) the stated or determinable amount of the primary obligation in respect of which such Guaranteed

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Indebtedness is incurred and (y) the maximum amount for which such Person may be liable pursuant to the terms of the instrument embodying such Guaranteed Indebtedness, or, if not stated or determinable, the maximum reasonably anticipated liability (assuming full performance) in respect thereof.

“ Hong Kong ” means the Hong Kong Special Administrative Region of the People’s Republic of China.

“ Hong Kong Dollars ” or “ HK$ ” means the lawful currency of Hong Kong.

“ Hong Kong Dollars LIBOR Rate ” means, for each LIBOR Period with respect to a LIBOR Loan denominated in Hong Kong Dollars, the rate designated as

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“FIXING@11:00” (or any other designation which may from time to time replace that designation or, if no such designation appears, the arithmetic average (rounded upwards, if necessary, to the nearest 1/100 of 1%) of the displayed rates for such LIBOR Period) for such LIBOR Period appearing under the heading “HONG KONG INTERBANK OFFERED RATES (HK DOLLAR)” on page HKABHIBOR on Thomson Reuters Services (or any successor or substitute page of such service, or any successor to or substitute for such service, providing rate quotations comparable to those currently provided on such page of such service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to deposits in Hong Kong Dollars in the Hong Kong interbank market). If the offered rate described in the foregoing sentence does not exist, such rate will be the rate of interest per annum, as determined by the Administrative Agent (rounded upwards, if necessary, to the nearest 1/100 of 1%) at which deposits of Hong Kong Dollars in immediately available funds are offered at 11:00 A.M. (Hong Kong time) on the first day of such LIBOR Period by major financial institutions reasonably satisfactory to the Administrative Agent in the Hong Kong interbank market for a LIBOR Period of the applicable duration for the applicable principal amount on such date of determination. Notwithstanding the foregoing, the “Hong Kong Dollars LIBOR Rate” shall be deemed to be zero if the rate otherwise calculated pursuant to this definition would result in a rate less than zero.

“ IEEPA ” means the International Emergency Economic Power Act, 50 U.S.C. § 1701 et. seq.

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effect on the Restatement Effective Date) of future rental payments under all synthetic leases, (f) all obligations of such Person under commodity purchase or option agreements or other commodity price hedging arrangements, in each case whether contingent or matured, (g) all obligations of such Person under any foreign exchange contract, currency swap agreement, interest rate swap, cap or collar agreement or other similar agreement or arrangement designed to alter the risks of that Person arising from fluctuations in currency values or interest rates, in each case whether contingent or matured, (h) all Indebtedness referred to above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in property or other assets (including accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness, and (i) the Obligations.

“ Indemnified Liabilities ” has the meaning ascribed to it in Section 1.14 .

“ Indemnified Person ” has the meaning ascribed to in Section 1.14 .

“ Insolvency Event ” has the meaning ascribed to in Section 12.5 .

“ Intellectual Property ” means any and all Licenses, Patents, Copyrights, Trademarks, and the goodwill associated with such Trademarks.

“ Intercompany Indebtedness ” has the meaning ascribed to in Section 12.5 .

“ Interest Payment Date ” means (a) as to any Index Rate Loan, the first Business Day of each month to occur while such Loan is outstanding, and (b) as to any LIBOR Loan, the

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last day of the applicable LIBOR Period; provided , that in the case of any LIBOR Period greater than three months in duration, interest shall be payable at three-month intervals and on the last day of such LIBOR Period; provided , further , that, in addition to the foregoing, each of (x) the date upon which all of the Commitments have been terminated and the Loans have been paid in full and (y) the Commitment Termination Date shall be deemed to be an “Interest Payment Date” with respect to any interest that has then accrued under the Agreement.

“ IRC ” means the Internal Revenue Code of 1986 and all regulations promulgated thereunder.

“ IRS ” means the Internal Revenue Service.

“ Judgment Conversion Date ” has the meaning ascribed to it in Section 1.20(a) .

“ Judgment Currency ” has the meaning ascribed to it in Section 1.20(a) .

“ L/C Issuer ” has the meaning ascribed to it in Annex B .

“ L/C Sublimit ” means, at any time, the sum of the Dollar Tranche L/C Sublimit at such time plus the Multicurrency Tranche L/C Sublimit at such time.

“ Lenders ” means, collectively, the Dollar Tranche Lenders and the Multicurrency Tranche Lenders.

“ Lending Office ” means, with respect to any Lender, the office or offices of such Lender specified as its “Lending Office” beneath its name on the applicable signature page

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hereto or to the applicable Assignment Agreement, or such other office or offices of such Lender as it may from time to time notify the Borrower Representative and the Administrative Agent.

“ Letters of Credit ” means, collectively, Dollar Tranche Letters of Credit and Multicurrency Tranche Letters of Credit.

“ Letter of Credit Fee ” has the meaning ascribed to it in Annex B .

“ Letter of Credit Obligations ” means, collectively, the Dollar Tranche Letter of Credit Obligations and the Multicurrency Tranche Letter of Credit Obligations.

“ Letter of Credit Request ” has the meaning ascribed to it in Annex B .

(b) any LIBOR Period that would otherwise extend beyond the Commitment Termination Date shall end two (2) LIBOR Business Days prior to such date;

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(d) Borrower Representative shall select LIBOR Periods so that there shall be no more than fifteen (15) separate LIBOR Loans in existence at any one time.

“ License ” means any Copyright License, Patent License, Trademark License or other license of rights or interests now held or hereafter acquired by any Sotheby Entity.

“ Liquidity Amount ” means, as of any date of determination, the sum of (a) the Aggregate Borrowing Availability as of such date and (b) the Unrestricted Cash Amount as of such date.

“ Litigation ” has the meaning ascribed to it in Section 3.13(a) .

“ Loan Account ” has the meaning ascribed to it in Section 1.13 .

“ Loans ” means the Revolving Loan and the Swing Line Loan.

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“ Majority in Interest ” means, at any time, (a) in the case of Dollar Tranche Lenders, Lenders having, in the aggregate, greater than 50% of the sum of the Dollar Tranche Commitments of all Lenders (or, if the Commitment Termination Date has occurred, Lenders holding in the aggregate, greater than 50% of the aggregate outstanding amount of all Dollar Tranche Loans held by the Lenders) and (b) in the case of Multicurrency Tranche Lenders, Lenders having, in the aggregate, greater than 50% of the sum of the Multicurrency Tranche Commitments of all Lenders (or, if the Commitment Termination Date has occurred, Lenders holding in the aggregate, greater than 50% of the sum of the aggregate outstanding amount of all Multicurrency Tranche Loans held by the Lenders).

“ Margin Stock ” means “margin stock” as such term is defined in Regulation T, U or X of the Federal Reserve Board.

“ Material Indebtedness Contracts ” means, collectively, (a) the Auction Revolving Credit Agreement, (b) the Senior Note Indenture and the Senior Notes, (c) the Specified Debt Facility Documents, (d) the York Avenue Loan Agreement and (e) any other contract, agreement or other instrument to which any Sotheby Entity is a party evidencing any Indebtedness or Guaranteed Indebtedness (other than the Obligations) of such Sotheby Entity having a Dollar Equivalent in excess of $20,000,000 in the aggregate (including (x) undrawn committed or available amounts and (y) amounts owing to all creditors under any combined or syndicated credit arrangements).

“ Maximum Amount ” means, as of any date of determination, the sum of the Maximum Dollar Tranche Amount as of such date plus the Maximum Multicurrency Tranche Amount as of such date.

“ Maximum Borrowing Availability ” means, as of any date of determination, the lesser of (a) an amount equal to (i) the Maximum Amount minus (ii) the aggregate Revolving Loan then outstanding minus (iii) the aggregate Swing Line Loan then outstanding and (b) an

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amount equal to the sum of (i) the Domestic Borrowing Availability as of such date plus (ii) the Foreign Borrowing Availability as of such date.

“ Maximum Distribution Amount ” has the meaning assigned to it in Section 6.13(g) .

“ Maximum Dollar Tranche Amount ” means, as of any date of determination, an amount equal to the Dollar Tranche Commitments of all Lenders as of such date.

“ Maximum Lawful Rate ” has the meaning assigned to it in Section 1.5(f) .

“ Maximum Multicurrency Tranche Amount ” means, as of any date of determination, an amount equal to the Multicurrency Tranche Commitments of all Lenders as of such date.

“ Multicurrency Tranche Advance ” means any Multicurrency Tranche Revolving Credit Advance or Multicurrency Tranche Swing Line Advance, as the context may require.

“ Multicurrency Tranche Commitments ” means (a) as to any Lender, the commitment of such Lender to make Multicurrency Tranche Revolving Credit Advances, incur Multicurrency Tranche Letter of Credit Obligations or purchase participations therein as set forth on Annex J to the Agreement or in the most recent Assignment Agreement executed by such Lender (including without duplication the Swing Line Lender’s Multicurrency Tranche Swing Line Commitment as a subset of its Multicurrency Tranche Commitment) and (b) as to all Lenders, the aggregate commitment of all Lenders to make Multicurrency Tranche Revolving Credit Advances, incur Multicurrency Tranche Letter of Credit Obligations or purchase participations therein (including without duplication the Swing Line Lender’s Multicurrency Tranche Swing Line Commitment as a subset of its Multicurrency Tranche Commitment), which aggregate commitment shall be Three Hundred Fifty Million Dollars ($350,000,000) on the Amendment No. 1 Effective Date, in each case, as such amount may be reduced or adjusted from time to time in accordance with the Agreement.

“ Multicurrency Tranche Lenders ” means, as of any date, Lenders having a Multicurrency Tranche Commitment as of such date or, if the Multicurrency Tranche Commitments have terminated or expired, Lenders holding any Multicurrency Tranche Loans as of such date.

“ Multicurrency Tranche Letter of Credit Obligations ” means all outstanding obligations incurred by the Administrative Agent and Multicurrency Tranche Lenders at the request of Borrower Representative, whether direct or indirect, contingent or otherwise, due or not due, in connection with the issuance of Multicurrency Tranche Letters of Credit by GE

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Capital or another L/C Issuer or the purchase of a participation as set forth in Annex B with respect to any Multicurrency Tranche Letter of Credit. The amount of such Multicurrency Tranche Letter of Credit Obligations shall equal the maximum amount that may be payable at such time or at any time thereafter by the Multicurrency Tranche Lenders thereupon or pursuant thereto.

“ Multicurrency Tranche Letters of Credit ” means documentary or standby letters of credit issued for the account of any Borrower (and any Subsidiary thereof that may be a co-applicant on any such Letter of Credit) by any L/C Issuer, and bankers’ acceptances issued by any Borrower, for which the Administrative Agent and Multicurrency Tranche Lenders have incurred Multicurrency Tranche Letter of Credit Obligations.

“ Multicurrency Tranche Loans ” means the Multicurrency Tranche Revolving Loan and the Multicurrency Tranche Swing Line Loan.

“ Multicurrency Tranche Revolving Credit Advance ” has the meaning ascribed to it in Section 1.1(a)(i) .

“ Multicurrency Tranche Revolving Loan ” and “ Multicurrency Tranche Revolving Loan Outstandings ” mean, at any time, the sum of (i) the Dollar Equivalent of the aggregate amount of Multicurrency Tranche Revolving Credit Advances outstanding to the Borrowers plus (ii) the Dollar Equivalent of the aggregate Multicurrency Tranche Letter of Credit Obligations incurred on behalf of the Borrowers. Unless the context otherwise requires, references to the outstanding principal balance of the Multicurrency Tranche Revolving Loan shall include the outstanding balance of Multicurrency Tranche Letter of Credit Obligations.

“ Multicurrency Tranche Swing Line Advance ” has the meaning ascribed to it in Section 1.1(b)(i) .

“ Multicurrency Tranche Swing Line Availability ” means, as of any date of determination, the least of (a) the Multicurrency Tranche Swing Line Commitment, (b) an amount equal to (i) the Maximum Multicurrency Tranche Amount minus (ii) the aggregate Multicurrency Tranche Revolving Loan then outstanding and (c) an amount equal to (i) the Domestic Borrowing Base as of such date minus (ii) the aggregate outstanding principal balance of the Revolving Credit Advances made to the Domestic Borrowers as of such date minus (iii) the aggregate principal balance of Dollar Tranche Swing Line Advances outstanding to the Borrowers minus (iv) the Dollar Equivalent of the aggregate Letter of Credit Obligations incurred on behalf of the Domestic Borrowers as of such date.

“ Multicurrency Tranche Swing Line Commitment ” means the commitment of the Swing Line Lender to make Multicurrency Tranche Swing Line Advances as set forth on Annex J to the Agreement, which commitment constitutes a subfacility of the Multicurrency Tranche Commitment.

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“ Multicurrency Tranche Swing Line Loan ” means, as the context may require, at any time, the aggregate amount of Multicurrency Tranche Swing Line Advances outstanding to any Borrower or to all Borrowers.

“ New Lender ” has the meaning ascribed to it in Section 1.16(a)(ix) .

“ Non-Funding Lender ” means any Lender that has (a) failed to fund any payments required to be made by it under the Loan Documents within two (2) Business Days after any such payment is due (excluding expense and similar reimbursements that are subject to good faith disputes) unless such Lender notifies the Administrative Agent and the Borrower Representative in writing that such failure is the result of such Lender’s reasonable determination that one or more conditions precedent to funding specified in such notice has not been satisfied, (b) given written notice (and the Administrative Agent has not received a revocation in writing), to a Borrower, any Agent, any Lender, or any L/C Issuer or has otherwise publicly announced (and the Administrative Agent has not received notice of a public retraction) that such Lender believes it will fail to fund payments or purchases of participations required to be funded by it under the Loan Documents or one or more other syndicated credit facilities, or (c) any Lender that has (i) become subject to a voluntary or involuntary case under the Bankruptcy Code or any similar bankruptcy laws, (ii) a custodian, conservator, receiver or similar official appointed for it or any substantial part of such Person’s assets, or (iii) made a general assignment for the benefit of creditors, been liquidated, or otherwise been adjudicated as, or determined by any Governmental Authority having regulatory authority over such Person or its assets to be, insolvent or bankrupt, and for clause (c), the Administrative Agent has determined that such Lender is reasonably likely to fail to fund any payments required to be made by it under the Loan Documents.

“ Notes ” means, collectively, the Revolving Notes and the Swing Line Notes.

“ Notice of Conversion/Continuation ” has the meaning ascribed to it in Section 1.5(e) .

“ Notice of Revolving Credit Advance ” has the meaning ascribed to it in Section 1.1(a) .

“ Oberon ” has the meaning ascribed to it in the preamble to the Agreement.

“ Obligation Currency ” has the meaning ascribed to it in Section 1.20(a) .

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owing by any Credit Party to any Agent, any Lender or any L/C Issuer, and all covenants and duties regarding such amounts, of any kind or nature, present or future, whether or not evidenced by any note, agreement, letter of credit agreement or other instrument, arising under the Agreement or any of the other Loan Documents. This term includes all principal, interest (including all interest that accrues after the commencement of any case or proceeding by or against any Credit Party in bankruptcy, whether or not allowed in such case or proceeding), Fees, expenses, attorneys’ fees and any other sum chargeable to any Credit Party under the Agreement or any of the other Loan Documents. This term does not include any Bank Product and Hedging Obligations.

“ Obligor ” has the meaning ascribed to it in Section 12.5 .

“ OFAC ” means the U.S. Department of Treasury’s Office of Foreign Asset Control.

“ Overadvance ” has the meaning ascribed to it in Section 1.1(a)(iii) .

“ Parent ” means Sotheby’s, a Delaware corporation.

“ Participant Register ” has the meaning ascribed to it in Section 9.1(d) .

“ PATRIOT Act ” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56) (The USA PATRIOT Act).

“ PBGC ” means the Pension Benefit Guaranty Corporation.

“ Pension Plan ” means a Plan described in Section 3(2) of ERISA.

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“ Permitted Encumbrances ” means the following encumbrances: (a) Liens for taxes or assessments or other governmental Charges not yet due and payable or which are being contested in accordance with Section 5.2(b) ; (b) pledges or deposits of money securing statutory obligations under workmen’s compensation, unemployment insurance, social security or public liability laws or similar legislation (excluding Liens under ERISA); (c) pledges or deposits of money securing bids, tenders, contracts (other than contracts for the payment of money) or leases to which any Sotheby Entity is a party as lessee made in the ordinary course of business; (d) inchoate and unperfected workers’, mechanics’ or similar liens arising in the ordinary course of business, so long as such Liens attach only to Equipment, Fixtures and/or Real Estate; (e)(i) carriers’, warehousemen’s, suppliers’ or other similar possessory liens arising in the ordinary course of business and securing liabilities in an outstanding aggregate amount not in excess of a Dollar Equivalent of $2,500,000 at any time, so long as such Liens attach only to Inventory or (ii) solely for purposes of Sections 1.6 , 3.6 and 6.7 , Liens securing Indebtedness under the Specified Debt Facility, so long as such Liens are subject to an intercreditor agreement (the “ Specified Debt Facility Intercreditor Agreement ”) entered into between the Agents and the administrative agent under the Specified Debt Facility and in form and substance reasonably satisfactory to the Agents, which shall provide that the Liens securing Indebtedness under the Specified Debt Facility shall be junior in priority to the Liens securing the Secured Obligations, except with respect to any Collateral which is purchased or financed solely with the proceeds of the Specified Debt Facility, in which case the Liens securing Indebtedness under the Specified Debt Facility may be senior to the Liens securing the Secured Obligations solely with respect to the Collateral so purchased or financed; (f) deposits securing, or in lieu of, surety, appeal or customs bonds in proceedings to which any Sotheby Entity is a party; (g) any attachment or judgment lien not constituting an Event of Default under Section 8.1(i) ; (h) zoning restrictions, easements, licenses, or other restrictions on the use of any Real Estate or other minor irregularities in title (including leasehold title) thereto, so long as the same do not materially impair the use, value, or marketability of such Real Estate; (i) any Lien in favor of a consignor on a segregated deposit account established for the benefit of such consignor and into which only proceeds of Works of Art consigned by such consignor to a Sotheby Entity for sale (including such Sotheby Entity’s commissions on such sales) are deposited; provided , that if such consignor is an Art Loan Debtor, such Lien shall constitute a “Permitted Encumbrance” only if an agreement among the applicable Borrower, such consignor and the applicable account bank expressly states that amounts received in such deposit account shall be transferred first, without any further consent of any Person, to the applicable Borrower until the related Art Loan is repaid in full prior to any such amounts being transferred to such consignor; (j) presently existing or

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hereafter created Liens in favor of the Collateral Agent, on behalf of Secured Parties, pursuant to the Loan Documents and the “Loan Documents” under the Auction Revolving Credit Agreement; (k) other than with respect to any Blocked Account or Cash Collateral Account, any lien or banker’s right of set-off or combination of accounts arising by operation of law or in accordance with standard terms of banking; (l) Liens expressly permitted under clauses (c) and (d) of Section 6.7 of the Agreement, and (m) Liens arising in the ordinary course of business in favor of consignors securing Works of Art of such consignors that are consigned to a Sotheby Entity for sale.

“ Permitted U.K. Real Estate Financing ” means any mortgage financing, sale leaseback, synthetic lease or similar transaction in respect of any Specified U.K. Real Estate.

“ Personal Data ” shall have the same meaning set forth in the Data Protection Laws.

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“ Prohibited Person ” means any Person:

(a) listed in the Annex to, or otherwise subject to the provisions of, the Executive Order;

(b) that is owned or controlled by, or acting for or on behalf of, any person or entity that is listed in the Annex to, or is otherwise subject to the provisions of, the Executive Order;

(d) that commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Order;

(g) that is an affiliate (including any principal, officer, immediate family member or close associate) of a person or entity described in one or more of clauses (a) – (f) of this definition.

“ Pro Rata Share ” means with respect to all matters relating to any Lender,

(a) in respect of the Dollar Tranche Commitment, (i) prior to the Commitment Termination Date, the percentage obtained by dividing (x) the Dollar Tranche Commitment of

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that Lender by (y) the aggregate Dollar Tranche Commitments of all Lenders, and (ii) on and after the Commitment Termination Date, the percentage obtained by dividing (x) the sum of (A) the aggregate outstanding principal balance of the Dollar Tranche Revolving Loan held by that Lender by (y) the outstanding principal balance of the Dollar Tranche Revolving Loan held by all Lenders;

(b) in respect of the Multicurrency Tranche Commitment, (i) prior to the Commitment Termination Date, the percentage obtained by dividing (x) the Multicurrency Tranche Commitment of that Lender by (y) the aggregate Multicurrency Tranche Commitments of all Lenders, and (ii) on and after the Commitment Termination Date, the percentage obtained by dividing (x) the Dollar Equivalent of the aggregate outstanding principal balance of the Multicurrency Tranche Revolving Loan held by that Lender by (y) the Dollar Equivalent of the outstanding principal balance of the Multicurrency Tranche Revolving Loan held by all Lenders; and

(c) in respect of the Commitment, (i) prior to the Commitment Termination Date, the percentage obtained by dividing (x) the Commitment of that Lender by (y) the aggregate Commitments of all Lenders, and (ii) on and after the Commitment Termination Date, the percentage obtained by dividing (x) the Dollar Equivalent of the aggregate outstanding principal balance of the Revolving Loan held by that Lender by (y) the Dollar Equivalent of the outstanding principal balance of the Revolving Loan held by all Lenders;

in each case as any such percentages may be adjusted by assignments permitted pursuant to Section 9.1 or other adjustments to the Commitments pursuant to the Agreement.

“ Qualifying Lender ” means:


(i)	in respect of a payment made by a U.K. Credit Party, a Lender which is beneficially entitled to interest or other amounts payable to that Lender in respect of an advance under this Agreement or the other Loan Documents and is:

(A) a Lender:

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(1)


(2)	in respect of an advance made under this Agreement or the other Loan Documents by a Person that was a bank (as defined for the purpose of Section 879 of the Income Tax Act 2007 of the United Kingdom) at the time that that advance was made and which is within the charge to United Kingdom corporation tax as respects any payments of interest made in respect of that advance; or


(B)	a Lender which is:


(1)	a company resident in the United Kingdom for United Kingdom tax purposes;


(2)	a partnership each member of which is:


(a)	a company resident in the United Kingdom for United Kingdom tax purposes; or

(b)


(3)	a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account interest payable in respect of that advance in computing its

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chargeable profits (within the meaning of section 19 of the Corporation Tax Act 2009 of the United Kingdom); or


(C)	a Treaty Lender with respect to the United Kingdom.


(ii)	in respect of a payment made by a Domestic Credit Party, a Lender which is:

(A)

created or organized under the laws of the United States of America or of any state (including the District of Columbia) thereof; provided , that such Lender has delivered (in a timely fashion and without undue delay and from time to time thereafter upon the reasonable request of Borrowers or the Administrative Agent, shall deliver) to Borrower Representative and the Administrative Agent two original copies of IRS Form W-9 (or successor form) properly prepared and executed;

(B)

(C)

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Lender’s entitlement to exemption from United States withholding tax with respect to all payments to be made to such Lender under any Loan Document.

(iii) in respect of a payment made by a Credit Party organized under the laws of Hong Kong, a Lender which is:


(A)	created or organized under the laws of Hong Kong or a company that is resident in Hong Kong for Hong Kong tax purposes;


(B)	a Treaty Lender with respect to Hong Kong that is entitled to receive payments under any Loan Document without deduction or withholding of any Hong Kong profits taxes;

(C)

“ Qualified Plan ” means a Pension Plan that is intended to be tax qualified under Section 401(a) of the IRC.

“ Real Estate ” has the meaning ascribed to it in Section 3.6 .

“ Refunded Dollar Tranche Swing Line Loan ” has the meaning ascribed to it in Section 1.1(b)(iii) .

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“ Refunded Multicurrency Tranche Swing Line Loan ” has the meaning ascribed to it in Section 1.1(b)(iii) .

“ Refunded Foreign Currency Swing Line Loan ” has the meaning ascribed to it in Section 1.1(b)(iv) .

“ Related Transactions ” means (i) the execution and delivery of the Auction Revolving Credit Agreement, (ii) the “Loans” and “Letter of Credit Obligations” to be made or incurred on the Restatement Effective Date under the Auction Revolving Credit Agreement, (iii) the disbursement of the proceeds of such “Loans” under the Auction Revolving Credit Agreement pursuant to the instructions of the “Borrower Representative” thereunder and (iv) the payment of all fees, costs and expenses in connection with each of the foregoing.

“ Relationship Bank ” has the meaning ascribed to it in Annex C .

“ Register ” has the meaning ascribed to it in Section 9.1(b) .

“ Replacement Lender ” has the meaning ascribed to it in Section 1.17(d) .

“ Repurchase ” means a repurchase by Parent of the Stock of Parent on any date.

“ Requisite Lenders ” means, collectively, (a) prior to the “Incremental Commitment Termination Date” (as defined in the Auction Revolving Credit Agreement) or Commitment Termination Date, Lenders having, in the aggregate, more than 50% of the sum of the Commitments of all Lenders plus the “Commitments” of all “Lenders” under the Auction Revolving Credit Agreement, (b) on and after the “Incremental Commitment Termination Date” (as defined in the Auction Revolving Credit Agreement) but prior to the Commitment Termination Date, Lenders holding in the aggregate, greater than 50% of (i) the sum of the Commitments of all the Lenders plus the sum of the “Auction Commitments” of all the “Auction Lenders” under the Auction Revolving Credit Agreement and (ii) the aggregate outstanding principal balance of the “Incremental Revolving Credit Advances” (as defined in the Auction Revolving Credit Agreement) held by all “Incremental Lenders” (as defined in the Auction Revolving Credit Agreement), and (c) on and after the Commitment Termination Date, Lenders

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holding in the aggregate, greater than 50% of (i) the aggregate outstanding amount of all Loans held by the Lenders and (ii) the aggregate outstanding amount of all “Loans” held by the “Lenders” under the Auction Revolving Credit Agreement.

“ Reserves ” means the Due-to-Consignor Reserve and such other reserves against Eligible Art Loans, Domestic Borrowing Availability or Foreign Borrowing Availability that the Administrative Agent may, in its sole reasonable credit judgment, establish from time to time. Without limiting the generality of the foregoing, Reserves established to ensure the payment of accrued Interest Expenses, Indebtedness, Bank Product and Hedging Obligations or other scheduled liabilities shall be deemed to be a reasonable exercise of the Administrative Agent’s credit judgment. For purposes of clarity, the Administrative Agent will not be required at any time to obtain any approval from any Sotheby Entity, any Lenders or any other Person(s) for the establishment, modification or elimination of any Reserves (other than the Due-to-Consignor Reserve).

“ Restatement Effective Date ” means August 22, 2014.

“ Revolving Credit Advance ” means either a Dollar Tranche Revolving Credit Advance or a Multicurrency Tranche Revolving Credit Advance.

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“ Revolving Loan ” and “ Revolving Loan Outstandings ” mean, at any time, the sum of (i) the Dollar Equivalent of the aggregate amount of all Revolving Credit Advances outstanding to the Borrowers plus (ii) the Dollar Equivalent of the aggregate Letter of Credit Obligations incurred on behalf of the Borrowers. Unless the context otherwise requires, references to the outstanding principal balance of the Revolving Loan shall include the outstanding balance of Letter of Credit Obligations.

“ Secured Obligations ” means, collectively, (i) the Obligations, (ii) the “Obligations” (as defined in the Auction Revolving Credit Agreement), (iii) the Bank Product and Hedging Obligations and (iv) the “Bank Product and Hedging Obligations” (as defined in the Auction Revolving Credit Agreement).

“ Senior Note Indenture ” means that certain Indenture, dated as of September 27, 2012, governing the Senior Notes.

“ SFS/Auction Ratable Share ” means, at any time, the sum of the Revolving Loan at such time plus the outstanding balance of the Swing Line Loan at such time as a percentage of the sum of (a) the sum of the Auction Revolving Loan at such time plus the outstanding balance of the Swing Line Loan at such time plus (b) the sum of the “Auction Revolving Loan” (as defined in the Auction Revolving Credit Agreement) at such time plus the outstanding balance of the “Swing Line Loan” (as defined in the Auction Revolving Credit Agreement) at such time.

“ SFS California ” has the meaning ascribed to it in the preamble to the Agreement.

“ SFS Inc. ” has the meaning ascribed to it in the preamble to the Agreement.

“ SFS Ltd. ” has the meaning ascribed to it in the preamble to the Agreement.

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Person on its debts as they become absolute and matured; (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature; and (d) such Person is not engaged in a business or transaction, and is not about to engage in a business or transaction, for which such Person’s property would constitute an unreasonably small capital and (ii) with respect to any Foreign Subsidiary organized under the laws of England or Hong Kong, on a particular date, (a) such Foreign Subsidiary is unable, or has admitted its inability, to pay its debts as they fall due, has suspended making payments on any of its debts or, by reason of actual or anticipated financial difficulties, has commenced negotiations with one or more of its creditors with a view to rescheduling any of its indebtedness, (b) the value of the assets of such Foreign Subsidiary is less than its liabilities (taking into account contingent and prospective liabilities) or (c) a moratorium has been declared in respect of any indebtedness of such Foreign Subsidiary. The amount of contingent liabilities (such as litigation, guaranties and pension plan liabilities) at any time shall be computed as the amount that, in light of all the facts and circumstances existing at the time, represents the amount that can be reasonably be expected to become an actual or matured liability.

“ Sotheby Entities ” means, collectively, Parent, each other Borrower, each “Borrower” under the Auction Revolving Credit Agreement and each of their respective Subsidiaries.

“ Sotheby’s Deferred Benefits Compensation Plan ” means the Sotheby’s Deferred Benefits Compensation Plan, dated as of January 1, 2007.

“ Sotheby’s H.K. ” has the meaning ascribed to it in the preamble to the Agreement.

“ Sotheby’s, Inc. ” has the meaning ascribed to it in the preamble to the Agreement.

“ Sotheby’s U.K. ” has the meaning ascribed to it in the preamble to the Agreement.

“ Specified Debt Facility Intercreditor Agreement ” has the meaning ascribed to it in clause (e)(ii) of the definition of “Permitted Encumbrances” in Annex A .

“ Specified Related Person ” has the meaning ascribed to it in Annex C .

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“ Specified U.K. Real Estate ” means any Real Estate located in England that any U.K. Credit Party has a fee simple interest in as of the Restatement Effective Date.

“ SPTC Delaware ” means SPTC Delaware LLC, a Delaware limited liability company, and each other “Eligible SPV” (as such term is defined in the SPTC Delaware Trademark License Agreement).

“ Sterling ” or “ £ ” means the lawful currency of Great Britain and Northern Ireland.

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“ Stockholder ” means, with respect to any Person, each holder of Stock of such Person.

“ Supermajority Lenders ” means, collectively, (a) prior to the “Incremental Commitment Termination Date” (as defined in the Auction Revolving Credit Agreement) or Commitment Termination Date, Lenders having, in the aggregate, 75% or more of the sum of the Commitments of all Lenders plus the “Commitments” of all “Lenders” under the Auction Revolving Credit Agreement, (b) on and after the “Incremental Commitment Termination Date” (as defined in the Auction Revolving Credit Agreement) but prior to the Commitment Termination Date, Lenders holding in the aggregate, 75% or more of (i) the sum of the Commitments of all the Lenders plus the sum of the “Auction Commitments” of all the “Auction Lenders” under the Auction Revolving Credit Agreement and (ii) the aggregate outstanding principal balance of the “Incremental Revolving Credit Advances” (as defined in the Auction Revolving Credit Agreement) held by all “Incremental Lenders” (as defined in the Auction Revolving Credit Agreement), and (c) on and after the Commitment Termination Date, Lenders holding in the aggregate, 75% or more of (i) the aggregate outstanding amount of all Loans held by the Lenders and (ii) the aggregate outstanding amount of all “Loans” held by the “Lenders” under the Auction Revolving Credit Agreement.

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“ Swing Line Advances ” has the meaning ascribed to it in Section 1.1(b)(i) .

“ Swing Line Lender ” means GE Capital.

“ Swing Line Loan ” means, at any time, the sum of the Dollar Tranche Swing Line Loan at such time plus the Multicurrency Tranche Swing Line Loan at such time.

“ Swing Line Note ” has the meaning ascribed to it in Section 1.1(b)(ii) .

“ Swing Line Request ” has the meaning ascribed to it in Section 1.1(b)(i) .

“ Swiss Franc ” means the lawful currency of Switzerland.

(a) a company resident in the United Kingdom for United Kingdom tax purposes;

“ Tax Credit ” means a credit against, relief or remission for, or repayment of, any Tax.

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“ Tax Deduction ” means a deduction or withholding for or on account of Tax from a payment under any Loan Document.

“ Tax Payment ” means either the increase in a payment made by a Credit Party to a Lender under Section 1.16(a) or a payment under Section 1.16(b) .

“ Trademark License ” means rights under any written agreement now owned or hereafter acquired by any Sotheby Entity granting any right to use any Trademark.

“ Trademark Security Agreements ” means the Trademark Security Agreements made in favor of the Collateral Agent, on behalf of the Secured Parties, by each applicable Credit Party.

“ Transfer Account ” has the meaning ascribed thereto in Annex C .

“ Treaty ” has the meaning ascribed to it in the definition of “Treaty State”.

“ Treaty Lender ” means a Lender which:

(a) is treated as a resident of a Treaty State for the purposes of a Treaty;

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(a) above and meets the requirement of the provisions dealing with limitation on benefits if such treaty contains such a provision;

(d) is entitled, under the terms of the relevant Treaty (subject to the completion of any necessary procedural formalities), to claim full exemption from tax on interest;

but, in the case of a UK source interest payment made by a U.K. Credit Party, if a Lender:


(A)	is a limited liability company organized in the United States and disregarded for United States federal income tax purposes (a “US LLC Lender”);


(B)	is a party to this Agreement at the date of this Agreement (or, in relation to a Lender which becomes a party to this Agreement after the date of this Agreement, the Borrower Representative has approved the Lender for the purposes of this paragraph (B));

(C)

(D)

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Regulation 2 of the Double Taxation Relief (Taxes on Income) (General) Regulations 1970 (SI 1970/488) in relation to UK source interest payments to the US LLC.

“ UCC ” means the Uniform Commercial Code as in effect from time to time in each applicable jurisdiction.

“ U.K. Borrowers ” has the meaning ascribed thereto in the preamble to the Agreement.

“ U.K. Credit Parties ” means, collectively, the U.K. Borrowers and the U.K. Subsidiary Guarantors.

“ U.K. Pension Plans ” has the meaning ascribed to it in Section 3.12(c) .

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currency in which such Art Loan is denominated and Dollars at all times until the maturity of such Art Loan.

“ US Corporation ” has the meaning set forth in the definition of “Treaty Lender” in this Annex A .

“ US LLC Lender ” has the meaning set forth in the definition of “Treaty Lender” in this Annex A .

“ VAT ” means:

(a) any tax imposed in compliance with the Council Directive of 28 November 2006 on the common system of value added tax (EC Directive 2006/112); and

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“ Ventures LLC ” has the meaning ascribed to it in the preamble to the Agreement.

“ Welfare Plan ” means a Plan described in Section 3(1) of ERISA.

“ Work of Art ” shall mean any item of Goods of a type purchased, sold or taken as collateral for an Art Loan or an “Extended Term Art Receivable” (as defined in the Auction Revolving Credit Agreement), or consigned to the Credit Parties for sale, in each case in the ordinary course of the Credit Parties’ business.

“ York Avenue Lease Documents ” means the York Avenue Lease, the York Avenue Lease Guaranty and each document executed in connection therewith or otherwise related thereto.

“ York Avenue Lender ” means the “Lender” as defined in the York Avenue Loan Agreement.

“ York Avenue Loan Documents ” means the York Avenue Loan Agreement and all documents executed in connection therewith or otherwise related thereto.

“ York Avenue Owner ” means 1334 York, LLC, a Delaware limited liability company.

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ANNEX B ( Section 1.2 )
to
CREDIT AGREEMENT

LETTERS OF CREDIT

(a) Issuance .

(i) Subject to the terms and conditions of the Agreement, the Administrative Agent and Dollar Tranche Lenders agree to incur, from time to time prior to the Commitment Termination Date, upon the request of Borrower Representative on behalf of the applicable Borrower (and any Subsidiary that may be a co-applicant therewith) and for such Borrower’s (and such Subsidiary’s, as applicable) account, Dollar Tranche Letter of Credit Obligations by causing Letters of Credit denominated in Dollars to be issued by GE Capital or a Subsidiary thereof or a bank or other legally authorized Person selected by or acceptable to the Administrative Agent in its sole discretion (and consented to by such Person) (each, an “L/C Issuer”) for such Borrower’s account and guaranteed by the Administrative Agent; provided, that if the L/C Issuer is a Lender, then such Letters of Credit shall not be guaranteed by the Administrative Agent but rather each Dollar Tranche Lender shall, subject to the terms and conditions hereinafter set forth, purchase (or be deemed to have purchased) risk participations in all such Letters of Credit issued with the written consent of the Administrative Agent, as more fully described in paragraph (b)(ii) below. The aggregate amount of all such Dollar Tranche Letter of Credit Obligations shall not at any time exceed the lesser of (i) an amount equal to Sixty Million Dollars ($60,000,000) less the aggregate “Auction Dollar Tranche Letter of Credit Obligations” (as defined in the Auction Revolving Credit Agreement) (such amount, the “ Dollar Tranche L/C Sublimit ”) and (ii) the Maximum Dollar Tranche Amount less the aggregate outstanding principal balance of the Dollar Tranche Revolving Credit Advances and the Dollar Tranche Swing Line Loan.

(ii) Subject to the terms and conditions of the Agreement, the Administrative Agent and Multicurrency Tranche Lenders agree to incur, from time to time prior to the Commitment Termination Date, upon the request of Borrower Representative on behalf of the applicable Borrower (and any Subsidiary that may be a co-applicant therewith) and for such Borrower’s (and such Subsidiary’s, as applicable) account, Multicurrency Tranche Letter of Credit Obligations by causing Letters of Credit denominated in Dollars, Sterling, Euros, Swiss Francs, Hong Kong Dollars or any Alternative L/C Currency to be issued by an L/C Issuer for such Borrower’s account and guaranteed by the Administrative Agent; provided, that if the L/C Issuer is a Lender, then such Letters of Credit shall not be guaranteed by the Administrative Agent but rather each Lender shall, subject to the terms and conditions hereinafter set forth, purchase (or be deemed to have purchased) risk participations in all such Letters of Credit issued with the written consent of the Administrative Agent, as more fully described in paragraph (b)(ii) below. The Dollar Equivalent of the aggregate amount of all such Multicurrency Tranche Letter of Credit Obligations shall not at any time exceed the lesser of (i) an amount equal to Fifteen Million Dollars ($15,000,000) less the aggregate “Auction Multicurrency Tranche Letter of Credit Obligations” (as defined in the Auction Revolving Credit Agreement) (such amount, the

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“ Multicurrency Tranche L/C Sublimit ”) and (ii) the Maximum Multicurrency Tranche Amount less the Dollar Equivalent of the aggregate outstanding principal balance of the Multicurrency Tranche Revolving Credit Advances and the Multicurrency Tranche Swing Line Loan.

(iii) The Dollar Equivalent of the aggregate amount of all Letter of Credit Obligations incurred for the benefit of the Domestic Borrowers shall not at any time exceed the Domestic Borrowing Base less the aggregate outstanding principal balance of the Revolving Credit Advances and Swing Line Advances made to Domestic Borrowers. The Dollar Equivalent of the aggregate amount of all Letter of Credit Obligations incurred for the benefit of the Foreign Borrowers shall not at any time exceed an amount equal to the Foreign Borrowing Base less the Dollar Equivalent of the outstanding principal balance of the Revolving Credit Advances made to the Foreign Borrowers. The sum of (i) the Dollar Equivalent of the aggregate amount of all Letter of Credit Obligations incurred for the benefit of the Foreign Borrowers plus (ii) the Dollar Equivalent of the outstanding principal balance of the Revolving Credit Advances made to the Foreign Borrowers plus (iii) SFS Foreign Borrower Obligations shall not at any time exceed the Foreign Borrower Subfacility Limit. No Letter of Credit shall have an expiry date that is more than one year following the date of issuance thereof, unless otherwise determined by the Administrative Agent, in its sole discretion (including with respect to customary evergreen provisions), and neither the Administrative Agent nor Lenders shall be under any obligation to incur Letter of Credit Obligations in respect of, or purchase risk participations in, any Letter of Credit having an expiry date that is later than the Commitment Termination Date.

(b) Revolving Credit Advances Automatic; Participations .

(i) In the event that the Administrative Agent or any Dollar Tranche Lender shall make any payment on or pursuant to any Dollar Tranche Letter of Credit Obligation incurred for the benefit of a Borrower, regardless of whether a Default or Event of Default has occurred and is continuing and notwithstanding any Borrower’s failure to satisfy the conditions precedent set forth in Section 2, such payment shall then be deemed automatically to constitute a Dollar Tranche Revolving Credit Advance to the applicable Borrower under Section 1.1(a) of the Agreement in Dollars in an amount equal to the Dollar Equivalent of such payment as of the date thereof, and each Dollar Tranche Lender shall be obligated to pay its Pro Rata Share thereof in accordance with the Agreement.

(ii) In the event that the Administrative Agent or any Multicurrency Tranche Lender shall make any payment on or pursuant to any Multicurrency Tranche Letter of Credit Obligation incurred for the benefit of any Borrower, regardless of whether a Default or Event of Default has occurred and is continuing and notwithstanding any Borrower’s failure to satisfy the conditions precedent set forth in Section 2, such payment shall then be deemed automatically to constitute a Multicurrency Tranche Revolving Credit Advance to the applicable Borrower under Section 1.1(a) of the Agreement in Dollars (if the applicable Borrower is a Domestic Borrower), in Sterling (if the applicable Borrower is a U.K. Borrower) or Hong Kong Dollars (if the applicable Borrower is Sotheby’s H.K.) in an amount equal to the Dollar Equivalent, Sterling Equivalent or Hong Kong Dollar Equivalent, as applicable, of such payment

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as of the date thereof, and each Multicurrency Tranche Lender shall be obligated to pay its Pro Rata Share thereof in accordance with the Agreement.

(iii) The failure of any Lender to make available to the Administrative Agent for the Administrative Agent’s own account its Pro Rata Share of any such Revolving Credit Advance or payment by the Administrative Agent under or in respect of a Letter of Credit shall not relieve any other Lender of its obligation hereunder to make available to the Administrative Agent its Pro Rata Share thereof, but neither any Lender shall be responsible for the failure of any other Lender to make available such Person’s share of any such payment.

(iv) If it shall be illegal or unlawful for any Borrower to incur Dollar Tranche Revolving Credit Advances as contemplated by paragraph (b)(i) above because of an Event of Default described in Sections 8.1(g) or (h) or otherwise or if it shall be illegal or unlawful for any Dollar Tranche Lender to be deemed to have assumed a ratable share of the reimbursement obligations owed to an L/C Issuer, or if the L/C Issuer is a Lender, then (A) immediately and without further action whatsoever, each Dollar Tranche Lender shall be deemed to have irrevocably and unconditionally purchased from the Administrative Agent (or such L/C Issuer, as the case may be) an undivided interest and participation equal to such Lender’s Pro Rata Share (based on its Dollar Tranche Commitments) of the Dollar Tranche Letter of Credit Obligations in respect of all Dollar Tranche Letters of Credit then outstanding for the benefit of the Borrowers and (B) thereafter, immediately upon issuance of any Dollar Tranche Letter of Credit for the benefit of any Borrower, each Dollar Tranche Lender shall be deemed to have irrevocably and unconditionally purchased from the Administrative Agent (or such L/C Issuer, as the case may be) an undivided interest and participation equal to such Dollar Tranche Lender’s Pro Rata Share (based on the Dollar Tranche Commitments) of the Dollar Tranche Letter of Credit Obligations with respect to such Dollar Tranche Letter of Credit on the date of such issuance. Each Dollar Tranche Lender shall fund its participation in all payments made under any Dollar Tranche Letters of Credit issued for the benefit of a Borrower, in the same manner as provided in the Agreement with respect to Dollar Tranche Revolving Credit Advances, each of which Dollar Tranche Revolving Credit Advances shall be in an amount equal to the Dollar Equivalent of such payment as of the date thereof.

(v) If it shall be illegal or unlawful for any Borrower to incur Multicurrency Tranche Revolving Credit Advances as contemplated by paragraph (b)(ii) above because of an Event of Default described in Sections 8.1(g) or (h) or otherwise or if it shall be illegal or unlawful for any Multicurrency Tranche Lender to be deemed to have assumed a ratable share of the reimbursement obligations owed to an L/C Issuer, or if the L/C Issuer is a Multicurrency Tranche Lender, then (A) immediately and without further action whatsoever, each Multicurrency Tranche Lender shall be deemed to have irrevocably and unconditionally purchased from the Administrative Agent (or such L/C Issuer, as the case may be) an undivided interest and participation equal to such Multicurrency Tranche Lender’s Pro Rata Share (based on the Multicurrency Tranche Commitments) of the Multicurrency Tranche Letter of Credit Obligations in respect of all Multicurrency Tranche Letters of Credit then outstanding for the benefit of the Borrowers and (B) thereafter, immediately upon issuance of any Multicurrency Tranche Letter of Credit for the benefit of a Borrower, each Multicurrency Tranche Lender shall

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be deemed to have irrevocably and unconditionally purchased from the Administrative Agent (or such L/C Issuer, as the case may be) an undivided interest and participation equal to such Multicurrency Tranche Lender’s Pro Rata Share (based on the Multicurrency Tranche Commitments) of the Multicurrency Tranche Letter of Credit Obligations with respect to such Multicurrency Tranche Letter of Credit on the date of such issuance. Each Multicurrency Tranche Lender shall fund its participation in all payments made under any Multicurrency Tranche Letters of Credit in the same manner as provided in the Agreement with respect to Multicurrency Tranche Revolving Credit Advances, each of which Multicurrency Tranche Revolving Credit Advances shall be in an amount equal to the Dollar Equivalent (if such Borrower is a Domestic Borrower), Sterling Equivalent (if such Borrower is a U.K. Borrower) or Hong Kong Dollar Equivalent (if such Borrower is Sotheby’s H.K.) of such payment as of the date thereof.

(i) If Borrowers are required to provide cash collateral for any Letter of Credit Obligations pursuant to the Agreement, including Section 8.2 of the Agreement, prior to the Commitment Termination Date, each Borrower will pay to the Collateral Agent for the ratable benefit of itself and the other Secured Parties, with respect to each Letter of Credit outstanding for the benefit of such Borrower, cash or cash equivalents acceptable to the Administrative Agent (“ Acceptable Cash Equivalents ”) in the currency in which such Letter of Credit is denominated in an amount equal to 105% of the maximum amount then available to be drawn under such Letter of Credit. Such funds or Acceptable Cash Equivalents shall be held by the Collateral Agent in a cash collateral account (each, a “ Cash Collateral Account ”) maintained at a bank or financial institution acceptable to the Collateral Agent. Each Cash Collateral Account shall be in the name of the applicable Borrower(s) and shall be pledged to, and subject to the control of, the Collateral Agent, on behalf of itself and the other Secured Parties, in a manner satisfactory to the Collateral Agent.

(ii) If any Letter of Credit Obligations, whether or not then due and payable, shall for any reason be outstanding on the Commitment Termination Date, Borrowers shall either (A) provide cash collateral therefor in the manner described above, or (B) cause all such Letters of Credit and guaranties thereof, if any, to be canceled and returned, or (C) deliver a stand-by letter (or letters) of credit in guaranty of such Letter of Credit Obligations, which stand-by letter (or letters) of credit shall be of like tenor, currency and duration (plus thirty (30) additional days) as, and in an amount equal to 105% of, the aggregate maximum amount then available to be drawn under, the Letters of Credit to which such outstanding Letter of Credit Obligations relate and shall be issued by a Person, and shall be subject to such terms and conditions, as are be satisfactory to the Collateral Agent in its sole discretion.

(iii) From time to time after funds are deposited in the Cash Collateral Account by any Borrower, whether before or after the Commitment Termination Date, the Collateral Agent may apply such funds or Acceptable Cash Equivalents then held in the Cash Collateral Account to the payment of any amounts, and in such order as the Collateral Agent may elect, as shall be or shall become due and payable by such Borrower to the Secured Parties with

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respect to such Letter of Credit Obligations of such Borrower and, upon the satisfaction in full of all Letter of Credit Obligations of such Borrower, to any other Secured Obligations then due and payable.

(d) Fees and Expenses . Each Borrower agrees to pay to the Administrative Agent for the benefit of the Dollar Tranche Lenders, as compensation for Dollar Tranche Letter of Credit Obligations incurred hereunder for the benefit of such Borrower, (i) all costs and expenses incurred by the Administrative Agent or any Dollar Tranche Lender on account of such Dollar Tranche Letter of Credit Obligations, and (ii) for each month during which any such Dollar Tranche Letter of Credit Obligation shall remain outstanding, a fee in Dollars in an amount equal to the Applicable L/C Margin from time to time in effect multiplied by the Dollar Equivalent of the maximum amount available from time to time to be drawn under each applicable Dollar Tranche Letter of Credit. Each Borrower agrees to pay to the Administrative Agent for the benefit of the Multicurrency Tranche Lenders, as compensation for Multicurrency Tranche Letter of Credit Obligations incurred hereunder for the benefit of such Borrower, (i) all costs and expenses incurred by the Administrative Agent or any Multicurrency Tranche Lender on account of such Multicurrency Tranche Letter of Credit Obligations, and (ii) for each month during which any such Multicurrency Tranche Letter of Credit Obligation shall remain outstanding, a fee in Dollars in an amount equal to the Applicable L/C Margin from time to time in effect multiplied by the Dollar Equivalent of the maximum amount available from time to time to be drawn under each applicable Multicurrency Tranche Letter of Credit. The foregoing fees (collectively, the “Letter of Credit Fee”) shall be paid to the Administrative Agent for the benefit of the Dollar Tranche Lenders or Multicurrency Tranche Lenders, as applicable, in arrears, on the first Business Day of each month and on the Commitment Termination Date. In addition, Borrowers shall pay to any L/C Issuer, on demand, such fees, charges and expenses of such L/C Issuer in respect of the issuance, negotiation, acceptance, amendment, transfer and payment of such Letter of Credit or otherwise payable pursuant to the application and related documentation under which such Letter of Credit is issued.

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contrary, Letter of Credit applications by Borrower Representative and approvals by the Administrative Agent and the L/C Issuer may be made and transmitted pursuant to electronic codes and security measures mutually agreed upon and established by and among Borrower Representative, the Administrative Agent and the L/C Issuer.

(f) Obligation Absolute . The obligation of Borrowers to reimburse the Administrative Agent and Lenders for payments made with respect to any Letter of Credit Obligation shall be absolute, unconditional and irrevocable, without necessity of presentment, demand, protest or other formalities, and the obligations of each Lender to make payments to the Administrative Agent with respect to Letters of Credit shall be unconditional and irrevocable. Such obligations of Borrowers and Lenders shall be paid strictly in accordance with the terms hereof under all circumstances including the following:

(i) any lack of validity or enforceability of any Letter of Credit or the Agreement or the other Loan Documents or any other agreement;

(ii) the existence of any claim, setoff, defense or other right that any Borrower or any of their respective Affiliates or any Lender may at any time have against a beneficiary or any transferee of any Letter of Credit (or any Persons or entities for whom any such transferee may be acting), the Administrative Agent, any Lender, or any other Person, whether in connection with the Agreement, the Letter of Credit, the transactions contemplated herein or therein or any unrelated transaction (including any underlying transaction between any Borrower or any of their respective Affiliates and the beneficiary for which the Letter of Credit was procured);

(v) any other circumstance or event whatsoever, that is similar to any of the foregoing; or

(vi) the fact that a Default or an Event of Default has occurred and is continuing.

(g) Indemnification; Nature of Lenders’ Duties .

(i) In addition to amounts payable as elsewhere provided in the Agreement, Borrowers hereby agree to pay and to protect, indemnify, and save harmless each Agent and each Lender from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable attorneys’ fees and allocated costs of

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internal counsel) that any Agent or any Lender may incur or be subject to as a consequence, direct or indirect, of (A) the issuance of any Letter of Credit or guaranty thereof, or (B) the failure of any Agent or any Lender seeking indemnification or of any L/C Issuer to honor a demand for payment under any Letter of Credit or guaranty thereof as a result of any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or Governmental Authority, in each case other than to the extent solely as a result of the gross negligence or willful misconduct of such Agent or such Lender (as determined by a court of competent jurisdiction in a final, non-appealable judgment). It is understood and agreed that, notwithstanding anything to the contrary herein, no Foreign Credit Party shall have any obligation hereunder with respect to any indemnification liabilities that are Obligations of any Domestic Credit Party.

(ii) As between any Agent and any Lender and Borrowers, Borrowers assume all risks of the acts and omissions of, or misuse of any Letter of Credit by beneficiaries, of any Letter of Credit. In furtherance and not in limitation of the foregoing, to the fullest extent permitted by law, neither any Agent nor any Lender shall be responsible for: (A) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document issued by any party in connection with the application for and issuance of any Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (B) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, that may prove to be invalid or ineffective for any reason; (C) failure of the beneficiary of any Letter of Credit to comply fully with conditions required in order to demand payment under such Letter of Credit; provided , that in the case of any payment by any Agent under any Letter of Credit or guaranty thereof, such Agent shall be liable to the extent such payment was made solely as a result of its gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final, non-appealable judgment) in determining that the demand for payment under such Letter of Credit or guaranty thereof complies on its face with any applicable requirements for a demand for payment under such Letter of Credit or guaranty thereof; (D) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they may be in cipher; (E) errors in interpretation of technical terms; (F) any loss or delay in the transmission or otherwise of any document required in order to make a payment under any Letter of Credit or guaranty thereof or of the proceeds thereof; (G) the credit of the proceeds of any drawing under any Letter of Credit or guaranty thereof; and (H) any consequences arising from causes beyond the control of any Agent or any Lender. None of the above shall affect, impair, or prevent the vesting of any of any Agent’s or any Lender’s rights or powers hereunder or under the Agreement.

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(h) Non-Funding Lender; Impacted Lender . Notwithstanding anything else to the contrary herein, if any Dollar Tranche Lender is a Non-Funding Lender or Impacted Lender, no L/C Issuer shall be obligated to issue any Dollar Tranche Letter of Credit unless (i) the Non-Funding Lender or Impacted Lender has been replaced in accordance with Section 1.17(d) or 9.1, (ii) the Dollar Tranche Letter of Credit Obligations of such Non-Funding Lender or Impacted Lender have been cash collateralized, (iii) the Dollar Tranche Commitments of the other Dollar Tranche Lenders have been increased by an amount sufficient to satisfy the Administrative Agent that all future Dollar Tranche Letter of Credit Obligations will be covered by all Dollar Tranche Lenders that are not Non-Funding Lenders or Impacted Lenders, or (iv) the Dollar Tranche Letter of Credit Obligations of such Non-Funding Lender or Impacted Lender have been reallocated to other Dollar Tranche Lenders in a manner consistent with Section 9.9(d)(ii). Notwithstanding anything else to the contrary herein, if any Multicurrency Tranche Lender is a Non-Funding Lender or Impacted Lender, no L/C Issuer shall be obligated to issue any Multicurrency Tranche Letter of Credit unless (i) the Non-Funding Lender or Impacted Lender has been replaced in accordance with Section 1.17(d) or 9.1, (ii) the Multicurrency Tranche Letter of Credit Obligations of such Non-Funding Lender or Impacted Lender have been cash collateralized, (iii) the Multicurrency Tranche Commitments of the other Multicurrency Tranche Lenders have been increased by an amount sufficient to satisfy the Administrative Agent that all future Multicurrency Tranche Letter of Credit Obligations will be covered by all Multicurrency Tranche Lenders that are not Non-Funding Lenders or Impacted Lenders, or (iv) the Multicurrency Tranche Letter of Credit Obligations of such Non-Funding Lender or Impacted Lender have been reallocated to other Multicurrency Tranche Lenders in a manner consistent with Section 9.9(d)(ii).

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ANNEX C ( Section 1.9 )
to
CREDIT AGREEMENT

CASH MANAGEMENT SYSTEM

Each Sotheby Entity shall, and shall cause its Subsidiaries to, establish and maintain the Cash Management Systems described below:

C-1

(h) Each Borrower shall and shall cause its Affiliates, officers, employees, agents, directors or other Persons acting for or in concert with such Borrower (each, a “ Specified Related Person ”) to (i) hold in trust for the Collateral Agent, for the benefit of itself and the other Secured Parties, all checks, cash and other items of payment delivered by the applicable Art Loan Debtor (other than any Due-to-Consignor Amounts) and received by such Borrower or any such Specified Related Person in respect of any Art Loan and (ii) within one (1) Business Day after receipt by such Borrower or any such Specified Related Person of any such checks, cash or other items of payment, deposit the same into a Blocked Account of such Borrower. Each Borrower on behalf of itself and each Specified Related Person thereof acknowledges and agrees that all cash, checks or other items of payment constituting proceeds of Art Loans (other than any Due-to-Consignor Amounts) are part of the Collateral. Following delivery of an Activation Notice, proceeds of the sale or other disposition of any Art Loans shall be deposited directly to the applicable Blocked Account within two (2) Business Days after the receipt thereof by any Sotheby Entity.

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ANNEX D ( Section 2.1(a ))
to
CREDIT AGREEMENT

See attached.

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ANNEX E ( Section 4.1(a))
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CREDIT AGREEMENT

FINANCIAL STATEMENTS AND PROJECTIONS -- REPORTING

Borrowers shall deliver or cause to be delivered in writing or by Electronic Transmission:

E-1

(c) Operating Plan . To the Administrative Agent and Lenders, as soon as available, but not later than forty-five (45) days after the end of each Fiscal Year, an annual operating plan for Parent and its Subsidiaries on a consolidated basis for the following Fiscal Year, which (i) includes a statement of all of the material assumptions on which such plan is based, (ii) includes quarterly balance sheets, income statements and statements of cash flows for the following year and (iii) integrates sales, gross profits, operating expenses, operating profit, cash flow projections, Domestic Borrowing Availability and Foreign Borrowing Availability projections, all prepared on the same basis and in similar detail as that on which operating results are reported (and in the case of cash flow projections, representing management’s good faith estimates of future financial performance based on historical performance), and including plans for personnel, Capital Expenditures and facilities. The income statements contained in such annual operating plan shall be approved by the Board of Directors of Parent.

(d) Annual Audited Financials . To the Administrative Agent and Lenders, within ninety (90) days after the end of each Fiscal Year, audited consolidated (with respect to Parent and its Subsidiaries) and unaudited consolidating Financial Statements, consisting of balance sheets, statements of income and (consolidated) statements of retained earnings and cash flows, setting forth in comparative form in each case the figures for the previous Fiscal Year,

E-2

which Financial Statements shall be prepared in accordance with GAAP and certified without qualification, by an independent certified public accounting firm of national standing or otherwise acceptable to the Administrative Agent. Such Financial Statements shall be accompanied by (i) a statement prepared in reasonable detail showing the calculations used in determining compliance with each of the Financial Covenants, (ii) a report from such accounting firm to the effect that, in connection with their audit examination, nothing has come to their attention to cause them to believe that a Default or Event of Default has occurred with respect to the Financial Covenants (or specifying those Defaults and Events of Default that they became aware of), it being understood that such audit examination extended only to accounting matters and that no special investigation was made with respect to the existence of Defaults or Events of Default, and (iii) the certification of a Financial Officer of Borrowers that (x) such financial information presents fairly (in the case of the consolidated Financial Statements with respect to Parent and its Subsidiaries, in accordance with GAAP) the financial position, results of operations and statements of cash flows of Borrowers and their Subsidiaries, on both a consolidated (with respect to Parent and its Subsidiaries) and consolidating basis, as at the end of such Fiscal Year and for the period then ended, and (y) there was no Default or Event of Default in existence as of such time or, if a Default or Event of Default has occurred and is continuing, describing the nature thereof and all efforts undertaken to cure such Default or Event of Default.

(g) Due-to-Consignor Statements . To the Administrative Agent, (i) on the last Business Day of the calendar week immediately following any calendar week in which the Liquidity Amount shall be less than $100,000,000 and continuing so long as the Liquidity Amount shall be less than $100,000,000 on the last Business Day of each alternate calendar week thereafter and (ii) on each Business Day on which a Default or Event of Default has occurred and is continuing or on which the Liquidity Amount shall be less than $70,000,000, a

E-3

statement (such statement, a “ Due-to-Consignor Statement ”) certified by a Financial Officer of Borrower Representative, providing a calculation of the Due-to-Consignor Amount as of the date on which such statement is delivered, which calculation shall separately identify (i) the aggregate amount of cash received and held by all Sotheby Entities that is payable to consignors as of such Business Day as a result of the sale of such consignors’ Works of Art by a Sotheby Entity, and (ii) the aggregate outstanding amount of all principal, accrued interest, and other related amounts as of such Business Day with respect to any Art Loans secured by such Works of Art.

(j) Supplemental Schedules . To the Administrative Agent, supplemental disclosures, if any, required by Section 5.6 .

(l) Insurance Notices . To the Administrative Agent, disclosure of losses or casualties required by Section 5.4 .

(m) Lease Default Notices . To the Administrative Agent, (i) within two (2) Business Days after receipt thereof, copies of any and all default notices received under or with

E-4

respect to any leased location or public warehouse where Collateral (including any Work of Art securing repayment of any Art Loan) is located, and (ii) such other notices or documents as the Administrative Agent may reasonably request.

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ANNEX F ( Section 4.1(b) )
to
CREDIT AGREEMENT

COLLATERAL REPORTS

Borrowers shall deliver or cause to be delivered the following:

(i) a Borrowing Base Certificate, accompanied by such supporting detail and documentation as shall be requested by the Administrative Agent in its reasonable discretion; and

(ii) an Art Loan Receivables Report, accompanied by such supporting detail and documentation as shall be requested by Administrative Agent in its reasonable discretion;

provided that, without limiting the foregoing, the Borrowers’ may, in their sole discretion, deliver the foregoing on a more frequent basis.

(i) a reconciliation of the Art Loans Receivables Report to the most recent Borrowing Base Certificate, general ledger and monthly Financial Statements delivered pursuant to Annex E , in each case accompanied by such supporting detail and documentation as shall be requested by the Administrative Agent in its reasonable discretion;

(c) To the Administrative Agent, at the time of delivery of each of the quarterly Financial Statements delivered pursuant to Annex E , a list of any applications for the

F-1

registration of any Patent, Trademark or Copyright filed by any Credit Party with the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency in the prior Fiscal Quarter, except any Trademark registered by a Sotheby Entity at the direction of the purchaser of Sotheby’s International Realty, Inc., a Michigan corporation, as contemplated by Disclosure Schedule (3.15) .

(d) Each Borrower, at its own expense, shall make available to the Administrative Agent upon reasonable request the results of each physical verification, if any, that such Borrower or any of its Subsidiaries may in their discretion have made, or caused any other Person to have made on their behalf, of all or any portion of the Collateral (including, without limitation, any Works of Art securing repayment of Art Loans) (and, if a Default or an Event of Default has occurred and is continuing, each Borrower shall, upon the request of the Administrative Agent, conduct, and deliver the results of, such physical verifications as the Administrative Agent may require).

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ANNEX G ( Section 6.10 )
to
CREDIT AGREEMENT

FINANCIAL COVENANTS

Borrowers shall not breach or fail to comply with any of the following financial covenants, each of which shall be calculated in accordance with GAAP consistently applied:

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ANNEX H ( Section 9.9(a) )
to
CREDIT AGREEMENT

WIRE TRANSFER INFORMATION

Dollars



Bank Name:	Deutsche Bank Trust Company
Bank Address:	New York, NY
Account Title:	GECC CFS CIF Collection Account
Account #:	50279513
ABA #:	021-001-033
Reference:	CFK2570-Sotheby's

Sterling



Bank Name:	Barclays Bank plc
Bank Address:	London, England
Account Title:	GECC/CEF CIF
Account #:	282596
Swift Code:	BARCGB22
Branch Code:	200000
Reference:	CFI1855-Sotheby's

Euro



Bank Name:	Deutsche Bank AG
Bank Address:	Frankfurt, Germany
Account Title:	General Electric Capital Corporation
Account #:	1766039
Swift Code:	DEUTDEFF
Branch Code:	50070010
Reference:	CFI1854-Sotheby's

Hong Kong Dollars

H-1



Bank Name:	HSBC Bank (Hong Kong)
Bank Address:	Hong Kong
Account Title:	General Electric Capital Corporation
Account #:	502110182002
Swift Code:	HSBCHKHH
Reference:	CFI1856-Sotheby's

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ANNEX I ( Section 11.10 )
to
CREDIT AGREEMENT

NOTICE ADDRESSES

(A) If to any Agent or GE Capital, at

General Electric Capital Corporation
401 Merritt Seven

Norwalk, Connecticut 06851

Attention: Sotheby’s Account Manager
Telecopier No.: (203) 749-4307

Telephone No.: (203) 956-3640

with a copy to:

General Electric Capital Corporation
401 Merritt Seven
Norwalk, Connecticut 06851
Attention: Corporate Counsel - Commercial Finance
Telecopier No.: (203) 567-8215

Telephone No.: (203) 956-4379

(B) If to any Borrower, to Borrower Representative, at

Sotheby’s
1334 York Avenue
New York, NY 10021
Attention: Chief Financial Officer
Telecopier No.: (212) 606-7372

Telephone No.: (212) 606-7107

with a copy to:

Sotheby’s
1334 York Avenue
New York, NY 10021
Attention: General Counsel
Telecopier No.: (212) 606-7574
Telephone No.: (212) 894-1439

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ANNEX J (from Annex A - Commitments definition )
to
CREDIT AGREEMENT



Lender	Dollar Tranche Commitment		Multicurrency Tranche Commitment
General Electric Capital Corporation		$72,127,989.80		$59,704,809.49
JPMorgan Chase Bank, N.A	77,117,976.49		63,835,330.90
HSBC Bank PLC	22,033,707.57		18,238,665.97
HSBC Bank USA, National Association	27,542,134.47		22,798,332.46
ING LLC	42,771,314.69		35,404,469.23
RBS Citizens, N.A.	33,050,561.35		27,357,998.96
Goldman Sachs Bank USA	21,709,682.46		17,970,450.30
Credit Suisse AG	23,972,673.83		19,843,668.58
NYCB Specialty Finance Company, LLC	40,272,373.54		0.00
Santander Bank, N.A.	22,033,707.57		18,238,665.97
Comerica Bank	17,626,966.05		14,590,932.78
People's United Bank	31,090,272.37		0.00
Bank of America, N.A.	15,423,595.30		12,767,066.18
EverBank	28,190,661.48		0.00
Investors Bank	27,063,035.02		0.00
The PrivateBank and Trust Company	22,794,163.42		0.00
Israel Discount Bank of New York	12,603,280.73		10,432,516.94
Amalgamated Bank	20,136,186.77		0.00
CIT Finance LLC	20,136,186.77		0.00
The Huntington National Bank	20,136,186.77		0.00
Rockland Trust Company	20,136,186.77		0.00
SunTrust Bank	11,016,853.78		9,119,332.99
T.D. Bank, N.A.	20,136,186.77		0.00
Bank Leumi USA	13,220,224.54		10,943,199.58
Webster Business Credit Corporation	10,576,179.63		8,754,559.67
Flushing Bank	12,081,712.06		0.00
Total		$685,000,000.00		$350,000,000.00




Lender	Dollar Tranche Swing Line Commitment	Multicurrency Tranche Swing Line Commitment
General Electric Capital Corporation	$10,000,000	$5,000,000

EXHIBIT 1.1(a)(i)
to
CREDIT AGREEMENT
FORM OF NOTICE OF REVOLVING CREDIT ADVANCE

GENERAL ELECTRIC CAPITAL CORPORATION
as Agent under the Credit Agreement referred to below

_______________ __, ____

Re: Sotheby’s

The Borrower Representative, on behalf of Borrowers identified below, hereby gives you irrevocable notice, pursuant to Section 1.1(a) of the Credit Agreement of its request of a Revolving Credit Advance (the “ Proposed Advance ”) under the Credit Agreement and, in that connection, sets forth the following information:

The date of the Proposed Advance is __________, ____ (the “ Funding Date ”).

Borrower: ________

[The aggregate principal amount of requested Dollar Tranche Revolving Loans by this Borrower is $_________, of which $________ consists of Index Rate Loans and $________ consists of LIBOR Loans having an initial LIBOR Period of ______ months.]

[The aggregate principal amount of requested Multicurrency Tranche Revolving Loans by this Borrower is [$][£][HK$][€]_________, of which [$][£][HK$][€]________ consists of Index Rate Loans and [$][£][HK$][€]________ consists of LIBOR Loans having an initial LIBOR Period of ______ months.]

[Borrower: ________

(B) no Default or Event of Default under the Credit Agreement has occurred and is continuing;

(C) the outstanding principal amount of the aggregate Dollar Tranche Revolving Loan will not exceed the Maximum Dollar Tranche Amount less the then outstanding principal amount of the Dollar Tranche Swing Line Loan, (ii) the Dollar Equivalent of the outstanding principal amount of the aggregate Multicurrency Tranche Revolving Loan will not exceed the Maximum Multicurrency Tranche Amount less the then outstanding principal amount of the Multicurrency Tranche Swing Line Loan, (iii) the Dollar Equivalent of the aggregate outstanding principal balance of Revolving Credit Advances and Swing Line Advances made to Domestic Borrowers and the Dollar Equivalent of the Letter of Credit Obligations incurred for the benefit of the Domestic Borrowers will not, in the aggregate, exceed the Domestic Borrowing Base, (iv) the outstanding amount of the Dollar Tranche Letter of Credit Obligations will not exceed the Dollar Tranche L/C Sublimit or the Dollar Equivalent of the outstanding amount of the Multicurrency Tranche Letter of Credit Obligations will not exceed the Multicurrency Tranche L/C Sublimit, (v) the aggregate outstanding principal amount of the Dollar Tranche Swing Line Loan will not exceed Dollar Tranche Swing Line Availability, (vi) the Dollar Equivalent of the aggregate outstanding principal amount of the Multicurrency Tranche Swing Line Loan will not exceed Multicurrency Tranche Swing Line Availability, (vii) the Dollar Equivalent of the aggregate outstanding principal balance of Revolving Credit Advances made to Foreign Borrowers and the Dollar Equivalent of the outstanding amount of the Letter of Credit Obligations incurred for the benefit of the Foreign Borrowers will not, in the aggregate, exceed the Foreign Borrowing Base or (viii) the sum of (A) the Dollar Equivalent of the aggregate outstanding principal balance of Revolving Credit Advances made to Foreign Borrowers and the Dollar Equivalent of the outstanding amount of the Letter of Credit Obligations incurred for the benefit of the Foreign Borrowers plus (B) the Dollar Equivalent of the aggregate outstanding principal balance of “Auction Revolving Credit Advances” made to “Foreign Borrowers” and the Dollar Equivalent of the outstanding amount of the “Letter of Credit Obligations” incurred for the benefit of the “Foreign Borrowers” (as each such term in this clause (B) is defined in the Auction Revolving Credit Agreement) will not, in the aggregate, exceed the Foreign Borrower Subfacility Limit; and

(D) as of the date of this notice and after giving effect to the making of the Proposed Advance, Parent shall be in compliance with Section 4.03 of the Senior Note Indenture.

IN WITNESS WHEREOF, Borrower Representative has caused this Notice of Revolving Credit Advance to be executed and delivered on behalf of the applicable Borrower(s) by its duly authorized officer as of the date first set forth above.

SOTHEBY’S, as the Borrower Representative

By:         /s/ Michael L. Gillis
    Name: Michael L. Gillis
    Title: Vice President and Treasurer

EXHIBIT 1.1(b)(i)
to
CREDIT AGREEMENT
FORM OF SWING LINE LOAN REQUEST

GENERAL ELECTRIC CAPITAL CORPORATION
as Administrative Agent under the Credit Agreement referred to below

_________ __, ____

Re: Sotheby’s, Inc., a New York corporation (“ Sotheby’s, Inc. ”), Sotheby’s Financial Services, Inc., a Nevada corporation (“ SFS Inc. ”), Sotheby’s Financial Services California, Inc., a Nevada corporation (“ SFS California ”), Oberon, Inc., a Delaware corporation (“ Oberon ”). Sotheby’s Ventures, LLC, a New York limited liability company (“ Ventures LLC ” and, collectively with Sotheby’s, Inc., SFS Inc., SFS California and Oberon, the “ Domestic Borrowers ”), Sotheby’s, a company registered in England (“ Sotheby’s U.K. ”), Sotheby’s Financial Services Limited, a company registered in England (“ SFS Ltd. ”), and Sotheby’s Hong Kong Limited, a company incorporated in Hong Kong (“ Sotheby’s H.K. ” and, collectively with Sotheby’s U.K. and SFS Ltd., the “ Foreign Borrowers ” and, collectively with the Domestic Borrowers, the “ Borrowers ”)

Reference is made to the Amended and Restated Credit Agreement, dated as of August 22, 2014 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among the Borrowers, the other Persons named therein as Credit Parties, General Electric Capital Corporation, as Administrative Agent, Collateral Agent and a Lender and the other Persons signatory thereto from time to time as Lenders. C apitalized terms used herein but not otherwise defined herein shall have the respective meanings ascribed to such terms in the Credit Agreement.

The Borrower Representative, on behalf of the Borrowers, hereby gives you irrevocable notice pursuant to Section 1.1(b)(i) of the Credit Agreement that it requests Swing Line Advances under the Credit Agreement (the “ Proposed Advance ”) and, in connection therewith, sets for the following information:

A. The date of the Proposed Advance is __________, ____ (the “ Funding Date ”).

B. The aggregate principal amount of Proposed Advance is [$][£][HK$][€]_________.

C. The Proposed Advance is a [Dollar][Multicurrency] Tranche Swing Line Advance.

Borrower Representative hereby (i) represents and warrants that all of the conditions contained in Section 2.2 of the Credit Agreement have been satisfied on and as of the date hereof, and will continue to be satisfied on and as of the Funding Date, before and after giving effect thereto; and (ii) reaffirms the cross-guaranty provisions set forth in Section 12 of the Credit Agreement and the guaranty and continuance of Collateral Agent’s Liens, on behalf of itself and the other Secured Parties, pursuant to the Collateral Documents and (iii) represents and warrants that, as of the date of this notice and after giving effect to the making

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of the Proposed Advance, Parent shall be in compliance with Section 4.03 of the Senior Note Indenture .

Sincerely,

SOTHEBY’S,

as Borrower Representative

By: ___ /s/ Michael L. Gillis ____

Name: ___ Michael L. Gillis _______

Title: ___ Vice President and Treasurer

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EXHIBIT 10.5

SECOND AMENDED AND RESTATED SOTHEBY'S

RESTRICTED STOCK UNIT PLAN

(Reflecting Amendments Effective as of January 1, 2015)

SECOND AMENDED AND RESTATED

SOTHEBY'S RESTRICTED STOCK UNIT PLAN

(Reflecting Amendments Effective as of January 1, 2015)

TABLE OF CONTENTS

Page


ARTICLE 1	BACKGROUND, AMENDMENT

PURPOSE AND TERM 1

1.1 Establishment of Original Plan and Amendment

and Restatement of Plan 1

1.2 Plan Amendments 1

1.3 Purpose of Plan 1

1.4 Adoption and Term 1

ARTICLE 2 DEFINITIONS 1

ARTICLE 3 ADMINISTRATION 5

3.1 Administration 5

3.2 Expenses of Administration 6

3.3 Indemnification 6

ARTICLE 4 SHARES OF COMMON STOCK SUBJECT TO THE PLAN 6

4.1 Shares Subject to the Plan 6

4.2 Restricted Stock Units

Subject to Forfeited or Terminated Awards or Withholding Tax 6

ARTICLE 5 PARTICIPATION 6

ARTICLE 6 RESTRICTED STOCK UNITS 6

6.1 Grant of Restricted Stock Units 6

6.2 Establishment of Performance Criteria and Restrictions 7

6.3 Transfer of Shares 7

6.4 Voting and Dividend Rights 7

ARTICLE 7 TERMS AND CONDITIONS OF RESTRICTED STOCK UNITS 8

7.1 Award Agreements 8

7.2 Plan Provisions Control Terms 8

7.3 Time Vesting 8

7.4 Acceleration of Vesting 9

7.5 Taxes and Withholding 9

7.6 Surrender of Restricted Stock Units 9

7.7 Incorporation by Reference

of Articles of Incorporation 9

ARTICLE 8 AMENDMENT AND TERMINATION OF THE PLAN;

REORGANIZATIONS AND RECAPITALIZATIONS

OF THE CORPORATION 9

8.1 Amendment of the Plan 9

8.2 Termination of the Plan 10 8.3 Reorganizations and Recapitalizations of

the Corporation 10

ARTICLE 9 COMPLIANCE WITH OTHER LAWS AND REGULATIONS 11

9.1 Registration or Qualification of Securities 11

9.2 Representation 11

ARTICLE 10 RESTRICTIONS ON TRANSFER 11

ARTICLE 11 GENERAL PROVISIONS 11

11.1 No Right to Continued Employment 11

11.2 Beneficiaries or Representatives of a Participant 11

11.3 Elimination of Fractional Shares 11

11.4 Inspection of Records 12

11.5 Word Meanings 12

11.6 Section Titles 12

11.7 Severability 12

11.8 Compliance with Section 16(b) of the Securities

Exchange Act 12

11.9 Strict Construction 12

11.10 Choice of Law 12

11.11 Section 409A……………………………………………………………… 13

SOTHEBY'S SECOND AMENDED AND RESTATED

RESTRICTED STOCK UNIT PLAN

(Reflecting Amendments Effective as of January 1, 2015)

Article 1

Background, Amendment, Purpose and Term

1.1 Establishment of Original Plan and Second 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 Shareholders, the Second Amended and Restated Sotheby’s Restricted Stock Unit Plan was approved by shareholders, 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.

1.2 Plan Amendments. The Plan was amended and restated effective as of March 1, 2013 to (a) increase the number of reserved shares for issuance by 3,000,000 shares to permit future grants; (b) renew the provision permitting the reissuance of shares withheld upon vesting or settlement for income tax withholding for an additional ten years; and (c) eliminate Restricted Stock, Restricted Stock Entitlements and the French Sub-Plan. The Plan was further 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.

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

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

Article 2

Definitions

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

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

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

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

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

to the rights and obligations of such Participant under the Plan and the Award Agreement upon such Participant's death.

2.5 "Board of Directors" means the Board of Directors of the Corporation.

2.6 "Business Day" means any Day on which the New York Stock Exchange is open for trading.

2.7 “Cause” means and is limited to:

(a) a Participant’s conviction for a felony crime; or

(b) 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 .

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

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

2.10 "Common Stock" means Corporation, par value $0.01 per share.

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

2.12 "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.

2.13 "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.

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

2.15 "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.

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

2.17 "Employee" means an individual who is and continues to be employed (within the meaning of section 3401 of the Code and the regulations promulgated thereunder) by the Corporation or a Subsidiary (while a corporation continues to be a Subsidiary) including officers (whether or not they may also be directors) of the Corporation or a Subsidiary. An Employee shall cease to be an Employee upon the voluntary or involuntary termination of his employment with the Corporation or a Subsidiary for any reason, including death, Disability, Retirement, 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.

2.18 "Exchange Act" means the Securities Exchange Act of 1934, as amended.

2.19 "Executive Bonus Plan" means the Sotheby's Executive Bonus Plan, most recently amended as of January 1, 2013, and as it may be further amended from time to time.

2.20 "Fair Market Value" means the value of the underlying shares of Common Stock subject to the Restricted Stock Unit, determined for a particular date as follows:

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

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

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

2.21 "Fiscal Year" means the fiscal year of the Corporation.

2.22 "Fractional Share" means a portion of, or less than the whole of, a share of Common Stock.

2.23 "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);

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.

2.24 "Participant" means an Employee who has an outstanding Award granted under this Plan.

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

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

2.27 "Plan" means the Sotheby’s Restricted Stock Unit Plan as amended and restated effective as of March 1, 2013, as such plan may be amended from time to time.

2.28 "Reporting Person" means any and all Employees subject to Section 16 of the Exchange Act.

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

2.30 "Retirement" means the termination of employment by an Employee after the attainment of the age of sixty-five (65) years or upon such earlier date as required by local law or as otherwise determined or approved by the Compensation Committee and under any other conditions the Committee may add including, but not limited to, a minimum length of service requirement.

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

employees” (as defined in Code Section 162(m)) so that the Restricted Stock Units can qualify as performance-based compensation under Code Section 162(m).

2.32 ”Securities Act” means the Securities Act of 1933, as amended.

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

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

2.35 "Valuation Date" means, with respect to an Award of Restricted Stock Units, 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 or the Section 162(m) Subcommittee as applicable shall have the sole discretionary authority:

(a) to authorize the granting of Restricted Stock Unit Awards;

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

(d) to establish and modify administrative rules for the Plan;

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

(f) to execute or cause to be executed Award Agreements; and

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

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

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

and the regulations promulgated thereunder. Any Person or Persons delegated or designated by the Committee shall be subject to the same obligations and requirements imposed on the Committee and its members under the Plan.

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

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

Article 4

Shares of Common Stock Subject to the Plan

4.1 Shares Subject to the Plan. The shares of stock underlying Restricted Stock Unit Awards granted under the Plan shall be shares of the Corporation’s authorized but unissued or reacquired Common Stock. Subject to adjustment as provided in Section 8.3 hereof, the aggregate number of shares of Common Stock that may be issued by the Corporation under the Plan is 9,500,000 shares of Common Stock. The number of shares of Common Stock underlying Restricted Stock Units shall not exceed the relevant number of shares of Common Stock remaining available for issuance under the Plan.

4.2 Restricted Stock Units Subject to Forfeited or Terminated Awards or Withholding Tax. In the event that any shares of Common Stock underlying Restricted Stock Unit Awards, with respect to an outstanding Award 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 shareholders, if such approval is then deemed necessary to comply with applicable rules or regulations.

Article 5

Participation

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

Article 6

Restricted Stock 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 Executive Bonus Plan which are intended to be "performance-based compensation" under the provisions of Code Section 162(m). The maximum aggregate number of shares which may be granted pursuant to Awards to any one Employee during a 36-consecutive month period shall be limited to 1 million shares. For purposes of calculating the maximum number of shares of stock granted during a 36-consecutive month period to an Employee who is subject to Code Section 162(m), any shares that are granted and subsequently cancelled or surrendered during such 36-month period, including shares surrendered or cancelled for tax withholding purposes, shall continue to be counted against the maximum number of shares which may be granted to such Employee pursuant to the Plan during such period. Notwithstanding the foregoing, to the extent an adjustment is made to the Common Stock to reflect a change in the corporate capitalization of the Corporation, the additional number of Restricted Stock Units, if any, shall not be counted against the maximum number of shares which may be granted to the Participant.

6.2 Establishment of Performance Criteria and Restrictions. Restricted Stock Unit Awards will be subject to time vesting under Section 7.3. The Compensation Committee may, in its sole discretion, at the time a grant is made, prescribe restrictions in addition to or other than time vesting, including the satisfaction of corporate or individual performance objectives, which shall be applicable to all or any portion of the Award. Corporate or individual performance criteria include, but are not limited to, achievement of corporate pre-tax earnings thresholds, designated levels or changes in total shareholder return, net income, return on equity, return on assets, EBIDTA, or such other financial measures or performance criteria as the Committee may select. Such restrictions shall be set forth in the Participant’s Award Agreement. Each Award may be subject to a different Period of Restriction as specified in the Award Agreement. Subject to Section 7.4 and except with respect to grants of Restricted Stock Units intended to qualify as performance based compensation for purposes of Section 162(m) of the Code, the Compensation Committee may, in its sole discretion, shorten or terminate the Period of Restriction or waive any other restrictions applicable to all or a portion of such Award.

6.3 Transfer of Shares. The Corporation will establish procedures regarding the delivery of share certificates or the transfer of shares in book entry form. None of the Restricted Stock 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 as provided in Section 6.3. Participants will have the right to receive dividend equivalents with respect to the equivalent number of Restricted Stock Units. Such dividend equivalents shall be taxed to the Participant in accordance with applicable law. All distributions, if any, received by an Employee with respect to Restricted Stock Units as a result of any stock split, stock distributions, combination of shares, or other similar transaction shall be subject to the restrictions of the Plan.

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

Completed Years of Employment Cumulative

From Date of Grant Vesting Percentage

1 25%

2 50%

3 75%

4 or more 100%

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 through the notice period provided that the originally scheduled vesting and payment dates and performance requirements are not changed. However, a Participant shall be 100% vested in the event he terminates employment or gives notice of termination of employment by reason of death, Disability, or Retirement. 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 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 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, 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 after the date of a qualifying termination event as described above occurring within two (2) years of the date of a Change in Control. This paragraph applies to all Restricted Stock Units, whether with or without performance-based restrictions.

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. Subject to Section 7.4, the Compensation Committee may approve Restricted Stock Unit Awards that provide alternate vesting schedules. For purposes of this Section 7.3, account shall be taken of any adjustments made to the number of Restricted Stock Units subject to Awards as described in Section 8.3 hereof after the Date of Grant, such that the number of shares of Common Stock underlying Restricted Stock Units with respect to which a Participant is vested shall be redetermined at the time of an adjustment.

If this Section 7.3 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.

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 Taxes and Withholding . When a Participant incurs tax liability in connection with the lapse of a restriction which tax liability is subject to tax withholding under applicable tax laws, and the Participant is obligated to pay an amount required to be withheld under applicable tax laws, the withholding tax obligation will be satisfied by withholding from shares to be issued upon lapse of such restriction that number of shares of Common Stock having a Fair Market Value equal to the minimum amount required to be withheld (but in no event any more than the minimum amount required to be withheld). Generally, such shares withheld shall be returned to the reserve held by the Corporation unless the Participant opts to make payment in cash in lieu of the share withholding pursuant to procedures established by the Corporation. Additionally, the Corporation shall also be permitted to accomplish this withholding requirement by selling the number of shares of Common Stock sufficient to cover the full tax liability, and to the extent any excess amount remains after satisfying the tax liability, such amount shall be refunded to the Participant. The amount of any such withholding shall be determined by the Corporation.

7.6 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.

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

Article 8

Amendment and Termination of the Plan; Reorganizations and

Recapitalizations of the Corporation

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

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

8.3 Reorganizations and Recapitalizations of the Corporation.

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

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

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

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

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

Article 9

Compliance With Other Laws and Regulations

9.1 Registration or Qualification of Securities. The Plan and the grant of Restricted Stock Units under the Plan shall be subject to all applicable federal and state laws, rules, and regulations and to such approvals by any government or regulatory agency as may be required. Each Restricted Stock Unit 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 Restricted Stock Units, the Restricted Stock Units shall comply with any registration, qualification, consent or approval requirements as imposed by the Compensation Committee.

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

Article 10

Restrictions on Transfer

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

Article 11

General Provisions

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

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

11.3 Elimination of Fractional Shares. If under any provision of the Plan that requires a computation of the number of shares of Common Stock the number so computed is not a whole number of

shares of Common Stock, such number of shares of Common Stock shall be rounded down to the next whole number.

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

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

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

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

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

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

11.10 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.

11.11 Section 409A.

(a) Awards are intended to comply with or be exempt from the requirements of Section 409A of the Internal Revenue Code ("Section 409A"). To the extent that any Award is subject to the requirements of Section 409A, then, with respect to such Award, the Plan and the Award Agreement will be interpreted to the maximum extent permitted by law in a manner to comply with the requirements of Section 409A.

(b) Notwithstanding any other provision of the Plan or the Award Agreement, Awards that are subject to the requirements of Section 409A may only be paid out upon an event and in a manner that complies with Section 409A. Accordingly, any such payment that is to be made upon or as a result of a termination of employment, change in control, or disability, shall only be made if such termination of employment constitutes a "separation from service" (as defined under Section 409A), and, for purposes of any such provision of the Plan or the Award Agreement, (i) references to a "termination," "termination of employment," "employment termination date," or like terms shall mean "separation from service" (as defined in Section 409A), (ii) references to a "change in control" shall be limited by the definition of "change in control event" set forth in Treasury Regulation Section 1.409A-3(i)(5), and (iii) references to "disability" shall be limited by the definition of disability set forth in Treasury Regulation Section 1.409A-3(i)(4).

(c) To the extent that an Award is subject to the requirements of Section 409A and is payable as a result of a separation from service (as defined under Section 409A) during the six-month period immediately following such separation from service, then, notwithstanding any other provision in the Plan or the Award Agreement to the contrary, the Award will not be paid to the Participant during the six-month period immediately following the Participant's separation from service if the Participant is then deemed to be a "specified employee" (as that term is defined under Section 409A and determined pursuant to any procedures and elections made by the Corporation). Such Award shall instead be paid during the seventh month following such separation from service. This paragraph will cease to be applicable in the event of and following the Participant's death.

(d) For purposes of Section 409A, any installment payment provided under an Award shall be treated as a separate payment.

(e) Notwithstanding the foregoing, the Corporation makes no representation about the effect of Section 409A on the provisions of any Award and the Corporation shall have no liability to any Participant in the event that the Participant becomes subject to taxation (including taxes, penalties, and interest) under Section 409A (other than any reporting and/or withholding obligations that the Corporation may have under applicable tax law) or in the event the Participant incurs other expenses on account of non-compliance or alleged non-compliance with Section 409A.

To record the adoption of the Second Amended and Restated Sotheby’s Restricted Stock Unit Plan (Reflecting Amendments Effective as of January 1, 2015), the Corporation has caused the execution hereof as of this 1st day of January, 2015.

SOTHEBY'S

a Delaware corporation

By: /S/ Susan Alexander

Its: Executive Vice President, Worldwide Head of Human Resources

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Thomas S. Smith, certify that:


(1)	I have reviewed this Quarterly Report on Form 10-Q for the period ended June 30, 2015 of Sotheby’s;


(2)	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


(3)	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


(4)	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


(5)	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



/s/ THOMAS S. SMITH
Thomas S. Smith
President and Chief Executive Officer
Sotheby’s
August 7, 2015

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Patrick S. McClymont, certify that:


(1)	I have reviewed this Quarterly Report on Form 10-Q for the period ended June 30, 2015 of Sotheby’s;


(2)	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


(3)	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


(4)	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


(5)	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



/s/ PATRICK S. MCCLYMONT
Patrick S. McClymont
Executive Vice President and Chief Financial Officer
Sotheby’s
August 7, 2015

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Sotheby’s on Form 10-Q for the period ended June 30, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas S. Smith, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:


(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the registrant.



/s/ THOMAS S. SMITH
Thomas S. Smith
President and Chief Executive Officer
Sotheby’s
August 7, 2015

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Sotheby’s on Form 10-Q for the period ended June 30, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Patrick S. McClymont, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:


(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the registrant.



/s/ PATRICK S. MCCLYMONT
Patrick S. McClymont
Executive Vice President and Chief Financial Officer
Sotheby’s
August 7, 2015