EXHIBIT 10.2
EXECUTION COPY

 

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

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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

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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

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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

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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

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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

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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

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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

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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 Restatement 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

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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
 
 
 

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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, 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,

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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)    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

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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

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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 $40,000,000 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 $15,000,000 at any time, shall not cause the
Dollar Equivalent of the aggregate Multicurrency Tranche Revolving Loan to
exceed the Maximum Multicurrency Dollar 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

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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
$100,000,000, (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

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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

6

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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

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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

8

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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.

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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 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

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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

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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.

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(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.

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(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 (5th) 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

14

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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:
(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 Auction Revolving Credit Agreement);
(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);
(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 Auction 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 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

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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);
(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 Auction 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 Auction
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 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

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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
(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 Auction
Revolving Credit Agreement).
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:
(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
Auction Revolving Credit Agreement);
(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);
(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 Auction
Revolving Credit Agreement);

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(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 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
(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 Auction
Revolving Credit Agreement).
Neither the 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).

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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
 

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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.
(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.

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(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 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).

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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.
(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.

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:
(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

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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

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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 $150,000,000 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

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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);
(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 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.

(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 Auction Revolving Credit
Agreement.
(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

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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.

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 Revolving Loan shall be applied ratably to the
portion thereof held by each Lender as determined by its Pro Rata Share. All
payments and prepayments applied to the Dollar Tranche Revolving Loan shall be
applied 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

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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;
(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 Auction 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 Auction 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 Auction 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 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

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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

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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);
(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 Auction 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 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

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(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);
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
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.

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

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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.
(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

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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,

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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;

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(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

b.
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

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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
(C)    a Treaty Lender.
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

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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.
(c)    Tax Credit. If a Credit Party makes a Tax Payment and the relevant Lender
determines that:

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(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

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(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.

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(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

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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,

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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.

(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

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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
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.

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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.
(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).
(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)    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.

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(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:
(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

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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.
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),

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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
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.

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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.

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.

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(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.
(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 Auction 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

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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

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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

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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

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(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

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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.

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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. 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

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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 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 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.
(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.

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(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 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.
(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) 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.

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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.

(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,

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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

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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.

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.

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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

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(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), 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.

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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.

(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.
(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

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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.
(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.

(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

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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

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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 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.
(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.

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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;

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(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” (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;
(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
(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.

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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;
(ii)    obligations (contingent or otherwise) in respect of 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 thereof or amendments or modifications thereto that do not have the
effect of (x) 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, amendment or
modification (as reasonably determined by the Administrative Agent) or (y)
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 Permitted U.K. Real Estate Financing being refinanced, amended or
modified;
(iii)    obligations (contingent or otherwise) under the York Avenue Loan
Documents and refinancings 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, amendment or
modification (as reasonably determined by the Administrative Agent) 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 York
Avenue Loan Documents being refinanced, amended or modified;
(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,

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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.
(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

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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.

(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.

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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;
(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

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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 securing Indebtedness permitted
pursuant to clause (ii)(B) 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.

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

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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;
(c) employee loans permitted under Section 6.4(b);
(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

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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 Auction
Revolving Credit Agreement, Parent may pay dividends or distributions on its
Stock so long as, both before and after giving effect thereto, (i) no

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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.

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.

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.

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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
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

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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

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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

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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.

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,
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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.

(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

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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 Federal Reserve
Bank, and 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;
provided, that no such pledge to a Federal Reserve Bank shall release such
Lender from such Lender’s obligations hereunder or under any other Loan
Document.
(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

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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).

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(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 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.

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

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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

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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.

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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.

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

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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 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

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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.

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(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.
(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

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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 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

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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

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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.
(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 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

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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).
(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.
(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].
(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

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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 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

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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 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.
(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
Borrowing Base” or “Foreign Borrowing Base,” unless in writing and signed by the
Administrative Agent and the Supermajority Lenders, (ii) modify any criteria set
forth in Section 1.6 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 (iii) 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

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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.
(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.

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(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;
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 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.

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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;
(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
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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.
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.

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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 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

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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 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.

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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.
(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

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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.
(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

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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.

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 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

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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.

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.

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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 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

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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.

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 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.

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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.
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

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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 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

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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 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.

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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/Clive Lord                
Name: Michael L. Gillis
Name: Clive Lord
Title: SVP, Treasurer
Title: Director
 
 
SOTHEBY’S HONG KONG LIMITED

SOTHEBY’S,
a company registered in England
 
 
By:  /s/Henry Li                
By:  /s/Clive Lord                
Name: Henry Li
Name: Clive Lord
Title: Director
Title: Director
 
 
 
 
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: SVP, Treasurer
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Signature Page to Amended and Restated Credit Agreement
(SFS Revolving Credit Facility)

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GENERAL ELECTRIC CAPITAL CORPORATION, as Administrative Agent, Collateral Agent,
and a Lender
 
 
 
 
 
By:  /s/Philip Carfora                
 
Name: Philip Carfora
 
Title: Duly Authorized Signatory

 

Signature Page to Amended and Restated Credit Agreement
(SFS Revolving Credit Facility)

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JPMORGAN CHASE BANK, N.A., as an Auction Dollar Tranche Lender and an Auction
Multicurrency Tranche Lender

By: /s/Kennedy A. Capin            
Name:Kennedy A. Capin
Title: Vice President

For US Legal Notices:
Kennedy A. Capin
Vice President
JPMorgan Chase Bank, N.A Branch

277 Park Avenue, Floor 22
New York, NY 10172
T: 212-270-1480
F: 646-534-2268

For US Operational Notices:
Robin D' Souza
Operations Specialist
JPMorgan Chase Bank, N.A

10 South Dearborn
Chicago, IL 60603-2300
New York, NY 10172
T: 91 80 66760473
E: cbc.participation@jpmchase.com

For UK Legal Notices:
Helen Mathie
Vice President
JPMorgan Chase Bank, N.A., London Branch

25 Bank Street, Canary Wharf
London, E14 5JP
T: +44 (0)20 7134 4398
F: +44 (0)20 3493 1365

For UK Operational Notices:
Gomathy B
Transactional Processing Specialist
JPMorgan Chase Bank, N.A., London Branch

Signature Page to Amended and Restated Credit Agreement
(SFS Revolving Credit Facility)

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25 Bank Street, Canary Wharf
London, E14 5JP
T: 91 80 4416 3110
E: cls.emea.loan.ops@jpmorgan.com

Signature Page to Amended and Restated Credit Agreement
(SFS Revolving Credit Facility)

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HSBC BANK USA, NATIONAL ASSOCIATION, as a Dollar Tranche Lender and a
Multicurrency Tranche Lender

By: /s/Varun Gupta        
Name: Varun Gupta
Title: Vice President

Address for notices:
452 Fifth Avenue - 4th Floor
New York, NY 10018
Attn: Varun Gupta / Alma Boxe-Crawford
Facsimile: 212 525 5257

Lending office:
452 Fifth Avenue - 4th Floor
New York, NY 10018

Signature Page to Amended and Restated Credit Agreement
(SFS Revolving Credit Facility)

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HSBC BANK PLC, as a Dollar Tranche Lender and a Multicurrency Tranche Lender

By: /s/Patrick J. Mlodozenec     
Name: Patrick J. Mlodozenec     
Title: Senior Corporate Banking Manager

Address for notices:
8 Canada Square, London
E14 5HQ    

    
Attn: Loans Admin Manager
Facsimile: 02079924680
Lending office:
8 Canada Square,
London E14 5HQ    
    

Signature Page to Amended and Restated Credit Agreement
(SFS Revolving Credit Facility)

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GOLDMAN SACHS BANK USA, as a Dollar Tranche Lender and a Multicurrency Tranche
Lender

By: /s/Rebecca Kratz    
Name: Rebecca Kratz
Title: Authorized Signatory

Address for notices:
Goldman Sachs Bank USA
200 West Street
New York, NY 10282
Fax: 917-977-3966

Lending office:
Goldman Sachs Bank USA
200 West Street
New York, NY 10282
Fax: 917-977-3966
 

Signature Page to Amended and Restated Credit Agreement
(SFS Revolving Credit Facility)

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RBS CITIZENS, N.A., as a Dollar Tranche Lender and a Multicurrency Tranche
Lender

By: /s/Hassan Sayed    
Name: Hassan Sayed
Title: Vice President

Address for notices:
RBS Citizens
20 Cabot Road
Medford, MA 02155
Attn: Laura Ferraz
Facsimile: (855) 457-1554

Lending office:
RBS Citizens
340 Madison Ave.
22nd Floor
New York, NY 10173
Attn: Hassan Sayed
 

Signature Page to Amended and Restated Credit Agreement
(SFS Revolving Credit Facility)

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CREDIT SUISEE AG, as a Dollar Tranche Lender and a Multicurrency Tranche Lender

By: /s/Christophe Muller    
Name: Christophe Muller
Title: Director

By: /s/Lorenz Meier    
Name: Lorenz Meier
Title: Assistant Vice President

Address for notices:
Credit Suisse AG
Giesshubelstrasse 30
8070 Zurich (Switzerland)
Attn: Mr. Lorenz Meier
Facsimile: +41 (0) 44 333 40 41

Lending office:
Credit Suisse AG
Giesshubelstrasse 30
8070 Zurich (Switzerland)

 

Signature Page to Amended and Restated Credit Agreement
(SFS Revolving Credit Facility)

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NYCB SPECIALTY FINANCE COMPANY, LLC, a wholly owned subsidiary of New York
Community Bank, as a Dollar Tranch Lender

By: /s/Willard D. Dickerson, Jr.
Name: Willard D. Dickerson, Jr.
Title: Senior Vice President

Address for notices:
16 Chestnut Street
Foxboro, MA 02035

Attn: Mary Trabucco    
Facsimile: 508-543-3006    

Lending office:
16 Chestnut Street
Foxboro, MA 02035

Signature Page to Amended and Restated Credit Agreement
(SFS Revolving Credit Facility)

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COMERICA BANK, as a Dollar Tranche Lender and a Multicurrency Tranche Lender

By: /s/Timothy O'Rourke        
Name: Timothy O'Rourke
Title: Vice President

Address for notices:
Comerica Bank    
3551 Hamlin - MC 2397    
Auburn Hills, MI 48326    
Attn: Timothy O'Rourke
Facsimile: (248) 371-6251

Lending office:
Comerica Bank    
3551 Hamlin - MC 2397    
Auburn Hills, MI 48326    

Signature Page to Amended and Restated Credit Agreement
(SFS Revolving Credit Facility)

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THE PRIVATE BANK AND TRUST COMPANY, as a Dollar Tranche Lender

By: /s/Andrew Hoffman        
Name: Andrew Hoffman
Title: Officer

Address for notices:
120 S. LaSalle St.
Chicago, IL 60603    

Attn: Robert Mary
Facsimile: 312-291-2174

Lending office:
120 S. LaSalle St.
Chicago, IL 60603    

Signature Page to Amended and Restated Credit Agreement
(SFS Revolving Credit Facility)

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INVESTORS BANK, as a Dollar Tranche Lender

By: /s/L. W. Carlson        
Name: Lynsey W. Carlson
Title: V.P. Business Lending

Address for notices:
Investor's Bank    
101 JFK Parkway    
Short Hills, NJ 07078    
Attn: Margaret Scuderi
Facsimile: 973-522-1684

Lending office:
Investor's Bank
255 Lafayette Street
Newark, NJ 07105    

Signature Page to Amended and Restated Credit Agreement
(SFS Revolving Credit Facility)

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ISRAEL DISCOUNT BANK OF NEW YORK, as a Dollar Tranche Lender and a Multicurrency
Tranche Lender a

By: /s/ Michael Paul            
Name: Michael Paul
Title: Senior Vice President

By: /s/ Ekaterina Evenko        
Name: Ekaterina Evenko
Title: Assistant Vice President

Address for notices:
511 Fifth Ave    
New York, NJ 10017    
    
Attn: Ekaterina Evenko
Facsimile: 212-551-8720

Lending office:
511 Fifth Ave    
New York, NJ 10017    

Signature Page to Amended and Restated Credit Agreement
(SFS Revolving Credit Facility)

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PEOPLE'S UNITED BANK, as a Dollar Tranche Lender

By: /s/ Jeffrey Giunta            
Name: Jeffrey Giunta    
Title: Vice President

Address for notices:
People's United Business Capital
One Conant Street
Danvers, MA 01923

Attn: Jeffrey Giunta    
Facsimile: (978) 777-0732

Lending office:
People's United Business Capital
One Conant Street
Danvers, MA 01923

Signature Page to Amended and Restated Credit Agreement
(SFS Revolving Credit Facility)

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TD BANK, N.A., as a Dollar Tranche Lender

By:     /s/Stephen A. Caffrey            
Name:    Stephen A. Caffrey
Title: Vice President

Address for notices:
2005 Market Street, 2nd Floor    
Philadelphia, PA 19103    
Attn: ABL Dept.
Facsimile: 215-282-2438

Lending office:
2005 Market Street, 2nd Floor    
Philadelphia, PA 19103    
Attn: ABL Dept.
Fascimile: 215-282-2438

Lending office:
2005 Market Street, 2nd Floor    
Philadelphia, PA 19103    
Attn: ABL

Signature Page to Amended and Restated Credit Agreement
(SFS Revolving Credit Facility)

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BANK LEUMI USA, as a Dollar Tranche Lender and a Multicurrency Tranche Lender

By: /s/Alex Kozlowsky    
Name: Alex Kozlowsky
Title: Vice President

By: /s/Robert Kowalewski    
Name: Robert Kowalewski
Title: Assistant Vice President

Address for notices:
579 Fifth Avenue
New York, NY 10017    
Attn: Ann Green / Virginia DeLeon
Facsimile: (212) 626-1309

Lending office:
579 Fifth Avenue
New York, NY 10017    

Signature Page to Amended and Restated Credit Agreement
(SFS Revolving Credit Facility)

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WEBSTER BUSINESS CREDIT CORPORATION, as a Dollar Tranche Lender and a
Multicurrency Tranche Lender

By: /s/Harvey Winter        
Name: Harvey Winter
Title: Senior Vice President

Address for notices:
Webster Business Credit Corporation
360 Lexington Avenue
New York, NY 10017
Attn: Sotheby's account executive
Facsimile: 212-806-4510

Lending office:
Webster Business Credit Corporation
360 Lexington Avenue
New York, NY 10017

Signature Page to Amended and Restated Credit Agreement
(SFS Revolving Credit Facility)

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FLUSHING BANK, as a Dollar Tranche Lender

By: /s/John Stangl                
Name:John Stangl
Title: Vice President

Address for notices:
225 Park Avenue South, 2nd Floor
New York, NY 10003    
    
Attn: John Stangl/Jeremy Applebaum
Facsimile: 212-477-8253

Lending office:
225 Park Avenue South, 2nd Floor
New York, NY 10003

[

Signature Page to Amended and Restated Credit Agreement
(SFS Revolving Credit Facility)

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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             
YORK AVENUE DEVELOPMENT, INC.
Name: Michael L. Gillis
SOTHEBY’S THAILAND, INC.
Title: SVP, Treasurer
SOTHEBY’S HOLDINGS INTERNATIONAL,     INC.
 
SOTHEBY’S NEVADA, INC.
 
SOTHEBYS.COM LLC
OATSHARE LIMITED
SOTHEBYS.COM AUCTIONS, INC.
 
SIBS, LLC
 
72ND AND YORK, INC.
By:   /s/Clive Lord             
THETA, INC.
Name: Clive Lord
YORK HOLDINGS INTERNATIONAL, INC.
Title: Director
SOTHEBY’S RES, INC.
 
 
 
By:  /s/Michael L. Gillis              
 
Name: Michael L. Gillis
 
Title: SVP, Treasurer
CATALOGUE DISTRIBUTION COMPANY LIMITED
 
NOORTMAN MASTER PAINTINGS LTD.

SOTHEBY’S WINE HONG KONG LIMITED
SOTHEBY’S SHIPPING LIMITED

 
YORK UK HOLDCO INTERNATIONAL LIMITED
By:   /s/Henry Li             
 
Name: Henry Li
By:   /s/Clive Lord             
Title: Director
Name: Clive Lord
 
Title: Director
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Signature Page to Amended and Restated Credit Agreement
(SFS Revolving Credit Facility)

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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), 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 $85,000,000 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 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.
“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 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 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.
“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.
“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 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 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 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 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).
“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 Loan Debtor” means an Account Debtor liable on an Art Loan.
“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 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” 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
(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
$20,000,000 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 $20,000,000 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.
“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.
“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(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).
“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 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.
“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.
“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.
“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.
“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
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 Five Hundred Fifty Million Dollars ($550,000,000) on the
Restatement 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, 2019, (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 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.
“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).
“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.
“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 Four Hundred
Million Dollars ($400,000,000) on the Restatement 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
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.
“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 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.
“Domestic Credit Parties” means each Domestic Borrower and each Domestic
Subsidiary Guarantor.
“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 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.
“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 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 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 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 (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 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;
(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.
“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.
“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.
“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 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.
“Fair Labor Standards Act” means the Fair Labor Standards Act, 29 U.S.C. §201 et
seq.
“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 $85,000,000
and (2) the average daily Liquidity Amount for the previous thirty (30)
consecutive Business Days shall be less than $150,000,000, or (b) Aggregate
Borrowing Availability shall be less than $70,000,000 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.
“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 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.
“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 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.
“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 Currency Revolving Credit Advance” has the meaning ascribed to it in
Section 1.1(a)(i).
“Foreign Currency Lender” shall mean each Lender (a) designated in Annex J to
the Agreement or in the most recent Assignment Agreement executed by such Lender
as a “Foreign Currency Lender” or (b) that shall have become a Foreign Currency
Lender pursuant to Section 9.1(i).
“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 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.
“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.
“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.
“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 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.
“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.
“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.
“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 (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.
“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 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 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.
“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.
“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 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.
“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 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 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.
“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.
“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 One Hundred Fifty
Million Dollars ($150,000,000) on the Restatement 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 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.
“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.
“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 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), (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, (c) failed to fund, and not cured,
loans, participations, advances, or reimbursement obligations under one or more
other syndicated credit facilities, unless subject to a good faith dispute, or
(d) 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 (d), and 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).
“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 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” means Sotheby’s, a Delaware corporation.
“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.
“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 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 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.
“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.
“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;
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 Dollar Tranche Commitment, (i) prior to the Commitment
Termination Date, the percentage obtained by dividing (x) the Dollar Tranche
Commitment of 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.
“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 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) 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;

(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(b)(iii).
“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 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.
“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.
“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(f).
“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 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.
“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 either a Dollar Revolving Credit Advance or a
Foreign Currency Revolving Credit Advance.
“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).
“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 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.
“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.
“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 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” 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.
“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 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 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.
“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(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.
“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
(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 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.
“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),

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.
“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 Maximum Amount.
“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
(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” (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.
“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.
“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.

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 Ten Million
Dollars ($10,000,000) (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 Five Million Dollars
($5,000,000) (the “ 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 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 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.
(c)    Cash Collateral.
(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 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 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.
(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 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);
(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.
(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 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.
(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.
(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).

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:
(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, 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 pursuant to the sale of Works of Art securing repayment of such Art Loan)
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 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.
ANNEX D (Section 2.1(a))
to
CREDIT AGREEMENT

See attached.

ANNEX E (Section 4.1(a))
to
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.
(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 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, 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.
(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
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.
(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) 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 $85,000,000, 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.

ANNEX F (Section 4.1(b))
to
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 14th 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; 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.
(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 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;
(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) (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.

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 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.

Signature Page to Amended and Restated Credit Agreement
(SFS Revolving Credit Facility)

--------------------------------------------------------------------------------

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:
[Redacted]
Account #:
[Redacted]
ABA #:
[Redacted]
Reference:
[Redacted]

Sterling

Bank Name:
Barclays Bank plc
 
Bank Address:
London, England
 
 
Account Title:
[Redacted]
Account #:
[Redacted]
Swift Code:
[Redacted]
Branch Code:
[Redacted]
Reference:
[Redacted]

Euro

Bank Name:
Deutsche Bank AG
 
Bank Address:
Frankfurt, Germany
 
 
Account Title:
[Redacted]
Account #:
[Redacted]
Swift Code:
[Redacted]
Branch Code:
[Redacted]
Reference:
[Redacted]

Hong Kong Dollars

H-1

--------------------------------------------------------------------------------

Bank Name:
HSBC Bank (Hong Kong)
 
Bank Address:
Hong Kong
 
 
Account Title:
[Redacted]
Account #:
[Redacted]
Swift Code:
[Redacted]
Reference:
[Redacted]

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
ANNEX J (from Annex A - Commitments definition)
to
CREDIT AGREEMENT
 
 
 
 
Lender(s)
Dollar Tranche Commitment
Multicurrency Tranche Commitment
General Electric Capital Corporation
$66,770,893.47
$33,775,981.53
JPMorgan Chase Bank, N.A.
$72,477,807.45
$36,662,817.55
HSBC Bank USA, National Association
$22,827,655.89
$11,547,344.11
HSBC Bank PLC
$22,827,655.89
$11,547,344.11
Goldman Sachs Bank USA
$26,251,804.27
$13,279,445.73
RBS Citizens, N.A.
$22,827,655.89
$11,547,344.11
Credit Suisse AG
$18,901,299.08
$9,561,200.92
NYCB Specialty Finance Company, LLC, a wholly owned subsidiary of New York
Community Bank
$27,500,000.00
$0.00
Comerica Bank
$15,979,359.12
$8,083,140.88
The PrivateBank and Trust Company
$19,456,250.00
$0.00
Investors Bank
$16,225,000.00
$0.00
Israel Discount Bank of New York
$9,861,547.34
$4,988,452.66
People’s United Bank
$16,225,000.00
$0.00
TD Bank, N.A.
$17,187,500.00
$0.00
Bank Leumi USA
$9,131,062.36
$4,618,937.64
Webster Business Credit Corporation
$8,674,509.24
$4,387,990.76
Flushing Bank
$6,875,000.00
$0.00
Total
$400,000,000.00
$150,000,000.00
 
 
 
Lender
Dollar Tranche Swing Line Commitment
Multicurrency Tranche Swing Line Commitment
General Electric Capital Corporation
$10,000,000
$5,000,000

H-2