Document:

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                                                                 Exhibit 10(b)

                                      LEASE

                                     between

                                  [RFR ENTITY]

                                   "Landlord"

                                       and

                                 SOTHEBY'S, INC.

                                    "Tenant"

                                 February 7, 2003

                                    Premises:

     1334 York Avenue

New York, New York

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                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

1.        THE PREMISES.........................................................1

2.        TERM AND EXTENSION OPTIONS...........................................2

3.        BASE RENT............................................................4

4.        SERVICES; UTILITIES..................................................5

5.        IMPOSITIONS..........................................................5

6.        USE..................................................................8

7.        COMPLIANCE WITH LAWS AND AGREEMENTS..................................9

8.        MAINTENANCE AND REPAIR..............................................10

9.        TENANT CHANGES......................................................11

10.       INSURANCE...........................................................15

11.       INDEMNIFICATION; NON-LIABILITY......................................19

12.       DAMAGE OR DESTRUCTION...............................................21

13.       CONDEMNATION........................................................24

14.       EQUIPMENT...........................................................27

15.       SUBORDINATION AND NONDISTURBANCE....................................27

16.       QUIET ENJOYMENT.....................................................29

17.       ASSIGNMENT AND SUBLETTING...........................................29

18.       ENTRY BY LANDLORD; RIGHT OF LANDLORD TO PERFORM
          TENANT'S COVENANTS..................................................39

19.       TENANT'S DEFAULT....................................................41

20.       SIGNS; ROOF RIGHTS..................................................44

21.       SURRENDER OF PREMISES...............................................45

22.       MEMORANDUM OF LEASE.................................................47

23.       RIGHT OF FIRST OFFER................................................48

24.       EXCULPATION OF LANDLORD.............................................49

25.       ADDITIONAL RENT; TENANT'S PAYMENTS..................................49

26.       LANDLORD'S CURE AND ENFORCEMENT RIGHTS..............................50

27.       COVENANT AGAINST LIENS..............................................50

28.       AFFIRMATIVE WAIVERS.................................................50

29.       LANDLORD'S AND TENANT'S CERTIFICATES................................51

30.       LANDLORD'S CONSENT AND APPROVAL.....................................52

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31.       CAPITAL LEASE; NONTERMINABILITY.....................................52

32.       OMITTED.............................................................54

33.       ENCROACHMENTS, RESTRICTIONS, ETC....................................54

34.       OMITTED.............................................................54

35.       MISCELLANEOUS PROVISIONS............................................54

36.       GUARANTY; FINANCIAL STATEMENTS; ANNUAL REPORTS......................56

37.       BROKER..............................................................57

38.       HAZARDOUS MATERIALS; INSPECTIONS....................................57

39.       LEASEHOLD MORTGAGE..................................................59

40.       PUBLICITY...........................................................59

41.       TRANSFER TAXES......................................................59

42.       NO DEVELOPMENT RIGHTS...............................................59

43.       SPECIAL BANKRUPTCY RELATED PROVISIONS...............................60

44.       EXPEDITED ARBITRATION...............................................60

SCHEDULES

Schedule A     Description of Land
Schedule B     Base Rent
Schedule C     Form of Memorandum of Lease

Schedule D     Form of Tenant Non-Disturbance Agreement
Schedule E     Form of Guaranty
Schedule F     Ground Floor Plan

EXHIBITS

Exhibit A  Definitions
Exhibit B  Existing Leases
Exhibit C  Agreements

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                             INDEX OF DEFINED TERMS

DEFINITION                                           WHERE DEFINED

1st Floor Portion                                    Exhibit A
AAA                                                  Section 44(a)
Affiliate                                            Section 17(b)(2)
Assignment Consideration                             Section 17(s)
Base Rent                                            Section 3(a)
Base Rental Rate                                     Schedule B
Bond                                                 Section 9(j)
Business Days                                        Exhibit A
Cap Ex Improvements                                  Section 31(b)
Casualty Depositary                                  Section 12(d)
Casualty Insurance                                   Section 10(a)(1)
Claim                                                Section 11(a)
Code                                                 Section 43(a)
Commencement Date                                    Section 2(a)
Condemnation Depositary                              Section 13(a)(2)
Condemnation Work                                    Section 13(b)(2)
Condemnation Work Proceeds                           Section 13(b)(3)(B)
Control                                              Section 17(b)(2)
Default Rate                                         Exhibit A
Direct Competitor                                    Exhibit A
Dispute Resolution Period                            Section 2(c)
Due Date                                             Section 3(b)
Excluded Property                                    Exhibit A
End of Term Casualty                                 Section 12(g)
Equipment                                            Section 14(a)
Event of Default                                     Section 19(a)
Exchange Date                                        Section 2(c)
Existing Leases                                      Section 17(t)
Extension Notice                                     Section 2(b)
Extension Options                                    Section 2(b)
Extension Terms                                      Section 2(b)
Fair Market Rent                                     Section 2(b)
Fee Mortgagee                                        Section 15(a)
First Class Standard                                 Section 8(a)
First Extension Option                               Section 2(b)
First Extension Term                                 Section 2(b)
Floor Price                                          Section 23(a)
GAAP                                                 Section 17(n)(2)(iv)
Guarantor                                            Section 36(a)
Guaranty                                             Section 36(a)
Hazardous Materials                                  Section 38(a)
Hazmat Conditions                                    Section 38(f)

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Hazmat Losses                                        Section 38(f)
IDA                                                  Section 17(u)
IDA Sublease                                         Section 17(u)
IDA Sublease Documentation                           Section 17(u)
IDA Sub-sublease                                     Section 17(u)
Imposition                                           Section 5(a)
Impositions                                          Section 5(a)
Improvements                                         Section 1(a)
Indemnified Parties                                  Section 11(a)
Initial Term                                         Section 2(a)
Insolvency Laws                                      Section 43(a)
Institutional Lender                                 Exhibit A
Insurance Requirements                               Exhibit A
Interest Rate                                        Exhibit A
JPMorgan                                             Section 37
Land                                                 Section 1(a)
Landlord                                             Cover, Recitals, Exhibit A
Landlord Party                                       Exhibit A
Landlord's Determination                             Section 2(c)
Landlord's Offer                                     Section 23(a)
Landlord's Reminder Notice                           Section 2(d)
Laws                                                 Exhibit A
Leasehold Mortgage                                   Section 39
Liability Insurance                                  Section 19(a)(2)
Losses                                               Section 11(a)
Major Subtenant                                      Section 17(v)
Material Tenant Change                               Section 9(a)(1)
Mortgage                                             Section 15(a)
Net Casualty Insurance Proceeds                      Section 12(d)
Net Condemnation Work Proceeds                       Section 13(b)(4)
Non-Disturbance Agreement                            Section 15(f)
notices                                              Section 35(a)
Occupancy Requirement                                Exhibit A
Offer Notice                                         Section 23(a)
Other Sublease Consideration                         Section 17(r)
Permitted Occupant                                   Section 17(c)
Permitted Occupants                                  Section 17(c)
person                                               Exhibit A
Plans and Specifications                             Section 9(b)
Premises                                             Section 1(a)
Premiums                                             Section 10(c)
Prohibited Tenant Change                             Section 9(c)
Prohibited Use                                       Exhibit A
Proposed Sotheby's Changes                           Section 9(k)
Prudent Owner Standard                               Section 31(b)
purchase price                                       Section 23(c)
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Rating Agencies                                      Section 17(n)(2)(i)
Recapture Occupancy Requirement                      Exhibit A
Recapture Offer                                      Section 17(e)
Recapture Transaction                                Section17(e)
Redemption Right                                     Section 19(b)(2)
Removal Notice                                       Section 9(h)(i)
Restoration Work                                     Section 12(a)
Roof                                                 Section 20(c)
Rooftop Equipment                                    Section 20(c)
Sale Period                                          Section 23(a)
Satellite Antenna                                    Section 20(c)
Second Extension Option                              Section 2(b)
Second Extension Term                                Section 2(b)
Secure Areas                                         Section 18(c)
Separate Street Entrance                             Section 17(v)(B)(ii)
Six Month Holdover Date                              Section 21(b)(iii)
Sixty Day Holdover Date                              Section 21(b)(ii)
Sublease Consideration                               Section 17(r)
substantially all of the Premises                    Section 13(a)(2)(B)
Subtenant SNDA                                       Section 17(v)
Successor Landlord                                   Section 15(d)
Tenant                                               Cover, Recitals, Exhibit A
Tenant Change                                        Section 9
Tenant Changes                                       Section 9
Tenant Named Herein                                  Exhibit A
Tenant Party                                         Exhibit A
Tenant's Assignment Cost                             Section 17(s)
Tenant's Basic Cost                                  Section 17(r)
Tenant's Cap Ex Share                                Section 31(b)
Tenant's Determination                               Section 2(c)
Tenant's Property                                    Exhibit A
Tenant's Proposal                                    Section 17(d)
Tenant's Sublease Expenses                           Section 17(r)
Termination Notice                                   Section 12(g)
Thirty Day Holdover Date                             Section 21(b)(i)
Transfer Notice                                      Section 17(j)
Uncommon Change                                      Exhibit A
Useful Life                                          Section 31(b)
Worker's Compensation Insurance                      Section 10(a)(6)

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                                      LEASE

          THIS LEASE entered into this 7th day of February, 2003, by and
between [RFR Entity], a Delaware limited partnership having an office at
c/o RFR Holding LLC, 400 Park Avenue, New York, NY 10022 (hereinafter called
"LANDLORD") and SOTHEBY'S, INC., a New York corporation having an office at
1334 York Avenue, New York, New York 10021 (hereinafter called "TENANT").

                              W I T N E S S E T H:

          Upon the terms and subject to the conditions hereinafter set forth,
Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, the
Premises (as hereinafter defined).

          1.   THE PREMISES.

          (a)  The property hereby leased to Tenant is that certain parcel of
land (the "LAND") more particularly described in SCHEDULE A attached hereto and
by this reference made a part hereof, TOGETHER WITH the buildings and other
improvements (inclusive of the Equipment (as hereinafter defined)) now or
hereafter located thereon (collectively, the "IMPROVEMENTS"). The Land and
Improvements, together with all appurtenances thereto, hereinafter sometimes
collectively referred to as the "PREMISES".

          (b)  The Premises are demised and let hereunder subject to (a) the
rights of any parties in possession thereof and the existing state of the title
thereof as of the Commencement Date (as hereinafter defined), (b) any state of
facts which an accurate survey or physical inspection thereof might show, (c)
all zoning regulations, restrictions, rules and ordinances, building
restrictions and other laws and regulations now in effect or hereafter adopted
by any governmental authority having jurisdiction, and (d) with respect to the
Improvements, their condition as of the Commencement Date, without
representation or warranty by Landlord. Tenant represents to Landlord that
Tenant has examined the title to the Premises prior to the execution and
delivery of this Lease and has found the same to be satisfactory for all
purposes hereof.

          (c)  TENANT HAS HAD THE OPPORTUNITY TO EXAMINE THE PREMISES AND THE
SIDEWALKS AND CURBS ADJACENT THERETO AND THE PHYSICAL CONDITION THEREOF,
INCLUDING THE EXISTENCE OR NON-EXISTENCE OF ANY HAZARDOUS SUBSTANCES THEREON OR
UNDER, AND TENANT ACCEPTS THE SAME "AS IS" AS OF THE DATE HEREOF. EXCEPT TO THE
EXTENT EXPRESSLY PROVIDED HEREIN TO THE CONTRARY, TENANT ASSUMES ALL RISKS, IF
ANY, RESULTING FROM ANY LATENT OR PATENT DEFECTS IN THE DEMISED PREMISES OR THE
SIDEWALKS AND CURBS ADJACENT THERETO OR FROM ANY FAILURE OF THE SAME TO COMPLY
WITH ANY REQUIREMENTS APPLICABLE THERETO.

          (d)  Landlord makes no representation or warranty with respect to the
condition of the Premises or its fitness or availability for any particular use,
and Landlord shall not be liable for any latent or patent defect therein.

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          2.   TERM AND EXTENSION OPTIONS.

          (a)  The initial term of this Lease (the "INITIAL TERM") shall
commence on the date of this Lease (the "COMMENCEMENT Date") and end on the last
day of the calendar month in which occurs the day immediately prior to the
twentieth (20th) anniversary of the Commencement Date or on such earlier date
upon which said term may expire or be terminated pursuant to any of the
conditions of limitation or other provisions of this Lease or pursuant to the
provisions of any Laws (as hereinafter defined).

          (b)  Provided no material non-monetary Event of Default (as
hereinafter defined) or monetary Event of Default in excess of $25,000 shall
then be continuing and Tenant shall then satisfy the Occupancy Requirement,
Tenant shall have two (2) separate, successive options to extend the term of
this Lease (as the same may have been extended by a prior such option) for an
additional term of ten (10) years each (such options are herein collectively
called "EXTENSION OPTIONS", and respectively called the "FIRST EXTENSION OPTION"
and the "SECOND EXTENSION OPTION," and such renewal terms are herein
collectively called the "EXTENSION TERMS", and respectively called the "FIRST
EXTENSION TERM" and the "SECOND EXTENSION TERM". Each Extension Term shall
commence on the day after the then current expiration date of the term of this
Lease and shall expire on the tenth (10th) anniversary of such then current
expiration date. Each of the Extension Options shall be exercisable (separately)
only by Tenant by written notice to Landlord (each, an "EXTENSION NOTICE") given
not later than the date that is twenty four (24) months prior to the then
current expiration date of the term of this Lease. Each of the Extension Terms
shall be upon the same covenants, terms and conditions as in this Lease for the
Initial Term, except (i) as to the duration of the term hereof and any other
provisions of this Lease which by their terms are applicable only to any
portions of the term hereof and excluding, upon the expiration of the Second
Extension Term, any further option or right to extend the term hereof and (ii)
the annual Base Rent (as hereinafter defined) for each Extension Term shall be
the Fair Market Rent determined as hereinafter set forth. "FAIR MARKET RENT" to
be determined hereunder shall be deemed to mean the fair market renewal rent for
the Premises which would be payable by a renewal tenant to lease the Premises.

          (c)  If Tenant timely exercises an Extension Option, Landlord shall
give Tenant notice within ten (10) Business Days following such exercise,
specifying a date (on a Business Day) and time (during business hours) and place
(in the borough of Manhattan, City of New York) within five (5) Business Days of
such Landlord's notice (such date, the "EXCHANGE DATE") for representatives of
Landlord and Tenant to convene and exchange sealed envelopes containing
Landlord's and Tenant's good faith determination of the Fair Market Rent (with
respect to Landlord, "LANDLORD'S DETERMINATION", and with respect to Tenant,
"TENANT'S DETERMINATION"). If the parties shall not agree on the Fair Market
Rent on the Exchange Date, they shall have five (5) Business Days (the "DISPUTE
RESOLUTION PERIOD") to negotiate in good faith to reach such agreement. If the
parties shall be unable to so agree prior to the close of the Dispute Resolution
Period, the Fair Market Rent shall be determined by arbitration conducted in
accordance with the Real Estate Valuation Arbitration Rules (Expedited
Procedures) of the AAA (as hereinafter defined), except that the provisions of
this SECTION 2(c) shall supersede any conflicting or inconsistent provisions of
said rules. Landlord and Tenant shall jointly appoint an arbitrator within seven
(7) days after the expiration of the Dispute Resolution Period. If

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Landlord and Tenant fail to do so, then either Landlord or Tenant may request
the AAA to appoint an arbitrator who shall be impartial within fourteen (14)
days of such request and both parties shall be bound by any appointment so made
within such 14-day period. If no such arbitrator shall have been appointed
within such 14-day period, either Landlord or Tenant may apply to any court
having jurisdiction to make such appointment. The arbitrator only shall
subscribe and swear to an oath fairly and impartially to determine such dispute.
Within five (5) days following the appointment of such arbitrator, each party
shall submit a report to the arbitrator setting forth its determination of the
Fair Market Rent, which report shall consist of Landlord's Determination and/or
Tenant's Determination, as the case may be, together with such other information
or such other evidence as such party shall deem relevant. Within ten (10) days
following the appointment of such arbitrator, he or she shall render his or her
determination of the Fair Market Rent in writing solely by selecting whichever
of Landlord's Determination or Tenant's Determination, in the judgment of the
arbitrator, most nearly reflects the Fair Market Rent. It is expressly
understood that the decision of such arbitrator as to the Fair Market Rent shall
be final and binding upon the parties hereto and non-appealable. The arbitrator
shall not have the power to add to, modify or change any of the provisions of
this Lease. The fees and expenses of any arbitration pursuant to this SECTION
2(c) shall be borne by the parties equally, but each party shall bear the
expense of its own attorneys and experts. The arbitrator shall have at least ten
(10) years' experience in leasing and valuation of properties which are similar
in character to the Premises. After the parties' or the arbitrator's
determination, as the case may be, of the Fair Market Rent has been made, the
parties shall execute and deliver an instrument setting forth the Fair Market
Rent, but the failure to so execute and deliver any such instrument shall not
effect the determination of Fair Market Rent.

          (d)  In the case of each Extension Option, Landlord shall have the
right to make time of the essence as to the delivery by Tenant of an Extension
Notice by delivering written notice to Tenant ("LANDLORD'S REMINDER NOTICE")
reminding Tenant of the Extension Options. In order to be effective such
Landlord's Reminder Notice must be delivered by Landlord during the 90-day
period immediately preceding the date on which the Extension Notice must be
delivered by Tenant in order to exercise the applicable Extension Option under
SECTION 2(a) above. If Tenant fails to timely deliver an Extension Notice to
Landlord and Landlord fails to timely deliver Landlord's Reminder Notice to
Tenant, Tenant's right to exercise the applicable Extension Option by delivery
of an Extension Notice shall continue; provided, however, that if the applicable
Extension Notice is not delivered by Tenant to Landlord on or prior to the date
that is twenty-two (22) months prior to then current expiration date of the term
of this Lease (time being of the essence), Tenant shall be deemed to have waived
its option with respect to the applicable Extension Term.

          (e)  Notwithstanding anything to the contrary hereinabove contained,
Landlord, at its option, may render any Extension Notice null and void if, at
the time that Landlord receives the same, a material non-monetary Event of
Default or a monetary Event of Default in excess of $25,000 shall have occurred
and shall then be continuing.

          (f)  References herein to the "term of this Lease" or the "term
hereof" or the like shall refer to the entire term of this Lease, I.E., the
Initial Term as theretofore extended by all applicable Extension Terms; and
references to the "then current expiration date" of the term of

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this Lease shall mean, at the time in question, the expiration of the Initial
Term as theretofore extended by all applicable Extension Terms.

          3.   BASE RENT.

          (a)  Tenant, throughout the term of this Lease, covenants to pay
Landlord, without demand therefor and without any setoff or deduction
whatsoever, a net fixed annual rent (herein called the "BASE RENT") equal to the
"Base Rental Rate" (as such term is defined in SCHEDULE B attached hereto and by
this reference made a part hereof) from time to time in effect during the term
of this Lease.

          (b)  The Base Rent shall be payable commencing on the Commencement
Date and thereafter in equal monthly installments in advance on the first day of
each and every calendar month during the term of this Lease (the "DUE DATE"). If
the Commencement Date is not the first day of a month, Base Rent for such
partial month preceding the first full monthly payment of Base Rent shall be
appropriately prorated and paid in arrears simultaneously with the first full
monthly payment.

          (c)  It is the purpose and intent of Landlord and Tenant that the Base
Rent payable hereunder shall be absolutely net to Landlord so that this Lease
shall yield, net to Landlord, the Base Rent specified herein in each year during
the term of this Lease except to the extent expressly provided herein with
respect to Cap Ex Improvements or as otherwise expressly provided herein.

          (d)  Landlord may, at its option, direct Tenant by written notice,
from time to time, to pay all or any portion of the Base Rent directly to any
Fee Mortgagee (as hereinafter defined) and to pay the balance of the Base Rent,
if any, to Landlord. All Base Rent shall be paid either by wire transfer of
immediately available federal funds (in which case, such wire transfer must be
made by 3:00 p.m., Eastern Standard Time, on the applicable Due Date) or in
funds that are otherwise immediately available for use in an account designated
by Landlord or any Fee Mortgagee, as the case may be, and Landlord may from time
to time designate that all Base Rent be paid to such other account or at such
other address as Landlord shall designate by written notice to Tenant. If
Landlord shall direct Tenant to pay, or if Tenant shall have otherwise elected
to pay, Base Rent by wire transfer, then Tenant shall not be in default of
Tenant's obligation to pay Base Rent, nor shall any interest (as provided for
herein) be imposed, if and for so long as Tenant shall timely comply with
Landlord's wire instructions in connection with such payments. Accordingly, if
Tenant shall have timely complied with Landlord's instructions pertaining to a
wire transfer, but the funds shall thereafter have been misdirected or not
accounted for properly by the recipient bank designated by Landlord, then the
same shall not relieve Tenant's obligation to make the payment so wired, but
shall toll the due date for such payment until the wired funds shall have been
located.

          (e)  If any installment of Base Rent is not paid within five (5) days
after the Due Date therefor, Tenant shall pay Landlord interest on such overdue
payment at the Default Rate (as hereinafter defined), accruing from the day
following the Due Date of such payment until the same is paid; PROVIDED,
HOWEVER, that if Tenant fails to pay any installment of Base Rent within such
5-day period two (2) times during any 12-month period during the term hereof,
then

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for any future Base Rent payments during the term of this Lease, Tenant shall
pay interest at the Default Rate if any installment of Base Rent is not paid on
or prior to the Due Date.

          4.   SERVICES; UTILITIES.

          Tenant shall furnish, at its own expense, all services, utilities and
facilities of every type and nature required by it in its use of the Premises
(including, without limitation, electricity, gas, steam, water, sewer, heating,
ventilating and air conditioning, cleaning and security) and shall pay or cause
to be paid, when due, all bills, expenses and charges of any kind for any such
services, utilities and facilities used on, in connection with, or chargeable
against the Premises for any period during the term of this lease. Tenant
assumes full and sole responsibility for obtaining all such services, utilities
and facilities and Tenant shall indemnify and save harmless Landlord and any
Landlord Party (as hereinafter defined) from and against any loss, cost and/or
expense in connection therewith, except to the extent Tenant's inability to
obtain services or utilities (or any interruption thereof) is caused by the
negligent actions or misconduct of Landlord or a Landlord party while performing
any right or obligation under this Lease. Notwithstanding the foregoing, in
addition to Landlord's consent rights over persons performing Tenant's changes
pursuant to section 9, Landlord's consent (not to be unreasonably withheld)
shall be required prior to Tenant's retaining the following third party service
providers: (i) property manager, (ii) elevator contractor, (iii) contractor
performing material electrical installations within the Premises, (iv) plumbing
contractor, (v) HVAC contractor and (vi) life safety contractor (it being
understood that no such consent shall be required as to any such service
providers who are providing services to the Premises as of the commencement
date.

          5.   IMPOSITIONS.

          (a)  Tenant covenants to pay, before any fine, penalty, interest or
cost may be added thereto for the nonpayment thereof, as additional rent, all
taxes, assessments (including but not limited to, all assessments for public
improvements or benefits, accruing during the term of this Lease), water, sewer
and other rents, rates and charges, charges for public utilities, excises,
levies, license and permit and inspection fees (including, without limitation,
license, permit, inspection, authorization and similar fees) and other
governmental charges, general and special, ordinary and extraordinary, foreseen
and unforeseen, of any kind and nature whatsoever, which at any time prior to or
during the term of this Lease may have been or may be assessed, levied,
confirmed, imposed upon, or grow or become due or payable out of or in respect
of, or become a lien on, (A) the Premises or any part thereof or any
appurtenance thereto, (B) any Base Rent or other sums payable hereunder
(including, without limitation, commercial rent tax), (C) this Lease or the
leasehold estate created thereby, (D) the operation, possession or use of the
Premises, (E) any personal property or the rent and income received by Tenant
from subtenants, (F) any use, possession or occupation of the Premises or
activity conducted therein, including rentals or sales (including lease
rentals), value added, ad valorem, single business, gross receipts, use and
similar taxes that are at any time levied, assessed or payable on account
thereof, (G) all transfer, recording, stamp and real property gain taxes
incurred upon the assignment, transfer, foreclosure or other disposition by
Tenant of its interest in the Premises or this Lease, (H) all claims and demands
of mechanics, laborers, materialmen and others (excluding those engaged by
Landlord or a Landlord Party) which, if unpaid, might create a lien on the
Premises, (I) all charges of utilities, communications and similar services
serving the Premises and (J) charges imposed with

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respect to the Premises for police protection, fire protection, street and
highway maintenance, construction and lighting, sanitation and water supply, if
any, (all of the foregoing, together with any and all fines, penalties, costs
and/or interest thereon, and together with any and all Premiums, being
hereinafter sometimes collectively referred to as "IMPOSITIONS", and any of the
same being hereinafter sometimes referred to as an "IMPOSITION"). Nothing herein
contained shall require Tenant to pay income taxes assessed against Landlord, or
any of Landlord's capital levy, franchise, excess profits, estate, gift,
succession, inheritance, transfer taxes or mortgage recording taxes in
connection with any Mortgage of Landlord (other than in accordance with SECTION
41), unless and to the extent that such taxes are imposed or levied upon or
assessed as a total or partial substitute for, or in lieu of, any other
Imposition required to be paid by Tenant pursuant to this SECTION 5, in which
event same shall be deemed Impositions and shall be paid by Tenant. If, at any
time during the term of this Lease, the method of taxation shall be such that
there shall be levied, assessed or imposed on Landlord a capital levy, gross
receipts or other tax directly on the rents received therefrom and/or a
franchise tax or an assessment, levy or charge measured by or based, in whole or
in part, upon such rents, the Premises (including but not limited to the
acquisition, leasing, use, or value thereof) or the present or any future
Improvements on the Premises or the construction thereof and/or measured in
whole or in part by Landlord's income from the Premises, then to the extent that
such taxes are imposed or levied upon or assessed as a total or partial
substitute for, or in lieu of, any other Imposition required to be paid by
Tenant pursuant to this SECTION 5, all such taxes, assessments, levies and
charges, or the part thereof so measured or based, shall be deemed to be
included within the term "Imposition" for the purposes hereof, but in any event
only to the extent that such taxes would be payable if the Premises were the
only property of Landlord (it being acknowledged and agreed that any franchise,
income, profit, sales, use, occupancy, gross receipts, rental or similar tax
which is unique to Landlord and which is not related to the Premises shall be
excluded from Impositions), and Tenant shall pay and discharge the same as
herein provided in respect of the payment of Impositions. All Impositions shall
be paid directly by Tenant to the entity to whom such Impositions are due.
Tenant shall furnish to Landlord, promptly after payment of any Impositions,
official receipts or other satisfactory proof evidencing payment of such
Imposition. Notwithstanding anything to the contrary set forth in this SECTION
5(a), nothing herein shall be deemed to modify Tenant's obligation to pay any
transfer tax, mortgage recording tax or other Imposition if and to the extent
such obligation is a term set forth in any "Landlord's Offer" pursuant to
SECTION 23(a).

          (b)  If at any time during the term, an Event of Default resulting
from Tenant's failure to pay Impositions constituting real estate taxes has
occurred, Tenant, within ten (10) Business Days after written demand by Fee
Mortgagee (as hereinafter defined) or by Landlord in response to a demand made
upon Landlord by Fee Mortgagee, shall deposit into escrow with Fee Mortgagee, on
the first day of each and every succeeding month during the term of this Lease,
an amount equal to one-twelfth (1/12th) of the amount necessary to pay annual
Impositions constituting real estate taxes then in effect, as reasonably
estimated by such Fee Mortgagee. If, at any time, the monies so deposited by
Tenant shall be insufficient to pay in full the next installment of such
Impositions then due, then within ten (10) Business Days following demand by
Landlord, Tenant shall deposit the amount of the insufficiency with such Fee
Mortgagee, to enable such Fee Mortgagee to pay all installments of such
Impositions. If on the first anniversary of the date that Tenant shall first
become obligated to pay such Impositions into

                                        6
<Page>

escrow as provided in this SECTION 5(b), and on each subsequent anniversary of
such date, the total monthly deposits made by Tenant for the previous year
pursuant to this SECTION 5(b) shall exceed the amount of such Impositions due
with respect to such previous year, such excess (less any amounts retained by
Landlord to cure any default in the payment of Base Rent and additional rent
under the Lease) shall be refunded to Tenant within twenty (20) days of such
applicable anniversary date. The funds deposited by Tenant with Fee Mortgagee on
account of Impositions pursuant to this SECTION 5(b), and any interest accruing
thereon, shall be held in escrow for the sole and exclusive purpose of paying
Impositions to the applicable party on or before the applicable due date thereof
and shall not be used by Landlord (except as stated above), Fee Mortgagee
(subject to the terms of the Mortgage) or any other party for any other purpose
whatsoever. All interest, if any, on such funds shall be for the account of
Tenant and shall be applied to pay any outstanding Impositions or amounts due
from Tenant to Landlord, or shall be refunded to Tenant, as the case may be,
pursuant to this SECTION 5(b).

          (c)  After prior written notice to Landlord, at Tenant's sole cost,
Tenant may contest in good faith (including seeking a reduction in the assessed
value of the Premises or an abatement or reduction of) any Impositions agreed to
be paid hereunder; provided that (i) Tenant first shall satisfy the requirements
of any Laws, including, if required, that the Impositions be paid in full before
being contested, (ii) no material non-monetary Event of Default or monetary
Event of Default in excess of $25,000 shall then be continuing and (iii) in
Landlord's reasonable judgment, failing to pay such Impositions will not subject
Landlord or Fee Mortgagee to criminal penalties or to prosecution for a crime or
(unless Tenant shall indemnify Landlord therefor) civil liability, or result in
the imminent risk of the sale, forfeiture or loss of any portion of the
Premises. Tenant agrees that each such contest shall be promptly and diligently
prosecuted to a final conclusion, except that Tenant shall have the right to
attempt to settle or compromise such contest; provided, however, that Tenant
shall not settle or compromise such contest without Landlord's prior consent,
which consent shall not be unreasonably withheld or delayed and shall be deemed
given if Landlord shall fail to respond within ten (10) Business Days following
Tenant's request for consent, such request setting forth the proposed terms of
such compromise or settlement. Tenant shall pay and save Landlord and Fee
Mortgagee harmless against any and all losses, judgments, decrees and costs
(including, without limitation, all reasonable out-of-pocket attorneys' fees and
expenses) in connection with any such contest. Tenant's right to contest any
Impositions shall be conditioned upon Tenant's depositing with Landlord (or Fee
Mortgagee) such security (in the form of cash or other security reasonably
acceptable to Landlord) for the payment of the amounts so contested and unpaid
together with all interest and penalties that may be imposed in connection
therewith, and all costs and charges which might become a lien or charge on all
or any part of the Premises in any such contest. Promptly after the conclusion
of such contest (by final determination, settlement, compromise or otherwise),
Tenant shall fully pay and discharge the amounts which shall be levied,
assessed, charged or imposed or be determined to be payable therein or in
connection therewith, together with all penalties, fines, interest, costs and
expenses thereof or in connection therewith, and perform all acts the
performance of which shall be ordered or decreed as a result thereof, provided
that Landlord shall return all amounts deposited with it with respect to the
contest of such Impositions, as aforesaid, or, at the written direction of
Tenant, Landlord shall make any such payment out of the funds on deposit with
Landlord and the balance, if any, shall be returned to Tenant. Landlord shall
not be subject to any liability whatsoever for the payment of any fees, costs
and expenses in

                                        7
<Page>

connection with such proceedings. Tenant agrees to pay all such fees (including
reasonable out-of-pocket attorneys' fees incurred by Landlord), costs and
expenses or, on demand, to make reimbursement for such payment. Landlord agrees
to cooperate with Tenant's efforts in connection with this SECTION 5(c) at no
cost or expense to Landlord. Should Tenant prevail in any such contest, Tenant
shall enjoy the benefit of any reduction in the Imposition in question
attributable to the term hereof.

          (d)  If Landlord elects to contest an Imposition, Landlord shall first
give Tenant written notice of such intention and Tenant shall have twenty (20)
days from the date of Landlord's notice to deliver to Landlord written notice of
Tenant's election to contest (in accordance with SECTION 5(c)) or not contest
the Imposition in question. The immediately preceding sentence notwithstanding,
if Tenant elects not to contest an Imposition with respect to real estate taxes
or assessments, Tenant shall notify Landlord thereof not less than thirty (30)
days prior to the final date upon which such Imposition may be contested without
suffering any penalty and Landlord may, after prior written notice to Tenant,
contest any such Imposition in good faith. Landlord shall not be obligated to
contest Impositions, and any such contest shall be by appropriate proceedings
conducted in the name of Landlord or in the name of Landlord and Tenant. If
Landlord elects to contest the amount or validity, in whole or in part, of any
Imposition, such contests by Landlord shall be at Landlord's sole cost and
expense, provided, however, that if the amounts payable by Tenant are reduced
(or if a proposed increase in such amounts is avoided or reduced) by reason of
Landlord's contest, Tenant shall enjoy the benefit of any such reduction or
avoidance, and Tenant shall reimburse Landlord for all reasonable out-of-pocket
costs incurred by Landlord in contesting the Imposition in question, but such
reimbursements shall not be in excess of the amount saved by Tenant by reason of
Landlord's actions in contesting such Imposition. Such reimbursement shall be
made within twenty (20) Business Days after demand accompanied by reasonable
documentation supporting the amount of any such costs or expenses.

          6.   USE.

          (a)  To the extent that Tenant Named Herein satisfies the Occupancy
Requirement, the Premises may be used for any lawful purpose that is consistent
with the First Class Standard (as hereinafter defined), including, without
limitation, office space, auction house, exhibiting gallery, museum, retail,
restaurant, medical office uses, the operation of a hospital facility and uses
incidental or ancillary to each of the foregoing uses.

          (b)  To the extent the conditions set forth in SECTION 6(a) are not
satisfied, the use of all or any portion of the Premises may not be changed or
modified except for the following purposes: office space, auction house,
exhibiting gallery, retail, restaurant, medical office use, and uses incidental
or ancillary to each of the foregoing uses, and such other commercial uses
approved by Landlord, such approval not to be unreasonably withheld, conditioned
or delayed (it being expressly understood, however, that unless Tenant Named
Herein shall be satisfying the Occupancy Requirement, Landlord may in its sole
discretion withhold its approval to a change in use involving the operation of a
hospital facility practicing around-the-clock care (as opposed to an
"outpatient" center for consultation and procedures which will not require
patients to remain on the Premises overnight).

                                        8
<Page>

          (c)  Notwithstanding anything to the contrary set forth in SECTION
6(a) or SECTION 6(b) above, Tenant shall not use or occupy or suffer the use or
occupancy of any part of the Premises in a manner (i) constituting a Prohibited
Use (as hereinafter defined) or (ii) inconsistent with the First Class Standard.

          (d)  Tenant shall not use or occupy or permit the Premises to be used
or occupied, nor do or permit anything to be done in or on the Premises or any
part thereof, in a manner that would in any way violate any of the Laws, zoning
ordinances, Insurance Requirements or any certificate of occupancy affecting the
Premises (as the same may be amended), or make void or voidable any insurance
then in force with respect thereto, or that may make it impossible to obtain
fire or other insurance thereon required to be furnished hereunder by Tenant, or
that will constitute a Prohibited Use, a public or private nuisance or waste.
Nothing contained in this Lease and no action or inaction by Landlord shall be
deemed or construed to mean that Landlord has granted to Tenant any right, power
or permission to do any act or to make any agreement that may create, give rise
to, or be the foundation for, any right, title, interest, lien, charge or other
encumbrance upon the estate of Landlord in the Premises;

          7.   COMPLIANCE WITH LAWS AND AGREEMENTS.

          (a)  Tenant shall, throughout the term of this Lease, and at Tenant's
sole cost and expense, promptly comply, or cause compliance: (i) with all Laws,
whether present or future, foreseen or unforeseen, ordinary or extraordinary,
and whether or not the same shall be presently within the contemplation of
Landlord and Tenant or shall involve any change of governmental policy, or
require structural or extraordinary repairs, alterations, or additions, and
irrespective of the cost thereof, which may be applicable to the Premises
(except to the extent provided herein with respect to Cap Ex Improvements) and
(ii) with any agreements, contracts, easements and restrictions affecting the
Premises or any part thereof or the ownership, occupancy or use thereof existing
on the date hereof or hereafter created by Tenant, or expressly consented to or
requested by Tenant.

          (b)  No abatement, diminution or reduction in Base Rent, additional
rent or any other charges required to be paid by Tenant pursuant hereto shall be
claimed by or allowed to Tenant for any inconvenience or interruption,
cessation, or loss of business caused directly or indirectly, by any present or
future Laws, or by priorities, rationing or curtailment of labor or materials,
or by war, civil commotion, terrorist action, strikes or riots, or any manner or
thing resulting therefrom, or by any other cause or causes beyond the control of
Landlord or Tenant, nor shall this Lease be affected by any such causes; and no
diminution in the amount of the space used by Tenant caused by legally required
changes in the construction, equipment, fixtures, machinery, operation or use of
the Premises shall entitle Tenant to any abatement, diminution or reduction of
the rent or any other charges required to be paid by Tenant pursuant to the
terms of this Lease.

          (c)  From time to time throughout the term of this Lease, Landlord
shall cooperate with Tenant in Tenant's efforts to obtain from governmental
authorities such licenses and permits as are necessary for the operation of the
Premises and the permitted use thereof, and any modification or amendment to the
Building's certificate of occupancy required in connection with the Tenant
Changes or the use of the Premises (in each case as permitted under this Lease),

                                        9
<Page>

provided and on condition that in connection therewith (i) Tenant shall promptly
reimburse Landlord (as additional rent) for all reasonable out-of-pocket costs
and expenses incurred by Landlord (including, without limitation, reasonable
out-of-pocket attorneys' fees and costs) in connection therewith within twenty
(20) days after demand accompanied by reasonable documentation supporting the
amount of any such costs or expenses, and (ii) Landlord shall not incur any
obligation or liability of any kind. Tenant shall indemnify, defend and hold
Landlord and any Landlord Party harmless from and against any and all loss,
liability, damage, cost and expense (including, without limitation, reasonable
out-of-pocket attorneys' fees and costs) incurred by Landlord and any Landlord
Party in connection with such application and/or procuring or attempting to
procure any such license and/or permits or any such modification or amendment to
the certificate of occupancy.

          8.   MAINTENANCE AND REPAIR.

          (a)  Tenant shall promptly throughout the term of this Lease, at
Tenant's cost and expense, take good care of and maintain the Premises
including, without limitation, the roof, landscaping, walls, footings,
foundations, HVAC, mechanical and electrical systems in or serving the Premises,
structural and nonstructural components and systems of the Premises and all
pathways, sidewalks, vaults, utility connections and curbs, if any, on, adjacent
and appurtenant thereto, in good working order and repair, and keep and maintain
the Premises in character and condition in accordance with the standards
applicable to a comparable first-class commercial building located in the
neighborhood in which the Improvements are located (the "FIRST CLASS STANDARD").
Tenant shall promptly remove all accumulated snow, ice and debris from any and
all pathways, sidewalks and curbs located upon or appurtenant to the Premises
and from any and all other sidewalks and curbs adjacent to the Premises. Tenant
shall promptly make all repairs and replacements, including, without limitation,
any capital improvements, at its sole cost and expense (except with respect to
Cap Ex Improvements, which Cap Ex Improvements shall be performed by Landlord
and paid for in accordance with SECTION 31(b) hereof), and in accordance with
the First Class Standard, whether interior or exterior, structural or
nonstructural, foreseen or unforeseen, ordinary or extraordinary, which may be
required to be made upon or in connection with any portion of the Premises in
order to keep and maintain the Premises in such condition as is required to
comply with Laws and to keep the building systems in working order, and whether
or not necessitated by wear and tear, obsolescence or defects, latent or
otherwise.

          (b)  Tenant shall not commit or suffer to be committed any waste upon
or about the Premises, and shall promptly at its cost and expense, make all
necessary replacements, restorations, renewals and repairs to the Premises and
appurtenances thereto necessary to comply with its obligations under this Lease.
Tenant shall not make any claim or demand upon or bring any action against the
Landlord for any loss, cost, injury, damage or other expense caused by any
failure or defect, structural or nonstructural, of the Premises or any part
thereof, except to the extent caused by the negligent actions or misconduct of
Landlord or a Landlord Party (as hereinafter defined).

          (c)  Except as expressly provided herein with respect to Cap Ex
Improvements, Landlord shall not under any circumstances have any obligation to
build any improvements on the Premises, or make any repairs, replacements,
alterations or renewals of any

                                       10
<Page>

nature or description to the Premises or to any of the Improvements, whether
interior or exterior, ordinary or extraordinary, structural or nonstructural,
foreseen or unforeseen, or to perform any maintenance or other work whatsoever
on the Premises or to the Improvements, or to make any expenditure whatsoever in
connection with this Lease or to inspect or maintain the Premises in any way.
Subject to Landlord's obligations under SECTIONS 12(f)(4), 12(g), 31(b) and
38(g), Tenant hereby waives the right to make repairs, replacements, renewals or
restorations at the expense of Landlord pursuant to any Laws.

          (d)  Any dispute under this SECTION 8 shall be resolved by arbitration
in accordance with SECTION 44.

          9.   TENANT CHANGES.

          Tenant, at its sole cost and expense, shall have the right at any time
and from time to time during the term of this Lease to make alterations,
additions and other changes to the Improvements, including, without limitation,
those items constituting Proposed Sotheby's Changes (as hereinafter defined)
referred to in SECTION 9(k) below subject, however, to compliance with the
provisions of this SECTION 9 (all of the foregoing are hereinafter collectively
called "TENANT CHANGES" and any of the foregoing is called a "TENANT CHANGE"),
SUBJECT, HOWEVER, in all cases, to the following provisions:

          (a)  (1)  Tenant shall not make any Tenant Change which is a Material
Tenant Change (as hereinafter defined) without having first obtained Landlord's
prior written approval thereof in each instance in accordance with this SECTION
9. So long as Tenant complies with the provisions of this SECTION 9 and there
shall not otherwise exist a material non-monetary Event of Default or a monetary
Event of Default in excess of $25,000 under this Lease, Landlord's approval of
any proposed Material Tenant Change shall not be unreasonably withheld,
conditioned or delayed UNLESS the proposed Material Tenant Change is a
Prohibited Tenant Change (as hereinafter defined). As used herein, the term
"MATERIAL TENANT CHANGE" shall mean any Tenant Change which (i) affects the
exterior of any Improvements (including the roof and the facade of the
Improvements), (ii) affects the structural elements of any Improvements, (iii)
affects in any material respect the electrical, plumbing, HVAC, elevator or
other mechanical or building systems of the Improvements, (iv) changes the
character of the lobby/atrium area or facade of the Improvements in any material
respect or (v) reduces the usable or rentable area of any Improvements by more
than a DE MINIMIS amount. Tenant acknowledges that Landlord, to the extent
provided for in SECTION 31(b), shall perform all Cap Ex Improvements.

               (2)  Notwithstanding the terms of SECTION 9(a)(1)(iv) above,
provided that Tenant Named Herein satisfies the Occupancy Requirement, Landlord
shall not withhold its consent to any Material Tenant Change performed by Tenant
Named Herein to the Sotheby's lobby/atrium area, provided that the same, in
Landlord's reasonable judgment does not (A) adversely affect the structure or
building systems of the Improvements, (B) constitute a Prohibited Tenant Change
or (C) fail to preserve or maintain the first-class architectural integrity of
such area.

                                       11
<Page>

          (b)  Any Material Tenant Change shall be conducted under the
supervision of a licensed architect or engineer selected by Tenant and
reasonably approved by Landlord and shall be made in accordance with reasonably
detailed plans and specifications which shall be displayed on a CAD disk (the
"PLANS AND SPECIFICATIONS") and cost estimates prepared by such architect or
engineer. Any request by Tenant for Landlord's approval of any Material Tenant
Change pursuant to SECTION 9(a) above shall be accompanied by a full set of the
Plans and Specifications therefor and a copy of the cost estimates in respect
thereof; provided, however that prior to Tenant's submission of the full set of
Plans and Specifications for a proposed Material Tenant Change, Tenant shall
have the right to request in writing Landlord's preliminary approval of
schematic drawings and/or design development drawings and mechanical, electrical
and plumbing plans and specifications, pre-purchase specifications and long lead
items, provided that in the reasonable judgment of Landlord the same are
sufficiently complete and integrated for Landlord to review and comment upon.
Landlord shall respond in writing to Tenant's duly submitted request for
Landlord's approval of a Material Tenant Change and the Plans and Specifications
therefor (or Landlord's preliminary approval, as applicable) within ten (10)
Business Days of such request or, in the case of a resubmission of Plans and
Specifications in response to comments by Landlord, within seven (7) Business
Days after Landlord's receipt of such resubmission. Landlord shall be deemed to
have approved any request to which Landlord shall fail to respond within the
time periods set forth in the preceding sentence, provided that the written
request in question shall have made specific reference to such deemed consent
under this Section 9(b). Tenant shall reimburse Landlord (as additional rent)
for all reasonable out-of-pocket costs and expenses incurred by Landlord and
payable to third party architects or engineers in connection with its review of
the Plans and Specifications within twenty (20) days after demand accompanied by
reasonable documentation supporting the amount of any such costs and expenses.
If Landlord disapproves any Plans and Specifications, Landlord shall furnish a
reasonably detailed explanation for such disapproval.

          (c)  Notwithstanding anything to the contrary contained herein, in no
event shall Tenant make any Prohibited Tenant Change. As used herein, the term
"PROHIBITED TENANT CHANGE" shall mean any Tenant Change which (i) decreases the
size of or decreases the usable or rentable area of the Improvements by an
amount that in Landlord's reasonable judgment is greater than DE MINIMIS, (ii)
reduces the lobby/atrium area of the Premises or increases the amount of
existing retail space in the area depicted by cross-hatching on EXHIBIT F
annexed hereto and made a part hereof, (iii) reduces the value of the Premises,
(iv) constitutes a new or additional building or material structure, or (v) ties
in or connects the Premises or any Improvements thereon with any real property
outside the Premises.

          (d)  No Tenant Change shall be undertaken until Tenant shall have
procured and paid for all required permits and authorizations of all municipal
departments and governmental subdivisions having jurisdiction; and Landlord, at
Tenant's sole cost and expense, and upon the reasonable request of Tenant, shall
join in any applications for any permits, approvals or certificates required to
be obtained by Tenant in connection with any permitted Tenant Changes and shall
otherwise cooperate with Tenant in connection therewith, provided, and on
condition that in connection therewith (i) the applications relate to a Tenant
Change that otherwise complies with the terms of this Lease, (ii) the provisions
of applicable Laws shall require that Landlord join in such application, (iii)
Tenant shall reimburse Landlord (as

                                       12
<Page>

additional rent) for all reasonable out-of-pocket costs and expenses incurred by
Landlord in connection therewith within twenty (20) days after demand
accompanied by reasonable documentation supporting the amount of any such costs
or expenses, (iv) Landlord shall not under any circumstances incur any
obligation or liability of any kind and (v) Tenant shall indemnify, defend and
hold Landlord and any Landlord Party harmless from and against any and all loss,
liability, damage, cost or expense (including without limitation reasonable
out-of-pocket attorneys' fees and disbursements) incurred by Landlord in
connection therewith.

          (e)  All Tenant Changes shall be made promptly and in a good
workmanlike manner in accordance with the First-Class Standard and in compliance
with (i) all applicable permits and authorizations and building and zoning laws
and all other Laws, (ii) all Insurance Requirements and the orders, rules,
regulations and requirements of any Board of Fire Underwriters having
jurisdiction or any similar body exercising similar functions, and (iii) any
agreements, contracts, restriction, easement or covenant affecting title to or
use of the Premises or any part thereof or the ownership or occupancy thereof
existing on the date hereof or hereafter created by Tenant or Tenant Party, or
consented to or requested by Tenant or Tenant Party.

          (f)  Tenant covenants and agrees to pay any contractor it engages the
cost of the work being performed by such contractor in stages as the work
progresses subject only to customary retentions and amounts being disputed in
good faith. In the event of any such dispute, Tenant shall promptly furnish
Landlord with all information relating thereto as Landlord may reasonably
request. Any mechanic's lien filed against the Premises for work claimed to have
been done for, or materials claimed to have been furnished to, Tenant or any
Tenant Party shall be discharged by Tenant within thirty (30) days after Tenant
or any Tenant Party shall have received notice thereof, at Tenant or Tenant
Party's, as the case may be, sole cost and expense, by payment or filing the
bond required by law.

          (g)  Landlord agrees to promptly execute and deliver to Tenant, at
Tenant's sole cost and expense, such waivers of lien and consents in respect of
the leasing and financing of Tenant's Property pursuant to this SECTION 9(g) as
Tenant may reasonably request, provided (i) that the form and substance of such
consents and waivers shall be subject to Landlord's final approval, which
approval shall not be unreasonably withheld, delayed or conditioned, (ii) Tenant
shall reimburse Landlord (as additional rent) for all reasonable out-of-pocket
costs and expenses incurred by Landlord in connection therewith within twenty
(20) days after demand, (iii) Landlord shall not under any circumstances incur
any obligation or liability of any kind in Landlord's sole and absolute
discretion and (iv) Tenant shall indemnify, defend and hold Landlord and any
Landlord Party harmless from and against any and all loss, liability, damage,
cost or expense (including without limitation reasonable out-of-pocket
attorneys' fees and disbursements) incurred by Landlord in connection therewith.

          (h)  (i)  All Tenant Changes that are of a permanent nature and cannot
be removed without damage to the Premises (unless Tenant shall repair such
damage), and all Equipment as provided in Section 14 hereof, shall become and be
the property of Landlord upon the expiration date of this Lease and shall be
surrendered to Landlord with the Premises as a part thereof. Notwithstanding the
foregoing, upon Landlord's request, by notice given at least ninety (90) days
prior to the expiration date of this Lease (the "REMOVAL NOTICE"), Tenant shall
be obligated to remove on or before the expiration date of this Lease any
Uncommon Changes (as

                                       13
<Page>

hereinafter defined), and Tenant shall repair and restore in a good and
workmanlike manner any damage to the Premises caused by such removal. If
Landlord does not timely deliver the Removal Notice, all Uncommon Changes shall
become and be the property of Landlord upon the expiration date of this Lease
and shall be surrendered to Landlord with the Premises as a part thereof. In
addition, if at the time Tenant performs an Uncommon Change, Tenant delivers a
written notice to Landlord requesting in BOLD LETTERING that Landlord notify
Tenant whether Landlord shall require such Uncommon Change be removed at the end
of the term hereof, Landlord shall, within ten (10) days following such notice,
notify Tenant of whether Landlord shall require that such Uncommon Change be
removed at the end of the term hereof.

               (ii) All Tenant's Property installed by Tenant or its equipment
lessors, subtenants, concessionaires or licensees shall remain the property of
Tenant and such lessors, subtenants, concessionaires and licensees, as the case
may be, and may be removed from the Premises by Tenant at Tenant's option;
provided, however, that Tenant shall repair and restore in a good and
workmanlike manner any damage to the Premises caused by such removal. Any items
of Tenant's Property which shall remain in the Premises after the expiration
date of this Lease may, at the sole option of Landlord, be deemed to have been
abandoned, and in such case such items may be retained by Landlord as its
property or disposed of by Landlord, at Tenant's expense, without
accountability, in such manner as Landlord shall determine in its sole and
absolute discretion.

          (i)  Throughout the prosecution of any Tenant Change, Tenant shall
carry or cause its contractors to carry all necessary Worker's Compensation
Insurance (as hereinafter defined) and shall furnish Landlord with evidence of
any and all such coverage. No Tenant Change shall be undertaken until Tenant
shall have delivered to Landlord copies of insurance policies or abstracts
thereof issued by insurers satisfying the requirements set forth in SECTION
10(b), bearing notations evidencing the payment of premiums or accompanied by
other evidence reasonably satisfactory to Landlord of such payments, for the
insurance required under SECTION 10, which shall be kept in full force and
effect until the completion of the applicable Tenant Change.

          (j)  Subject to the last sentence of this SECTION 9(j), before
proceeding with any Material Tenant Change (or series of Material Tenant Changes
performed together) which cost $2,500,000 or more in the aggregate, Tenant shall
furnish to Landlord, as security for the full completion thereof, a payment and
performance bond ("BOND") issued by a bonding company reasonably satisfactory to
Landlord naming Landlord and any Fee Mortgagee as beneficiary, which bond (A)
shall be in an amount equal to one hundred five (105%) percent of Landlord's
reasonable estimate of the cost of such Material Tenant Change, (B) shall not
require any payment as a condition to the bonding company performing its
obligations under the bond, and (C) shall otherwise be in a form reasonably
satisfactory to Landlord. Tenant shall not be required to comply with the
bonding requirements set forth in this SECTION 9(j) with respect to the
performance of any Material Tenant Changes to the extent that and so long as
Tenant maintains a credit rating of at least BB (as rated by any of the Rating
Agencies (as hereinafter defined));

          (k)  Landlord acknowledges that Tenant Named Herein may in the future
consider performing the following Tenant Changes during the term hereof
(collectively, the "PROPOSED SOTHEBY'S CHANGES"): (i) the installation of a
separate entrance to the Improvements

                                       14
<Page>

located at 71st and/or 72nd Street; (ii) the construction of an additional
elevator and/or upgrades to the existing elevators serving the above-ground
floors of the Improvements; (iii) alterations in the form of enhancements to the
structure, electrical and mechanical systems and other components of the
Improvements to prepare and/or separately demise space in connection with a
subletting for hospital use to the extent permitted by the terms of this Lease;
and (iv) separately demising portions of the Premises to separate the auction
area from the upper floors. Landlord hereby agrees that notwithstanding the fact
that a Proposed Sotheby's Change may constitute a Material Tenant Change
hereunder, any such Proposed Sotheby's Change shall be acceptable in principle
to Landlord so long as (A) all requirements under this SECTION 9 are complied
with in connection with the performance of each such Proposed Sotheby's Change
and (B) Tenant Named Herein satisfies the Occupancy Requirement at the time any
such Proposed Sotheby's Change is performed. Notwithstanding anything to the
contrary set forth in this SECTION 9, in connection with any of the Proposed
Sotheby's Changes described in SECTIONS 9(k)(i), 9(k)(ii) and 9(k)(iv), Landlord
and Tenant hereby agree that in addition to the approval rights reserved to
Landlord under this SECTION 9 relating to Material Tenant Changes, Landlord
shall have the right to request changes to the Plans and Specifications for such
Proposed Sotheby's Change only if the impact of such change will not increase
the estimated hard and soft costs of the Proposed Sotheby's Change by more than
two and one-half percent (2.5%).

          (l)  Any or all of Tenant's Property furnished or installed by Tenant
or its equipment lessors, subtenants, concessionaires or licensees in the
Premises may, from time to time, become subject to the lien of leases, financing
statements and security agreements under the Uniform Commercial Code and should
any such lien be foreclosed or terminated, subject to the provisions of SECTION
9(h) regarding the replacement of certain items and repair of damage, the
foreclosing or terminating party may remove such property from the Premises.
Landlord agrees to promptly execute and deliver to Tenant, at Tenant's sole cost
and expense, such waivers of lien and consents in respect of the leasing and
financing of Tenant's Property pursuant to this SECTION 9(l) as Tenant may
reasonably request, PROVIDED, HOWEVER, that the form and substance of such
consents and waivers shall be subject to Landlord's final approval, which
approval shall not be unreasonably withheld, delayed or conditioned.

          (m)  Any dispute under this SECTION 9 shall be resolved by arbitration
in accordance with SECTION 44.

          10.  INSURANCE.

          (a)  Tenant shall, throughout the term of this Lease, at its own cost
and expense, obtain and maintain in full force and effect (and shall cause any
assignees and sublessees to do the same with respect to any permitted assignment
or sublease of the Premises) and in the name of Tenant as named insured, and
with Landlord and any Fee Mortgagee (and any additional party reasonably
requested by Landlord in writing) being named as loss payee and additional
insureds:

               (1)  "all risk" property insurance (including but not limited to
     collapse, loss or damage occasioned by fire, the perils included in the
     so-called extended coverage endorsement, vandalism and malicious mischief,
     water damage, flood, earthquake, Builder's Risk and against any other risks
     as shall then be commercially reasonable to

                                       15
<Page>

     insure) and containing an "agreed amount endorsement" or other endorsement
     to eliminate application of any coinsurance clause, in amounts sufficient
     to provide one hundred (100%) percent of the full replacement cost of the
     Premises (without deduction for depreciation), including, without
     limitation, sprinkler leakage, demolition cost, cost of debris removal,
     increased cost of construction arising from operation or enforcement of
     building laws and ordinances and such additional endorsement as Landlord,
     or Fee Mortgagee may reasonably require; which amounts shall be determined
     from time to time, but not more frequently than once in any thirty-six (36)
     calendar months (unless otherwise reasonably requested by a Fee Mortgagee),
     at Tenant's expense, at the request of the Landlord, by any appraiser
     selected by Tenant and approved by Landlord and the insurance carrier (all
     of the insurance described in this clause (1) being hereinafter sometimes
     collectively referred to as the "CASUALTY INSURANCE"); PROVIDED, HOWEVER,
     that notwithstanding anything in this SECTION 10 or this Lease to the
     contrary, (x) Tenant Named Herein shall be required during the term of this
     Lease to obtain and maintain coverage in its Casualty Insurance policy (or
     in any separate policy that might become commercially available) against
     loss or damage by terrorist acts in an amount equal to (but not exceeding)
     a limit of $50,000,000 per occurrence, and (y) any Tenant other than Tenant
     Named Herein shall be required during the term of this Lease to obtain and
     maintain coverage in its Casualty Insurance policy (or in any separate
     policy that might become commercially available) against loss or damage by
     terrorist acts in an amount equal to 100% of the "Full Replacement Cost" of
     the Premises; PROVIDED, HOWEVER, if such coverage is not commercially
     available, then any Tenant other than Tenant Named Herein must obtain and
     maintain such coverage in an amount equal to the highest amount then
     available on commercially reasonable terms, but in no event shall any such
     Tenant obtain or maintain such coverage in an amount less than $50,000,000
     per occurrence;

               (2)  commercial general liability and umbrella insurance against
     any loss, liability or damage on, about or relating to the Premises, with
     deductibles in amounts not exceeding such that Landlord and Fee Mortgagee
     may reasonably approve, against claims for bodily injury including death,
     property damage and "personal and advertising injury" occurring in, on or
     about the Premises and the adjoining streets, sidewalks and passageways
     with a combined single limit with respect to each occurrence on a
     per-location basis of not less than Ten Million Dollars ($10,000,000.00)
     (under the primary or umbrella coverage), which amount shall be increased
     or decreased from time to time to those amounts and coverages of insurance
     which in Landlord's reasonable judgment are then being customarily required
     by prudent landlords of properties meeting the First Class Standard (all of
     the insurance described in this clause (2) being hereinafter sometimes
     collectively referred to as the "LIABILITY INSURANCE"), it being agreed
     that such Liability Insurance shall also provide the following protections:

               (a)  products and completed operations;

               (b)  personal and advertising injury protection;

               (c)  fire legal liability, if not otherwise covered under the
comprehensive form of public liability insurance;

                                       16
<Page>

               (d)  employees as additional insured coverage;

               (e)  liquor liability; and

               (f)  contractual liability.

               (3)  rental loss and/or business interruption insurance in an
     annual aggregate amount equal to the gross rentals payable with respect to
     the coverage period on an actual loss sustained basis from the Premises,
     such insurance to cover the period commencing on the date of any casualty
     or condemnation and ending twelve (12) months following the date of such
     casualty (it being understood that (x) the policy under which Tenant shall
     carry such insurance shall provide that the proceeds of such policy shall
     be paid with respect to the foregoing rental loss coverage before being
     paid to cover any other loss, and (y) Tenant's obligation to pay rent
     hereunder in the event of casualty shall be deemed satisfied to the extent
     and only to the extent that Landlord receives proceeds equal to the amount
     of rent and additional rent that would otherwise have been payable
     hereunder (it being acknowledged that any deficiency in such proceeds shall
     be payable by Tenant).

               (4)  if a sprinkler system shall be located in the Premises,
     sprinkler leakage insurance in amounts reasonably satisfactory to Landlord
     and any Fee Mortgagee;

               (5)  Boiler and Machinery Broad Form policy covering explosion
     insurance in respect of steam and pressure boilers and similar apparatus,
     if any, located on the Premises in an amount equal to one hundred (100%)
     percent of the full replacement cost of the Improvements;

               (6)   worker's compensation and employer's liability insurance
     subject to statutory limits or better in respect of any work or other
     operations on or about the Premises in accordance with applicable Laws on
     all employees of contractors, subcontractors, consultants and vendors
     engaged on or with respect to the Premises ("WORKER'S COMPENSATION
     INSURANCE"); and

               (7)  such other insurance with respect to the Premises and in
     such amounts as Landlord or any Fee Mortgagee from time to time may
     reasonably request against such other insurable hazards which at the time
     in question are commonly insured against in the case of property meeting
     the First Class Standard; provided that it is expressly understood that
     notwithstanding anything in this SECTION 10 or this Lease to the contrary,
     Tenant shall not be required to carry any insurance coverage that is not
     commercially available at the time in question.

          (b)  All such insurance described in subparagraph (a) of this SECTION
10 shall: (i) be obtained from and maintained with reputable and financially
sound insurance company(ies) reasonably acceptable to Landlord, authorized to
issue such insurance in the State of New York, and (x) rated in Best's Insurance
Guide, or any successor thereto, as having a "Best's Rating" of A or better and
a "Financial Size Category" of at least "x" or better and (y)

                                       17
<Page>

have a claims paying ability rating of not less than AA - by S& P and Aa3 by
Moody's; (ii) be on and/or contain such terms and conditions as shall be
reasonably satisfactory to Landlord; (iii) provide that any loss otherwise
payable thereunder shall be payable notwithstanding any act or negligence of
Tenant, Landlord or any Landlord Party, which might, absent such agreement,
result in a forfeiture of all or part of the payment of such loss; and (iv)
otherwise comply with the provisions of this SECTION 10. The proceeds of any
loss under any policy or policies of Casualty Insurance shall be payable to
Landlord (and/or to any Fee Mortgagee designated by Landlord therefor) as the
sole "loss payee" thereunder, it being understood that the provisions of SECTION
12 below shall apply in respect thereof.

          (c)  Tenant shall furnish Landlord (and any named Fee Mortgagee) with
duplicate original(s) or original certificate(s) together with true copy(ies) of
all such insurance policies described in SECTION 10(a) above, including any
renewal and replacement policy(ies), together with written evidence that the
premiums therefor (the "PREMIUMS") have been paid, and such additional
information as Landlord or any Fee Mortgagee may reasonably require. It is
understood and agreed that said policies may be blanket policies covering other
locations operated by Tenant, its affiliates or subsidiaries, provided that such
blanket policies otherwise comply with the provisions of this SECTION 10, and
provided further that such policies shall be written on a "per occurrence" basis
so as to assure that the amount of insurance required by the provisions of this
SECTION 10 will be available notwithstanding any losses with respect to other
property covered by such blanket policies.

          (d)  The policies of insurance required under this Lease shall contain
an agreement by the insurer that it will not cancel or modify the provisions of
such policy relating to Tenant's obligations under this Lease except after
thirty (30) days prior written notice to Landlord (and all named Fee Mortgagees
and other parties, if any) by certified mail, return receipt requested. Not less
than thirty (30) days prior to the expiration of any such insurance policy,
Tenant shall deliver to Landlord (and all named Fee Mortgagees) a certificate
evidencing the replacement or renewal thereof.

          (e)  Tenant shall not take out separate insurance concurrent in form
or contributing in the event of loss with that required to be furnished by
Tenant under this SECTION 10 of this Lease, unless Landlord (and all named Fee
Mortgagees), are included therein as insureds, with losses being payable as in
this SECTION 10 provided. Tenant shall immediately notify Landlord whenever any
such separate insurance is taken out and shall deliver to Landlord (and all
named Fee Mortgagees) duplicate original(s) thereof, or original certificate(s)
evidencing the same with true copies thereof, as provided in this Lease.

          (f)  Each insurance policy required to be maintained by Tenant under
this SECTION 10 shall include a waiver of the insurer's right of subrogation
against Landlord (and all named Fee Mortgagees). Tenant hereby releases Landlord
and all Landlord Parties, with respect to any claim (including a claim for
negligence) which it might otherwise have against the other party, for loss,
damage or destruction with respect to its property occurring during the term of
this Lease to the extent that any of the foregoing are covered by the insurance
required to be carried hereunder or would have been covered by Tenant's
insurance if Tenant had fully carried such insurance required hereunder.

                                       18
<Page>

          (g)  If Tenant fails to provide, maintain, keep in force or deliver
and furnish the certificates of insurance required by this Lease, Landlord upon
at least ten (10) Business Days' prior written notice may, but shall not be
obligated to, procure such insurance or single-interest insurance for such risks
covering Landlord's interest (or the interest of any Fee Mortgagee) and pay the
premiums for any such insurance. All sums advanced by Landlord to pay premiums
on insurance policies which Tenant is required to maintain hereunder shall be
due and payable by Tenant to Landlord within fifteen (15) Business Days after
demand accompanied by reasonable documentation supporting the amount of any such
costs or expenses and shall earn interest from and after the date the same are
paid by Landlord, whether or not demand for repayment is then made, at the
Default Rate.

          (h)  Landlord shall not be limited in the proof of any damages which
Landlord may claim against Tenant arising out of or by reason of Tenant's
failure during the term of this Lease to provide and keep in force the insurance
required under this Lease to the amount of the insurance premium or premiums not
paid or incurred by Tenant and which would have been payable upon such
insurance, but Landlord shall also be entitled to recover as damages for such
breach the uninsured amount of any loss to the extent of any deficiency between
the insurance required by the provisions of this Lease and the insurance carried
by Tenant, together with all costs and expenses incurred by Landlord which
Landlord would not have incurred if the required insurance had been maintained
by Tenant.

          (i)  In no event shall either party shall have any liability under or
in connection with this Lease for any consequential or indirect damages suffered
by the other party or by any person claiming through such party (except to the
extent expressly provided in Section 21(b) hereof).

          (j)  Any dispute under this SECTION 10 shall be resolved by
arbitration pursuant to SECTION 44 hereof.

          11.  INDEMNIFICATION; NON-LIABILITY.

          (a)  Tenant shall, at its sole cost and expense, indemnify, defend and
hold harmless Landlord, Landlord's Affiliates, any Fee Mortgagee and their
respective members, officers, directors, shareholders, partners, trustees,
beneficiaries, agents and employees ("INDEMNIFIED PARTIES") from and against any
and all claims, charges, losses and costs (including reasonable out-of-pocket
attorneys fees and court costs) by or on behalf of, and any penalties imposed
by, any person that may be asserted against any Indemnified Party or the
Premises by any third party (collectively, "LOSSES") by reason of any of the
following matters: (a) the use, occupancy, operation, maintenance, repairs or
management of the Premises by Tenant or any subtenant or other person holding or
claiming under or through Tenant, (b) the alteration of any part of the
Improvements (other than the performance by Landlord of a Cap Ex Improvement),
the installation, alteration or removal of Equipment or the conduct or
management of, and the payment for, any work or thing whatsoever done in or
about the Premises, by or on behalf of Tenant (or any subtenant or other person
holding or claiming through or under Tenant) during the term of this Lease; (c)
the condition of the Premises during the term of this Lease; (d) any breach or
default on the part of Tenant in the performance of any of Tenant's covenants or
obligations under this Lease; (e) the failure to timely pay any Impositions or
comply with any

                                       19
<Page>

Laws, whether or not Tenant shall be validly contesting the same in accordance
with the terms of this Lease; (f) any wilful misconduct or negligence of Tenant,
or any of its agents, servants, employees, contractors, invitees or licensees,
or of any person holding or claiming through or under Tenant; (g) any accident,
injury or damage whatsoever caused to any person or persons or any property
damage occurring during the term of this Lease, in or about the Premises, or
upon the sidewalks or streets adjacent thereto, or (h) any participation or
cooperation or execution of any documents by Landlord requested by Tenant in
connection with any activity of Tenant (including with respect to any contest or
other proceeding brought by Tenant relating to Impositions or Laws or
otherwise). Further, Tenant agrees to indemnify and hold harmless the
Indemnified Parties against and from all Losses incurred in connection with any
claim, action or proceeding against which the Indemnified Parties are
indemnified under this SECTION 11; PROVIDED, HOWEVER, that to the extent any
Indemnified Party(ies) bring a claim, action or proceeding under this SECTION 11
against Tenant, and Tenant is the prevailing party in such claim, Tenant shall
not be obligated to pay for such Indemnified Party(ies) attorneys' fees incurred
thereby in connection with such claim. In case any claim, action or proceeding
(a "CLAIM") is brought against any Indemnified Party in respect of which
indemnification may be sought by such Indemnified Party, such Indemnified Party
shall give prompt written notice thereof to Tenant, which notice shall include
all documents and information in the possession of or under the control of such
Indemnified Party relating to such Claim and shall specifically state that
indemnification for such Claim is being sought under this SECTION 11(a);
provided, however, that the failure of such Indemnified Party to so notify
Tenant shall not limit or affect such Indemnified Party's rights to be
indemnified pursuant to this SECTION 11(a) if and to the extent Tenant is not
prejudiced thereby. Upon receipt of such notice of Claim (together with such
documents and information) from such Indemnified Party, Tenant shall, at is sole
cost and expense, in good faith defend any such Claim with counsel reasonably
satisfactory to such Indemnified Party. In the alternative, an Indemnified Party
may elect to conduct its own defense through counsel of its own choosing and at
the reasonable expense of Tenant, if (A) such Indemnified Party reasonably
determines that the conduct of its defense by Tenant could be prejudicial to its
interests, (B) Tenant refuses to defend, or (C) Tenant shall have failed, in
Landlord's reasonable judgment, to defend the Claim in good faith. Tenant may
settle any Claim against an Indemnified Party without such Indemnified Party's
consent, provided (i) such settlement is without any liability, cost or expense
whatsoever to such Indemnified Party, (ii) the settlement does not include or
require any admission of liability or culpability by such Indemnified Party
under any federal, state or local statute or regulation, whether criminal or
civil in nature and (iii) Tenant obtains an effective written release of
liability for such Indemnified Party from the party to the Claim with whom such
settlement is being made, which release must be acceptable to such Indemnified
Party, and a dismissal with prejudice of any pending legal action against such
Indemnified Party in connection with such Claim. Each Indemnified Party shall
reasonably cooperate with Tenant, at Tenant's sole cost and expense, in
connection with the defense or settlement of any Claim in accordance with the
terms hereof. If Tenant refuses to defend any Claim or if, in the reasonable
judgment of Landlord, Tenant fails to defend such Claim in good faith and the
Indemnified Party in question elects to defend such Claim by counsel of its own
choosing, Tenant shall be responsible for any good faith settlement of such
Claim entered into by such Indemnified Party. If an Indemnified Party reasonably
determines that the conduct of its defense by Tenant could be materially
prejudicial to its interests and the Indemnified Party in question elects to
defend such Claim by counsel of its own choosing,

                                       20
<Page>

Tenant shall be responsible for any reasonable settlement of such Claim entered
into by such Indemnified Party.

          (b)  In no event shall either party have any liability for
consequential damages resulting from the matters described in this SECTION 11.

          12.  DAMAGE OR DESTRUCTION.

          (a)  If the whole or any portion of the Premises is damaged or
destroyed by fire or other casualty, then Tenant shall forthwith give notice
thereof to Landlord, and unless Tenant shall exercise its termination option in
connection with an End of Term Casualty (as hereinafter defined) set forth in
SECTION 12(g) below, Tenant shall, at its cost and expense (subject only to the
limitation on Tenant Named Herein's obligation set forth in SECTION 12 (f)(4)
with respect to a casualty resulting from a terrorist act), forthwith repair,
restore, rebuild or replace the damaged or destroyed Improvements, fixtures or
equipment, and complete the same as soon as reasonably possible, to the
condition they were in prior to such damage or destruction, except for such
changes in design or materials as may then be required by Laws (the repair,
restoration, rebuilding and/or replacement work required of Tenant under this
SECTION 12(a) is herein collectively called the "RESTORATION WORK"). The
provisions and requirements of SECTION 9 shall apply with respect to the
Restoration Work (and the same shall constitute Tenant Changes); without
limiting the generality of the foregoing, the same shall be performed in
accordance with the Plans and Specifications to the extent required under
SECTION 9.

          (b)  The obligation to pay the rent provided for herein and to
otherwise perform Tenant's obligations hereunder shall continue unabated by
reason of such damage or destruction; that is, there shall be no abatement or
diminution of rent or release from any of Tenant's obligations hereunder by
reason of such damage or destruction or any insurance proceeds deficiency with
respect thereto regardless of the period of time, if any, during which the
Premises or any part thereof remain untenantable, any Laws to the contrary
notwithstanding.

          (c)  Promptly after any damage or destruction to the Premises by fire
or other casualty, Tenant shall submit proof of loss statements with the
insurance company(ies) under the policies of Casualty Insurance and provide
Landlord (and any named Fee Mortgagee) with a copy of all such submitted
statements. Landlord (and any named Fee Mortgagee) shall have the right to
participate with Tenant in the adjustment, collection and compromise of any and
all claims under all policies of Casualty Insurance and to execute and deliver
on behalf of Tenant all necessary proofs of loss, receipts, vouchers and
releases required by the insurers. Tenant shall not settle any claim without the
prior written approval of Landlord and the Fee Mortgagee, which shall not be
unreasonably withheld, delayed or conditioned by Landlord.

          (d)  The proceeds of the policies of Casualty Insurance in respect of
the damage or destruction in question shall be paid either by the insurance
company(ies) to Landlord or to any Fee Mortgagee designated by Landlord for such
purpose (in either event, the person being paid such proceeds by the insurance
company(ies) is herein called the "CASUALTY DEPOSITARY") in trust in accordance
with the following provisions of this SECTION 12. The term "NET CASUALTY
INSURANCE PROCEEDS" shall mean the proceeds of the policies of Casualty
Insurance, in respect of the damage or destruction in question, which are
actually paid by the

                                       21
<Page>

insurance company(ies), LESS the reasonable out-of-pocket cost to the Casualty
Depositary and/or Landlord, as evidenced by reasonable documentation, of
recovering, holding and/or paying out such proceeds pursuant to the provisions
of this SECTION 12 (including, without limitation, reasonable out-of-pocket
attorneys' fees, costs and disbursements and, as applicable, the costs and
expenses allocable to policing the requirements of SECTION 12(f)(1) through (5)
below, including without limitation the costs and expenses incurred in
inspecting the Restoration Work and/or any plans and specifications therefor).

          (e)  If the estimated cost of the Restoration Work, as reasonably
determined by the Casualty Depositary, shall be $500,000 or less, then the
Casualty Depositary shall pay the Net Casualty Insurance Proceeds to Tenant, as
trustee, and Tenant shall hold the same in trust to be applied toward the cost
of the Restoration Work.

          (f)  If the estimated cost of the Restoration Work, as reasonably
determined by the Casualty Depositary, shall exceed $500,000, then the Casualty
Depositary shall hold the Net Casualty Insurance Proceeds, and disburse the same
to Tenant, as reimbursement for the costs of the Restoration Work, from time to
time, as the Restoration Work progresses (but not more frequently than monthly),
SUBJECT, HOWEVER, in all events, to the following conditions:

               (1)  Each request for payment shall be made on ten (10) days
     prior written notice to the Casualty Depositary and shall be accompanied by
     a certificate to be made by the architect, engineer or other third party
     professional supervising the Restoration Work stating (x) that the part of
     the Restoration Work which has been completed has been performed
     substantially and in material compliance with the approved plans and
     specifications, (y) that the amount requested is justly required to
     reimburse Tenant for payments by Tenant to, or is justly due to, the
     contractor, subcontractors, materialmen, laborers, engineers, architects or
     other persons rendering services or materials for the Restoration Work
     (giving a brief description of such services and materials), and that, in
     the reasonable opinion of such party, when added to all amounts previously
     paid out by the Casualty Depositary does not exceed the value of the
     Restoration Work performed to the date of such certificate, and (z) whether
     or not, in the reasonable opinion of such party, the amount of the Net
     Casualty Insurance Proceeds remaining in the hands of the Casualty
     Depositary will be sufficient on completion of the Restoration Work to pay
     for the same in full (giving in such detail, as the Casualty Depositary may
     reasonably require, an estimate of the cost of such completion).

               (2)  Each request shall be accompanied by waivers of lien for the
     work covered by the requisition immediately preceding the requisition in
     question reasonably satisfactory to the Casualty Depositary covering that
     part of the Restoration Work for which payment or reimbursement is being
     requested and by a search prepared by a title company or by other evidence
     satisfactory to the Casualty Depositary that there has not been filed with
     respect to the Premises any mechanics' or other lien or instrument for the
     retention of title in respect of any part of the Restoration Work which has
     not been discharged of record.

                                       22
<Page>

               (3)  The request for any payment after the Restoration Work has
     been substantially completed shall be accompanied by a copy of any
     certificate or certificates required by law to permit the legal occupancy
     of the Premises.

               (4)  If, at any time prior to completion of the Restoration Work,
     the Casualty Depositary, in its reasonable judgment, shall determine that
     the Net Casualty Insurance Proceeds it is holding shall be insufficient to
     pay for the full completion of the Restoration Work, then Tenant shall pay
     the amount of such deficiency to the Casualty Depositary to be held and
     applied pursuant to this SECTION 12(f) along with the Net Casualty
     Insurance Proceeds or shall provide the Casualty Depositary with security
     for such payment acceptable to such Casualty Depositary; PROVIDED, HOWEVER,
     that if the casualty in question is caused by a terrorist act or acts,
     Tenant shall be responsible for the cost of the Restoration Work only up to
     the limits covered by its Casualty Insurance Policy (or in any separate
     policy that might become commercially available) against loss or damage by
     terrorist acts, and Landlord shall be responsible for the remainder of such
     cost.

          (g)  If, during the last two (2) years of (i) the initial term hereof
or (ii) either Extension Term, fifty percent (50%) or more of the Premises is
damaged or destroyed by fire or other casualty (such casualty, an "END OF TERM
CASUALTY"), and prior to the End of Term Casualty (during the initial term
hereof or either Extension Term) Tenant shall not have exercised any available
Extension Option, then Tenant shall have the option, within fifteen (15) days of
the occurrence of the End of Term Casualty, to terminate this Lease by a notice
to Landlord (the "TERMINATION NOTICE") specifying such election pursuant to this
SECTION 12(g). Failure to timely deliver the Termination Notice shall be deemed
an election by Tenant to perform all Restoration Work with respect to the End of
Term Casualty in accordance with this SECTION 12. If Tenant shall have timely
delivered the Termination Notice, the term of this Lease shall cease and come to
an end on the day that is thirty (30) days following the date of delivery of
such notice. Prior to the termination of this Lease pursuant to this SECTION
12(g):

               (i)    Tenant shall (a) assign to Landlord (or Fee Mortgagee or
such other designee selected by Landlord) all of its rights to receive the
proceeds of the policies of Casualty Insurance applicable to the End of Term
Casualty and (b) provide a letter from Tenant's insurance carrier (1) consenting
to the assignment of such proceeds, (2) acknowledging that Landlord (or its
designee) has all rights to collect the proceeds under such policy and (3)
representing that there are no defenses to such insurance carrier's obligation
to pay any claim to Landlord (or its designee) under such policy;

               (ii)   Tenant shall pay to Landlord (or its designee) the amount
of any deductible  set forth in Tenant's  Casualty Insurance policy; and

               (iii)  Tenant shall be obligated to pay to Landlord all Base
Rent, additional rent and other sums that would have been due and payable by
Tenant under this Lease if the End of Term Casualty had not occurred and the
term of this Lease would have expired as if it had not been terminated as
aforesaid.

                                       23
<Page>

          (h)  Notwithstanding anything in this SECTION 12 to the contrary, if
an Event of Default resulting from non-payment of Base Rent and/or additional
rent shall be continuing during any period that the Casualty Depositary is
holding any insurance proceeds hereunder, then the Casualty Depositary shall
have the right, but not the obligation, to apply the whole or any part of such
proceeds to the cure or remedy of such default prior to paying over, holding
and/or applying the same in accordance with the provisions of SECTION 12(e) and
12(f) hereof.

          (i)  This Lease shall be considered an express agreement governing any
case of damage to or destruction of the Improvements or any part thereof by fire
or other casualty, and SECTION 227 of the Real Property Law of the State of New
York (providing for such a contingency in the absence of express agreement), and
any other law of like import now or hereafter in force, shall have application
in such case.

          (j)  The obligations under this SECTION 12 shall survive the
expiration of sooner termination of this Lease.

          13.  CONDEMNATION.

          (a)  If at any time during the term of this Lease, all or
substantially all of the Premises shall be taken for any public or quasi-public
purpose by any lawful power or authority by the exercise of the right of
condemnation or eminent domain or by agreement between Landlord, Tenant and
those authorized to exercise such right, then the following provisions shall
apply:

               (1)  This Lease and the term hereby granted shall terminate and
     expire on the date of such taking and all Base Rent and additional rent
     provided to be paid by Tenant shall be apportioned and paid to the date of
     such taking.

               (2)  The entire award for the taking of the Premises (without
     reduction therefrom for the value of any leasehold estate of Tenant
     hereunder or any value attributable to any Tenant Changes to the
     Improvements) shall be paid either to Landlord or to a Fee Mortgagee
     designated by Landlord for such purpose (in either event, the "CONDEMNATION
     DEPOSITARY"), in trust, and shall be retained or paid by Landlord as
     follows:

                    (A)  FIRST,  the Condemnation  Depositary  shall pay the
     reasonable fees and expenses incurred in collecting the award; and

                    (B)  SECOND, the balance of such award (if any) shall be
     paid to Landlord (and/or to any Fee Mortgagee designated by Landlord for
     such purpose).

The term "SUBSTANTIALLY ALL OF THE PREMISES" shall be deemed to mean such
portion(s) of the Premises as, when so taken, would in Landlord's reasonable
judgment leave remaining a balance of the Premises which (due either to the area
so taken or the location of the part so taken in relation to the part not so
taken) would not (under economic conditions or any Laws), assuming, to the
extent feasible, the restoration of the portion of any existing Improvements not
taken and the construction of new Improvements on any Land not taken, be capable
of either (I) supporting

                                       24
<Page>

Tenant's business operations or (II) producing a fair and reasonable return as a
rental property. Nothing contained in this SECTION 13 shall be deemed to prevent
Tenant from making a separate claim in any condemnation proceeding for the then
value of Tenant's trade fixtures and personal property which have been taken,
and moving expenses incurred as a result thereof, provided that such claim would
not have the effect of reducing the amount of the award to which Landlord would
otherwise be entitled.

          (b)  If at any time during the term of this Lease less than
substantially all of the Premises shall be so taken or condemned, then the
following provisions shall apply:

               (1)  This Lease and the term hereof shall nevertheless continue,
     and there shall be no abatement, diminution or reduction in Base Rent,
     additional rent or any other charges required to be paid by Tenant pursuant
     to this Lease;

               (2)  Tenant, whether or not any condemnation award is sufficient
     for such purposes, shall proceed diligently to restore the remaining parts
     of the Premises and the sidewalks and curbs adjacent thereto not so taken
     so that the same shall be a complete, rentable, self-contained
     architectural unit in good condition and repair (all such restoration work
     being herein called the "CONDEMNATION WORK"). The provisions and
     requirements of SECTION 9 shall apply with respect to the Condemnation Work
     (and the same shall constitute Tenant Changes hereunder); without limiting
     the generality of the foregoing, the same shall be performed in accordance
     with the Plans and Specifications to the extent required under SECTION 9.

               (3)  The entire award for the taking of the applicable portion of
     the Premises shall be paid to a Condemnation Depositary, in trust, and
     shall be paid by the Condemnation Depositary as follows:

                    (A)  FIRST,  the Condemnation  Depositary  shall pay the
          reasonable fees and expenses  incurred in collecting the award;

                    (B)  SECOND, the balance of such award, up to the amount
          reasonably required to perform the Condemnation Work (as determined by
          a mutually agreeable architect), shall be made available to Tenant to
          perform the Condemnation Work, subject to and in accordance with the
          provisions of SECTION 13(b)(4) below (such portion of the award being
          herein called the "CONDEMNATION WORK PROCEEDS");

                    (C)  THIRD, the balance of such award shall be paid to
          Landlord (and/or any Fee Mortgagees designated by Landlord for such
          purpose), up to an amount equal to the fair market value of Landlord's
          Fee Estate as to the portion of the Premises taken.

               (4)  The Condemnation Work Proceeds shall be held and/or
     disbursed by the Condemnation Depositary in accordance with the following
     provisions of this SECTION 13(b)(4). The term "NET CONDEMNATION WORK
     PROCEEDS" shall mean the proceeds of such award which are actually paid by
     the taking authority to the Condemnation

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<Page>

     Depositary, LESS the reasonable and customary cost to the Condemnation
     Depositary and/or Landlord, as evidenced by reasonably detailed bills,
     invoices and other records, of holding and/or paying out such proceeds
     pursuant to the provisions of this SECTION 13(b)(4) (including, without
     limitation, reasonable attorneys' fees, costs and disbursements and, as
     applicable, the costs and expenses allocable to policing the requirements
     of SECTION 13(b)(4)(B) below, including without limitation costs and
     expenses incurred in inspecting the Condemnation Work and/or any plans and
     specifications therefor). The Net Condemnation Work Proceeds shall be held
     and/or disbursed as follows:

                    (A)  If the estimated cost of the Condemnation Work, as
          determined by a mutually agreeable architect, shall be $500,000 or
          less, then the Condemnation Depositary shall pay the Net Condemnation
          Work Proceeds to Tenant, and Tenant shall hold the same in trust to be
          applied toward the cost of the Condemnation Work.

                    (B)  If the estimated cost of the Condemnation Work, as
          reasonably determined by a mutually agreeable architect, shall exceed
          $500,000, then the Condemnation Depositary shall disburse the Net
          Condemnation Work Proceeds to Tenant, as reimbursement for the costs
          of the Condemnation Work, from time to time, as the Condemnation Work
          progresses (but not more frequently than monthly), SUBJECT, HOWEVER,
          in all events, to the following conditions set forth in SECTION
          12(f)(1) through (5), applied MUTATIS MUTANDIS, to the Condemnation
          Work and the Condemnation Depositary.

          (c)  If the temporary use of the whole or any part of the Premises
shall be taken at any time during the term of this Lease for any public or
quasi-public purpose by any lawful power or authority by the exercise of the
right of condemnation or eminent domain, or by agreement between Tenant and
those authorized to exercise such right, Tenant shall give prompt notice thereof
to Landlord. Tenant shall be entitled, except as hereinafter set forth, to
receive that portion of the award or payment for such taking which represents
compensation for the use and occupancy of the Premises, for the taking of
Tenant's Property, and for the cost of any Condemnation Work required to be
performed by Tenant pursuant to subsection (c) hereof and for moving expenses.
Except as hereinafter set forth, this Lease shall be and remain unaffected by
any such taking and Tenant and Landlord shall each continue to be responsible
for all of its respective obligations hereunder insofar as such obligations are
not affected by such taking and Tenant shall continue to pay in full the Base
Rent and additional rent due hereunder. If all of the Premises shall be taken
and the period of temporary use or occupancy shall extend beyond the expiration
date, this Lease shall terminate as of the date of such taking, and Landlord
shall be entitled to the entire award which represents compensation for the use
and occupancy of the Premises. If less than all of the Premises shall be so
taken and the period of temporary use or occupancy shall extend beyond the
expiration date, that part of the award which represents compensation for the
use and occupancy of the Premises (or a part thereof) shall be divided between
Landlord and Tenant so that Tenant shall receive so much thereof as represents
the period up to and including such expiration date (as same may have been
extended or accelerated) and Landlord shall receive so much thereof as
represents the period after such expiration date (as

                                       26
<Page>

same may have been extended or accelerated). All monies payable to Tenant as, or
as part of, an award for temporary use and occupancy for a period beyond the
date to which the rent has been paid shall be received, held in a
interest-bearing account and applied by Landlord as a trust fund for payment of
the rent becoming due hereunder.

          (d)  In any and all proceedings pursuant to which the Premises or any
part thereof, or the temporary use of the whole or any part thereof, shall be so
taken or condemned, Landlord and Tenant shall be entitled solely to the amounts,
if any, payable to them pursuant to the provisions of this SECTION 13. In each
such proceeding, Landlord and Tenant agree to execute any and all documents that
may be required to facilitate collection of the award(s) in such proceeding.

          (e)  Notwithstanding anything herein to the contrary, if an Event of
Default resulting from non-payment of Base Rent and/or additional rent shall be
continuing during any period that the Condemnation Depositary is holding any
proceeds of any condemnation award hereunder, then the Condemnation Depositary
shall have the right, but not the obligation, to apply the whole or any part of
such proceeds to the cure or remedy of such default prior to paying over,
holding and/or applying the same in accordance with the provisions of SECTION
13(a) and 13(b) hereof.

          14.  EQUIPMENT.

          (a)  The Equipment, as herein provided, shall be deemed part of the
"Improvements", and, as such, may not be removed by Tenant during the term of
this Lease except as part of Tenant Changes pursuant to SECTION 9 hereof. As
used herein, the term "EQUIPMENT" shall mean any item of property (other than
any property constituting Excluded Property) now or hereafter installed in or on
the Premises that is an integral part of the Improvements, including, without
limiting the generality of the foregoing, heating, base building security
systems, ventilating, and air-conditioning plants and systems, electrical and
plumbing fixtures and systems and other like equipment and fixtures, if any
(including, without limitation, all machinery, engines, dynamos, boilers,
elevators, elevator shafts, radiators, air conditioning compressors, sprinkler
equipment, electrical equipment, ducts, fire protection equipment, pipes,
conduits and fittings and any other systems servicing or furnishing utilities to
the Improvements at any time now or hereafter erected, constructed, affixed or
attached to or placed in or placed upon the Land or the Improvements, and any
and all alterations, renewals and replacements thereof, additions thereto and
substitutes therefor).

          15.  SUBORDINATION AND NONDISTURBANCE.

          (a)  For purposes of this Lease, the following definitions shall
apply:

               "MORTGAGE" shall mean any mortgage or deed of trust held by an
Institutional Lender which may now or hereafter affect Landlord's fee estate in
the Land and/or the Improvements, or any part of either (whether or not such
mortgage or deed of trust shall also cover other properties), and shall include
each and every advance made or hereafter to be made under such mortgage or deed
of trust, and to each and every renewal, modification, replacement

                                       27
<Page>

or extension of such mortgage or deed of trust and any spreader or consolidation
of such mortgage or deed of trust, and "FEE MORTGAGEE" shall mean any holder of
any Mortgage.

          (b)  Subject to the provisions of SECTION 15(f) below and the delivery
to Tenant of a Non-Disturbance Agreement as provided therein (so long as Tenant
complies with its obligations therein), this Lease, and all rights of Tenant
hereunder, are and shall be subject and subordinate to all Mortgages. In
confirmation of such subordination, Tenant shall promptly execute, acknowledge
and deliver any instrument that Landlord or a Fee Mortgagee may reasonably
request to evidence such subordination.

          (c)  If any act or omission of Landlord would give Tenant the right,
immediately or after lapse of a period of time, to cancel or terminate this
Lease, or to abate or offset against the payment of rent or to claim a partial
or total eviction, Tenant shall not exercise such right (I) until it has given
written notice of such act or omission to Landlord and each Fee Mortgagee whose
name and address shall previously have been furnished to Tenant, and (II) until
a reasonable period for remedying such act or omission shall have elapsed
following the giving of such notice and following the time when such Fee
Mortgagee shall have become entitled under such Mortgage to remedy the same
(which reasonable period shall in no event be less than the period to which
Landlord would be entitled under this Lease or otherwise, after similar notice,
to effect such remedy plus thirty (30) days), provided such Fee Mortgagee within
thirty (30) days following Tenant's notice shall give Tenant notice of its
intention to, and with due diligence commence and continue to, remedy such act
or omission.

          (d)  If any Fee Mortgagee, or any designee of any Fee Mortgagee or any
other person, shall succeed to the rights of Landlord under this Lease through a
possession or foreclosure action or delivery of a deed in lieu of foreclosure or
other exercise of such Fee Mortgagee's remedies, then at the request of such
party so succeeding to Landlord's rights (herein called "SUCCESSOR LANDLORD"),
and upon such Successor Landlord's written agreement to accept Tenant's
attornment pursuant to a Non-Disturbance Agreement (as hereinafter defined),
Tenant shall attorn to and recognize such Successor Landlord as Tenant's
landlord under this Lease and shall promptly execute and deliver any instrument
that such Successor Landlord may reasonably request to evidence such attornment.

          (e)  If any Fee Mortgagee shall require any modification(s) of this
Lease, Tenant shall, at Landlord's request, promptly execute and deliver to
Landlord such instruments effecting such modification(s) as Landlord shall
reasonably require, provided that such modification(s) do not affect, except to
a DE MINIMIS extent, any of Tenant's rights or obligations under this Lease.

          (f)  (1)  Notwithstanding the foregoing provisions of SECTION 15(b),
this Lease shall not be subject and subordinate to any Mortgage unless and until
Landlord shall have obtained for Tenant a Non-Disturbance Agreement from the Fee
Mortgagee under such Mortgage. As used herein, the term "NON-DISTURBANCE
AGREEMENT" shall mean an agreement by the holder of such Mortgage duly executed
and in statutory form for recordation and otherwise substantially in the form
annexed hereto and made a part hereof as SCHEDULE D.

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<Page>

               (2)  Notwithstanding the foregoing provisions of SECTION 15(f)(1)
above, a Non-Disturbance Agreement shall be deemed to have been obtained for
Tenant if either (i) Landlord shall have delivered to Tenant a form of
Non-Disturbance Agreement (meeting the criteria set forth above in the
definition of the same) executed by the Fee Mortgagee under such Mortgage, or
(ii) (x) Landlord shall have delivered to Tenant, for execution by Tenant, a
form of Non-Disturbance Agreement (meeting the criteria set forth above in the
definition of the same) which is not yet executed by the Fee Mortgagee under
such Mortgage, and (y) Tenant shall fail to execute such form and re-deliver the
same back to Landlord within ten (10) days after the delivery thereof to Tenant.

          16.  QUIET ENJOYMENT.

          Provided no Event of Default has occurred and is continuing, Tenant
may peaceably and quietly have, hold and enjoy the Premises during the term of
this Lease, subject, however, to all the terms of this Lease. The preceding
sentence notwithstanding, no failure by Landlord to comply with the foregoing
covenant shall give Tenant any right to cancel or terminate this Lease or to
abate, reduce or make any deduction from or offset against any rent or any other
sum payable under this Lease, or to fail to perform any other obligations of
Tenant hereunder.

          17.  ASSIGNMENT AND SUBLETTING.

          (a)  Subject to the further provisions of this SECTION 17, neither
this Lease nor the term and estate hereby granted, nor any part hereof or
thereof, shall be assigned, mortgaged, pledged, encumbered or otherwise
transferred voluntarily, involuntarily, by operation of law or otherwise, and
neither the Premises, nor any part thereof, shall be subleased, licensed, used
or occupied by any person or entity other than Tenant or be encumbered in any
manner by reason of any act or omission on the part of Tenant, and no rents or
other sums receivable by Tenant under any sublease of all or any part of the
Premises shall be assigned or otherwise encumbered, without the prior written
consent of Landlord. The dissolution or direct or indirect transfer of control
of Tenant (however accomplished, including, by way of example, the admission of
new partners or members or withdrawal of existing partners or members, or
transfers of interests in distributions of profits or losses of Tenant, issuance
of additional stock, transfer of stock, redemption of stock, stock voting
agreement, or change in classes of stock) shall be deemed an assignment of this
Lease regardless of whether the transfer is made by one or more transactions, or
whether one or more persons or entities hold the controlling interest prior to
the transfer or afterwards. The transfer of shares of Tenant (if Tenant is a
corporation or trust) for purposes of this SECTION 17 shall not include the sale
of shares by persons other than those deemed "insiders" within the meaning of
the Securities Exchange Act of 1934, as amended, which sale is effected through
the "over-the-counter market" or through any recognized stock exchange
(including, without limitation, in connection with a public offering). An
agreement under which another person or entity becomes responsible for all or a
portion of Tenant's obligations under this Lease shall be deemed an assignment
of this Lease. No assignment or other transfer of this Lease and the term and
estate hereby granted, and no subletting of all or any portion of the Premises
shall relieve Tenant of its liability under this Lease except as expressly
provided in SECTION 17(n) below or of the obligation to obtain Landlord's prior
consent to any further assignment, other

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<Page>

transfer or subletting. Any attempt to assign this Lease or sublet all or any
portion of the Premises in violation of this SECTION 17 shall be null and void.

          (b)  (1)  Notwithstanding SECTION 17(a), Landlord's prior written
consent shall not be required in the case of a proposed assignment to (i) an
entity created by merger, reorganization or recapitalization of or with Tenant
or (ii) a purchaser of all or substantially all of Tenant's assets or of a
controlling interest in Guarantor (such controlling interest to be purchased for
the purpose of continuing the Sotheby's business and for utilizing the
Improvements as a first-class auction house); PROVIDED, in the case of both
CLAUSE (i) and CLAUSE (ii), that (A) Landlord shall have received a notice of
such assignment from Tenant, (B) the assignee assumes by written instrument
reasonably satisfactory to Landlord all of Tenant's obligations under this
Lease, and (C) such assignment is for a valid business purpose and not to avoid
any obligations under this Lease.

               (2)  Notwithstanding SECTION 17(a), without the consent of
Landlord, Tenant may assign this Lease or sublet all or any part of the Premises
to an Affiliate of Tenant; PROVIDED that (i) Landlord shall have received a
notice of such assignment or sublease from Tenant; and (ii) in the case of any
such assignment, (A) the assignment is for a valid business purpose and not to
avoid any obligations under this Lease and (B) the assignee assumes by written
instrument reasonably satisfactory to Landlord all of Tenant's obligations under
this Lease. "AFFILIATE" means, as to any designated person or entity, any other
person or entity which controls, is controlled by, or is under common control
with, such designated person or entity. "CONTROL" (and with correlative meaning,
"controlled by" and "under common control with") means ownership or voting
control, directly or indirectly, of 50% or more of the voting stock, partnership
interests or other beneficial ownership interests of the entity in question.

          (c)  Notwithstanding SECTION 17(a), so long as Tenant shall satisfy
the Occupancy Requirement, Tenant shall have the right without the consent of
Landlord, subject to all of the applicable terms and conditions of this Lease,
to permit any temporary use or occupancy of space in the Premises only by
persons who have a specific business arrangement with Tenant or a Tenant Party
(such persons who shall be permitted to occupy portions of the Premises pursuant
to this SECTION 17(c) being referred to individually as a "PERMITTED OCCUPANT",
or collectively as the "PERMITTED OCCUPANTS"), provided that (i) no demising
walls shall be or shall be required by any Laws to be erected in the Premises
separating the space used by a Permitted Occupant from the remainder of the
Premises, (ii) there shall be no separate identification of any Permitted
Occupant in the lobby or any entrance to the Premises, (iii) Tenant shall ensure
that the Permitted Occupants use the Premises in conformity with and comply with
all applicable provisions of this Lease, (iv) in no event shall the use of any
portion of the Premises by any Permitted Occupant create or be deemed to create
any right, title or interest of the Permitted Occupant in or to the Premises,
(v) such arrangement will terminate automatically upon the termination of this
Lease, (vi) Tenant shall receive no rent, payment or other consideration in
connection with the occupancy by a Permitted Occupant in excess of the pro rata
portion of the Base Rent, Impositions, additional rent and operating expenses
attributable to such space plus reasonable out-of-pocket expenses for any
services rendered by Tenant and (vii) to the extent any Tenant Party is a
subtenant or sub-subtenant of Tenant at the Premises, such subtenants' or
sub-subtenants' Permitted Occupants shall only be permitted to

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<Page>

occupy an amount of space that is no greater than ten percent (10%) of such
subleased premises. At least five (5) days prior to a Permitted Occupant taking
occupancy of a portion of the Premises, Tenant shall give notice to Landlord
advising Landlord of (x) the character and nature of the business to be
conducted by such Permitted Occupant, (y) the rentable square footage to be
occupied by such Permitted Occupant, and (z) the duration of such occupancy
together with a copy of any executed license or occupancy agreement between
Tenant and such Permitted Occupant. Within fifteen (15) days after request by
Landlord, Tenant shall provide Landlord with a list of the names of all
Permitted Occupants then occupying any portion of the Premises.

          (d)  If Tenant desires (other than in accordance with SECTIONS 17(b)
or 17(c)) to assign this Lease or sublet all or any portion of the Premises,
Tenant shall give to Landlord notice ("TENANT'S PROPOSAL") thereof, specifying
(i) in the case of a proposed subletting pursuant to this SECTION 17(d), the
location of the space to be sublet and the term of the subletting of such space,
(ii) (A) in the case of a proposed assignment, Tenant's good faith offer of the
consideration Tenant desires to receive or pay for such assignment or (B) in the
case of a proposed subletting, Tenant's good faith offer of the fixed annual
rent which Tenant desires to receive for such proposed subletting and (iii) the
proposed assignment or sublease commencement date.

          (e)  If the proposed transaction is (x) an assignment of this Lease or
a sublet of all or substantially all of the Premises for a term of five (5)
years or more or (y) a sublet of any portion of the Premises for a sublease term
which runs for all or substantially all of the remainder of the Term, (either of
(x) or (y) is a "RECAPTURE TRANSACTION") Tenant's Proposal shall be deemed an
offer from Tenant to Landlord (a "RECAPTURE OFFER") whereby Landlord (or
Landlord's designee) may, at Landlord's option, (i) terminate and release Tenant
(it being understood that such release shall be solely with respect to any
obligations or liability of Tenant accruing on or after the date of such
termination) under this Lease (if the proposed transaction is an assignment or a
sublease of all or substantially all of the Premises or a sublease of a portion
of the Premises which, when aggregated with other subleases then in effect,
covers all or substantially all of the Premises) or (ii) terminate and release
Tenant (it being understood that such release shall be solely with respect to
any obligations or liability of Tenant accruing on or after the date of such
termination) under this Lease with respect to the space covered by the proposed
sublease (if the proposed transaction is a sublease of part of the Premises).
Notwithstanding the preceding sentence, in the event that Tenant shall satisfy
the Recapture Occupancy Requirement (as hereinafter defined), Tenant's Proposal
shall not be deemed to be a Recapture Offer and the rights of Landlord set forth
in clauses (i) and (ii) above shall not apply. Said option may be exercised by
Landlord by notice to Tenant within thirty (30) days after a Tenant's Proposal,
together with all information required pursuant to this SECTION 17, has been
given by Tenant to Landlord.

          (f)  If Landlord exercises its option under SECTION 17(e) to terminate
this Lease, then this Lease shall terminate on the proposed assignment or
sublease commencement date specified in the applicable Tenant's Proposal and all
Base Rent, additional rent and other sums payable to Landlord shall be paid and
apportioned to such date.

          (g)  If Landlord exercises its option under SECTION 17(e) to terminate
this Lease with respect to the space covered by a proposed sublease, then (i)
this Lease shall terminate with

                                       31
<Page>

respect to such part of the Premises on the effective date of the proposed
sublease; (ii) from and after such date the Base Rent and any additional rent
and other costs payable herewith (collectively defined Rent) by Tenant shall be
adjusted, based upon the proportion that the rentable area of the Premises
remaining bears to the total rentable area of the Premises and (iii) Tenant
shall pay to Landlord, within twenty (20) days after demand accompanied by
reasonable documentation supporting the amount of any such costs or expenses,
the reasonable out-of-pocket costs and expenses incurred by Landlord in demising
separately such part of the Premises and in complying with any Laws relating to
such demise.

          (h)  If Landlord exercises its option under SECTION 17(e) to terminate
this Lease with respect to the space covered by a proposed sublease, so long as
Tenant Named Herein satisfies the Occupancy Requirement, any new lease that
Landlord may enter into with respect to such terminated space shall provide that
the tenant under such lease (1) shall not be a Direct Competitor (as hereinafter
defined) of Tenant and (2) shall not be permitted to use all or any portion of
the premises therein demised for a Prohibited Use.

          (i)  In the case of a Recapture Transaction, Tenant shall not sublet
any space to a third party at a rental which is less (on a per rentable square
foot basis) than the rental (on a per rentable square foot basis) specified in
Tenant's Proposal with respect to such space, without complying once again with
all of the provisions of SECTIONS 17(d),(e),(f),(g),(i), AND (j) and re-offering
such space to Landlord at such lower rental. In the case of a proposed
assignment, Tenant shall not assign this Lease to a third party where Tenant
pays greater consideration or grants a greater concession to such third party
for such assignment then the consideration offered to be paid or concession
offered to be granted to Landlord in Tenant's Proposal without complying once
again with all of the provisions of SECTIONS 17(d),(e),(f),(g),(i), AND (j) and
re-offering to assign this Lease to Landlord and pay such consideration or grant
such concession to Landlord.

          (j)  If Tenant delivers to Landlord a Tenant's Proposal with respect
to any Recapture Transaction and Landlord does not timely exercise its option to
terminate the same under SECTION 17(e), if Tenant thereafter desires to assign
this Lease or sublet the space specified in Tenant's Proposal, or if Tenant
desires to sublease a portion of the Premises which sublease does not constitute
a Recapture Transaction (expressly excluding in accordance with SECTIONS 17(b),
17(c), and 17(t)), in all such cases, Tenant shall notify Landlord (a "TRANSFER
NOTICE") of such desire, which notice shall be accompanied by (i) a copy of the
proposed assignment or sublease and all related agreements, the effective date
of which shall be conditioned upon Landlord's consent pursuant to this Lease,
(ii) a statement setting forth in reasonable detail the identity of the proposed
assignee or subtenant, the nature of its business and its proposed use of the
Premises, (iii) current financial information with respect to the proposed
assignee or subtenant, including, without limitation, its most recent financial
statement and (iv) such other information as Landlord may reasonably request,
and Landlord's consent to the proposed assignment or sublease shall not be
unreasonably withheld, delayed or conditioned (and shall be deemed given if
Landlord shall fail to respond to such Transfer Notice within fifteen (15)
Business Days of Tenant's delivery of a Transfer Notice making specific
reference to such deemed consent under this SECTION 17(j)), provided, that:

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<Page>

               (A)  In Landlord's reasonable judgment the proposed assignee or
subtenant will use the Premises in a manner that (x) is in keeping with the
First Class Standard, (y) is limited to the use expressly permitted under this
Lease with respect to the space in question (provided, that Landlord shall
comply with SECTION 6(a) with respect to any proposed subtenant or assignee) and
(z) will not be used for any Prohibited Use;

               (B)  The proposed assignee or subtenant is, in Landlord's
reasonable judgment, a reputable person or entity of good character and with
sufficient financial worth (or is ready, willing and able to post sufficient
security, a letter of credit or a guaranty) considering the responsibility
involved;

               (C)  The form of the proposed sublease shall be reasonably
satisfactory to Landlord and shall comply with the applicable provisions of this
SECTION 17;

               (D)  In connection with any sublease entered into by Tenant, the
term of which runs during (I) any portion of the last five (5) years of the
Initial Term or (II) any Extension Term, the aggregate rent to be paid by the
proposed subtenant is not less than the greater of (x) the fair rental value of
the sublet space as sublet space or (y) 90% of the fair rental value of the
sublet space if such space were being leased directly by Landlord;

               (E)  Tenant shall reimburse Landlord within twenty (20) days
after demand accompanied by reasonable documentation supporting the amount of
any such costs or expenses for any reasonable out-of-pocket costs and expenses
incurred by Landlord in connection with said assignment or sublease, including,
without limitation, the costs of making investigations as to the acceptability
of the proposed assignee or subtenant, and legal costs incurred in connection
with the granting of any requested consent; and

               (F)  No material non-monetary Event of Default or monetary Event
of Default in excess of $25,000 shall be continuing at the time (x) that
Tenant's Proposal was delivered to Landlord or (y) on the date of the proposed
assignment or subletting, as the case may be.

          (k)  If Landlord consents to a proposed assignment or sublease and
Tenant fails to execute and deliver the assignment or sublease to which Landlord
consented within 60 days after the giving of such consent, then Tenant shall
again comply with this SECTION 17 before assigning this Lease or subletting all
or part of the Premises.

          (l)  If this Lease is assigned, whether or not in violation of this
Lease, Landlord may collect rent from the assignee. If the Premises or any part
thereof are sublet or occupied by anybody other than Tenant, whether or not in
violation of this Lease, Landlord may, after default by Tenant, and expiration
of Tenant's time to cure such default, collect rent from the subtenant or
occupant. In either event, Landlord may apply the net amount collected against
Rent, but no such assignment, subletting, occupancy or collection shall be
deemed a waiver of any of the provisions of SECTION 17(a), or the acceptance of
the assignee, subtenant or occupant as tenant, or a release of Tenant or
Guarantor from the performance of Tenant's and Guarantor's obligations under
this Lease and the Guarantor (as applicable).

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<Page>

          (m)  No assignment or transfer shall be effective until the assignee
delivers to Landlord an agreement in form and substance reasonably satisfactory
to Landlord whereby the assignee assumes Tenant's obligations under this Lease.

          (n)  (1)  Subject to SECTIONS 17(n)(2) and 17(n)(3), notwithstanding
any assignment or transfer, whether or not in violation of this Lease, and
notwithstanding the acceptance of any Base Rent or additional rent by Landlord
from an assignee, transferee, or any other party, Tenant and Guarantor, jointly
and severally, shall remain fully liable for the payment of the Rent and the
performance of all of Tenant's and Guarantor's other obligations under this
Lease and the Guaranty (as applicable). The joint and several liability of
Tenant and Guarantor and any immediate or remote successor in interest of Tenant
shall not be discharged, released or impaired in any respect by any agreement
made by Landlord extending the time to perform, or otherwise modifying, any of
the obligations of Tenant under this Lease, or by any waiver or failure of
Landlord to enforce any of the obligations of Tenant under this Lease (except
that no modification or amendment insofar as it increases the obligations of the
then Tenant hereunder shall be binding on such prior Tenant or Guarantor).

               (2)  Notwithstanding SECTION 17(n)(1), following an assignment
otherwise permitted under this SECTION 17, the joint and several liability of
Tenant Named Herein and Guarantor for the obligations under this Lease shall be
released (solely to the extent such obligations accrue on or after the date of
such assignment) only after each of the following conditions have been satisfied
and any attempted release which is not in compliance with the following
provisions shall be deemed null and void and of no force or effect:

               (i)  such proposed assignee and/or substitute guarantor, as the
case may be, shall have a credit rating of at least BBB- (as rated by Standard &
Poors (or the equivalent rating issued by Moody's, the National Association of
Insurance Companies or such other rating agency reasonably acceptable to
Landlord and Fee Mortgagee (collectively, the "RATING AGENCIES")) on the date of
such assignment and following such assignment date maintains a credit rating of
at least BBB- for a continuous twelve (12) month period;

               (ii) Landlord shall have received confirmation in writing from a
Rating Agency that rates the securitization pool of which the Mortgage is a part
that Guarantor's release and such subsequent assignee or guarantor's assumption
of the obligations under the Lease shall not result, in and of itself, in a
downgrade, withdrawal or qualification of any rating then assigned to such
securitization pool;

               (iii) such proposed assignee and/or substitute guarantor shall
(1) assume full liability for the payment of Base Rent, additional rent,
Impositions and the performance of all of Tenant's and Guarantor's other
obligations under this Lease and the Guaranty accruing on or after the date of
such assignment, (2) agree to perform and observe, from and after the effective
date of such assignment, all of the terms, covenants and conditions of this
Lease (and/or the substitute guaranty, as applicable) to be observed and
performed by such assignee or substitute guarantor from and after the effective
date of such assignment and (3) be bound by all of the other provisions of this
Lease (and/or substitute guaranty);

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<Page>

               (iv) in the case of a substitute guarantor seeking such
assumption, such substitute guarantor shall deliver a substitute guaranty
substantially in the form of the Guaranty;

               (v)  the assignee and/or substitute guarantor is, in the
reasonable determination of Landlord and Fee Mortgagee, a reputable person of
good character and business dealings;

               (vi) the foregoing release of Tenant Named Herein and Guarantor
and the subsequent assumption and agreement by such assignee and/or substitute
guarantor shall be effectuated pursuant to an instrument or instruments duly
executed by Tenant Named Herein and/or Guarantor, such assignee and/or
substitute guarantor, and Landlord;

               (vii) Tenant Named Herein shall deliver certified financial
statements for the proposed assignee and/or substitute guarantor prepared in
accordance with generally acceptable accounting principles consistently applied
("GAAP") for the two (2) full years prior to proposed assignment (or, if such
information is not available, such other information that any Fee Mortgagee may
reasonably request, PROVIDED that such information shall, at such proposed
assignee and/or substitute guarantor's request, be subject to a confidentiality
agreement); and

               (viii) the assignee and/or substitute guarantor shall deliver
organizational documents, certificates or other instruments reasonably requested
by Landlord and Fee Mortgagee evidencing the direct and indirect ownership
interests of such assignee and/or substitute guarantor.

               (3)  Following the release of Tenant Named Herein and Guarantor,
any future Tenant and/or guarantor shall only be released from its obligations
under this Lease and the guaranty after (A) any such future proposed assignee
and/or substitute guarantor shall have fully complied with all the conditions
precedent set forth in SECTION 17(n)(2) and (B) the immediately succeeding
Tenant and/or substitute guarantor shall have on the date of assignment a credit
rating (given by a Rating Agency) equal to or better than the credit rating of
the "released" Tenant and/or guarantor on such assignment date and following
such assignment date shall maintain such equal or better credit rating for a
continuous twelve (12) month period.

          (o)  Each subletting by Tenant shall be subject to the following:

               (i)  No subletting shall be for a term (including any renewal or
extension options contained in the sublease) ending later than one day prior to
the expiration or sooner termination of this Lease;

               (ii) No subtenant shall take possession of the Premises or any
part thereof, until there has been delivered to Landlord, both (A) an executed
counterpart of such sublease, and (B) a certificate of insurance evidencing that
(x) Landlord and any Fee Mortgagee are additional insureds under the insurance
policies required to be maintained by occupants of the Premises pursuant to
SECTION 10, and (y) there is in full force and effect, the insurance otherwise
required by SECTION 10; and

                                       35
<Page>

               (iii) Each sublease shall provide that it is subject and
subordinate to this Lease, and that in the event of termination, reentry or
dispossess by Landlord under this Lease Landlord may, at its option, take over
all of the right, title and interest of Tenant, as sublessor, under such
sublease, and such subtenant shall, at Landlord's option, attorn to Landlord
pursuant to the then executory provisions of such sublease.

          (p)  Each sublease shall provide that the subtenant may not assign its
rights thereunder or further sublet the space demised under the sublease, in
whole or in part, except in compliance with all of the terms and conditions of
this SECTION 17 (including, without limitation, Landlord's consent rights),
which for purposes of this SECTION 17(p) shall be deemed to be appropriately
modified to take into account that the transaction in question is an assignment
of the sublease or a further subletting of the space demised under the sublease,
as the case may be.

          (q)  No Tenant other than a Tenant meeting the Occupancy Requirement
may publicly advertise the availability of the Premises or any portion thereof
as sublet space or by way of an assignment of this Lease, without first
obtaining Landlord's consent, which consent shall not be unreasonably withheld
or delayed provided that in any event such advertising shall be done in a first
class manner and in no event shall the rental rate or any description thereof be
publicly advertised.

          (r)  Upon any subletting of all or any part of the Premises (excluding
any subletting pursuant to SECTION 17(b) or SECTION 17(t)), from and after the
date on which Tenant shall recoup the full amount of Tenant's Sublease Expenses,
Tenant shall pay to Landlord as additional rent hereunder, in monthly
installments, as and when received from the subtenant thereunder, 50% of the
Sublease Consideration received by Tenant for such subletting. "SUBLEASE
CONSIDERATION" shall mean the amount by which the aggregate of the amounts
payable on account of fixed and additional rent under a sublease of any part of
the Premises and the amount of any Other Sublease Consideration payable to
Tenant by such subtenant, whether received in a lump-sum payment or otherwise
shall be in excess of Tenant's Basic Cost therefor at the time in question.
Tenant shall deliver to Landlord within fifteen (15) Business Days of Landlord's
written request made within (x) sixty (60) Business Days after the end of each
calendar year or (y) within sixty (60) Business Days after the expiration or
earlier termination of this Lease, a statement specifying each sublease in
effect during such calendar year or partial calendar year, the rentable area
demised thereby, the term thereof and a computation in reasonable detail showing
the calculation of the amounts paid and payable by the subtenant to Tenant, and
by Tenant to Landlord, with respect to such sublease for the period covered by
such statement. "TENANT'S BASIC COST" for sublet space at any time means the sum
of the portion of the Base Rent, Impositions, additional rent and operating
expenses incurred and paid by Tenant with respect to the Premises that are
properly attributable to the sublet space. "TENANT'S SUBLEASE EXPENSES" shall
mean the costs and expenses of Tenant actually incurred in connection with the
specific sublease in question (which would not otherwise be payable but for such
sublease): including, without limitation (i) out-of-pocket brokerage
commissions; (ii) out-of-pocket attorneys' fees and disbursements and
advertising fees; (iii) out-of-pocket cost of improvements or alterations made
by Tenant for the purpose of preparing such part of the Premises specifically
for such subtenant; (iv) the unamortized and unreimbursed cost of any Tenant
Changes or Tenant's Property sold or leased to and used by such subtenant; (v)
the amount of rent

                                       36
<Page>

concessions given by Tenant to such subtenant; (vi) any moving expenses of the
subtenant paid for by Tenant; (vii) any sums paid in connection with obtaining
Landlord's consent to such sublease under this SECTION 17; (viii) the amount of
rental attributable to the period (if any) commencing on the day that such
portion of the Premises is unused by Tenant and not sublet and continuing until
the day immediately preceding the rent commencement date of the sublease; (ix)
any other reasonable tenant inducement costs incurred by Tenant; and (x) any
payments required to be, and actually made, by Tenant in connection with such
sublease pursuant to any real property transfer tax of the United States or the
State of New York. "OTHER SUBLEASE CONSIDERATION" means all sums paid over and
above fixed and additional rent paid by such subtenant for the furnishing of
services by Tenant and the sale or rental of Tenant's Property less, in either
case, the then net unamortized or undepreciated cost thereof determined on the
basis of Tenant's federal income tax returns (or if such property is leased
rather than owned by Tenant less any rentals that may be due to the third party
lessor thereof).

          (s)  Upon any assignment of this Lease (excluding any assignment
pursuant to SECTION 17(b), from and after the date on which Tenant shall recoup
the full amount of Tenant's Assignment Cost, Tenant shall pay to Landlord as
additional rent hereunder, as and when received from the assignee thereunder,
50% of the Assignment Consideration received by Tenant for such assignment.
"ASSIGNMENT CONSIDERATION" means an amount equal to all sums and other
consideration paid to Tenant by the assignee for or by reason of such assignment
(including, without limitation, sums paid for the furnishing of services by
Tenant and the sale or rental of Tenant's fixtures, leasehold improvements,
equipment, furniture, furnishings or other personal property, less, in the case
of a sale thereof, the then net unamortized or undepreciated cost thereof
determined on the basis of Tenant's federal income tax returns (or if such
property is leased rather than owned by Tenant less any rentals that may be due
to the third party lessor thereof)). "TENANT'S ASSIGNMENT COST" shall mean the
costs and expenses of Tenant actually incurred in connection with the specific
sublease in question (which would not otherwise be payable but for such
assignment) including, without limitation (i) the out-of-pocket expenses of
Tenant incurred in connection with such assignment including, without
limitation, brokerage commissions and attorney's fees and disbursements and
advertising fees; (ii) the out-of-pocket cost of improvements or alterations
made by Tenant for the purpose of preparing the Premises for such assignee;
(iii) the unamortized and unreimbursed cost of any Tenant Changes or Tenant's
Property sold or leased to and used by such assignee; (iv) the amount of rent
concessions given by Tenant to such assignee; (v) any moving expenses of the
assignee paid for by Tenant; (vii) any sums paid in connection with obtaining
Landlord's consent under this SECTION 17; (viii) the amount of rental
attributable to the period (if any) commencing on the day that such portion of
the Premises is unused by Tenant and not assigned and continuing until the day
immediately preceding the rent commencement date of the assignment; and (ix) any
other reasonable tenant inducement costs incurred by Tenant; and (x) any
payments required to be, and actually made, by Tenant incurred in connection
with such assignment pursuant to any real property transfer tax of the United
States or the State of New York.

          (t)  It is hereby expressly acknowledged and agreed that Landlord's
consent shall not be required in connection with the conversion of the Existing
Leases into subleases between Tenant, as sublandlord, and the tenant under each
Existing Lease, as subtenant. "EXISTING LEASES" shall mean the leases entered
into by Landlord's predecessor-in-interest listed

                                       37
<Page>

on Exhibit B annexed hereto and made a part hereof. In addition, the
profit-sharing provisions of SECTION 17(r) shall not apply to such Existing
Leases.

          (u)  Subject to the last sentence of this SECTION 17(u), without
limiting any other provisions of this SECTION 17, Tenant shall have the right,
without being required to obtain the consent of Landlord, to enter into an
agreement with the New York City Industrial Development Agency (the "IDA")
pursuant to which Tenant may sublease from time to time (including any interim
sublease) all or any portion of the Premises to the IDA (the "IDA SUBLEASE"),
and the IDA shall sub-sublease such portion of the Premises to Tenant (the "IDA
SUB-SUBLEASE"); provided that: (i) the IDA Sublease shall be entered into
simultaneously with the entering into of the IDA Sub-sublease and shall have a
scheduled expiration date no later than one day prior to the scheduled
expiration date of this Lease and shall terminate automatically upon the earlier
termination of this Lease with respect to the portion of the Premises demised
thereby; (ii) the IDA Sublease and the IDA Sub-sublease (collectively, the "IDA
SUBLEASE DOCUMENTATION") shall be entered into for the sole purpose of
implementing a sales tax exemption and other governmental economic incentives
package for Tenant, as the case may be; (iii) the IDA Sublease Documentation
shall grant no right of occupancy to any party other than Tenant (provided,
however, that the foregoing shall not be deemed to limit Tenant's rights under
this SECTION 17); (iv) the IDA Sublease Documentation shall not release Tenant
from any liability or obligation of Tenant under this Lease, (v) the IDA
Sublease Documentation shall not impose any additional obligation or liability
on Landlord or decrease any of the term hereof, but shall not relieve Landlord
from Landlord's obligations under this Lease; (vi) Tenant shall comply with, and
the IDA Sublease Documentation shall be in compliance with, the provisions of
this SECTION 17; (vii) Tenant shall indemnify, defend and save and hold Landlord
and any Landlord Party harmless from and against any and all losses, costs,
demands, liabilities and expenses (including reasonable attorneys' fees and
disbursements) which Landlord may incur arising out of or in connection with the
IDA Sublease Documentation; (viii) Tenant, as sub-subtenant under the IDA
Sub-sublease, shall be entitled to exercise all of Tenant's rights under this
Lease, as if the IDA Sublease Documentation had not been executed; and (ix)
Landlord shall consent to the form and substance of the IDA Sublease
Documentation and all ancillary agreements thereto, which consent shall not be
unreasonably withheld, conditioned or delayed. Without limiting the generality
of clause (vii) of the immediately preceding sentence, if Landlord shall incur
any reasonable out-of-pocket cost or expense in connection with the IDA Sublease
Documentation, Tenant shall reimburse Landlord for such reasonable out-of-pocket
costs or expenses, as additional rent within twenty (20) Business Days after
demand accompanied by reasonable documentation supporting the amount of any such
costs or expenses. Notwithstanding anything to the contrary set forth herein,
the rights created pursuant to this SECTION 17(u) shall only benefit Tenant and
any assignees of Tenant, and expressly exclude any subtenants of Tenant or any
assignees.

          (v)  Notwithstanding the above provisions of this ARTICLE 17, subject
to the terms of this SECTION 17(v), Landlord shall not unreasonably withhold,
condition or delay its consent to entering into a subordination, non-disturbance
and attornment agreement (a "SUBTENANT SNDA") with any Major Subtenant
identified by Tenant Named Herein so long as the Subtenant SNDA shall be in a
form reasonably satisfactory to Landlord (taking into account the same criteria
set forth in SECTION 17(j) above (other than SECTION 17(J)(D))) and on
reasonable

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<Page>

market terms with a reasonable market rent. The term "MAJOR SUBTENANT" as used
herein shall mean either of the following:

               (A)  any subtenant whose sublease provides for occupancy of a
minimum of (i) two (2) contiguous floors of the Premises (the lowest of such
floors being the 1st Floor Portion (as hereinafter defined) of the Premises), or
(ii) if a Major Subtenant meeting the criteria set forth in the preceding clause
(i) shall then be in occupancy, any subtenant whose sublease provides for
occupancy of two (2) or more floors contiguous to the floors occupied by the
Major Subtenant meeting the criteria set forth in the preceding clause (i),
PROVIDED that the sublease term with respect to such occupancy may not extend
beyond the term of the sublease with respect to the sublease entered into by the
Major Subtenant meeting the criteria set forth in the preceding clause (i); or

               (B)  any subtenant whose sublease provides for occupancy of a
minimum of (i) three (3) contiguous floors of the Premises, if such occupant or
Tenant (on such occupant's behalf) shall have installed a street entrance to the
Premises serving such subleased premises which is located in an area of the
Premises that is separate and distinct from the then main street entrance to the
Premises (a "SEPARATE STREET ENTRANCE"), or (ii) if a Major Subtenant meeting
the criteria set forth in the preceding clause (i) shall then be in occupancy,
any subtenant whose sublease provides for occupancy of two (2) or more floors
contiguous to the floors occupied by the Major Subtenant meeting the criteria
set forth in the preceding clause (i), PROVIDED that such occupant shall either
have access through the Separate Street Entrance accessed by the Major Subtenant
meeting the criteria set forth in the preceding clause (i) or such occupant (or
Tenant on such occupant's behalf) shall have installed an additional Separate
Street Entrance, and FURTHER PROVIDED that the sublease term with respect to
such occupancy may not extend beyond the term of the sublease with respect to
the sublease entered into by the Major Subtenant meeting the criteria set forth
in the preceding clause (i).

Notwithstanding the provisions of this SECTION 17(v), Landlord shall not be
required to deliver a Subtenant Non-Disturbance Agreement with respect to any
subtenant of a Tenant other than a Major Subtenant of Tenant Named Herein or
other sub-subtenants or any other immediate or remote undertenants.

          (w)  Any dispute under this SECTION 17 shall be resolved by
arbitration pursuant to SECTION 44 hereof.

          18.  ENTRY BY LANDLORD; RIGHT OF LANDLORD TO PERFORM TENANT'S
COVENANTS.

          (a)  Landlord, and persons authorized by Landlord, shall have the
right to enter the Premises accompanied by a representative of Tenant at all
reasonable times, after reasonable notice, for the purposes of:

               (i)  inspecting the conditions of same, and making such repairs,
alterations, additions, or improvements thereto as may be necessary or desirable
if Tenant fails to do so as required hereunder (but Landlord shall have no duty
whatsoever to make any such inspections, repairs, alterations, additions, or
improvements); and

                                       39
<Page>

               (ii) exhibiting the same to persons who may wish to purchase or
lease the same, and, during the last twenty-four (24) months of the term of this
Lease, placing a notice of reasonable size on the Premises offering the same or
any part thereof for sale or for rent.

          (b)  If Tenant shall fail to make any payment or perform any act
required to be made or performed by Tenant hereunder, Landlord may (but shall be
under no obligation to) without waiving or releasing any obligation or default:

               (i)  in case of emergency, reasonably foreseeable or actual
criminal liability, or if, in Landlord's reasonable judgment, complying with the
notice and cure provisions set forth in SECTION 18(b)(ii) below will have an
imminent material adverse effect on the Improvements or will cause injury to
third parties on or near the Premises,

               (ii) if such failure is under any provision of this Lease
(including this SECTION 18), if Landlord shall give written notice to Tenant
referring to this SECTION 18(b) and specifying such failure and requiring it to
be remedied and Tenant shall not remedy such failure within five (5) Business
Days after the giving of such notice (or diligently commence to remedy any such
failure which is not susceptible of being cured within such five (5) Business
Day period);

make such payment or perform such act for the account and at the expense of
Tenant, and may enter upon the Premises or any part thereof for such purpose and
take all such action thereon as, in the reasonable opinion of Landlord, may be
necessary or appropriate therefor. All payments so made by Landlord and all
costs and expenses (including, without limitation, reasonable attorneys' fees
and expenses) incurred in connection therewith, together with interest thereon
at the Interest Rate, shall be paid by Tenant to Landlord within twenty (20)
Business Days after Tenant's receipt of Landlord's demand therefor referring to
this SECTION 34 and accompanied by reasonable documentation supporting the
amount of any such costs and expenses.

          (c)  Tenant shall have the right to designate, by written notice to
Landlord, certain areas ("SECURE AREAS") within the Premises (including, without
limitation, any area containing valuables (such as artwork), a safe or Tenant's
main computer room, telephone equipment room or closet) as secure areas, to
which Landlord shall not have access unless accompanied at all times by a
representative of Tenant, except in the case of an emergency, as determined in
Landlord's reasonable judgment. Tenant agrees to cooperate with Landlord with
respect to making a representative of Tenant available to Landlord during any
access required or permitted hereunder. If, in connection with any reasonable
request by Landlord to gain access to a particular Secure Area accompanied by a
representative of Tenant, Tenant does not provide such reasonably requested
access to Landlord after Landlord's second (2nd) such request, then Landlord
shall be able to access such Secure Area at any reasonable time during business
hours for the purposes stated in such request.

          (d)  Any dispute under this SECTION 18 shall be resolved by
arbitration pursuant to SECTION 44 hereof.

          19.  TENANT'S DEFAULT.

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<Page>

          (a)  EVENTS OF DEFAULT.  Each of the following events shall constitute
an "EVENT OF DEFAULT":

               (1)  If Tenant shall default in the payment of any Base Rent,
     additional rent or other amount payable hereunder, and such default shall
     continue, in the case of Base Rent for five (5) days, and in the case of
     additional rent or other amounts, for ten (10) days, after written notice
     thereof from Landlord;

               (2)  If there shall occur a default under the provisions of
     SECTION 17 of this Lease, and such default shall continue for ten (10)
     Business Days after written notice thereof from Landlord;

               (3)  If Tenant shall fail to maintain any insurance required to
     be maintained under SECTION 10 and such failure shall continue for five (5)
     Business Days after written notice of such default is given to Tenant
     (provided that Landlord shall be entitled to deliver any such notice at any
     time after receiving notice from any insurance carrier that any insurance
     required to be maintained under this Lease is being cancelled);

               (4)  If Tenant shall, whether by action or inaction, be in
     default of any of its obligations under this Lease (other than a default
     described in SECTION 19(a)(1), (2) OR (3) above) and such default shall
     continue and not be remedied as soon as practicable and in any event within
     twenty (20) days after Landlord shall have given to Tenant a notice
     specifying the same, or, in the case of a default which cannot with due
     diligence be cured within a period of twenty (20) days, if Tenant shall not
     (x) within such 20-day period advise Landlord of Tenant's intention to take
     all steps necessary to remedy such default, (y) duly commence within such
     20-day period, and thereafter diligently prosecute to completion, all steps
     necessary to remedy the default, and (z) complete such remedy within a
     reasonable time after the date of such notice of Landlord;

               (5)  If any execution or attachment shall be issued against
     Tenant or any of its property whereby the Premises or any portion thereof
     shall be taken or occupied by someone other than Tenant (other than
     pursuant to a Leasehold Mortgage meeting the requirements of SECTION 39
     hereof), and the same shall not be bonded, dismissed or discharged as
     promptly as possible;

               (6)  If Tenant shall make or file, or have made or filed against
     Tenant, any bankruptcy proceeding or any assignment or other arrangement
     for the benefit or creditors under any state or federal insolvency or
     bankruptcy laws, which proceeding, assignment or arrangement is not vacated
     or dismissed within ninety (90) days after the commencement thereof;

               (7)  If a receiver, trustee or liquidator of Tenant or of all or
     substantially all of the assets of Tenant or of the Premises or Tenant's
     estate therein shall be appointed in any proceeding brought against Tenant
     and shall not be discharged within ninety (90) days after such appointment;

               (8)  if Tenant shall dissolve or liquidate; or

                                       41
<Page>

               (9)  if Guarantor shall default under any of its obligations
under the Guaranty.

          (b)  TERMINATION, RE-ENTRY, DAMAGES, ETC.

               (1)  This Lease and the estate hereby granted are subject to the
     limitation that if an Event of Default shall occur, then, in any such case,
     Landlord may give to Tenant a notice of intention to terminate this Lease
     and the term hereof as of the fifth (5th) day after the giving of such
     notice, and, in which event, as of such fifth (5th) day, this Lease and the
     term hereof shall terminate with the same effect as if such day was the
     date of expiration of this Lease, BUT Tenant shall not be relieved of its
     obligations hereunder, all of which shall survive such termination, and any
     subsequent re-entry, repossession, removal or reletting.

               (2)  If this Lease shall be terminated as provided in Section
     19(b)(1) above, Landlord, or its agents or employees, may re-enter the
     Premises at any time and remove therefrom Tenant and any Tenant Parties,
     together with any of its, or their, property, either by summary dispossess
     proceedings or by any suitable action or proceeding at law or otherwise. In
     the event of such termination, Landlord may repossess and enjoy the
     Premises. Landlord shall be entitled to the benefits of all provisions of
     law respecting the speedy recovery of lands and tenements. Tenant waives
     any rights to the service of any notice of Landlord's intention to reenter
     provided for by any present or future law. Landlord shall not be liable in
     any way in connection with any action it takes pursuant to the foregoing.
     Notwithstanding any such reentry, recession, dispossession or removal, if
     this Lease is terminated prior to the then current expiration date by
     reason of an Event of Default, Tenant's liability under the provisions of
     this Lease shall continue until the date the term of this Lease would have
     expired had such termination not occurred. Notwithstanding anything to the
     contrary set forth in Sections 19(b)(1) and 19(b)(2), in the event Landlord
     initiates a holdover or termination proceeding in connection with any
     monetary Event of Default, Tenant Named Herein shall have the right (the
     "Redemption Right") to defeat such proceeding by tendering such payment as
     is necessary to cure such Event of Default on or before the date of such
     proceeding. Tenant Named Herein may only exercise the Redemption Right once
     during any five (5) year period.

               (3)  In any case of termination of this Lease, or reentry or
     repossession of the Premises, whether the same is the result of the
     institution of summary or other proceedings, Tenant shall remain liable (in
     addition to theretofore accrued liabilities) to the extent legally
     permissible for: (I) the rent, together with (A) all other charges provided
     for herein until the date this Lease would have expired had such
     termination, reentry or repossession not occurred, (B) all reasonable
     out-of-pocket costs and expenses which Landlord may incur in (w) reentering
     or repossessing the Premises, (x) making good any default of Tenant, (y)
     painting, altering or dividing the Premises, combining the same with other
     space, or placing the same in proper repair, (z) protecting and preserving
     the Premises by placing therein watchmen and caretakers, (C) all reasonable
     out-of-pocket costs and expenses which Landlord may incur in reletting the
     Premises (including attorneys' fees and disbursements, marshall's fees and
     brokerage fees), and (D) any

                                       42
<Page>

     expenses which Landlord may incur during the occupancy of any new tenant,
     LESS (II) the net proceeds of any reletting. Tenant agrees to pay to
     Landlord the difference between items (I) and (II) hereinabove with respect
     to each month, at the end of such month. Any suit brought by Landlord to
     enforce collection of such difference for any one month shall not prejudice
     Landlord's right to enforce the collection of any difference for any
     subsequent month. In addition to the foregoing, Tenant shall reimburse
     Landlord all reasonable attorneys' fees and disbursements incurred by
     Landlord with respect to any such action or proceeding to collect such
     difference and/or any action or proceeding to otherwise collect any rent
     and/or to enforce any of Tenant's other obligations under this Lease and/or
     any summary or other dispossess proceedings.

               (4)  Landlord may, in its sole discretion, relet the whole or any
     part of Premises for the whole or any part of the unexpired term of this
     Lease, or longer, or from time to time for shorter periods, for any rental
     it wishes and giving such concessions of rent and making such special
     repairs, alterations, decorations and paintings for any new tenant as it
     may in its sole and absolute discretion deem advisable, and Landlord may
     collect and receive the rents thereunder. In no event shall Landlord ever
     be obligated to relet or to attempt to relet the Premises or any part
     thereof.

               (5)  If, after a termination of this Lease as aforesaid,
     Landlord, in its sole discretion, so elects, Tenant shall pay Landlord,
     within fifteen (15) Business Days after demand, as liquidated and agreed
     final damages, a sum equal to the amount by which the rent for the period
     which otherwise would have constituted the unexpired portion of the term
     exceeds the then fair and reasonable rental value of the Premises for the
     same period, both discounted to the present value (calculated at a discount
     rate of 10%), less the aggregate amount of deficiencies theretofore
     collected by Landlord pursuant to this SECTION 19 for the same period. Upon
     payment of such liquidated and agreed final damages, Tenant shall have no
     further liability with respect to the period after the date of such demand.

          (c)  ADDITIONAL REMEDIES. The specific remedies granted to Landlord
under this Lease are cumulative and are not intended to be exclusive of each
other or of any other remedies which may be available to Landlord at law or in
equity. Landlord may exercise any and/or all such rights and remedies (whether
specifically granted herein or otherwise available to Landlord at law or in
equity) at such times, in such order, to such extent, and as often, as Landlord
deems advisable without regard to whether the exercise of any such right or
remedy precedes, is concurrent with or succeeds the exercise of another such
right or remedy.

          (d)  Tenant expressly waives, for itself and for any person claiming
by, through or under Tenant, any rights which Tenant or any such persons may
have under the provisions of SECTION 2201 of the New York Civil Practice Law and
Rules, and of any successor law of like import then in force, in connection with
any summary holdover proceedings which Landlord may institute to enforce the
provisions of this SECTION 19. Tenant's obligations under this SECTION 19 shall
survive the expiration of sooner termination of this Lease.

          20.  SIGNS; ROOF RIGHTS.

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          (a)  Subject to the consent requirements set forth in SECTION 20(b)
below, Tenant may, during the term of this Lease, upon obtaining any and all
necessary permits from governmental authorities, paint or erect and maintain and
repair, at its cost and expense, signs of such dimensions and materials as it
may reasonably deem appropriate in or about the Premises (for its own use only
and not for the purpose of leasing or licensing to any third party, or any other
purpose). The nature, design, size and character of such signs shall be
consistent with the First Class Standard. Such signs shall be removed by Tenant
Named Herein prior to, or upon, the expiration or earlier termination of this
Lease. All such signs shall comply with all applicable Laws. It is expressly
understood that Tenant's installation of signage under this SECTION 20(a) shall
not be deemed a Material Tenant Change requiring Landlord's consent unless such
installation would adversely affect (other than to a de minimis extent) the
exterior, structural elements or mechanical or building systems of the
Improvements.

          (b)  The installation of any signage at the Premises by or on behalf
of any party other than Tenant Named Herein, or by or on behalf of Tenant Named
Herein at any time the Occupancy Requirement is not met, shall be subject to
Landlord's consent, not to be unreasonably withheld, conditioned or delayed, and
shall be removed prior to, or upon, the expiration or earlier termination of
this Lease. All such signs shall comply with all applicable Laws.

          (c)  It is expressly understood that the Premises includes the roof of
the Improvements (herein called the "ROOF") and that Tenant shall, during the
term of this Lease, have the sole and exclusive right to the use and enjoyment
thereof. Subject to the provisions of this SECTION 20, Tenant shall have the
right to install, operate and maintain on the Roof: (a)equipment systems
servicing the Premises, including mechanical, electrical, plumbing,
telecommunications and technology systems and all equipment and other
installations that Tenant shall deem necessary or desirable in connection
therewith, including emergency generators, switch-gear, UPS equipment,
telecommunications equipment, and related distribution systems ("ROOFTOP
EQUIPMENT") and (b) microwave(s), satellite(s) or other antenna communications
systems and related equipment ("SATELLITE ANTENNA") that transmits or receives
signals to or from other communications installations located off-site,
provided, that: (i) the installation of all such items (including all structural
reinforcement, framing and waterproofing) shall be performed subject to the
provisions of SECTIONS 9(d), (e) and (f) hereof and (ii) Tenant, promptly
following notice from Landlord, shall repair any damage to the Improvements
caused by such installation, operation or maintenance.

          (d)  Tenant shall be responsible for providing such detailed and fully
complete plans and specifications for the Rooftop Equipment, including, without
limitation, plans and specifications for the installation thereof. All plans and
specifications, which shall be prepared by an architect or engineer licensed in
the State of New York and stamped and certified by such architect or engineer,
shall be prepared in strict compliance with applicable building standards and
requirements as set forth in this Lease and shall otherwise be reasonably
satisfactory to Landlord. All construction documents and calculations prepared
by or on behalf of Tenant, including, without limitation, preliminary drafts of
the plans and specifications, shall be submitted by Tenant to Landlord for
approval, which shall not be unreasonably withheld; PROVIDED HOWEVER, Landlord
shall not be deemed to have unreasonably withheld its consent to

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<Page>

the plans and specifications showing the installation of the Rooftop Equipment
if the Rooftop Equipment (i) would adversely affect the electrical or mechanical
systems of the Improvements, as reasonably determined by Landlord, or (ii) would
adversely affect the structure of the Improvements, and FURTHER PROVIDED, that
to the extent Tenant Named Herein satisfies the Occupancy Requirement,
Landlord's consent thereto shall be deemed to have been given. Within ten (10)
days after Landlord's receipt of plans and specifications for the Rooftop
Equipment, Landlord shall return to Tenant one set of plans and specifications
with any of Landlord's suggested modifications and/or approval. If Landlord
disapproves the plans and specifications or approves the plans and
specifications subject to certain comments and requirements (which approval
shall be granted or denied in accordance with the provisions of this Section
20(b)), Tenant will promptly have the plans and specifications revised and
resubmitted to Landlord for approval. Tenant shall have the sole responsibility
for compatibility of such plans with the existing electrical, mechanical and
other systems servicing the Improvements and structure of the Improvements.

          (e)  Any assignees and any subtenants (including, without limitation,
Landlord and any of its assignees or subtenants in the case of a Recapture
Transaction) shall each have the right to use and maintain a portion of the
Rooftop Equipment and Satellite Antenna in an amount no greater than each such
assignee's or subtenant's pro rata share of rentable square footage demised
thereto at the Premises at the time of such use. No Tenant other than Tenant
Named Herein shall have the right to resell the use, or rights to the use, of
the Satellite Antenna or Rooftop Signage, including the granting of any
licensing or other rights, except to one or more assignees or subtenants. In no
event, however, shall any party other than Tenant Named Herein have the right to
sell, lease or license the use of the Satellite Antenna to a third party for
profit (and any such lease or license entered into by Tenant Named Herein after
December 16, 2002 shall be shared equally (50/50) between Tenant Named Herein
and Landlord in accordance with the profit-sharing provisions set forth in
SECTION 17(r)). The rights granted in this Section are granted in connection
with, and as part of the rights created under, this Lease, and are not
separately transferable or assignable other than in connection with an
assignment of Tenant's rights under this Lease as permitted by this Lease.

          (f)  Tenant shall procure and maintain throughout the balance of the
term of this Lease, such insurance, in addition to the insurance coverage
required pursuant to the provisions of SECTION 10 above, as Landlord shall
reasonably require in connection with Tenant's installation, operation and
maintenance of the Rooftop Equipment and Satellite Antenna, which additional
insurance coverage shall be commensurate with that which prudent owners of other
comparable buildings would require for such installation, operation and
maintenance. Tenant shall also indemnify and hold Landlord and any Landlord
Party harmless from and against any and all liability and damages suffered by
Landlord in connection therewith.

          (g)  Any dispute under this SECTION 20 shall be resolved by
arbitration pursuant to SECTION 44 hereof.

          21.  SURRENDER OF PREMISES.

          (a)  At the expiration or sooner termination of the term of this
Lease, Tenant shall surrender the Premises in good order and condition (subject
to reasonable wear and tear and

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<Page>

to the limitations on Tenant's obligations set forth in SECTIONS 12(g) and 38(g)
hereof, and further subject to Landlord's obligations under SECTIONS 12(f)(4)
and 31(b) hereof), and with the removals, repairs and restorations required
under SECTION 9(h) hereof completed (if required by Landlord), and shall
surrender all keys for the Premises to Landlord at the place then fixed for the
payment of rent and shall inform Landlord of all combinations on locks, safes
and vaults, if any, in the Premises. Additionally, Tenant shall furnish to
Landlord copies of all books and records, plans and specifications, and such
other documents and materials in Tenant's possession utilized in connection with
the operation, maintenance and repair of the Premises, including any
construction or contract warranties or guaranties.

          (b)  The parties recognize and agree that the damage to Landlord
resulting from any failure by Tenant to timely surrender possession of the
Premises upon the expiration or other termination of the term will be
substantial, will exceed the amount of the monthly installments of the Base Rent
and additional rent theretofore payable hereunder and will be impossible to
accurately measure. Tenant therefore agrees that if possession of the Premises
is not surrendered to Landlord within twenty-four (24) hours after the
expiration date of this Lease, in addition to any other rights or remedies
Landlord may have hereunder or at law, Tenant shall pay to Landlord the
following:

               (i)   for each month and for each portion of any month during
which Tenant holds over in the Premises during the period commencing upon the
expiration date of this Lease up to and including the date that is thirty (30)
days following such expiration date (the "THIRTY DAY HOLDOVER DATE"), a sum
equal to one and one-half (1.5) times that portion of the Base Rent and
additional rent which was payable under this Lease for the last full calendar
month of the term;

               (ii)  for each month and for each portion of any month during
which Tenant holds over in the Premises during the period commencing on the day
immediately following the Thirty Day Holdover Date up to and including the date
that is sixty (60) days following the expiration date of this Lease (the "SIXTY
DAY HOLDOVER DATE"), a sum equal to one and three-quarters (1.75) times that
portion of the Base Rent and additional rent which was payable under this Lease
for the last full calendar month of the term; and

               (iii) for each month and for each portion of any month during
which Tenant holds over in the Premises during the period commencing on the day
immediately following the Sixty Day Holdover Date up to and including the date
that is one hundred and eighty (180) days following the expiration date of this
Lease (the "SIX MONTH HOLDOVER DATE"), a sum equal to two (2) times that portion
of the Base Rent and additional rent which was payable under this Lease for the
last full calendar month of the term.

          Nothing herein contained shall be deemed to permit Tenant to retain
possession of the Premises after the expiration date and no acceptance by
Landlord of payments from Tenant after the expiration date shall be deemed to be
other than on account of the amount to be paid by Tenant in accordance with the
provisions of this SECTION 21(b). Tenant's obligations under this Section shall
survive the expiration or earlier termination of this Lease. Tenant expressly
waives, for itself and for any person claiming through or under Tenant, any
rights which Tenant or any such person may have under the provisions of SECTION
2201 of the New York Civil

                                       46
<Page>

Practice Law and Rules and of any successor law of like import then in force in
connection with any holdover summary proceedings which Landlord may institute to
enforce the foregoing provisions of this Section. If Tenant shall hold over or
remain in possession of any portion of the Premises beyond the expiration date,
Tenant shall be subject to summary proceeding and all damages related thereto,
other than consequential or indirect damages. Notwithstanding the foregoing, if
Tenant shall hold over or remain in possession of any portion of the Premises
beyond the Six Month Holdover Date, Tenant shall be subject to summary
proceedings and all damages related thereto, including but not limited to any
consequential or indirect damages provided that Landlord, within twenty (20)
Business Days of Tenant's request made at any time prior to the Six Month
Holdover Date, shall have provided Tenant with written notice advising Tenant of
(i) Landlord's good faith estimate of any rent abatements or other fines,
penalties or costs to be paid or suffered by Landlord as a result of Tenant's
continued holdover and (ii) any termination rights of any successor tenant to
the Premises that would be triggered by such holdover by Tenant. All damages to
Landlord by reason of such holding over by Tenant may be the subject of a
separate action and need not be asserted by Landlord in any summary proceedings
against Tenant.

          22.  MEMORANDUM OF LEASE.

          (a)  Simultaneously with the execution of this Lease, Landlord and
Tenant shall execute a memorandum of this Lease (substantially in the form set
forth on SCHEDULE C attached hereto) in recordable form, setting forth
information regarding this Lease, including, without limitation, the right of
first offer contained in SECTION 23, the dates of commencement and expiration of
this Lease and any other information required to be included therein by SECTION
291-C of the Real Property Law of the State of New York. Tenant, at its expense,
shall cause the memorandum to be recorded in the appropriate land records. If
and when the parties hereto shall amend this Lease, then, at such time, either
party, at the request of the other party, shall execute, acknowledge and deliver
a memorandum in respect of such amendment to this Lease, which memorandum shall
be sufficient for recording and in form reasonably satisfactory to other party,
and which memorandum shall thereafter be recorded by Tenant, at its expense, in
the appropriate land records. Notwithstanding the foregoing, no such memorandum
shall recite the amounts or rates of Base Rent or any additional rent payable
hereunder, or any price to be paid under any purchase option, or the amount of
any allowance hereunder. Neither Landlord nor Tenant shall record this Lease or
any instrument modifying this Lease. In no event shall any memorandum of this
Lease or any amendment hereof be deemed to change or otherwise affect any of the
obligations or provisions of this Lease or such amendment hereof.

          (b)  In the event of a termination of this Lease, Tenant, within
thirty (30) days of the date of such termination, shall execute, acknowledge and
deliver to Landlord all necessary instrument(s) in recordable form evidencing a
termination of this Lease and sufficient to discharge any memorandum hereof, and
any memorandum of any amendment hereof, of record, and Tenant shall pay for all
costs, taxes and/or expenses necessary to the effective recordation of such
instrument(s). If there occurs a termination of this Lease and Tenant shall
fail, for any reason whatsoever, to execute all of the aforementioned
instrument(s) within the aforementioned 30-day period, then, without limiting
any other rights or remedies that Landlord may have on account thereof, (i)
Landlord shall be deemed to be and Tenant hereby irrevocably appoints

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<Page>

Landlord, Tenant's attorney-in-fact, coupled with an interest, to execute such
instrument(s) in the name of Tenant and on Tenant's behalf and any other
instrument(s) necessary to the effective recordation of such instrument(s) and
the discharge of record of any memorandum or memoranda, (ii) Tenant shall pay
for all costs, taxes and/or expenses necessary to effectuate the recordation of
all such instrument(s), and (iii) Tenant shall be liable for all damages that
Landlord incurs as a result of Tenant's failure.

          23.  RIGHT OF FIRST OFFER.

          (a)  So long as no material non-monetary Event of Default or monetary
Event of Default in excess of $25,000 is then continuing and Tenant Named Herein
shall satisfy the Occupancy Requirement, if Landlord desires to sell the
Premises, Landlord shall give notice to Tenant Named Herein (an "OFFER NOTICE")
of such proposed transaction (such proposal, "LANDLORD'S OFFER"), and a
statement of Landlord's proposed purchase price and deposit and the proposed
closing date of the transaction for the Premises. Upon receipt of the Offer
Notice, Tenant Named Herein shall have thirty (30) days to accept or reject
Landlord's Offer. In the event Tenant Named Herein rejects Landlord's Offer,
then for the 270-day period thereafter (the "SALE PERIOD"), Landlord may sell
the Premises to a third party for a purchase price equal to or greater than 97%
of the purchase price set forth in the Offer Notice (the "FLOOR PRICE"). If
within the Sale Period (i) Landlord desires to sell the Premises for a purchase
price which is less than the Floor Price, (ii) Landlord shall not have entered
into any contract of sale with respect to the Premises on such terms and
conditions as set forth in Landlord's Offer or (iii) Landlord shall have timely
entered into a contract of sale with respect to the Premises on such terms and
conditions as provided in Landlord's Offer, but Landlord shall not have
consummated the sale of the Premises within nine (9) calendar months thereafter,
then Landlord shall again be required to comply with the provisions of this
SECTION 23(a) if Landlord intends to sell the Premises to a third party. Nothing
contained in the foregoing clause (iii) shall be construed to permit Landlord to
avoid Landlord's obligations to Tenant Named Herein pursuant to this SECTION
23(a) by consummating the sale of the Premises at a purchase price that shall be
less than ninety-seven (97%) percent of the purchase price or on otherwise more
favorable (to purchaser) terms than were set forth in Landlord's Offer without
being once again required to comply with the provisions of this SECTION 23(a).

          (b)  Notwithstanding anything to the contrary set forth in this
SECTION 23, if Tenant fails to timely deliver an Extension Notice under SECTION
2 or Tenant shall otherwise not satisfy the conditions precedent to exercising
an Extension Option, then this SECTION 23 shall be of no force or effect.

          (c)  For the purposes of this SECTION 23: all references to "purchase
price" shall be deemed to refer to the actual purchase price as adjusted to
reflect the economic value of all material business terms contained in
Landlord's Offer and the terms "sell" and "sale" shall include any transaction
which results in (x) the day-to-day control of Landlord being vested in, or the
powers customarily reserved to a managing general partner, managing member or
equivalent party being granted to, parties other than the principals of RFR
Holding LLC and /or Fee Mortgagee; PROVIDED, HOWEVER, that the granting of
approval rights of the type that are customary to be granted in similar
circumstances with respect to certain major decisions to other partners, members
or equivalent parties of the entity or entities constituting Landlord shall not
be

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deemed to be a violation of this clause (x), or (y) in a sale of all or
substantially all of the ownership interest in Landlord, it being deemed that
only a sale of at least 80% of such ownership interests shall constitute a sale
of all or substantially all of the same.

          (d)  Any dispute under this SECTION 23 shall be resolved by
arbitration pursuant to SECTION 44 hereof.

          24.  EXCULPATION OF LANDLORD.

          The obligations of Landlord under this Lease shall not be binding upon
Landlord after the sale, conveyance, assignment or transfer by such Landlord of
its interest in the Premises, and in the event of any such sale, conveyance,
assignment or transfer, Landlord shall be and hereby is entirely freed and
relieved of all covenants and obligations of Landlord. Neither Landlord nor any
of the direct or indirect partners, shareholders, directors or officers of
Landlord shall be personally liable for the performance of Landlord's
obligations under this Lease. Tenant shall look solely to Landlord to enforce
Landlord's obligations hereunder. Prior to any such sale, conveyance, assignment
or transfer, the liability of Landlord for Landlord's obligations under this
Lease shall be limited to Landlord's interest in the Premises and Tenant shall
not look to any other property or assets of Landlord or the property in seeking
either to enforce Landlord's obligations under this Lease or to satisfy a
judgment for Landlord's failure to perform such obligations. After any such
sale, conveyance, assignment or transfer, to the extent that Landlord has any
liability at all, the liability of Landlord for such obligations shall be
limited to the proceeds of such transfer received by Landlord.

          25.  ADDITIONAL RENT; TENANT'S PAYMENTS.

          (a)  Each and every payment and expenditure, other than Base Rent and
other than costs for any Tenant Changes, or any repairs or replacements to the
Improvements, which are required to be paid by Tenant under this Lease shall be
deemed to be additional rent hereunder, whether or not the provisions requiring
payment of such amounts specifically so state, and shall be payable, unless
otherwise provided in this Lease, within ten (10) Business Days after demand
accompanied by reasonable documentation evidencing the amount of any such costs
or expenses by Landlord, and, in the case of the nonpayment of any such amount,
Landlord shall have, in addition to all of its other rights and remedies, all of
the rights and remedies available to Landlord hereunder or by Laws in the case
of non-payment of Base Rent. Unless expressly otherwise provided in this Lease,
the performance and observance by Tenant of all the terms, covenants and
conditions of this Lease to be performed and observed by Tenant hereunder shall
be performed and observed by Tenant at Tenant's sole cost and expense.

          (b)  Tenant covenants and agrees to pay all rent, as and when the same
is due and payable hereunder, without notice or demand therefor and without any
abatement, deduction or setoff for any reason whatsoever, except, in either
case, as may be expressly provided in this Lease. If, pursuant to any provision
of this Lease, Tenant shall be obligated to pay any additional rent to Landlord
and no due date or payment period therefor is specified herein, then such
additional rent shall be paid by Tenant to Landlord within fifteen (15) Business
Days after being billed therefor.

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          26.  LANDLORD'S CURE AND ENFORCEMENT RIGHTS. In addition to its
obligations under SECTION 18(b) hereof, Tenant within fifteen (15) Business Days
after demand accompanied by reasonable supporting documentation, shall reimburse
Landlord for any reasonable out-of-pocket costs and expenses incurred by
Landlord (including reasonable attorneys' fees) pursuant to, or in connection
with collecting or endeavoring to collect rent or any component thereof, or
enforcing or endeavoring to enforce any of Landlord's rights against Tenant
hereunder or any of Tenant's obligations hereunder, together, in either case,
with interest thereon, at the Default Rate, from the date that such expenses
were incurred by Landlord to the date that the same are reimbursed to Landlord
by Tenant, but only if Landlord shall be the prevailing party in any dispute
relating thereto.

          27.  COVENANT AGAINST LIENS.

          (a)  Commencing as of the date hereof, Tenant shall pay and discharge
before the imposition of any fine, lien, interest or penalty all additional rent
and other amounts and obligations which Tenant assumes or agrees to pay or
discharge pursuant to this Lease, together with every fine, lien, penalty and
interest with respect thereto. If, because of any act or omission or alleged act
or omission of Tenant where Tenant has a duty to act, any mechanic's or other
lien, charge or order for the payment of money or other encumbrances shall be
filed or imposed against Landlord, any Fee Mortgagee and/or any portion of the
Premises (whether or not such lien, charge, order or encumbrance is valid or
enforceable as such), Tenant shall, at its cost and expense, cause same to be
discharged of record or bonded within thirty (30) days after notice to Tenant of
the filing or imposition thereof; and Tenant shall indemnify and defend Landlord
and any Landlord Party against and save Landlord and any Landlord Party harmless
from all losses, costs, damages, expenses, liabilities, suits, fines, charges,
penalties, claims, demands and obligations, including, without limitation,
reasonable counsel fees, resulting therefrom. If Tenant fails to comply with the
foregoing provisions, Landlord shall have the option of discharging or bonding
any such lien, charge, order or encumbrance, and Tenant agrees to reimburse
Landlord (as additional rent) for all losses, costs, damages, and expenses
resulting therefrom or incurred in connection therewith, together with interest
at the Default Rate, within fifteen (15) Business Days after demand accompanied
by reasonable documentation supporting the amount of any such costs or expenses.

          (b)  All materialmen, contractors, artisans, mechanics, laborers and
any other persons now or hereafter furnishing any labor, services, materials,
supplies or equipment to Tenant with respect to any portion of the Premises, are
hereby charged with notice that they must look exclusively to Tenant to obtain
payment for same. Notice is hereby given that the Landlord shall not be liable
for any labor, services, materials, supplies or equipment furnished or to be
furnished to Tenant upon credit, and that no mechanic's or other lien for any
such labor, services, materials, supplies or equipment shall attach to or affect
the estate or interest of the Landlord in and to the Premises.

          28.  AFFIRMATIVE WAIVERS.  Landlord and Tenant hereby waive trial by
jury in any action, proceeding or counterclaim brought by either against the
other on any matter whatsoever arising out of or in any way connected with this
Lease, the relationship of Landlord and Tenant, Tenant's use or occupancy of the
Premises, including any claim of injury or damage, and any emergency and other
statutory remedy with respect thereto. Tenant shall not interpose

                                       50
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any counterclaim of any kind in any action or proceeding commenced by Landlord
to recover possession of the Premises (except to the extent set forth in
SECTIONS 12, 13, 31(b) and 38(g)). Subject to SECTION 19(b)(2), Tenant hereby
waives any right of redemption or similar right that it may have with respect to
this Lease after the termination hereof.

          29.  LANDLORD'S AND TENANT'S CERTIFICATES

          (a)  Landlord, at any time and from time to time, on or prior to the
tenth (10th) Business Day following a written request by Tenant, shall execute
and deliver to Tenant (and/or to a party designated by Tenant) a statement (i)
certifying that this Lease is unmodified and in full force and effect (or if
there have been modifications, that the same is in full force and effect as
modified and stating the modifications), (ii) certifying to the Commencement
Date, the then current expiration date of this Lease, and the dates to which
Base Rent has been received (as well as the number of remaining Extension
Options and the terms thereof), (iii) stating whether or not, to the best
knowledge of Landlord, Landlord is in default in performance of any of its
obligations under this Lease (and, if so, specifying each such default of which
Landlord shall have knowledge), and (iv) stating whether or not, to the best
knowledge of Landlord, any Event of Default has occurred which is then
continuing (or any event has occurred which with the giving of notice or passage
of time, or both, would constitute an Event of Default), and, if so, specifying
each such event. Landlord also shall include or confirm in any such statement
such other information concerning this Lease as Tenant may reasonably request,
to the extent the same is readily accessible to Landlord.

          (b)  Tenant, at any time and from time to time, on or prior to the
tenth (10th) Business Day following a written request by Landlord, shall execute
and deliver to Landlord (and/or to a party designated by Landlord) a statement
(i) certifying that this Lease is unmodified and in full force and effect (or if
there have been modifications, that the same is in full force and effect as
modified and stating the modifications), (ii) certifying to the Commencement
Date, the then current expiration date of this Lease, and the dates to which
Base Rent has been paid (as well as the number of remaining Extension Options
and the terms thereof), (iii) stating whether or not, to the best knowledge of
Tenant, Landlord is in default in performance of any of its obligations under
this Lease (and, if so, specifying each such default of which Tenant shall have
knowledge), (iv) stating whether or not, to the best knowledge of Tenant, Tenant
has any counterclaims, defenses or right to offset against any amounts due to
Landlord under this Lease, and whether or not, to the best knowledge of Tenant,
Tenant is entitled to any concessions, rebates or any rent reductions under this
Lease for whatever reason as of the date such statement is given, (v) stating
whether there exists any material unrepaired damage to the Premises from fire or
other casualty, (vi) stating whether Tenant has received written notice of any
actions or proceedings pending against the Premises before any governmental
authority to condemn the Premises or any portion thereof or any interest therein
and whether, to Tenant's knowledge, any such actions or proceedings have been
threatened, (vii) stating that the estoppel shall be binding upon Tenant, and
may be relied upon by Landlord (and/or a party designated by Landlord) and
(viii) stating whether or not, to the best knowledge of Tenant, any Event of
Default has occurred which is then continuing (or any event has occurred which
with the giving of notice or passage of time, or both, would constitute an Event
of Default), and, if so, specifying each such event. Tenant also shall include
or confirm in any such statement such other information concerning

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<Page>

this Lease as Landlord may reasonably request, to the extent the same is readily
accessible to Tenant.

          30.  LANDLORD'S CONSENT AND APPROVAL.

          If Tenant shall request Landlord's consent or approval and Landlord
shall fail or refuse to give such consent or approval, Tenant shall not be
entitled to any damages for any withholding by Landlord of its consent or
approval (unless a court determines that Landlord's failure to consent or
approve was made in bad faith), it being intended that Tenant's sole remedy
shall be an action for specific performance or injunction, and that such remedy
shall be available only in those cases where Landlord has expressly agreed in
writing not to unreasonably withhold its consent or where as a matter of law
Landlord may not unreasonably withhold its consent or approval.

          31.  CAPITAL LEASE; NONTERMINABILITY.

          (a)  This is a capital lease and, except as otherwise specifically
provided in SECTIONS 12 or 13 hereof, this Lease shall not terminate nor shall
Tenant have any right to terminate this Lease; nor shall Tenant be entitled to
any abatement, deduction, deferment, suspension or reduction of, or setoff,
defense or counterclaim against, any rentals, charges, or other sums payable by
Tenant under this Lease except as otherwise specifically provided in SECTIONS
12, 13, 31(b) and 38(g) hereof; nor shall the respective obligations of Landlord
and Tenant be otherwise affected by reason of damage to or destruction of the
Premises from whatever cause, any taking by condemnation, eminent domain or by
agreement between Landlord and those authorized to exercise such rights, the
lawful or unlawful prohibition of Tenant's use of the Premises, the interference
with such use by any persons, corporations or other entities, or by reason of
any eviction by paramount title, or by reason of Tenant's acquisition of
ownership of the Premises otherwise than pursuant to an express provision of
this Lease, or by reason of any default or breach of any warranty by Landlord
under this Lease or any other agreement between Landlord and Tenant, or to which
Landlord and Tenant are parties, or for any other cause whether similar or
dissimilar to the foregoing, any Laws to the contrary notwithstanding; it being
the intention that the obligations of Landlord and Tenant hereunder shall be
separate and independent covenants and agreements and that the Base Rent,
additional rent and all other charges and sums payable by Tenant hereunder shall
continue to be payable in all events unless the obligations to pay the same
shall be terminated pursuant to the express provisions of this Lease; and Tenant
covenants and agrees that it will remain obligated under this Lease in
accordance with its terms, and that it will not take any action to terminate,
cancel, rescind or void this Lease, notwithstanding the bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation, dissolution, winding up
or other proceedings affecting Landlord or any assignee of, or successor to,
Landlord, and notwithstanding any action with respect to this Lease that may be
taken by a trustee or receiver of Landlord or any assignee of, or successor to,
Landlord or by any court in any such proceeding. Except as specifically provided
in SECTIONS 12(f)(4), 31(b), and 38(g), Tenant shall pay all expenses related to
the operation, management, development, use, occupancy, maintenance and repair
of the Premises, including, without limitation, the costs of utilities, real
estate taxes and insurance, which arise or become payable during or after (but
attributable to a period falling within) the term hereof.

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          (b)  Notwithstanding the foregoing or anything in this Lease to the
contrary, during the period commencing on the fifteenth (15th) anniversary of
the Commencement Date and ending on the expiration date of the Initial Term, if
any of the repairs, replacements or improvements to be made by Tenant to comply
with Section 8(a) hereof are capital in nature and are to be made with respect
to the roof, structural elements of the Building, exterior walls or the
elevators located at the Premises, and such improvements shall have a useful
life (as determined in accordance with GAAP) that extends more than one (1) year
beyond the expiration of the Initial Term (such improvements, the "CAP EX
IMPROVEMENTS"), and a reasonably prudent owner of premises comparable to the
Premises would, after taking account all relevant factors that such owner would
reasonably consider, including the then remaining term of this Lease it being
understood that the First Class Standard and all applicable Laws must in any
event be complied with (such standard, the "PRUDENT OWNER STANDARD"), Landlord
shall perform such Cap Ex Improvements. The cost of any such Cap Ex Improvement
(including the cost of the contract price to perform such Cap Ex Improvement
(and any cost overruns) and any reasonable fees and disbursements of any
architects, engineers or attorneys retained by Landlord and Tenant in connection
with such Cap Ex Improvement, shall be calculated on a straight line
depreciation basis and be apportioned between Tenant and Landlord as follows:
Tenant's proportionate share of such cost ("TENANT'S CAP EX SHARE") shall be
equal to a fraction, the numerator of which shall be equal to the number of
months remaining in the Initial Term from and after the date that, in Landlord's
reasonable estimation, the applicable Cap Ex Improvement shall be substantially
completed, and the denominator of which shall be the number of months of the
reasonably estimated useful life of the applicable Cap Ex Improvement (the
"USEFUL LIFE"), and Landlord shall be responsible for a portion of the cost of
any such Cap Ex Improvement equal to a fraction, the numerator of which shall be
equal to the number of months remaining in the Useful Life from and after the
expiration of the Initial Term, and the denominator of which shall be equal to
the Useful Life. All Cap Ex Improvements shall be performed by Landlord,
provided that Landlord's performance thereof shall be performed at times and
during hours that are mutually agreeable to the parties and in a manner that
does not unreasonably disturb or interfere with Tenant's operation of its
business at the Premises. Tenant shall reimburse Landlord for Tenant's Cap Ex
Share of any bill (i) submitted in connection with a Cap Ex Improvement by
paying Tenant's Cap Ex Share of such bill within twenty (20) days following
delivery by Landlord of such bill (and other reasonable supporting
documentation) OR (ii) in equal monthly installments pro rated based on the
number of months remaining in the Initial Term from the date of Landlord's
delivery of such bill, provided, that with respect to this clause (ii), Tenant
shall pay interest on the amount of Tenant's Cap Ex Share of each such bill in
an amount equal to the Default Rate. If Tenant shall exercise either of its
Extension Options, from and after the commencement of the Extension Term, Tenant
shall have no obligation to pay Tenant's Cap Ex Share of any Cap Ex Improvements
being performed during the Extension Term, and Landlord shall perform such Cap
Ex Improvements (to the extent required under this SECTION 31(b)) at its sole
cost and expense and in accordance with the Prudent Owner Standard.

          (c)  Any dispute under this SECTION 31(b) shall be resolved by
arbitration pursuant to SECTION 44 hereof.

          32.  OMITTED.

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          33.  ENCROACHMENTS, RESTRICTIONS, ETC.

          If, as a result of Tenant Changes, any of the Improvements shall, at
any time, encroach upon any property, street or right of way adjoining or
adjacent to the Premises, or shall violate the agreements or conditions
contained in any restrictive covenant existing as of the date hereof or to which
Tenant or any Tenant Party shall have consented in writing or other agreement
affecting the Premises existing as of the date hereof or to which Tenant or any
Tenant Party shall have consented to in writing, or any part thereof, or shall
hinder or obstruct any easement or right-of-way to which the Premises are
subject existing as of the date hereof or to which Tenant or any Tenant Party
shall have consented to in writing, or shall impair the rights of others under
such easement or right-of-way, then promptly upon the request of the Landlord at
the behest of any persons affected by any such encroachment, violation,
hindrance, obstruction or impairment, Tenant shall, at its cost and expense,
either (i) obtain valid and effective waivers or settlements of all claims,
liabilities and damages resulting from each such encroachment, violation,
hindrance, obstruction or impairment, whether the same shall affect Landlord or
Tenant, or (ii) make such changes in the Improvements and take such other
actions as shall be necessary to remove such encroachments, hindrances or
obstructions and to end such violations or impairments, including, if necessary,
but only with Landlord's prior written consent, the alteration or removal of any
of the Improvements. Any such alteration or removal consented to by Landlord
shall be made by Tenant in accordance with the requirements of Section 9 hereof.
Tenant's obligations under this SECTION 33 shall survive the expiration or
sooner termination of this Lease.

          34.  OMITTED.

          35.  MISCELLANEOUS PROVISIONS.

          (a)  NOTICES.  Any bill, notice, statement, demand, consent, approval
or other communication required or permitted to be given, rendered or made by
either Landlord or Tenant pursuant to this Lease (collectively, "NOTICES") shall
be in writing and shall be deemed to have been properly given, rendered or made
only if sent by (i) registered or certified mail, return receipt requested,
posted in a United States post office station or letter box in the State of New
York (in which event such notice shall be deemed to have been given, rendered or
made on the third (3rd) Business Day after the day so mailed), or (ii) overnight
courier service or by hand against a signed receipt (in which event such notice
shall be deemed to have been given, rendered or made when delivered), and to the
other party at the address(es) hereinabove set forth at the beginning of this
Lease. Either party may, by notice as aforesaid, designate a different address
or addresses for notices intended for it.

          (b)  RELATIONSHIP OF THE PARTIES. It is the intention of the parties
hereto to create the relationship of Landlord and Tenant, and no other
relationship whatsoever, and unless expressly otherwise provided herein, nothing
herein shall be construed to make the parties hereto liable for any of the
debts, liabilities or obligations of the other party.

          (c)  GOVERNING  LAWS.  This Lease shall be governed by the provisions
hereof and by the laws of the State of New York, as same may from time to time
exist.

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          (d)  INVALIDITY OF PARTICULAR PROVISIONS. If any term or provision of
this Lease or the application thereof to any person or circumstance shall, to
any extent, be invalid or unenforceable, the remainder of this Lease, or the
application of such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby and each term and provision of this Lease shall be valid and be enforced
to the fullest extent permitted by law.

          (e)  NON-WAIVER. No delay or omission by Landlord or by Tenant in
exercising a right or remedy shall exhaust or impair such right or remedy or
constitute a waiver of, or acquiescence in, any default by Tenant or Landlord,
as the case may be. A single or partial exercise of a right or remedy shall not
preclude a further exercise thereof, or the exercise of another right or remedy,
from time to time. The receipt by Landlord of rent with knowledge of any default
by Tenant shall not be deemed a waiver of such default, and no provision of this
Lease, nor any default by either party hereunder, shall be deemed to have been
waived by the other party unless such waiver be in writing signed by such party.
No payment by Tenant or receipt by Landlord of a lesser amount than the rent
herein stipulated shall be deemed to be other than on account of the stipulated
rent. No endorsement or statement of any check or any letter accompanying any
check or payment as rent shall be deemed an accord and satisfaction, and
Landlord may accept such check or payment without prejudice to Landlord's right
to recover the balance of such rent or pursue any other remedy in this Lease
provided.

          (f)  COUNTERPARTS. This Lease may be executed in several counterparts,
each of which shall be deemed an original, and such counterparts shall
constitute but one and the same instrument.

          (g)  SOLE AGREEMENT. This Lease sets forth all the promises,
inducements, agreements, conditions and understandings between Landlord and
Tenant relative to the Premises, and there are no promises, agreements,
conditions or understandings, either oral or written, expressed or implied
between them concerning Tenant's use and occupancy of the Premises during the
term of this Lease, other than as expressly set forth on EXHIBIT C or as
otherwise agreed to in writing by Landlord and Tenant. Except as herein
otherwise provided, no subsequent alteration, amendment, change or addition to
this Lease shall be binding upon Landlord or Tenant, unless reduced to writing
and signed by the party(ies) to be charged therewith.

          (h)  CAPTIONS. The captions of the several Sections and subsections of
this Lease and table of contents are not a part of the context hereof and shall
be ignored in construing this Lease. They are intended only as aids in locating
various provisions hereof.

          (i)  SUCCESSORS AND ASSIGNS. Except as may be expressly otherwise
provided herein, the terms, covenants and conditions hereof shall inure to the
benefit of and shall be binding upon Landlord and its successors and assigns and
the terms, covenants and conditions hereof shall inure to the benefit of and
shall be binding upon Tenant and its successors and permitted assigns.

          (j)  NO MERGER. There shall be no merger of this Lease, or the
leasehold estate created by this Lease, with any other estate or interest in the
Premises, or any part thereof,

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<Page>

by reason of the fact that the same person, firm, corporation or other entity
may acquire or own or hold, directly or indirectly, (i) this Lease or the
leasehold estate created by this Lease, or any interest in this Lease or in any
such leasehold estate, and (ii) any such other estate or interest in the
Premises or any part thereof; and no such merger shall occur unless and until
all persons, corporations, firms and other entities having an interest
(including a security interest) in (i) this Lease or the leasehold estate
created by this Lease; and (ii) any such other estate or interest in the
Premises, or any part thereof, shall join in a written instrument effecting such
merger and shall duly record the same.

          (k)  OWNERSHIP OF PREMISES.  Tenant  acknowledges  that the Premises
are the property of Landlord and that Tenant has only the right to the
possession and use thereof upon the terms, covenants and conditions set forth in
this Lease.

          (l)  ACCEPTANCE OF SURRENDER. No surrender to Landlord of this Lease
or of the Premises, or any part thereof, or of any interest therein, shall be
valid or effective unless agreed to and accepted in writing by Landlord, and no
act or omission by Landlord or any representative or agent of Landlord, other
than such a written acceptance by Landlord, consented to as aforesaid, shall
constitute an acceptance of any such surrender.

          36.  GUARANTY; FINANCIAL STATEMENTS; ANNUAL REPORTS.

          (a)  As security for the performance of payment of all of Tenant's
obligations under this Lease, Sotheby's Holdings, Inc. ("GUARANTOR") has
simultaneously herewith delivered to Landlord a Guaranty of Lease (the
"GUARANTY") in the form annexed hereto as SCHEDULE E.

          (b)  Guarantor agrees to furnish to Landlord upon Landlord's request:
(1) copies of the most recently prepared consolidated financial statements of
Tenant and Guarantor (I.E., annual balance sheets, income statements and
statements of cash flow, audited and certified by Guarantor's independent
certified public accountants); and (2) other financial statements, reports and
documents which Tenant: (i) files with or otherwise sends to the Securities and
Exchange Commission, whether pursuant to the Securities Act of 1933, as amended,
or the Securities Exchange Act of 1934 including, without limitation, Annual
Report on Form 10K, Quarterly Report on Form 10Q, Current Report on Form 8-K and
Proxy Statements and other soliciting materials; (ii) files with any other
governmental commission, department or agency or any securities exchange; and
(iii) sends to or makes available to its shareholders (but only if at the time
in question Guarantor has securities registered under the Securities Exchange
Act of 1934, as amended). Tenant and Guarantor shall provide such other
financial materials that are in Guarantor's or Tenant's possession (or are
otherwise reasonably available to Tenant) as may be reasonably requested by
Landlord or Fee Mortgagee, subject to any prohibitions against such disclosure
under applicable Laws and provided that Landlord shall keep and shall direct Fee
Mortgagee to keep any such financial information confidential. The obligations
of this SECTION 36 with respect to Guarantor shall not diminish for any reason,
including, without limitation, if Guarantor ceases to be a publicly traded
entity.

          (c)  Within one hundred twenty (120) days of the end of each of
Tenant's fiscal years during the term hereof, Tenant shall furnish to Landlord a
statement of operating expenses for the Improvements for such fiscal year
together with a schedule of any subleases of

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<Page>

all or any part of the Premises indicating the premises demised, commencement
date, renewal options, base rent, escalation provisions and any other
information that Landlord shall reasonably request; provided, that if Tenant
shall not have furnished such statements within such 120-day period, then Tenant
shall furnish the same within fifteen (15) days following Landlord's request.

          37.  BROKER.

          Landlord and Tenant each represents and warrants that it has had no
dealings or conversations with any broker in connection with the negotiation and
execution of this Lease. J.P. Morgan Securities, Inc. and J.P. Morgan Realty
Advisors, Inc. (collectively, "JPMORGAN") acted as financial advisors in
connection with this transaction. Landlord and Tenant each agrees to defend,
indemnify and hold harmless the other against all liabilities arising from any
claims for commissions, fees, compensation or reimbursement of expenses,
asserted by any person other than JPMorgan who dealt with or claims to have
dealt with Landlord, Tenant or any Affiliates thereof, as the case may be, in
connection with this Lease, including the reasonable cost of counsel fees and
disbursements. Tenant Named Herein acknowledges that it is obligated to
compensate JPMorgan pursuant to a separate agreement.

          38.  HAZARDOUS MATERIALS; INSPECTIONS.

          (a)  For the purposes hereof, the term "HAZARDOUS MATERIALS" shall
include, without limitation, substances defined as "hazardous substances",
"hazardous materials" or "toxic substances" in any Laws.

          (b)  Tenant represents and warrants that, except as herein set forth,
it will not use, store or dispose of any Hazardous Materials in the Premises
except in compliance with all applicable Laws.

          (c)  If, at any time during the term hereof, Hazardous Materials shall
be found in or on the Premises, then Tenant shall remove or remediate the same
to the extent required by any applicable Laws, and in compliance with all
applicable Laws; provided, however, that this SECTION 38(c) and Tenant's
compliance herewith shall not be deemed to be a waiver of any claims or rights
Tenant may have against Landlord or any prior owner of the Premises arising out
of, in respect of or in connection with the release, threatened release or
presence of any Hazardous Materials at, on or under the Premises; provided,
further that any such rights or claims of Tenant shall not give rise to any
right of setoff, counterclaim, recoupment, abatement, suspension, reduction or
defense against Base Rent, additional rent and any other sums due to Landlord
under this Lease.

          (d)  Upon reasonable prior notice, Landlord and Fee Mortgagee, their
agents, representatives and employees shall have the right at all reasonable
times and during normal business hours, except to the extent such access is
limited by applicable Law, to enter upon and inspect all or any portion of the
Premises, provided that such inspections are conducted in the presence of a
representative designated by Tenant and such inspections shall not unreasonably
interfere with the operation of the Premises. Tenant shall reimburse Fee
Mortgagee or Landlord within fifteen (15) Business Days after demand accompanied
by reasonable documentation supporting the amount of any such costs or expenses
for all costs and expenses (including

                                       57
<Page>

reasonable attorneys' fees and disbursements, administrative and similar costs
of Fee Mortgagee or Landlord) reasonably relating to or incurred by Fee
Mortgagee or Landlord in connection with the inspections, tests and reports
described in this SECTION 38 if Fee Mortgagee or Landlord, as applicable, has
reasonable grounds to believe (based on the receipt of notice relating to such
fact) at the time any such inspection is ordered, that there exists an
environmental violation or that a Hazardous Material is present on, under or
emanating from the Premises in violation of Laws or this Lease.

          (e)  To the extent that Tenant has knowledge thereof, Tenant shall
promptly provide notice to Landlord and Fee Mortgagee of:

               (i)  any proceeding or investigation  commenced or threatened by
any governmental authority with respect to the presence of any Hazardous
Materials affecting the Premises; and

               (ii) all claims made or any lawsuit or other legal action or
proceeding brought by any person against (A) Tenant or Landlord or the Premises,
or (B) any other party occupying the Premises or any portion thereof, in any
such case relating to any loss or injury allegedly resulting from any Hazardous
Materials or relating to any violation or alleged violation of any Law.

          (f)  Subject to SECTION 38(g), Tenant shall be solely responsible for
and shall defend, indemnify and hold each Landlord Party harmless from and
against all claims, including costs and expenses of any kind, including without
limitation reasonable expenses of investigation by engineers, environmental
consultants and similar technical personnel and reasonable fees and
disbursements of counsel (collectively, "HAZMAT LOSSES"), arising out of, in
respect of or in connection with (i) Tenant's breach of its obligations under
this Section or (ii) the release, threatened release or presence of any
Hazardous Materials at, on or under the Premises at any time first occurring
during the term of this Lease (collectively, "HAZMAT CONDITIONS"); provided that
Tenant shall not be required to indemnify, defend or hold harmless any Landlord
Party for any such matter arising due to the gross negligence or wilful
misconduct of any Landlord Party.

          (g)  Notwithstanding SECTION 38(f), Tenant's liability with respect to
any HazMat Losses arising out of, in respect of or in connection with any HazMat
Conditions resulting from a terrorist act shall be limited to the amount of
coverage Tenant is required to maintain in its Casualty Insurance policy against
loss or damage by terrorist acts pursuant to SECTION 10(a)(1).

          (h)  The indemnity obligations of Tenant and the rights and remedies
of Landlord under this SECTION 38 shall survive the termination of this Lease.

          39.  LEASEHOLD MORTGAGE.

          Notwithstanding anything contained in Section 17 hereof or otherwise
in this Lease to the contrary, Tenant shall have the right with Landlord's prior
written consent, which shall not be unreasonably withheld, delayed or
conditioned, to mortgage, pledge, encumber or otherwise hypothecate its interest
in this Lease or the Premises or any part thereof (any of the

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foregoing being referred to as a "LEASEHOLD MORTGAGE"), provided that (i) such
Leasehold Mortgage is to be held by an Institutional Lender, (ii) the Leasehold
Mortgage shall not increase Landlord's obligations or reduce Landlord's rights
under this Lease (except to the limited extent provided under a recognition
agreement as set forth below), and (iii) in Landlord's reasonable judgment,
Tenant entering into the Leasehold Mortgage is unlikely to have an adverse
effect on Landlord's ability to obtain financing with respect to the Premises.
Solely to the extent that Landlord has consented to a Leasehold Mortgage in
accordance with the immediately preceding sentence, Landlord shall provide such
cooperation in connection with the creation of such Leasehold Mortgage as is
reasonably requested by Tenant, which shall include execution and delivery of
such customary and reasonable agreements as the leasehold mortgagee shall
require, including, without limitation, a recognition agreement in favor of the
leasehold mortgagee containing reasonable and customary provisions as to the
cure by leasehold mortgage of Tenant defaults and the like. Tenant shall
reimburse Landlord for the customary and reasonable expenses (including
reasonable attorneys' fees) incurred by Landlord in connection therewith, within
fifteen (15) Business Days after demand therefor. Notwithstanding anything set
forth in this SECTION 39, in any Leasehold Mortgage shall be subject and
subordinate to Landlord's interest in this Lease and any Mortgage in all
respects.

          40.  PUBLICITY.

          Landlord and Tenant hereby agree that they will not authorize or issue
any publicity of this Lease or the matters contained herein without first
obtaining the written consent of the others. Nothing herein contained shall
limit any parties right to disclose this Lease and matters contained therein to
prospective lenders, partners, tenants, title companies and governmental
agencies (to the extent required by law) and to Landlord's and Tenant's
respective attorneys, accountants and engineers.

          41.  TRANSFER TAXES.

          Tenant shall pay the cost of any transfer or similar tax, if any,
imposed in connection with the execution and delivery of this Lease.

          42.  NO DEVELOPMENT RIGHTS.

          Tenant acknowledges that it has no rights to any development rights,
air rights or comparable rights appurtenant to the Premises and Tenant consents,
without further consideration, to any utilization of such rights by Landlord.
Tenant shall promptly execute and deliver any instruments which may be requested
by Landlord, including instruments merging zoning lots, evidencing such
acknowledgment and consent. The provisions of this SECTION 42 shall be construed
as an express waiver by Tenant of any interest Tenant may have as a "party in
interest" (as such term is defined in SECTION 12-10 of Zoning Lot of the Zoning
Resolution of the City of New York) in the Premises.

          43.  SPECIAL BANKRUPTCY RELATED PROVISIONS.

          (a)  All amounts payable by Tenant to or on behalf of Landlord under
this Lease, whether or not expressly denominated Base Rent or additional rent,
shall constitute rent

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for the purpose of SECTION 502(b)(6) of the United States Bankruptcy Code (the
"CODE"), as same may be amended and for the purpose of any similar section of
Title 11 of the Code, as the same may hereafter be amended or replaced, or any
federal, state or foreign law covering all or part of the same or similar
subject matter as is covered by the Code (collectively, "INSOLVENCY LAWS").

          (b)  If the original Tenant named herein assigns its interest in this
Lease and such Tenant is not released of further liability under this Lease, and
this Lease is thereafter disaffirmed or rejected in any proceeding under any
Insolvency Laws, or in the event of the termination of this Lease by reason of
any such proceeding, the original Tenant herein named, upon request of Landlord
given within sixty (60) days after such disaffirmance or rejection, shall (i)
pay to Landlord all Base Rent and additional rent then due and payable to
Landlord under this Lease to and including the date of such disaffirmance or
rejection and (b) enter into a new lease as lessee with Landlord of the Premises
for a term commencing on the effective date of such disaffirmance or rejection
and ending on the date that would have been the expiration date if this Lease
had not been disaffirmed or rejected, at the same Base Rent and additional rent
and upon the then executory terms and conditions contained in this Lease, except
that (i) the rights of the lessee under the new lease shall be subject to any
possessory rights of the last assignee of this Lease and any rights of persons
claiming through or under such assignee, (ii) such new lease shall require all
defaults existing under this Lease which are susceptible of cure by such lessee
to be cured by the lessee with reasonable diligence, and (iii) such new lease
shall require the lessee to pay all Base Rent and additional rent which, had
this Lease not been disaffirmed or rejected, would have become due after the
effective date of such disaffirmance or rejection. If the original Tenant herein
named shall fail or refuse to enter into the new lease within thirty (30) days
after Landlord's request to do so, then in addition to all other rights and
remedies by reason of such default under this Lease, at law or in equity,
Landlord shall have the same rights and remedies against the original Tenant
herein named as Landlord would have had if the original Tenant herein named had
entered into such new lease had thereafter been terminated at the beginning of
its term by reason of the default of the lessee thereunder. If the original
Tenant herein enters into such new lease, then simultaneously therewith,
Landlord shall assign to the original Tenant named herein all rights that
Landlord may have thereafter against the last assignee of this Lease and shall
pay to the original Tenant named herein all amounts which the last assignee of
this Lease would otherwise be entitled to receive under this Lease.

          44.  EXPEDITED ARBITRATION.

          (a)  If there is a dispute between Landlord and Tenant as to any
matter under any Section of this Lease that makes specific reference to this
Section 44, then such dispute shall, at the request of either party, be resolved
solely by arbitration in the City of New York under the Expedited Procedures
provisions (it being the intention of the parties that such provisions shall
apply even if the amount at issue exceeds $50,000, notwithstanding the fact that
such provisions may provide otherwise) of the Commercial Arbitration Rules of
the American Arbitration Association or any successor thereto (the "AAA");
PROVIDED, HOWEVER, that the provisions of this SECTION 44(a) shall supersede any
conflicting or inconsistent provisions of said provisions; and FURTHER PROVIDED,
that with respect to any such arbitration, (i) the list of arbitrators referred
to in Rule E-5 shall be returned within five (5) days from the date of mailing;
(ii) the parties shall notify the AAA by telephone, within four (4) days of any
objections to the arbitrator appointed

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<Page>

and shall have no right to object if the arbitrator so appointed was on the list
submitted by the AAA and was not objected to in accordance with Rule E-5(b);
(iii) the Notice of Hearing referred to in Rule E-5(c) shall be four (4) days in
advance of the hearing; (iv) the hearing shall be held within five (5) days
after the appointment of the arbitrator; (v) the arbitrator shall have no right
to award damages on account of any unreasonable or allegedly unreasonable
withholding of any consent; and (vi) the decision and award of the arbitrator
shall be final and conclusive on the parties. Time shall be of the essence as to
the time periods set forth in this SECTION 44(a).

          (b)  No later than twenty four (24) hours prior to the scheduled
hearing, Landlord and Tenant shall each: (i) first, simultaneously submit to the
arbitrator and then (ii) second, simultaneously submit to the other party such
party's specific written proposal stating such party's last and final position
and proposed award. Each such written proposal may be accompanied by such data
and memoranda in support of the submitter's position as the submitter may deem
reasonably necessary or appropriate in the circumstances.

          (c)  The arbitrator shall within three (3) Business Days after the
hearing choose either (i) Landlord's position with respect to all individual
matters being arbitrated or (ii) Tenant's position with respect to all such
matters, in either case as set forth in the proposal described in this Section
44, whichever of the two considered in the aggregate ("i" or "ii") the
arbitrator believes is closer to the appropriate resolution of all such disputed
matters. The arbitrator shall have no authority to establish or impose any
solution or remedy other than "i" or "ii" and may not combine elements of "i"
and "ii" to produce a hybrid award.

          (d)  It is expressly understood that the decision of any arbitrator in
accordance with this SECTION 44 shall be final and binding upon the parties
hereto and non-appealable. The arbitrator conducting any arbitration shall be
bound by the provisions of this Lease and shall not have the power to add to,
subtract from, or otherwise modify such provisions. Landlord and Tenant agree to
sign all documents and to do all other things necessary to submit any such
matter to arbitration and further agree to, and hereby do, waive any and all
rights they or either of them may at any time have to revoke their agreement
hereunder to submit to arbitration and to abide by the decision rendered
thereunder which shall be binding and conclusive on the parties and shall
constitute an "award" by the arbitrator within the meaning of the AAA rules and
applicable Laws.

          (e)  The arbitrator shall be a qualified, disinterested and impartial
person who shall have had at least ten (10) years experience in New York City in
a calling connected with the matter of the dispute. Each party hereunder shall
pay its own costs, fees and expenses in connection with any arbitration brought
under this Article, and the expenses and fees of the arbitrators selected shall
be shared equally by Landlord and Tenant, but each party shall bear the expense
of its own attorneys and experts.

                                       61
<Page>

     IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Lease as of
     the day and year first above written.

                              LANDLORD:

                              1334 York Avenue LP
                              -----------------------------,
                              a Delaware limited partnership
                              ------------------------------

                              By: /s/ MICHAEL FUCHS
                                  ------------------------
                                  Name:  Michael Fuchs
                                  Title: Vice President and Managing Member

                              TENANT:

                              SOTHEBY'S, INC.,
                              a New York corporation
                              -------------------------------

                              By: /s/ WILLIAM S. SHERIDAN
                                  ---------------------------
                                  Name:   William S. Sheridan
                                  Title: Executive Vice President and
                                         Chief Financial Officer

                              WITH RESPECT TO ITS OBLIGATIONS UNDER SECTION 36
                              ONLY:

                              SOTHEBY'S HOLDINGS, INC.,
                              a Michigan corporation

                              By: /s/ WILLIAM S. SHERIDAN
                                  --------------------------
                                  Name:  William S. Sheridan
                                  Title: Executive Vice President and
                                         Chief Financial Officer

                                       62
<Page>

                                   SCHEDULE A

                               DESCRIPTION OF LAND

ALL the certain plot, piece or parcel of land, situate, lying and being in the
Borough of Manhattan, City, County and State of New York, bounded and described
as follows:

BEGINNING at the corner formed by the intersection of the easterly side of York
Avenue (formerly Avenue A) and the southerly side of 72nd Street; running thence
in a southerly direction along the easterly side of York Avenue 204 feet 4
inches to the corner formed by the intersection of the easterly side of York
Avenue and the northerly side of 71st Street; running thence in an easterly
direction along the northern side of 71st Street, 198 feet; thence in a
northerly direction and parallel with York Avenue 204 feet 4 inches to the
southerly side of 72nd Street; and thence in a westerly direction along with
southerly side of 72nd Street 198 feet to the point or place of BEGINNING.

<Page>

                                   SCHEDULE B

                              SCHEDULE OF BASE RENT

The "BASE RENTAL RATE" shall be the following:

Period                                                           Annual Rent
------                                                           ------------

Commencement Date-> 3rd anniversary of the Commencement Date     $18,025,000.00

3rd anniversary of the Commencement Date-> 6th anniversary
of the Commencement Date                                         $19,286,750.00

6th anniversary of the Commencement Date-> 9th anniversary
of the Commencement Date                                         $20,636,822.50

9th anniversary of the Commencement Date-> 12th anniversary
of the Commencement Date                                         $22,081,400.08

12th anniversary of the Commencement Date-> 15th anniversary
of the Commencement Date                                         $23,627,098.08

15th anniversary of the Commencement Date-> 18th anniversary
of the Commencement Date                                         $25,280,994.95

18th anniversary of the Commencement Date-> 20th anniversary
of the Commencement Date                                         $27,050,664.59

<Page>

                                   SCHEDULE C

                           FORM OF MEMORANDUM OF LEASE

<Page>

                                  [RFR ENTITY]

                                                                       LANDLORD,

                                       AND

                                 SOTHEBY'S, INC.

                                                                         TENANT.

------------------------------------------------------------------------
                               MEMORANDUM OF LEASE
------------------------------------------------------------------------

DATED AS OF FEBRUARY 7, 2003

THE PREMISES AFFECTED BY THE WITHIN INSTRUMENT LIES IN THE CITY
OF NEW YORK, COUNTY OF NEW YORK, STATE OF NEW YORK
ADDRESS OF PROPERTY:     1334 YORK AVENUE
                         NEW YORK, NEW YORK 10021

LOT:              1
BLOCK:            1483

                              RECORD AND RETURN TO:
                           JONES, DAY, REAVIS & POGUE
                              222 EAST 41st STREET
                            NEW YORK, NEW YORK 10017
                        ATTENTION: SUSANNA S. FODOR, ESQ.

<Page>

                               MEMORANDUM OF LEASE
                          PURSUANT TO SECTION 291-C OF
                 THE REAL PROPERTY LAW OF THE STATE OF NEW YORK

DATE OF EXECUTION OF LEASE:        February 7, 2003

NAME AND ADDRESS OF LANDLORD:      1334 York Avenue L.P.
                                   c/o RFR Holding LLC
                                   400 Park Avenue
                                   New York, NY 10022

NAME AND ADDRESS OF TENANT:        Sotheby's, Inc.
                                   1334 York Avenue
                                   New York, New York 10021

DESCRIPTION OF DEMISED PREMISES:   All of the land and the improvements thereon
                                   known by the street address 1334 York Avenue,
                                   New York, New York in the Borough of
                                   Manhattan, City, County and State of New
                                   York, as more particularly described on
                                   SCHEDULE A attached hereto and made a part
                                   hereof.

EXPIRATION OF LEASE:               February 28, 2023

RENEWAL OPTIONS:                   Tenant has the right to extend the term of
                                   the Lease two consecutive times, each for a
                                   ten year term, by written notice to Landlord
                                   prior to the end of the then current term, as
                                   more particularly provided in the Lease.

MEMORANDUM OF LEASE:               This instrument, executed in connection with
                                   the Lease, is intended to be and is entered
                                   into as a memorandum thereof for the purpose
                                   of recordation and the giving of notice of
                                   the tenancy created by the Lease and of the
                                   rights and obligations of Landlord and Tenant
                                   thereunder, and shall not, in any event, be
                                   construed to change, vary, modify or
                                   interpret the Lease or any of the terms,
                                   covenants or conditions thereof, or any part
                                   thereof, which are set forth, described or
                                   summarized herein and reference is hereby
                                   made to the Lease for any and all purposes.
                                   All of the terms, covenants and conditions
                                   contained in the

                                       -1-
<Page>

                                   Lease are hereby incorporated herein by
                                   reference with like effect as if set forth
                                   herein verbatim.

SUBORDINATION:                     This Memorandum of Lease shall be subject and
                                   subordinate to all fee mortgages and all
                                   renewals and modifications thereof, subject
                                   to and in accordance with Section 15 of the
                                   Lease.

COUNTERPARTS:                      This Memorandum of Lease may be executed in
                                   counterparts, any one of which or all of
                                   which shall be deemed one and the same
                                   agreement.

                            [SIGNATURE PAGE FOLLOWS]

                                       -2-
<Page>

          IN WITNESS WHEREOF, the parties hereto have executed this Memorandum
of Lease as of this 6th day of February, 2003.

LANDLORD:                          1334 YORK AVENUE L.P., a Delaware
                                   limited partnership

                                   By: /s/ MICHAEL FUCHS
                                      -------------------------------
                                      Name:  Michael Fuchs
                                      Title: Vice President and
                                             Managing Member

TENANT:                            SOTHEBY'S, INC., a New York corporation

                                   By: /s/ WILLIAM S. SHERIDAN
                                      ------------------------------------
                                      Name:  William S. Sheridan
                                      Title: Executive Vice President

                                       -3-
<Page>

STATE OF NEW YORK        )

COUNTY OF NEW YORK       ) ss.:

     On the 5th day of February in the year 2003 before me, the undersigned,
personally appeared Michael Fuchs, personally known to me or proved to me on
the basis of satisfactory evidence to be the individual whose name is subscribed
to the within instrument and acknowledged to me that he executed the same in his
capacity, and that by his signature on the instrument, the individual, or the
person upon behalf of which the individual acted, executed the instrument.

  Ann Tyson
----------------------------
Signature and Office of individual
taking acknowledgment

STATE OF NEW YORK        )

COUNTY OF NEW YORK       ) ss.:

     On the 6th day of February in the year 2003 before me, the undersigned,
personally appeared William S. Sheridan, personally known to me or proved to
me on the basis of satisfactory evidence to be the individual whose name is
subscribed to the within instrument and acknowledged to me that he executed
the same in his capacity, and that by his signature on the instrument, the
individual, or the person upon behalf of which the individual acted, executed
the instrument.

  Julian Entner
----------------------------
Signature and Office of individual
taking acknowledgment

                                       -4-
<Page>

                                   SCHEDULE A

                                LEGAL DESCRIPTION

ALL the certain plot, piece or parcel of land, situate, lying and being in the
Borough of Manhattan, City, County and State of New York, bounded and described
as follows:

BEGINNING at the corner formed by the intersection of the easterly side of York
Avenue (formerly Avenue A) and the southerly side of 72nd Street; running thence
in a southerly direction along the easterly side of York Avenue 204 feet 4
inches to the corner formed by the intersection of the easterly side of York
Avenue and the northerly side of 71st Street; running thence in an easterly
direction along the northern side of 71st Street, 198 feet; thence in a
northerly direction and parallel with York Avenue 204 feet 4 inches to the
southerly side of 72nd Street; and thence in a westerly direction along the
southerly side of 72nd Street 198 feet to the point or place of BEGINNING.

<Page>

                                   SCHEDULE D

                    FORM OF TENANT NON-DISTURBANCE AGREEMENT

                                        6
<Page>

                         SUBORDINATION, NON-DISTURBANCE
                            AND ATTORNMENT AGREEMENT

          THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (the
"AGREEMENT") is made as of this 7th day of February, 2003, which date shall
be the effective date of this Agreement, between Sotheby's, Inc., a New York
corporation (the "TENANT") and BANK OF AMERICA, N.A., a national banking
association, a wholly owned subsidiary of BankAmerica Corporation, and having
its principal offices in Charlotte, North Carolina (together with its
successors and/or assigns the "Lender").

          The Tenant is the lessee under the lease described in EXHIBIT A
attached hereto (as the same may from time to time be assigned, subleased,
renewed, extended, amended, modified or supplemented, collectively the "LEASE").

          The Lender has previously made or is about to make a loan to 1334
York Avenue L.P., a Delaware limited liability company or its successor
and/or assigns with respect to the landlord's interest under the Lease (the
"Landlord"), evidenced by a promissory note in the original principal amount
of approximately $129,500,000 executed by the Landlord and payable to the
Lender and secured by a first priority deed of trust, mortgage or deed to
secure debt on certain real and personal property and improvements (the
"PREMISES"), recorded or to be recorded in the appropriate records of New
York County, New York (the "SECURITY INSTRUMENT").

          The Lender has requested the Tenant to confirm the fact that the Lease
is subject and subordinate to the Security Instrument.

          The Tenant is willing to confirm the subordination of the Lease,
provided it obtains assurance from the Lender that its possession of the
premises demised under the Lease (the "DEMISED PREMISES"), which Demised
Premises is all or a portion of the Premises, and its right to use any common
areas will not be disturbed by reason of or in the event of the foreclosure of
the Security Instrument.

          The Lender is willing to give such assurance.

          NOW, THEREFORE, for and in consideration of the mutual agreements
herein contained and other good and valuable consideration, the parties hereto
do hereby mutually covenant and agree as follows:

          1.   (a)  The Tenant hereby subordinates the Lease and all terms and
conditions contained therein and all rights, options, liens and charges created
thereby to the lien of the Security Instrument, and to all present or future
advances under the obligations secured thereby and to all renewals, extensions,
amendments, modifications and/or supplements of same, to the full extent of all
amounts secured thereby from time to time.

                                        7
<Page>

               (b)  Lender hereby consents to the execution and delivery of
the Lease by Landlord and, subject to the applicable terms and conditions
hereof, Lender agrees to recognize all of Tenant's rights, remedies and options
under and as described in the Lease which may be exercised in accordance with
the terms of the Lease without Lender's consent.

          2.   So long as no event of default on the part of the Tenant under
the Lease shall exist which would entitle the Landlord to terminate the Lease,
or if such an event of default shall exist, so long as the Tenant's time to cure
the default shall not have expired, the term of the Lease shall not be
terminated or modified in any respect whatsoever and the Tenant's right of
possession to the Demised Premises and its rights in and to any common areas and
its other rights arising out of the Lease will all be fully recognized and
protected by the Lender and shall not be disturbed, canceled, terminated or
otherwise affected by reason of the Security Instrument or any action or
proceeding instituted by the Lender to foreclose the Security Instrument, or any
extension, renewal, consolidation or replacement of same, or other exercise of
Lender's rights and remedies under the Security Instrument, irrespective of
whether the Tenant shall have been joined in any action or proceeding.

          3.   In the event that the Lender takes possession of the Premises,
either as the result of foreclosure of the Security Instrument or accepting a
deed to the Premises in lieu of foreclosure, or otherwise, or the Premises shall
be purchased at such a foreclosure by a third party unaffiliated with Landlord,
the Tenant shall attorn to the Lender or such third party and recognize the
Lender or such third party as its landlord under the Lease, and the Lender or
such third party will recognize and accept the Tenant as its tenant thereunder,
whereupon, the Lease shall continue in full force and effect as a direct lease
between the Lender or such third party and the Tenant for the full term thereof,
together with all extensions and renewals thereof, and the Lender or such third
party shall thereafter assume and perform all of the Landlord's obligations, as
the landlord under the Lease with the same force and effect as if the Lender or
such third party were originally named therein as the Landlord; provided,
however, that the Lender or such third party unaffiliated with Landlord shall
not be:

          (a)  liable for any act or omission of any prior landlord (including
the Landlord), except to the extent the Lender was furnished notice and
opportunity to cure the same in accordance with the provisions of this Agreement
prior to taking possession of such Premises; or

          (b)  subject to any offsets or defenses which the Tenant might have
against any prior landlord (including the Landlord), except to the extent the
Lender was furnished notice and opportunity to cure the same in accordance with
the provisions of this Agreement prior to taking possession of such Premises; or

          (c)  bound by any rent or additional rent which the Tenant might have
paid for more than two (2) months in advance to any prior landlord (including
the Landlord); or

          (d)  bound by any amendment or modification of the Lease not consented
to in writing by the Lender (excluding any amendment or modification reflecting
the exercise by Landlord or Tenant of any right or option contained in the Lease
in accordance with the applicable terms and provisions thereof).

                                        8
<Page>

          Except as expressly and specifically set forth above, nothing
contained in this paragraph 3 shall diminish any of Landlord's obligations under
the Lease.

          4.  Notwithstanding anything to the contrary in this Agreement or
otherwise, in the event the Lender or a third party takes possession of the
Premises as provided in paragraph 3 above, the personal liability of the Lender
or such third party under the Lease shall be limited to the Lender's or such
third party's, as the case may be, interest in the Premises, and upon any
assignment or other transfer of the Lender's or such third-party's interest in
the Premises, the Lender or such third party, as applicable, shall be discharged
and released from any obligation or liability under the Lease arising or
accruing after the date of such assignment or transfer.

          5.   Except as Tenant may be required to do under the Lease, Tenant
agrees not to subordinate the Lease to any other lien or encumbrance which (i)
affects the Premises under the Lease, or any part thereof, or (ii) is junior to
the Security Instrument, without the express written consent of the Lender, and
any such subordination or any such attempted subordination or agreement to
subordinate without such consent of Lender, shall be void and of no force and
effect. The foregoing provision shall not affect Tenant's right under the Lease
to encumber its interest in the Lease and, except as expressly and specifically
set forth in the Lease, no consent of Lender shall be required in connection
with such encumbrance.

          6.   Tenant  agrees to provide  copies of all  notices  given
Landlord under the Lease to the following parties at the following addresses:

           Lender:             Bank of America, N.A.
                               Capital Markets Servicing Group
                               555 South Flower Street
                               6th Floor
                               CA9-703-04-42
                               Los Angeles, California 90017
                               Attn: Servicing Manager
                               Telephone No: (800) 462-0505
                               Fascimile No: (213) 345-6587

           With a copy to:     Bank of America Legal Department
                               GCIB/CMBS
                               NC1-007-20-01
                               100 North Tyron Street
                               Charlotte, North Carolina 28255-0001
                               Attention: Dean B. Roberson, Esq.
                               Fascimile No: (704) 387-0922

or to such other address as such parties shall designate in writing; and all
such notices shall be in writing and shall be considered as properly given if
(i) mailed to the addressee by first class United States mail, postage prepaid,
registered or certified with return receipt requested, (ii) by delivering same
in person to the addressee, or (iii) by delivery to a third party commercial
delivery service for same day or next day delivery to the office of the
addressee with proof of delivery; any notice so given shall be effective, as
applicable, upon (a) the third (3rd) day following the day such notice is
deposited with the United States mail, (b) delivery to the addressee, or (c)
upon delivery to such third party delivery service; and any notice given in any
other manner shall be effective only if and when received by the addressee.

          7.   In the event Landlord shall fail to perform or observe any of the
terms, conditions or agreements in the Lease, Tenant shall give written notice
thereof to Lender and Lender shall have the right (but not the obligation) to
cure such default. Except in the case of an emergency, Tenant shall not take any
action with respect to such default under the Lease (including without
limitation any action in order to terminate, rescind or avoid the Lease or to
withhold any rent or other monetary obligations thereunder) for a period of
thirty (30) days following receipt of written notice by Lender that it intends
to cure such default; provided, however, that in the case of any default which
cannot with diligence be cured within such thirty (30) day period, if Lender

                                        9
<Page>

proceeds to promptly to cure such default or thereafter prosecutes the curing of
such default with diligence and continuity, then the time within which such
default may be cured shall be extended for such period as may be reasonably
necessary to complete the curing of such default with diligence and continuity.

          8.   Nothing  contained in this Agreement  shall in any way impair or
affect the lien created by the Security Instrument, except as specifically set
forth herein.

          9.   This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns, including,
without limitation, any subtenant, assignee or leasehold mortgagee of Tenant
permitted pursuant to the applicable terms and conditions of the Lease;
provided, however, that in the event of the assignment or transfer of the
interest of the Lender to a party that assumes the Lender's obligations and
liabilities hereunder, all obligations and liabilities of the Lender under this
Agreement shall terminate, and thereupon all such obligations and liabilities
shall be the responsibility of the party to whom the Lender's interest is
assigned or transferred.

          10.  In the event of any litigation or other legal proceeding arising
between the parties to this Agreement, whether relating to the enforcement of a
party's rights under this Agreement or otherwise, the prevailing party shall be
entitled to receive its reasonable attorney's fees and costs of suit from the
non-prevailing party in such amount as the court shall determine.

          11.  Tenant hereby acknowledges and agrees Lender is a "Fee
Mortgagee" (as such term is defined in Section 15(a) of the Lease) and the
Security Instrument is a "Mortgage" (as such term is defined in Section 15(a)
of the Lease), and all provisions relating to "Fee Mortgagees" and
"Mortgages" under the Lease shall be deemed to relate to Lender and the
Security Instrument. Pursuant to Section 39 of the Lease, Lender agrees that
Lender shall not unreasonably withhold, condition or delay Lender's consent
to a Leasehold Mortgage provided that the conditions set forth in Section 39
related thereto have been satisfied (including, without limitation, the
conditions set forth in clauses (i) through (iii) thereof).

          12.  This Agreement may be executed in several counterparts, each
of which counterparts, shall be deemed an original instrument and all of
which shall constitute a single agreement.

                         [NO FURTHER TEXT ON THIS PAGE]

                                       10
<Page>

          IN WITNESS WHEREOF the undersigned have executed this Agreement as of
the date and year first written above.

WITNESS/ATTEST:                         TENANT:

Monica English                          Sotheby's Inc., a New York corporation
-------------------------               --------------------------------------

WITNESS/ATTEST:                         By: /s/ WILLIAM S. SHERIDAN
                                           ---------------------------------
                                          Name:  William S. Sheridan
                                                -----------------------------
                                          Title: Executive Vice President
-------------------------                       -----------------------------

WITNESS/ATTEST:                         LENDER:

                                        BANK OF AMERICA, N.A., a national
                                        banking association
-------------------------

WITNESS/ATTEST:
                                         By: /s/ DEAN RAVOSA
                                            ---------------------------------
                                          Name:  Dean Ravosa
                                               -------------------------------
                                          Title: Principal
-------------------------                      -------------------------------

                                       11
<Page>

ACKNOWLEDGED AND AGREED:

WITNESS/ATTEST:                         GUARANTOR:

                                        SOTHEBY'S HOLDINGS, INC., a Michigan
Monica English                          corporation
-------------------------               --------------------------------------

WITNESS/ATTEST:                         By: /s/ WILLIAM S. SHERIDAN
                                           ---------------------------------
                                          Name:  William S. Sheridan
                                                -----------------------------
                                          Title: Executive Vice President
-------------------------                       -----------------------------

WITNESS/ATTEST:                         LANDLORD:

                                        1334 YORK AVENUE L.P., a Delaware
limited                                       partnership
-------------------------
                                          By:  1334 GP II LLC, a Delaware
                                                          liability company,
WITNESS/ATTEST:
limited                                   By: /s/ MICHAEL FUCHS
its general partner                          ---------------------------------
                                          Name:  Michael Fuchs
                                               -------------------------------
                                          Title: Managing Member and Vice
                                                 President
-------------------------                      -------------------------------

                                        12
<Page>

STATE OF NEW YORK     )
                      SS:
COUNTY OF NEW YORK    )

       On the 6th day of February, in the year 2003 before me, the
undersigned, personally appeared William S. Sheridan, the Executive Vice
President of Sotheby's, Inc., personally known to me on the basis of
satisfactory evidence to be the individual whose name is subscribed to the
within instrument and acknowledged to me that he/she executed the same in
his/her capacity, and that by his/her signature on the instrument, the
individual, or the person upon behalf of which the individual acted, executed
the instrument.

                                   /s/ JULIAN ENTER
                                   ---------------------------
                                   Notary Public

                                       13
<Page>

STATE OF NEW YORK      )
                       ss:
COUNTY NEW YORK        )

      On the 4th day of February, in the year 2003 before me, the undersigned,
personally appeared Dean Ravosa, the Principal of Bank of America, N.A.,
personally known to me on the basis of satisfactory evidence to be the
individual whose name is subscribed to the within instrument and acknowledged
to me that he/she executed the same in his/her capacity, and that by his/her
signature on the instrument, the individual, or the person upon behalf of which
the individual acted, executed the instrument.

                                  /s/ DANIELLE MYERS
                                  ---------------------
                                      Notary Public

                                       14
<Page>

STATE OF NEW YORK      )
                       ss:
COUNTY NEW YORK        )

      On the 6th day of February, in the year 2003 before me, the undersigned,
personally appeared William S. Sheridan, the Executive Vice President of
Sotheby's Holdings, Inc. personally known to me on the basis of satisfactory
evidence to be the individual whose name is subscribed to the within instrument
and acknowledged to me that he/she executed the same in his/her capacity, and
that by his/her signature on the instrument, the individual, or the person upon
behalf of which the individual acted, executed the instrument.

                                  /s/ JULIAN ENTNER
                                  ---------------------
                                      Notary Public

                                       15
<Page>

STATE OF NEW YORK      )
                       ss:
COUNTY NEW YORK        )

      On the 4th day of February, in the year 2003 before me, the undersigned,
personally appeared Michael Fuchs, the Managing Member and Vice President of
1334 GP II LLC, the general partner of 1334 York Avenue L.P., personally known
to me on the basis of satisfactory evidence to be the individual whose name is
subscribed to the within instrument and acknowledged to me that he/she executed
the same in his/her capacity, and that by his/her signature on the instrument,
the individual, or the person upon behalf of which the individual acted,
executed the instrument.

                                  /s/ ANN TYSON
                                  ---------------------
                                      Notary Public

                                       16
<Page>

                                   EXHIBIT A

                                      LEASE

     That certain lease, dated as of the date hereof, by and among Sotheby's,
Inc., as tenant, and 1334 York Avenue, as landlord, relating to the Premises
generally described as 1334 York Avenue, New York, New York together with
that certain Guaranty of Lease dated as of the date hereof executed by
Sotheby's Holdings, Inc. as each of the same assigned, subleased, renewed,
extended, amended, modified or supplemented from time to time, collectively,
the Lease).

<Page>

                                   SCHEDULE E

                                FORM OF GUARANTY

<Page>

                                GUARANTY OF LEASE

          GUARANTY (this "GUARANTY") made as of this day of this 7th day of
February 2003, by SOTHEBY'S HOLDINGS, INC., a Michigan corporation having an
address at 38500 Woodward Avenue, Suite 100, Bloomfield Hills, Michigan 48304
("GUARANTOR") to [RFR Entity], a Delaware limited partnership having an
address at c/o RFR Holding LLC, 400 Park Avenue, New York, NY 10022
("LANDLORD").

                              W I T N E S S E T H:
                              - - - - - - - - - -

          WHEREAS Guarantor has requested Landlord to enter into a lease with
Sotheby's, Inc., as tenant ("TENANT"), dated as of the date hereof (such lease,
together with any modifications, amendments, extensions and renewals being
collectively called the "LEASE"), with respect to that certain parcel of real
property located in the City of New York, State of New York, as is more
particularly described in SCHEDULE A attached hereto and by this reference made
a part hereof, together with the buildings and other improvements now or
hereafter located thereon (capitalized terms not otherwise defined herein have
the meanings specified in the Lease); and

          WHEREAS, Landlord has refused to enter into the Lease unless Guarantor
guaranties the performance by Tenant of all of the terms, covenants, conditions,
obligations and agreements contained in the Lease on the part of Tenant to be
performed thereunder (collectively, the "COVENANTS"), subject to and in
accordance with the terms of this Guaranty.

          NOW, THEREFORE, Guarantor agrees with Landlord as follows:

          1.   Guarantor unconditionally guaranties to Landlord the prompt
payment when due of the rent, additional rent and other charges payable under
the Lease and full and faithful performance and observance of any and all
Covenants (including, without limitation, the indemnity contained in Section 11
of the Lease); and Guarantor unconditionally covenants to Landlord that if
default or breach shall at any time be made by Tenant in the Covenants to pay
rent and additional rent or any other charges payable under the Lease or in the
performance of any of the other Covenants, and notice of any such default or
breach shall have been given by Landlord to Tenant and Tenant shall not have
cured such default or breach within the grace period, if any, provided for in
the Lease, Guarantor shall well and truly perform the Covenants, and pay said
rent, additional rent or other charges or arrears thereof that may remain due
thereon to Landlord, and also all damages that may arise in consequence of the
non-performance of the Covenants, or any of them, or as the result of the breach
of any of the conditions of limitation set forth in Section 19 of the Lease,
including, without limitation, all damages stipulated in Section 19(b) of the
Lease; PROVIDED, HOWEVER, that Guarantor shall not have any liability in
connection with this Guaranty or the Lease for any consequential or indirect
damages (except to the extent that Tenant incurs liability for such
consequential or indirect damages pursuant to SECTION 21(b) of the Lease).
Guarantor shall pay to Landlord on demand (or if Guarantor is not an Affiliate
of Tenant, within ten (10) days after written notice to Guarantor) all expenses
(including, without

<Page>

limitation, Landlord's reasonable out-of-pocket attorneys' fees and
disbursements) of, or incidental to, or relating to the enforcement or
protection of Landlord's rights hereunder or under the Lease.

          2.   The liability of Guarantor hereunder shall not be impaired,
abated, deferred, diminished, modified, released, terminated or discharged, in
whole or in part, or otherwise affected, by any event, condition, occurrence,
circumstance, proceeding, action or failure to act, with or without notice to,
or the knowledge or consent of, Guarantor, including, without limitation:

               (a)  any amendment, modification or extension of the Lease or any
Covenant;

               (b)  any extension of time for performance, whether in whole or
in part, of any Covenant given prior to or after default thereunder;

               (c)  any exchange, surrender or release, in whole or in part, of
any security which may be held by Landlord at any time for or under the Lease;

               (d)  any other guaranty now or hereafter executed by Guarantor or
anyone else;

               (e)  any waiver of or assertion or enforcement or failure or
refusal to assert or enforce, in whole or in part, any covenant, claim, cause of
action, right or remedy which Landlord may, at any time, have under the Lease or
with respect to any Guarantee or any security which may be held by Landlord at
any time for or under the Lease or with respect to Tenant;

               (f)  any act or thing or omission or delay to do any act or thing
which may in any manner or to any extent vary the risk of Guarantor or which
would otherwise operate as a discharge of Guarantor as a matter of law;

               (g)  the release of any other guarantor from liability for the
performance or observance of any Covenant, whether by operation of law or
otherwise;

               (h)  Landlord's consent to any assignment or subletting or the
assignment or successive assignments of the Lease by Tenant, or any subletting
of the premises demised under the Lease by Tenant;

               (i)  the failure to give Guarantor any notice whatsoever;

               (j)  any right, power or privilege that Landlord may now or
hereafter have against any person, entity or collateral;

               (k)  any assignment, conveyance, mortgage, merger or other
transfer, voluntary or involuntary (whether by operation of law or otherwise),
of all or any part of Tenant's interest in the Lease, including, without
limitation, any assumption of the Lease by Guarantor pursuant to Section 6
hereof or the occurrence of any such assignment, conveyance,

<Page>

mortgage, merger or other voluntary or involuntary transfer which results in
Guarantor becoming the tenant under the Lease; or

               (l)  any assignment, conveyance, mortgage, merger or other
transfer, voluntary or involuntary (whether by operation of law or otherwise) of
all or part of the interest or rights of Landlord under the Lease.

               If any agreement between Landlord and Tenant shall extend the
time of performance or modify any of the Covenants, Guarantor shall continue to
be liable upon this Guaranty according to the tenor of any such agreement.
Notwithstanding the foregoing, to the extent that Guarantor is not an Affiliate
of Tenant, Guarantor shall not be bound to the extent any amendment,
modification, extension or waiver with respect to an unaffiliated Tenant
increases Guarantor's obligations hereunder; PROVIDED, that the exercise by any
such unaffiliated Tenant of any Extension Option under the Lease shall not be
deemed to be an amendment, modification, extension or waiver thereof.

          3.   To charge Guarantor under this Guaranty no demand shall be
required, Guarantor hereby expressly waiving any such demand; PROVIDED, HOWEVER,
that to the extent that Guarantor is not an Affiliate of Tenant (pursuant to any
assignment of Tenant's interest in the Lease made in accordance with the
provisions set forth in SECTIONS 17(d),(j),(k),(m), and (s) of the Lease, any
charge to Guarantor under this Guaranty may be made by Landlord upon ten (10)
days prior written notice. Landlord shall have the right to enforce this
Guaranty without pursuing any right or remedy of Landlord against Tenant or any
other party, or any security Landlord may hold, it being intended that if there
occurs any breach or default by Tenant in the performance or observance of any
Covenant and notice of any such default or breach shall have been given by
Landlord to Tenant and Tenant shall have failed to cure such default or breach
within the grace period, if any, provided for in the Lease, or upon the
occurrence of any condition of limitation in the Lease, Guarantor shall be
obligated to Landlord as provided in this Guaranty. Landlord may commence any
action or proceeding based upon this Guaranty directly against Guarantor without
making Tenant or anyone else a party defendant in such action or proceeding. Any
one or more successive and/or concurrent actions may be brought hereon against
Guarantor either in the same action, if any, brought against Tenant and/or any
other party or in separate actions, as often as Landlord, in its sole
discretion, may deem advisable.

          4.   This Guaranty shall be binding upon Guarantor and its successors
and assigns, and shall inure to the benefit of and may be enforced by the
successors and assigns of Landlord or by any party to whom Landlord's interest
in the Lease or any part thereof, including the rents, may be assigned whether
by way of mortgage or otherwise. Wherever in this Guaranty reference is made to
either Landlord or Tenant, the same shall be deemed to refer also to the then
successor or assign of Landlord or Tenant.

          5.   Guarantor hereby expressly waives and releases (a) notice of the
acceptance of this Guaranty and notice of any change in Tenant's financial
condition; (b) the right to interpose any substantive or procedural defense of
the law of guarantee, indemnification or suretyship, except the defense of prior
payment or prior performance by Tenant (of the obligations which Guarantor is
called upon to pay or perform under this Guaranty) or any other defense that is
available and that Tenant is entitled to assert under the Lease); (c) all rights
and

<Page>

remedies accorded by applicable law to guarantors or sureties, including
without limitation, any extension of time conferred by any law now or hereafter
in effect; (d) the right to trial by jury, in any action or proceeding of any
kind arising on, under, out of, or by reason of or relating, in any way, to this
Guaranty or the interpretation, breach or enforcement thereof; (e) the right to
interpose any defense (except as allowed under (b) above), set off or
counterclaim of any nature or description in any action or proceeding; and (f)
any right or claim of right to cause a marshalling of Tenant's assets or to
cause Landlord to proceed against Tenant and/or any collateral held by Landlord
at any time or in any particular order.

          6.   Without limiting Guarantor's obligations elsewhere under this
Guaranty, if Tenant, or Tenant's trustee, receiver or other officer with similar
powers with respect to Tenant, rejects, disaffirms or otherwise terminates the
Lease pursuant to any bankruptcy, insolvency, reorganization, moratorium or any
other law affecting creditors' rights generally, Guarantor shall automatically
be deemed to have assumed, from and after the date such rejection, disaffirmance
or other termination of the Lease is deemed effective, all obligations and
liabilities of Tenant under the Lease to the same extent as if Guarantor had
been originally named instead of Tenant as a party to the Lease and the Lease
had never been so rejected, disaffirmed or otherwise terminated. Guarantor, upon
such assumption, shall be obligated to perform and observe all of the Covenants
whether theretofore accrued or thereafter accruing and Guarantor shall be
subject to any rights or remedies of Landlord which may have theretofore accrued
or which may thereafter accrue against Tenant on account of any default under
the Lease, notwithstanding that such defaults existed prior to the date
Guarantor was deemed to have automatically assumed the Lease or that such rights
or remedies are unenforceable against Tenant by reason of such rejection,
dissaffirmance or other termination. Guarantor shall confirm such assumption in
writing at the request of Landlord upon or after such rejection, dissaffirmance
or other termination, but the failure to do so shall not affect such assumption.
Guarantor, upon the assumption of the Lease, shall have all of the rights of
Tenant under the Lease (to the extent permitted by law). Neither Guarantor's
obligation to make payment in accordance with this Guaranty nor any remedy for
the enforcement thereof shall be impaired, modified, changed, stayed, released
or limited in any manner by any impairment, modification, change, release,
limitation or stay of the liability of Tenant or its estate in bankruptcy or any
remedy for the enforcement thereof, resulting from the operation of any present
or future provision of the Bankruptcy Code of the United States or other statute
or from the decision of any court interpreting any of the same, and Guarantor
shall be obligated under this Guaranty as if no such impairment, stay,
modification, change, release or limitation had occurred.

          7.   (a)  This Guaranty and all rights, obligations and liabilities
arising hereunder shall be construed according to the laws of the State of New
York. Guarantor hereby irrevocably submits, to the extent permitted by
applicable law, to the non-exclusive jurisdiction of (i) the United States
Courts for the Southern District of New York, or the courts of the State of New
York, in any action or proceeding arising out of or relating to this Guaranty,
and Guarantor hereby irrevocably agrees that all claims against it in respect of
such action or proceeding against Guarantor may be heard and determined in such
courts. Guarantor hereby appoints [PLEASE PROVIDE] as its attorney-in-fact and
agent in its name, place and stead to accept service of legal process in any
such action or proceeding in any court described above, and consents that
service of legal process in any such action or proceeding may be made upon it by
service upon [PLEASE PROVIDE]. To the extent permitted by applicable law,
Guarantor agrees that a final judgment

<Page>

obtained in any court described above in any action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.

               (b)  Nothing in this SECTION 7 shall affect the right of Landlord
to serve legal process in any other manner permitted by law. Guarantor
hereby consents that service of process by registered or certified mail, return
receipt requested, addressed to Guarantor at the address hereinabove set forth
will be sufficient.

               (c)  To the extent that Guarantor has or hereafter may acquire
any immunity from jurisdiction of any such court referred to in CLAUSE (a)(i) or
(a)(ii) above or from any legal process (whether through service or notice,
attachment prior to judgment, attachment in aid of execution, execution or
otherwise) with respect to itself or its property, to the extent permitted by
applicable law, Guarantor hereby irrevocably waives such immunity in respect of
its obligations under this Guaranty.

               (d)  Guarantor hereby irrevocably waives, to the extent permitted
by applicable law, any objection, including, without limitation, any objection
to the laying of venue or based on the grounds of FORUM NON CONVENIENS, that
Guarantor may now or hereafter have to the bringing of any such action or
proceeding in such respective courts referred to in CLAUSES (a)(i) and (a)(ii)
above.

          8.   Guarantor hereby waives any and all rights of subrogation (if
any) which it may have against Tenant as a result of actions taken or amounts
paid in connection with or relating to this Guaranty or to the Lease until all
of Guarantor's obligations hereunder are satisfied or Guarantor is released
pursuant to SECTION 16 below.

          9.   Guarantor represents and warrants to Landlord that as of the date
hereof:

               (a)  Guarantor has full power, authority and legal right to
execute, deliver, perform and observe this Guaranty, including, without
limitation, the payment of all moneys hereunder.

               (b)  The execution, delivery and performance by Guarantor of this
Guaranty have been duly authorized by all necessary corporate action.

               (c)  This Guaranty constitutes the legal, valid and binding
obligation of Guarantor, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, and other laws affecting
creditors' rights generally, to moratorium laws from time to time in effect and
to general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law).

          10.  Guarantor shall not merge or consolidate with any corporation or
sell all or substantially all of its assets unless either (a) Guarantor shall be
the surviving corporation or (b) contemporaneously with such merger or
consolidation or sale, the surviving or purchasing corporation executes and
delivers to Landlord a guaranty of the Lease, substantially in the form and
substance of this Guaranty, together with reasonably satisfactory evidence of
the due authorization, execution, delivery, validity and binding effect thereof,
but whether or not such

<Page>

execution and delivery shall take place the surviving or purchasing corporation
shall be bound by this Guaranty as if it had so executed and delivered such
guaranty.

          11.  If Landlord shall be obligated by reason of any bankruptcy,
insolvency or other legal proceeding to pay or repay to Tenant or to Guarantor
or to any trustee, receiver or other representative of either of them, any
amounts previously paid by Tenant or Guarantor pursuant to the Lease or this
Guaranty, Guarantor shall reimburse Landlord for any such payment or repayment
and this Guaranty shall extend to the extent of such payment or repayment made
by Landlord, except to the extent, if any, that such payment or repayment is
prohibited by law or that such payment or repayment constitutes merely a
reimbursement of any overpayment. Landlord shall not be required to litigate or
otherwise dispute its obligation or make such payment or repayment if in good
faith and on written advice of counsel Landlord believes that such obligation
exists.

          12.  Landlord and Guarantor shall each, at any time and from time to
time, within ten (10) business days following request by the other, execute,
acknowledge and deliver to the other a statement certifying that this Guaranty
is unmodified and in full force and effect (or if there have been modifications,
that the same is in full force and effect as modified and stating such
modifications) and that to the best of the certifying party's knowledge,
Guarantor is not in default hereunder (or if there is such a default, describing
such default in reasonable detail).

          13.  All remedies afforded to Landlord by reason of this Guaranty or
the Lease, or otherwise available at law or in equity, are separate and
cumulative remedies and no one remedy, whether or not exercised by Landlord,
shall be deemed to be in exclusion of any other remedy available to Landlord and
shall not limit or prejudice any other legal or equitable remedy which Landlord
may have.

          14.  If any term, covenant, condition or provision of this Guaranty or
the application thereof to any circumstance or to Guarantor shall be invalid or
unenforceable to any extent, the remaining terms, covenants, conditions and
provisions of this Guaranty or the application thereof to any circumstances or
to Guarantor other than those as to which any term, covenant, condition or
provision is held invalid or unenforceable, shall not be affected thereby and
each remaining term, covenant, condition and provision of this Guaranty shall be
valid and shall be enforceable to the fullest extent permitted by law.

          15.  Any notice hereunder shall be in writing and personally delivered
or sent by certified or registered mail, return receipt requested to Landlord or
Guarantor at their respective addresses hereinabove set forth or such other
address designated by Landlord or Guarantor by ten (10) days prior notice. Any
notice hereunder to be delivered to Guarantor by Landlord shall also delivered
to Tenant concurrently at the following address (or such other address
designated by Tenant by ten (10) days prior notice):

          Sotheby's, Inc.
          1334 York Avenue
          New York, New York  10021
          Attention:  General Counsel

<Page>

Any notice shall be deemed given as of the date of delivery as indicated by
affidavit in case of personal delivery or by the return receipt in the case of
mailing; and in the event of failure to deliver by reason of changed address of
which no notice is given or refusal to accept delivery, as of the date of such
failure as indicated by affidavit or return receipt as aforesaid.

          16.  Notwithstanding anything in this Guaranty to the contrary,
Guarantor shall be released from its obligations hereunder (a) upon the
satisfaction of all of the conditions set forth in SECTIONS17(n)(2) or 17(n)(3),
as the case may be, and (b) only to the extent such obligations accrue on or
after the date of such release.

<Page>

          IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the day
and year first above written.

                                       SOTHEBY'S HOLDINGS, INC., a Michigan
                                       corporation

                                        By: WILLIAM S. SHERIDAN
                                           --------------------------------
                                           Name:  William S. Sheridan
                                           Title: Executive Vice President
                                                  and Chief Financial Officer
<Page>

                                   SCHEDULE A

                               The Leased Premises

ALL the certain plot, piece or parcel of land, situate, lying and being in the
Borough of Manhattan, City, County and State of New York, bounded and described
as follows:

BEGINNING at the corner formed by the intersection of the easterly side of York
Avenue (formerly Avenue A) and the southerly side of 72nd Street; running thence
in a southerly direction along the easterly side of York Avenue 204 feet 4
inches to the corner formed by the intersection of the easterly side of York
Avenue and the northerly side of 71st Street; running thence in an easterly
direction along the northern side of 71st Street, 198 feet; thence in a
northerly direction and parallel with York Avenue 204 feet 4 inches to the
southerly side of 72nd Street; and thence in a westerly direction along with
southerly side of 72nd Street 198 feet to the point or place of BEGINNING.

<Page>

                                   SCHEDULE F

                                GROUND FLOOR PLAN

<Page>

                                    EXHIBIT A

                                   DEFINITIONS

          For the purposes of this Lease, the following definitions shall be
applicable:

          "BUSINESS DAYS" shall mean all days except Saturday, Sundays, New
Year's Day, Washington's Birthday, Memorial Day, Independence Day, Labor Day,
Thanksgiving, the day following Thanksgiving, Christmas and any other days which
are either observed by both the federal and the state governments or by the
labor unions servicing the Improvements as legal holidays.

          "DEFAULT RATE" shall mean the Interest Rate plus one percent (1%); but
in no event shall the "Default Rate" be a rate greater than the highest lawful
rate from time to time in effect.

          "DIRECT COMPETITOR" shall mean any art or antiques auction house.

          "EXCLUDED PROPERTY" shall mean (i) all art work located in the
Improvements, which art work is owned, leased or otherwise held, including on
consignment, by Tenant, its Affiliates or a client of Tenant, (ii) all fixtures,
furniture, furnishings, equipment, supplies, tools, machinery, security systems
(solely relating to Tenant's business as opposed to base building security
systems, if any), computer software or other personal property (such as trade
fixtures in, on, around or affixed to the Improvements) owned or leased by any
contractor or employee or any client of Tenant and its Affiliates or by a
subtenant of Tenant Named Herein, and (iii) all fixtures, furniture,
furnishings, equipment, supplies, tools, machinery, security systems (relating
to Tenant's business as opposed to base building security systems, if any),
computer software and other personal property (including, without limitation,
trade fixtures in, on, around or affixed to the Improvements) which is owned or
leased by Tenant or its Affiliates or otherwise used by Tenant or its Affiliates
solely in connection with the operation of Tenant's or its Affiliates' business
(in contradistinction to the operation of the Property), including, without
limitation, all specialized fixtures and equipment used by Tenant or its
Affiliates, such as, for example, audio-visual equipment.

          "INSTITUTIONAL LENDER" shall mean a savings bank, a savings and loan
association, a commercial bank or trust company (whether acting individually or
in a fiduciary capacity), an insurance company organized and existing under the
laws of the United States or any state thereof, an opportunity fund, investment
banking, merchant banking or brokerage firm, a real estate investment trust
sponsored by an Institutional Lender (which is not another real estate
investment trust), a religious, educational or eleemosynary institution, a
union, federal, state, municipal or secular employee's welfare, benefit, pension
or retirement fund or any combination of Institutional Lenders; provided, that
each of the above entities shall qualify as an Institutional Lender within the
provisions of this Section only if it shall (a) be subject, or submit itself, to
the jurisdiction of the courts of the State of New York in any actions arising
out of this Lease, (b) be subject to the supervision of the Comptroller of the
Currency of the United States or the Insurance Department or the Banking
Department or the Comptroller of the State of New York, or the Comptroller of
New York City, or any federal, state or municipal agency or public benefit
corporation or public authority advancing or assuring mortgage loans or making
payments

<Page>

which, in any manner, assist in the financing, development, operation and
maintenance of improvements, or, in the case of a secular employee's welfare,
benefit, pension or retirement fund, be the subject of a then current favorable
Determination Letter from the Internal Revenue Service pursuant to SECTIONS 401
AND 501 of the Internal Revenue Code, and (c) have net assets (combined with any
agency, department or Affiliate of the same) of not less than $250,000,000.

          "INSURANCE REQUIREMENTS" shall mean all orders, rules, regulations,
requirements or policies of any board of fire underwriters, fire rating
organization, insurance rating organization or any other body exercising the
same or similar functions to the foregoing (collectively, "insurance rating
organizations") which have jurisdiction over, or otherwise make rates or
findings in respect of, all or any part of the Real Property.

          "INTEREST RATE" shall mean an interest rate equal to two percent (2%)
above the so-called annual "Base Rate" of interest established and approved by
The Bank of New York, from time to time, as its interest rate charged for
unsecured loans to its corporate customers, but in no event greater than the
highest lawful rate from time to time in effect. In the event that the "Base
Rate" (or other term used for the rate currently called the "Base Rate") shall
cease to be established and approved by the Bank of New York, then Landlord
shall designate another nationally recognized banking organization that
establishes a "Base Rate".

          "LANDLORD" shall mean only the owner, at the time in question, of the
Premises so that in the event of any transfer or transfers of title to the
Building, the transferor shall be and hereby is relieved and freed of all
obligations of Landlord under this Lease accruing after such transfer, and it
shall be deemed, without further agreement, that such transferee has assumed and
agreed to perform and observe all obligations of Landlord herein during the
period it is the holder of Landlord's interest under this Lease.

          "LANDLORD PARTY" shall mean (1) any principal, partner, member,
officer, stockholder, director, employee or agent of Landlord or of any partner
or member of any partnership constituting Landlord, disclosed or undisclosed,
(2) any tenant of Landlord (other than Tenant) or any other party claiming by
through or under Landlord (including without limitation any concessionaire or
licensee and any subtenant or assignee of a tenant of Landlord other than Tenant
or a Tenant Party), and (3) any Fee Mortgagee or any principal, partner, member,
officer, stockholder, director, employee or agent thereof; and "LANDLORD
PARTIES" shall have the corresponding plural meaning.

          "LAWS" shall mean all applicable laws, statutes and ordinances
(including codes, approvals, permits and zoning regulations and ordinances) and
the orders, rules, regulations, interpretations, directives and requirements of
all federal, state, county, city and borough departments, bureaus, boards,
agencies, offices, commissions and other subdivisions thereof, or of any
official thereof, or of any other governmental, public or quasipublic authority,
whether now or hereafter in force, including, but not limited to, NYC Local Laws
No. 5 of 1973, No. 16 of 1984 and No. 58 of 1988, each as amended from time to
time, and all laws, rules and regulations then in effect relating to asbestos
and to access for the handicapped and disabled.

          "OCCUPANCY REQUIREMENT" shall mean the occupancy for its own use of
three (3) full floors of the Improvements; PROVIDED, that such floors may
include either (x) the portion of

<Page>

the first floor of the Improvements (the "1ST FLOOR PORTION") shown by separate
shading on SCHEDULE F annexed hereto and made a part hereof (occupancy of which
area shall be deemed to be full occupancy of the full 1st floor) or (y) the 10th
floor of the Improvements; and FURTHER PROVIDED, that, at the applicable time of
determining the Occupancy Requirement, Tenant Named Herein has the present
intention of maintaining such occupancy and has no plans at such time to
relocate from any such occupied floors.

          "PERSON" shall mean any natural person or persons, a partnership, a
corporation, and any other form of business or legal association or entity.

          "PROHIBITED USE" shall mean any use or occupancy of the Premises in
violation of the then current certificate of occupancy issued for the
Improvements. Prohibited Use also includes the use of any part of the Premises
for: (A) the business of photocopying, multilith or offset printing; (B) a
school (it being understood that the ancillary use of portions of the Premises
for classroom and/or educational purposes relating to the type of business
conducted by a Tenant Party is expressly permitted); (C) lodging or sleeping
(except for any hospital use specifically permitted under the terms of this
Lease); (D) offices of any governmental authority, any foreign government, the
United Nations, or any agency or department of the foregoing; (E) any illegal
activity or any activity constituting a nuisance or (F) any obscene or
pornographic purposes (other than in connection with the first class art
business of Tenant Named Herein), any sort of commercial sex establishment, any
obscene, nude, or semi-nude live performances, as a so called rubber goods shop,
or as a sex club or any sort, or as a "massage parlor". Any dispute as to
whether a use is a Prohibited Use shall be resolved by arbitration in accordance
with SECTION 44 hereof.

          "RECAPTURE OCCUPANCY REQUIREMENT" shall mean Tenant Named Herein's
occupancy for its own use of five (5) full floors of the Improvements (it being
understood that occupancy of the 1st Floor Portion shall be deemed to be full
occupancy of the full 1st FLOOR); PROVIDED, that, at the applicable time of
determining the Recapture Occupancy Requirement, Tenant Named Herein has the
present intention of maintaining such occupancy and has no plans at such time to
relocate from any such occupied floors.

          "TENANT" shall mean the Tenant herein named or any assignee or other
successor in interest (immediate or remote) of Tenant Named Herein, which at the
time in question is the owner of Tenant's estate and interest granted by this
Lease; but the foregoing provisions of this definition shall not be construed to
permit any assignment of this Lease or to relieve Tenant herein named or any
assignee or other successor in interest (whether immediate or remote) of the
Tenant herein named from the full and prompt payment, performance and observance
of the covenants, obligations and conditions to be paid, performed and observed
by Tenant under this Lease.

          "TENANT NAMED HEREIN" Sotheby's Inc. and any Affiliate of Guarantor.

          "TENANT PARTY" shall mean (1) any principal, partner, member, officer,
stockholder, director, employee or agent of Tenant or of any partner or member
of any partnership constituting Tenant, disclosed or undisclosed, (2) any
subtenant of Tenant or any other party claiming by, through or under Tenant
(including without limitation any

<Page>

concessionaire or licensee), or any principal, partner, member, officer,
stockholder, director, employee or agent of such subtenant or such other party,
or (3) any contractor, guest or invitee of any of the foregoing; and "TENANT
PARTIES" shall have the corresponding plural meaning.

          "TENANT'S PROPERTY" shall mean the Excluded Property and Tenant's
movable fixtures and movable partitions, telephone and other equipment,
furniture, furnishings, decorations and other items of personal property,
expressly excluding Equipment (as such term is defined in SECTION 14 hereof).

          "UNCOMMON CHANGE" shall mean (x) any Proposed Sotheby's Change that is
performed by Tenant and (y) any escalators or elevators installed after the date
hereof.

<Page>

                                    EXHIBIT B

                                 EXISTING LEASES

1.   Lease Agreement for Foodservice dated as of ________ __, ____, between
     Sotheby's, Inc. and Tentation TPC Special Events Catering, Inc.
     (Restaurant, cafe and other catering services.)

2.   Agreement of Lease dated as of January _, 2002, between SIBS, LLC, as
     Owner, and Sunrise Liquors & Wines, Inc., d/b/a Aulden Cellars, as Tenant.
     (Wine store.)*

3.   Lease Agreement dated as of October 2, 2000 by and between Omnipoint
     Communications, Inc., as Tenant, and SIBS, LLC, as Landlord. (Antenna)

<Page>

                                    EXHIBIT C

                                   AGREEMENTS

                                      None<Page>

                                                                   EXHIBIT 10(c)

================================================================================

                      AMENDED AND RESTATED CREDIT AGREEMENT

                          Dated as of February 7, 2003,

                                      Among

                            SOTHEBY'S HOLDINGS, INC.,

                                SOTHEBY'S, INC.,

                                OATSHARE LIMITED,

                                   SOTHEBY'S,

                         SOTHEBY'S GLOBAL TRADING GmbH,

                            THE LENDERS NAMED HEREIN

                                       and

                               JPMORGAN CHASE BANK

           as Administrative Agent, Collateral Agent and Issuing Bank

================================================================================

<Page>

                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                            Page
                                                                            ----
                                    ARTICLE I

                                   DEFINITIONS
     <S>                                                                        <C>
     SECTION 1.01.  DEFINED TERMS ..............................................2
     SECTION 1.02.  TERMS GENERALLY.............................................19

                                   ARTICLE II

                                   THE CREDITS

     SECTION 2.01.  COMMITMENTS.................................................19
     SECTION 2.02.  LOANS.......................................................20
     SECTION 2.03.  LETTERS OF CREDIT...........................................21
     SECTION 2.04.  BORROWING PROCEDURE.........................................25
     SECTION 2.05.  INTEREST ELECTIONS..........................................25
     SECTION 2.06.  FEES........................................................27
     SECTION 2.07.  REPAYMENT OF LOANS..........................................28
     SECTION 2.08.  INTEREST ON LOANS...........................................28
     SECTION 2.09.  DEFAULT INTEREST............................................28
     SECTION 2.10.  ALTERNATE RATE OF INTEREST..................................29
     SECTION 2.11.  TERMINATION AND REDUCTION OF COMMITMENTS....................29
     SECTION 2.12.  PREPAYMENT..................................................29
     SECTION 2.13.  RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES...............30
     SECTION 2.14.  CHANGE IN LEGALITY..........................................31
     SECTION 2.15.  INDEMNITY...................................................32
     SECTION 2.16.  PRO RATA TREATMENT..........................................33
     SECTION 2.17.  SHARING OF SETOFFS..........................................33
     SECTION 2.18.  PAYMENTS....................................................34
     SECTION 2.19.  TAXES.......................................................34
     SECTION 2.20.  ASSIGNMENT OF COMMITMENTS UNDER CERTAIN CIRCUMSTANCES.......36

                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

     SECTION 3.01.  CORPORATE EXISTENCE AND GOOD STANDING.......................37
     SECTION 3.02.  CORPORATE POWER, AUTHORIZATION AND COMPLIANCE WITH THE LAW..37
     SECTION 3.03.  FINANCIAL INFORMATION; ABSENCE OF MATERIAL ADVERSE CHANGE...38
     SECTION 3.04.  EMPLOYEE BENEFIT PLANS......................................38
     SECTION 3.05.  ENVIRONMENTAL MATTERS.......................................38
     SECTION 3.06.  LITIGATION..................................................38
     SECTION 3.07.  TAXES.......................................................39
     SECTION 3.08.  SUBSIDIARIES................................................39
     SECTION 3.09.  INVESTMENT COMPANY ACT......................................39
</Table>

<Page>

<Table>
     <S>                                                                        <C>
     SECTION 3.10.  NO MATERIAL MISSTATEMENTS...................................39
     SECTION 3.11.  FEDERAL RESERVE REGULATIONS.................................39
     SECTION 3.12.  TITLE TO PROPERTIES.........................................39
     SECTION 3.13.  USE OF PROCEEDS.............................................40
     SECTION 3.14.  SECURITY DOCUMENTS..........................................40

                                   ARTICLE IV

                                   CONDITIONS

     SECTION 4.01.  EFFECTIVE DATE..............................................40
     SECTION 4.02.  EACH BORROWING DATE.........................................42

                                    ARTICLE V

                              AFFIRMATIVE COVENANTS

     SECTION 5.01.  FINANCIAL STATEMENTS........................................42
     SECTION 5.02.  PAYMENT OF OBLIGATIONS......................................43
     SECTION 5.03.  MAINTAIN PROPERTY AND INSURANCE.............................43
     SECTION 5.04.  MAINTAIN EXISTENCE..........................................44
     SECTION 5.05.  COMPLIANCE WITH LAWS........................................44
     SECTION 5.06.  INSPECTION..................................................44
     SECTION 5.07.  ERISA.......................................................44
     SECTION 5.08.  COLLATERAL AND BORROWING BASE EVALUATIONS...................44
     SECTION 5.09.  FURTHER ASSURANCES..........................................45
     SECTION 5.10.  ART LOANS...................................................45

                                   ARTICLE VI

                               NEGATIVE COVENANTS

     SECTION 6.01.  LIENs.......................................................45
     SECTION 6.02.  SUBSIDIARY INDEBTEDNESS.....................................47
     SECTION 6.03.  CONSOLIDATIONS, MERGERS, AND SALES OF ASSETS................47
     SECTION 6.04.  LINES OF BUSINESS...........................................47
     SECTION 6.05.  TRANSACTIONS WITH AFFILIATES................................48
     SECTION 6.06.  RESTRICTIONS ON DIVIDENDS...................................48
     SECTION 6.07.  CONSOLIDATED LEVERAGE RATIO.................................48
     SECTION 6.08.  ADJUSTED CONSOLIDATED NET WORTH.............................48
     SECTION 6.09.  CONSOLIDATED COVERAGE RATIO.................................48
     SECTION 6.10.  RESTRICTED PAYMENTS; CERTAIN PAYMENTS IN RESPECT OF
                    INDEBTEDNESS................................................48
     SECTION 6.11.  ART LOANS...................................................49
</Table>

<Page>

<Table>
                                   ARTICLE VII
     <S>                                                                        <C>
     EVENTS OF DEFAULT..........................................................54

                                  ARTICLE VIII

     THE AGENTS.................................................................57

                                   ARTICLE IX

                                    GUARANTEE

     SECTION 9.01.  GUARANTEE...................................................54
     SECTION 9.02.  OBLIGATIONS UNCONDITIONAL...................................54
     SECTION 9.03.  REINSTATEMENT...............................................55
     SECTION 9.04.  SUBROGATION.................................................55
     SECTION 9.05.  REMEDIES....................................................55
     SECTION 9.06.  CONTINUING GUARANTEE........................................55

                                    ARTICLE X

                                  MISCELLANEOUS

     SECTION 10.01.  NOTICES....................................................55
     SECTION 10.02.  SURVIVAL OF AGREEMENT......................................56
     SECTION 10.03.  BINDING EFFECT.............................................56
     SECTION 10.04.  SUCCESSORS AND ASSIGNS.....................................57
     SECTION 10.05.  EXPENSES; INDEMNITY........................................60
     SECTION 10.06.  RIGHT OF SETOFF............................................61
     SECTION 10.07.  APPLICABLE LAW.............................................62
     SECTION 10.08.  WAIVERS; AMENDMENT.........................................62
     SECTION 10.09.  INTEREST RATE LIMITATION...................................62
     SECTION 10.10.  ENTIRE AGREEMENT...........................................62
     SECTION 10.11.  WAIVER OF JURY TRIAL.......................................63
     SECTION 10.12.  SEVERABILITY...............................................63
     SECTION 10.13.  JUDGMENT CURRENCY..........................................63
     SECTION 10.14.  COUNTERPARTS...............................................64
     SECTION 10.15.  HEADINGS...................................................64
     SECTION 10.16.  JURISDICTION; CONSENT TO SERVICE OF PROCESS................64
     SECTION 10.17.  CONFIDENTIALITY............................................64
     SECTION 10.18.  RELEASE OF LIENS AND GUARANTEES............................65
</Table>

<Page>

<Table>
     <S>                   <C>
     Exhibit A             Form of  Borrowing Request
     Exhibit B             Administrative Questionnaire
     Exhibit C             Form of Assignment and Assumption
     Exhibit D-1           Form of Opinion of General Counsel of Sotheby's
                           Holdings, Inc.
     Exhibit D-2           Form of Opinion of Weil, Gotshal & Manges LLP
     Exhibit D-3           Form of Opinion of Miro, Weiner & Kramer
     Exhibit D-4           Form of Opinion of Woodburn and Wedge
     Exhibit D-5           Form of Opinion of Freshfields
     Exhibit D-6           Form of Opinion of Pestalozzi Lachenal Patry
     Exhibit E             Form of Perfection Certificate
     Exhibit F             Indemnity, Subrogation and Contribution Agreement
     Exhibit G             Composite Conformed Amended and Restated Pledge
                           Agreement
     Exhibit H             Composite Conformed Amended and Restated Security
                           Agreement
     Exhibit I             Composite Conformed Amended and Restated
                           Subsidiary Guarantee Agreement
     Exhibit J             Composite Conformed Amended and Restated Trademark
                           SecurityAgreement
     Schedule 1.01A        Other Obligations
     Schedule 1.01B        Specified Assets
     Schedule 1.01C        Excluded Subsidiaries
     Schedule 1.01D        Existing Letters of Credit
     Schedule 2.01         Commitments
     Schedule 3.06B        Litigation Liabilities
     Schedule 3.08         Subsidiaries
     Schedule 6.01         Liens
</Table>

<Page>

                    AMENDED AND RESTATED CREDIT AGREEMENT (this "AGREEMENT")
               dated as of February 7, 2003, among SOTHEBY'S HOLDINGS, INC., a
               Michigan corporation ("HOLDINGS"), SOTHEBY'S, INC., a New York
               corporation (together with Holdings, the "US BORROWERS"),
               OATSHARE LIMITED, a company registered in England ("OATSHARE"),
               and SOTHEBY'S, a company registered in England (together with
               Oatshare, the "UK BORROWERS"); SOTHEBY'S GLOBAL TRADING GmbH, a
               company organized in Switzerland (the "SWISS BORROWER" and,
               together with the UK Borrowers and the US Borrowers, the
               "BORROWERS"); the lenders listed in Schedule 2.01 hereto or
               subsequently becoming parties hereto as provided herein (the
               "LENDERS"); and JPMORGAN CHASE BANK, a New York banking
               corporation ("JPMCB"), as administrative agent (in such capacity,
               the "ADMINISTRATIVE AGENT") and as collateral agent (in such
               capacity, the "COLLATERAL AGENT") for the Lenders and as the
               issuing bank (in such capacity, the "ISSUING BANK").

          WHEREAS the parties hereto have agreed to amend, restate and continue
the Amended and Restated Credit Agreement dated as of July 10, 2001, among the
Borrowers, certain lenders and JPMCB, as Administrative Agent, Collateral Agent
and Issuing Bank, as heretofore amended by an Amendment No. 1 dated as of July
8, 2002, and an Amendment No. 2 dated as of July 30, 2002 (as so amended, the
"EXISTING CREDIT AGREEMENT");

          WHEREAS the Borrowers have requested the Lenders, the Administrative
Agent, the Collateral Agent and the Issuing Bank to continue to extend credit
under the Existing Credit Agreement, as amended and restated hereby, in the form
of (a) Term Loans in an initial aggregate amount of $20,000,000, (b) Revolving
Loans at any time and from time to time during the Revolving Availability Period
in an aggregate principal amount at any time outstanding not in excess of
$55,000,000 or an equivalent amount in Sterling minus the LC Exposure at such
time and (c) Letters of Credit in an aggregate stated amount at any time
outstanding that will not result in the Revolving Exposure exceeding $55,000,000
or the LC Exposure exceeding $15,000,000. The proceeds of the Loans have been
and are to be used for general corporate purposes including, without limitation,
the payments of amounts due under the Existing Credit Agreement, the payment of
amounts due in respect of Litigation Liabilities, refinancing commercial paper
or other borrowings and providing funds for capital expenditures and working
capital. The Letters of Credit have been and are to be used for general
corporate purposes. The Administrative Agent, the Collateral Agent, the Issuing
Bank and the Lenders are willing to amend and restate the Existing Credit
Agreement, the Lenders are willing to extend and continue such credit to the
Borrowers and the Issuing Bank is willing to issue and continue Letters of
Credit for the accounts of the Borrowers, in each case on the terms and subject
to the conditions set forth herein.

          Accordingly, the parties hereto agree as follows:

<Page>

                                                                               2

                             ARTICLE I. DEFINITIONS

          SECTION 1.01.  DEFINED TERMS. As used in this Agreement, the following
terms shall have the meanings specified below:

          "ABR BORROWING" shall mean a Borrowing comprised of ABR Loans.

          "ABR LOAN" shall mean any Loan bearing interest at a rate determined
by reference to the Alternate Base Rate in accordance with the provisions of
Article II.

          "ABR REVOLVING LOAN" shall mean a Revolving Loan that is an ABR Loan.

          "ABR TERM LOAN" shall mean a Term Loan that is an ABR Loan.

          "ADJUSTED CONSOLIDATED INTEREST EXPENSE" shall mean, with respect to
Holdings and its consolidated subsidiaries for any period, (a) Consolidated
Interest Expense for such period, MINUS (b) interest income of Holdings and its
consolidated subsidiaries for such period, determined on a consolidated basis in
accordance with GAAP, MINUS (c) any amounts included in Consolidated Interest
Expense for such period in respect of amortization of (i) discounts on the
payment of settlements with the Department of Justice, (ii) discounts on the
existing Senior Notes and (iii) closing fees incurred in conjunction with
amendments and restatements of the Existing Credit Agreement and this Agreement,
MINUS (d) to the extent included in Consolidated Interest Expense, interest
accrued on amounts payable on the Benefit Equalization Plan, an unfunded senior
management benefit plan.

          "ADJUSTED CONSOLIDATED NET WORTH" shall mean at any date Consolidated
Net Worth at such date MINUS, to the extent not reflected in Consolidated Net
Worth and without duplication, the aggregate amount of (a) all payments made by
Holdings and the Subsidiaries in respect of Litigation Liabilities, (b) all
accounting reserves established by Holdings and the Subsidiaries in respect of
anticipated Litigation Liabilities, (c) all amounts escrowed or otherwise
segregated from the general assets of Holdings and the Subsidiaries to provide
for Litigation Liabilities and (d) all amounts that Holdings and the
Subsidiaries have agreed to or become obligated to pay, but have not yet paid,
pursuant to fines, judgments, settlements or agreements entered into in respect
of Litigation Liabilities, PLUS the sum of (i) restructuring and other
non-recurring charges incurred in any period ending on or before September 30,
2002, (ii) payments and reserves in respect of obligations under the Settlement
Agreements and European Claims incurred in any period ending on or before
December 31, 2002, (iii) up to $25,000,000 in payments made by Holdings and the
Subsidiaries to settle and defend antitrust claims brought by parties that opted
out of the Antitrust Settlement Agreement and antitrust and other claims related
to auctions outside the United States of America, (iv) restructuring charges of
up to $4,500,000 attributable to the fiscal quarter ended December 31, 2002, and
up to an additional $10,000,000 in the aggregate attributable to subsequent
fiscal quarters, and (v) accruals in respect of incentive compensation to the
extent deducted in determining Consolidated Net Income but not then paid in cash
(but subtracting cash payments in respect of such incentive compensation when
paid to the extent not then deducted in determining Consolidated Net Income).

          "ADMINISTRATIVE FEES" shall have the meaning assigned to such term in
Section 2.06(c).

<Page>

                                                                               3

          "ADMINISTRATIVE QUESTIONNAIRE" shall mean an Administrative
Questionnaire in the form of Exhibit B hereto.

          "AFFILIATE" shall mean, as to any person, another person (other than a
subsidiary of such first person) that directly, or indirectly through one or
more intermediaries, Controls or is Controlled by or is under common Control
with such first person.

          "AGENTS" shall mean the Administrative Agent and the Collateral Agent.

          "ALTERNATE BASE RATE" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of
(a) the Prime Rate in effect on such day and (b) the Federal Funds Effective
Rate in effect on such day plus 1/2 of 1%. For purposes hereof, "PRIME RATE"
shall mean the rate of interest per annum publicly announced from time to time
by the Administrative Agent as its prime rate in effect at its principal office
in New York City; each change in the Prime Rate shall be effective on the date
such change is publicly announced as effective. "FEDERAL FUNDS EFFECTIVE RATE"
shall mean, for any day, the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published on the next succeeding Business Day by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for the day of such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it. If for any reason the
Administrative Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Federal
Funds Effective Rate for any reason, including the inability of the
Administrative Agent to obtain sufficient quotations in accordance with the
terms thereof, the Alternate Base Rate shall be determined without regard to
clause (b) of the first sentence of this definition until the circumstances
giving rise to such inability no longer exist.

          "ANTITRUST SETTLEMENT AGREEMENT" shall mean the Sotheby's Settlement
Agreement dated October 27, 2000, entered into by Holdings and Sotheby's, Inc.
in the matter of IN RE AUCTION HOUSES ANTITRUST LITIGATION.

          "ART LOANS" shall mean loans made by the Lending Subsidiaries to
customers of Holdings and the Subsidiaries, to finance the purchase or carrying
of, or in anticipation of the potential sale of, or secured by, works of art.

          "ASSIGNED DOLLAR VALUE" shall mean, in respect of any Borrowing,
Letter of Credit or LC Disbursement denominated in Sterling or Euros, the Dollar
Equivalent thereof determined based upon the applicable Spot Exchange Rate as of
the Denomination Date for such Borrowing, Letter of Credit or LC Disbursement.

          "ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean an assignment and
assumption agreement entered into by a Lender and an assignee, and accepted by
the Administrative Agent and/or Holdings, as required, in the form of Exhibit C
or such other form as shall be approved by the Administrative Agent.

          "AVAILABLE ART LOANS" shall mean the aggregate outstanding principal
amount of all Art Loans, excluding (a) Art Loans that are unsecured, (b) Art
Loans on which interest is no longer accrued, (c) the excess above 70% of the
loan-to-value percentages of Art Loans that are secured or consignor loans, in
each case with loan-to-value percentages greater than 70%, (d) the

<Page>

                                                                               4

excess above 90% of the loan-to-value percentages of Venture Loans with
loan-to-value percentages greater than 90%, (e) to the extent not otherwise
deducted, any Art Loan subject to litigation challenging the validity or
enforceability of such loan or any related documentation or the rights of the
borrower or the lender in the works of art securing such loan, except for any
such Art Loan in respect of which the Required Lenders shall have delivered to
the Administrative Agent a notice stating that such Art Loan shall not be
deducted, (f) any Art Loans for which collateral is not in the possession of a
Lending Subsidiary or a UCC financing statement is not filed, (g) if Venture
Loans constitute more than 20% of Art Loans after deducting (a)-(f) above, the
excess above 20% and (h) an unallocated general reserve of 1% of the average
outstanding amount of Art Loans for the four quarters most recently ended.

          "BOARD" shall mean the Board of Governors of the Federal Reserve
System of the United States.

          "BORROWERS" shall mean Sotheby's Holdings, Inc., Sotheby's, Inc.,
Oatshare Limited, Sotheby's and Sotheby's Global Trading GmbH.

          "BORROWING" shall mean a group of Loans of a single Type made by the
Lenders.

          "BORROWING BASE" shall mean, at any time, an amount equal to the sum
of (a) 85% of Available Art Loans that are (i) owned by Lending Subsidiaries
that are Domestic Subsidiaries (and are not Excluded Subsidiaries) and (ii)
subject to perfected, first priority pledges or security interests in favor of
the Collateral Agent created under the Security Documents to secure the
Obligations, as contemplated by the definition of "Collateral and Guarantee
Requirement", (b) the lesser of (i) the aggregate outstanding principal amount
of Borrowings of the UK Borrowers and (ii) 85% of Available Art Loans that are
(A) owned by Sotheby's Financial Services Ltd. and (B) subject to perfected,
first priority pledges or security interests in favor of the Collateral Agent
created under the Security Documents to secure the Obligations of the UK
Borrowers, as contemplated by the definition of "Collateral and Guarantee
Requirement", (c) the lesser of (i) the aggregate outstanding amount of
borrowings of the Swiss Borrower and (ii) 85% of Available Art Loans that are
(A) owned by the Swiss Borrower and (B) subject to perfected, first priority
pledges or security interests in favor of the Collateral Agent to secure the
Obligations of the Swiss Borrower, as contemplated by the definition of
"Collateral and Guarantee Requirement" and (d) an amount equal to the lesser of
(i) 15% of Consolidated Net Tangible Assets for the previous fiscal quarter and
(ii) US$20,000,000.

          "BORROWING BASE CERTIFICATE" shall mean a certificate in a form
approved by the Administrative Agent, together with all attachments contemplated
thereby.

          "BORROWING REQUEST" shall mean a request made pursuant to Section 2.04
in the form of Exhibit A.

          "BUSINESS DAY" shall mean any day (other than a day which is a
Saturday, Sunday or legal holiday in the State of New York) on which banks are
open for business in New York City; PROVIDED, HOWEVER, that, when used in
connection with a Eurocurrency Loan, the term "BUSINESS DAY" shall also exclude
any day on which banks are not open for dealings in deposits in Dollars or
Sterling, as the case may be, in the London interbank market.

          "CAPITAL LEASE OBLIGATIONS" of any person shall mean the obligations
of such person to pay rent or other amounts under any lease of (or other
arrangement conveying the right

<Page>

                                                                               5

to use) real or personal property, or a combination thereof, which obligations
are required to be classified and accounted for as capital leases on a balance
sheet of such person under GAAP and, for the purposes of this Agreement, the
amount of such obligations at any time shall be the capitalized amount thereof
at such time determined in accordance with GAAP.

          A "CHANGE IN CONTROL" shall be deemed to have occurred if (a) A.
Alfred Taubman shall sell, transfer or otherwise dispose of shares of capital
stock of Holdings and, following such sale, transfer or other disposition shall
not beneficially own, directly or indirectly, shares of capital stock of
Holdings representing more than 50% of the aggregate ordinary voting power
represented by all the issued and outstanding capital stock of Holdings, unless
the Lenders shall have been notified, at least 20 days prior to such sale,
transfer or other disposition, of the identity of the intended transferee and
all the Lenders have delivered to Holdings a notice of their approval of such
transferee; or (b) a majority of the seats (other than vacant seats) on the
Board of Directors of Holdings shall be occupied by persons other than
Continuing Directors.

          "CLOSING DATE" shall mean the date of this Agreement.

          "CODE" shall mean the Internal Revenue Code of 1986, as the same may
be amended from time to time.

          "COLLATERAL" shall mean any and all "Collateral", as defined in any
applicable Security Document.

          "COLLATERAL AND GUARANTEE REQUIREMENT" shall mean, at any time, that
the following requirements shall be satisfied at and as of such time:

               (a)  a Subsidiary Guarantee Agreement (or a supplement thereto)
          shall have been executed by each Domestic Subsidiary existing at such
          time, other than any Borrower, shall have been delivered to the
          Collateral Agent and shall be in full force and effect;

               (b)  one or more Pledge Agreements (or supplements thereto) shall
          have been duly executed and delivered by Holdings, each Domestic
          Subsidiary existing at such time and Sotheby's Financial Services
          Ltd., and there shall have been duly and validly pledged to the
          Collateral Agent thereunder, for the ratable benefit of the holders of
          the Obligations (and the holders of the Senior Notes, to the extent
          required under the Senior Note Indenture after giving effect to
          baskets and exceptions provided for therein in a manner satisfactory
          to the Collateral Agent) (A) all the outstanding Equity Interests
          (other than Equity Interests in any Foreign Subsidiary) owned directly
          by Holdings or any Domestic Subsidiary, (B) 65% of the outstanding
          voting Equity Interests, and 100% of the outstanding non-voting Equity
          Interests (or, in each case, such lesser percentages as shall be owned
          by Holdings and the Domestic Subsidiaries) in each Foreign Subsidiary
          owned in whole or in part directly by Holdings or any Domestic
          Subsidiary, (C) all Art Loans and other Indebtedness owed to Holdings
          or any Domestic Subsidiary and (D) solely as security for the
          Obligations of the UK Borrowers, all Art Loans and other Indebtedness
          owed to Sotheby's Financial Services Ltd., and all steps required
          under applicable law or reasonably requested by the Collateral Agent
          to ensure that the Pledge Agreements create valid, first priority,
          perfected Liens on all the Collateral subject thereto shall have been
          taken to the

<Page>

                                                                               6

          satisfaction of the Collateral Agent, it being understood that to the
          extent effective under applicable law, perfection on the Art Loans
          will be accomplished by means of filings under the Uniform Commercial
          Code or other applicable statutes, PROVIDED that if the Collateral
          Agent shall deliver to Holdings a notice stating that the Collateral
          Agent believes (x) that the financial condition of Holdings and the
          Subsidiaries has deteriorated and (y) that the interests of the
          Lenders would be more effectively protected if the Collateral Agent
          possessed the instruments evidencing the Art Loans, Holdings will
          cause each Lending Subsidiary promptly to deliver such instruments to
          the Collateral Agent, accompanied by undated instruments of transfer
          satisfactory to the Collateral Agent and executed in blank by the
          appropriate Lending Subsidiary;

               (c)  at any time when Sotheby's Global Trading GmbH shall have
          outstanding Art Loans that are or are to be taken into account in
          determining the Borrowing Base, (A) the form of the documentation
          therefor shall have been approved by the Collateral Agent, (B) a
          Pledge Agreement in form and substance reasonably satisfactory to the
          Collateral Agent shall have been duly executed by Sotheby's Global
          Trading GmbH and there shall be duly and validly pledged to the
          Collateral Agent thereunder, for the ratable benefit of the holders of
          the Obligations of the Swiss Borrower, all Art Loans owed to the Swiss
          Borrower and (C) all steps required under applicable law or reasonably
          requested by the Collateral Agent to ensure that such Pledge Agreement
          creates valid, first priority, perfected Liens on all the Collateral
          subject thereto shall have been taken to the satisfaction of the
          Collateral Agent;

               (d)  the Security Agreement (or supplements thereto) (and, with
          respect to any trademark, the Trademark Security Agreement) shall have
          been duly executed and delivered by Holdings and each Domestic
          Subsidiary existing at such time and there shall have been subjected
          to security interests in favor of the Collateral Agent thereunder, for
          the ratable benefit of the holders of the Obligations (and the holders
          of the Senior Notes, to the extent required under the Senior Note
          Indenture after giving effect to baskets and exceptions provided for
          therein in a manner satisfactory to the Collateral Agent), all the
          tangible and intangible assets of Holdings and each Domestic
          Subsidiary (including all Art Loans and other Indebtedness owed to
          Holdings or any Domestic Subsidiary) in which security interests can
          be created under the Uniform Commercial Code as in effect in the State
          of New York or other applicable law, and all documents and
          instruments, including UCC financing statements, required by law or
          reasonably requested by the Collateral Agent to be filed, registered
          or recorded to create and perfect the Liens intended to be created by
          the Security Agreement and the Trademark Security Agreement shall have
          been filed, registered or recorded (or arrangements satisfactory to
          the Collateral Agent for such filing, registration or recording shall
          have been made);

               (e)  the Collateral Agent shall have received (A) counterparts of
          a Mortgage with respect to each Mortgaged Property, duly executed and
          delivered by the record owner of such Mortgaged Property, (B) at the
          reasonable request of the Collateral Agent or the Required Lenders, in
          the case of each Mortgaged Property with a book or fair market value
          in excess of $1,000,000, a policy or policies of title insurance
          issued by a nationally recognized title insurance

<Page>

                                                                               7

          company insuring the Lien of each such Mortgage as a valid first Lien
          on the Mortgaged Property described therein, free of any other Liens
          except as expressly permitted by Section 6.01, together with
          endorsements, coinsurance and reinsurance and (C) such surveys,
          abstracts, legal opinions and other documents as the Collateral Agent
          or the Required Lenders may reasonably request with respect to any
          such Mortgage or Mortgaged Property;

               (f)  the Indemnity, Subrogation and Contribution Agreement (or a
          supplement thereto) shall have been executed by Holdings and each
          Domestic Subsidiary party to the Guarantee Agreement or any Security
          Document, shall have been delivered to the Collateral Agent and shall
          be in full force and effect; and

               (g)  each Borrower shall have obtained all consents and approvals
          required to be obtained by it in connection with the execution and
          delivery of all Security Documents to which it is a party, the
          performance of its obligations thereunder and the creation by it of
          the Liens provided for therein.

The foregoing definition shall not require the creation or perfection of pledges
of or security interests in (a) the Specified Assets or (b) particular assets of
Holdings and the Subsidiaries if and for so long as, in the judgment of the
Administrative Agent with respect to this clause (b), the cost or effort to
create or perfect such pledges or security interests in such assets, or the
effort required to do so, shall be excessive in view of the benefits to be
obtained by the Lenders therefrom. The Administrative Agent may grant extensions
of time for the perfection of security interests in or the obtaining of title
insurance with respect to particular assets (including extensions beyond the
Closing Date for the perfection of security interests in assets of Holdings and
the Subsidiaries on such date) where it determines that perfection cannot be
accomplished without undue effort or expense by the time or times at which it
would otherwise be required by this Agreement or the Security Documents.

          "COMMITMENT" shall mean a Revolving Commitment or a Term Commitment,
as applicable.

          "COMMITMENT FEE" shall have the meaning assigned to such term in
Section 2.06(a).

          "CONSOLIDATED COVERAGE RATIO" shall mean, with respect to Holdings and
its consolidated subsidiaries for any period, the ratio of (a) Consolidated
EBITDA for such period to (b) Adjusted Consolidated Interest Expense for such
period.

          "CONSOLIDATED EBITDA" shall mean, with respect to Holdings and its
consolidated subsidiaries for any period, (a) the sum, without duplication, of
(i) Consolidated Net Income for such period, (ii) Consolidated Interest Expense
for such period, (iii) all Federal, state, local and foreign income taxes
deducted in determining such Consolidated Net Income, (iv) depreciation and
amortization deducted in determining such Consolidated Net Income, (v) for the
period ending December 31, 2002, (A) payments and reserves in respect of
obligations under the Settlement Agreements and European Claims and (B)
restructuring and other non-recurring charges, both to the extent deducted in
determining Consolidated Net Income, (vi) up to $25,000,000 in payments made by
the Holdings and its consolidated subsidiaries to settle or defend antitrust
claims brought by parties that opted out of the Antitrust Settlement Agreement

<Page>

                                                                               8

and antitrust and other claims related to auctions outside the United States to
the extent deducted in determining Consolidated Net Income, (vii) restructuring
and other charges of up to $4,500,000 attributable to the fiscal quarter ended
December 31, 2002, and up to an additional $10,000,000 in the aggregate
attributable to subsequent fiscal quarters, (viii) accruals in respect of
retention bonuses paid or to be paid during the fiscal years ending December 31,
2002 and 2003 and (ix) accruals in respect of incentive compensation to the
extent deducted in determining Consolidated Net Income but not then paid in cash
MINUS (b) any tax benefits reflected in such Consolidated Net Income MINUS (c)
cash payments in respect of incentive compensation when paid to the extent not
then deducted in determining Consolidated Net Income.

          "CONSOLIDATED INTEREST EXPENSE" shall mean, with respect to Holdings
and its consolidated subsidiaries for any period, the consolidated gross
interest expense of Holdings and its consolidated subsidiaries for such period
determined on a consolidated basis in accordance with GAAP consistently applied.

          "CONSOLIDATED LEVERAGE RATIO" shall mean, as to Holdings and its
consolidated subsidiaries, the ratio of (a) the consolidated Indebtedness of
Holdings and its consolidated subsidiaries to (b) the sum of the consolidated
Indebtedness of Holdings and its consolidated subsidiaries and Adjusted
Consolidated Net Worth.

          "CONSOLIDATED NET INCOME" shall mean, for Holdings and its
consolidated subsidiaries for any period, the aggregate net income (or net
deficit) of such persons determined on a consolidated basis for such period in
accordance with GAAP on a basis consistent with that used in preparing the
Financial Statements referred to in Section 3.03; PROVIDED, HOWEVER, that in
computing "Consolidated Net Income", any extraordinary gains and losses and any
non-recurring losses relating to the Litigation Liabilities shall be excluded.

          "CONSOLIDATED NET TANGIBLE ASSETS" shall mean the aggregate amount of
assets (less applicable reserves and other properly deductible items) after
deducting therefrom (a) all current liabilities other than the current portion
of the capital lease obligation associated with the York Avenue Property, (b)
all goodwill, trade names, trademarks, patents, unamortized debt discount and
expense and other like intangibles, (c) the aggregate outstanding principal
amount of all Art Loans, (d) the book value of the capital lease asset related
to the York Avenue Property and (e) Net Post-2002 Investment.

          "CONSOLIDATED NET WORTH" shall mean at any date shareholders' equity,
as shown on a consolidated balance sheet of Holdings and its Subsidiaries
prepared in accordance with GAAP at such date.

          "CONTINUING DIRECTOR" shall mean any Director of Holdings that shall
have been a Director on the Closing Date or shall have been nominated or
appointed by a majority of the then Continuing Directors.

          "CONTROL" shall mean 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, and the terms "CONTROLLING" and "CONTROLLED" shall have meanings
correlative thereto.

          "DEFAULT" shall mean any event or condition which upon notice, lapse
of time or both would constitute an Event of Default.

<Page>

                                                                               9

          "DENOMINATION DATE" shall mean (a) in relation to any Sterling
Borrowing, the date that is three Business Days before the date such Borrowing
is made, (b) in relation to any Letter of Credit denominated in Sterling or
Euro, the most recent date that is (i) the date three Business Days before the
date of issuance or renewal of such Letter of Credit (the "INITIAL VALUATION
DATE") or (ii) a date corresponding to the Initial Valuation Date in the third,
sixth or ninth month following the month in which the Initial Valuation Date
shall have occurred and (c) in relation to any LC Disbursement, the Denomination
Date applicable to the Letter of Credit under which such LC Disbursement shall
have been made.

          "DOLLAR EQUIVALENT" shall mean (a) with respect to any amount in US
Dollars, such amount, and (b) with respect to an amount of Sterling or Euro on
any date, (i) for any Loan, the amount of Dollars that may be purchased with
such amount of such Sterling at the Spot Exchange Rate with respect to Sterling
on such date and (ii) for any Letter of Credit, the Dollar equivalent of the
face amount of such Letter of Credit determined at the most recent of (x) the
exchange rate at the date such Letter of Credit was issued and (y) the exchange
rate at the three month anniversary of such date.

          "DOLLARS" or "$" shall mean lawful money of the United States of
America.

          "DOMESTIC SUBSIDIARIES" shall mean all Subsidiaries incorporated or
organized under the laws of the United States of America, any State thereof or
the District of Columbia, except for Excluded Subsidiaries.

          "EFFECTIVE DATE" shall mean the date on which all the conditions
specified in Section 4.01 are satisfied (or waived in accordance with Section
10.08).

          "EQUITY INTERESTS" shall mean any shares of capital stock, partnership
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity ownership interests in a person, and any
warrants, options or other rights to acquire any such equity ownership
interests.

          "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as the same may be amended from time to time.

          "ERISA AFFILIATE" shall mean any trade or business (whether or not
incorporated) that together with the Borrowers is treated as a single employer
under Section 414 of the Code.

          "EURO" or "EURO " means the single currency of the European Union as
constituted by the treaty establishing the European Community being the Treaty
of Rome, as amended from time to time and as referred to in the legislative
measures of the European Union for the introduction of, changeover to or
operation of the Euro in one or more member states.

          "EURO EQUIVALENT" shall mean, with respect to an amount of Dollars on
any date, the amount of Euros that may be purchased with such amount of Dollars
at the Spot Exchange Rate on such date.

          "EUROCURRENCY BORROWING" shall mean a Borrowing comprised of
Eurocurrency Loans.

<Page>

                                                                              10

          "EUROCURRENCY LOAN" shall mean any Loan bearing interest at a rate
determined by reference to the LIBO Rate in accordance with the provisions of
Article II.

          "EUROCURRENCY REVOLVING BORROWING" shall mean a Revolving Borrowing
comprised of Eurocurrency Revolving Loans.

          "EUROCURRENCY REVOLVING LOAN" shall mean any Revolving Loan that is a
Eurocurrency Loan.

          "EUROCURRENCY TERM BORROWING" shall mean a Term Borrowing comprised of
Eurocurrency Term Loans.

          "EUROCURRENCY TERM LOAN" shall mean any Term Loan that is a
Eurocurrency Loan.

          "EUROPEAN CLAIMS" shall mean (a) the fine imposed by the European
Commission pursuant to a decision dated October 30, 2002, relating to breaches
of the competition provisions of the EC Treaty and (b) claims asserted in
antitrust lawsuits alleging violations of Federal or state antitrust laws in
connection with auctions outside the United States.

          "EVENT OF DEFAULT" shall have the meaning assigned to such term in
Article VII.

          "EXCLUDED SUBSIDIARIES" shall mean those subsidiaries listed on
Schedule 1.01C that do not have assets greater than $200,000 or earnings greater
than $50,000 for the period of four fiscal quarters most recently ended.

          "FEES" shall mean the Commitment Fee, the Administrative Fees, the LC
Participation Fees and the Issuing Bank Fees.

          "FINANCIAL OFFICER" of any corporation shall mean the Chief Financial
Officer, principal accounting officer, Treasurer or Controller of such
corporation.

          "FOREIGN SUBSIDIARIES" shall mean all Subsidiaries other than Domestic
Subsidiaries or Excluded Subsidiaries.

          "GAAP" shall mean United States generally accepted accounting
principles, applied on a basis consistent with the financial statements referred
to in Section 3.03.

          "GOVERNMENTAL AUTHORITY" shall mean any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body.

          "GUARANTEE" of or by any person shall mean any obligation, contingent
or otherwise, of such person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other person (the "PRIMARY OBLIGOR") in any
manner, whether directly or indirectly, and including any obligation of such
person, direct or indirect, (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or to purchase (or to advance
or supply funds for the purchase of) any security for the payment of such
Indebtedness, (b) to purchase property, securities or services for the purpose
of assuring the owner of such Indebtedness of the payment of such Indebtedness
or (c) to maintain working capital, equity capital or other financial statement
condition or liquidity of the primary obligor so

<Page>

                                                                              11

as to enable the primary obligor to pay such Indebtedness; PROVIDED, HOWEVER,
that the term Guarantee shall not include endorsements for collection or
deposit, or guarantees in the ordinary course of business including, without
limitation, guarantees by the Borrowers to consignors of minimum prices in
connection with sales of property.

          "GUARANTOR" shall mean the Borrowers (other than Sotheby's Global
Trading GmbH) in their capacity as guarantors under Section 9.01, except that
Oatshare Limited and Sotheby's will not be Guarantors in respect of any
Obligations of Holdings, Sotheby's, Inc. and Sotheby's Global Trading GmbH.

          "INDEBTEDNESS" of any person shall mean, without duplication, (a) all
obligations of such person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such person
upon which interest charges are customarily paid, (d) all obligations of such
person under conditional sale or other title retention agreements relating to
property or assets purchased by such person, (e) all obligations of such person
issued or assumed as the deferred purchase price of property or services, (f)
all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on property owned or acquired by such person, whether or not the
obligations secured thereby have been assumed, (g) all Guarantees by such person
of Indebtedness of others, (h) all Capital Lease Obligations of such person, (i)
all obligations of such person in respect of interest rate protection
agreements, foreign currency exchange agreements or other interest or exchange
rate hedging arrangements and (j) all obligations of such person as an account
party in respect of letters of credit and bankers' acceptances; PROVIDED,
HOWEVER, that Indebtedness shall not include trade accounts payable in the
ordinary course of business (whether or not any such trade accounts have terms
providing a discount if paid within a certain time or an interest factor if not
paid within a certain time), and for purposes of determining compliance with the
covenants contained in Sections 6.02, 6.07 and 6.09, Indebtedness will not
include the items referred to in (i) and (j) above. The Indebtedness of any
person shall include the Indebtedness of any partnership in which such person is
a general partner to the extent that the Indebtedness of such partnership is
attributed to such person in accordance with GAAP.

          "INDEMNITY, SUBROGATION AND CONTRIBUTION AGREEMENT" shall mean the
Indemnity, Subrogation and Contribution Agreement dated March 10, 2000 among
Holdings, the Subsidiary Guarantors (as defined therein) and JPMCB.

          "INTEREST ELECTION REQUEST" shall mean a request by the Borrower to
convert or continue a Borrowing in accordance with Section 2.05.

          "INTEREST PAYMENT DATE" shall mean, with respect to any Loan, the last
day of each Interest Period applicable thereto and, in the case of a
Eurocurrency Loan with an Interest Period of more than three months' duration,
each day that would have been an Interest Payment Date for such Loan had
successive Interest Periods of three months' duration or 90 days duration, as
the case may be, been applicable to such Loan and, in addition, the date of any
conversion of such Loan to a Loan of a different Type.

          "INTEREST PERIOD" shall mean (a) as to any Eurocurrency Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the last
day) in the calendar month that is 1, 2, 3 or 6 months thereafter, as the
applicable Borrower may elect and (b) as to any ABR

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                                                                              12

Borrowing, a period commencing on the date of such Loan and ending on the
earlier of the next succeeding March 31, June 30, September 30 and December 31
or the date on which such Loan is repaid or prepaid; PROVIDED, HOWEVER, that (i)
if any Interest Period would end on a day other than a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless, in
the case of Eurocurrency Loans only, such next succeeding Business Day would
fall in the next calendar month, in which case such Interest Period shall end on
the next preceding Business Day and (ii) no Interest Period shall end later than
the Maturity Date. Interest shall accrue from and including the first day of an
Interest Period to but excluding the last day of such Interest Period.

          "ISSUING BANK" means JPMCB, in its capacity as the issuer of Letters
of Credit hereunder, and its successors in such capacity as provided in Section
2.03(i). The Issuing Bank may, in its discretion, arrange for one or more
Letters of Credit to be issued by Affiliates of the Issuing Bank, in which case
the term "Issuing Bank" shall include any such Affiliate with respect to Letters
of Credit issued by such Affiliate.

          "ISSUING BANK FEES" shall have the meaning assigned to such term in
Section 2.06(b).

          "LC DISBURSEMENT" means a payment made by the Issuing Bank pursuant to
a Letter of Credit.

          "LC EXPOSURE" shall mean, at any time, the sum of (a) the aggregate
undrawn amount of all outstanding Letters of Credit denominated in Dollars at
such time plus (b) the aggregate amount of all LC Disbursements denominated in
Dollars that have not yet been reimbursed by or on behalf of the applicable
Borrowers at such time plus (c) the sum of the Assigned Dollar Values of the
undrawn amounts of all outstanding Letters of Credit denominated in Sterling or
Euro at such time plus (d) the sum of the Assigned Dollar Values of all LC
Disbursements denominated in Sterling or Euro that have not yet been reimbursed
by or on behalf of the applicable Borrowers at such time. The LC Exposure of any
Lender at any time shall be its Revolving Percentage of the total LC Exposure at
such time.

          "LC PARTICIPATION FEE" shall have the meaning assigned to such term in
Section 2.06(b).

          "LENDING SUBSIDIARIES" shall mean Sotheby's Financial Services, Inc.,
Sotheby's Financial Services California, Inc., Oberon Inc., Theta Inc.,
Sotheby's Ventures LLC, Sotheby's Financial Services Limited, Sotheby's
Aktiengesellschaft and Sotheby's Global Trading GmbH.

          "LETTER OF CREDIT" means (i) any letter of credit issued pursuant to
this Agreement and (ii) the existing letters of credit listed on Schedule 1.01D.

          "LIBO RATE" shall mean, with respect to any Eurocurrency Borrowing for
any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to the rate at which deposits in the currency in
which such Borrowing is denominated approximately equal in principal amount to
the Loan of the Administrative Agent, in its capacity as a Lender (or, if the
Administrative Agent is not a Lender in respect of such Borrowing, then the Loan
of the Lender in respect of such Borrowing with the greatest Loan amount),
included in such Eurocurrency Borrowing, and for a maturity comparable to such
Interest Period are offered to the principal London office of the Administrative
Agent in immediately available funds in the

<Page>

                                                                              13

London interbank market at approximately 11:00 a.m., London time, on the date
that is two Business Days prior to the commencement of such Interest Period.

          "LIEN" shall mean with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, encumbrance, charge or security interest in or on such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement relating to such asset and
(c) in the case of securities, any purchase option, call or similar right of a
third party with respect to such securities.

          "LITIGATION LIABILITIES" shall mean (a) liabilities (whether actual or
asserted), claims, judgments, settlements and expenses resulting from (a) the
antitrust investigation by the United States Department of Justice or related
antitrust investigations by other Governmental Authorities, (b) antitrust
litigation, whether commenced by Governmental Authorities or other persons,
arising out of the matters that are or were the subject of any such
investigation, (c) related shareholder derivative lawsuits and claims and (d)
related securities lawsuits and claims.

          "LOAN" shall mean a Revolving Loan or a Term Loan, whether made as a
Eurocurrency Loan or an ABR Loan, as permitted hereby.

          "LOAN DOCUMENTS" shall mean this Agreement, including all Exhibits and
Schedules, and the Security Documents.

          "LONDON PROPERTIES" shall mean the land, buildings and improvements
constituting Sotheby's sales rooms and offices owned or leased by Sotheby's and
located on or near 34-35 New Bond Street, London, England.

          "MARGIN STOCK" shall have the meaning given such term under Regulation
U.

          "MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" shall mean a
materially adverse change in, or a materially adverse effect on, the business,
assets, operations or financial condition of Holdings and its Subsidiaries taken
as a whole (other than any such change or effect resulting from the Litigation
Liabilities to the extent no Default shall have resulted therefrom under Section
6.08 or any other provision of this Agreement).

          "MATERIAL SUBSIDIARY" shall mean at any time (a) each Subsidiary that
is a Borrower and (b) any other Subsidiary that either (i) has a Subsidiary Net
Worth at such time in excess of 2.5% of Consolidated Net Worth at such time or
(ii) has consolidated assets in excess of 5% of the consolidated assets of
Holdings and its consolidated subsidiaries at such time.

          "MATURITY DATE" shall mean February 6, 2004.

          "MORTGAGE" shall mean one or more mortgages or deeds of trust in form
and substance satisfactory to Holdings and the Collateral Agent.

          "MORTGAGED PROPERTY" shall mean each parcel of real property owned by
Holdings or any Domestic Subsidiary on the date hereof or at any time hereafter
and the improvements thereto.

          "MULTIEMPLOYER PLAN" shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA to which the Borrowers or any ERISA Affiliate (other
than one considered

<Page>

                                                                              14

an ERISA Affiliate only pursuant to subsection (m) or (o) of Code Section 414)
is making or accruing an obligation to make contributions, or has within any of
the preceding five plan years made or accrued an obligation to make
contributions.

          "NET POST-2002 INVESTMENT" means, as to all Foreign Subsidiaries, the
sum of (i) all investments in and loans and advances to Foreign Subsidiaries by
Holdings or any Domestic Subsidiary, PLUS (ii) all repayments of loans and
advances and all dividends, returns of capital and other distributions by
Holdings or any Domestic Subsidiary to Foreign Subsidiaries, MINUS (iii) all
investments in and loans and advances to Holdings or any Domestic Subsidiary by
Foreign Subsidiaries, MINUS (iv) all repayments of loans or advances and all
dividends, returns of capital and other distributions by Foreign Subsidiaries to
Holdings or any Domestic Subsidiary, in each case after December 31, 2002;
PROVIDED that the Net Post-2002 Investment in all Foreign Subsidiaries shall in
no event be less than zero.

          "OBLIGATIONS" shall mean (a) the due and punctual payment by the
Borrowers of the principal of and interest (including interest accruing during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Loans, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, (b) each payment required to be made
by the Borrowers under this Agreement in respect of any Letter of Credit, when
and as due, including payments in respect of reimbursement of disbursements and
obligations to provide cash collateral, (c) all other monetary obligations,
including fees, costs, expenses and indemnities, whether primary, secondary,
direct, contingent, fixed or otherwise (including monetary obligations incurred
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding), of
Holdings and the Subsidiaries to the Lenders under this Agreement and the other
Loan Documents, (d) the due and punctual payment and performance of all
covenants, agreements, obligations and liabilities of the Borrowers, monetary or
otherwise, under or pursuant to this Agreement and the other Loan Documents and
(e) the due and punctual payment of all monetary obligations of Holdings and the
Subsidiaries referred to in Schedule 1.01A hereto.

          "OBLIGATION CURRENCY" shall have the meaning assigned to such term in
Section 10.13.

          "OTHER TAXES" shall have the meaning assigned to such term in Section
2.19(b).

          "PARTICIPANT" has the meaning set forth in Section 10.04.

          "PBGC" shall mean the Pension Benefit Guaranty Corporation referred to
and defined in ERISA.

          "PERFECTION CERTIFICATE" shall mean a perfection certificate in form
and substance satisfactory to Holdings and the Collateral Agent, substantially
in the form of Exhibit E hereto.

          "PERSON" shall mean any natural person, corporation, business trust,
joint venture, association, company, partnership, government (or any agency or
political subdivision thereof) or other entity.

          "PLAN" shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code

<Page>

                                                                              15

which is maintained for current or former employees, or any beneficiary thereof,
of the Borrowers or any ERISA Affiliate.

          "PLEDGE AGREEMENTS" shall mean (i) the Amended and Restated Pledge
Agreement dated as of July 10, 2001, as amended by the Third Amendment, among
Holdings, the Subsidiary Pledgors (as defined therein) and the Collateral Agent,
a composite conformed copy of which is included as Exhibit G hereto, (ii) the UK
Securities Mortgage, (iii) the UK Debenture, (iv) the Swiss Securities Mortgage
and (v) any future pledge agreement among Holdings, Sotheby's Global Trading
GmbH and the Collateral Agent.

          "PURCHASE AND SALE AGREEMENT" shall mean the Purchase and Sale
Agreement dated as of December 16, 2002, between SIBS, LLC and RFR Holding Corp.
in the form heretofore delivered to the Administrative Agent and the Lenders.

          "REGISTER" shall have the meaning given such term in Section 10.04(d).

          "REGULATION D" shall mean Regulation D of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.

          "REGULATION U" shall mean Regulation U of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.

          "REGULATION X" shall mean Regulation X of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.

          "RELATED FUND" shall mean, with respect to any Lender which is a fund
that invests in loans, any other fund that invests in loans that is managed by
the same investment advisor as such Lender or by an Affiliate of such Lender or
such investment advisor.

          "REPORTABLE EVENT" shall mean any reportable event as defined in
Section 4043(b) of ERISA or the regulations issued thereunder with respect to a
Plan (other than a Plan maintained by an ERISA Affiliate that is considered an
ERISA Affiliate only pursuant to subsection (m) or (o) of Code Section 414).

          "REQUIRED LENDERS" shall mean, at any time, Lenders having Revolving
Exposures, outstanding Term Loans and unused Commitments representing more than
66 K% of the Total Revolving Exposures, outstanding Term Loans and unused
Commitments at such time or, after the Commitments shall have been terminated or
for purposes of acceleration pursuant to paragraph (a) of Article VII, Lenders
holding Loans and LC Exposures representing more than 66 K% of the aggregate
principal amount of the Loans and LC Exposures outstanding. For purposes of
determining the Required Lenders, any Loans or Letters of Credit denominated in
Sterling or Euros, as applicable, shall be translated into Dollars at the Spot
Exchange Rate in effect on the applicable Denomination Date.

          "RESPONSIBLE OFFICER" of any corporation shall mean any executive
officer or Financial Officer of such corporation and any other officer or
similar official thereof responsible for the administration of the obligations
of such corporation in respect of this Agreement.

          "RESTRICTED PAYMENT" shall mean any dividend or other distribution
(whether in cash, securities or other property) with respect to any Equity
Interests in Holdings or any

<Page>

                                                                              16

Subsidiary, or any payment (whether in cash, securities or other property),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of any Equity
Interests in Holdings or any Subsidiary.

          "REVOLVING AVAILABILITY PERIOD" shall mean the period from and
including the Effective Date to but excluding the earlier of the Maturity Date
and the date of termination of the Revolving Commitments.

          "REVOLVING BORROWING" shall mean a Borrowing comprised of Revolving
Loans.

          "REVOLVING COMMITMENT" shall mean, with respect to any Lender at any
time, the commitment (if any) of such Lender set forth on Schedule 2.01 (or in
the Assignment and Acceptance pursuant to which such Lender shall have assumed
its Revolving Commitment) to make Revolving Loans pursuant to Section 2.01(b),
as such commitment may be reduced from time to time pursuant to Section 2.11(c)
or pursuant to assignments by or to such Lender pursuant to Section 10.04.

          "REVOLVING EXPOSURE" shall mean, with respect to any Lender at any
time, the sum of (a) the aggregate principal amount at such time of all
outstanding Revolving Loans of such Lender denominated in Dollars, (b) the
Assigned Dollar Value at such time of the aggregate principal amount at such
time of all outstanding Revolving Loans of such Lender that are Sterling Loans
and (c) such Lender's LC Exposure at such time.

          "REVOLVING LENDER" shall mean a Lender with a Revolving Commitment or,
if the Revolving Commitments have terminated or expired, a Lender with a
Revolving Exposure.

          "REVOLVING LOAN" shall mean a Loan made by a Revolving Lender pursuant
to Section 2.04. Each Revolving Loan denominated in Dollars shall be a
Eurocurrency Revolving Loan or an ABR Revolving Loan, and each Revolving Loan
denominated in Sterling shall be a Eurocurrency Revolving Loan.

          "REVOLVING PERCENTAGE" shall mean, with respect to any Revolving
Lender, the percentage of the total Revolving Commitment represented by such
Lender's Revolving Commitment. If the Revolving Commitments have terminated or
expired, the Revolving Percentages shall be determined based upon the Revolving
Exposure of such Lender.

          "SALE AND LEASEBACK" means the sale of the York Avenue Property by
SIBS, LLC, a wholly owned subsidiary of Holdings, to RFR Holding Corp. or an
affiliate of RFR Holding Corp. for gross proceeds (including the assumption of
Term Loans under and as defined in the Existing Credit Agreement) of not less
than $170,000,000, and the substantially simultaneous lease of the York Avenue
Property by RFR Holding Corp. or an affiliate of RFR Holding Corp. to Sotheby's,
Inc., all pursuant to and on substantially the terms set forth in the Purchase
and Sale Agreement.

          "SECURITY AGREEMENT" shall mean the Amended and Restated Security
Agreement, dated as of July 10, 2001, as amended by the Third Amendment, among
Holdings, the Subsidiary Guarantors (as defined therein) and JPMCB, a composite
conformed copy of which is included as Exhibit H hereto.

<Page>

                                                                              17

          "SECURITY DOCUMENTS" shall mean the Security Agreement, the Pledge
Agreements, the Trademark Security Agreement, the Mortgages and each other
security agreement or other instrument or document executed and delivered
pursuant to Section 5.09.

          "SENIOR NOTES" shall mean Holdings' 6 O% Notes due 2009 in an
aggregate principal amount outstanding on the date hereof of $100,000,000.

          "SENIOR NOTE INDENTURE" shall mean the Indenture dated as of February
5, 1999, governing the Senior Notes, as amended, supplemented or otherwise
modified from time to time.

          "SETTLEMENT AGREEMENTS" shall mean (a) the Antitrust Settlement
Agreement (b) the Stipulation and Agreement of Settlement dated November 7,
2000, entered into by Holdings and Sotheby's, Inc. in IN RE SOTHEBY'S HOLDINGS,
INC. SECURITIES LITIGATION and (c) the Plea Agreement dated October 5, 2000,
between Holdings and the United States of America.

          "SPECIFIED ASSETS" shall mean those assets listed on Schedule 1.01B.

          "SPOT EXCHANGE RATE" shall mean, on any day, (a) with respect to
Sterling or Euro in relation to Dollars, the spot rate at which Dollars are
offered on such day by JPMorgan Europe Limited in London for Sterling or Euro,
as applicable, at approximately 11:00 a.m. (London time), and (b) with respect
to Dollars in relation to Sterling or Euro, the spot rate at which Sterling or
Euro, as applicable, is offered on such day by JPMorgan Europe Limited in London
for Dollars at approximately 11:00 a.m. (London time). For purposes of
determining the Spot Exchange Rate in connection with a Sterling Borrowing, such
Spot Exchange Rate shall be determined as of the Denomination Date for such
Borrowing with respect to transactions in Sterling that will settle on the date
of such Borrowing. Each determination of a Spot Exchange Rate will be made by
the Administrative Agent and will be conclusive absent manifest error.

          "STATUTORY RESERVE RATE" shall mean, with respect to any currency, a
fraction (expressed as a decimal), the numerator of which is the number one and
the denominator of which is the number one minus the aggregate of the maximum
reserve, liquid asset or similar percentages (including any marginal, special,
emergency or supplemental reserves) expressed as a decimal established by any
Governmental Authority of the United States or of the jurisdiction of such
currency to which banks in such jurisdiction are subject for any category of
deposits or liabilities customarily used to fund loans in such currency or by
reference to which interest rates applicable to Loans in such currency are
determined. Eurocurrency Loans shall be deemed to be subject to such reserve
requirements without benefit of or credit for proration, exemptions or offsets
that may be available from time to time to any Lender under Regulation D or any
other applicable law, rule or regulation. The Statutory Reserve Rate shall be
adjusted automatically on and as of the effective date of any change in any
reserve percentage.

          "STERLING" shall mean lawful money of the United Kingdom.

          "STERLING BORROWING" shall mean a Borrowing comprised of Sterling
Loans.

          "STERLING EQUIVALENT" shall mean, with respect to an amount of Dollars
on any date, the amount of Sterling that may be purchased with such amount of
Dollars at the Spot Exchange Rate on such date.

          "STERLING LOAN" shall mean any Loan denominated in Sterling.

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                                                                              18

          "SUBSIDIARY" shall mean, with respect to any person (herein referred
to as the "PARENT"), any corporation, partnership, association or other business
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or more
than 50% of the general partnership interests are, at the time any determination
is being made, owned, Controlled or held, or (b) which is, at the time any
determination is made, otherwise Controlled, by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the
parent.

          "SUBSIDIARY" shall mean any subsidiary of Holdings.

          "SUBSIDIARY GUARANTEE AGREEMENT" shall mean the Amended and Restated
Guarantee Agreement dated as of July 10, 2001, as amended by the Third
Amendment, among Holdings, the Subsidiary Guarantors (as defined therein) and
JPMCB, a composite conformed copy of which is included as Exhibit I hereto.

          "SUBSIDIARY NET WORTH" shall mean, as to any Subsidiary at any date,
the shareholder's equity of such Subsidiary and its consolidated subsidiaries at
such date determined in accordance with GAAP.

          "SWISS BORROWER" shall mean Sotheby's Global Trading GmbH.

          "SWISS SECURITIES MORTGAGE" shall mean the Public Deed dated August
10, 2001 between Holdings and JPMCB.

          "TAXES" shall have the meaning assigned to such term in Section
2.19(a).

          "TERM BORROWING" shall mean a Borrowing comprised of Term Loans.

          "TERM COMMITMENT" shall mean, with respect to any Lender at any time,
the commitment (if any) of such Lender set forth on Schedule 2.01 to make a Term
Loan pursuant to Section 2.01(a).

          "TERM LENDER" shall mean a Lender with a Term Commitment or an
outstanding Term Loan.

          "TERM LOAN" shall mean a Loan made pursuant to Section 2.01(a).

          "THIRD AMENDMENT" shall mean Amendment No. 3 dated as of the date
hereof to the Existing Credit Agreement.

          "TRADEMARK SECURITY AGREEMENT" shall mean the Amended and Restated
Trademark Security Agreement dated as of July 10, 2001, as amended by the Third
Amendment, among the Grantors (as defined therein) and JPMCB, a composite
conformed copy of which is included as Exhibit J hereto.

          "TRANSFEREE" shall have the meaning assigned to such term in Section
2.19(a).

          "TYPE", when used in respect of any Loan or Borrowing, shall refer to
the rate by reference to which interest on such Loan or on the Loans comprising
such Borrowing is determined and the currency in which such Loan or the Loans
comprising such Borrowings are

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                                                                              19

denominated. For purposes hereof, the term "RATE" shall include the LIBO Rate
and the Alternate Base Rate, and the term "CURRENCY" shall include Dollars and
Sterling.

          "UK DEBENTURE" shall mean the Debenture dated July 11, 2001 between
Sotheby's Financial Services Limited and JPMCB.

          "UK SECURITIES MORTGAGE" shall mean the Mortgage Over Securities dated
July 11, 2001 between Sotheby's, Inc. and JPMCB.

          "VENTURE LOANS" shall mean Art Loans 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 arrangement with the dealer.

          "WITHDRAWAL LIABILITY" shall mean liability to a Multiemployer Plan as
a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
          "YORK AVENUE PROPERTY" shall mean the land, building and improvements
located at 1334 York Avenue, New York, New York.

          SECTION 1.02.  TERMS GENERALLY. The definitions in Section 1.01 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time to time; PROVIDED,
HOWEVER, that if the Borrowers notify the Administrative Agent that the
Borrowers wish to amend any covenant in Article VI or any related definition to
eliminate the effect of any change in GAAP occurring after the date of this
Agreement on the operation of such covenant (or if the Administrative Agent
notifies the Borrowers that the Required Lenders wish to amend Article VI or any
related definition for such purpose), then the Borrowers' compliance with such
covenant shall be determined on the basis of GAAP in effect immediately before
the relevant change in GAAP became effective, until either such notice is
withdrawn or such covenant is amended in a manner satisfactory to the Borrowers
and the Required Lenders. The phrase "the date of this Agreement" or "the date
hereof", or words of similar effect, when used herein, shall mean the date of
this Amended and Restated Credit Agreement.

                             ARTICLE II. THE CREDITS

          SECTION 2.01.  COMMITMENTS. (a) Subject to the terms and conditions
and relying upon the representations and warranties herein set forth, each Term
Lender agrees, severally and not jointly, to make on the Effective Date a Term
Loan in Dollars to Sotheby's, Inc. in a principal amount not exceeding its Term
Commitment. Amounts repaid in respect of Term Loans may not be reborrowed.

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                                                                              20

          (b)  Subject to the terms and conditions and relying upon the
representations and warranties herein set forth, each Revolving Lender agrees,
severally and not jointly, to make Revolving Loans to the Borrowers at any time
and from time to time during the Revolving Availability Period in Dollars or
Sterling (as specified in the Borrowing Requests with respect thereto), in an
aggregate principal amount at any time outstanding that will not result in such
Lender's Revolving Exposure exceeding such Lender's Commitment, subject,
however, to the conditions that (i) at no time shall the aggregate Revolving
Exposures of all Lenders exceed the aggregate Revolving Commitments, (ii) at no
time shall the aggregate Term Loans and Revolving Exposures of all the Lenders
exceed the Borrowing Base then in effect and (iii) at all times the outstanding
aggregate principal amount of all Revolving Loans made by each Revolving Lender
shall equal such Revolving Lender's Revolving Percentage of the outstanding
aggregate principal amount of all Revolving Loans. Within the foregoing limits,
the Borrowers may borrow, pay or prepay and reborrow hereunder, on and after the
date hereof and prior to the Maturity Date, subject to the terms, conditions and
limitations set forth herein.

          (c)  For purposes of paragraph (b) above, if the Dollar Equivalent of
an outstanding Revolving Borrowing denominated in Sterling, determined by the
Administrative Agent based upon the applicable Spot Exchange Rate as of the date
that is three Business Days before the end of the Interest Period with respect
to such Revolving Borrowing, does not exceed by more than 5% the Assigned Dollar
Value of such Revolving Borrowing, and if the entire amount of such Revolving
Borrowing is to be continued as a new Revolving Borrowing of equivalent amount
in the same currency and by the same Revolving Borrower, then such Revolving
Borrowing shall continue to have the same Assigned Dollar Value as in effect
prior to such continuation. The Administrative Agent shall determine the
applicable Spot Exchange Rate as of the date three Business Days before the end
of an Interest Period with respect to a Revolving Borrowing denominated in
Sterling and shall promptly notify the Borrower and the Revolving Lenders
whether the Dollar Equivalent of such Borrowing exceeds by more than 5% the
Assigned Dollar Value thereof.

          SECTION 2.02.  LOANS. (a) Each Term Loan and each Revolving Loan shall
be made as part of a Borrowing consisting of Loans made by the Lenders ratably
in accordance with their respective Term Commitments or Revolving Commitments as
the case may be; PROVIDED, HOWEVER, that the failure of any Lender to make any
Loan shall not in itself relieve any other Lender of its obligation to lend
hereunder (it being understood, however, that no Lender shall be responsible for
the failure of any other Lender to make any Loan required to be made by such
other Lender). The Loans comprising any Borrowing shall be in (i) an aggregate
principal amount which is (or the Assigned Dollar Value of which is) not less
than $1,000,000 and, except in the case of a Sterling Borrowing, an integral
multiple of $1,000,000 or (ii) an aggregate principal amount equal to the
remaining balance of the available Commitments (or the Sterling Equivalent
thereof in the case of an Sterling Borrowing).

          (b)  Each Term Borrowing and each Revolving Borrowing denominated in
Dollars shall be comprised entirely of Eurocurrency Loans or ABR Loans, as the
Borrowers may request pursuant to Section 2.03 or 2.04, as applicable. Each
Revolving Borrowing denominated in Sterling shall be comprised entirely of
Eurocurrency Loans. Each Lender may at its option make any Eurocurrency
Revolving Loan by causing any domestic or foreign branch or Affiliate of such
Lender to make such Loan; PROVIDED that any exercise of such option shall not
affect the obligation of the applicable Borrower to repay such Loan in
accordance with the terms of this Agreement. Borrowings of more than one Type
may be outstanding at the same time; PROVIDED,

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                                                                              21

HOWEVER, that none of the Borrowers shall be entitled to request any Borrowing
which, if made, would result in an aggregate of more than twelve separate
Borrowings being outstanding hereunder at any one time. For purposes of the
foregoing, Borrowings having different Interest Periods or denominated in
different currencies, regardless of whether they commence on the same date,
shall be considered separate Borrowings.

          (c)  Subject to Section 2.05, each Lender shall make each Loan to be
made by it hereunder on the proposed date thereof by wire transfer to such
account as the Administrative Agent may designate in federal funds (in the case
of any Loan denominated in Dollars) or such other immediately available funds as
may then be customary for the settlement of international transactions in
Sterling not later than 12:00 (noon), New York City time, in the case of
fundings to an account in New York City, or 11:00 a.m., local time, in the case
of fundings to an account in another jurisdiction, and the Administrative Agent
shall by 1:00 p.m., New York City time, in the case of fundings to an account in
New York City, or 12:00 (noon), local time, in the case of fundings to an
account in another jurisdiction, credit the amounts so received to an account
designated by the applicable Borrower in the applicable Borrowing Request, which
account must be in the country of the currency of the Loan (it being understood
that the funding may be for the credit of an account outside such country) or,
if a Borrowing shall not occur on such date because any condition precedent
herein specified shall not have been met, return the amounts so received to the
respective Lenders. Loans shall be made by the Lenders pro rata in accordance
with Section 2.16. Unless the Administrative Agent shall have received notice
from a Lender prior to the date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender's portion of such Borrowing,
the Administrative Agent may assume that such Lender has made such portion
available to the Administrative Agent on the date of such Borrowing in
accordance with this paragraph (c) and the Administrative Agent may, in reliance
upon such assumption, make available to the applicable Borrower on such date a
corresponding amount in the required currency. If the Administrative Agent shall
have so made funds available then to the extent that such Lender shall not have
made such portion available to the Administrative Agent, such Lender and the
applicable Borrower severally agree to repay to the Administrative Agent
forthwith on demand such corresponding amount together with interest thereon in
such currency, for each day from the date such amount is made available to the
applicable Borrower until the date such amount is repaid to the Administrative
Agent at (i) in the case of the Borrower, the interest rate applicable at the
time to the Loans comprising such Borrowing and (ii) in the case of such Lender,
a rate determined by the Administrative Agent to represent its cost of overnight
or short-term funds in the relevant currency (which determination shall be
conclusive absent manifest error). If such Lender shall repay to the
Administrative Agent such corresponding amount, such amount shall constitute
such Lender's Loan as part of such Borrowing for purposes of this Agreement.

          (d)  Notwithstanding any other provision of this Agreement, no
Borrower shall be entitled to request any Borrowing if the Interest Period
requested with respect thereto would end after the Maturity Date.

          SECTION 2.03.  LETTERS OF CREDIT. (a) GENERAL. Subject to the terms
and conditions set forth herein, any Borrower may request the issuance of
Letters of Credit denominated in Dollars or in Sterling for its own account, in
a form reasonably acceptable to the Administrative Agent and the Issuing Bank,
at any time and from time to time after the date hereof and until the earlier of
the Maturity Date and the termination of the Commitments in accordance with the
terms hereof. In the event of any inconsistency between the terms and conditions
of this Agreement and the terms and conditions of any form of letter of credit

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                                                                              22

application or other agreement submitted by the applicable Borrower to, or
entered into by the applicable Borrower with, the Issuing Bank relating to any
Letter of Credit, the terms and conditions of this Agreement shall control.
Letters of Credit will be issued solely to support obligations owed to persons
that are Lenders as of the respective date of issuance of such Letters of
Credit.

          (b)  NOTICE OF ISSUANCE, AMENDMENT, RENEWAL, EXTENSION; CERTAIN
CONDITIONS. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the applicable
Borrower shall hand deliver or telecopy (or transmit by electronic
communication, if arrangements for doing so have been approved by the Issuing
Bank) to the Issuing Bank and the Administrative Agent (reasonably in advance of
the requested date of issuance, amendment, renewal or extension) a notice
requesting the issuance of a Letter of Credit, or identifying the Letter of
Credit to be amended, renewed or extended, and specifying the date of issuance,
amendment, renewal or extension (which shall be a Business Day), the date on
which such Letter of Credit is to expire (which shall comply with paragraph (c)
of this Section), the amount of such Letter of Credit, the name and address of
the beneficiary thereof and such other information as shall be necessary to
prepare, amend, renew or extend such Letter of Credit. If requested by the
Issuing Bank, the applicable Borrower also shall submit a letter of credit
application on the Issuing Bank's standard form in connection with any request
for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or
extended only if (and upon issuance, amendment, renewal or extension of each
Letter of Credit the Borrower shall be deemed to represent and warrant that),
after giving effect to such issuance, amendment, renewal or extension (i) the LC
Exposure shall not exceed $15,000,000; (ii) the aggregate Revolving Exposures
shall not exceed the aggregate amount of the Revolving Commitments; and (iii)
the sum of the aggregate principal amount of the outstanding Term Loans and the
aggregate Revolving Exposures shall not exceed the Borrowing Base then in
effect.

          (c)  EXPIRATION DATE. Each Letter of Credit shall expire at or prior
to the close of business on the earlier of (i) the date one year after the date
of the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) and (ii) the date
that is five Business Days prior to the Maturity Date.

          (d)  PARTICIPATIONS. By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank or the Revolving Lenders, the
Issuing Bank hereby grants to each Revolving Lender, and each Revolving Lender
hereby acquires from the Issuing Bank, a participation in such Letter of Credit
equal to such Revolving Lender's Revolving Percentage of the aggregate amount
available to be drawn under such Letter of Credit. In consideration and in
furtherance of the foregoing, each Revolving Lender hereby absolutely and
unconditionally agrees to pay to the Administrative Agent, for the account of
the Issuing Bank, such Revolving Lender's Revolving Percentage of each LC
Disbursement made by the Issuing Bank and not reimbursed by the applicable
Borrower on the date due as provided in paragraph (e) of this Section, or of any
reimbursement payment required to be refunded to the applicable Borrower for any
reason. Each Revolving Lender acknowledges and agrees that its obligation to
acquire participations pursuant to this paragraph in respect of Letters of
Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default or reduction or
termination of the Revolving Commitments, and that each such payment shall be
made without any offset, abatement, withholding or reduction whatsoever.

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                                                                              23

          (e)  REIMBURSEMENT. If the Issuing Bank shall make any LC Disbursement
in respect of a Letter of Credit, the applicable Borrower shall reimburse such
LC Disbursement by paying to the Administrative Agent an amount equal to such LC
Disbursement not later than 12:00 noon, New York City time, on the date that
such LC Disbursement is made, if the Borrower shall have received notice of such
LC Disbursement prior to 10:00 a.m., New York City time, on such date, or, if
such notice has not been received by the Borrower prior to such time on such
date, then not later than 12:00 noon, New York City time, on (i) the Business
Day that the applicable Borrower receives such notice, if such notice is
received prior to 10:00 a.m., New York City time, on the day of receipt, or (ii)
the Business Day immediately following the day that the applicable Borrower
receives such notice, if such notice is not received prior to such time on the
day of receipt. If the applicable Borrower fails to make such payment when due,
the Administrative Agent shall notify each Revolving Lender of the applicable LC
Disbursement, the payment then due from the applicable Borrower in respect
thereof and such Lender's Revolving Percentage thereof. Promptly following
receipt of such notice, each Revolving Lender shall pay to the Administrative
Agent its Revolving Percentage of the payment then due from the applicable
Borrower, in the same manner as provided in Section 2.02(c) with respect to
Revolving Loans made by such Revolving Lender (and Section 2.02(c) shall apply,
MUTATIS MUTANDIS, to the payment obligations of the Lenders), and the
Administrative Agent shall promptly pay to the Issuing Bank the amounts so
received by it from the Revolving Lenders. Promptly following receipt by the
Administrative Agent of any payment from the applicable Borrower pursuant to
this paragraph, the Administrative Agent shall distribute such payment to the
Issuing Bank or, to the extent that Revolving Lenders have made payments
pursuant to this paragraph to reimburse the Issuing Bank, then to such Revolving
Lenders and the Issuing Bank as their interests may appear. Any payment made by
a Revolving Lender pursuant to this paragraph to reimburse the Issuing Bank for
any LC Disbursement shall not constitute a Revolving Loan and shall not relieve
the applicable Borrower of its obligation to reimburse such LC Disbursement.

          (f)  OBLIGATIONS ABSOLUTE. The applicable Borrower's obligation to
reimburse LC Disbursements as provided in paragraph (e) of this Section shall be
absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement under any and all circumstances
whatsoever and irrespective of (i) any lack of validity or enforceability of any
Letter of Credit or this Agreement, or any term or provision therein, (ii) any
draft or other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Borrower's obligations hereunder. None of
the Administrative Agent, the Lenders or the Issuing Bank, nor any of their
Affiliates, shall have any liability or responsibility by reason of or in
connection with the issuance or transfer of any Letter of Credit or any payment
or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the
Issuing Bank; PROVIDED that the foregoing shall not be construed to excuse the
Issuing Bank from liability to the applicable Borrower to the extent of any
direct damages (as opposed to consequential damages,

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                                                                              24

claims in respect of which are hereby waived by such Borrower to the extent
permitted by applicable law) suffered by such Borrower that are caused by the
Issuing Bank's failure to exercise care when determining whether drafts and
other documents presented under a Letter of Credit comply with the terms
thereof. The parties hereto expressly agree that, in the absence of gross
negligence or wilful misconduct on the part of the Issuing Bank (as finally
determined by a court of competent jurisdiction), the Issuing Bank shall be
deemed to have exercised care in each such determination. In furtherance of the
foregoing and without limiting the generality thereof, the parties agree that,
with respect to documents presented which appear on their face to be in
substantial compliance with the terms of a Letter of Credit, the Issuing Bank
may, in its sole discretion, either accept and make payment upon such documents
without responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.

          (g)  DISBURSEMENT PROCEDURES. The Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit. The Issuing Bank shall promptly
notify the Administrative Agent and the applicable Borrower by telephone
(confirmed by telecopy) of such demand for payment and whether the Issuing Bank
has made or will make an LC Disbursement thereunder; PROVIDED that any failure
to give or delay in giving such notice shall not relieve the applicable Borrower
of its obligation to reimburse the Issuing Bank and the Revolving Lenders with
respect to any such LC Disbursement.

          (h)  INTERIM INTEREST. If the Issuing Bank shall make any LC
Disbursement, then, unless the applicable Borrower shall reimburse such LC
Disbursement in full on the date such LC Disbursement is made, the unpaid amount
thereof shall bear interest, for each day from and including the date such LC
Disbursement is made to but excluding the date that the applicable Borrower
reimburses such LC Disbursement, at the rate per annum then applicable to ABR
Loans; PROVIDED that, if the applicable Borrower fails to reimburse such LC
Disbursement when due pursuant to paragraph (e) of this Section, then Section
2.09 shall apply. Interest accrued pursuant to this paragraph shall be for the
account of the Issuing Bank, except that interest accrued on and after the date
of payment by any Revolving Lender pursuant to paragraph (e) of this Section to
reimburse the Issuing Bank shall be for the account of such Revolving Lender to
the extent of such payment.

          (i)  REPLACEMENT OF THE ISSUING BANK. The Issuing Bank may be replaced
at any time by written agreement among Holdings, the Administrative Agent, the
replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent
shall notify the Revolving Lenders of any such replacement of the Issuing Bank.
At the time any such replacement shall become effective, the applicable Borrower
shall pay all unpaid fees accrued for the account of the replaced Issuing Bank
pursuant to Section 2.06. From and after the effective date of any such
replacement, (i) the successor Issuing Bank shall have all the rights and
obligations of the Issuing Bank under this Agreement with respect to Letters of
Credit to be issued thereafter and (ii) references herein to the term "Issuing
Bank" shall be deemed to refer to such successor or to any previous Issuing
Bank, or to such successor and all previous Issuing Banks, as the context shall
require. After the replacement of an Issuing Bank hereunder, the replaced
Issuing Bank shall remain a party hereto and shall continue to have all the
rights and obligations of an Issuing Bank under this Agreement with respect to
Letters of Credit issued by it prior to such replacement, but shall not be
required to issue additional Letters of Credit.

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                                                                              25

          (j)  CASH COLLATERALIZATION. If any Event of Default shall occur and
be continuing, on the Business Day that the applicable Borrower receives notice
from the Administrative Agent or the Revolving Lenders with LC Exposures
representing a majority in amount of the total LC Exposure demanding the deposit
of cash collateral pursuant to this paragraph, the applicable Borrower shall
deposit in an account with the Administrative Agent, in the name of the
Administrative Agent and for the benefit of the Revolving Lenders, an amount in
cash equal to the total LC Exposure as of such date plus any accrued and unpaid
interest thereon; PROVIDED that the obligation to deposit such cash collateral
shall become effective immediately, and such deposit shall become immediately
due and payable, without demand or other notice of any kind, upon the occurrence
of any Event of Default with respect to the Borrower described in clause (l) or
(m) of Article VII. Each such deposit shall be held by the Administrative Agent
as collateral for the payment and performance of the obligations of the
Borrowers under this Agreement. The Administrative Agent shall have exclusive
dominion and control, including the exclusive right of withdrawal, over such
account. Other than any interest earned on the investment of such deposits,
which investments shall be made at the option and sole discretion of the
Administrative Agent and at the applicable Borrower's risk and expense, such
deposits shall not bear interest. Interest or profits, if any, on such
investments shall accumulate in such account. Moneys in such account shall be
applied by the Administrative Agent to reimburse the Issuing Bank for LC
Disbursements for which it has not been reimbursed and, to the extent not so
applied, shall be held for the satisfaction of the reimbursement obligations of
the applicable Borrower for the LC Exposure at such time or, if the maturity of
the Loans has been accelerated (but subject to the consent of Revolving Lenders
with LC Exposure representing a majority in amount of the total LC Exposure), be
applied to satisfy other obligations of the Borrower under this Agreement. If
any Borrower is required to provide an amount of cash collateral hereunder as a
result of the occurrence of an Event of Default, such amount (to the extent not
applied as aforesaid) shall be returned to such Borrower within three Business
Days after all Events of Default have been cured or waived.

          SECTION 2.04.  BORROWING PROCEDURE. (a) In order to request a
Borrowing, the applicable Borrower shall give telephonic notice to the
Administrative Agent (confirmed by hand delivery or telecopy of a duly completed
Borrowing Request in the form of Exhibit A), (a) in the case of a Eurocurrency
Borrowing, not later than 12:00 noon, London time, three Business Days before a
proposed borrowing and (b) in the case of an ABR Borrowing, not later than 11:00
a.m., New York City time, on the Business Day of a proposed borrowing. Such
notice shall be irrevocable and shall in each case specify (i) in the case of a
Borrowing on the Effective Date, whether the requested Borrowing is to be a Term
Borrowing or a Revolving Borrowing, (ii) whether the Borrowing then being
requested is to be a Eurocurrency Borrowing or an ABR Borrowing, (iii) the date
of such Borrowing (which shall be a Business Day), (iv) the aggregate principal
amount of such Borrowing, (v) the currency of such Borrowing (which, in the case
of an ABR Revolving Borrowing, shall be Dollars) and (v) if such Borrowing is to
be a Eurocurrency Borrowing, the Interest Period with respect thereto. If no
election as to the currency of a Eurocurrency Revolving Borrowing is specified
in any Borrowing Request, then the applicable Borrower shall be deemed to have
requested a Revolving Borrowing in Dollars. If no election as to the Type of
Revolving Borrowing is specified, then the requested Revolving Borrowing shall
be an ABR Revolving Borrowing if denominated in Dollars or a Eurocurrency
Revolving Borrowing if denominated in Sterling. If no Interest Period with
respect to any Eurocurrency Revolving Borrowing is specified, then the
applicable Borrower shall be deemed to have selected an Interest Period of one
month's duration.

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                                                                              26

          SECTION 2.05.  INTEREST ELECTIONS. (a) Each Borrowing initially shall
be of the Type specified in the applicable Borrowing Request and, in the case of
a Eurocurrency Borrowing, shall have an initial Interest Period as specified in
such Borrowing Request. Thereafter, the Borrower may elect to convert such
Borrowing to a different Type or to continue such Borrowing and, in the case of
a Eurocurrency Borrowing, may elect Interest Periods therefor, all as provided
in this Section. The Borrower may elect different options with respect to
different portions of the affected Borrowing, in which case each such portion
shall be allocated ratably among the Lenders holding the Loans comprising such
Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing.

          (b)  To make an election pursuant to this Section, the Borrower shall
notify the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.04 if the Borrower were
requesting a Borrowing of the Type resulting from such election to be made on
the effective date of such election. Each such telephonic Interest Election
Request shall be irrevocable and shall be confirmed promptly by hand delivery of
telecopy to the Administrative Agent of a written Interest Election Request in a
form approved by the Administrative Agent and signed by the Borrower.

          (c)  Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.02:

               (i)   the Borrowing to which such Interest Election Request
          applies and, if different options are being elected with respect to
          different portions thereof, the portions thereof to be allocated to
          each resulting Borrowing (in which case the information to be
          specified pursuant to clauses (iii) and (iv) below shall be specified
          for each resulting Borrowing);

               (ii)  the effective date of the election made pursuant to such
          Interest Election Request, which shall be a Business Day;

               (iii) whether the resulting Borrowing is to be an ABR Borrowing
          or a Eurocurrency Borrowing; and

               (iv)  if the resulting Borrowing is a Eurocurrency Borrowing, the
          Interest Period to be applicable thereto after giving effect to such
          election, which shall be a period contemplated by the definition of
          the term "Interest Period".

If any such Interest Election Request requests a Eurocurrency Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.

          (d)  Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender's portion of each resulting Borrowing.

          (e)  If the Borrower fails to deliver a timely Interest Election
Request with respect to a Eurocurrency Borrowing prior to the end of the
Interest Period applicable thereto, then, unless such Borrowing is repaid as
provided herein, at the end of such Interest Period such Borrowing shall be (i)
in the case of a Borrowing denominated in Dollars, converted to an ABR

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                                                                              27

Borrowing and (ii) in the case of a Borrowing denominated in Sterling, converted
to a Eurocurrency Borrowing with an Interest Period of one month.
Notwithstanding any contrary provision hereof, if an Event of Default has
occurred and is continuing and the Administrative Agent, at the request of the
Required Lenders, so notifies the Borrower, then, so long as an Event of Default
is continuing (i) no outstanding Borrowing denominated in Dollars may be
converted to or continued as a Eurocurrency Borrowing and (ii) unless repaid,
each Eurocurrency Borrowing denominated in Dollars shall be converted to an ABR
Borrowing at the end of the Interest Period applicable thereto.

          SECTION 2.06.  FEES. (a) Holdings agrees to pay to each Lender,
through the Administrative Agent, on each March 31, June 30, September 30 and
December 31 and on the Maturity Date, a commitment fee (a "COMMITMENT Fee")
equal to 0.75% per annum on the daily average unused amount of the Revolving
Commitment of such Lender (whether or not the conditions set forth in Section
4.02 shall have been satisfied), during the preceding quarter (or shorter period
commencing with the date hereof or ending with the Maturity Date or any date on
which the Revolving Commitment of such Lender shall be terminated). All
Commitment Fees shall be computed on the basis of the actual number of days
elapsed in a year of 360 days. The Commitment Fee due to each Lender shall
commence to accrue on the date of this Agreement and shall cease to accrue on
the earlier of the Maturity Date and the date on which the Revolving Commitment
of such Lender shall have been terminated and the Loans of such Lender shall
have been repaid.

          (b)  Holdings agrees to pay (i) to the Administrative Agent for the
account of each Lender a participation fee with respect to its participations in
Letters of Credit (an "LC PARTICIPATION FEE"), which shall accrue at the rate of
3.50% per annum, on the average daily amount of such Lender's LC Exposure
(excluding any portion thereof attributable to unreimbursed LC Disbursements)
during the period from and including the date hereof to but excluding the later
of the date on which such Lender's Commitment terminates and the date on which
such Lender ceases to have any LC Exposure, and (ii) to the Issuing Bank a
fronting fee, which shall accrue at the rate or rates per annum separately
agreed upon between Holdings and the Issuing Bank on the average daily amount of
the LC Exposure (excluding any portion thereof attributable to unreimbursed LC
Disbursements) during the period from and including the date hereof to but
excluding the later of the date of termination of the Commitments and the date
on which there ceases to be any LC Exposure, as well as the Issuing Bank's
standard fees with respect to the issuance, amendment, renewal or extension of
any Letter of Credit or processing of drawings thereunder (together with such
fronting fee, the "ISSUING BANK FEES"). Participation fees and fronting fees
accrued through and including the last day of March, June, September and
December of each year shall be payable on the third Business Day following such
last day, commencing on the first such date to occur after the Effective Date;
PROVIDED that all such fees shall be payable on the date on which the
Commitments terminate and any such fees accruing after the date on which the
Commitments terminate shall be payable on demand. Any other fees payable to the
Issuing Bank pursuant to this paragraph shall be payable within 10 days after
demand. All participation fees and fronting fees shall be computed on the basis
of a year of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).

          (c)  Holdings agrees to pay the Administrative Agent, for its own
account, such fees, and at such times, as have been separately agreed upon (the
"ADMINISTRATIVE FEES").

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                                                                              28

          (d)  All Fees shall be paid on the dates due, in immediately available
funds, to the Administrative Agent for distribution, if and as applicable, among
the Lenders (and, if applicable, to the Issuing Bank with respect to Fees owed
to it). Once paid, none of the Fees shall be refundable except in the case of
errors.

          SECTION 2.07.  REPAYMENT OF LOANS. (a) The outstanding principal
balance of each Loan shall be payable on the Maturity Date. Each Loan shall bear
interest from the date of the Borrowing of which such Loan is a part on the
outstanding principal balance thereof as set forth in Section 2.08.

          (b)  Each Lender shall, and is hereby authorized by the Borrowers to,
maintain, in accordance with its usual practice, records evidencing the
indebtedness of each Borrower to such Lender hereunder from time to time,
including the date, amount, currency and Type of and the Interest Period
applicable to each Loan made by such Lender from time to time and the amounts of
principal and interest paid to such Lender from time to time in respect of each
such Loan.

          (c)  The entries made in the records maintained pursuant to paragraph
(b) of this Section 2.07 and in the Register maintained by the Administrative
Agent pursuant to Section 10.04(d) shall be prima facie evidence of the
existence and amounts of the obligations of each Borrower to which such entries
relate; PROVIDED, HOWEVER, that the failure of any Lender or the Administrative
Agent to maintain or to make any entry in such records or the Register, as
applicable, or any error therein shall not in any manner affect the obligation
of any Borrower to repay any Loans in accordance with the terms of this
Agreement.

          SECTION 2.08.  INTEREST ON LOANS. (a) Subject to the provisions of
Section 2.09, the Eurocurrency Loans comprising each Eurocurrency Borrowing
shall bear interest (computed on the basis of the actual number of days elapsed
over a year of 360 days) at a rate per annum equal to the LIBO Rate for the
Interest Period in effect for the Borrowing of which such Loan is part
multiplied by the Statutory Reserve Rate plus 3.50% per annum.

          (b)  Subject to the provisions of Section 2.09, the Loans comprising
each ABR Borrowing shall bear interest (computed on the basis of the actual
number of days elapsed over a year of 365 or 366 days, as applicable, when
determined by reference to the Prime Rate and over a year of 360 days at all
other times) at a rate per annum equal to the Alternate Base Rate plus 2.50% per
annum.

          (c)  Interest on each Loan shall be payable in arrears on each
Interest Payment Date applicable to such Loan except as otherwise provided in
this Agreement. The applicable LIBO Rate or Alternate Base Rate for each
Interest Period or day within an Interest Period, as the case may be, shall be
determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error.

          SECTION 2.09.  DEFAULT INTEREST. If any Borrower shall default in the
payment of the principal of or interest on any Loan or any other amount becoming
due hereunder, whether by scheduled maturity, notice of prepayment, acceleration
or otherwise, such Borrower shall on demand from time to time from the
Administrative Agent pay interest, to the extent permitted by law, on such
defaulted amount up to (but not including) the date of actual payment (after as
well as before judgment) at a rate per annum (computed on the basis of the
actual number of days

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                                                                              29

elapsed over a year of 360 days) equal to the Alternate Base Rate plus 2% per
annum (or, in the case of the principal of any Loan, if higher, the rate of
interest otherwise applicable, or most recently applicable, to such Loan
hereunder plus 2% per annum).

          SECTION 2.10.  ALTERNATE RATE OF INTEREST. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurocurrency Borrowing of any Type the Administrative
Agent shall have determined that Dollar deposits or deposits in Sterling in
which such Borrowing is to be denominated in the principal amounts of the Loans
comprising such Borrowing are not generally available in the London interbank
market, or that the rates at which such deposits are being offered will not
adequately and fairly reflect the cost to any Lender of making or maintaining
its Eurocurrency Loan during such Interest Period, or that reasonable means do
not exist for ascertaining the LIBO Rate, the Administrative Agent shall, as
soon as practicable thereafter, give written or telecopy notice of such
determination to the applicable Borrower and the Lenders. In the event of any
such determination, until the Administrative Agent shall have advised the
applicable Borrower and the Lenders that the circumstances giving rise to such
notice no longer exist, any request by a Borrower for a Eurocurrency Borrowing
of the affected Type or in the affected currency shall be deemed to be a request
for an ABR Borrowing denominated in Dollars. Each determination by the
Administrative Agent hereunder shall be conclusive absent manifest error.

          SECTION 2.11.  TERMINATION AND REDUCTION OF COMMITMENTS. (a) Unless
previously terminated under this Agreement, (i) the Term Commitments shall be
automatically and permanently terminated at 5:00 p.m., New York City time, on
the Effective Date and (ii) the Revolving Commitments shall be automatically
terminated at the Administrative Agent's close of business in New York City on
the Maturity Date.

          (b)  Upon at least three Business Days' prior irrevocable written or
telecopy notice to the Administrative Agent, Holdings (on behalf of all the
Borrowers) may at any time in whole permanently terminate, or from time to time
in part permanently reduce, the Revolving Commitments; PROVIDED, HOWEVER, that
(i) each partial reduction of a Revolving Commitment shall be in an integral
multiple of $1,000,000 and in a minimum principal amount of $5,000,000 or if
less, the remaining Revolving Commitment and (ii) no such termination or
reduction shall be made which would reduce the aggregate Revolving Commitments
to an amount less than the aggregate Revolving Exposures.

          (c)  On the date of any prepayment of Term Loans pursuant to Section
2.12(e), the Revolving Commitments will be automatically reduced by an amount
equal to the aggregate principal amount of the Term Loans prepaid multiplied by
a fraction of which the numerator is equal to the Revolving Commitments and the
denominator is equal to the outstanding Term Loans, in each case immediately
prior to such prepayment.

          (d)  Each reduction in the Revolving Commitments hereunder shall be
made ratably among the Revolving Lenders in accordance with their respective
Revolving Commitments. Holdings shall pay to the Administrative Agent for the
account of the Revolving Lenders, on the date of each termination or reduction,
the Commitment Fees on the amount of the Revolving Commitments so terminated or
reduced accrued to but not including the date of such termination or reduction.

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                                                                              30

          SECTION 2.12.  PREPAYMENT. (a) Each Borrower shall have the right at
any time and from time to time to prepay any Borrowing, in whole or in part,
upon giving written or telecopy notice (or telephone notice promptly confirmed
by written or telecopy notice) to the Administrative Agent: (i) in the case of
Eurocurrency Loans no later than 12:00 noon, New York City time, three Business
Days prior to prepayment and (ii) in the case of ABR Loans, no later than 11:00
a.m., New York City time, on the Business Day of the prepayment; PROVIDED,
HOWEVER, that each partial prepayment shall be in an amount which is (or the
Assigned Dollar Value of which is) not less than $5,000,000 and, except in the
case of Sterling Borrowing, an integral multiple of $1,000,000.

          (b)  On the date of any termination or reduction of the Revolving
Commitments pursuant to Section 2.11, the Borrowers shall pay or prepay so much
of the Revolving Borrowings as shall be necessary in order that the aggregate
Revolving Exposures will not exceed the aggregate Revolving Commitments after
giving effect to such termination or reduction.

          (c)  In the event and on each occasion that the sum of the aggregate
principal amount of the outstanding Term Loans and the aggregate Revolving
Exposures exceeds the Borrowing Base, the Borrowers shall prepay Borrowings in
an aggregate amount equal to such excess.

          (d)  Each notice of prepayment under this Section shall specify the
prepayment date and the principal amount of each Borrowing (or portion thereof)
to be prepaid, shall be irrevocable and shall commit the applicable Borrower to
prepay such Borrowing (or portion thereof) by the amount stated therein on the
date stated therein. All prepayments under this Section shall be subject to
Section 2.15 but otherwise without premium or penalty.

          (e)  Each prepayment under this Section shall be applied first against
the Lenders' Revolving Loans to the extent of the amount of such Revolving Loans
that shall be outstanding at the time of such prepayment and then against
outstanding Term Loans.

          SECTION 2.13.  RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES. (a)
Notwithstanding any other provision herein, if after the date of this Agreement
any change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall change the basis of taxation of payments to any Lender (or any
lending office of any Lender) or the Issuing Bank of the principal of or
interest on any Eurocurrency Loan made by such Lender or any Letter of Credit or
participation therein, or any Fees or other amounts payable hereunder (other
than changes in respect of taxes imposed on the overall net income or capital
stock of such Lender by the jurisdiction in which such Lender has its principal
office or by any political subdivision or taxing authority therein), or shall
impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of or credit
extended by such Lender (or any lending office of such Lender) or the Issuing
Bank, or shall impose on such Lender or the Issuing Bank or the London interbank
market any other condition affecting this Agreement or any Eurocurrency Loan
made by such Lender or any Letter of Credit or participation therein, and the
result of any of the foregoing shall be to increase the cost to such Lender of
making or maintaining any Eurocurrency Loan or to increase the cost to such
Lender or the Issuing Bank of participating in, issuing or maintaining any
Letter of Credit or to reduce the amount of any sum received or receivable by
such Lender hereunder (whether of principal, interest or otherwise) by an amount
deemed by such

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                                                                              31

Lender to be material, then Holdings shall (or shall cause the Borrowers to) pay
to such Lender or the Issuing Bank upon demand such additional amount or amounts
as will compensate such Lender or the Issuing Bank for such additional costs
incurred or reduction suffered.

          (b)  If any Lender or the Issuing Bank shall have determined that any
change after the date hereof in the applicability of any law, rule, regulation
or guideline adopted pursuant to or arising out of the July 1988 report of the
Basel Committee on Banking Regulations and Supervisory Practices entitled
"International Convergence of Capital Measurement and Capital Standards", or the
adoption after the date hereof of any other law, rule, regulation or guideline
regarding capital adequacy, or any change in any of the foregoing or in the
interpretation or administration of any of the foregoing by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or any lending office of
such Lender) or any Lender's or the Issuing Bank's holding company with any
request or directive regarding capital adequacy (whether or not having the force
of law) of any such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on such Lender's or the Issuing
Bank's capital or on the capital of such Lender's or the Issuing Bank's holding
company, if any, as a consequence of this Agreement or the Loans or Letters of
Credit or participations therein made by such Lender or the Issuing Bank
pursuant hereto to a level below that which such Lender, the Issuing Bank or
such Lender's or the Issuing Bank's holding company could have achieved but for
such applicability, adoption, change or compliance (taking into consideration
such Lender's and the Issuing Bank's policies and the policies of such Lender's
and the Issuing Bank's holding company with respect to capital adequacy) by an
amount deemed by such Lender or the Issuing Bank to be material, then from time
to time Holdings shall (or shall cause the responsible Borrower to) pay to such
Lender or the Issuing Bank such additional amount or amounts as will compensate
such Lender, the Issuing Bank or such Lender's or the Issuing Bank's holding
company for any such reduction suffered.

          (c)  A certificate of a Lender or the Issuing Bank setting forth such
amount or amounts as shall be necessary to compensate such Lender or the Issuing
Bank as specified in paragraph (a) or (b) above, as the case may be, shall be
delivered to Holdings and shall be conclusive absent manifest error. Holdings
shall (or shall cause the responsible Borrower to) pay each Lender or the
Issuing Bank the amount shown as due on any such certificate delivered by it
within 10 days after the receipt of the same.

          (d)  Except as provided below in this paragraph (d), failure on the
part of any Lender or the Issuing Bank to demand compensation for any increased
costs or reduction in amounts received or receivable or reduction in return on
capital with respect to any period shall not constitute a waiver of such
Lender's or the Issuing Bank's right to demand compensation with respect to such
period or any other period. The protection of this Section shall be available to
each Lender and the Issuing Bank regardless of any possible contention of the
invalidity or inapplicability of the law, rule, regulation, guideline or other
change or condition which shall have occurred or been imposed. Neither the
Issuing Bank nor any Lender shall be entitled to compensation under this Section
2.13 for any costs incurred or reductions suffered with respect to any date
unless it shall have notified Holdings that it will demand compensation for such
costs or reductions not more than 90 days after the later of (i) such date and
(ii) the date on which it shall have become aware of such costs or reductions.

          SECTION 2.14.  CHANGE IN LEGALITY. (a) Notwithstanding any other
provision herein, if, after the date hereof, (i) any change in any law or
regulation or in the interpretation

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                                                                              32

thereof by any Governmental Authority charged with the administration or
interpretation thereof shall make it unlawful for any Lender to make or maintain
any Eurocurrency Loan or Sterling Loan or to give effect to its obligations as
contemplated hereby with respect to any Eurocurrency Loan or Sterling Loan or
(ii) there shall have occurred any change in national or international
financial, political or economic conditions (including the imposition of or any
change in exchange controls) or currency exchange rates which would make it
impracticable for any Lender to make Loans denominated in Sterling or to any
Borrower, then, by written notice to the Borrowers and to the Administrative
Agent, such Lender may:

               (i)  declare that Eurocurrency Loans or Sterling Loans (in the
          affected currency or to the affected Borrower), as the case may be,
          will not thereafter (for the duration of such unlawfulness or
          impracticability) be made by such Lender hereunder, whereupon any
          request by a Borrower for a Eurocurrency Borrowing or Sterling
          Borrowing (in the affected currency or to the affected Borrower), as
          the case may be, shall, as to such Lender only, be deemed a request
          for an ABR Loan or a Loan denominated in Dollars, as the case may be,
          unless such declaration shall be subsequently withdrawn (or, if a Loan
          to the requesting Borrower cannot be made for the reasons specified
          above, such request shall be deemed to have been withdrawn); and

               (ii) require that all outstanding Eurocurrency Loans or Sterling
          Loans (in the affected currency or to the affected Borrower), as the
          case may be, made by it be converted to ABR Loans or Loans denominated
          in Dollars, as the case may be, in which event all such Eurocurrency
          Loans or Sterling Loans (in the affected currency or to the affected
          Borrower) shall be automatically converted to ABR Loans or Loans
          denominated in Dollars, as the case may be, as of the effective date
          of such notice as provided in paragraph (b) below.

In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal which would otherwise have been applied to
repay the Eurocurrency Loans or Sterling Loans, as the case may be, that would
have been made by such Lender or the converted Eurocurrency Loans or Sterling
Loans, as the case may be, of such Lender shall instead be applied to repay the
ABR Loans or Loans denominated in Dollars, as the case may be, made by such
Lender in lieu of, or resulting from the conversion of, such Eurocurrency Loans
or Loans denominated in Dollars, as the case may be.

          (b)  For purposes of this Section 2.14, a notice to the Borrowers by
any Lender shall be effective as to each Loan, if lawful, on the last day of the
Interest Period currently applicable to such Loan; in all other cases such
notice shall be effective on the date of receipt by the Borrowers.

          SECTION 2.15.  INDEMNITY. The Borrowers agree to indemnify each Lender
against any actual loss or expense which such Lender may sustain or incur as a
consequence of (a) any failure by such Borrower to fulfill on the date of any
borrowing hereunder the applicable conditions set forth in Article IV, (b) any
failure by such Borrower to borrow or to convert or continue any Loan hereunder
after irrevocable notice of such borrowing, conversion or continuation has been
given or deemed given pursuant to Section 2.04 or 2.05, (c) any payment,
prepayment, conversion or transfer of a Eurocurrency Loan required by any other
provision of this Agreement or otherwise made or deemed made on a date other
than the last day of the Interest Period applicable thereto, (d) any default in
payment or prepayment of the principal

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                                                                              33

amount of any Loan or any part thereof or interest accrued thereon, as and when
due and payable (at the due date thereof, whether by scheduled maturity,
acceleration, irrevocable notice of prepayment or otherwise) or (e) the
occurrence of any other Event of Default, including, in each such case, any
actual loss or reasonable expense sustained or incurred or to be sustained or
incurred in liquidating or employing deposits from third parties acquired to
effect or maintain such Loan or any part thereof as a Eurocurrency Loan. Such
loss or reasonable expense shall include an amount equal to the excess, if any,
as reasonably determined by such Lender, of (i) its cost of obtaining the funds
for the Loan being paid, prepaid, converted, transferred or not borrowed
(assumed to be the LIBO Rate) for the period from the date of such payment,
prepayment, conversion, transfer or failure to borrow to the last day of the
Interest Period for such Loan (or, in the case of a failure to borrow, the
Interest Period for such Loan which would have commenced on the date of such
failure) over (ii) the amount of interest (as reasonably determined by such
Lender) that would be realized by such Lender in reemploying the funds so paid,
prepaid, converted, transferred or not borrowed for such period or Interest
Period, as the case may be. A certificate of any Lender setting forth any amount
or amounts which such Lender is entitled to receive pursuant to this Section
shall be delivered to the Borrowers and shall be conclusive absent manifest
error.

          SECTION 2.16.  PRO RATA TREATMENT. (a) Except as required under
Section 2.14, each Revolving Borrowing, each payment or prepayment of principal
of any Revolving Borrowing, each payment of interest on the Revolving Loans,
each payment of the Commitment Fees, each payment constituting reimbursement of
an LC Disbursement, each reduction of the Revolving Commitments and each
conversion or continuation of any Revolving Borrowing with a Revolving Borrowing
of any Type, shall be allocated pro rata among the Revolving Lenders in
accordance with the respective principal amounts of their outstanding Revolving
Loans. Each Revolving Lender agrees that in computing such Revolving Lender's
portion of any Revolving Borrowing to be made hereunder, the Administrative
Agent may, in its discretion, round each Revolving Lender's percentage of such
Revolving Borrowing to the next higher or lower whole Dollar (or comparable unit
of Sterling) amount.

          (b)  Except as required under Section 2.14, each Term Borrowing, each
payment or prepayment of principal of any Term Borrowing, each payment of
interest on the Term Loans, and each conversion or continuation of any Term
Borrowing with a Term Borrowing of any Type, shall be allocated pro rata among
the Term Lenders in accordance with their respective Term Commitments or, if
such Term Commitments shall have expired or been terminated, in accordance with
the respective principal amounts of their outstanding Term Loans.

          SECTION 2.17.  SHARING OF SETOFFS. Each Lender agrees that if it
shall, through the exercise of a right of banker's lien, setoff or counterclaim
against any Borrower, or pursuant to a secured claim under Section 506 of Title
11 of the United States Code or other security or interest arising from, or in
lieu of, such secured claim, received by such Lender under any applicable
bankruptcy, insolvency or other similar law or otherwise, or by any other means,
obtain payment (voluntary or involuntary) in respect of any Loan or Loans or
reimbursement obligations in respect of any LC Disbursement (other than pursuant
to and in accordance with the provisions of this Agreement) as a result of which
the unpaid principal portion of its Loans or LC Disbursements shall be
proportionately less than the unpaid principal portion of the Loans or LC
Disbursements of any other Revolving Lender or Term Lender, as applicable, it
shall be deemed simultaneously to have purchased from such other Lender at face
value, and shall promptly pay to such other Lender the purchase price for, a
participation in the Loans and LC Disbursements of such other Lender, so that
the aggregate unpaid principal amount of the Loans and LC

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                                                                              34

Disbursements and participations in the Loans and LC Disbursements held by each
Lender shall be in the same proportion to the aggregate unpaid principal amount
of all Loans and LC Disbursements then outstanding as the principal amount of
its Loans and LC Disbursements prior to such exercise of banker's lien, setoff
or counterclaim or other event was to the principal amount of all Loans and LC
Disbursements outstanding prior to such exercise of banker's lien, setoff or
counterclaim or other event; PROVIDED, HOWEVER, that, if any such purchase or
purchases or adjustments shall be made pursuant to this Section 2.17 and the
payment giving rise thereto shall thereafter be recovered, such purchase or
purchases or adjustments shall be rescinded to the extent of such recovery and
the purchase price or prices or adjustment restored without interest. The
Borrowers expressly consent to the foregoing arrangements and agree that any
Lender holding a participation in a Loan or LC Disbursement deemed to have been
so purchased may exercise any and all rights of banker's lien, setoff or
counterclaim with respect to any and all moneys owing by such Borrower to such
Lender by reason thereof as fully as if such Lender had made a Loan or LC
Disbursement directly to such Borrower in the amount of such participation.

          SECTION 2.18.  PAYMENTS. (a) Each Borrower shall make each payment
(including principal of or interest on any Borrowing, reimbursements of LC
Disbursements or any Fees or other amounts) hereunder and under each other Loan
Document, without setoff or counterclaim, not later than 12:00 noon, local time
at the place of payment, on the date when due in immediately available funds.
Each such payment shall be made to the Administrative Agent at its offices at
1111 Fannin, 10th Floor, Houston, Texas 77002. Each such payment (other than
principal of and interest on Sterling Loans, which shall be made in Sterling)
shall be made in Dollars and each Sterling payment should be made at the offices
of the Administrative Agent at 125 London Wall, London, England EC2Y5AJ, or any
other account that the Administrative Agent may designate.

          (b)  Whenever any payment (including principal of or interest on any
Borrowing, reimbursements of LC Disbursements or any Fees or other amounts)
hereunder or under any other Loan Document shall become due, or otherwise would
occur, on a day that is not a Business Day, such payment may be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of interest or Fees, if applicable.

          SECTION 2.19.  TAXES. (a) Each Borrower covenants and agrees that,
whether or not any Loans are made by the Lenders or Letters of Credit are issued
by the Issuing Bank hereunder:

               (i)  all payments on account of the principal of and interest on
          the Loans, and all other amounts payable by each Borrower hereunder,
          to or for the account of the Lenders including, without limitation,
          amounts payable under clause (ii) of this Section 2.19(a), shall be
          made without any setoff or counterclaim and free and clear of, and
          without reduction by reason of, all present and future income, stamp,
          documentary, registration, excise, property and other taxes and
          levies, deductions, charges, compulsory loans and withholdings
          whatsoever (other than income or franchise taxes imposed on the
          overall net income or capital stock of the Administrative Agent, the
          Issuing Bank or any Lender, including any transferee or assignee
          thereof ("TRANSFEREE"), by the taxing authority of the jurisdiction in
          which the Administrative Agent or such Lender, as applicable, has its
          principal lending office or under the laws of which the Administrative
          Agent, the Issuing Bank or such Lender, as applicable, is organized)
          and all interest,

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                                                                              35

          penalties or similar amounts with respect thereto, now or hereafter
          imposed, assessed, levied or collected by any country or any political
          subdivision or taxing authority thereof or therein or by any
          federation or association of or with which any country may be a member
          or associated or by any jurisdiction from which any payment hereunder
          is made or any taxing authority thereof or therein, on or in respect
          of this Agreement, the recording, registration, notarization or other
          formalization of any thereof, the enforcement thereof or the
          introduction thereof in any judicial proceedings, or on or in respect
          of any payments of principal, interest, premiums, charges, fees or
          other amounts made on, under or in respect of any thereof (hereinafter
          called "Taxes"), all of which will be paid by the appropriate
          Borrower, for its own account, prior to the date on which penalties
          attach thereto;

               (ii)  the Borrowers shall indemnify the Administrative Agent, the
          Issuing Bank and Lenders against, and reimburse the Administrative
          Agent, the Issuing Bank and Lenders (or Transferees) on demand for,
          any Taxes and any loss, liability, claim or expense arising therefrom
          or with respect thereto, including interest, penalties and reasonable
          legal fees and disbursements, which the Administrative Agent or the
          Issuing Bank may incur, whether or not such Taxes were correctly or
          legally asserted by the relevant taxing authority. A certificate as to
          the amount of such Tax, loss, liability, claim or expense prepared by
          the Administrative Agent or the Issuing Bank, absent manifest error,
          shall be final, conclusive and binding for all purposes. Such
          indemnification shall be made within 30 days after the date the
          Administrative Agent or the Issuing Bank makes a written demand
          therefor;

               (iii) in the event that a Borrower is required by applicable law,
          decree or regulation to deduct or withhold Taxes from any amounts
          payable on, under or in respect to this Agreement, such Borrower shall
          pay to the Administrative Agent, the Issuing Bank or the applicable
          Lenders, as the case may be, such additional amount(s) as may be
          required, after the deduction or withholding of Taxes (including any
          deduction or withholding of Taxes with respect to such additional
          amounts), to enable the Administrative Agent, the Issuing Bank or such
          Lender to receive from such Borrower an amount equal to the amount
          stated to be payable by such Borrower to the Administrative Agent, the
          Issuing Bank or such Lender under this Agreement;

               (iv)  each Borrower shall furnish to the Administrative Agent the
          official tax receipts in respect of each payment of Taxes required
          under this Section 2.19(a) within 30 days after the date such payment
          is due pursuant to applicable law, and each Borrower shall promptly
          furnish to the Bank, at the Administrative Agent's request, any other
          information, documents and receipts that the Administrative Agent may,
          from time to time, reasonably require to establish to its reasonable
          satisfaction that full and timely payment has been made of all Taxes
          required to be paid under this Section 2.19(a);

               (v)   in the event that the payments by a Borrower become exempt
          from or not subject to Taxes, such Borrower will, upon the reasonable
          request of the Administrative Agent, furnish to the Administrative
          Agent either a certificate

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                                                                              36

          from each appropriate taxing authority or an opinion of counsel
          reasonably acceptable to the Administrative Agent, in either case
          stating that payments hereunder are exempt from or not subject to
          taxes; and

               (vi)  if a Lender (or Transferee), the Issuing Bank or the
          Administrative Agent shall become aware that it is entitled to receive
          a refund in respect of Taxes as to which it has been indemnified by a
          Borrower, or with respect to which a Borrower has paid additional
          amounts, pursuant to this Section 2.19, it shall promptly notify the
          Borrower of the availability of such refund and shall, within 30 days
          after receipt of a request by the Borrower, make a claim to the
          relevant taxing authority or other Governmental Authority for such
          refund at the Borrower's expense. If any Lender (or Transferee), the
          Issuing Bank or the Administrative Agent receives a refund (including
          pursuant to a claim for refund made pursuant to the preceding
          sentence) in respect of any Taxes as to which it has been indemnified
          by a Borrower or with respect to which a Borrower has paid additional
          amounts pursuant to this Section 2.19, it shall promptly repay such
          refund (but only to the extent of indemnity payments made, or
          additional amounts paid, by the Borrower under this Section 2.19 with
          respect to the Taxes giving rise to such refund), net of all
          out-of-pocket expenses of such Lender (or Transferee), the Issuing
          Bank or the Administrative Agent, to the Borrower; each Borrower, upon
          the request of such Lender (or Transferee) or the Administrative
          Agent, agrees to return any such refund (plus penalties, interest or
          other charges) to such Lender (or Transferee), the Issuing Bank or the
          Administrative Agent in the event such Lender (or Transferee), the
          Issuing Bank or the Administrative Agent is required to repay such
          refund to the relevant taxing authority or other Governmental
          Authority.

               (vii) Any Lender that is entitled to an exemption from or
          reduction of withholding tax under the law of the jurisdiction in
          which a Borrower is located, or any treaty to which such jurisdiction
          is a party, with respect to payments under this Agreement shall
          deliver to Holdings (with a copy to the Administrative Agent), at the
          time or times prescribed by applicable law, such properly completed
          and executed documentation prescribed by applicable law or reasonably
          requested by Holdings as will permit such payments to be made without
          withholding or at a reduced rate, provided that such Lender has
          received written notice from the Borrower advising it of the
          availability of such exemption or reduction and supplying all
          applicable documentation.

          (b)  Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations of each Borrower pursuant to
this Section 2.19 shall survive the payment in full of the principal of and
interest on the Loans.

          SECTION 2.20.  ASSIGNMENT OF COMMITMENTS UNDER CERTAIN CIRCUMSTANCES.
(a) Any Lender (or Transferee) claiming any additional amounts payable pursuant
to Section 2.13 or Section 2.19 shall use reasonable efforts (consistent with
legal and regulatory restrictions) to file any certificate or document requested
by a Borrower or to change the jurisdiction of its applicable lending office if
the making of such a filing or change would avoid the need for or reduce the
amount of any such additional amounts which may thereafter accrue and would not,
in

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                                                                              37

the judgment of such Lender (or Transferee), be otherwise disadvantageous to
such Lender (or Transferee).

          (b)  In the event that any Lender shall have delivered a notice or
certificate pursuant to Section 2.13 or 2.14, or a Borrower shall be required to
make additional payments to any Lender under Section 2.19, Holdings shall have
the right, at its own expense, upon notice to such Lender and the Administrative
Agent, to require such Lender to transfer and assign without recourse (in
accordance with and subject to the restrictions contained in Section 10.04) all
its interests, rights and obligations under this Agreement to another financial
institution approved by the Administrative Agent (which approval shall not be
unreasonably withheld) which shall assume such obligations; PROVIDED that (i) no
such assignment shall conflict with any law, rule or regulation or order of any
Governmental Authority and (ii) the assignee shall pay to the affected Lender in
immediately available funds on the date of such assignment the principal of and
interest accrued to the date of payment on the Loans made by it hereunder and a
Borrower shall pay to the affected Lender in immediately available funds on such
date all other amounts accrued for its account or owed to it hereunder.

                   ARTICLE III. REPRESENTATIONS AND WARRANTIES

          Holdings and each Borrower represents and warrants that:

          SECTION 3.01.  CORPORATE EXISTENCE AND GOOD STANDING. Holdings and
each of its Material Subsidiaries: (a) is a corporation, partnership or other
entity duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization; (b) has all requisite corporate or other
power, and has all material governmental licenses, authorizations, consents and
approvals, necessary to own its assets and carry on its business as now being or
as proposed to be conducted; and (c) is qualified to do business and is in good
standing in all jurisdictions in which the nature of the business conducted by
it makes such qualification necessary and where failure so to qualify or to be
in good standing could reasonably be expected to (either individually or in the
aggregate) result in a Material Adverse Effect.

          SECTION 3.02.  CORPORATE POWER, AUTHORIZATION AND COMPLIANCE WITH THE
LAW. (a) The execution, delivery and performance by the Borrowers of this
Agreement and by Holdings and the Subsidiaries of the other Loan Documents to
which they are to be party are within their respective corporate powers, have
been duly authorized by all necessary corporate action and will not violate any
provision of law of or their articles of incorporation, by-laws or memoranda or
articles of association, or result in the breach of or constitute a default
under or require any consent under any indenture or other material agreement or
instrument to which Holdings or any Subsidiary is a party or by which Holdings
or any Subsidiary or its respective properties may be bound or affected, or
cause any of its properties to become subject to any Lien; this Agreement
constitutes the legal, valid and binding obligation of each Borrower; and each
other Loan Document constitutes the legal, valid and binding obligation of
Holdings and each Subsidiary (to the extent Holdings or such Subsidiary is party
thereto) enforceable against such person in accordance with its terms.

          (b)  The conduct by Holdings and its Subsidiaries of their respective
businesses as they are presently operated does not violate any material
provision of law or material rule or regulation of any Governmental Authority in
a manner which, when taken together with all other

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                                                                              38

such violations, could reasonably be expected to result in a Materially Adverse
Effect; and Holdings and its Subsidiaries have obtained all material consents
and approvals of Governmental Authorities required to conduct their respective
businesses as they are presently operated, except to the extent that failure to
obtain any such consents or approvals could not reasonably be expected to result
in a Material Adverse Effect.

          SECTION 3.03.  FINANCIAL INFORMATION; ABSENCE OF MATERIAL ADVERSE
CHANGE. (a) The audited consolidated financial statements of Holdings and its
Subsidiaries for the fiscal year ended December 31, 2001, certified by
independent public accountants selected by Holdings, fairly present the
financial condition of Holdings and its Subsidiaries at the date of such
statements and the results of their respective operations for the fiscal year
ended on said date, all in conformity with GAAP.

          (b)  The consolidating balance sheets by geographic region of Holdings
and its Subsidiaries as of December 31, 2001, were prepared by the management of
Holdings in good faith.

          (c)  The unaudited consolidated financial statements of Holdings and
its Subsidiaries for the fiscal quarters ended March 31, June 30 and September
30, 2002, heretofore delivered to the Administrative Agent fairly present the
financial condition of Holdings and its Subsidiaries at the dates of such
statements and the results of their respective operations for the fiscal
quarters ended on such dates, all in conformity with GAAP.

          (d)  Since December 31, 2001, there has occurred no Material Adverse
Change.

          SECTION 3.04.  EMPLOYEE BENEFIT PLANS. Each of the Borrowers and its
ERISA Affiliates are in compliance in all material respects with the applicable
provisions of ERISA and the Code and the regulations and published
interpretations thereunder. No Reportable Event has occurred in respect of any
Plan of any Borrower or any ERISA Affiliate. The present value of all benefit
liabilities of all underfunded Plans (based on those assumptions used to fund
each such Plan) did not, as of the last annual valuation dates applicable
thereto, exceed by more than $5,000,000 the value of the assets of all such
underfunded Plans. Neither the Borrowers nor any ERISA Affiliate have incurred
any Withdrawal Liability that materially adversely affects the financial
condition of any Borrower and its ERISA Affiliates taken as a whole. Neither the
Borrowers nor any ERISA Affiliate have received any notification that any
Multiemployer Plan is in reorganization or has been terminated, within the
meaning of Title IV of ERISA, and no Multiemployer Plan is reasonably expected
to be in reorganization or to be terminated, where such reorganization or
termination has resulted or can reasonably be expected to result in an increase
in the contributions required to be made to such Plan that would materially and
adversely affect the financial condition of any Borrower and its ERISA
Affiliates taken as a whole.

          SECTION 3.05.  ENVIRONMENTAL MATTERS. The Borrowers are aware of no
events, conditions or circumstances involving environmental pollution or
contamination or employee health or safety that could reasonably be expected to
result in a Material Adverse Change.

          SECTION 3.06.  LITIGATION. (a) There are no suits, investigations or
proceedings pending or, to the best of its knowledge, threatened, against or
affecting Holdings or the Subsidiaries which call into question the validity of
this Agreement or could reasonably be

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                                                                              39

expected to result in a Material Adverse Effect (other than suits,
investigations or proceedings referred to in the definition of "Litigation
Liabilities" to the extent no Default shall have resulted therefrom under
Section 6.08 or any other provision of this Agreement).

          (b)  Except as described in Schedule 3.06(b) hereto, (i) all suits,
investigations or proceedings that have resulted or are expected to result in
Litigation Liabilities have been settled pursuant to the Settlement Agreements,
all of which have been approved by the applicable courts pursuant to
non-appealable orders, and (ii) all amounts due or to become due under the
Settlement Agreements have been accrued for or paid in full.

          SECTION 3.07.  TAXES. Holdings and its Subsidiaries have filed all
Federal and other material tax returns required to be filed and paid all Federal
and other material taxes due or assessed indicated thereon, including interest
and penalties, except for taxes which are being contested in good faith and by
applicable proceedings, and for which Holdings and its Subsidiaries have made
adequate reserves on the books of Holdings and its Subsidiaries.

          SECTION 3.08.  SUBSIDIARIES. Schedule 3.08, as the same shall be
updated by Holdings from time to time by means of one or more notices delivered
to the Administrative Agent, correctly sets forth the name of each Subsidiary of
Holdings, its jurisdiction of incorporation and the percentage of each class of
issued and outstanding capital stock owned by Holdings and any Subsidiary,
respectively, if any; the corporations listed on Schedule 3.08 are the only
Subsidiaries of Holdings as of the date of this Agreement.

          SECTION 3.09.  INVESTMENT COMPANY ACT. Neither Holdings nor any of its
Subsidiaries is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.

          SECTION 3.10.  NO MATERIAL MISSTATEMENTS. No information, report,
financial statement, exhibit or schedule furnished by or on behalf of any
Borrower to the Administrative Agent or any Lender in connection with this
Agreement or included herein or delivered pursuant hereto contained or contains
any material misstatement of fact or omitted or omits any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, or are made, not misleading.

          SECTION 3.11.  FEDERAL RESERVE REGULATIONS. (a) Neither Holdings nor
any of its Subsidiaries is engaged principally, or as one if its important
activities, in the business of extending credit for the purpose of purchasing or
carrying Margin Stock.

          (b)  No part of the proceeds of any Loan will be used, whether
directly or indirectly, and whether immediately, incidentally or ultimately, (i)
to purchase or carry Margin Stock or to extend credit to others for the purpose
of purchasing or carrying Margin Stock or to refund indebtedness originally
incurred for such purpose or (ii) for any purpose which entails a violation of,
or which is inconsistent with, the provisions of the Regulations of the Board,
including Regulation U or X.

          SECTION 3.12.  TITLE TO PROPERTIES. Holdings and its Subsidiaries have
good title in fee simple to, or valid and subsisting leasehold interests in, all
their respective material real properties, and good title to all their
respective material other properties, reflected on the financial statements of
Holdings and its Subsidiaries referred to in Section 3.03 above, except

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                                                                              40

property disposed of in the ordinary course of business and except that SIBS's
ownership interest in the York Avenue Property has been replaced by a leasehold
interest in favor of Sotheby's, Inc. pursuant to the Sale and Leaseback, and
none of such properties or documents of title relating to such properties are
subject to any Liens except Liens permitted by Section 6.01.

          SECTION 3.13.  USE OF PROCEEDS. The Borrowers will use the proceeds of
the Loans only for the purposes specified in the preamble to this Agreement.

          SECTION 3.14.  SECURITY DOCUMENTS. (a) The Pledge Agreement is
effective to create in favor of the Collateral Agent a legal, valid and
enforceable security interest in the Collateral (as defined therein), and
constitutes a perfected first priority Lien on and security interest in all
right, title and interest of each pledgor thereunder in and to the Collateral
(as defined therein).

          (b)  The Security Agreement is effective to create in favor of the
Collateral Agent a legal, valid and enforceable security interest in the
Collateral (as defined therein), and constitutes a perfected first priority Lien
on and security interest in all right, title and interest of each grantor
thereunder in and to such Collateral to the extent it can be perfected by
filings or other actions under the Uniform Commercial Code, subject only to
Liens existing on the date hereof and expressly permitted by Section 6.01.

          (c)  The Trademark Security Agreement has been filed in the United
States Patent and Trademark Office and the United States Copyright Office, and
constitutes a perfected Lien on and security interest in all right, title and
interest of the grantors thereunder in the Intellectual Property (as defined in
the Security Agreement) that is registered in the United States.

          (d)  The Collateral and Guarantee Requirement has been satisfied.

          (e)  The UK Securities Mortgage is effective to create in favor of the
Collateral Agent a legal, valid and enforceable security interest in the pledged
equity interests of the UK Borrowers, and constitutes a perfected first priority
Lien on and security interest in all right, title and interest of each pledgor
thereunder.

          (f)  The Swiss Securities Mortgage is effective to create in favor of
the Collateral Agent a legal, valid and enforceable security interest in the
pledged equity interests of the Swiss Borrower, and constitutes a perfected
first priority Lien on and security interest in all right, title and interest of
each pledgor thereunder.

                             ARTICLE IV. CONDITIONS

          SECTION 4.01.  EFFECTIVE DATE. This Agreement shall become effective
on the date on which each of the following conditions shall have been satisfied
(or waived in accordance with Section 10.08):

               (a)  The Administrative Agent (or its counsel) shall have
          received from each party hereto either (i) a counterpart of this
          Agreement signed on behalf of such party or (ii) written evidence
          satisfactory to the Administrative Agent

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                                                                              41

          (which may include telecopy transmission of a signed signature page of
          this Agreement) that such party has signed a counterpart of this
          Agreement.

               (b)  The Administrative Agent shall have received the favorable
          written opinions of Weil, Gotshal & Manges LLP, counsel for the
          Borrowers, Mr. Donaldson C. Pillsbury, General Counsel of Sotheby's
          Holdings, Inc., Miro, Weiner & Kramer, Woodburn and Wedge,
          Freshfields, and Pestalozzi Lachenal Patry, dated the Effective Date
          and addressed to the Lenders, the Administrative Agent and the Issuing
          Bank to the effect set forth in Exhibits D-1, D-2, D-3, D-4, D-5 and
          D-6, respectively; the Borrowers hereby instruct such counsel to
          deliver such opinions to the Administrative Agent.

               (c)  All legal matters incidental to this Agreement and the
          borrowings hereunder shall be satisfactory to the Lenders and their
          counsel and to Cravath, Swaine & Moore, counsel for the Administrative
          Agent.

               (d)  The Administrative Agent shall have received such evidence
          as it shall reasonably have requested as to the power and authority of
          Holdings and each Subsidiary to enter into and perform its obligations
          under each Loan Document to which it is party and as to the due
          execution and delivery of each such Loan Document.

               (e)  The Administrative Agent shall have received a certificate
          of Holdings, dated the Effective Date and signed by a Financial
          Officer of Holdings, confirming compliance with the conditions
          precedent set forth in paragraph (j) of this Section and paragraphs
          (b), (c) and (d) of Section 4.02.

               (f)  The Sale and Leaseback shall have been completed or shall
          simultaneously be completed; the net proceeds therefrom shall have
          been applied or shall simultaneously be applied to prepay all the
          Loans outstanding under the Existing Credit Agreement.

               (g)  The Administrative Agent shall have received or shall
          simultaneously with the initial borrowings under this Agreement
          receive all Fees and interest accrued under the Existing Credit
          Agreement through the date immediately preceding the Effective Date
          (whether or not then due) and all other amounts due and payable under
          the Existing Credit Agreement on or prior to the Effective Date.

               (h)  The Administrative Agent shall have received a completed
          Borrowing Base Certificate dated as of a recent date and signed by a
          Financial Officer on behalf of Holdings.

               (i)  The Collateral Agent shall have received an updated
          Perfection Certificate dated the Effective Date and duly executed by a
          Financial Officer of Holdings.

               (j)  The Collateral and Guarantee Requirement shall be satisfied.

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                                                                              42

The Administrative Agent shall notify the Borrowers and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, this Agreement shall not become effective unless each of the
foregoing conditions shall have been satisfied (or waived pursuant to Section
10.08) at or prior to 3:00 p.m., New York City time, on February 7, 2003.

          SECTION 4.02.  EACH BORROWING DATE. On the date of each Borrowing and
on the date of issuance of any Letter of Credit:

               (a)  The Administrative Agent shall have received a notice of
          such Borrowing as required by Section 2.04.

               (b)  The representations and warranties set forth in Article III
          hereof shall be true and correct in all material respects on and as of
          the date of such Borrowing with the same effect as though made on and
          as of such date, except to the extent such representations and
          warranties expressly relate to an earlier date.

               (c)  Each Borrower shall be in compliance with all the terms and
          provisions set forth herein and at the time of and immediately after
          such Borrowing no Event of Default or Default shall have occurred and
          be continuing.

               (d)  After giving effect to such Borrowing or the issuance of
          such Letter of Credit, the aggregate principal amount of the
          outstanding Term Loans and the aggregate Revolving Exposures shall not
          exceed the Borrowing Base.

Each Borrowing shall be deemed to constitute a representation and warranty by
each Borrower on the date of such Borrowing (a) as to the matters specified in
paragraphs (b), (c) and (d) of this Section 4.02 and (b) that no material event
has occurred since the previous fiscal quarter end that would require the
recording of a liability under FASB Statement No. 5 with respect to Litigation
Liabilities, which leads Holdings to believe that a Default will occur under
Section 6.08 or Section 6.09 as of the next fiscal quarter end.

                        ARTICLE V. AFFIRMATIVE COVENANTS

          The Borrowers covenant and agree with each Lender that, so long as
this Agreement shall remain in effect or the principal of or interest on any
Loan, any Fees or any other expenses or amounts payable under any Loan Document
shall be unpaid, or any Letter of Credit shall remain outstanding, unless the
Required Lenders shall otherwise consent in writing, Holdings will, and will
cause each of the Subsidiaries to:

          SECTION 5.01.  FINANCIAL STATEMENTS. In the case of Holdings, furnish
to the Administrative Agent and each Lender:

               (a)  within 90 days after the end of each fiscal year, (i) a
          consolidated balance sheet at the end of such fiscal year and the
          related statements of income and operations and changes in financial
          position and of shareholder's equity for such year, all prepared in
          accordance with GAAP and audited by and accompanied by the opinion of
          Deloitte & Touche or other independent public accountants reasonably
          satisfactory to the Required Lenders and (ii) a

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                                                                              43

          consolidating balance sheet by geographic region;

               (b)  within 60 days after the end of the first, second and third
          quarter of each fiscal year, a consolidated balance sheet (and a
          consolidating balance sheet by geographic region) at the end of such
          quarter and the related statement of income for such period, all
          prepared in accordance with GAAP and certified by the Financial
          Officer of Holdings;

               (c)  (i) at the time of each delivery of financial statements
          pursuant to (a) or (b) above, a certificate signed by a Responsible
          Officer of Holdings stating whether or not Holdings and its
          Subsidiaries are in compliance with Article VI and setting forth in
          detail satisfactory to the Administrative Agent calculations of the
          amounts, ratios and baskets referred to in Sections 6.07, 6.08, 6.09
          and 6.10, and (ii) within 45 days after the end of each calendar
          quarter, a completed Borrowing Base Certificate setting forth the
          calculation of and certifying the Borrowing Base as of the last day of
          such calendar quarter, certified as complete and correct and signed on
          behalf of Holdings by a Financial Officer, together with such other
          supporting documentation and additional reports with respect to the
          Borrowing Base as the Administrative Agent shall reasonably request;

               (d)  promptly after the filing thereof, copies of all forms and
          reports filed by it with the Securities and Exchange Commission and,
          promptly after knowledge thereof shall have come to the attention of
          any Responsible Officer, written notice of (i) any threatened or
          pending litigation or arbitral or governmental or administrative
          proceeding against Holdings or any of its Subsidiaries which could
          reasonably be expected to result in a Material Adverse Effect and (ii)
          any Event of Default (or event which with notice or the passage of
          time or both would constitute an Event of Default) together with a
          statement by a Responsible Officer describing the action, if any,
          which Holdings proposes to take with respect thereto; and

               (e)  promptly, such further information regarding the business
          affairs, legal affairs, financial condition and contingent liabilities
          (including Litigation Liabilities) of Holdings and its Subsidiaries as
          the Administrative Agent may reasonably request.

          SECTION 5.02.  PAYMENT OF OBLIGATIONS. (a) Pay and discharge or cause
to be paid and discharged promptly when due all material and lawful taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or in respect of its property, before the same shall become in
default, as well as all material and lawful claims which, if unpaid, might
become a lien or charge upon such properties or any part thereof; PROVIDED,
HOWEVER, that neither Holdings nor any of the Subsidiaries shall be required to
pay and discharge or to cause to be paid and discharged any such tax,
assessment, charge, levy or claim so long as the validity, applicability or
amount thereof shall be contested in good faith by applicable proceedings and
Holdings or such Subsidiary, as the case may be, shall have set aside on its
books reserves reasonably deemed adequate by it with respect thereto.

          SECTION 5.03.  MAINTAIN PROPERTY AND INSURANCE. (a) Maintain and
preserve all properties which are used in the conduct of the business of
Holdings and the Material

<Page>

                                                                              44

Subsidiaries in good working order and condition, ordinary wear and tear
excepted, and (b) maintain in respect of the assets of Holdings and the Material
Subsidiaries, insurance in such amounts and against such risks as is generally
maintained by companies operating similar businesses in the same general area.
All insurance policies hereunder shall be maintained with sound and reputable
insurance carriers of recognized standing.

          SECTION 5.04.  MAINTAIN EXISTENCE. Preserve (a) the corporate
existence and good standing of Holdings and the Material Subsidiaries and (b)
all the material rights, privileges and franchises necessary and desirable in
the normal conduct of the business of Holdings and the Material Subsidiaries.

          SECTION 5.05.  COMPLIANCE WITH LAWS. Comply with the requirements of
all applicable laws (including ERISA), regulations and orders of any
Governmental Authority, a violation of which would materially affect the
business or financial condition of Holdings and its Subsidiaries taken as a
whole, except any such law, regulation or order which is being contested by
Holdings or any Subsidiary in good faith by applicable proceedings.

          SECTION 5.06.  INSPECTION. Give, upon the request of any Lender upon
reasonable advance notice, any representative of such Lender access during
normal business hours to inspect, and permit such representative to inspect, all
properties belonging to it and permit such representative to examine, copy and
make extracts from, financial records relating to its affairs, as such
representative may reasonably require.

          SECTION 5.07.  ERISA. (a) Comply in all material respects with the
applicable provisions of ERISA and the Code and (b) furnish to the
Administrative Agent and each Lender (i) as soon as possible, and in any event
within 30 days after any Responsible Officer of Holdings or any ERISA Affiliate
either knows or has reason to know that any Reportable Event has occurred that
alone or together with any other Reportable Event could reasonably be expected
to result in liability of Holdings to the PBGC in an aggregate amount exceeding
$5,000,000, a statement of a Financial Officer setting forth details as to such
Reportable Event and the action proposed to be taken with respect thereto,
together with a copy of the notice, if any, of such Reportable Event given to
the PBGC, (ii) promptly after receipt thereof, a copy of any notice Holdings or
any ERISA Affiliate may receive from the PBGC relating to the intention of the
PBGC to terminate any Plan or Plans (other than a Plan maintained by an ERISA
Affiliate which is considered an ERISA Affiliate only pursuant to subsection (m)
or (o) of Section 414 of the Code) or to appoint a trustee to administer any
Plan or Plans, (iii) within 10 days after the due date for filing with the PBGC
pursuant to Section 412(n) of the Code of a notice of failure to make a required
installment or other payment with respect to a Plan, a statement of a Financial
Officer setting forth details as to such failure and the action proposed to be
taken with respect thereto, together with a copy of such notice given to the
PBGC and (iv) promptly and in any event within 30 days after receipt thereof by
any Borrower or any ERISA Affiliate from the sponsor of a Multiemployer Plan, a
copy of each notice received by such Borrower or any ERISA Affiliate concerning
(A) the imposition of Withdrawal Liability or (B) a determination that a
Multiemployer Plan is, or is expected to be, terminated or in reorganization,
both within the meaning of Title IV of ERISA.

          SECTION 5.08.  COLLATERAL AND BORROWING BASE EVALUATIONS. Permit any
representatives designated by the Administrative Agent (including consultants or
other advisors retained by the Administrative Agent) to conduct evaluations of
its computation of the Borrowing

<Page>

                                                                              45

Base and the assets included in the Borrowing Base, all at such reasonable times
and as often as reasonably requested; PROVIDED that, if no Default shall have
occurred and be continuing, no more than one such evaluation will be requested
by the Administrative Agent during any fiscal year; and PROVIDED FURTHER that
any consultants or other advisors retained by the Administrative Agent (i) shall
not be employed by a competing auction house and (ii) shall be subject to the
confidentiality provisions of Section 10.17. Holdings shall pay the reasonable
fees and expenses of any such evaluation.

          SECTION 5.09.  FURTHER ASSURANCES. Execute any and all further
documents, financing statements, agreements and instruments, and take all such
further actions (including the filing and recording of financing statements,
fixture filings, mortgages, deeds of trust and other documents), which may be
required under any applicable law, or which the Collateral Agent or the Required
Lenders may reasonably request, to cause the Collateral and Guarantee
Requirement to be and remain satisfied at all times, all at the expense of
Holdings. Holdings also agrees to provide to the Administrative Agent from time
to time upon request evidence reasonably satisfactory to the Collateral Agent as
to the perfection and priority of the Liens created or intended to be created by
the Security Documents.

          SECTION 5.10.  ART LOANS. Cause each Lending Subsidiary, in connection
with each Art Loan made or to be made by it, to apply credit standards and loan
to collateral value requirements, and to follow practices with respect to
documentation and the perfection of security interests, not less strict than
those generally applied and followed in the Lending Subsidiaries' art lending
business prior to the Closing Date.

                         ARTICLE VI. NEGATIVE COVENANTS

          The Borrowers covenant and agree with each Lender that, so long as
this Agreement shall remain outstanding or the principal of or interest on any
Loan, any Fees or any other expenses or amounts payable under any Loan Document
shall be unpaid, or any Letter of Credit shall remain in effect, unless the
Required Lenders shall otherwise consent in writing, Holdings will not, either
directly or indirectly, and will not cause or permit any of the Subsidiaries to:

          SECTION 6.01.  LIENS. Incur, create, assume or permit to exist any
mortgage, pledge, security interest, lien, charge or other encumbrance of any
nature whatsoever (including conditional sales or other title retention
agreement) on any of its property or assets, whether owned at the date hereof or
hereafter acquired, other than:

               (a)  liens incurred or pledges and deposits made in connection
          with workmen's compensation, unemployment insurance, old-age pensions,
          social security and public liability and similar legislation;

               (b)  liens securing the performance of bids, tenders, leases,
          contracts (other than for the repayment of borrowed money), statutory
          obligations, surety and appeal bonds and other obligations of like
          nature, incurred incident to and in the ordinary course of business;

               (c)  statutory liens of landlords and other liens imposed by law,
          such as

<Page>

                                                                              46

          carriers', warehousemen's, mechanics', materialmen's and vendors'
          liens, incurred in good faith in the ordinary course of business;

               (d)  liens securing the payment of taxes, assessments and
          governmental charges or levies, either (i) not delinquent or (ii)
          being contested in good faith by appropriate proceedings with adequate
          reserves;

               (e)  zoning restrictions, easements, licenses, reservations,
          restrictions on the use of real property or minor irregularities
          incident thereto which do not in the aggregate materially detract from
          the value of the property or assets of Holdings and the Subsidiaries
          taken as a whole or materially impair the operation of the business of
          Holdings and the Subsidiaries taken as a whole;

               (f)  liens incurred in the ordinary course of business (other
          than consensual liens on assets constituting Collateral) provided that
          such liens are not given as security for Indebtedness;

               (g)  liens on property or assets of any Subsidiary securing
          Indebtedness of such Subsidiary to Holdings or to a wholly owned
          Subsidiary of Holdings;

               (h)  liens for judgments or awards, so long as the finality of
          such judgment or award is being contested in good faith and execution
          thereof is stayed; PROVIDED that the aggregate amount of liens
          permitted by this clause may not exceed $10,000,000;

               (i)  liens in connection with the Sale and Leaseback;

               (j)  any lien existing on any property or assets of any
          corporation at the time it becomes a Subsidiary of Holdings, or
          existing prior to the time of acquisition upon any property or assets
          acquired by Holdings or any of its Subsidiaries through purchase,
          merger or consolidation or otherwise, whether or not assumed by
          Holdings or such Subsidiary;

               (k)  any lien placed upon property or assets within 90 days of
          the time of acquisition of such property or assets by Holdings or any
          of its Subsidiaries to secure all or a portion of (or to secure
          Indebtedness incurred to pay all or a portion of) the purchase price
          thereof, provided that any such lien shall not encumber any other
          property or assets of Holdings or any Subsidiary;

               (l)  liens, other than the liens permitted by clauses (a) through
          (k) above (including any such liens in existence as of the date
          hereof), existing as of the date hereof and set forth on Schedule
          6.01; PROVIDED, HOWEVER, that no such lien shall be permitted under
          this clause (l) if it extends to property other than the property
          subject to such lien on the date hereof;

               (m)  any lien renewing, extending or refunding any lien permitted
          by clause (j), (k) or (l) above, provided that the principal amount
          secured is not increased, and the lien is not extended to other
          property;

<Page>

                                                                              47

               (n)  liens, in addition to the liens permitted by clauses (a)
          through (m) above, on assets not constituting Collateral securing
          obligations in an aggregate amount not greater than 10% of
          Consolidated Net Worth; and

               (o)  liens created under the Security Documents.

          SECTION 6.02.  SUBSIDIARY INDEBTEDNESS. Permit any Subsidiary to
create, incur, assume or permit to exist any Indebtedness except:

          (a)  Indebtedness in connection with the Sale and Leaseback;

          (b)  in the case of any Subsidiary that is a Borrower, Indebtedness
not prohibited under any other Section of this Agreement;

          (c)  Indebtedness of any Subsidiary the proceeds of which are used by
such Subsidiary to make secured loans to consignors, dealers or clients in the
ordinary course of business of the Borrowers and their subsidiaries and in a
manner that is consistent with established practices pursuant to the auction
finance business of the Borrowers and their subsidiaries;

          (d) Indebtedness of any Subsidiary to another Subsidiary or any
Borrower;

          (e)  Indebtedness of any Subsidiary outstanding on the date hereof or
available to any Subsidiary under credit facilities existing on the date hereof,
not in excess of $20,000,000 in the aggregate with respect to all Subsidiaries;
and

          (f)  other Indebtedness, provided that the aggregate principal amount
of all such other Indebtedness of all Subsidiaries outstanding at any time
(excluding amounts permitted under clauses (a) through (e) above) does not
exceed 10% of Consolidated Net Worth at such time.

          SECTION 6.03.  CONSOLIDATIONS, MERGERS, AND SALES OF ASSETS. (a) Merge
or consolidate with any other corporation, except that (i) any Borrower may
merge or consolidate with a Subsidiary so long as the Borrower is the surviving
entity in such merger or consolidation, (ii) any Subsidiary other than a
Borrower may merge or consolidate with a Subsidiary so long as the surviving
entity in such merger or consolidation is a Subsidiary (and, if either
constituent corporation is a Domestic Subsidiary, a Domestic Subsidiary) or
(iii) any Borrower may merge or consolidate with any other Person so long as the
Borrower is the surviving entity in such merger or consolidation and, after
giving effect to such merger or consolidation, no Event of Default exists.

          (b)  Sell, lease, transfer or otherwise dispose of all or a
substantial part of its assets, other than assets no longer used or useful in
the conduct of its business or leases for space used in the ordinary course of
business which are near the end of their term, except (i) dispositions in the
ordinary course of business for a full and adequate consideration and (ii) the
sale of the York Avenue Property pursuant to the Sale and Leaseback.

          (c)  Sell, lease, transfer or otherwise dispose of any Art Loan.

<Page>

                                                                              48

          (d)  Sell, transfer or otherwise dispose of any of the London
Properties.

          SECTION 6.04.  LINES OF BUSINESS. Engage to any substantial extent in
any line or lines of business activity fundamentally different from the business
engaged in on the date hereof.

          SECTION 6.05.  TRANSACTIONS WITH AFFILIATES. Sell or transfer any
property or assets to, or purchase or acquire any property or assets from, or
otherwise engage in any other transactions with, any of its Affiliates, except
that as long as no Default or Event of Default shall have occurred and be
continuing, Holdings or any of its Subsidiaries may engage in any of the
foregoing transactions in the ordinary course of business at prices and on terms
and conditions not less favorable to Holdings or any Subsidiary than could be
obtained on an arm's-length basis from unrelated third parties.

          SECTION 6.06.  RESTRICTIONS ON DIVIDENDS. Enter into any agreement,
contract or arrangement which expressly limits the right of any Subsidiary to
pay dividends to its parent corporation.

          SECTION 6.07.  CONSOLIDATED LEVERAGE RATIO. Permit the Consolidated
Leverage Ratio at any time during any of the periods set forth below to exceed
the ratio set forth opposite such period:

<Table>
<Caption>
          Period                               Ratio
          <S>                                  <C>
          10/1/02-12/31/02                     .60 to 1.0
          Thereafter                           .70 to 1.0
</Table>

          SECTION 6.08.  ADJUSTED CONSOLIDATED NET WORTH. Permit Adjusted
Consolidated Net Worth at any of the dates set forth below to be less than the
amount set forth opposite such date:

<Table>
<Caption>
          Date                                 Amount
          ----                                 ------
          <S>                                  <C>
          12/31/02                             $  160,000,000
          3/31/03                                 145,000,000
          6/30/03                                 170,000,000
          9/30/03                                 145,000,000
          12/31/03                                170,000,000
          Each fiscal quarter end thereafter      145,000,000
</Table>

          SECTION 6.09.  CONSOLIDATED COVERAGE RATIO. Permit the Consolidated
Coverage Ratio for any period of four consecutive financial quarters ending on
any of the dates set forth below to be less than the ratio set forth opposite
such date:

<Table>
<Caption>
          Date                                 Ratio
          <S>                                  <C>
          12/31/02                             3.00 to 1.00
          3/31/03                              2.00 to 1.00
          6/30/03                              2.00 to 1.00
</Table>

<Page>

                                                                              49

<Table>
          <S>                                  <C>
          9/30/03                              1.50 to 1.00
          Each fiscal quarter end thereafter   2.25 to 1.00
</Table>

          SECTION 6.10.  RESTRICTED PAYMENTS; CERTAIN PAYMENTS IN RESPECT OF
INDEBTEDNESS. (a) Declare or make, or agree to make, directly or indirectly, any
Restricted Payment, or incur any obligation (contingent or otherwise) to do so,
except that (i) Subsidiaries may declare and pay dividends ratably with respect
to their capital stock, (ii) Holdings and Subsidiaries may, as part of their
incentive compensation programs for employees, repurchase Equity Interests in
Holdings or any Domestic Subsidiary in an aggregate amount not greater than
$3,000,000 for any fiscal year and (iii) if no Default or Event of Default has
occurred and is continuing or would occur as a result thereof, Holdings may make
any Restricted Payment that, taken together with all other Restricted Payments
made after July 10, 2001, would not exceed 40% of Consolidated Net Income of
Holdings, adjusted to exclude nonrecurring or extraordinary reserves and charges
relating to the Litigation Liabilities, for the period (treated as one
accounting period) commencing January 1, 2000, and ending at the most recent
fiscal quarter end for which financial statements shall have been delivered
under Section 5.01(a) or (b).

          (b)  Make any payment on account of the purchase, redemption,
prepayment, retirement or defeasance of the Senior Notes.

          SECTION 6.11.  ART LOANS. Permit any of the Pledged Art Loans (as such
term is defined in the Pledge Agreement) to be represented or evidenced by an
instrument or a certificate, or permit any agreement relating to any Pledged Art
Loan to provide that any of the documentation evidencing such Pledged Art Loan
is a security governed by Article 8 of the Uniform Commercial Code as in effect
in any applicable jurisdiction.

                         ARTICLE VII. EVENTS OF DEFAULT

          In case of the happening of any of the following events ("EVENTS OF
DEFAULT"):

          (a)  default shall be made in the payment of any principal of any Loan
or any amount due in respect of the reimbursement of any LC Disbursement when
and as the same shall become due and payable, whether at the due date thereof or
at a date fixed for prepayment thereof or by acceleration thereof or otherwise;

          (b)  default shall be made in the payment of any interest on any Loan
or LC Disbursement or any Fee or any other amount due under any Loan Document,
when and as the same shall become due and payable, and such default shall
continue unremedied for a period of five days;

          (c)  default shall be made in the due observance or performance by a
Borrower or any Subsidiary of any other covenant, condition or agreement
contained in Section 5.04(a) or 5.10 or in Article VI;

          (d)  default shall be made in the due observance or performance by a
Borrower or any Subsidiary of any other covenant, condition or agreement
contained in any Loan Document and such default shall continue unremedied for a
period of 30 days after notice thereof

<Page>

                                                                              50

from the Administrative Agent or any Lender to Holdings, or default shall be
made in the due observance or performance by a Borrower or any Subsidiary of any
other covenant, condition or agreement contained in any Security Document and
such default shall continue unremedied for a period of 5 Business Days after
notice thereof from the Administrative Agent or any Lender to Holdings;

          (e)  Holdings or any Subsidiary shall fail to pay any Indebtedness
greater than $1,000,000, or fail during any 30-day period to pay Indebtedness
aggregating more than $1,000,000, owing by Holdings or such Subsidiary, or any
interest or premium thereon aggregating $1,000,000 or more, when due (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise) and
such failure shall continue after the applicable grace period, if any, specified
in the agreement or instrument relating to such Indebtedness;

          (f)  any event or condition shall occur or exist under any agreement
or instrument of Holdings or any Subsidiary evidencing or securing or relating
to any Indebtedness exceeding $10,000,000, if the effect of such event or
condition is to accelerate, or to permit the holder or holders of such
Indebtedness or the trustee or trustees under any such agreement or instrument
to accelerate, the maturity of such Indebtedness;

          (g)  any representation or warranty made or deemed made in or in
connection with any Loan Document or the borrowings hereunder, or any
representation, warranty, statement or information contained in any report,
certificate, financial statement or other instrument furnished in connection
with or pursuant to any Loan Document, shall prove to have been false or
misleading in any material respect when so made, deemed made or furnished;

          (h)  (i) a Reportable Event or Reportable Events, or a failure to make
a required installment or other payment (within the meaning of Section 412(n)(1)
of the Code), shall have occurred with respect to any Plan or Plans that
reasonably could be expected to result in liability of Holdings to the PBGC or
to a Plan in an aggregate amount exceeding $5,000,000 and, within 30 days after
the reporting of any such Reportable Event to the Administrative Agent or after
the receipt by the Administrative Agent of a statement required pursuant to
Section 5.07(b)(iii) hereof, the Administrative Agent shall have notified the
Borrower in writing that (A) the Required Lenders have made a determination
that, on the basis of such Reportable Event or Reportable Events or the failure
to make a required payment, there are reasonable grounds for the termination of
such Plan or Plans by the PBGC, the appointment by the appropriate United States
district court of a trustee to administer such Plan or Plans or the imposition
of a lien in favor of a Plan and (B) as a result thereof an Event of Default
exists hereunder; (ii) a trustee shall be appointed by a United States district
court to administer any such Plan or Plans; or (iii) the PBGC shall institute
proceedings (including giving notice of intent thereof) to terminate any such
Plan or Plans;

          (i)  (i) the Borrowers or any ERISA Affiliate shall have been notified
by the sponsor of a Multiemployer Plan that it has incurred Withdrawal Liability
to such Multiemployer Plan, (ii) such Borrower or such ERISA Affiliate does not
have reasonable grounds for contesting such Withdrawal Liability or is not
contesting such Withdrawal Liability in a timely and appropriate manner and
(iii) the amount of such Withdrawal Liability specified in such notice, when
aggregated with all other amounts required to be paid to Multiemployer Plans in
connection with Withdrawal Liabilities (determined as of the date or dates of
such notification), either (A) exceeds $5,000,000 or requires payments exceeding
$1,000,000 in any year or (B) is less than

<Page>

                                                                              51

$5,000,000 but any Withdrawal Liability payment remains unpaid 30 days after
such payment is due;

          (j)  the Borrower or any ERISA Affiliate shall have been notified by
the sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or is being terminated, within the meaning of Title IV of ERISA,
if solely as a result of such reorganization or termination the aggregate annual
contributions of the Borrower and its ERISA Affiliates to all Multiemployer
Plans that are then in reorganization or have been or are being terminated have
been or will be increased over the amounts required to be contributed to such
Multiemployer Plans for their most recently completed plan years by an amount
exceeding $1,000,000;

          (k)  a judgment or judgments for the payment of money in excess of
$5,000,000 in the aggregate shall have been rendered against Holdings or any
Subsidiary and the same shall have remained unsatisfied and in effect, without
stay of execution, for any period of 60 days;

          (l)  an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i) relief
in respect of Holdings or any Material Subsidiary, or of a substantial part of
the property or assets of Holdings or any Material Subsidiary, under Title 11 of
the United States Code, as now constituted or hereafter amended, or any other
Federal or state bankruptcy, insolvency, receivership or similar law (or similar
statute or law in any other jurisdiction), (ii) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for Holdings
or any Material Subsidiary or for a substantial part of the property or assets
of Holdings or a Material Subsidiary or (iii) the winding-up or liquidation of
Holdings or any Material Subsidiary; and such proceeding or petition shall
continue undismissed for 30 days or an order or decree approving or ordering any
of the foregoing shall be entered;

          (m)  Holdings or any Material Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking relief under Title 11 of
the United States Code, as now constituted or hereafter amended, or any other
Federal or state bankruptcy, insolvency, receivership or similar law (or similar
statute or law in any other jurisdiction), (ii) consent to the institution of,
or fail to contest in a timely and applicable manner, any proceeding or the
filing of any petition described in (g) above, (iii) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for Holdings or any Material Subsidiary or for a substantial
part of the property or assets of Holdings or any Material Subsidiary, (iv) file
an answer admitting the Material allegations of a petition filed against it in
any such proceeding, (v) make a general assignment for the benefit of creditors,
(vi) become unable, admit in writing its inability or fail generally to pay its
debts as they become due or (vii) take any action for the purpose of effecting
any of the foregoing;

          (n)  a Change in Control shall occur;

          (o)  any Lien purported to be created under any Security Document
shall cease to be, or shall be asserted in writing by any Borrower or any
Subsidiary party to a Security Document not to be, a valid and perfected Lien on
any Collateral, with the priority required by the applicable Security Document,
except (i) as a result of the sale or other disposition of the applicable
Collateral in a transaction permitted under the Loan Documents or (ii) as a
result of the Administrative Agent's failure to maintain possession of any stock
certificates, promissory notes or other instruments delivered to it under the
Pledge Agreement or to make or continue UCC

<Page>

                                                                              52

filings; provided that no such cessation shall give rise to an Event of Default
unless such cessation (x) affects Collateral that is or should be subject to a
Lien in favor of the Collateral Agent having an aggregate value in excess of
$1,000,000 or (y) is not corrected upon request by the Collateral Agent upon
reasonable notice; or

          (p)  Holdings shall breach or fail to perform any of its material
obligations under any of the Settlement Agreements.

then, and in every such event (other than an event with respect to any Borrower
described in paragraph (l) or (m) above), and at any time thereafter during the
continuance of such event, the Administrative Agent shall, at the request of the
Required Lenders, by notice to the Borrowers, take either or both of the
following actions, at the same or different times: (i) terminate forthwith the
Commitments and (ii) declare the Loans then outstanding to be forthwith due and
payable in whole or in part, whereupon the principal of the Loans so declared to
be due and payable, together with accrued interest thereon and any unpaid
accrued Fees and all other liabilities of the Borrowers accrued hereunder, shall
become forthwith due and payable, without presentment, demand, protest or any
other notice of any kind, all of which are hereby expressly waived by the
Borrowers, anything contained herein to the contrary notwithstanding; and, in
any event with respect to a Borrower described in paragraph (l) or (m) above,
the Commitments shall automatically terminate and the principal of the Loans
then outstanding, together with accrued interest thereon and any unpaid accrued
Fees and all other liabilities of the Borrowers accrued hereunder, shall
automatically become due and payable, without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived by the
Borrowers, anything contained herein to the contrary notwithstanding.

                            ARTICLE VIII. THE AGENTS

          In order to expedite the transactions contemplated by this Agreement,
JPMCB is hereby appointed to act as Administrative Agent and Collateral Agent on
behalf of the Lenders. Each of the Lenders hereby irrevocably authorizes the
Agents to take such actions on behalf of such Lender and to exercise such powers
as are specifically delegated to the Agents by the terms and provisions hereof
and of the other Loan Documents, together with such actions and powers as are
reasonably incidental thereto. The Administrative Agent is hereby expressly
authorized by the Lenders, without hereby limiting any implied authority, (a) to
receive on behalf of the Lenders all payments of principal of and interest on
the Loans and all other amounts due to the Lenders hereunder, and promptly to
distribute to each Lender its proper share of each payment so received; (b) as
provided in Article VII, to give notice on behalf of each of the Lenders to the
Borrowers of any Event of Default specified in this Agreement of which the
Administrative Agent has actual knowledge acquired in connection with its agency
hereunder; and (c) to distribute to each Lender copies of all notices, financial
statements and other materials delivered by any Borrower pursuant to this
Agreement as received by the Administrative Agent.

          Neither the Agents nor any of their directors, officers, employees or
agents shall be liable as such for any action taken or omitted by any of them
except for its or his own gross negligence or wilful misconduct, or be
responsible for any statement, warranty or representation herein or the contents
of any document delivered in connection herewith, or be required to ascertain or
to make any inquiry concerning the performance or observance by the Borrowers of
any of the terms, conditions, covenants or agreements contained in any Loan
Document. The

<Page>

                                                                              53

Agents shall not be responsible to the Lenders for the due execution,
genuineness, validity, enforceability or effectiveness of this Agreement, or any
other Loan Documents or other instruments or agreements. The Agents shall in all
cases be fully protected in acting, or refraining from acting, in accordance
with written instructions signed by the Required Lenders and, except as
otherwise specifically provided herein, such instructions and any action or
inaction pursuant thereto shall be binding on all the Lenders. The Agents shall,
in the absence of knowledge to the contrary, be entitled to rely on any
instrument or document believed by them in good faith to be genuine and correct
and to have been signed or sent by the proper person or persons. Neither the
Agents nor any of their directors, officers, employees or agents shall have any
responsibility to the Borrowers on account of the failure of or delay in
performance or breach by any Lender of any of its obligations hereunder or to
any Lender on account of the failure of or delay in performance or breach by any
other Lender or a Borrower of any of their respective obligations hereunder or
under any other Loan Document or in connection herewith or therewith. The Agents
may execute any and all duties hereunder and under the other Loan Documents by
or through agents or employees and shall be entitled to rely upon the advice of
legal counsel selected by them with respect to all matters arising hereunder and
shall not be liable for any action taken or suffered in good faith by them in
accordance with the advice of such counsel.

          The Lenders hereby acknowledge that the Agents shall be under no duty
to take any discretionary action permitted to be taken by them pursuant to the
provisions of this Agreement or any other Loan Document unless they shall be
requested in writing to do so by the Required Lenders.

          Subject to the appointment and acceptance of a successor
Administrative Agent as provided below, the Administrative Agent may resign at
any time by notifying the Lenders, the Issuing Bank and the Borrowers. Upon any
such resignation, the Required Lenders shall have the right to appoint a
successor. If no successor shall have been so appointed by the Required Lenders
and shall have accepted such appointment within 30 days after the retiring
Administrative Agent gives notice of its resignation, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent which shall be a bank with an office in New York, New York,
having a combined capital and surplus of at least $500,000,000 or an Affiliate
of any such bank. Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor bank, such successor shall succeed to and become vested
with all the rights, powers, privileges and duties of the retiring
Administrative Agent and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder. After the Administrative Agent's
resignation hereunder, the provisions of this Article and Section 10.05 shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as Administrative Agent.

          With respect to the Loans made by it hereunder, the Agents in their
individual capacity and not as Agents shall have the same rights and powers as
any other Lender and may exercise the same as though they were not the Agents,
and the Agents and their Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with Holdings or any Subsidiary or
other Affiliate thereof as if they were not the Agents.

          Each Lender agrees (a) to reimburse the Agents, on demand, in the
amount of its pro rata share (based on its outstanding Term Loans, Revolving
Exposures and unused Commitments at the time of such demand) of any expenses
incurred for the benefit of the Lenders by the Agents, including counsel fees
and compensation of agents and employees paid for services rendered on behalf of
the Lenders, which shall not have been reimbursed by one of the

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Borrowers and (b) to indemnify and hold harmless the Agents and any of their
directors, officers, employees or agents, on demand, in the amount of such pro
rata share, from and against any and all liabilities, taxes, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against them in their capacity as Agents or any of them in any
way relating to or arising out of this Agreement or any other Loan Document or
any action taken or omitted by any of them under this Agreement or any other
Loan Document, to the extent the same shall not have been reimbursed by the
Borrowers; PROVIDED that no Lender shall be liable to the Agents for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the gross
negligence or wilful misconduct of the Agents or any of their directors,
officers, employees or agents.

          Each Lender acknowledges that it has, independently and without
reliance upon the Agents or any other Lender and based on such documents and
information as it has deemed applicable, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agents or any other Lender and
based on such documents and information as it shall from time to time deem
applicable, continue to make its own decisions in taking or not taking action
under or based upon this Agreement or any other Loan Document, any related
agreement or any document furnished hereunder or thereunder.

                              ARTICLE IX. GUARANTEE

          SECTION 9.01.  GUARANTEE. Subject to the last sentence of this Section
9.01(a), each Guarantor hereby guarantees to each Lender and the Administrative
Agent and their respective successors and assigns the prompt payment in full
when due (whether at stated maturity, by acceleration, by optional prepayment or
otherwise) of the Obligations, strictly in accordance with the terms thereof.
Each Guarantor hereby further agrees that if any Borrower shall fail to pay in
full when due (whether at stated maturity, by acceleration, by optional
prepayment or otherwise) any of the Obligations, the Guarantor will promptly pay
the same, without any demand or notice whatsoever, and that in the case of any
extension of time of payment or renewal of any of the Obligations, the same will
be promptly paid in full when due (whether at extended maturity, by acceleration
or otherwise) in accordance with the terms of such extension or renewal.
Notwithstanding anything in this Article IX to the contrary, Oatshare Limited
and Sotheby's will not be liable as Guarantors for the Obligations of Holdings,
Sotheby's, Inc. and Sotheby's Global Trading GmbH.

          SECTION 9.02.  OBLIGATIONS UNCONDITIONAL. The obligations of each
Guarantor under Section 9.01 hereof are absolute and unconditional irrespective
of the value, genuineness, validity, regularity or enforceability of the
obligations of any Borrower under this Agreement or any other agreement or
instrument referred to herein or therein, or any substitution, release or
exchange of any other guarantee of or security for any of the Obligations, and,
to the fullest extent permitted by applicable law, irrespective of any other
circumstance whatsoever which might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor, it being the intent of this
Section 9.02 that the obligations of each Guarantor hereunder shall be absolute
and unconditional under any and all circumstances. Without limiting the
generality of the foregoing, it is agreed that the occurrence of any one or more
of the following shall not affect the liability of any Guarantor hereunder:

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                                                                              55

          (a)  at any time or from time to time, without notice to the
Guarantors, the time for any performance of or compliance with any of the
Obligations shall be extended, or such performance or compliance shall be
waived;

          (b)  any of the acts mentioned in any of the provisions of this
Agreement or any other agreement or instrument referred to herein or therein
shall be done or omitted; or

          (c)  the maturity of any of the Obligations shall be accelerated, or
any of the Obligations shall be modified, supplemented or amended in any
respect, or any right under this Agreement or any other agreement or instrument
referred to herein or therein shall be waived or any other guarantee of any of
the Obligations or any security therefor shall be released or exchanged in whole
or in part or otherwise dealt with.

Each Guarantor hereby expressly waives diligence, presentment, demand of
payment, protest and all notices whatsoever, and any requirement that the
Administrative Agent or any Lender exhaust any right, power or remedy or proceed
against any Borrower under this Agreement or any other agreement or instrument
referred to herein or therein, or against any other person under any other
guarantee of, or security for, any of the Obligations.

          SECTION 9.03.  REINSTATEMENT. The obligations of each Guarantor under
this Article IX shall be automatically reinstated if and to the extent that for
any reason any payment by or on behalf of any Borrower in respect of the
Obligations is rescinded or must be otherwise restored by any holder of any of
the Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will indemnify
the Administrative Agent and each Lender on demand for all reasonable costs and
expenses (including, without limitation, fees of counsel) incurred by the
Administrative Agent or such Lender in connection with such rescission or
restoration.

          SECTION 9.04.  SUBROGATION. Each Guarantor hereby irrevocably waives
all rights of subrogation or contribution, whether arising by operation of law
(including, without limitation, any such right arising under Title 11 of the
United States Code) or otherwise, by reason of any payment by it pursuant to the
provisions of this Article IX and further agrees for the benefit of each of its
creditors (including, without limitation, each Lender and the Administrative
Agent) that any such payment by it of the Obligations of any Borrower shall
constitute a contribution of capital or a dividend, as the case may be, by such
Guarantor to such Borrower.

          SECTION 9.05.  REMEDIES. Each Guarantor agrees that, as between the
Guarantors and the Lenders, the obligations of any Borrower under this Agreement
may be declared to be forthwith due and payable as provided in Article VII
hereof (and shall be deemed to have become automatically due and payable in the
circumstances provided in said Article VII) for purposes of Section 9.01 hereof
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or preventing such obligations from becoming automatically due and
payable) as against any Borrower and that, in the event of such declaration (or
such obligations being deemed to have become automatically due and payable),
such obligations (whether or not due and payable by such Borrower) shall
forthwith become due and payable by each Guarantor for purposes of such Section
9.01.

          SECTION 9.06.  CONTINUING GUARANTEE. The guarantee in this Article IX
is a continuing guarantee, and shall apply to all Obligations whenever arising.

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                            ARTICLE X. MISCELLANEOUS

          SECTION 10.01. NOTICES. Notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopy, as follows:

          (a)  if to any Borrower, to it in care of Sotheby's, Inc. at 1334 York
Avenue, New York, New York 10021, Attention of the Chief Financial Officer
(Telecopy No. (212) 606-7132);

          (b)  if to the Administrative Agent, to JPMorgan Chase Bank, 1111
Fannin, 10th Floor, Houston, Texas 77002 Attention of Jennifer Anyigho (Telecopy
No. 713-750-2762), with copies to JPMorgan Chase Bank, 270 Park Avenue, New
York, New York 10017, Attention of Teri Streusand (Telecopy No. 212-270-5646);

          (c)  if to the Issuing Bank, to JPMorgan Chase Bank, 270 Park Avenue,
New York, New York 10017, Attention of Teri Streusand (Telecopy No.
212-270-5646);

          (d)  if to the Collateral Agent, to JPMorgan Chase Bank, 270 Park
Avenue, New York, New York 10017, Attention of Teri Streusand (Telecopy No.
212-270-5646); and

          (e)  if to a Lender, to it at its address (or telecopy number) set
forth in Schedule 2.01 or in the Assignment and Assumption Agreement pursuant to
which such Lender shall have become a party hereto.

Notices and other communications to the Lenders hereunder may be delivered or
furnished by electronic communications pursuant to procedures approved by the
Administrative Agent; PROVIDED that the foregoing shall not apply to notices
pursuant to Article II unless otherwise agreed by the Administrative Agent and
the applicable Lender. The Administrative Agent or a Borrower may, in its
discretion, agree to accept notices and other communications to it hereunder by
electronic communications pursuant to procedures approved by it; PROVIDED that
approval of such procedures may be limited to particular notices or
communications. All notices and other communications given to any party hereto
in accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt if delivered by hand or overnight courier service
or sent by telecopy, or on the date five Business Days after dispatch by
certified or registered mail, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 10.01 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 10.01.

          SECTION 10.02. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by the Borrowers herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Lenders and shall survive the making by the Lenders
of the Loans and the issuance of the Letters of Credit by the Issuing Bank,
regardless of any investigation made by the Lenders or on their behalf, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any Fee or any other amount payable under this
Agreement or any other Loan Document is outstanding and unpaid and so long as
the Commitments have not been terminated.

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          SECTION 10.03. BINDING EFFECT. This Agreement shall become effective
when it shall have been executed by the Borrowers and the Administrative Agent
and when the Administrative Agent shall have received copies hereof which, when
taken together, bear the signatures of the Required Lenders, and thereafter
shall be binding upon and inure to the benefit of the Borrowers, the
Administrative Agent and each Lender and their respective successors and
assigns, except that the Borrowers shall not have the right to assign rights
hereunder or any interest herein without the prior consent of all the Lenders.

          SECTION 10.04. SUCCESSORS AND ASSIGNS. (a) Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the successors and assigns of such party permitted hereby (including any
Affiliate of the Issuing Bank that issues any Letter of Credit), except that (i)
no Borrower may assign or otherwise transfer any of its rights or obligations
hereunder, except pursuant to a merger permitted by Section 6.03, without the
prior written consent of each Lender (and any attempted assignment or transfer
by a Borrower without such consent shall be null and void) and (ii) no Lender
may assign or otherwise transfer its rights or obligations hereunder except in
accordance with this Section; and all covenants, promises and agreements by or
on behalf of the Borrowers, the Administrative Agent, the Issuing Bank or the
Lenders that are contained in this Agreement shall bind and inure to the benefit
of their respective successors and assigns (including any Affiliate of the
Issuing Bank that issues any Letter of Credit). Nothing in the Agreement,
expressed or implied, shall be construed to confer upon an Person (other than
the parties hereto, their respective successors and assigns permitted hereby
(including any Affiliate of the Issuing Bank that issues any Letter of Credit),
Participants (to the extent provided in paragraph (c) of this Section) and, to
the extent expressly contemplated hereby, Related Funds) any legal or equitable
right, remedy or claim under or by reason of this Agreement.

          (b)  (i) Subject to the conditions set forth in paragraph (b)(ii)
below, any Lender may assign to one or more assignees all or a portion of its
rights and obligations under this Agreement (including all or a portion of its
Commitment or outstanding Loans or Letters of Credit at the time owing to it)
with the prior written consent (such consent not to be unreasonably withheld)
of:

                    (A)  Holdings; PROVIDED that no consent of Holdings shall be
               required for an assignment to a Lender or an Affiliate or a
               Related Fund of a Lender or, if an Event of Default under (a),
               (b), (l) or (m) of Article VII has occurred and is continuing;
               and

                    (B)  the Administrative Agent (and, in the case of an
               assignment of all or a portion of any Lender's LC Exposure, the
               Issuing Bank); PROVIDED that no consent of the Administrative
               Agent (or the Issuing Bank) shall be required for an assignment
               to an Affiliate or Related Fund of a Lender or of a Commitment
               (or an LC Exposure) to an assignee that is a Lender with a
               Commitment (or an LC Exposure) immediately prior to giving effect
               to such assignment.

               (ii)  Assignments shall be subject to the following additional
               conditions:

                    (A)  except in the case of an assignment to a Lender or an
               Affiliate or Related Fund of a Lender or an assignment of the
               entire

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                                                                              58

               remaining amount of the assigning Lender's Commitment, (x) the
               amount of the Commitment of the assigning Lender subject to each
               such assignment (determined as of the date the Assignment and
               Assumption with respect to such assignment is delivered to the
               Administrative Agent) shall not be less than $1,000,000 and (y)
               the amount of the Commitment of such Lender remaining after such
               assignment shall not be less than $1,000,000; PROVIDED that no
               such consent of Holdings shall be required if an Event of Default
               under (a), (b), (l) or (m) of Article VII has occurred and is
               continuing;

                    (B)  each partial assignment shall be made as an assignment
               of a proportionate part of all the assigning Lender's rights and
               obligations under this Agreement;

                    (C)  the parties to each assignment shall execute and
               deliver to the Administrative Agent an Assignment and Assumption
               Agreement, together with, except in the case of an assignment to
               a Lender or an Affiliate or a Related Fund of a Lender, a
               processing and recordation fee of $4,000; and

                    (D)  the assignee, if it shall not be a Lender, shall
               deliver to the Administrative Agent an Administrative
               Questionnaire.

               (iii) Subject to acceptance and recording thereof pursuant to
          paragraph (b)(v) of this Section, from and after the effective date
          specified in each Assignment and Assumption Agreement, which effective
          date shall be at least five Business Days after the execution thereof,
          the assignee thereunder shall be a party hereto and, to the extent of
          the interest assigned by such Assignment and Assumption Agreement,
          have the rights and obligations of a Lender under this Agreement, and
          the assigning Lender thereunder shall, to the extent of the interest
          assigned by such Assignment and Assumption Agreement, be released from
          its obligations under this Agreement (and in the case of an Assignment
          and Assumption Agreement covering all of the assigning Lender's rights
          and obligations under this Agreement, such Lender shall cease to be a
          party hereto but shall continue to be entitled to the benefits of
          Sections 2.13, 2.15, 2.19 and 10.05, as well as to any Fees accrued
          for its account hereunder and not yet paid). Any assignment or
          transfer by a Lender of rights or obligations under this Agreement
          that does not comply with this Section 10.04 shall be treated for
          purposes of this Agreement as a sale by such Lender of a participation
          in such rights and obligations in accordance with paragraph (c) of the
          Section.

               (iv)  By executing and delivering an Assignment and Assumption
          Agreement, the assigning Lender thereunder and the assignee thereunder
          shall be deemed to confirm to and agree with each other and the other
          parties hereto as follows: (A) such assigning Lender warrants that it
          is the legal and beneficial owner of the interest being assigned
          thereby free and clear of any adverse claim and that its Commitment,
          if any, and the outstanding balances of its Loans, if any, in each
          case without giving effect to assignments thereof which have not
          become effective, are as set forth in such Assignment and Assumption

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                                                                              59

          Agreement, (B) except as set forth in (A) above, such assigning Lender
          makes no representation or warranty and assumes no responsibility with
          respect to any statements, warranties or representations made in or in
          connection with this Agreement, or the execution, legality, validity,
          enforceability, genuineness, sufficiency or value of this Agreement,
          any other Loan Document or any other instrument or document furnished
          pursuant hereto or the financial condition of the Borrowers or any
          Subsidiary or the performance or observance by any Borrower of any of
          its obligations under this Agreement, any other Loan Document or any
          other instrument or document furnished pursuant hereto; (C) such
          assignee represents and warrants that it is legally authorized to
          enter into such Assignment and Assumption Agreement; (D) such assignee
          confirms that it has received a copy of this Agreement, together with
          copies of the most recent financial statements delivered pursuant to
          Section 5.01 and such other documents and information as it has deemed
          applicable to make its own credit analysis and decision to enter into
          such Assignment and Assumption Agreement; (E) such assignee will
          independently and without reliance upon the Administrative Agent, such
          assigning Lender 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; (F) such assignee appoints and authorizes the
          Administrative Agent to take such action as agent on its behalf and to
          exercise such powers under this Agreement as are delegated to the
          Administrative Agent by the terms hereof, together with such powers as
          are reasonably incidental thereto; and (G) such assignee agrees that
          it will perform in accordance with their terms all the obligations
          which by the terms of this Agreement are required to be performed by
          it as a Lender.

               (v)   The Administrative Agent, acting for this purpose as an
          agent of the Borrowers, shall maintain at one of its offices a copy of
          each Assignment and Assumption Agreement delivered to it and a
          register for the recordation of the names and addresses of the
          Lenders, and the Commitment of, and principal amount of the Loans and
          LC Disbursements owing to, each Lender pursuant to the terms hereof
          from time to time (the "REGISTER"). The entries in the Register shall
          be conclusive in the absence of manifest error and the Borrowers, the
          Administrative Agent, the Issuing Bank and the Lenders may 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,
          notwithstanding notice to the contrary. The Register shall be
          available for inspection by the Borrowers, the Issuing Bank and any
          Lender, at any reasonable time and from time to time upon reasonable
          prior notice.

               (vi)  Upon its receipt of a duly completed Assignment and
          Assumption Agreement executed by an assigning Lender and an assignee,
          an Administrative Questionnaire completed in respect of the assignee
          (unless the assignee shall already be a Lender hereunder), the
          processing and recordation fee referred to in paragraph (b) of this
          section and any written consent to such assignment required by
          paragraph (b) of this Section, the Administrative Agent shall (i)
          accept such Assignment and Assumption Agreement, (ii) record the
          information contained therein in the Register and (iii) give prompt
          notice thereof to the Lenders. No assignment shall be effective for
          purposes of this Agreement unless it has been recorded in the Register
          as provided in this paragraph.

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          (c)  (i) Each Lender may, without the consent of Holdings, the Issuing
Bank or the Administrative Agent, sell participations to one or more banks or
other entities (a "PARTICIPANT") in all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment,
if any, and the Loans or LC Disbursements owing to it); PROVIDED, HOWEVER, that
(A) such Lender's obligations under this Agreement shall remain unchanged, (B)
such Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, and (C) the Borrowers, the Administrative
Agent, the Issuing Bank and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; PROVIDED that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first provision to Section 10.08(b) that affects such
Participant. Subject to paragraph (c)(ii) of this Section, the Borrowers agree
that each Participant shall be entitled to the benefits of Sections 2.13, 2.15
and 2.19 to the same extent as if it were a lender and had acquired its interest
by assignment pursuant to paragraph (b) of this Section. To the extent permitted
by law, each Participant also shall be entitled to the benefits of Section 10.06
as though it were a Lender, provided such Participant agrees to be subject to
Section 2.17 as though it were a Lender.

          (ii)  A Participant shall not be entitled to receive any greater
payment under Section 2.13, 2.15 and 2.19 than the applicable Lender would have
been entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation is made with the prior written
consent of Holdings. A Participant shall not be entitled to the benefits of
Section 2.19 unless Holdings is notified of the participation sold to such
Participant and such Participant agrees, for the benefit of the Borrowers, to
comply with Section 2.19(a)(vii) as though it were a Lender.

          (d)  Any Lender or participant may, in connection with any assignment
or participation or proposed assignment or participation pursuant to this
Section 10.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrowers furnished to such Lender
by or on behalf of the Borrowers; PROVIDED that, prior to any such disclosure of
information, each such assignee or participant or proposed assignee or
participant shall execute an agreement whereby such assignee or participant
shall agree on terms substantially similar to those set forth in Section 10.17
to preserve the confidentiality of such confidential information.

          (e)  Any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement to secure obligations
of such Lender, including without limitation (i) any pledge or assignment to
secure obligations to a Federal Reserve Bank and (ii) in the case of any Lender
that is a fund that invests in loans, any pledge or assignment to any holders of
obligations owed, or securities issued, by such Lender, including to any trustee
for, or any other representative of, such holders, and this Section 10.04 shall
not apply to any such pledge or assignment of a security interest; PROVIDED that
no such pledge or assignment of a security interest shall release a Lender from
any of its obligations hereunder or substitute any such pledgee or assignee for
such Lender as a party hereto. In order to facilitate such a pledge or
assignment, the applicable Borrower shall, at the request of the assigning
Lender, duly execute and deliver to the

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                                                                              61

assigning Lender a promissory note or notes evidencing the Loans made to such
Borrower by the assigning Lender hereunder.

          SECTION 10.05. EXPENSES; INDEMNITY. (a) Each Borrower agrees to pay
all reasonable out-of-pocket expenses incurred by the Administrative Agent in
connection with the preparation of this Agreement and the other Loan Documents
or in connection with any amendments, modifications or waivers of the provisions
hereof or thereof (whether or not the transactions hereby contemplated shall be
consummated) or incurred by the Administrative Agent or any Lender in connection
with the enforcement or protection of their rights in connection with this
Agreement and the other Loan Documents or in connection with the Loans made
hereunder, including the reasonable fees, charges and disbursements of Cravath,
Swaine & Moore, counsel for the Administrative Agent, and, in connection with
any such enforcement or protection, the reasonable fees, charges and
disbursements of any other counsel for the Administrative Agent or any Lender
and all reasonable out-of-pocket expenses incurred by the Issuing Bank in
connection with the issuance, amendment, renewal or extension of any Letter of
Credit or any demand for payment thereunder. Each Borrower further agrees that
it shall indemnify the Lenders from and hold them harmless against any
documentary taxes, assessments or charges made by any Governmental Authority by
reason of the execution and delivery of this Agreement or any of the other Loan
Documents.

          (b)  Each Borrower agrees to indemnify the Administrative Agent, the
Issuing Bank, each Lender and each of their respective directors, officers,
employees and agents (each such person being called an "INDEMNITEE") against,
and to hold each Indemnitee harmless from, any and all actual losses, claims,
damages, liabilities and related expenses, including reasonable counsel fees,
charges and disbursements, incurred by or asserted against any Indemnitee
arising out of, in any way connected with, or as a result of (i) the execution
or delivery of this Agreement or any other Loan Document (as defined in this
Agreement as in effect at any time prior to, on or after the date hereof; and as
any such Loan Document shall have been in effect at any time prior to, on or
after the date hereof) or any agreement or instrument contemplated thereby, the
performance by the parties thereto of their respective obligations thereunder or
the consummation of the transactions contemplated thereby, (ii) the actual or
proposed use of the proceeds of the Loans (including Loans made prior to the
date hereof) or (iii) any claim, litigation, investigation or proceeding
relating to any of the foregoing, whether or not any Indemnitee is a party
thereto; PROVIDED that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or wilful
misconduct of such Indemnitee.

          (c)  The provisions of this Section 10.05 shall remain operative and
in full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the expiration of the Letters of Credit, the
invalidity or unenforceability of any term or provision of this Agreement or any
other Loan Document, or any investigation made by or on behalf of the
Administrative Agent, the Issuing Bank or any Lender. All amounts due under this
Section 10.05 shall be payable on written demand therefor.

          SECTION 10.06. RIGHT OF SETOFF. If an Event of Default shall have
occurred and be continuing, each Lender is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time

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                                                                              62

or demand, provisional or final) at any time held and other indebtedness at any
time owing by such Lender to or for the credit or the account of any Borrower
against any of and all the obligations of such Borrower now or hereafter
existing under this Agreement, irrespective of whether or not such Lender shall
have made any demand under this Agreement or such other Loan Document and
although such obligations may be unmatured. The rights of each Lender under this
Section are in addition to other rights and remedies (including other rights of
setoff) which such Lender may have.

          SECTION 10.07. APPLICABLE LAW. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK.

          SECTION 10.08. WAIVERS; AMENDMENT. (a) No failure or delay of the
Administrative Agent or any Lender in exercising any power or right hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
the exercise of any other right or power. The rights and remedies of the
Administrative Agent, the Issuing Bank and the Lenders hereunder are cumulative
and are not exclusive of any rights or remedies which they would otherwise have.
No waiver of any provision of this Agreement or consent to any departure by any
Borrower therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on any Borrower in any case shall entitle such Borrower to any
other or further notice or demand in similar or other circumstances.

          (b)  Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrowers and the Required Lenders; PROVIDED, however, that
no such agreement shall (i) decrease the principal amount of, or extend the
maturity of or any scheduled principal payment date or date for the payment of
any interest on any Loan, or waive or excuse any such payment or any part
thereof, or decrease the rate of interest on any Loan, without the prior written
consent of each Lender affected thereby, (ii) change or extend the Commitment or
decrease the Commitment Fees of any Lender or extend any payment date therefor
without the prior written consent of such Lender or (iii) amend or modify the
provisions of Section 2.16, the provisions of Article IX, the provisions of this
Section or the definitions of the terms "Required Lenders", "Borrowing Base",
"Available Art Loans", "Consolidated Net Tangible Assets" or "Net Post-2002
Investment" without the prior written consent of each Lender; PROVIDED FURTHER
that no such agreement shall amend, modify or otherwise affect the rights or
duties of the Administrative Agent hereunder without the prior written consent
of the Administrative Agent.

          SECTION 10.09. INTEREST RATE LIMITATION. Notwithstanding anything
herein to the contrary, if at any time the applicable interest rate, together
with all fees and charges which are treated as interest under applicable law
(collectively the "CHARGES"), as provided for herein or in any other document
executed in connection herewith, or otherwise contracted for, charged, received,
taken or reserved by any Lender, shall exceed the maximum lawful rate (the
"MAXIMUM RATE") which may be contracted for, charged, taken, received or
reserved by such Lender in accordance with applicable law, the rate of interest
payable on the Loans of such Lender, together with all Charges payable to such
Lender, shall be limited to the Maximum Rate.

<Page>

                                                                              63

          SECTION 10.10. ENTIRE AGREEMENT. This Agreement and the other Loan
Documents constitute the entire contract between the parties relative to the
subject matter hereof. Any previous agreement among the parties with respect to
the subject matter hereof is superseded by this Agreement and the other Loan
Documents. Nothing in this Agreement or in the other Loan Documents, expressed
or implied, is intended to confer upon any party other than the parties hereto
and thereto any rights, remedies, obligations or liabilities under or by reason
of this Agreement or the other Loan Documents.

          SECTION 10.11. WAIVER OF JURY TRIAL. Each party hereto hereby waives,
to the fullest extent permitted by applicable law, any right it may have to a
trial by jury in respect of any litigation directly or indirectly arising out
of, under or in connection with this Agreement or any of the other Loan
Documents. Each party hereto (a) certifies that no representative, agent or
attorney of any other party has represented, expressly or otherwise, that such
other party would not, in the event of litigation, seek to enforce the foregoing
waiver and (b) acknowledges that it and the other parties hereto have been
induced to enter into this Agreement and the other Loan Documents, as
applicable, by, among other things, the mutual waivers and certifications in
this Section 10.11.

          SECTION 10.12. SEVERABILITY. In the event any one or more of the
provisions contained in this Agreement or in any other Loan Document should be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby. The parties shall endeavor
in good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.

          SECTION 10.13. JUDGMENT CURRENCY. (a) The Borrowers' obligations
hereunder and under the other Loan Documents to make payments in Dollars,
Sterling or Euros (the "OBLIGATION CURRENCY") shall not be discharged or
satisfied by any tender or recovery pursuant to any judgment expressed in or
converted into any currency other than the Obligation Currency, except to the
extent that such tender or recovery results in the effective receipt by the
Administrative Agent or a Lender of the full amount of the Obligation Currency
expressed to be payable to the Administrative Agent or such Lender under this
Agreement or the other Loan Documents. If, for the purpose of obtaining or
enforcing judgment against any Borrower or in any court or in any jurisdiction,
it becomes necessary to convert into or from any currency other than the
Obligation Currency (such other currency being hereinafter referred to as the
"JUDGMENT CURRENCY") an amount due in the Obligation Currency, the conversion
shall be made at the Sterling Equivalent, Euro Equivalent or Dollar Equivalent,
in the case of any Sterling, Euros or Dollars, and, in the case of other
currencies, the rate of exchange (as quoted by the Administrative Agent or if
the Administrative Agent does not quote a rate of exchange on such currency, by
a known dealer in such currency designated by the Administrative Agent)
determined, in each case, as of the date immediately preceding the day on which
the judgment is given (such Business Day being hereinafter referred to as the
"JUDGMENT CURRENCY CONVERSION DATE").

          (b)  If there is a change in the rate of exchange prevailing between
the Judgment Currency Conversion Date and the date of actual payment of the
amount due, the Borrower covenants and agrees to pay, or cause to be paid, as a
separate obligation and notwithstanding any judgment, such additional amounts,
if any (but in any event not a lesser amount), as may be

<Page>

                                                                              64

necessary to ensure that the amount paid 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 Judgment Currency stipulated in the judgment or judicial
award at the rate of exchange prevailing on the Judgment Currency Conversion
Date.

          (c)  For purposes of determining the Sterling Equivalent, Euro
Equivalent or Dollar Equivalent or rate of exchange for this Section, such
amounts shall include any premium and costs payable in connection with the
purchase of the Obligation Currency.

          SECTION 10.14. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract, and shall become
effective as provided in Section 10.03.

          SECTION 10.15. HEADINGS. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.

          SECTION 10.16. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) Each
Borrower hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that any
Lender may otherwise have to bring any action or proceeding relating to this
Agreement or the other Loan Documents against any Borrower or its properties in
the courts of any jurisdiction.

          (a)  Each Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this agreement or the other Loan
Documents in any New York State or Federal court. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.

          (b)  Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 10.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.

          SECTION 10.17. CONFIDENTIALITY. Except as otherwise provided in
Section 10.04(c), the Administrative Agent, the Issuing Bank, the Collateral
Agent and each of the Lenders agrees to keep confidential (and (i) to cause its
respective officers, directors and employees to keep confidential and (ii) to
use its best efforts to cause its respective agents and representatives to keep
confidential) the Information (as defined below) and all copies thereof,

<Page>

                                                                              65

extracts therefrom and analyses or other materials based thereon, except that
the Administrative Agent, the Issuing Bank, the Collateral Agent or any Lender
shall be permitted to disclose Information (a) to such of its respective
affiliates, officers, directors employees, agents and representatives as need to
know such Information, (b) to the extent requested by any bank regulatory
authority, (c)(i) to the extent otherwise required by applicable laws and
regulations or by any subpoena or similar legal process or (ii) in connection
with the enforcement of this Agreement, (d) to the extent such Information (i)
becomes publicly available other than as a result of a breach of this Agreement
or (ii) becomes available to the Administrative Agent, the Issuing Bank, the
Collateral Agent or any Lender on a nonconfidential basis from a source other
than the Borrowers or (e) to the extent Holdings shall have consented to such
disclosure in writing. Notwithstanding anything to the contrary set forth
herein, each party hereto agrees that the obligations of confidentiality
contained herein or otherwise undertaken in connection with the transactions
contemplated hereby (the "CONFIDENTIALITY OBLIGATIONS") shall not apply to the
"structure or the tax aspects," as that phrase is used In Section
1.6011-4T(a)(3) (or any successor provision) of the Treasury Regulations (the
"CONFIDENTIALITY REGULATION") promulgated under Section 6011 of the Internal
Revenue Code of 1986, as amended, of such transactions; PROVIDED, HOWEVER, that
the Confidentiality Obligations nevertheless shall apply to any and all items of
information not required to be freely disclosable in order for the transaction
or transactions not to be treated as "offered under conditions of
confidentiality" within the meaning of the Confidentiality Regulation. For the
purposes of this Section, "INFORMATION" shall mean all information that is
received from and relates to Holdings or any of its Subsidiaries other than any
such information available to the Administrative Agent, the Issuing Bank, the
Collateral Agent or any Lender on a nonconfidential basis prior to its
disclosure thereto by Holdings or any such Subsidiary. The provisions of this
Section 10.17 shall remain operative and in full force and effect regardless of
the expiration of this Agreement.

          SECTION 10.18. RELEASE OF LIENS AND GUARANTEES. (a) Except as provided
in paragraph (b) below, no amendment to the Loan Documents that has the effect
of releasing all or substantially all the Collateral or any of the guarantees
under the Subsidiary Guarantee Agreements or hereunder shall be effective except
pursuant to an agreement or agreements in writing entered into by the Borrowers
and all the Lenders. It is expressly understood that an amendment providing that
additional obligations will be secured under the Security Documents will not
constitute a release of Collateral for purposes of this paragraph.

          (b)  In the event that Holdings or any Subsidiary sells, transfers or
otherwise disposes of all or any portion of any of the Equity Interests, assets
or property owned by Holdings or such Subsidiary in a transaction not prohibited
by this Agreement, the Administrative Agent and the Collateral Agent shall
promptly (and the Lenders hereby authorize and instruct the Administrative Agent
and the Collateral Agent to) take such action and execute any such documents as
may be reasonably requested by the Borrower to release any Liens created by any
Loan Document in respect of such Equity Interests, assets or property, including
the release and satisfaction of record of any mortgage or deed of trust granted
in connection herewith, and, in the case of a disposition of all or
substantially all the Equity Interests or assets of any Subsidiary, to terminate
such Subsidiary's obligations under the Subsidiary Guarantee Agreement and each
other Loan Document. In addition, the parties hereto acknowledge and agree that
the Liens and security interests created by the Security Documents will
automatically terminate when all the Obligations have been paid in full and the
Commitments have been terminated, and the Administrative Agent and the
Collateral Agent will take such actions as are reasonably requested by the
Borrower to evidence such termination. Holdings agrees to pay all out-of-pocket
expenses

<Page>

                                                                              66

of the Administrative Agent and the Collateral Agent in connection with releases
of Liens and obligations under the Subsidiary Guarantee Agreement provided for
in this Section.

<Page>

                                                                              67

          IN WITNESS WHEREOF, the Borrowers (in their capacity as Borrowers and
Guarantors), the Administrative Agent and the Lenders have caused this Agreement
to be duly executed by their respective authorized officers as of the day and
year first above written.

                                       SOTHEBY'S HOLDINGS, INC.,

                                       by /s/ William S. Sheridan
                                          --------------------------------------
                                          Name:  William S. Sheridan
                                          Title: Executive Vice President and
                                                 Chief Financial Officer

                                       SOTHEBY'S, INC.,

                                       by /s/ William S. Sheridan
                                          --------------------------------------
                                          Name:  William S. Sheridan

                                       OATSHARE LIMITED,

                                       by /s/ William S. Sheridan
                                          --------------------------------------
                                          Name: William S. Sheridan

                                       SOTHEBY'S,

                                       by  /s/ William S. Sheridan
                                          --------------------------------------
                                          Name: William S. Sheridan

                                       SOTHEBY'S GLOBAL TRADING GmbH,

                                       by  /s/ William S. Sheridan
                                          --------------------------------------
                                          Name: William S. Sheridan

<Page>

                                                                              68

                                       COMERICA BANK,

                                       by /s/ Scott M. Kowalski
                                          --------------------------------------
                                          Name:  Scott M. Kowalski
                                          Title: Account Officer

<Page>

                                                                              69

                                       HSBC BANK PLC,

                                       by /s/ Paul Hagger
                                          --------------------------------------
                                          Name:  Paul Hagger
                                          Title: Senior Corporate
                                                 Relationship Manager

<Page>

                                                                              70

                                       JPMORGAN CHASE BANK, individually
                                       and as Administrative Agent,
                                       Collateral Agent, and Issuing Bank,

                                       by /s/ Teri Streusand
                                          --------------------------------------
                                          Name:  Teri Streusand
                                          Title: Vice President

<Page>

                                                                  SCHEDULE 1.01A

                        OTHER OBLIGATIONS OF THE LENDERS

1.   All obligations of Holdings and any Subsidiary owed to any Lender in
     connection with cash management services provided by such Lender or
     commitments to provide such services.

2.   All guarantee obligations of Holdings and any Subsidiary owed to JPMCB or
     any affiliate of JPMCB in connection with loans and other extensions of
     credit made by JPMCB for officers and employees of Holdings and its
     Subsidiaries.

3.   All obligations of Holdings and any Subsidiary in connection with interest
     rate and foreign exchange rate hedging agreements with persons that are
     Lenders on the date hereof or were Lenders at the time such agreements were
     entered into.

4.   All obligations of Holdings and any Subsidiary owed to The Bank of New York
     or any affiliate of The Bank of New York in connection with cash management
     services, including ACH lines, in an aggregate amount not to exceed $
     5,500,000 (which amount shall include interest, fees and reasonable fees
     and expenses of attorneys).

<Page>

                                                                  SCHEDULE 1.01B

                                SPECIFIED ASSETS

1.   Property now or hereafter in or on the York Avenue Property other than (i)
all art work located at or in the York Avenue Property, which art work is owned,
leased or otherwise held, including on consignment, by any Grantor, (ii) all
instruments, documentation or records owned, leased or otherwise held by any
Grantor, including all instruments, documentation or records relating to any Art
Loans, (iii) all accounts receivable or other general intangibles that may be
deemed to be located at the York Avenue Property and are owned or otherwise held
by any Grantor, (iv) all inventory owned, leased or otherwise held by any
Grantor and (v) all fixtures, furniture, furnishings, equipment, supplies,
tools, machinery, security systems (solely relating to the business of any
Grantor as opposed to base building security systems, if any), computer software
or other personal property (such as trade fixtures in, on, around or affixed to
the York Avenue Property) owned or leased by any Grantor.

2.   50% membership interest in a wine joint venture (in formation) to be held
by Sotheby's, Inc.

3.   50% partnership interest in Acquavella Modern Art held by Sotheby's Nevada,
Inc.

4.   49.99% membership interest in a joint venture to be formed by Sotheby's
International Realty, Inc. with a major investment bank for a residential
mortgage program.

5.   The rights under any other real property lease or software license
agreement to which any of the Borrowers or any Subsidiary is a party that would
require the consent of the counter-party thereto in connection with the grant of
security interests contemplated hereunder.

6.   Issued and outstanding shares (and assets, if any) of Excluded
Subsidiaries.

<Page>

                                                                  SCHEDULE 1.01B

                              EXCLUDED SUBSIDIARIES

1.   Sotheby's Parke Bernet Stamp Auction Company, Inc.

2.   Sotheby's Art Sales Corporation

3.   Sotheby's International Realty of Colorado, Inc.

4.   York Storage, Inc.

5.   Sotheby's - Deitch Holdings, Inc.

6.   Sotheby's Insurance Brokerage Services, Inc.

<Page>

                                                                  SCHEDULE 1.01D

                           EXISTING LETTERS OF CREDIT

<Table>
<Caption>
Number       Account Party               Beneficiary                   Amount            Maturity Date
------       -------------               -----------                   ------            -------------
<S>          <C>                         <C>                           <C>                 <C>
P202150      Sotheby's, Inc.             Barclays Bank, PLC            US $ 3,811,225      6/14/03
P011095      Sotheby's, Inc.             Pickwick Plaza Associates     US $ 75,000         9/30/03
P202069      Sotheby's Holdings, Inc.    38 East 61st Street, LLC      US $ 1,600,000      6/15/03
</Table>

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