Document:

EXHIBIT 10.2 

EXECUTION COPY 

AMENDMENT NO. 2 TO CREDIT AGREEMENT

          This
AMENDMENT NO. 2 TO CREDIT AGREEMENT (this “Amendment”), dated as of
February 25, 2010, by and among Sotheby’s, a Delaware corporation (“Parent”),
Sotheby’s, Inc., a New York corporation (“Sotheby’s, Inc.”), Sotheby’s
Financial Services, Inc., a Nevada corporation (“SFS Inc.”), Sotheby’s
Financial Services California, Inc., a Nevada corporation (“SFS California”),
Oberon, Inc., a Delaware corporation (“Oberon”), Theta, Inc., a Delaware
corporation (“Theta”), Sotheby’s Ventures, LLC, a New York limited
liability company (“Ventures LLC”), Oatshare Limited, a company
registered in England (“Oatshare”), Sotheby’s, a company registered in
England (“Sotheby’s U.K.”), and Sotheby’s Financial Services Limited, a
company registered in England (“SFS Ltd.” and, collectively with Parent,
Sotheby’s, Inc., SFS Inc., SFS California, Oberon, Theta, Ventures LLC,
Oatshare and Sotheby’s U.K., the “Borrowers”), General Electric Capital
Corporation, a Delaware corporation (in its individual capacity, “GE Capital”),
as a Lender and as Agent for the Lenders and the Fronting Lender (in such
capacity, the “Agent”), and the other Lenders signatory hereto, amends
that certain Credit Agreement, dated as of August 31, 2009 (as amended by
Amendment No. 1 thereto, dated as of December 17, 2009, the “Credit
Agreement”), by and among the Borrowers, other Credit Parties signatory
thereto, the Agent, the Fronting Lender, and the Lenders. Capitalized terms
used herein and not otherwise defined herein shall have the meanings ascribed
to such terms in Annex A to the Credit Agreement. 

RECITALS

          A.
The Borrowers have requested that the Lenders amend the Credit Agreement as set
forth herein. 

          B.
The Agent and the Lenders signatory hereto have agreed, on the terms and
conditions set forth below, to so amend the Credit Agreement. 

AGREEMENT

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

          1.
Amendment to Credit Agreement. Subject to the satisfaction of the
conditions precedent set forth in Paragraph 2 of this Amendment, Section
6.4(b) of the Credit Agreement is hereby amended and restated as follows: 

	
 

	
 

	
 

	
No Sotheby Entity shall enter into any lending or borrowing
transaction with any employees of any Sotheby Entity, except (i) loans to its
respective employees in the ordinary course of business consistent with past
practices for travel and entertainment expenses, relocation costs and similar
purposes and stock option 

	
 

	
 

	
 

	
financing, up to a maximum of a Dollar Equivalent of $1,500,000 in
the aggregate at any one time outstanding, (ii) Art Loans to employees of any
Sotheby Entity in the ordinary course of business pursuant to fair and
reasonable terms that are no less favorable to such Sotheby Entity making
such Art Loan than would be obtained in a comparable arm’s length transaction
with a Person not an employee of, or otherwise affiliated with, any Sotheby
Entity, up to a maximum of a Dollar Equivalent of $25,000,000 in the
aggregate at any one time outstanding and (iii) other loans to its respective
employees, up to a maximum of a Dollar Equivalent of $1,500,000 in the
aggregate at any one time outstanding. 

          2.
Effectiveness of this Amendment; Conditions Precedent. The provisions of
Paragraph 1 of this Amendment shall be deemed to have become effective
as of the date of this Amendment, but such effectiveness shall be expressly
conditioned upon Agent’s receipt of a counterpart of this Amendment executed
and delivered by duly authorized officers of each Borrower, each Credit Party,
the Requisite Lenders and Agent. 

          3. Miscellaneous.

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

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

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

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

          (i)
this Amendment and the Credit Agreement as amended by this Amendment,
constitute the legal, valid and binding obligations of such Credit Party,
enforceable against it in accordance with their respective terms except as
enforceability may be limited by applicable bankruptcy, insolvency or similar
laws affecting the enforcement of creditor’s rights generally or by equitable
principles relating to enforceability; 

          (ii)
its execution, delivery and performance of this Amendment and its performance
of the Credit Agreement as amended by this Amendment, to the extent a party
thereto, have been duly authorized by all necessary corporate action and do
not: (1) contravene the terms of any of such Credit Party’s charter, bylaws or
operating agreement, as applicable, (2) violate any law or regulation, or any
order or decree of any court or Governmental Authority; (3) conflict with or
result in the breach or termination of, constitute 

2

a default
under or accelerate or permit the acceleration of any performance required by,
any indenture, mortgage, deed of trust, lease, agreement or other instrument to
which any Sotheby Entity is a party or by which any Sotheby Entity or any of
its property is bound, (4) result in the creation or imposition of any Lien
upon any of the property of any Sotheby Entity other than those in favor of
Agent, on behalf of itself and the other Secured Parties, pursuant to the Loan
Documents; or (5) require the consent or approval of any Governmental Authority
or any other Person that has not already been obtained; and 

          (iii)
(1) no Default or Event of Default has occurred and is continuing and (2) all
of the representations and warranties of such Credit Party contained in the
Credit Agreement and in each other Loan Document to which it is a party (other
than representations and warranties which, in accordance with their express
terms, are made only as of an earlier specified date) are true and correct as
of the date of such Credit Party’s execution and delivery hereof or thereof as
though made on and as of such date. 

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

          (f)
Effect. Upon the effectiveness of this Amendment, each reference in the
Credit Agreement to “this Agreement,” “hereunder,” “hereof” or words of like
import shall mean and be a reference to the Credit Agreement as amended hereby
and each reference in the other Loan Documents to the Credit Agreement,
“thereunder,” “thereof,” or words of like import shall mean and be a reference
to the Credit Agreement as amended hereby. Except as expressly provided in this
Amendment, all of the terms, conditions and provisions of the Credit Agreement
and the other Loan Documents shall remain the same. Each Credit Party hereby
represents and warrants to each Lender and the Agent that all authorizations,
consents and approvals of such Credit Party’s board of directors, shareholders,
members or any other Persons necessary to permit such Borrower to execute and
deliver this Amendment and to perform its obligations hereunder and under the
Credit Agreement as amended hereby, and to permit the Lenders and the Agent to
enforce such obligations, have been obtained. This Amendment shall constitute a
Loan Document for purposes of the Credit Agreement. 

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

          (h)
Agent’s Expenses. The Borrowers hereby jointly and severally agree to
promptly reimburse Agent for all of the reasonable out-of-pocket expenses,
including, without 

3

limitation,
attorneys’ and paralegals’ fees, it has heretofore or hereafter incurred or
incurs in connection with the preparation, negotiation and execution of this
Amendment. 

******

4

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

	
  

 	
  

 	
  

 	
  

 	
  

 
	
 SOTHEBY’S, 
a
 Delaware corporation

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 OATSHARE LIMITED

 
	
 By:

 	
 /s/ Michael L. Gillis

 	
  

 	
  

 	
  

 
	
  

 	
 

 	
  

 	
 By:

 	
 /s/ William S. Sheridan

 
	
 Name: Michael L. Gillis

 	
  

 	
  

 	

 

 
	
 Title: SVP, Treasurer

 	
  

 	
 Name: William S. Sheridan

 
	
  

 	
  

 	
  

 	
 Title: EVP & Chief Financial Officer

 
	
 SOTHEBY’S, INC.

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 SOTHEBY’S, 

 
	
 By:

 	
 /s/ Michael L. Gillis

 	
  

 	
 a
 company registered in England

 
	
  

 	

 

 	
  

 	
  

 
	
 Name: Michael L. Gillis

 	
  

 	
  

 	
  

 
	
 Title: SVP, Treasurer

 	
  

 	
 By:

 	
 /s/ William S. Sheridan

 
	
  

 	
  

 	
  

 	
  

 	

 

 
	
  

 	
  

 	
 Name: William S. Sheridan

 
	
 SOTHEBY’S FINANCIAL SERVICES, INC.

 	
  

 	
 Title: EVP & Chief Financial Officer

 
	
 SOTHEBY’S FINANCIAL SERVICES CALIFORNIA,
 INC.

 	
  

 	
  

 	
  

 
	
 OBERON, INC.

 	
  

 	
 SOTHEBY’S FINANCIAL SERVICES LIMITED

 
	
 THETA, INC.

 	
  

 	
  

 	
  

 
	
 SOTHEBY’S VENTURES, LLC

 	
  

 	
 By:

 	
 /s/ William S. Sheridan

 
	
  

 	
  

 	
  

 	

 

 
	
  

 	
  

 	
  

 	
 Name: William S. Sheridan

 
	
  

 	
  

 	
  

 	
 Title: EVP & Chief Financial Officer

 
	
 By:

 	
 /s/ Michael L. Gillis

 	
  

 	
  

 
	
  

 	

 

 	
  

 	
  

 	
  

 
	
 Name: Michael L. Gillis

 	
  

 	
  

 	
  

 
	
 Title: SVP, Treasurer

 	
  

 	
  

 	
  

 

Signature Page to

Amendment No. 2

	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 GENERAL ELECTRIC CAPITAL CORPORATION, as the
 Agent and a Lender

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ Daniel
 T. Eubanks

 
	
  

 	
  

 	

 

 
	
  

 	
 Name: Daniel
 T. Eubanks

 
	
  

 	
 Title: Duly
 Authorized Signatory

 

Signature Page to

Amendment No. 2

	
  

 	
  

 	
  

 
	
  

 	
 HSBC BANK PLC, as a Lender

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ Paul
 Hagger

 
	
  

 	
  

 	

 

 
	
  

 	
 Name: Paul
 Hagger

 
	
  

 	
 Title:
 Global Relationship Manager

 

Signature Page to

Amendment No. 2

	
  

 	
  

 	
  

 
	
  

 	
 HSBC BANK USA, NATIONAL ASSOCIATION, as a
 Lender

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ Randolph
 Cates

 
	
  

 	
  

 	

 

 
	
  

 	
 Name:
 Randolph Cates

 
	
  

 	
 Title: Vice
 President, Senior Relationship Manager

 

Signature Page to

Amendment No. 2

	
  

 	
  

 	
  

 
	
  

 	
 JPMORGAN CHASE BANK, N.A., as a Lender

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ Joseph
 M. Callahan

 
	
  

 	
  

 	

 

 
	
  

 	
 Name: Joseph
 M. Callahan

 
	
  

 	
 Title:
 Senior Credit Executive

 

Signature Page to

Amendment No. 2

	
  

 	
  

 	
  

 
	
  

 	
 THE PRIVATEBANK AND TRUST COMPANY, as a
 Lender

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ Mitchell
 B. Rasky

 
	
  

 	
  

 	

 

 
	
  

 	
 Name:
 Mitchell B. Rasky

 
	
  

 	
 Title:
 Managing Director

 

Signature Page to

Amendment No. 2

	
  

 	
  

 	
  

 
	
  

 	
 TD BANK, N.A., as a Lender

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ Stephen
 A. Caffrey

 
	
  

 	
  

 	

 

 
	
  

 	
 Name:
 Stephen A. Caffrey

 
	
  

 	
 Title: Vice
 President

 

Signature Page to

Amendment No. 2

	
  

 	
  

 	
  

 
	
  

 	
 BANK OF AMERICA, N.A., as a Lender

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ Edwin B.
 Cox

 
	
  

 	
  

 	

 

 
	
  

 	
 Name: Edwin
 B. Cox

 
	
  

 	
 Title:
 Senior Vice President

 

Signature Page to

Amendment No. 2

	
  

 	
  

 	
  

 
	
  

 	
 COMERICA BANK, as a Lender

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ Chris
 Rice

 
	
  

 	
  

 	

 

 
	
  

 	
 Name: Chris
 Rice

 
	
  

 	
 Title:
 Corporate Banking Officer

 

Signature Page to

Amendment No. 2

	
  

 	
  

 	
  

 
	
  

 	
 ISRAEL DISCOUNT BANK OF NEW YORK, as a
 Lender

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ Richard
 Tripaldi

 
	
  

 	
  

 	

 

 
	
  

 	
 Name:
 Richard Tripaldi

 
	
  

 	
 Title: Vice
 President

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ David
 Acosta

 
	
  

 	
  

 	

 

 
	
  

 	
 Name: David
 Acosta

 
	
  

 	
 Title:
 Senior Vice President

 

Signature Page to

Amendment No. 2

	
  

 	
  

 
	
 Acknowledged and Agreed as of the date first above written:

 
	
  

 	
  

 
	
 SOTHEBYS.COM LLC, as a Credit Party

 
	
  

 	
  

 
	
 By:

 	
 /s/ William
 S. Sheridan

 
	
  

 	

 

 
	
 Name:
 William S. Sheridan

 
	
 Title: EVP
 & Chief Financial Officer

 
	
  

 	
  

 
	
 SOTHEBY’S FINE ART HOLDINGS, INC.

 
	
 SOTHEBY’S ASIA, INC.

 
	
 YORK WAREHOUSE, INC.

 
	
 SPTC, INC.

 
	
 SOTHEBY PARKE BERNET, INC.

 
	
 YORK AVENUE DEVELOPMENT, INC.

 
	
 SOTHEBY’S THAILAND, INC.

 
	
 SOTHEBY’S HOLDINGS INTERNATIONAL, INC.

 
	
 SOTHEBY’S NEVADA, INC.

 
	
 SOTHEBYS.COM AUCTIONS, INC.

 
	
 SIBS, LLC,

 
	
 each as a
 Credit Party

 
	
  

 	
  

 
	
 By:

 	
 /s/ Michael
 L. Gillis

 
	
  

 	

 

 
	
 Name:
 Michael L. Gillis

 
	
 Title: SVP,
 Treasurer

 
	
  

 	
  

 
	
 SUNRISE LIQUORS & WINES, INC., as a
 Credit Party

 
	
  

 	
  

 
	
 By:

 	
 /s/ Richard
 C. Buckley

 
	
  

 	

 

 
	
 Name:
 Richard C. Buckley

 
	
 Title:

 
	
  

 	
  

 
	
 CATALOGUE DISTRIBUTION COMPANY LIMITED, as a
 Credit Party

 
	
  

 	
  

 
	
 By:

 	
 /s/ William
 S. Sheridan

 
	
  

 	

 

 
	
 Name:
 William S. Sheridan

 
	
 Title: EVP
 & Chief Financial Officer

 

Signature Page to

Amendment No. 2EXHIBIT
10.3

Severance
Agreement

As of 1 January, 2010

Dear Kevin:

          This
letter sets forth our understanding and agreement with respect to your
employment by Sotheby’s Hong Kong, Ltd. (individually and, as the context may
require, together with all of its parent companies, subsidiaries and related
entities, “Sotheby’s” or the “Company”). 

	
  

 	
  

 
	
 (1)

 	
 Term of Employment You agree to
 act as a full-time employee of the Company and the Company agrees to employ
 you full-time from January 1, 2010 through and including December 31, 2013
 (the “Term”),
 subject to the terms and conditions set forth in this Agreement (this “Agreement”).
 

 
	
  

 	
  

 
	
 (2)

 	
 Title; Responsibilities

 
	
  

 	
  

 
	
  

 	
 As Chief Executive Officer, Asia, you will be
 responsible for developing and executing the strategic plan for expanding
 Sotheby’s business to capture the opportunities in collecting in Asia, with
 continued emphasis on China. This will involve developing relationships and
 networks with government officials, principals in the art business and collectors.
 You will continue to develop and execute the tactical objectives for each
 fiscal year, and to recruit, build, and manage our team in Asia. You will
 also be expected to develop relationships with clients and to initiate
 auction/private treaty transactions.

 
	
  

 	
  

 
	
  

 	
 In addition to the foregoing, you agree to perform
 such other functions and responsibilities as may be reasonably requested by
 the Chief Operating Officer of Sotheby’s (the “Chief Operating Officer”)
 from time to time. During the Term, you shall devote all of your business
 time and efforts to the performance of your functions and responsibilities
 hereunder.

 
	
  

 	
  

 
	
 (3)

 	
 Compensation. In consideration for
 the services to be rendered by you to the Company, you shall receive during
 the Term the following:

 
	
  

 	
  

 
	
  

 	
 a) An annual base salary of HK$4,500,000, which
 amount reflects the HK$500,000 reduction in your annual base salary that you
 agreed to in May 2009. Your salary shall be payable in appropriate
 installments to conform to the regular payroll dates for salaried personnel
 of the Company. Your base salary shall be reviewed, along with those other

 

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 senior executives whose salaries was similarly
 reduced in May, 2010 to determine whether business conditions warrant the
 reinstatement of all or part of the salary reduction and from time to time
 thereafter if not fully reinstated at that time. Any reinstatement of all or
 part of the salary reduction shall be consistent with that of the other
 senior executives whose salary was reduced. In addition, your annual base
 salary shall be reviewed on an annual basis and shall be subject to such
 adjustment as the Chief Operating Officer shall determine to reflect your
 performance and responsibilities beginning with the regular review cycle in
 2011. Notwithstanding the
 change in your base salary outlined above, the term “base salary” in
 Subparagraphs 13(a)(i), 13(a)(ii) and 13(b) shall mean HK$5,000,000 solely
 for the purpose of calculating any amount payable to you should you terminate
 your employment for Good Reason or the Company terminate your employment
 without Cause. 

 
	
  

 	
  

 
	
  

 	
 b)

 	
 In addition to the annual base salary, you will be
 eligible for:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 i)

 	
 An annual discretionary cash incentive bonus target
 of HK$4,050,000, provided that you must be an employee of the Company at the
 time that any award is paid under the terms and conditions of the Sotheby’s
 Annual Incentive Compensation Program (or successor program) attached hereto
 as Schedule 1.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 ii)

 	
 An annual equity based incentive bonus target of
 US$175,000 under the Company’s discretionary annual incentive compensation
 program (which may consist of an award or awards of any of the following:
 restricted stock units, performance share units and/or stock options) with
 any such award subject to the terms and conditions of the Sotheby’s Amended
 and Restated Restricted Stock Unit Plan and the 1997 Sotheby’s Stock Option
 Plan (or any successor plans), and the terms of any applicable award
 agreements The Sotheby’s Amended and Restated Restricted Stock Plan and the 1997
 Sotheby’s Stock Option Plan are attached hereto as Schedules 2 and 3 respectively.

 
	
  

 	
  

 	
  

 
	
 (4)

 	
 Pension. 

 
	
  

 	
  

 
	
  

 	
 a)

 	
 You are eligible to join either the Mandatory
 Provident Fund Scheme (“MPF”) or the Mandatory Provident Fund
 Exempted Occupational Retirement Scheme (“MPF Exempted ORSO”)
 maintained by the Company as particularly set out in Schedule 4. 

 
	
  

 	
  

 	
  

 
	
  

 	
 b)

 	
 The Company shall continue your enrollment in the
 provident fund scheme of your choice pursuant to Subparagraph (4)(a) above,
 and you shall give all necessary assistance to the Company to maintain such
 enrollment (including, but not limited to, signing any and all documents that
 the Company may in its sole and absolute discretion determine to be necessary
 to give full effect to the said enrolment).

 

2

	
  

 	
  

 	
  

 
	
  

 	
 c)

 	
 The Company shall be entitled during the Term to
 make such deductions as may be authorized under the Mandatory Provident Fund
 Schemes Ordinance (the “Ordinance”) from the salary payable to
 you, and shall make all necessary contributions to the provident fund scheme
 as prescribed under the Ordinance. 

 
	
  

 	
  

 	
  

 
	
  

 	
 d)

 	
 The Company shall inform you in writing of the
 amount of contributions made for, or in respect of, you to the provident fund
 scheme in accordance with the relevant provisions of the Ordinance.

 
	
  

 	
  

 	
  

 
	
  

 	
 e)

 	
 The Company reserves the right to vary or
 discontinue any scheme in place from time to time.

 
	
  

 	
  

 	
  

 
	
 (5)

 	
 Benefits. You shall be entitled,
 to the extent that your position, title, tenure, salary, age, health and
 other qualifications make you eligible, to participate in all employee
 benefit plans or programs now in effect as set out in Schedule 5 or hereafter
 adopted by the Company. Your participation in such plans or programs shall
 continue to be subject to the provisions, rules and regulations applicable
 thereto. Your former salary of
 HK$5,000,000 will be used as the basis for calculating benefits including
 life assurance and income protection but excluding pension.

 
	
  

 	
  

 
	
 (6)

 	
 Vacation. During the Term, you
 shall be entitled, with full pay, to 20 days annual leave. Annual leave will
 be allowed and shall be taken in accordance with the established policies of
 the Company now or hereafter in effect.

 
	
  

 	
  

 
	
 (7)

 	
 Expenses. You shall be authorized
 to incur reasonable and necessary expenses in connection with the Company’s
 business, including expenses for entertainment, travel and similar items in
 accordance with the Company’s travel and entertainment policy. The Company
 will reimburse you for all such expenses upon presentation by you monthly of
 an itemized account of such expenditures, with appropriate receipts. Such
 expenditures, however, shall be subject at all times to the approval of the
 Company in accordance with the Company’s expense reimbursement policy.

 
	
  

 	
  

 
	
 (8)

 	
 Housing Allowance. During the Term, HK$867,000 of your annual
 base salary shall be attributable to rental reimbursement. To be
 eligible for rental reimbursement, you have to submit to the Company relevant
 copies of your rental agreements and rental receipts. The Company will then
 reimburse the rent you paid to your landlord up to a maximum of HK$73,000 per
 month. 

 
	
  

 	
  

 
	
 (9)

 	
 Car Allowance. You will be
 provided with an annual car allowance of HK$230,000 during the Term. This is
 taxable income to you.

 
	
  

 	
  

 
	
 (10)

 	
 Confidentiality Agreement, Company’s Rules and Policies.
 As a condition to your continued employment by the Company, you shall be
 bound by the Company’s Confidentiality Agreement, Auction Rules, Code of
 Business Conduct and Ethics, 

 

3

	
  

 	
  

 
	
  

 	
 Conflict of Interest Policy, House Rules and other
 Compliance Policies, as attached to Schedule 6 (collectively, the “Rules and
 Policies”) and such other rules and policies as the Company may
 establish and/or amend from time to time. You acknowledge that you have read
 and understood each of the foregoing attached policies.

 
	
  

 	
  

 
	
 (11)

 	
 Special Undertaking. You agree
 that during the Term, you shall refrain from any discussions, meetings or
 communications of any kind whatsoever with any other potential employer
 regarding prospective employment, including, but not limited to, an art
 auction house, art dealer or any other company, organization or entity in
 which you would perform similar duties and responsibilities to those you have
 performed at the Company, regarding prospective employment for yourself
 during the Term. You agree that during the Term you are knowingly and
 voluntarily foregoing the right to engage in such conduct in exchange for the
 consideration set forth herein, and you acknowledge the vital importance of
 this undertaking to the Company.

 
	
  

 	
  

 
	
 (12)

 	
 Termination

 

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 a)

 	
 This Agreement may be terminated:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 i)

 	
 upon mutual written agreement of the Company and
 you; or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 ii)

 	
 at the option of the Company, for Cause (as
 hereinafter defined) summarily and without notice or payment in lieu of
 notice (but without prejudice to the rights and remedies of either party for
 any antecedent breach of this Agreement); or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 iii)

 	
 upon thirty (30) days prior written notice to you
 from the Company without Cause; or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 iv)

 	
 upon thirty (30) days’ prior written notice by you
 for Good Reason (as hereinafter defined) within thirty (30) days of your
 becoming aware of the existence of circumstances constituting Good Reason; or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 v)

 	
 upon one hundred eighty (180) day’s prior written
 notice (the “Notice Period”) by
 you to the Company without Good Reason unless such Notice Period or any
 portion thereof is waived by the Company; or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 vi)

 	
 at the option of the Company in the event of your
 Permanent Disability (as hereinafter defined); or 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 vii)

 	
 automatically upon your death.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 b)

 	
 As used herein, the term “Cause” shall mean the
 happening of any of the following events: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 i)

 	
 if you are convicted of a felony crime; or 

 

4

	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 ii)

 	
 if you are guilty of grave misconduct, fraud,
 willful malfeasance or gross negligence in performance of your duties; or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 iii)

 	
 if you commit any continuing or material breach of
 your obligations under this Agreement and, in the case of a breach which is
 capable of remedy, fail to remedy the same within thirty (30) days after
 receipt of a written notice from the Company specifying such breach and the
 action required to remedy the breach; or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 iv)

 	
 if you conduct yourself otherwise than as befits
 your status as an employee of the Company or are guilty of conduct tending to
 bring yourself, the Company or any of the parent company or companies
 associated, affiliated, or connected, with, or to, the Company into
 disrepute; or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 v)

 	
 if you commit an act of bankruptcy or compound with
 your creditors generally; or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 vi)

 	
 if you breach any of the provisions in Paragraph 10
 or 11. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 The Chief Operating Officer shall determine, in his
 sole discretion, whether the occurrence or non-occurrence of an event
 constitutes Cause within the meaning of this Agreement. Such determination
 shall be final, binding and conclusive on the parties hereto.

 
	
  

 	
  

 	
  

 
	
  

 	
 c)

 	
 As used herein, the term “Good Reason” shall mean the
 occurrence of any of the following events:

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 i)

 	
 any material breach of this Agreement by the
 Company; or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 ii)

 	
 any action by the Company that results in a material
 diminution in your position without your express consent (except in
 connection with the termination of your employment for Cause or as a result
 of your death or Permanent Disability or temporarily as a result of your
 illness or other absence); or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 iii)

 	
 the failure of the Company’s successor to assume
 this Agreement in accordance with Paragraph 23 without your express consent,

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 provided, however, that the Company shall have
 thirty (30) days following the receipt of written notice from you of the
 existence of circumstances constituting Good Reason to correct such
 circumstances. For the avoidance of doubt, the prior reduction in your annual
 base salary from HK$5,000,000 to HK$4,500,000 does not constitute Good Reason
 for purposes of this Agreement.

 

5

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 d)

 	
 As used herein, the term “Permanent Disability” shall
 mean, and be limited to, any physical or mental illness, disability or
 impairment that has prevented you from continuing the performance of your
 normal duties and responsibilities hereunder for a period in excess of six
 (6) consecutive months.

 
	
  

 	
  

 
	
 (13)

 	
 Compensation Upon Termination During the Term.

 
	
  

 	
  

 
	
  

 	
 a)

 	
 If during the Term, this Agreement is terminated by
 you for Good Reason in accordance with Subparagraph 12(a)(iv) hereof, or by
 the Company without Cause, in accordance with Subparagraph 12(a)(iii), the
 Company shall pay or provide you with the following:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 i)

 	
 Within fifteen (15) days of your termination date,
 payment of the sum of (x) any unpaid base salary through the date of
 termination and (y) any unpaid cash incentive compensation amount approved
 prior to your termination date; and, within sixty (60) days of your
 termination date, reimbursement for any unreimbursed expenses incurred
 through the date of termination in accordance with Paragraph 7 (“Accrued
 Obligations”); and

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 ii)

 	
 Twelve months of your base salary pursuant to
 Subparagraph 3(a) to be paid in a lump sum within fifteen (15) days after the
 requirements of Subparagraph 13(f) are fulfilled; and

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 iii)

 	
 Provided you have worked at least three (3) months
 in the calendar year prior to notice of termination, you will receive payment
 of a portion of your discretionary cash incentive compensation target pursuant
 to Subparagraph 3(b)(i). You will receive a pro rata portion of your target
 calculated as follows: your target cash incentive will be multiplied by a
 fraction, the numerator of which is the completed number of months worked
 following the end of the last year and the denominator of which is twelve.
 This amount shall be paid in a lump sum within fifteen (15) days after the
 requirements of Subparagraph 13(f) are fulfilled; and

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 iv)

 	
 In the event the amounts you receive pursuant to
 Subparagraphs 13(a)(ii) and 13(a)(iii) total less than HK$7,750,000, the
 Company shall pay you an amount equal to that difference that shall be
 calculated on your termination date. This amount shall be paid in a lump sum
 within fifteen (15) days after the requirements of Subparagraph 13(f) are
 fulfilled. 

 
	
  

 	
  

 	
  

 
	
  

 	
 b)

 	
 If during the Term, your employment is terminated on
 account of your Permanent Disability or your death, the Company shall pay or
 provide you (or, in the event of your death, your estate) with the amounts
 under the terms specified in Subparagraph 13(a)(i) above, Accrued
 Obligations, and equity based awards shall vest subject to the terms of the
 applicable plans (or successor plans) and/or award 

 

6

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 agreements.

 
	
  

 	
  

 	
  

 
	
  

 	
 c)

 	
 If during the Term, your employment is terminated
 for Cause, this Agreement shall terminate without further obligation to you,
 except that the Company shall pay or provide you with the amounts specified
 in Subparagraphs 13(a)(i) above, Accrued Obligations, and equity based awards
 shall vest subject to the terms of the applicable plans (or successor plans)
 and/or award agreements. You will not be eligible for any incentive
 compensation including those in Subparagraph 3(b) after the date of
 termination of your employment.

 
	
  

 	
  

 	
  

 
	
  

 	
 d)

 	
 If during the Term, your employment is terminated in
 accordance with Subparagraph 12(a)(i) hereof, the Company shall pay or
 provide you with the amounts mutually agreed on by the Company and you.

 
	
  

 	
  

 	
  

 
	
  

 	
 e)

 	
 If you terminate this Agreement in accordance with
 Subparagraph 12(a)(v) herein, the Company shall pay to you the amounts
 specified in Subparagraph 13(a)(i) above, Accrued Obligations, on the
 effective date of termination. You will not be eligible for any incentive
 compensation including those in Subparagraph 3(b) after the date of
 termination of your employment.

 
	
  

 	
  

 	
  

 
	
  

 	
 f)

 	
 Any payments payable pursuant to this Paragraph 13
 beyond Accrued Obligations shall only be payable if you deliver to the
 Company a release of any and all your claims occurring up to the release date
 with regard to the Company and its respective past or present officers,
 directors and employees in such form as reasonably requested by the Company.

 
	
  

 	
  

 	
  

 
	
  

 	
 g)

 	
 Any payments payable pursuant to this Paragraph 13
 beyond Accrued Obligations shall not be reduced, offset or prejudiced by any
 of your provident fund payments or entitlements.

 
	
  

 	
  

 	
  

 
	
 (14)

 	
 Employment After
 Expiration of the Term If the Company does not offer to
 renew this Agreement prior to the expiration of the Term with the same terms
 as Paragraphs 2, 3(a) and 3(b)(i) at the amounts of those terms in the final
 year of the Agreement for one additional year, then, you shall, upon the
 expiration of the Term, be entitled to receive a lump sum payment equivalent
 to twelve (12) months’ base salary.

 
	
  

 	
  

 	
  

 
	
 (15)

 	
 Effects of Termination

 
	
  

 	
  

 	
  

 
	
  

 	
 On the termination of this Agreement, howsoever
 arising, you shall:

 
	
  

 	
  

 	
  

 
	
  

 	
 a)

 	
 deliver to the Company all documents (including
 confidential information, correspondence, notes, memoranda, plans, drawings,
 records, reports, computer disks, software, client lists, client information
 and other documents and data of whatsoever nature) made or compiled by or
 delivered to you during your 

 

7

	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 employment and documents or information concerning
 the business, operation, finances or affairs of the Company. For the
 avoidance of doubt, it is hereby declared that the property in all such
 documents as aforesaid shall at all times belong to the Company; and

 

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 b)

 	
 at the Company’s request, and without compensation
 or other payment, resign from all appointments or offices which you hold as
 nominee or representative of the Company and, if you should fail to do so
 within seven (7) days of such request, the Company is irrevocably authorized
 to appoint some person in your name and on your behalf to sign any documents
 or do any things necessary or requisite to give effect to such
 resignation(s). 

 
	
  

 	
  

 
	
 (16)

 	
 Non-Compete and Non-Solicitation Agreement
 

 
	
  

 	
  

 
	
  

 	
 a)

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

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 i)

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

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 ii)

 	
 another entity engaged in conducting auctions,
 dealing in or making private sales of, collecting or advising with respect to
 the types of property in the collecting categories that the Company has
 offered for sale in its core business within the prior twelve (12) months
 anywhere in Asia in which the Company has an office, affiliation or has done
 business within the last twelve (12) months as well as London, Paris and/or
 New York.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 b)

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

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 ii)

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

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 iii)

 	
 solicit the business of, do business with, or seek
 to do business with, any client of the Company;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 iv)

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

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 v)

 	
 otherwise induce any client of the Company to cease
 doing business with,

 

8

	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
         or lessen its business with, the Company.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
  

 	
 If at any time there is a judicial determination by
 any court of competent jurisdiction that the time period, geographical scope,
 or any other restriction contained in this Paragraph 16 is unenforceable
 against you, the provisions of this Paragraph 16 shall not be deemed void but
 shall be deemed amended to apply as to such maximum time period, geographical
 scope and to such other maximum extent as the court may judicially determine
 or indicate to be enforceable.

 
	
  

 	
  

 	
  

 	
  

 
	
 (17)

 	
 Indemnification. The Company shall
 maintain for your benefit director and officer liability insurance in the
 same amount and to the same extent as the Company covers similarly situated
 employees. In addition, to the extent not covered by director and officer
 liability insurance, you shall be indemnified by the Company against
 liability as an officer or director of the Company to the maximum extent
 permitted by applicable law. Your rights under this Paragraph 17 shall
 continue so long as you may be subject to such liability, whether or not this
 Agreement may have terminated prior thereto.

 
	
  

 	
  

 	
  

 
	
 (18)

 	
 Personal Data. By accepting the
 terms of this Agreement, you agree to the use of personal data provided to
 the Company for employment related matters and authorize the release of
 information to banks, insurers, managers of provident fund, the travel
 industry and relevant departments of the Government of Hong Kong Special
 Administrative Region, and any organizations or individuals which the Company
 considers appropriate.

 
	
  

 	
  

 
	
 (19)

 	
 Miscellaneous. You may not assign
 your rights or delegate your obligations under this Agreement. The Company
 shall be entitled to withhold from any payments or deemed payments under this
 Agreement any amount of withholding required by law. This Agreement
 constitutes the entire agreement between you and the Company concerning the
 subject matter of your employment, with the exception of letters and
 documents specifically referenced herein, and it supersedes all prior
 agreements, written or oral, discussions, and negotiations on that subject
 (other than the documents specifically referenced herein). Any waiver or
 amendment of any provision of this Agreement must be done in writing and
 signed by both parties.

 
	
  

 	
  

 
	
 (20)

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

 
	
  

 	
  

 	
  

 	
  

 
	
 (21)

 	
 Severability. If at any time there
 is a judicial determination by any court of competent jurisdiction that any
 provision of this Agreement is unenforceable against you, the other

 

9

	
  

 	
  

 
	
  

 	
 provisions of this Agreement shall not be rendered
 void but shall be deemed amended to apply as to such maximum extent as the
 court may judicially determine or indicate to be enforceable under Hong Kong
 laws. 

 
	
  

 	
  

 
	
 (22)

 	
 Choice of Law/Choice of Forum.
 This Agreement shall be governed by, construed and enforced solely in
 accordance with the laws of Hong Kong irrespective of the principles of
 conflicts of law, and you consent to the exclusive jurisdiction of the courts
 and tribunals of Hong Kong for the purpose of adjudicating any dispute
 relating to this Agreement. 

 
	
  

 	
  

 
	
 (23)

 	
 Binding on Successor Company. This
 Agreement shall remain in effect and binding upon any successor or assign of
 Sotheby’s including any entity that (whether directly or indirectly, by
 purchase, merger, reorganization, consolidation, acquisition of property or
 stock, liquidation or otherwise) is the survivor of the Company or that
 acquires the Company and/or substantially all the assets of the Company in
 accordance with the operation of law, and such successor entity shall be
 deemed the “Company” for purposes of this Agreement. In the situations set
 forth in this Paragraph 23, if this Agreement is not assumed as a matter of
 law, the Company will require its assumption by the successor entity.

 
	
  

 	
  

 
	
 (24)

 	
 Notices. For the purpose of this
 Agreement, notices and all other communications provided for in this
 Agreement shall be in writing and shall be delivered personally or mailed by
 certified or registered mail, return receipt requested, postage prepaid,
 addressed to you at the address set forth on the initial page of this
 Agreement and to the Company at Sotheby’s, 1334 York Avenue, New York, New
 York 10021, Attention: Worldwide General Counsel, or to such other address as
 either party may have furnished to the other in writing in accordance
 herewith. Any such notice shall be deemed given when so delivered personally,
 or, if mailed, five (5) days after the date of deposit in the mail, except
 that notice of change of address shall be effective only upon receipt.

 
	
  

 	
  

 
	
 (25)

 	
 It is hereby agreed that this Agreement replaces and
 supersedes any prior employment agreement between you and the Company.

 

 [Remainder of Page
Left Intentionally Blank]

10

          Please
review this Agreement carefully and, if it correctly states our agreement, sign
and return to me the enclosed copy.

	
  

 	
  

 	
  

 
	
  

 	
 Very truly yours,

 
	
  

 	
  

 	
  

 
	
  

 	
 SOTHEBY’S
 HONG KONG, LTD.

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ William S. Sheridan

 
	
  

 	
  

 	

 

 
	
  

 	
  

 	
 William S. Sheridan

 
	
  

 	
  

 	
 Director

 

Read, accepted and agreed to this

1st day of January, 2010

	
  

 
	
 /s/
Kevin Ching 

 
	

 

 
	
 Kevin
Ching 

 

11

SCHEDULE 1

SOTHEBY’S INCENTIVE COMPENSATION
PROGRAM

12

SCHEDULE 2

AMENDED AND RESTATED

RESTRICTED STOCK UNIT AGREEMENT

13

SCHEDULE 3

1997 SOTHEBY’S STOCK OPTION PLAN

14

SCHEDULE 4

PROVIDENT SCHEMES MAINTAINED BY THE
COMPANY

15

SCHEDULE 5

EMPLOYMENT BENEFITS

16

SCHEDULE 6

COMPANY’S CONFIDENTIALITY AGREEMENT

AUCTION RULES

CODE OF BUSINESS CONDUCT AND ETHICS

CONFLICT OF INTEREST POLICY

OTHER COMPLIANCE POLICIES

 (not attached, but available on Company’s intranet)

17

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