SOTHEBYS HOLDINGS INC, 10-K, 1994-03-31

SOTHEBYS HOLDINGS INC
10-K, 1994-03-31
BUSINESS SERVICES, NEC

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K

(MARK ONE)

/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993.

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD
FROM TO .
COMMISSION FILE NUMBER 1-9750.

SOTHEBY'S HOLDINGS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

MICHIGAN 38-2478409
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)

500 NORTH WOODWARD AVENUE, SUITE 100
BLOOMFIELD HILLS, MICHIGAN 48304
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (313) 646-2400
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ---------------------
Class A Limited Voting Common Stock, New York Stock Exchange
$0.10 Par Value London Stock Exchange

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIODS THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS) AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES .....X.... NO ..........

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Sec. 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. / /

As of March 11, 1994, the aggregate market value of the 35,295,196 shares of
Class A Limited Voting Common Stock held by non-affiliates of the registrant was
$648,549,000, based upon the closing price ($18 3/8) on the New York Stock
Exchange composite tape on such date. (For this computation, the registrant has
excluded the market value of all shares of its Class A Limited Voting Common
Stock reported as beneficially owned by executive officers and directors of the
registrant; such exclusion shall not be deemed to constitute an admission that
any such person is an "affiliate" of the registrant.) As of March 11, 1994,
there were outstanding 35,580,469 shares of Class A Limited Voting Common Stock
and 20,064,305 shares of Class B Common Stock, freely convertible into
20,064,305 shares of Class A Limited Voting Common Stock. There is no public
market for the registrant's Class B Common Stock, which is held by affiliates
and non-affiliates of the registrant.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the annual shareholders report for the year ended December 31,
1993 are incorporated by reference into Parts I and II.

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<PAGE>
PART I

ITEM 1. BUSINESS
General

Sotheby's Holdings, Inc. (together with its subsidiaries, unless the
context otherwise requires, the "Company") is the world's leading fine art
auctioneer, specializing in paintings, jewelry, decorative art and a wide range
of other property. The worldwide auction business is conducted through a
division known as "Sotheby's" and consists of three principal operating units:
Sotheby's North and South America ("Sotheby's, Inc."), Sotheby's Europe and
Sotheby's Asia. In addition to auctioneering, the Company is engaged in two
other lines of business: art-related financing and marketing and brokering
luxury real estate.

The Company believes it is one of the world's leaders in art-related
financing. The Company lends money secured by consigned art to clients in order
to facilitate their bringing property to auction. In addition, a portion of the
Company's loan portfolio consists of loans to collectors, dealers and museums
secured by collections not presently intended for sale.

The Company, through its subsidiary, Sotheby's International Realty, Inc.,
is engaged in marketing and brokering luxury residential real estate.

The Company was incorporated in Michigan in August 1983. In October 1983,
the Company purchased Sotheby Parke Bernet Group Limited, which was then a
publicly held company listed on the International Stock Exchange of the United
Kingdom and the Republic of Ireland Limited (the "London Stock Exchange") and
which, through its predecessors, had been engaged in the auction business since
1744. In 1988, the Company sold shares of Class A Limited Voting Common Stock to
the public. The Class A Limited Voting Common Stock is listed on the New York
Stock Exchange and the London Stock Exchange.

Additional information relating to the Company's business segments and the
geographic areas in which the Company operates appears in Note C to the
Company's Consolidated Financial Statements in the Annual Shareholders Report
for the year ended December 31, 1993 (the "Annual Report"), which is
incorporated herein by reference.

THE AUCTION BUSINESS

Transactions in the world art market are effected through numerous dealers,
the two major auction houses and smaller auction houses and also directly
between collectors. Although dealers and smaller auction firms do not report
sales, the Company believes that dealers account for the majority of the volume
of transactions in the world art market.

The Company and Christies International Plc, a publicly held company in the
United Kingdom ("Christie's"), are the two largest art auction houses in the
world. The Company conducted aggregate auction sales in 1993 of $1.33 billion
(approximately B.P.888 million). Christie's aggregate auction sales in 1993 were
approximately $1.09 billion (B.P.728 million). The auction sales of the next
largest art auction house, Phillips Son & Neale, were approximately $123 million
(B.P.82 million) for the year ended December 31, 1993.

The Company auctions a wide variety of property, including fine art,
jewelry, decorative art and rare books. In an approximate breakdown of 1993
auction sales by type of property, fine art accounted for approximately $589
million, or 44%, of auction sales, decorative art accounted for approximately
$423 million, or 32%, of auction sales and jewelry, rare books and other
property accounted for approximately $313 million, or 24%, of auction sales.

1
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Most of the objects auctioned by the Company are unique items, and their
value, therefore, can only be estimated prior to sale. The Company's principal
role as an auctioneer is to identify, evaluate and authenticate works of art
through its international staff of experts, to stimulate purchaser interest
through professional marketing techniques and to match sellers and buyers
through the auction process.

In its role as auctioneer, the Company normally functions as an agent
accepting property on consignment from its selling clients. The Company conducts
its auctions as agent of the consignor, billing the buyer for property
purchased, receiving payment from the buyer and remitting to the consignor the
consignor's portion of the buyer's payments. The Company frequently releases
property sold at auction to buyers, primarily dealers, before the Company
receives payment. In such event, the Company is liable to the seller for the net
sale proceeds even if the Company never receives payment from the buyer.

In addition, on certain occasions, the Company will assure the consignor a
minimum price in connection with the sale of property. The Company must perform
under its assurances only in the event that (a) the property fails to sell at
auction and (b) the consignor prefers to be paid the minimum price rather than
retain ownership of the unsold property. In such event, the Company purchases
the property at the minimum price.

Occasionally, the Company acts as a principal in connection with the sale
of property. For example, the Company acts as a principal through its
participation in Acquavella Modern Art (the "Partnership" or "AMA"), a
partnership consisting of a wholly-owned subsidiary of the Company and
Acquavella Contemporary Art, Inc. ("ACA"). The Company's investment in the
Partnership is the contribution of the inventory acquired through the purchase
of the common stock of the Pierre Matisse Gallery ("Matisse") for $153.1 million
in 1990. The primary purpose of the Partnership is to dispose of the inventory.
According to the terms of the Partnership agreement, each partner has a 50%
interest in the earnings of the Partnership and all cash available for
distribution is initially distributed to the Company until the Company receives
$270,339,390, together with a return equal to the prime rate (as defined).
Thereafter, cash distributions are made on a 50-50 basis. To the extent that the
Partnership requires working capital, the Company has agreed to lend the same to
the Partnership. Any amounts loaned to the Partnership by the Company would bear
interest, compounded monthly, at prime plus 1%. As of December 31, 1993, the
Company had received the $270,339,390 noted above and no amounts had been loaned
to the Partnership or advanced to ACA. Inventory in the amount of $89.1 million
had been sold through December 31, 1993, primarily through private sales. See
Note E to the Consolidated Financial Statements in the Annual Report.

All buyers pay a premium (known as the buyer's premium) to the Company on
auction purchases. Effective January 1, 1993, the buyer's premium in North
America was increased to 15% of the hammer price on all items sold for $50,000
or less, and 15% of the first $50,000 for items sold in excess of that amount
(10% on the remainder). Generally, similar structures were simultaneously
implemented throughout most of the rest of Sotheby's auction operations.
Previously the buyer's premium had been 10% in most locations. A selling
commission, which can vary depending on the sale location, type of seller (for
example, dealers) and the selling price of the property, is charged to the
seller. In situations involving major individual works of art, collections or
collectors, the selling commission tends to be negotiated to a level below that
which otherwise would apply.

The Company's operating revenues are significantly influenced by a number
of factors not within the Company's control, including the overall strength of
the international economy, in particular, the economies of the United States,
the United Kingdom, the major countries of continental Europe and Asia,
principally Japan and Hong Kong; political conditions in various nations; the
presence of export and exchange controls; taxation of sales of auctioned
property; competition and the amount of property being consigned to art auction
houses.

2
<PAGE>
The Company's business is seasonal, with peak revenues and operating income
generally occurring in the second and fourth quarters of each year as a result
of the traditional spring and fall art auction seasons. See "Management's
Discussion and Analysis of Results of Operations and Financial
Condition--Seasonality" in the Annual Report, which is incorporated herein by
reference.

The Auction Market

Competition in the world art market is intense. A fundamental challenge
facing any auctioneer or dealer is to obtain high quality and valuable property
for sale. The Company's primary auction competitor is Christie's.

The owner of a work of art wishing to sell it has three options: sale or
consignment to, or private brokerage by, an art dealer; consignment to an
auction house; or private sale to a collector or museum without use of an
intermediary. The more valuable the property, the more likely it is that the
owner will consider more than one option and will solicit proposals from more
than one potential purchaser or agent, particularly if the seller is a fiduciary
representing an estate or trust.

A complex array of factors influences the seller's decision. These factors
include: the level of expertise of the dealer or auction house with respect to
the property; a prior relationship between the seller and the firm; the
reputation and historic level of achievement by a firm in attaining high sale
prices in the property's specialized category; the amount of cash offered by a
dealer or other purchaser to purchase the property outright compared with the
estimates given by auction houses; the time that will elapse before the seller
will receive sale proceeds; the desirability of a public auction in order to
achieve the maximum possible price (a particular concern for fiduciary sellers);
the amount of commission proposed by dealers or auction houses to sell a work on
consignment; the cost, style and extent of presale promotion to be undertaken by
a firm; recommendations by third parties consulted by the seller; personal
interaction between the seller and the firm's staff; and the availability and
extent of related services, such as a tax or insurance appraisal and short-term
financing. The Company's ability to obtain high quality and valuable property
for sale depends, in part, on the relationships that certain employees of the
Company, particularly its senior art experts, have established with potential
sellers.

It is not possible to measure the entire world art market or to reach any
conclusions regarding overall competition because dealers and smaller auction
firms do not report sales. Based on the reported sales of the Company and
Christie's during each of the last 10 years, the Company has been and remains
the world leader in auction sales.

Regulation

Regulation of the auction business varies from jurisdiction to
jurisdiction. Such regulations do not impose a material impediment to the
worldwide business of the Company.

In February 1990, certain members of the Assembly of the State of New York,
the jurisdiction where the Company's principal U.S. auctions are held, initiated
an inquiry with respect to the business practices of auction houses, museums and
art dealers, including the Company. In January 1991, and again in 1992 and 1993,
the Assemblymen reintroduced proposed legislation which, if enacted, would
substantially alter the manner in which the Company's auction business in New
York is conducted. To date, no legislation has been enacted by the State of New
York.

3
<PAGE>
THE FINANCE BUSINESS

The Company arranges financing secured by works of art and other personal
property owned by its customers. The Company's finance operations are conducted
through its wholly-owned subsidiary, Sotheby's Financial Services, Inc.

The Company generally makes two types of art-related loans: (1) advances to
consignors who are contractually committed, in the near term, to sell property
at auction; and (2) term loans to collectors, museums or dealers secured by
property not intended for sale. The loans are generally made with full recourse
to the borrower. In certain instances, consignor advances are made with recourse
limited to the works of art consigned for sale and pledged as security for the
loan, or with recourse limited to the consigned works and to other works of art
owned by the consignor but not pledged as security. The consignor advance allows
a consignor to receive funds shortly after consignment for an auction that will
occur several weeks or months in the future, while preserving for the benefit of
the consignor the potential of the auction process. The term loan allows the
Company to establish or enhance a mutually beneficial relationship with major
dealers and collectors. Term loans generally have a maturity of one year. The
Company's loans generally are variable rate loans.

The Company reviews its loan portfolio on a quarterly basis. Each loan is
categorized based on the financial status of the borrower and the current
estimated realizable value of collateral securing the loan. When management
believes that the estimated realizable collateral value has fallen below the
principal amount of a loan or when the borrower is in default, the loan becomes
subject to more frequent monitoring. For financial statement purposes, the
Company establishes reserves for certain loans that the Company believes are
under-collateralized and with respect to which the shortfall may not be
collectible from the borrower. With respect to any such loan, the amount of the
applicable reserve is adjusted quarterly to reflect the portion of the loan that
the Company believes may become uncollectible. See Note D to the Consolidated
Financial Statements in the Annual Report.

The Company funds its finance operations through internally generated
funds, through the issuance of U.S. commercial paper and through its bank credit
lines, including its revolving credit facilities. See "Management's Discussion
and Analysis of Results of Operations and Financial Condition--Liquidity and
Capital Resources" and Note G to the Consolidated Financial Statements in the
Annual Report.

Competition

A considerable number of conventional lending sources offer loans at a
lower cost to borrowers than those offered by the Company. However, the Company
believes that, with the exception of Christie's, few other lenders are as
willing to accept works of art as collateral. The Company believes that its
financing alternatives are attractive to clients who wish to obtain liquidity
from their art assets for various reasons, despite the comparatively higher
interest rates charged by the Company.

THE LUXURY REAL ESTATE BUSINESS

Sotheby's International Realty, Inc. ("SIR") was founded in 1976 as an
outgrowth of Sotheby's auction activities and in response to the requests of
major clients to market estates and other real property that required exposure
beyond a local market. SIR responds to the needs of its clients by (a) acting as
an exclusive marketing agent providing services to licensed real estate
brokerage offices and (b) operating its own real estate brokerage offices in
certain locations.

4
<PAGE>
Competition

SIR's primary competitors are small, local real estate brokerage firms that
deal exclusively with luxury real estate and the "distinctive property"
divisions of large regional and national real estate firms. Competition in the
luxury real estate business takes many forms, including competition in price,
marketing expertise and the provision of personalized service to sellers and
buyers.

Regulation

The real estate brokerage business is subject to regulation in most
jurisdictions in which SIR operates. Typically, individual real estate brokers
and brokerage firms are subject to licensing requirements. SIR is registered to
conduct business in 34 states and maintains real estate brokerage licenses in 12
states. In other jurisdictions, SIR acts as an exclusive marketing agent
providing services to licensed real estate brokers.

PERSONNEL

At December 31, 1993, the Company had 1,531 employees: 620 located in North
America; 644 in the United Kingdom and 267 in the rest of the world. The
following table provides a breakdown of employees by operational areas as of
December 31, 1993:

OPERATIONAL AREA NUMBER OF EMPLOYEES
- ---------------- --------------------
Auction..................................................... 1,388
Realty...................................................... 56
Other....................................................... 87
-------
Total.................................................. 1,531
-------
-------

The Company regards its relations with its employees as good.

ITEM 2. PROPERTIES

U.S. PROPERTIES

Sotheby's, Inc. and Sotheby's Financial Services, Inc. are headquartered at
1334 York Avenue, New York, New York (the "York Property"). The Company also
leases office and warehouse space in four other locations in the New York City
area, and leases office and exhibition space in several other major cities
throughout the United States, including Los Angeles, San Francisco, Chicago and
Palm Beach.

The Company currently leases the York Property, comprising approximately
160,500 square feet, from an unaffiliated party under a 30-year lease expiring
in 2009, which contains an option to extend the term for an additional 30 years
until July 31, 2039. The lease also grants the Company a right of first refusal
with respect to the sale of the York Property.

York Avenue Development, Inc. ("York"), a wholly-owned subsidiary of
Sotheby's, Inc., has the right to purchase the fee interest in the York Property
by exercising certain options available through January 31, 1999 and during the
months of August 1999, August 2004 and July 2009.

Since 1983, management of the Company has evaluated various alternatives
for the realization of the value of the right to purchase the fee interest in
the York Property. Additionally, the Company has studied how best to satisfy its
demand for additional office and auction space.

5
<PAGE>
Under an agreement with Taubman York Avenue Associates, Inc.
("Associates"), Associates has agreed that it will assist York in developing and
financing a new, mixed-use tower (the "New Tower") over the existing four-story
building on the York Property, should a decision be made to proceed with such
development. Sotheby's, Inc. has structured the transaction to isolate the
financial exposure of the Company with respect to development of the New Tower
in one subsidiary, namely, York. A. Alfred Taubman, the Company's Chairman and
largest shareholder, is presently the sole shareholder of Associates. See Note I
to the Consolidated Financial Statements in the Annual Report.

Sotheby's, Inc. also assigned to York its rights and obligations under a
project services agreement dated November 8, 1985 (the "Project Services
Agreement") between Sotheby's, Inc. and The Taubman Company ("TTC"), which is an
affiliate of A. Alfred Taubman. Under the Project Services Agreement, TTC agreed
to develop the New Tower on behalf of Sotheby's, Inc. and to provide
consultation and advice to Sotheby's, Inc. in connection with the development of
the New Tower, should a decision be made to proceed with the development.

SIR leases approximately 10,900 square feet of office space at 980 Madison
Avenue, New York, New York, from unaffiliated parties under leases expiring in
1994 and 2001. SIR also leases satellite office space at a number of locations,
totalling another 11,200 square feet.

OVERSEAS PROPERTIES

The Company's U.K. operations are centered at New Bond Street, London,
where the main salesrooms and administrative offices of Sotheby's (U.K.) are
located. Additional salesrooms are located in proximity to New Bond Street. The
total net usable floor area amounts to approximately 124,000 square feet. The
Company owns or holds long-term leasehold interests in approximately 75% of
these properties by area, the balance being held on leases with remaining terms
of less than 20 years. In addition, 50,000 square feet of warehouse space is
leased at King's House in West London. The Company also owns a country estate in
Sussex where it conducts satellite auctions.

The Company also leases office space in various locations throughout
continental Europe, including Paris, Geneva, Zurich, Amsterdam, Frankfurt,
Munich, Milan and Madrid; in Asia, including Japan and Hong Kong; and in South
America.

In management's opinion, the Company's premises are generally adequate for
the current conduct of its business. However, the Company evaluates, on an
ongoing basis, the adequacy of its premises for the requirements of the present
and future conduct of its business, with particular focus on its major auction
locations.

ITEM 3. LEGAL PROCEEDINGS

The Company becomes involved from time to time in various claims and
lawsuits incidental to the ordinary course of its business. The Company does not
believe that the outcome of any such pending claims or proceedings will have a
material effect upon its business or financial condition.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of the Company's shareholders during
the fourth quarter of 1993.

6
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PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK
AND RELATED SHAREHOLDER MATTERS

Market Information

The principal U.S. market for the Company's Class A Limited Voting Common
Stock, par value $0.10 per share (the "Class A Common Stock"), is the New York
Stock Exchange (symbol: BID). The Class A Common Stock is also traded on the
London Stock Exchange.

The Company also has a Class B Common Stock, par value $0.10 per share,
convertible on a share for share basis into Class A Common Stock. There is no
public market for the Class B Common Stock. Per share cash dividends are equal
for the Class A and Class B Common Stock.

The quarterly price ranges on the New York Stock Exchange of the Class A
Common Stock and dividends per share for 1993 and 1992 are shown in the
following schedules:

<TABLE><CAPTION>
1993
---------------------- CASH DIVIDEND
QUARTER ENDED HIGH LOW DECLARED
- --------------------------------------------- ----------- --------- ---------------
<S> <C> <C> <C>
March 31..................................... $ 14 1/4 $ 12 1/4 $ .15
June 30...................................... 14 7/8 11 3/8 .15
September 30................................. 13 1/8 10 3/4 .06
December 31.................................. 17 1/4 11 3/4 .06

<CAPTION>
1992
---------------------- CASH DIVIDEND
QUARTER ENDED HIGH LOW DECLARED
- --------------------------------------------- ----------- --------- ---------------
<S> <C> <C> <C>
March 31..................................... $ 15 3/8 $ 10 3/4 $ .15
June 30...................................... 15 5/8 11 3/8 .15
September 30................................. 13 7/8 10 1/4 .15
December 31.................................. 12 3/8 9 5/8 .15
</TABLE>

The number of holders of record of the Class A Common Stock as of March 11,
1994 was 1,483. The number of holders of record of the Class B Common Stock as
of March 11, 1994 was 44.

ITEM 6. SELECTED FINANCIAL DATA

Selected Financial Data on page 17 of the Annual Report are incorporated
herein by reference.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION

Management's Discussion and Analysis of Results of Operations and Financial
Condition on pages 18 through 23 of the Annual Report is incorporated herein by
reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Consolidated Financial Statements on pages 24 through 37 of the Annual
Report are incorporated herein by reference.

The Independent Auditors' Report on page 38 of the Annual Report is
incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

7
<PAGE>
PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT

All directors of the Company are elected to hold office until the next
annual meeting of shareholders and until their successors are elected and
qualified. Officers of the Company are appointed by the Board of Directors and
serve at the discretion of the Board. As of March 25, 1994, the directors and
executive officers of the Company (including certain officers of certain
principal subsidiaries and divisions) are as follows:

<TABLE><CAPTION>
NAME AGE PRESENT TITLE
---- --- -------------
<S> <C> <C>
A. Alfred Taubman......................... 69 Chairman and Director
Max M. Fisher............................. 85 Vice Chairman and Director
Viscount Blakenham........................ 56 Director
Lord Camoys............................... 53 Director
Walter J. P. Curley....................... 71 Director
The Rt. Hon. The Earl of Gowrie........... 54 Director
Leslie H. Wexner.......................... 56 Director
Michael L. Ainslie........................ 50 President, Chief Executive Officer and Director
George Bailey............................. 40 Managing Director, Sotheby's Europe
Kevin A. Bousquette....................... 36 Senior Vice President and Chief Financial Officer
Diana D. Brooks........................... 43 Director; President and Chief Executive Officer,
Sotheby's
Thomas F. Gannalo......................... 42 Vice President, Controller and Chief Accounting
Officer
Simon de Pury............................. 42 Chairman, Sotheby's Europe
William F. Ruprecht....................... 38 Managing Director, Sotheby's North and South America
R. Julian de la M. Thompson............... 52 Director; Chairman, Sotheby's Asia
Henry Wyndham............................. 40 Chairman, Sotheby's (U.K.)
Mitchell Zuckerman........................ 47 President, Sotheby's Financial Services, Inc.
</TABLE>

Mr. Taubman is a private investor. Since 1983, Mr. Taubman has been the
largest shareholder, Chairman and a director of the Company. He is Chairman of
Taubman Centers, Inc., a company engaged in the regional retail shopping center
business. He is also a director of R. H. Macy & Co., Inc., which owns and
operates department stores throughout the United States. In January 1992, R.H.
Macy & Co. filed for bankruptcy protection under Chapter 11 of the U.S.
Bankruptcy Code. He is also Chairman of the Board of Woodward & Lothrop
Holdings, Inc. and a director of Woodward & Lothrop Incorporated, both of which
filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code in
January 1994.

Mr. Fisher is a private investor and has been Vice Chairman of the Company
since 1986 and a director of the Company since 1983. He is a director of
Comerica Bank.

Lord Blakenham became a director of the Company in 1987. Since 1961, he has
served in various executive positions with Pearson plc, a British media company
that serves worldwide information, education and entertainment markets and which
has a substantial interest in the three Lazard investment banking firms. He has
been Executive Chairman of Pearson plc since 1983. He is a Managing Director of
Lazard Brothers & Co., Limited, an investment banking firm, and the non-
executive Chairman of MEPC, plc, a commercial real estate investment and
development company.

Lord Camoys became a director of the Company in October 1993. In addition,
he will assume the role of Deputy Chairman of the Company effective April 1,
1994. Since 1989 he has been Deputy Chairman of Barclays de Zoete Wedd Holdings
Limited, the international investment banking arm of
8
<PAGE>
Barclays Group. He is a director of Barclays Bank PLC and 3i Group plc, an
investment group, and is Deputy Chairman of National Provident Institution.

Mr. Curley became a director of the Company in April 1993. From 1989 to
March 1993, Mr. Curley served as U.S. Ambassador to France. Prior to 1989, Mr.
Curley was U.S. Ambassador to Ireland, was a partner of J.H. Whitney & Co., and
was a principal in his own private venture capital investment firm, W.J.P.
Curley. Mr. Curley is a director of American Exploration Company, an oil and gas
exploration and development company, Coflexip S.A., a manufacturer of flexible
pipe for the petroleum industry, Fiduciary Trust International, a funds
management firm, and The France Growth Fund, a closed end investment company. He
is also a member of the International Advisory Committee of Compagnie Financiere
de Paribas, an international bank.

Lord Gowrie has been a director of the Company since 1985. He served as
Chairman of Sotheby's Europe from 1992 through 1993. From 1988 to 1991, Lord
Gowrie served as Chairman of Sotheby's (U.K.), which then encompassed the United
Kingdom, Europe, Asia and Australia. Lord Gowrie is a director of the Ladbroke
Group PLC, an entertainment and leisure company.

Mr. Wexner has been a director of the Company since 1983. Since 1963, he
has been President and Chairman of The Limited, Inc., which is one of the
leading women's apparel specialty stores and mail order retailers in the United
States. Mr. Wexner is a director and a member of the Executive Committee of Banc
One Corporation.

Mr. Ainslie has been the President, Chief Executive Officer and a director
of the Company since 1984. Mr. Ainslie has resigned as President and Chief
Executive Officer of the Company effective April 1, 1994. Mr. Ainslie is also
Chairman of SIR.

Mr. Bailey was appointed Managing Director of Sotheby's Europe in January
1994. From 1992 through 1993, he served as director of Business Development,
Sotheby's Europe. From 1987 to 1992, Mr. Bailey was the director of operations,
Sotheby's (U.K.). Mr. Bailey joined Sotheby's in 1979.

Mr. Bousquette has been Senior Vice President and Chief Financial Officer
since April 1993. From 1985 to 1992, Mr. Bousquette was an executive at Kohlberg
Kravis Roberts & Co., L.P., a merchant banking firm, and a limited partner of
KKR Associates, L.P.

Ms. Brooks became President and Chief Executive Officer of Sotheby's, the
Company's worldwide auction business, in March 1993. She became a director of
the Company in 1992. She was named Chief Executive Officer of Sotheby's, Inc. in
1990. In addition, she has been President of Sotheby's, Inc., responsible for
North and South American operations, since 1987. Effective April 1, 1994, Ms.
Brooks has been appointed President and Chief Executive Officer of the Company,
succeeding Mr. Ainslie.

Mr. Gannalo was appointed Vice President and Controller in April 1991, and
was also named Chief Accounting Officer in August 1992. He joined the Company in
1987 as Controller of Sotheby's, Inc.

Mr. de Pury was appointed Chairman of Sotheby's Europe in January 1994. He
served as Deputy Chairman of Sotheby's Europe from 1992 through 1993. From 1988
to 1991, he served as Deputy Chairman of Sotheby's (U.K.), directly responsible
for European development. He joined the Company in 1986 as Managing Director,
Sotheby's International, Inc., responsible for all continental European offices.

Mr. Ruprecht was appointed Executive Vice President and Managing Director
of Sotheby's, Inc. in February 1994. In 1992, he became Director of Marketing
for the Company worldwide, a position he continues to hold. From 1986 to 1992,
he served as director of marketing for Sotheby's, Inc. Mr. Ruprecht joined the
Company in 1980.

9
<PAGE>
Mr. Thompson has been a director of the Company since 1983 and became
Chairman of Sotheby's Asia in January 1992, directly responsible for development
in Asia, India and Australia. From 1988 to 1991 he was Deputy Chairman of
Sotheby's (U.K.), directly responsible for development in Asia.

Mr. Wyndham became Chairman of Sotheby's (U.K.) in February 1994. Since
prior to 1989, he was partner of the St. James Art Group, an art dealing
business.

Mr. Zuckerman has been President of Sotheby's Financial Services, Inc.,
since 1988. From June 1986 until 1989, he served as Senior Vice President,
Corporate Development of the Company. From 1984 to 1988, he was Senior Vice
President, Business Development of Sotheby's, Inc.

Based on the Company's review of the filings made by the Company's
directors and executive officers under Section 16 of the Securities and Exchange
Act of 1934, all transactions in and beneficial ownership of the Company's
equity securities were reported in a timely manner, except that Mr. Fisher was
inadvertently three days late in reporting a sale of shares of Class A Common
Stock by a charitable foundation of which he is a director.

ITEM 11. EXECUTIVE COMPENSATION

The following table sets forth all compensation paid to the Chief Executive
Officer and each of the four most highly compensated executive officers of the
Company during 1993 for each of the last three years.

SUMMARY COMPENSATION TABLE

<TABLE><CAPTION>
ALL OTHER
LONG-TERM COMPENSATION
ANNUAL COMPENSATION COMPENSATION (15)
-------------------------------------------------- ------------- ---------------
OTHER ANNUAL STOCK OPTIONS
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (4) COMPENSATION (#)
- ---------------------------- --------- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael L. Ainslie 1993 $ 430,000 $ $ 16,800(8) 75,000 19,708
President and Chief 1992 430,000 224,325(9) 26,500
Executive Officer 1991 430,000 101,000 20,250(10) 26,550
Diana D. Brooks 1993 $ 400,000 $ 233,000(5) $ 8,640(11) 250,000 34,250
President and Chief 1992 280,000 255,000(5) 23,000
Executive Officer, 1991 280,000 151,000 44,050
Sotheby's
Roger C. Faxon(1) 1993 $ 300,000 $ 225,000(6) $ 248,739(12) 25,000 25,000
Managing Director, 1992 300,000 200,000(6) 767,187(13) 22,978
Sotheby's Europe 1991 300,000 101,000 18,854(14) 75,000 6,300
Simon de Pury(2) 1993 $ 243,180 $ 190,000(7) $ 100,000 30,469
Chairman, Sotheby's Europe 1992 230,106 80,000 14,000 34,515
1991 222,600 39,000 26,467
Kevin A. Bousquette(3) 1993 $ 239,808 $ 70,000 $ 150,000 7,500
Senior Vice President and 1992
Chief Financial Officer 1991
</TABLE>

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

(1) Mr. Faxon resigned from the Company effective December 31, 1993.

(2) Mr. de Pury served as Deputy Chairman of Sotheby's Europe in 1993. He
assumed the position of Chairman of Sotheby's Europe on January 1, 1994.

(3) Mr. Bousquette joined the Company in March 1993.

(4) The 1993 bonus amounts include cash paid in 1994 in respect of 1993
performance.

(Footnotes continued on following page)

10
<PAGE>
(Footnotes continued from preceding page)
(5) The 1993 bonus amount includes a payment of $60,000, representing part of a
special payment awarded to senior officers to reflect the fact that
salaries had been frozen since January 1990, and the 1992 bonus amount
includes a payment of $30,000, representing part of the special payment.
The balance of the special payment will be paid to Ms. Brooks in 1994,
contingent on her continued employment. The 1993 bonus amount also includes
payment of a deferred bonus of $23,000 paid for services rendered in
connection with the acquisition of Matisse and the management of AMA. The
1992 bonus amount also includes payment of a deferred bonus of $75,000 paid
in connection with the acquisition of Matisse and the management of AMA.

(6) The 1993 bonus amount includes a special bonus of $25,000 paid to Mr. Faxon
in 1993 in respect of 1993 performance. The 1992 bonus amount reflects not
only performance-related payments but also inducements to relocate to
London to manage European operations.

(7) The 1993 bonus amount includes a payment of $60,000, representing part of a
special payment awarded to senior officers to reflect the fact that
salaries had been frozen since January 1990. The balance of the special
payment will be paid to Mr. de Pury in 1994, contingent on his continued
employment.

(8) Company car payment.

(9) Includes a company car payment and, in accordance with the terms of Mr.
Ainslie's employment agreement, a payment of $207,525 in respect of stock
options exercised in 1992 ($0.15 per share).

(10) Company car payment.

(11) Company car payment.

(12) This amount includes a housing allowance ($78,156), a utilities allowance,
a company car payment and moving expenses. This amount also includes a
$150,000 severance payment paid to Mr. Faxon in connection with his
resignation from the Company effective December 31, 1993. This amount does
not include amounts which will be paid to Mr. Faxon in respect of 1993 to
compensate him for the increased income tax for which he was liable as a
result of his relocation to London in 1992, which amounts have not yet been
finally calculated.

(13) Mr. Faxon relocated to London at the Company's request. This amount
reflects reimbursement for losses associated with a sale, controlled by the
Company, of his U.S. residence ($455,898) and the related tax reimbursement
($204,824), moving expenses, a housing allowance and an annual company car
payment. This amount does not include amounts which will be paid to Mr.
Faxon in respect of 1992 to compensate him for the increased income tax for
which he was liable as a result of his relocation to London, which amounts
have not yet been finally calculated.

(14) Moving expense associated with Mr. Faxon's relocation from Los Angeles to
New York.

(15) The amounts disclosed in this column for 1993 include:

(a) Company contributions of the following amounts under the Retirement
Savings Plan: $11,792 on behalf of Mr. Ainslie, $11,792 on behalf of
Ms. Brooks, $11,467 on behalf of Mr. Faxon and $5,171 on behalf of Mr.
Bousquette;

(b) Company contributions of the following amounts under benefit
equalization agreements: $7,916 on behalf of Mr. Ainslie, $22,458 on
behalf of Ms. Brooks, $13,533 on behalf of Mr. Faxon and $2,329 on
behalf of Mr. Bousquette; and

Stock Option Plan

In 1987, the Company instituted the 1987 Stock Option Plan, including its
U.K. Sub-Plan (the "Stock Option Plan" or "Plan"), for employees of the Company.
The purposes of the Plan are to provide employees with added incentives to
continue in the employ of the Company, to encourage proprietary interest in the
Company through the acquisition of its stock and to attract new employees with
outstanding qualifications. Options may be granted under the Plan until July 27,
1997, and the Plan expires for all purposes on July 27, 2007. The Board of
Directors may suspend, discontinue, revise or amend the Plan at any time with
respect to shares not subject to options at the time of the amendment,
11
<PAGE>
except that, without the approval of the Company's shareholders, no such
revision or amendment may increase the number of shares subject to the Plan,
change the eligibility requirements or remove the restrictions regarding
amendment of the Plan.

The Audit and Compensation Committee of the Company's Board of Directors
(the "Committee"), in its discretion (based on each employee's performance and
expected future contribution to the Company), selects the employees eligible to
participate in the Plan. Under the U.K. Sub-Plan, options may only be granted to
a director or employee of the Company, or any of its subsidiaries, who is a U.K.
resident, and only if the resident devotes not less than 25 hours per week, in
the case of a director, or 20 hours per week, in the case of an employee who is
not a director, to his or her duties, subject to certain other limitations.

The Committee, in its discretion, determines the number of options to be
granted to an employee. Under the U.K. Sub-Plan, a U.K. resident may not receive
options for shares under the U.K. Sub-Plan with aggregate exercise prices
(converted to their pound sterling equivalent at the date of grant) exceeding
the greater of B.P.100,000 or four times relevant compensation during the
current or preceding year.

Only options on shares of Class B Common Stock can be granted under the
Plan, although, under certain circumstances, optionees may receive shares of
Class A Common Stock upon exercise. In July 1988, Rule 19c-4 (the "Rule")
adopted under the Securities Exchange Act of 1934 became effective. Although the
Rule has been vacated by a federal appellate court, the Rule has been adopted by
the New York Stock Exchange ("NYSE") as a NYSE rule. The NYSE's version of the
Rule, as currently interpreted and applied, prevents the continued listing of
the Class A Common Stock on the NYSE if the Company issues any additional shares
of Class B Common Stock other than in satisfaction of options granted under the
Plan prior to the Rule's effective date. The Company has received permission
from the NYSE to continue to grant options under the Plan subject to the
condition that each prospective optionee must agree that if the Company cannot
issue shares of Class B Common Stock to such optionee upon exercise and maintain
the listing of the Class A Common Stock on the NYSE, the optionee will receive
shares of Class A Common Stock instead of shares of Class B Common Stock. The
NYSE has proposed a change to its rules which would allow the Company to issue
additional shares of Class B Common Stock.

An optionee may exercise an option to the extent of one-third of the number
of shares subject to the option in each of the fourth, fifth and sixth years of
employment after the date of the grant of the option on a cumulative basis,
although the Committee has the discretion to accelerate the exercise dates of
options to a date, in the case of an option granted under the U.K. Sub-Plan
subsequent to July 3, 1991, not earlier than the third anniversary of the date
of grant and, in the case of any other option, not earlier than six months and
one day after the relevant date of grant.

Effective October 1992, the Committee approved a change in vesting for all
subsequent grants, such that an optionee, except those subject to the U.K.
Sub-Plan, may exercise an option to the extent of one-fifth of the number of
shares subject to the option in each of the second, third, fourth, fifth and
sixth years of employment after the date of the grant on a cumulative basis.
Under the U.K. Sub-Plan, optionees may exercise an option to the extent of
three-fifths of the number of shares subject to the option in the fourth year
and one-fifth in each of the fifth and sixth years of employment after the grant
date.

If an optionee terminates employment more than three years after the date
of grant for reasons other than death, disability, retirement or cause, the
option may be exercised to the extent it is vested and has not previously been
exercised at the time of termination of employment. If the termination is for
cause, which is defined as gross misconduct or unacceptable behavior as
determined by the Committee, the right to exercise the option is forfeited. If
the termination of employment is because of death, disability or retirement, the
option may be exercised in full. There are certain limitations on the timing
12
<PAGE>
of exercise of the option after termination of employment. No option may be
exercised after ten years from the date of the initial grant.

Under the current provisions of the Internal Revenue Code of 1986, an
optionee who is a U.S. citizen or resident will not realize any income for
federal income tax purposes upon the grant of an option. The optionee will,
however, receive compensation income at the time of the exercise of the option
in the amount of the excess of the fair market value of the shares at the time
of exercise over the exercise price. In the United States, the Company will
receive a deduction at that time in the amount that the U.S. optionee includes
in income.

The aggregate number of shares of stock that may be issued upon exercise of
options is limited to 16,507,076 shares of authorized but unissued or reacquired
Class B Common Stock. As of December 31, 1993, options for 5,229,997 shares of
Class B Common Stock held by 410 employees of the Company were outstanding. Of
this total, options for 1,099,166 shares were held by executive officers of the
Company. At December 31, 1993, options for 4,809,433 shares of Class B Common
Stock were available for grant under the Plan.

The limitation on the number of shares, the number of shares covered by
each option and the exercise price for such shares will be adjusted
proportionately in the event of any increase or decrease in the number of issued
shares of Class A Common Stock or Class B Common Stock or both resulting from a
subdivision or consolidation of such shares, any payment of a stock dividend,
any reorganization, consolidation, dissolution, liquidation, merger, exchange of
shares, recapitalization, stock split, reverse stock split or any other increase
or decrease, without consideration, in the number of issued shares of either
Class A Common Stock or Class B Common Stock.

Participants in the Plan receive an annual statement regarding their option
activity. This statement includes date of grant, number of options granted,
exercise price and vesting dates. Participants also receive all information sent
to shareholders generally, including annual and quarterly reports and proxy
statements.

The exercise price of an option is determined by the Committee at the date
of grant, and may not be less than the fair market value of the underlying
shares as of the date of grant.

The following table sets forth information regarding option grants to the
named executive officers in 1993:

OPTION GRANTS IN 1993

<TABLE><CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(2)
----------------------------------------------------- --------------------------
NUMBER OF PERCENT OF
SHARES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION
NAME GRANTED(1) 1993 SHARE DATE 5% 10%
- ----------------------------------- ----------- --------------- ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Michael L. Ainslie................. 75,000 3.19% $ 12.50 6/15/03 $ 589,589 $ 1,494,134
Kevin A. Bousquette................ 150,000 6.38% $ 12.50 6/15/03 $ 1,179,177 $ 2,988,267
Diana D. Brooks.................... 125,000 5.32% $ 13.38 1/26/03 $ 1,051,433 $ 2,664,538
Diana D. Brooks.................... 125,000 5.32% $ 12.50 6/15/03 $ 982,648 $ 2,490,223
Roger C. Faxon..................... 25,000 1.06% $ 13.38 3/31/94 $ 16,719 $ 33,438
Simon de Pury...................... 100,000 4.26% $ 13.38 1/26/03 $ 841,147 $ 2,131,631
</TABLE>

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

(1) Each named executive officer's options will vest and become exercisable to
the extent of one-fifth of the number of shares subject to the option on
each of the first, second, third, fourth and fifth anniversary of the date
of grant. None of the options granted to Mr. Faxon will vest before March
31, 1994, when such options expire.

(Footnotes continued on following page)

13
<PAGE>
(Footnotes continued from preceding page)
(2) The actual value, if any, that may be realized by each individual will
depend on the closing price of the Class A Common Stock on the NYSE on the
day preceding the exercise date. The option term for these option grants is
ten years. The appreciation rates used in the table are provided to comply
with Item 402(c) of Regulation S-K and do not necessarily reflect the views
of management as to the potential realizable value of options.

The following table provides information on option exercises in 1993 by the
named executive officers and year-end option values for unexercised options held
by the named executive officers:

AGGREGATED OPTION EXERCISES IN 1993 AND YEAR-END OPTION VALUES

<TABLE><CAPTION>
VALUE OF UNEXERCISED
SHARES NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT
ACQUIRED OPTIONS AT YEAR-END YEAR-END
ON EXERCISE VALUE --------------------------- ---------------------------
NAME (#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------- ----------- ------------- ----------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Michael L. Ainslie......... 0 $ 0 0 75,000 $ 0 $ 215,625
Kevin A. Bousquette........ 0 $ 0 0 150,000 $ 0 $ 431,250
Diana D. Brooks............ 0 $ 0 42,000 286,000 $ 102,000 $ 660,375
Roger C. Faxon............. 0 $ 0 25,000 150,000 $ 0 $ 415,625
Simon de Pury.............. 0 $ 0 13,334 120,666 $ 42,502 $ 250,997
</TABLE>

See Note J to the Consolidated Financial Statements in the Annual Report
for additional information about the Plan.

Retirement Savings Plan

The Company has a Retirement Savings Plan (the "Retirement Savings Plan")
for employees of the Company and its subsidiaries in the United States.
Effective May 1, 1993, there was a change in the eligibility requirements for
participation, such that employees are eligible to participate in the Retirement
Savings Plan as of the first day of the month following completion of a 90-day
waiting period commencing on the date of employment. Prior to May 1, 1993,
employees who had completed 1,000 hours of service during the 12-month period
commencing on the date of employment or during any calendar year thereafter were
eligible to participate in the Retirement Savings Plan as of the first day of
the month following completion of the service requirement.

The Company contributes 2% of each participant's compensation to the
Retirement Savings Plan on behalf of the participant. In addition, participants
may elect to save between 2% and 12% of their compensation, up to the maximum
amount allowable under the Internal Revenue Code of 1986, as amended (the
"Code") and the regulations thereunder, on a pre-tax basis. Participants also
may elect to make after-tax contributions, subject to certain limits. Employee
pre-tax savings are matched by a Company contribution of up to an additional 3%
of the participant's compensation. The total amount of contributions for each
participant is subject to certain limitations under the Code, and the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").

For the purpose of determining contributions, compensation is defined as
aggregate earnings, including basic compensation, commissions, overtime,
premiums, sickness (other than long-term disability) and vacation pay and cash
bonuses, but specifically excludes other incentive compensation, severance pay,
contributions to other welfare and pension plans (except other plans qualifying
under Section 401(k) of the Code) and reimbursement of expenses.

Employees may direct the apportionment of their account balances between
four funds: a fixed income fund, an equity fund, a balanced fund and, subject to
certain limitations, a Company stock fund. Income taxes on savings,
contributions (other than after-tax contributions) and investment earnings are
deferred until benefits are paid out to the employee upon retirement, death or
earlier termination of employment or withdrawal. The receipt of benefits
attributable to the Company's contributions
14
<PAGE>
(including the 2% Company contribution and matching contributions) is subject to
vesting and forfeiture provisions of the plan; other amounts are fully vested at
all times.

Participants may borrow from their Retirement Savings Plan accounts for any
purpose. The maximum amount which may be borrowed by any participant is the
lesser of $50,000 or one-half of the participant's vested account balance in the
plan.

Company contributions to the Retirement Savings Plan made on behalf of the
named executive officers have been included in the Summary Compensation Table.

Switzerland Plan

In accordance with the requirements of Swiss law, Sotheby's AG, the
Company's Swiss operating subsidiary, established in 1985 a fully insured
pension plan for its full-time employees whose salaries exceed 22,560 Swiss
francs ("SF"). There are two elements of the plan: a savings element (the
"Savings Plan") and a risk element (the "Risk Plan"). Employees are eligible to
join the Savings Plan as of the January 1 following attainment of age 24 and the
Risk Plan as of the January 1 following attainment of age 17.

Under the Savings Plan, an individual retirement account is established for
each participating employee. Each year, the account is credited with a
percentage of the employee's adjusted salary, which is the employee's annual
salary including bonuses and other allowances reduced by SF 22,560, with a
minimum adjusted salary of SF 2,820. Longer serving employees were made eligible
for additional Company contributions in respect of service with the Company
prior to 1985 and in respect of salary in excess of SF 112,800 for which no
contributions had been made prior to 1993. The percentage of adjusted salary
credited to the account ranges from 7% to 30%, depending on the employees' age,
sex and past service. The Company pays between 66% and 80% of this total
contribution, with the remainder paid by employees. The account is also credited
with interest at a rate fixed by the Federal Council.

At retirement age, which is age 65 for men and age 62 for women, the
employee's account is converted to a life annuity, with provisions for
contingent widow's pension of 60% of the retiree's benefit and immediate
pensions of 20% of the retiree's benefit for certain children of the retiree.
Participants may elect to receive their retirement benefits in a lump sum in
lieu of the annuity.

The Risk Plan provides disability and death benefits to employees, their
widows and certain of their children. Benefits are generally a percentage of the
amount credited to the employee's account, excluding interest. Benefits under
the Risk Plan are funded by insurance premiums, all of which are paid by the
Company.

Mr. de Pury is the only named executive officer who participates in the
plan. A total of SF 47,227 ($30,469) contributed in 1993 by the Company on
behalf of Mr. de Pury is included in the Summary Compensation Table.

Bonuses

The Company's officers are eligible to receive incentive bonuses. Bonuses
are recommended by management and approved by the Committee. Actual awards are a
function of the Company's after-tax worldwide profit and the individual's
performance.

In view of a 36-month salary freeze for senior officers of the Company,
supplemental compensation was approved in 1992 for selected officers as an
alternative to market-based salary adjustments. Once granted, these awards are
paid in four semiannual payments and are contingent upon continued employment.
Bonuses awarded to the named executives have been included in the Summary
Compensation Table.

15
<PAGE>
Benefit Equalization Agreements

The total annual contributions to the Company's Retirement Savings Plan are
subject to certain limitations under the Code and ERISA for each participant.
Officers (generally senior vice presidents and above) of the Company and its
U.S. subsidiaries who are affected by such limitations may enter into agreements
pursuant to which their salaries will be reduced, and the Company will maintain
accounts on their behalf, in the amount of the difference between (i) the
aggregate amount of contributions that would have been made to the Retirement
Savings Plan in the absence of the limitations, and (ii) the aggregate amount of
contributions actually made to the plan. Amounts deferred in 1993 and subsequent
years will be credited with the same earnings yield credited to contributions
made to the fixed income fund maintained under the Retirement Savings Plan.
Benefits under these unfunded agreements will be paid at the same time and in
the same manner as benefits under the Company's Retirement Savings Plan. Amounts
deferred by named executives of the Company pursuant to benefit equalization
agreements in 1993 have been included in the Summary Compensation Table.

COMPENSATION OF DIRECTORS

Each director of the Company who is not an executive officer of the Company
receives an annual fee of $15,000, plus a fee of $1,000 for each Board meeting
attended by such director, and a fee of $500 ($1,000 for the chairman of the
committee) for each committee meeting attended by such director, in addition to
reimbursement of expenses.

16
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the beneficial
ownership of the Company's Class A and Class B Common Stock as of March 11, 1994
by its directors, named executive officers and 5% shareholders. The Company has
relied upon information supplied by its officers, directors and certain
shareholders and upon information contained in filings with the Securities and
Exchange Commission. Each share of Class B Common Stock is freely convertible
into one share of Class A Common Stock. Accordingly, under the applicable rules
of the Securities and Exchange Act of 1934, holders of Class B Common Stock are
deemed to own an equal number of shares of Class A Common Stock. For purposes of
the calculation of the percentage of each class that each named officer,
director and 5% shareholder beneficially owns, the number of shares of such
class deemed to be outstanding is the sum of all outstanding shares of such
class plus the number of shares that such beneficial owner has, or is deemed to
have, the right to acquire by the exercise of options and/or conversion.

CLASS A AND CLASS B COMMON STOCK OWNERSHIP OF
DIRECTORS, EXECUTIVE OFFICERS AND 5% SHAREHOLDERS

CLASS A COMMON STOCK CLASS B COMMON STOCK
-------------------------- --------------------------
DIRECTORS, EXECUTIVE NUMBER PERCENT NUMBER PERCENT
OFFICERS AND 5% SHAREHOLDERS OF SHARES OF CLASS OF SHARES OF CLASS
- -------------------------------------------------- ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
A. Alfred Taubman................................. 13,199,616(1)(2) 27.1% 13,199,516(2) 65.8%
200 E. Long Lake Road
Bloomfield Hills, MI 48304
Max M. Fisher..................................... 1,932,821(3) 5.2% 1,840,921(4) 9.2%
2700 Fisher Building
Detroit, MI 48202
Leslie H. Wexner.................................. 1,140,216(5) 3.1% 993,316 5.0%
41 South High Street
Suite 3710
Columbus, OH 43215-6190
Lord Camoys....................................... 7,500 *
Barclays de Zoete Wedd
Ebbgate House, 2 Swan Lake
London EC4R 3TS, England
Michael L. Ainslie................................ 700,200(6) 1.9% 700,000 3.5%
Sotheby's, Inc.
1334 York Avenue
New York, New York 10021
Diana D. Brooks................................... 193,000(7) * 193,000(8) *
Sotheby's, Inc.
1334 York Avenue
New York, New York 10021
The Rt. Hon.
The Earl of Gowrie................................ 28,000(9) * 28,000(10) *
Sotheby's
34-35 New Bond Street
London W1 2AA England
R. Julian de la M. Thompson....................... 124,500(11) * 124,500(12) *
Sotheby's
34-35 New Bond Street
London W1 2AA England
Kevin A. Bousquette............................... 7,700 *
Sotheby's, Inc.
1334 York Avenue
New York, NY 10021
</TABLE>

17
<PAGE>
<TABLE><CAPTION>
CLASS A COMMON STOCK CLASS B COMMON STOCK
-------------------------- --------------------------
DIRECTORS, EXECUTIVE NUMBER PERCENT NUMBER PERCENT
OFFICERS AND 5% SHAREHOLDERS OF SHARES OF CLASS OF SHARES OF CLASS
- -------------------------------------------------- ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
Simon de Pury..................................... 55,000(13) * 40,000(14) *
Sotheby's
13 Quai du Mont Blanc
CH-1201 Geneva, Switz.
Fidelity Management & Research Co................. 5,157,000 14.5%
82 Devonshire Street
Boston, MA 02109
GeoCapital Corporation............................ 2,298,850(15) 6.5%
767 Fifth Avenue
New York, NY 10153
State of Wisconsin Investment Board............... 2,407,300 6.8%
P.O. Box 7842
Madison, WI 53707
Directors and Executive Officers.................. 17,545,855(16) 33.2% 17,260,582(16) 84.5%(16)
as a Group
</TABLE>

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

* Represents less than 1%.

(1) Mr. Taubman owns 100 shares of Class A Common Stock. This figure
includes 9,730,886 shares of Class A Common Stock that he has, or is deemed to
have, the right to acquire by converting shares of Class B Common Stock that Mr.
Taubman owns as trustee of his grantor trust and also includes 3,468,630 shares
of Class A Common Stock that he has the right to acquire by converting shares of
Class B Common Stock owned by Taubman Investments Limited Partnership, as to
which he has sole voting and dispositive control.

(2) This figure includes 3,468,630 shares of Class B Common Stock owned by
Taubman Investments Limited Partnership, as to which Mr. Taubman has sole voting
and dispositive control, and excludes shares owned by Judith Taubman. Mr.
Taubman disclaims beneficial ownership of the 792,830 shares of Class B Common
Stock owned by Judith Taubman, his wife. Mr. Taubman and Taubman Investments
Limited Partnership have pledged all of their shares of Class B Common Stock to
certain banks. If the banks were to foreclose on the pledges, a change in
control of the Company could take place under certain circumstances. In the
opinion of Mr. Taubman, the chances of a foreclosure on the pledges are remote.

(3) This figure includes 1,840,921 shares of Class A Common Stock that Mr.
Fisher has, or is deemed to have, the right to acquire by converting shares of
Class B Common Stock. See footnote 4 below. This figure also includes 91,900
shares of Class A Common Stock owned by a charitable foundation of which Mr.
Fisher is a director. Mr. Fisher disclaims beneficial ownership of all shares of
Class A Common Stock other than 1,830,161 shares relating to the shares of Class
B Common Stock held by him as trustee of his grantor trust. See footnote 4.

(4) This figure includes 10,760 shares of Class B Common Stock owned by
various family trusts of which Mr. Fisher is a co-trustee and 1,830,161 shares
of Class B Common Stock that Mr. Fisher holds as trustee of his grantor trust.
This figure excludes 668,624 shares owned by Martinique Hotel, Inc., a
corporation owned by Mr. Fisher's family. This figure also excludes 56,519
shares of Class B Common Stock owned by various family trusts of which Mr.
Fisher's wife is a co-trustee. Mr. Fisher disclaims beneficial ownership of all
shares other than those held by him as trustee of his grantor trust.

(5) Mr. Wexner owns 146,900 shares of Class A Common Stock. This figure
includes 993,316 shares of Class A Common Stock that he has the right to acquire
by converting shares of Class B Common Stock.

(6) This figure includes 200 shares of Class A Common Stock owned by a
trust for Mr. Ainslie's son, of which Mr. Ainslie is a trustee, Mr. Ainslie
disclaims beneficial ownership of such shares. This figure also includes 700,000
shares of Class A Common Stock that he has the right to acquire by converting
shares of Class B Common Stock.

(7) This figure includes 100,000 shares of Class A Common Stock that Ms.
Brooks has the right to acquire by converting shares of Class B Common Stock and
93,000 shares of Class A Common Stock
(Footnotes continued on following page)

18
<PAGE>
(Footnotes continued from preceding page)
that she has the right to acquire by exercising options for shares of Class B
Common Stock and converting those shares.

(8) This figure includes 93,000 shares of Class B Common Stock that Ms.
Brooks has the right to acquire by exercising options.

(9) This figure represents shares of Class A Common Stock that Lord Gowrie
has the right to acquire by exercising options for shares of Class B Common
Stock and converting those shares.

(10) This figure represents shares of Class B Common Stock that Lord Gowrie
has the right to acquire by exercising options.

(11) This figure includes 75,000 shares of Class A Common Stock that Mr.
Thompson has the right to acquire by converting shares of Class B Common Stock
and 49,500 shares of Class A Common Stock that he has the right to acquire by
exercising options for Class B Common Stock and converting those shares.

(12) This figure includes 49,500 shares of Class B Common Stock that Mr.
Thompson has the right to acquire by exercising options.

(13) Mr. de Pury owns 15,000 shares of Class A Common Stock. This figure
includes 40,000 shares of Class A Common Stock that Mr. de Pury has the right to
acquire by exercising options for shares of Class B Common Stock and converting
those shares.

(14) This figure represents shares of Class B Common Stock that Mr. de Pury
has the right to acquire by exercising options.

(15) This figure includes shares held in third parties' accounts over which
GeoCapital Corporation has investment discretion.

(16) See above notes.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Loan Programs

The Company has two loan programs that are available to certain U.S.
employees at the President's discretion. The first is a mortgage guarantee
program, whereby the employee borrows from a bank on a demand basis and pays an
annual interest rate equal to the prime rate. All of the repayment obligations
of the employee are guaranteed by the Company. Under the second program, the
Company lends money to certain employees to purchase a residence under term
notes bearing interest at an annual interest rate equal to the prime rate minus
1 - 2%. This program is available to employees at the Company's discretion. At
March 9, 1994, Mitchell Zuckerman, an executive officer, had borrowings
outstanding under the first program of $14,167 and borrowings outstanding under
the second program of $186,666. At March 9, 1994, William Ruprecht, another
executive officer, had borrowings outstanding under the first program of $68,333
and borrowings outstanding under the second program of $168,333.

In October 1993, Sotheby's (U.K.), a subsidiary of the Company, entered
into an agreement with Henry Wyndham Fine Art Ltd. ("Fine Art"), an art dealing
business in which Henry Wyndham, who has since become Chairman of Sotheby's
(U.K.), has a substantial equity interest. Under the agreement, Sotheby's (U.K.)
agreed to purchase from Fine Art various paintings outright, as well as Fine
Art's interest in another painting. Under the terms of the agreement, Sotheby's
(U.K.) paid Fine Art B.P.218,000 ($327,654) for a group of paintings in December
1993 and B.P.150,000 ($225,450) for a portion of its interest in another
painting in February 1994. Fine Art has the right to sell its remaining interest
in such painting to Sotheby's (U.K.) in February 1995 for B.P.180,000
($270,540). The original cost to Fine Art of its interest in such painting was
approximately B.P.300,000 ($450,900). However, the fair market value of such
interest is deemed by the Company to be in excess of the purchase price. The
various purchase prices were determined by the Company with reference to recent
sale prices of comparable property.

In addition to the above-described transactions, the Company has entered
into agreements with its largest shareholder and certain of his affiliates
regarding the proposed development of the York Property. See "Properties" and
Note I to the Consolidated Financial Statements in the Annual Report.

19
<PAGE>
PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT
SCHEDULES AND REPORTS ON FORM 8-K.

(a) (1) and (2)--The response to this portion of Item 14 is submitted as a
separate section of this report.

(3) Listing of Exhibits--The information required by this item is included
in the response to Item 14(c).

(b) Reports on Form 8-K filed in the fourth quarter of 1993--None

(d) Financial Statement Schedules--The response to this portion of Item 14
is submitted as a separate section of this report.

20
<PAGE>
ANNUAL REPORT ON FORM 10-K
ITEM 14(A) (1) AND (2) AND (D)
YEAR ENDED DECEMBER 31, 1993
SOTHEBY'S HOLDINGS, INC.
BLOOMFIELD HILLS, MICHIGAN

21
<PAGE>
FORM 10-K--ITEM 14(A) (1) AND (2)
SOTHEBY'S HOLDINGS, INC., AND SUBSIDIARIES
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

The following consolidated financial statements of Sotheby's Holdings, Inc. and
subsidiaries, included in the annual report of the registrant to its
shareholders for the year ended December 31, 1993, are incorporated by reference
in Item 8:

Consolidated Balance Sheets--December 31, 1993 and 1992

Consolidated Statements of Income--Years ended December 31, 1993, 1992 and 1991

Consolidated Statement of Changes in Shareholders' Equity--Years ended December
31, 1993, 1992 and 1991

Consolidated Statements of Cash Flows--Years ended December 31, 1993, 1992 and
1991

Notes to Consolidated Financial Statements--December 31, 1993

The following consolidated financial statement schedules of Sotheby's Holdings,
Inc. and subsidiaries and the Independent Auditors' Report are included in Item
14(d):

Independent Auditors' Report on Financial Statement Schedules

Schedule VIII--Valuation and Qualifying Accounts

Schedule IX--Short-Term Borrowings

All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions or are not applicable, and therefore have been omitted.

22
<PAGE>
INDEPENDENT AUDITORS' REPORT

Shareholders and Board of Directors
Sotheby's Holdings, Inc.:

We have audited the consolidated financial statements of Sotheby's Holdings,
Inc. and subsidiaries as of December 31, 1993 and 1992, and for each of the
three years in the period ended December 31, 1993 and have issued our report
thereon dated February 28, 1994; such consolidated financial statements and
report are included in your 1993 Annual Report to Shareholders and are
incorporated herein by reference. Our audits also included the consolidated
financial statement schedules of Sotheby's Holdings, Inc. and subsidiaries,
listed in Item 14. These consolidated financial statement schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion based on our audits. In our opinion, such consolidated financial
statement schedules, when considered in relation to the basic consolidated
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.

DELOITTE & TOUCHE
New York, New York
February 28, 1994

23
<PAGE>
SCHEDULE VIII

SOTHEBY'S HOLDINGS, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS

<TABLE><CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ------------------------------------------------------------ ----------- ----------- ----------- ----------
ADDITIONS
BALANCE AT CHARGED TO BALANCE
BEGINNING COST AND AT END
DESCRIPTION OF PERIOD EXPENSES DEDUCTIONS OF PERIOD
- ------------------------------------------------------------ ----------- ----------- ----------- ----------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
Valuation reserve deducted in the balance sheet
from the asset to which it applies:
Accounts and notes receivable:
1993 Allowance for doubtful accounts................... $ 12,930 $ 5,499 $ 7,833 $ 10,596
----------- ----------- ----------- ----------
----------- ----------- ----------- ----------
1992 Allowance for doubtful accounts................... $ 13,498 $ 3,836 $ 4,404 $ 12,930
----------- ----------- ----------- ----------
----------- ----------- ----------- ----------
1991 Allowance for doubtful accounts................... $ 13,745 $ 5,787 $ 6,034 $ 13,498
----------- ----------- ----------- ----------
----------- ----------- ----------- ----------
Inventory:
1993 Realizable value allowance........................ $ 18,637 $ 4,055 $ 8,358 $ 14,334
----------- ----------- ----------- ----------
----------- ----------- ----------- ----------
1992 Realizable value allowance........................ $ 26,982 $ 2,311 $ 10,656 $ 18,637
----------- ----------- ----------- ----------
----------- ----------- ----------- ----------
1991 Realizable value allowance........................ $ 26,995 $ 4,975 $ 4,988 $ 26,982
----------- ----------- ----------- ----------
----------- ----------- ----------- ----------
</TABLE>

24
<PAGE>
SCHEDULE IX

SOTHEBY'S HOLDINGS, INC. AND SUBSIDIARIES
SHORT-TERM BORROWINGS

COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- ------------------------------------------------ --------- ----------- ----------- --------------- -------------
MAXIMUM WEIGHTED
WEIGHTED AMOUNT AVERAGE AMOUNT AVERAGE
BALANCE AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE
CATEGORY OF AGGREGATE AT END INTEREST DURING THE DURING THE DURING THE
SHORT-TERM BORROWINGS OF PERIOD RATE PERIOD PERIOD PERIOD
- ------------------------------------------------ --------- ----------- ----------- --------------- -------------
(IN THOUSANDS, EXCEPT PERCENTAGES)
<S> <C> <C> <C> <C> <C>
1993:
Revolving Credit Facilities................... -- -- 10,000 386 3.70
Other Bank Lines of Credit.................... 1,238 10.84 1,238 708 13.70
Overdrafts.................................... -- -- 97 49 10.50
1992:
Revolving Credit Facilities................... -- -- 10,500 447 4.42
Other Bank Lines of Credit.................... 1,293 9.39 15,075 8,487 10.63
Overdrafts.................................... 97 10.50 1,120 608 11.52
1991:
Euro Commercial Paper Borrowings.............. -- -- 37,000 4,389 6.12
Revolving Credit Facilities................... -- -- 59,500 5,359 6.32
Other Bank Lines of Credit.................... 11,051 10.19 45,720 31,578 11.54
Overdrafts.................................... 1,120 11.61 2,943 2,031 9.45
</TABLE>

25
<PAGE>
SIGNATURES

PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES ACT
OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF
BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.

SOTHEBY'S HOLDINGS, INC.
BY: /S/ MICHAEL L. AINSLIE
--------------------------
MICHAEL L. AINSLIE
PRESIDENT AND CHIEF EXECUTIVE
OFFICER

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.

<TABLE>
<S> <C> <C>
SIGNATURE TITLE DATE
- ------------------------------------------------------ ----------------------------------- --------------------
Chairman of the Board
* and Director March 28, 1994
--------------------------
A. ALFRED TAUBMAN
* Vice Chairman and Director March 28, 1994
--------------------------
MAX M. FISHER
President, Chief Executive
/s/MICHAEL L. AINSLIE Officer and Director March 28, 1994
--------------------------
MICHAEL L. AINSLIE
Senior Vice President and
/s/KEVIN A. BOUSQUETTE Chief Financial Officer March 28, 1994
--------------------------
KEVIN A. BOUSQUETTE
* Director March 28, 1994
--------------------------
VISCOUNT BLAKENHAM
* Director March 28, 1994
--------------------------
LORD CAMOYS
* Director March 28, 1994
--------------------------
WALTER J.P. CURLEY
* Director March 28, 1994
--------------------------
THE RT. HON. THE EARL OF GOWRIE
* Director March 28, 1994
--------------------------
LESLIE H. WEXNER
* Director March 28, 1994
--------------------------
DIANA D. BROOKS
* Director March 28, 1994
--------------------------
R. JULIAN DE LA M. THOMPSON
Vice President, Controller and
/s/ THOMAS F. GANNALO Chief Accounting Officer March 28, 1994
--------------------------
THOMAS F. GANNALO

*By: /s/ KEVIN A. BOUSQUETTE March 28, 1994
------------------------
KEVIN A. BOUSQUETTE
AS ATTORNEY-IN-FACT
</TABLE>

26
<PAGE>
ITEM 14(C) EXHIBITS

EXHIBIT
NUMBER DESCRIPTION PAGE NO.
- --------- -------------------------------------------------------------------------------------------- ---------
<S> <C> <C>
3(a) --Amended and Restated Articles of Incorporation of Sotheby's Holdings, Inc., as amended,
incorporated herein by reference to Exhibit 4(b) to Registration Statement No. 33-26008.
3(b) --Restated By-Laws of Sotheby's Holdings, Inc., as amended, incorporated herein by reference
to Exhibit 3(b) to the Company's Annual Report on Form 10-K for the year ended December
31, 1988 (the "1988 Form 10-K").
4 --See Exhibits 3(a) and 3(b).
10(a) --Amendment No. 2 and Second Restatement, effective as of February 15, 1988 (with exhibits),
to Revolving Credit Agreement, dated as of October 23, 1986, among Sotheby's, Oatshare
Limited, Sotheby's, Inc., Sotheby's Holdings, Inc., Sotheby's Financial Services, Inc.,
Sotheby's International Realty, Inc., The Chase Manhattan Bank (National Association),
Chemical Bank, Manufacturers Hanover Trust Company and National Bank of Detroit (the
"Restated Revolving Credit Agreement"), incorporated herein by reference to Exhibit 10(cc)
to Registration Statement No. 33-17667, Amendment No 1, dated as of June 30, 1988, to the
Restated Revolving Credit Agreement, incorporated herein by reference to Exhibit 10(a) to
the Company's Annual Report on Form 10-K for the year ended December 31, 1989 (the "1989
Form 10-K"), Second Amendment, dated as of March 30, 1990, to the Restated Revolving
Credit Agreement, incorporated herein by reference to Exhibit 10(a) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1990 (the "1990 Form 10-K") and
Third Amendment, dated November 1, 1991, filed herewith.
10(b) --Issuing and Paying Agency Agreement, dated February 15, 1989, between Sotheby's Inc. and
the Chase Manhattan Bank, N.A. relating to the issuance of short-term notes ("U.S. Notes")
in the U.S. Commercial Paper market, incorporated herein by reference to Exhibit 10(g) to
the 1988 Form 10-K.
10(c) --U.S. Commercial Paper Dealer Agreement, dated February 15, 1989, between Sotheby's, Inc.
and Chase Securities, Inc. relating to the issuance of the U.S. Notes, incorporated herein
by reference to Exhibit 10(h) to the 1988 Form 10-K.
10(d) --U.S. Commercial Paper Dealer Agreement, dated February 15, 1989, between Sotheby's, Inc.
and Merrill Lynch Money Markets, Inc. relating to the issuance of the U.S. Notes,
incorporated herein by reference to the Exhibit 10(i) of the 1988 Form 10-K.
10(e) --Letter Agreement, dated September 6, 1988, between Sotheby's, Inc. and John L. Marion
setting forth certain terms and agreements of his employment, incorporated herein by
reference to Exhibit 10(m) to the 1988 Form 10-K.
10(f) --Lease, dated as of July 25, 1979, among The Benenson Capital Company, Lawrence A.
Benenson, Raymond E. Benenson (collectively, "Benenson") to Sotheby Parke Bernet Inc., and
amendments thereto, all relating to 1334 York Avenue, New York, New York (the "York Avenue
Property"), incorporated herein by reference to Exhibit 10(g) to Registration Statement
No. 33-17667.
10(g) --Option Agreement with Form of Exchange Agreement, dated July 25, 1979, among Benenson and
089 Nosidam Corp. (as nominee of Sotheby Parke Bernet Inc.) assignments thereof and
amendments thereto, all relating to the York Avenue Property, incorporated herein by
reference to Exhibit 10(h) to Registration Statement No. 33-17667.
10(h) --Exchange Agreement, dated October 27, 1986, among Benenson and York Avenue Development,
Inc., and Letter, dated October 27, 1986, from Benenson to Sotheby's, Inc. and York Avenue
Development, Inc., concerning zoning matters and security relating to the York Avenue
Property, incorporated herein by reference to Exhibit 10(i) to Registration Statement No.
33-17667.
</TABLE>

27
<PAGE>
<TABLE><CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE NO.
- --------- -------------------------------------------------------------------------------------------- ---------
<S> <C> <C>
10(i) --Guarantee, made November 6, 1986, by A. Alfred Taubman in favor of Benenson relating to
the York Avenue Property (the "Taubman Guarantee"), incorporated herein by reference to
Exhibit 10(j) to Registration Statement No. 33-17667.
10(j) --Letter from Sotheby's, Inc. and York Avenue Development, Inc., dated October 27, 1986,
agreeing to indemnify A. Alfred Taubman from all liabilities, damages, losses and
judgments arising under the Taubman Guarantee, incorporated herein by reference to Exhibit
10(k) to Registration Statement No. 33-17667.
10(k) --Project Services Agreement (the "Project Agreement"), dated November 8, 1985, between
Sotheby's, Inc. and The Taubman Company, Inc. relating to the proposed development of the
York Avenue Property, incorporated herein by reference to Exhibit 10(1) to Registration
Statement No. 33-17667.
10(l) --Financing and Guaranty Agreement (with exhibits), dated as of October 1, 1987, among
Sotheby's Inc., York Avenue Development, Inc., and Taubman York Avenue Associates, Inc.,
relating to the proposed development of the York Avenue Property, incorporated herein by
reference to Exhibit 10(m) to Registration Statement No. 33-17667.
10(m) --Memorandum of Option Agreement, dated January 31, 1981, among Benenson and 089 Nosidam
Corp., relating to the York Avenue Property, incorporated herein by reference to Exhibit
10(hh) to Registration Statement No. 33-17667.
10(n) --Letter Agreement, dated October 27, 1986, among Benenson and York Avenue Development, Inc.
relating to the York Avenue Property, incorporated herein by reference to Exhibit 10(ii)
to Registration Statement No. 33-17667.
10(o) --Assignment, Assumption Agreement and Release, dated as of October 1, 1987, among Sotheby's
Inc., York Avenue Development, Inc. and the Taubman Company, Inc. relating to the
assignment of the Project Agreement, incorporated herein by reference to Exhibit 10(jj) to
Registration Statement No. 33-17667.
10(p)* --Sotheby's Inc. 1988 Benefit Equalization Plan, incorporated herein by reference to Exhibit
10(t) to Registration Statement No. 33-17667.
10(q)* --Sotheby's Holdings, Inc. 1987 Stock Option Plan and U.K. Sub-Plan, incorporated herein by
reference to Exhibit 10(aa) to the 1989 Form 10-K, and Amendment to Sotheby's Holdings,
Inc. 1987 Stock Option Plan and Amendment to U.K. Sub-Plan, both dated August 8, 1991 and
both incorporated herein by reference to Exhibit 10(w) to the 1991 Form 10-K, and
Amendment to Sotheby's Holdings, Inc. 1987 Stock Option Plan and Amendment to U.K. Sub-
Plan, both dated August 13, 1992 and both incorporated herein by reference to Exhibit
10(z) to the Company's Annual Report of Form 10-K for the year ended December 31, 1992
(the "1992 Form 10-K").
10(r) --Agreement of Partnership of Acquavella Modern Art, dated May 29, 1990, between Sotheby's
Nevada, Inc. and Acquavella Contemporary Art, Inc., incorporated herein by reference to
Exhibit 10(b) to the Form 8-K.
10(s) --Letter Agreement, dated as of June 1, 1990, between Sotheby's, Inc. and Credit Lyonnais
Cayman Island Branch, and Amendment No. 1 thereto, dated as of May 31, 1991, incorporated
herein by reference to Exhibit 10(gg) to the 1991 Form 10K and Amendment No. 2 thereto,
dated as of May 31, 1993, filed herewith.
10(t) --Revolving Credit Agreement, dated as of July 1, 1991, between Sotheby's Holdings, Inc. and
Sotheby's, Inc. and NBD Bank, N.A., incorporated herein by reference to Exhibit 10(hh) to
the 1991 Form 10K.
10(u) --Revolving Credit Agreement, dated as of December 31, 1993, among Sotheby's Holdings, Inc.,
Sotheby's, Inc. and Comerica Bank.
</TABLE>

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

* A compensatory agreement or plan required to be filed pursuant to Item 14(c)
of Form 10-K.

28
<PAGE>

<TABLE><CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE NO.
- --------- -------------------------------------------------------------------------------------------- ---------
<S> <C> <C>
10(v) --Revolving Credit Agreement, dated as of December 1, 1993, among Sotheby's Holdings, Inc.,
Sotheby's, Inc. and Credit Suisse.
10(w) --Amendment, dated as of April 19, 1991, between The Benenson Capital Company, Lawrence A.
Benenson and Raymond E. Benenson and York Avenue Development, Inc. to Amendment to Option
Agreement and to Related Agreements, incorporated herein by reference to Exhibit 10(kk) to
the 1991 Form 10K.
10(x) --Restated Mortgage Note, dated November 5, 1991, from Mitchell Zuckerman and Joanne
Zuckerman in favor of Sotheby's, Inc., incorporated herein by reference to Exhibit 10(ll)
to the 1991 Form 10K.
10(y) --Commitment Letter, dated April 5, 1989, from Sotheby's Inc. to William Ruprecht and
Elizabeth Ruprecht.
10(z) --Revolving Credit Agreement, dated as of November 1, 1992, between Sotheby's, Inc. and IBJ
Schroder Bank & Trust Company, incorporated herein by reference to Exhibit 10(mm) to the
1992 Form 10-K.
13 --Annual Report to Shareholders for the year ended December 31, 1993
21 --Subsidiaries of the Registrant
23 --Consent of Deloitte & Touche
24 --Powers of Attorney
</TABLE>

EXHIBIT 10(a)

THIRD AMENDMENT
TO
AMENDMENT NO. 2
AND
SECOND RESTATEMENT
OF
REVOLVING CREDIT AGREEMENT

THIRD AMENDMENT dated as of November 1, 1991 among:

SOTHEBY'S HOLDINGS, INC., a Michigan corporation ("Holdings");

SFS HOLDINGS, INC. (formerly Sotheby's Financial Services, Inc.), a
Delaware corporation ("SFS");

SOTHEBY'S INTERNATIONAL REALTY, INC., a Michigan corporation ("SIR");

SOTHEBY'S INC., a Michigan corporation ("Sotheby's" and, together with
Holdings, SFS and SIR, the "Guarantors");

The Subsidiaries of Holdings identified on Schedule 1-A to the Agreement
(as defined below) which heretofore became or hereafter become a party to the
Agreement pursuant to an Assumption Letter (the "Domestic Borrowing
Subsidiaries" and, together with Holdings and Sotheby's, the "Domestic
Borrowers");

SOTHEBY'S, a company registered in England ("UK");

OATSHARE LIMITED, a company registered in England ("Oatshare");

The Subsidiaries of Holdings identified on Schedule 1-B to the Agreement
(as defined below) which heretofore became or hereafter become a party to the
Agreement pursuant to an Assumption Letter (together with Oatshare, UK and the
Domestic Borrowers, the "Borrowers");

Each of the banks listed on the signature pages hereto (the "Banks" and
individually, a "Bank"); and

THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), as Agent (the "Agent").

<PAGE>

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

WHEREAS, the parties hereto have entered into Amendment No. 2 and Second
Restatement of Revolving Credit Agreement dated as of February 15, 1988, as
amended by Amendment No. 1 dated as of June 30, 1988 and the Second Amendment
dated as of March 30, 1990 (the "Agreement"); and

WHEREAS, the parties hereto desire to amend the Agreement in certain
respects, as more fully set forth below;

NOW, THEREFORE, the parties hereto agree as follows:

SECTION 1. Definitions
-----------

Unless otherwise specifically defined herein, each term used herein which
is defined in the Agreement shall have the meaning assigned to such term in
the Agreement.

SECTION 2. Amendment of Section 8.05 of the Agreement.
-------------------------------------------

Section 8.05 of the Agreement is amended to read as follows:

"8.05. Initial Borrowing after March 30, 1990. The obligation of each
---------------------------------------
Bank to make the initial borrowing after March 30, 1990 to any Borrower is
subject to the fulfillment of each of the following conditions immediately
prior to or contemporaneously with such borrowing by such Borrower:

(a) if such Borrower is a Domestic Borrower, the Agent shall have
received a Note in the form of Exhibit B hereto properly executed by such
Borrower;

(b) if such Borrower is Oatshare or UK or any Borrowing Subsidiary, the
Agent shall have received a Note in the form of Exhibit C hereto properly
executed by such Borrower;

(c) the Agent shall have received certified copies of resolutions, in
form and substance satisfactory to the Agent, of the Board of Directors of such
Borrower authorizing or ratifying (i) the execution and delivery by such
Borrower of the Second Amendment dated as of March 30, 1990 to this Agreement
(the "Second Amendment") and the Note of such Borrower delivered pursuant to
Section 8.05 (the "Section 8.05 Note") and (ii) the performance of this
Agreement, as amended by the Second Amendment, and the Section 8.05 Note by
such Borrower; and

(d) the Agent shall have received certified copies of resolutions, in
form and substance satisfactory to the Agent, of the Board of Directors of the
Guarantors authorizing or ratifying (i) the execution and delivery by the
Guarantors of the Second Amendment and (ii) the performance of this Agreement,
as amended by the Second Amendment, by the Guarantors."

-2-

<PAGE>

SECTION 3. Amendment of Exhibit B to the Agreement.
----------------------------------------

Exhibit B to the Agreement is deleted and substituted therefor is Exhibit
B attached hereto.

SECTION 4. Amendment of Exhibit C to the Agreement.
----------------------------------------

Exhibit C to the Agreement is deleted and substituted therefor is Exhibit
C attached hereto.

SECTION 5. Effectiveness
-------------

This Amendment shall be effective as of the date hereof when the parties
hereto shall have each executed a counterpart hereof and delivered the same
to the Agent.

SECTION 6. Effect of Amendment on Agreement; Ratification
----------------------------------------------
and Confirmation of Agreement, as Amended.
- ------------------------------------------

On and after the effective date of this Amendment each reference in the
Agreement to "this Agreement", "hereunder", "hereof", or words of like import
referring to the Agreement, and each reference in the Notes referring to "the
Agreement", "thereunder", "thereof", or words of like import referring to the
Agreement, shall mean the Agreement as amended by this Amendment. The Agreement,
as amended by this Amendment, is and shall continue to be in full force and
effect and is hereby in all respects ratified and confirmed.

SECTION 7. Counterparts.
-------------

This Amendment may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.

SECTION 8. Section Headings.
-----------------

The Section headings in this Amendment are inserted for convenience only
and shall not be part of this instrument.

SECTION 9. Governing Law.
--------------

This Amendment shall be governed by and construed in accordance with the
laws of the State of New York.

-3-

<PAGE>

SECTION 10. Entire Agreement.
-----------------

This Amendment and the Agreement as amended hereby constitute the entire
agreement and understanding between the parties hereto and supersede any and
all prior agreements and understandings relating to the subject matter hereof.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date first above written.

SOTHEBY'S HOLDINGS, INC.

By: /s/
------------------------------
Title: Treasurer

SFS HOLDINGS, INC.

By: /s/
------------------------------
Title: President

SOTHEBY'S INTERNATIONAL REALTY, INC.

By: /s/
------------------------------
Title: Chief Financial Officer

SOTHEBY'S INC.

By: /s/
------------------------------
Title: Chief Financial Officer

OATSHARE LIMITED

By: /s/
------------------------------
Title: Director

SOTHEBY'S

By: /s/
------------------------------
Title: Director

-4-

<PAGE>

THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
individually and as Agent

By: /s/
------------------------------
Title: Vice President

CHEMICAL BANK

By: /s/
------------------------------
Title:

MANUFACTURERS HANOVER TRUST COMPANY

By: /s/
------------------------------
Title:

NBD BANK, N.A. (formerly National
Bank of Detroit)

By: /s/
------------------------------
Title: Vice President

-5-

Exhibit 10(s)

AMENDMENT NO. 2
DATED AS OF MAY 31, 1993
TO AGREEMENT
DATED JUNE 1, 1990

Amendment dated as of May 31, 1993 (the "Amendment") to
Agreement dated June 1, 1990 between SOTHEBY'S INC. (the
"Company") and CREDIT LYONNAIS CAYMAN ISLAND BRANCH (the "Bank")
(the "Agreement").

WHEREAS, the Company has requested the Bank to extend
the validity date of credit facility which was the subject of the
Agreement until December 31, 1994 and replace a representation
and warranty with a covenant; and

WHEREAS, the Bank is willing to agree to such extension
and substitution on and subject to the terms and conditions
hereof.

NOW, THEREFORE, IT IS AGREED:

1. All terms used but not otherwise defined herein
shall have the meaning ascribed to them in the Agreement.

2. As of the date of this Amendment: (a) the
Expiration Date shall be extended until December 31, 1994; (b)
the Maturity Date for Eurorate Loans shall be no later then
December 31, 1994; (c) subsection (v) of "Representations and
Warranties" shall be deleted; and (d) a new subparagraph (d)
shall be added to (ii) under "Covenants" to read: "Consolidated
Earnings Before Interest and Taxes with respect to any four
consecutive quarters at not less than the product of 2.0 times
Interest Expense for such four consecutive quarters."
Capitalized terms used in this subparagraph shall have the
meanings ascribed to them in the Credit Agreement.)

3. Except as expressly modified hereby, the terms and
provisions of the Agreement shall remain in full force and effect
and be enforceable against the Company.

<PAGE>

4. All representations and warranties in the
Agreement are deemed made as of the date hereof and as of the
date of each drawdown hereunder.

5. As used in the Agreement (including all Exhibits
thereto) and all other instruments and documents executed in
connection therewith, the term "Agreement" shall mean the
Agreement as amended hereby.

6. This Amendment shall be governed by and construed
in accordance with the laws of the State of New York.

IN WITNESS WHEREOF, the parties hereto through their
duly authorized representatives have set their hand as of the
date first written above.

SOTHEBY'S INC.

By: /s/
---------------------------

Title: Treasurer
------------------------

CREDIT LYONNAIS
CAYMAN ISLAND BRANCH

By: /s/
---------------------------
Authorized Signature

EXHIBIT 10(u)

SOTHEBY'S, INC.

BORROWER

SOTHEBY'S HOLDINGS, INC.,
GUARANTOR

COMERICA BANK

$20,000,000.00

REVOLVING CREDIT AGREEMENT
DATED AS OF DECEMBER 31, 1993

<PAGE>

This Table of Contents is not part of the Agreement to which
it is attached but is inserted for convenience only.

Page
----

RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Section 1. Certain Defined Terms; Accounting Principles . . . 1

1.01. Certain Defined Terms . . . . . . . . . . . . . . . 1
1.02. Accounting Principles . . . . . . . . . . . . . . . 8

Section 2. Loans; Commitment; Etc . . . . . . . . . . . . . . 8

2.01. Loans. . . . . . . . . . . . . . . . . . . . . . . 8
2.02. Changes of Commitment. . . . . . . . . . . . . . . 9
2.03. Commitment Fee. . . . . . . . . . . . . . . . . . . 9
2.04. Lending Offices. . . . . . . . . . . . . . . . . . 9
2.05. Letters of Credit . . . . . . . . . . . . . . . . . 9

Section 3. Borrowings; Prepayments . . . . . . . . . . . . . 10

3.01. Borrowings. . . . . . . . . . . . . . . . . . . . 10
3.02. Prepayments. . . . . . . . . . . . . . . . . . . 10

Section 4. Payments of Principal and Interest; Notes. . . . 10

4.01. Principal. . . . . . . . . . . . . . . . . . . . 10
4.02. Interest. . . . . . . . . . . . . . . . . . . . . 11
4.03. Note. . . . . . . . . . . . . . . . . . . . . . . 11

Section 5. Payments ; Computations; Etc. . . . . . . . . . . 11

5.01. Payments. . . . . . . . . . . . . . . . . . . . . 11
5.02. Computations. . . . . . . . . . . . . . . . . . . 12
5.03. Minimum Amounts of Borrowings and Prepayments. . 12
5.04. Certain Notices. . . . . . . . . . . . . . . . . 12
5.05. Other Rights. . . . . . . . . . . . . . . . . . . 13

Section 6. Yield Protection; Illegality; Taxes; Etc. . . . . 13

6.01. Additional Costs. . . . . . . . . . . . . . . . . 13
6.02. Limitation on Types of Loans. . . . . . . . . . . 13
6.03. Illegality. . . . . . . . . . . . . . . . . . . . 13
6.04. Certain Prepayments Pursuant to Sections 6.01
and 6.02. . . . . . . . . . . . . . . . . . . . . . 13
6.05. Indemnification. . . . . . . . . . . . . . . . . 13
6.06. Taxes. . . . . . . . . . . . . . . . . . . . . . 13
6.07. Refunds. . . . . . . . . . . . . . . . . . . . . 15

- i -

<PAGE>

(Continued)

Section 7. Guaranty. . . . . . . . . . . . . . . . . . . . . 15

7.01. Guaranty of the Loans. . . . . . . . . . . . . . 15
7.02. Terms of Guaranty . . . . . . . . . . . . . . . . 15
7.03. Further Covenants of Holdings Relating to the
Guaranty. . . . . . . . . . . . . . . . . . . . . 16
7.04. Reinstatement. . . . . . . . . . . . . . . . . . 17
7.05. Subrogation. . . . . . . . . . . . . . . . . . . 17
7.06. Remedies. . . . . . . . . . . . . . . . . . . . . 17

Section 8. Conditions of Lending. . . . . . . . . . . . . . 17

8.01. Initial Borrowing. . . . . . . . . . . . . . . . 17
8.02. Each Loan. . . . . . . . . . . . . . . . . . . . 18

Section 9. Representations and Warranties. . . . . . . . . . 18

9.01. Representations and Warranties. . . . . . . . . . 18

Section 10. Affirmative Covenants. . . . . . . . . . . . . . 21

10.01. Financial Statements. . . . . . . . . . . . . . 21
10.02. Insurance. . . . . . . . . . . . . . . . . . . . 22
10.03. Maintain Business. . . . . . . . . . . . . . . . 22
10.04. Taxes and Claims. . . . . . . . . . . . . . . . 22
10.05. Compliance with Laws. . . . . . . . . . . . . . 23
10.06. Notices. . . . . . . . . . . . . . . . . . . . . 23
10.07. Payments of Certain Taxes by Holdings. . . . . . 23
10.08. Inspection. . . . . . . . . . . . . . . . . . . 24
10.09. Authorizations. . . . . . . . . . . . . . . . . 24

Section 11. Negative Covenants. . . . . . . . . . . . . . . 24

11.01. Liens. . . . . . . . . . . . . . . . . . . . . . 24
11.02. Merger, Consolidation, Etc. . . . . . . . . . . 25
11.03. Limitation on Indebtedness. . . . . . . . . . . 25
11.04. Times Interest Earned Ratio. . . . . . . . . . . 25
11.05. Tangible Net Worth. . . . . . . . . . . . . . . 25
11.06. Disposition of Assets, Etc. . . . . . . . . . . 25
11.07. Compliance with ERISA . . . . . . . . . . . . . 25
11.08. Capital Expenditures. . . . . . . . . . . . . . 26
11.09. Limitation on Negative Covenants. . . . . . . . 26

Section 12. Default. . . . . . . . . . . . . . . . . . . . . 27

12.01. Events of Default. . . . . . . . . . . . . . . . 27

- ii -

<PAGE>

(Continued)

Section 13. Miscellaneous. . . . . . . . . . . . . . . . . . 30

13.01. Amendment and Waiver. . . . . . . . . . . . . . 30
13.02. Notices, Etc. . . . . . . . . . . . . . . . . . 30
13.03. Successors and Assigns. . . . . . . . . . . . . 30
13.04. Survival. . . . . . . . . . . . . . . . . . . . 30
13.05. Execution in Counterparts. . . . . . . . . . . . 30
13.06. Governing Law. . . . . . . . . . . . . . . . . . 31
13.07. Usury. . . . . . . . . . . . . . . . . . . . . . 31
13.08. Participation . . . . . . . . . . . . . . . . . 31
13.09. Submission of Jurisdiction. . . . . . . . . . . 32
13.10. Merger. . . . . . . . . . . . . . . . . . . . . 32
13.11. Extension of Maturity Date. . . . . . . . . . . 32

- iii -

<PAGE>

Schedule 1 - List of Subsidiaries of Holdings

Exhibits

Exhibit A - Form of Promissory Note
Exhibit B-1 - Description of Internal Policies on Client Loans
Exhibit B-2 - Form of Specific Policies on Client Loans
Exhibit C - Opinion of Counsel
Exhibit D - Extension Request

- iv -

<PAGE>

REVOLVING CREDIT AGREEMENT dated as of
December 31, 1993 among:

SOTHEBY'S HOLDINGS, INC., a Michigan
corporation ("Holdings" or "Guarantor");

SOTHEBY'S, INC., a New York corporation
("Sotheby's" or "Borrower");

and

COMERICA BANK

WHEREAS, the Borrower has requested the Bank to extend
credit to the Borrower in order to enable Borrower to borrow and
repay and reborrow, at any time and from time to time on or before
the Maturity Date (as hereinafter defined), not in excess of
$20,000,000 principal amount at any time outstanding, and the Bank
is willing to extend such credit to the Borrower upon the terms and
conditions hereinafter set forth. The proceeds of the loans are to
be used for general corporate purposes of the Borrower. All of the
loans to Sotheby's are to be guaranteed by Holdings.

NOW, THEREFORE, in consideration of the premises and of
the mutual covenants herein contained and intending to be legally
bound hereby, the parties hereto agree as follows:

Section 1. Certain Defined Terms; Accounting Principles
--------------------------------------------

1.01. Certain Defined Terms: As used herein, the
----------------------
following terms shall have the following meanings (terms defined in
the singular to have the same meanings when used in the plural and
vice versa):

"Advance Agreement" shall mean an agreement, legally
-----------------
enforceable in accordance with its terms, by which a client borrows
money from SFS and, in certain cases, secures such borrowing with
collateral, pursuant to the Client Loan Program.

"Affiliate" shall mean, as to any person, any other
---------
person which directly or indirectly controls, or is under common
control with, or is controlled by, such person, and, if such other
person is an individual, any member of the immediate family
(including parents, spouse and children) of such individual and any
trust whose principal beneficiary is such individual or one or more
members of such immediate family and any person who is controlled
by any such member or trust. As used in this definition, "control"
(including with its correlative meanings, "controlled by" and
"under common control with") shall mean possession, direct or
indirect, of the power to direct or cause the direction of
management or policies (whether through ownership of securities or

<PAGE>

partnership or other ownership interests, by contract or
otherwise), provided that, in any event, any person which owns
directly or indirectly twenty percent (20%) or more of the
securities having ordinary voting power for the election of
directors or other body of a corporation or twenty percent (20%) or
more of the partnership or other ownership interests of any other
person (other than as a limited partner of such other person) shall
be deemed to control such corporation or partnership.
Notwithstanding the foregoing, no individual shall be deemed to be
an Affiliate of a corporation or partnership solely by reason of
his being an officer, director or partner of such entity and
Holdings and its Subsidiaries shall not be deemed to be Affiliates
of each other.

"Agreement" shall mean this Revolving Credit Agreement,
---------
as the same may be amended, supplemented, restated or modified from
time to time.

"Bank" shall have the meaning set forth in the preamble
----
to this Agreement.

"Borrower" shall have the meaning set forth in the
--------
preamble to this Agreement.

"Business Day" shall mean a day which is not a Saturday,
------------
Sunday or legal holiday and on which commercial banks are open for
business in Detroit, Michigan provided that if such day relates to
the determination of the LIBO Rate, such day must be a day on which
commercial banks are open for domestic and international business
(including dealings in U.S. Dollar deposits) in London, England and
Detroit, Michigan.

"Capital Expenditures" means for any period, the Dollar
--------------------
amount of gross expenditures (including obligations under Capital
Leases) made for fixed assets, real property, plant and equipment,
and all renewals, improvements and replacements thereto (but not
repairs thereof) incurred during such period.

"Capital Lease" means any lease which has been or should
-------------
be capitalized on the books of the lessee in accordance with
generally accepted accounting principles.

"CD Based Rate" shall have the meaning set forth in the
-------------
Note in the form of Exhibit A.

"CD Rate Request Amount" shall have the meaning set forth
----------------------
in the Note in the form of Exhibit A.

"Client Loan Program" shall mean SFS's policy (as set
-------------------
forth in Exhibits B-1 and B-2 hereto) of making loans to Clients of
SFS which are either (i) secured by Collateral of such Clients
which has been consigned for sale at auction, (ii) secured by

<PAGE>

Collateral of such Clients which remains in the possession of such
Clients or SFS, or (iii) unsecured loans made to creditworthy
Clients.

"Clients" shall mean persons who have entered into an
-------
Advance Agreement with SFS pursuant to the Client Loan Program.

"Code" shall mean the Internal Revenue Code of 1986, as
----
amended from time to time.

"Collateral" shall mean real and/or personal property of
----------
a type customarily dealt in by Borrower or its Affiliates or, in
the case of real property in which Borrower or its Affiliates do
not so customarily deal, such real property which has been
appraised by a recognized expert in appraising property of such
type, which property shall secure an Advance pursuant to the Client
Loan Program.

"Commitment" shall mean $20,000,000, as the same may be
----------
terminated or reduced pursuant to Section 2.02.

"Consolidated Earnings Before Interest and Taxes" for any
-----------------------------------------------
relevant period shall mean an amount equal to the Earnings Before
Interest and Taxes of Holdings and its Subsidiaries, other than
York, for such period determined on a consolidated basis in
accordance with generally accepted accounting principles applied on
a consistent basis.

"Consolidated Tangible Net Worth" shall at any date mean
-------------------------------

(a) stockholder equity, as shown on a consolidated balance
sheet of Holdings and its Subsidiaries, other than York, prepared
as at such date,

minus the sum of

(b) the following items, to the extent reflected as an asset
in such consolidated balance sheet of Holdings and its
Subsidiaries, other than York,

(i) net intangibles (to the extent not capitalized in the
cost of property, plant and equipment), and

(ii) any surplus resulting from any write-up of assets
subsequent to December 31, 1990.

The foregoing calculation shall be made without reference to,
and shall exclude, adjustments for foreign currency translation in
accordance with Financial Accounting Standards Board Statement
No.52 (FASB-52).

<PAGE>

"Controlled Group" means any corporation, trade, or
----------------
business that is, along with Borrower or Holdings, a member of the
same controlled group of corporations or controlled group of trades
or businesses, within the meaning of sections 414 (b) or 414 (c) of
the Code, as Borrower or Holdings, as applicable.

"Default" shall mean an Event of Default or an event
-------
which with notice or lapse of time or both would become an Event of
Default.

"Default Rate" shall have the meaning set forth in the
------------
Notes.

"Dollar", "Dollars" and the sign "$" shall mean lawful
------ ------- -
money of the United States of America.

"Domestic Rate" shall mean, for any day, at the option of
-------------
the Borrower, either (a) the CD Based Rate on such day, or if such
day is not a Business Day, on the next preceding Business Day, (b)
the Prime Based Rate, or (c) the Money Market Based Rate.

"Earnings Before Interest and Taxes" for any person and
----------------------------------
for any relevant period shall mean the sum of (a) earnings before
income taxes and extraordinary credits, as shown on an income
statement of such person prepared for such period and (b) Interest
Expenses, as shown on such income statement.

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

"Eurodollar Interest Period" shall have the meaning given
--------------------------
such term in the Note in the form of Exhibit A hereto.

"Eurodollar Rate Request Amount" shall have the meaning
------------------------------
given such term in the Note in the form of Exhibit A hereto.

"EuroLoans" shall mean Loans made to Borrower which bear
---------
interest at a rate based upon the LIBO Rate.

"Event of Default" shall have the meaning set forth in
----------------
Section 12.

"Governmental Authority" shall mean the United States of
----------------------
America, or any other nation or principality having jurisdiction
over the Borrower or Holdings, any state or other political
subdivision thereof, and any entity thereof exercising executive,
legislative, judicial, regulatory or administrative functions.

"Guaranteed Obligations" shall have the meaning set forth
----------------------
in Section 7.01.

<PAGE>

"Hereunder", "hereby", "herein", "hereof" and the like
--------- ------ ------ ------
shall mean and refer to this Agreement as a whole and not merely to
the specific section, paragraph or clause in which the respective
word appears.

"Holdings" shall have the meaning set forth in the
--------
preamble to this Agreement.

"Indebtedness" means, in each case, determined in
------------
accordance with generally accepted accounting principles, (a) all
debt, whether or not represented by bonds, debentures, notes or
other securities, for the repayment of money borrowed, (b) all
deferred debt for the payment of the purchase price of property or
assets purchased, (c) all guarantees, endorsements (other than
guarantees and endorsements in the ordinary course of business,
including without limitation guarantees by the Borrower to its
consignors of a minimum price in connection with the sale of
property), assumptions and letters of credit in respect of, or to
purchase or to otherwise acquire, debt of others (other than
Holdings or its Subsidiaries), (d) all debt secured by any Lien
existing on property owned by Holdings or any of its Subsidiaries
subject to such Lien, whether or not debt secured thereby shall
have been assumed, and (e) the principal value of all rental
payments required to be made by Holdings or any of its Subsidiaries
as lessee, under Capital Leases having terms (including options to
renew or extend any term, whether or not exercised) of more than
one year.

"Interest Expense" for any person and for any relevant
----------------
period shall mean with respect to all Indebtedness of such person
an amount equal to the sum of all interest payments for such
period.

"Interest Period" shall mean any of the Interest Periods,
---------------
as defined in the Notes.

"Letters of Credit" shall have the meaning set forth in
-----------------
Section 2.05.

"Letter of Credit Agreement" shall mean with respect to
--------------------------
each Letter of Credit the application and related documentation
satisfactory to Bank.

"Letter of Credit Reserve" shall mean as of any date of
------------------------
determination, an amount equal to the sum of (a) the aggregate
outstanding principal amount of all drafts and other demands for
payment under Letters of Credit issued hereunder which have been
honored by Bank and with respect to which the Borrower has not
satisfied its reimbursement obligation and (b) the aggregate
undrawn principal amount of all Letters of Credit issued by Bank
for the account of the Borrower which are then outstanding under
and pursuant to this Agreement.

<PAGE>

"Lease" shall have the meaning set forth in Section
-----
11.09.

"LIBO Rate" shall have the meaning set forth in the Note
---------
in the form of Exhibit A hereto.

"Lien" shall mean any mortgage, lien, pledge, charge,
----
conditional sale, title retention agreement, financing lease or
other security interest, encumbrance or right of others.

"Loan Documents" shall mean this Agreement, the Note or
--------------
any other document delivered in connection herewith or therewith.

"Loans" shall have the meaning set forth in Section 2.01.
-----
For all purposes of this Agreement, all Loans made by the Bank on
any day shall be deemed to be a single Loan hereunder, except that
Loans of different types, or of the same type but having Interest
Periods of different durations or made from Loans of another type
on the same day shall be deemed to be separate Loans for all
purposes of this Agreement.

"Maturity Date" shall mean December 31, 1994.
-------------

"Money Market Based Rate" shall have the meaning given
-----------------------
such term in the Note in the form of Exhibit A hereto.

"Multiemployer Plan" means a multiemployer plan, as such
------------------
term is defined in Section 4001(a)(3) of ERISA, to which Borrower
or Holdings or any other member of the Controlled Group is, or
during the preceding five years has been, obligated to contribute.

"Note" shall mean the promissory note of the Borrower
----
provided for by Section 4.03.

"PBGC" means the Pension Benefit Guaranty Corporation and
----
any entity succeeding to any or all of its functions under ERISA.

"Person" shall mean any individual, partnership,
------
corporation, business trust, joint stock company, trust,
unincorporated association, joint venture, Governmental Authority
or other entity of whatever nature.

"Pension Plan" means a pension plan, as such term is
------------
defined in section 3 (2) of ERISA, which is subject to Title IV of
ERISA (other than a Multiemployer Plan), and to which Borrower,
Holdings or any other member of the Controlled Group may have any
liability.

"Premises" shall have the meaning set forth in Section
--------
11.09.

<PAGE>

"Prime Based Rate" shall have the meaning set forth in
----------------
the Note in the form of Exhibit A hereto.

"Principal Office" shall mean the principal office of the
----------------
Bank.

"Project Corporation" shall have the meaning set forth in
-------------------
Section 11.09.

"Quarterly Dates" shall mean the first day of each
---------------
January, April, July and October, the first of which shall be April
1, 1994 (on which date accrued interest for the period commencing
on the date of the initial borrowing and ending on March 31, 1994
shall be payable), provided that, if any such date is not a
Business Day, the relevant Quarterly Date shall be the next
succeeding Business Day.

"Responsible Officer" shall mean either of the Borrower's
-------------------
or Holding's Chief Executive Officer or Chief Financial Officer.

"SFS" shall mean Sotheby's Financial Services, Inc.
---

"Sotheby's" shall have the meaning set forth in the
---------
preamble to this Agreement.

"Subsidiary or Subsidiaries" shall mean any corporation
--------------------------
or corporations at least a majority of the securities of which
having ordinary voting power for the election of directors (other
than securities having such power only by reason of the happening
of a contingency) are at the time owned by Holdings or any
Subsidiary of Holdings.

"Taxes" shall have the meaning set forth in Section
-----
6.06(a).

"York" shall mean York Avenue Development, Inc., a New
----
York corporation.

1.02. Accounting Principles. All accounting terms not
---------------------
specifically defined herein shall be construed in accordance with
generally accepted accounting principles applicable in the United
States of America and, unless otherwise expressly provided for
herein, all calculations shall be made in accordance with such
principles.

Section 2. Loans; Commitment; Etc.
----------------------

2.01. Loans. The Bank agrees, on the terms of this
-----
Agreement, to make loans (individually, a "Loan" and, collectively,
the "Loans") to the Borrower during the period from the date hereof
to but not including the Maturity Date, in a principal amount at
any one time outstanding not exceeding the Bank's Commitment, as

<PAGE>

such amount may be increased or decreased or as such Commitment may
be terminated or reduced; provided, however, in no event shall the
sum of the aggregate principal amount of Loans outstanding at any
one time and the Letter of Credit Reserve exceed the Bank's
Commitment, as such Commitment may be increased or decreased or as
such Commitment may be terminated or reduced. Subject to the terms
of this Agreement, during such period Borrower may borrow, repay,
prepay (as provided in Section 3.02) and reborrow hereunder.

2.02. Changes of Commitment. Borrower shall have the
---------------------
right to terminate or reduce the Commitment at any time or from
time to time; provided that (i) Borrower shall give notice of each
such termination or reduction to the Bank as provided in Section
5.04, (ii) each partial reduction shall be in an amount at least
equal to $500,000 and (iii) no such reduction or termination shall
reduce the Bank's commitment to an amount less than the Letter of
Credit Reserve; and provided, further, that to the extent that the
sum of the amount of the Loans then outstanding and the Letter of
Credit Reserve exceeds the amount of the Bank's Commitment as then
reduced, any such termination or reduction shall be accompanied by
prepayment of the Loans in the amount of such excess, together with
accrued interest in the amount so prepaid to the date of such
prepayment and any indemnification payment required pursuant to the
Note or Section 6. Each notice shall specify the date when the
reduction or termination shall be effective and, in the case of a
reduction, the aggregate amount of such reduction. Borrower shall
have no right to rescind any termination or reduction pursuant to
this Section 2.02 or to restore the previous obligations of the
Bank to lend a greater amount.

2.03. Commitment Fee. In consideration of the
--------------
commitment of the Bank to lend pursuant to this Agreement, Borrower
will pay to the Bank a commitment fee at the rate of .25% per annum
(computed on the basis of a year of 360 days including the first
day but excluding the last day) on an amount equal to the average
daily undrawn portion of the Bank's Commitment calculated for the
period from the date hereof and ending on the Maturity Date or date
of the termination of this Agreement. The commitment fee shall be
payable to the Bank on each Quarterly Date (commencing February 1,
1994) in arrears for the three month period ending on the date
before such Quarterly Date. The February 1, 1994 payment will be
calculated for the period from the date hereof and ending January
31, 1994. For purposes of determining the commitment fee,
outstanding Letters of Credit shall be considered usage of the
Bank's Commitment.

2.04. Lending Offices. The Loans shall be made and
---------------
maintained at the Bank's Principal Office.

2.05. Letters of Credit. In addition to Loans under the
-----------------
Note to be provided to Company by Bank under and pursuant to

<PAGE>

Section 2.01 of this Agreement, Bank may issue, or commit to issue,
from time to time, standby letters of credit for the account of the
Borrower (herein individually called a "Letter of Credit" and
collectively "Letters of Credit"); provided, however that the sum
of the aggregate amount of Loans outstanding under the Note plus
the Letter of Credit Reserve shall not exceed Twenty Million
Dollars ($20,000,000) at any one time; and provided further that no
Letter of Credit shall, by its terms, have an expiration date which
extends beyond the earlier to occur of (i) one year from the date
of its issuance and (ii) the Maturity Date. In addition to the
terms and conditions of this Agreement, the issuance of any Letters
of Credit shall also be subject to the terms and conditions of the
applicable Letter of Credit Agreement and the form of any such
letter of credit must be acceptable to Bank. The Borrower shall pay
to Bank annually in advance a commission as agreed to by Bank and
the Borrower with respect to each Letter of Credit and such other
fees and expenses as are customarily charged by Bank in connection
therewith, which fees and expenses shall be payable at such times
as Bank may require.

Section 3. Borrowings; Prepayments
-----------------------

3.01. Borrowings. The Borrower shall give the Bank
----------
telephonic notice (to be promptly confirmed in writing) of the
Borrower's intention to borrow from the Bank under Section 2.01,
which notice shall be given as provided in Section 5.04. On the
date specified by Borrower for each borrowing hereunder, the Bank
shall, subject to the terms and conditions of this Agreement, make
available to the Borrower the amount of the Loan to be made by the
Bank to Borrower by Federal wire transfer to an account designated
by the Borrower or by depositing in immediately available funds the
proceeds thereof, in the general deposit account of Borrower, which
account shall be maintained at the Principal Office.

3.02. Prepayments. Unless otherwise provided in the
-----------
Note, the Borrower shall have the right to prepay Loans, without
premium, upon two (2) Business Days' notice (and upon notice prior
to 1:00 p.m. on the day of such prepayment of Prime Based Rate
Loans) specifying the amounts to be repaid and the date on which
such prepayment is to be made, at any time and from time to time in
whole or in part, subject to the payment of all interest and any
penalties and charges specified in this Agreement, which relate to
such prepaid Loan or portion of a Loan; provided, however, if any
prepayment of any EuroLoan or CD Based Rate Loan shall result in an
outstanding principal balance of such Loan such that the Bank shall
be required to fund less than $500,000 of such Loan, such
prepayment shall not be made unless such Loan is paid in full.

Section 4. Payments of Principal and Interest; Notes.
-----------------------------------------

4.01. Principal. Borrower hereby promises to pay to the
---------
Bank in full the principal amount of the Loans made by the Bank to

<PAGE>

Borrower on the terms set forth in the Note provided that, when a
new Loan is to be made by the Bank on a date Borrower is to repay
any principal of an outstanding Loan, the Bank shall apply the
proceeds thereof to the payment of the principal to be repaid and
only an amount equal to the difference between the principal to be
repaid and the amount of the Loan shall be made available by the
Bank to the Borrower as provided in Section 3.01 or paid by the
Borrower to the Bank pursuant to this Section 4.01, as the case may
be.

4.02. Interest. Borrower hereby promises to pay to the
--------
Bank interest on the unpaid principal amount of each Loan made by
the Bank to Borrower at the rates and on the terms set forth in the
Note.

4.03. Note. (a) Loans ma0de by the Bank to Borrower and
----
the obligation to repay such Loans, shall be evidenced by a single
promissory note of Borrower issued to the Bank, substantially in
the form of Exhibit A, dated the date of the initial borrowing
payable to the order of the Bank in a principal amount of up to the
Bank's Commitment as originally in effect and otherwise duly
completed.

(b) The Bank may, and is hereby authorized by the
Borrower to endorse on the grid on the last page of each Note held
by the Bank (or elsewhere on the Bank's books and records) an
appropriate notation evidencing the date and amount of each
borrowing hereunder, as well as the date and amount of each payment
and prepayment by the Borrower with respect thereto, and any such
recordation shall constitute prima facie evidence of the accuracy
of the information so recorded. The Bank's failure to make
notations upon the Note as permitted hereby (or elsewhere in the
Bank's books and records) shall not affect the validity of the
obligation of the Borrower to repay the unpaid principal of the
Loans with interest thereon as provided herein and therein.

Section 5. Payments ; Computations; Etc.
-----------------------------

5.01. Payments. All payments under this Agreement and
--------
the Note shall be made in Dollars in immediately available funds at
the Principal Office not later than 11:00 a.m. New York City time
on the day such payments are due (each such payment made after such
time on such due date to be deemed to have been made on the next
succeeding Business Day). The Bank may (but shall not be obligated
to) debit any or all accounts of Borrower with the Bank the amount
of any such payment which is not made by such time. Borrower
shall, at the time of making each payment under this Agreement or
the Note, specify to the Bank the principal or other amount payable
by Borrower under this Agreement or the Note to which such payment
is to be applied (and in the event that it fails to so specify, or
if a Default or an Event of Default has occurred and is continuing,

<PAGE>

the Bank may apply such payment as it may elect in its sole
discretion). If the due date of any payment under this Agreement
or the Note would otherwise fall on a day which is not a Business
Day, such date shall be extended to the next succeeding Business
Day and interest shall be payable for any principal so extended for
the period of such extension.

5.02. Computations. Interest on Loans shall be computed
------------
as provided in the Note. Commitment fees hereunder shall be
computed as provided in Section 2.03.

5.03. Minimum Amounts of Borrowings and Prepayments.
---------------------------------------------
Except for borrowings and prepayments which exhaust the full
remaining amount of the Bank's Commitment (in the case of
borrowings) or result in the prepayment of all Loans of a
particular type (in the case of prepayments) or prepayments made
pursuant to Section 3.02 or prepayments made pursuant to the Note
or Section 6, (i) each borrowing of a Loan (other than a Loan based
upon the Prime Based Rate) and each optional prepayment of
principal of a Loan (other than a Loan based upon the Prime Based
Rate) shall be in an aggregate amount for such Loan at least equal
to $500,000, or such greater amount in integral multiples of
$50,000 and (ii) each Loan based upon the Prime Based Rate and each
optional prepayment of principal of a Loan based upon the Prime
Based Rate shall be in an amount at least equal to $100,000 or such
greater amount in integral multiples of $10,000; provided, however,
if any prepayment of any EuroLoan or CD Based Rate Loan shall
result in an outstanding principal balance of such Loan such that
the Bank shall be required to fund less than $500,000 of such Loan,
such prepayment shall not be made unless such Loan is prepaid in
full.

5.04. Certain Notices. Borrower shall give notice to
---------------
the Bank of terminations or reductions of the Bank's Commitment
pursuant to Section 2.02 and Borrower shall give notice to the
Bank of borrowings of the Loans, pursuant to Section 3.01, which
notices may be made by telephone and confirmed in writing, shall be
irrevocable, and shall be effective only if received by the Bank
not later than 11:00 a.m. (1:00 p.m. in the case of Prime Based
Rate Loans) New York City time, (i) three (3) Business Days (in the
case of any transaction involving a LIBO Based Rate Loan or a CD
Based Rate Loan) prior to the date of the related termination,
reduction or borrowing or (ii) on the date of the related
termination, reduction or borrowing (in the case of any transaction
involving a Prime Based Rate Loan or Money Market Based Rate Loan).
Each such notice of reduction shall specify the amount thereof.
Each such notice of borrowing shall specify the duration of the
Interest Periods, the type of Loan or Loans and the amount or
amounts thereof (subject to Section 5.03) to be borrowed, the date
of borrowing (which shall be a Business Day) and the type of
interest rate applicable thereto. Each such notice of the duration

<PAGE>

of the Interest Period shall specify the Loan to which such
Interest Period is to relate.

5.05. Other Rights. In addition to (and without
------------
limitation of) any right of set-off, bankers' lien or counterclaim
the Bank may otherwise have, the Bank shall be entitled, at its
option whenever an Event of Default has occurred and is continuing,
to offset balances held by it for the account of the Borrower or
Holdings at any of its offices against any amount payable by
Borrower or Holdings hereunder which is not paid when due, in which
case it shall promptly notify Borrower or Holdings, as applicable,
thereof, provided, however, that its failure to give such notice
shall not affect the validity thereof.

Section 6. Yield Protection; Illegality; Taxes; Etc.
-----------------------------------------

6.01. Additional Costs. Borrower shall pay the Bank
----------------
such additional amount necessary to compensate the Bank for
increased costs as provided in the Note. Any claim by the Bank for
additional amounts shall be accompanied by a certificate from the
Bank setting forth the calculations by which such additional costs
were determined, which certificate shall be presumptive evidence of
such additional costs absent manifest error.

6.02. Limitation on Types of Loans. Borrowings
----------------------------
of any type of Loan shall be subject to availability as provided in
the Note.

6.03. Illegality. Notwithstanding any other provision
----------
of this Agreement, in the event that it becomes unlawful for the
Bank to (i) honor its obligation to make EuroLoans of any type
hereunder, or (ii) maintain EuroLoans of any type hereunder, then
the Bank shall promptly notify the Borrower thereof and the Bank's
obligation to make EuroLoans of such type hereunder shall be
suspended and the Bank may take such other action set forth in the
Note until such time as the Bank may again make and maintain
EuroLoans of such type, and the Bank's outstanding EuroLoans of
such type shall be prepaid, or converted into Domestic Rate Loans,
in accordance with Section 6.04.

6.04. Certain Prepayments Pursuant to Sections 6.01 and
-------------------------------------------------
6.02. If EuroLoans are to be prepaid pursuant to the Note and
- ----
Section 3.02, such Loans shall be prepaid as provided in the Note.

6.05. Indemnification. Borrower shall indemnify the
---------------
Bank as provided in the Note.

6.06. Taxes. (a) The Borrower covenants and agrees
-----
that, whether or not any Loans are made or Letters of Credit issued
by the Bank hereunder:

<PAGE>

(i) all payments on account of the principal of and
interest on the Loans and Note, and all other amounts payable by
such Borrower hereunder, under the Note or under the Letter of
Credit Agreements, to or for the account of the Bank including,
without limitation, amounts payable under clause (ii) of this
Section 6.06(a), shall be made without any set-off or counterclaim
and free and clear of and without reduction by reason of, all
present and future income, stamp, registration and other taxes and
levies, deductions, charges, compulsory loans and withholdings
whatsoever (other than franchise and other taxes imposed on the
overall net income of the Bank), and all interest, 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, in connection with Letters of Credit or under such Note
is made or any taxing authority thereof or therein, on or in
respect of this Agreement, such Loans, such Note, the Letters of
Credit, 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
Borrower, for its own account, prior to the date on which penalties
attach thereto;

(ii) Borrower shall indemnify the Bank against, and reimburse
the Bank on demand for, any Taxes and any loss, liability, claim or
expense, including interest, penalties and reasonable legal fees
and disbursements, which the Bank may incur at any time arising out
of or in connection with any failure of Borrower to make any
payments of Taxes when due;

(iii) in the event that 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, the
Loans, the Note, or the Letter of Credit Agreements, Borrower shall
pay to the Bank, such additional amount (s) as may be required,
after the deduction or withholding of Taxes, to enable the Bank to
receive from Borrower an amount equal to the amount stated to be
payable by Borrower to the Bank under this Agreement, the Letters
of Credit Agreements or the Note;

(iv) Borrower shall furnish to the Bank the official tax
receipts in respect of each payment of Taxes required under this
Section 6.06(a) within thirty (30) days after the date such payment
is due pursuant to applicable law, and Borrower shall promptly
furnish to the Bank, at the Bank's request, any other information,
documents and receipts that the Bank may, from time to time,
require to establish to its reasonable satisfaction that full and

<PAGE>

timely payment has been made of all Taxes required to be paid under
this Section 6.06(a); and

(v) in the event that the payments by Borrower become exempt
from or not subject to Taxes Borrower will, upon the reasonable
request of the Bank, furnish to the Bank either a certificate from
each appropriate taxing authority or an opinion of counsel
reasonably acceptable to the Bank, in either case stating that
payments hereunder are exempt from or not subject to Taxes.

(b) The obligations of Borrower pursuant to this Section
6.06 shall survive repayment of the Loans.

6.07. Refunds. If, after receiving payment or
-------
reimbursement from the Borrower for any additional costs or taxes
or indemnification for any loss as set forth in the Note, the Bank,
for its own account, receives a refund or otherwise receives money
from any person (other than Borrower, or other persons which become
participants or assignees pursuant to Section 13.08), specifically
referencing such costs, taxes or indemnification and in
reimbursement thereof, which reduces such costs, loss or taxes to
the Bank, the Bank shall refund the amount so received from
Borrower, up to the amount of such payment or reimbursement.

Section 7. Guaranty.
--------

7.01. Guaranty of the Loans. Holdings hereby
---------------------
guarantees, absolutely and unconditionally, to the Bank the full
and prompt payment of principal, interest, and all other charges
and sums payable hereunder (including, without limitation,
additional costs, penalties and all other amounts payable under
this Agreement) of Borrower and all obligations of the Borrower
arising in connection with the Letters of Credit and any Letter of
Credit Agreements (the obligations guaranteed hereunder herein
collectively called the "Guaranteed Obligations"), when and as the
same shall become due and payable, by acceleration or otherwise.
Holdings hereby covenants and agrees to and with the Bank that if
an Event of Default shall have occurred (and be continuing),
Holdings shall forthwith make, or cause to be made, all payments to
the Bank required under this Agreement under the Letter of Credit
Agreements, and any arrears thereof, and will forthwith pay to the
Bank all costs that may arise in consequence of such Event of
Default, including, without limitation, reasonable attorneys' fees
and disbursements incurred in connection with any such Event of
Default or the enforcement of this guaranty or any other provision
of the Agreement.

7.02. Terms of Guaranty. Holdings agrees as follows:
-----------------

(a) this guaranty is an absolute and unconditional
guaranty of payment (and not of collection);

<PAGE>

(b) this guaranty shall be enforceable against Holdings,
without the necessity of giving any notice of non-payment or
default under this Agreement or the Letter of Credit Agreements or
the giving of any notice of acceptance of this guaranty or the
giving of any other notice or demand to which Holdings might
otherwise be entitled, all of which Holdings hereby expressly
waives;

(c) Holdings hereby expressly agrees that the validity
of this guaranty and the obligations of Holdings hereunder shall in
no way be terminated, affected, diminished or impaired by reason of
(i) the assertion against Borrower of, or the failure to assert
against Borrower, any of the rights or remedies reserved to the
Bank pursuant to the terms, covenants and conditions of this
Agreement or the Letter of Credit Agreements or (ii) any provisions
of this Agreement or the Letter of Credit Agreements not being
legal or enforceable. In addition to, and not in limitation of,
the immediately preceding sentence, Holdings agrees that it shall
not be necessary as a condition to enforcing this guaranty against
Holdings that a suit be first instituted against Borrower or that
any rights or remedies against Borrower be first exhausted, it
being understood and agreed that the liability of Holdings
hereunder shall be primary, direct and in all respects
unconditional subject to no right of set-off against the Bank;

(d) this guaranty shall be a continuing guaranty, and
the liability of Holdings hereunder shall in no way be affected,
modified or diminished by reason of (i) any assignment, renewal,
modification, amendment or extension of this Agreement or the
Letter of Credit Agreements, (ii) any modification or waiver of or
change in any of the terms, covenants and conditions of this
Agreement or the Letter of Credit Agreements, (iii) any extension
of time that may be granted to Borrower, (iv) any consent, release,
indulgence or other action, inaction or omission under or in
respect of the Agreement, (v) any compromise, or release, by
operation of law or otherwise, of any rights against Borrower, (vi)
any dealings or transactions or other matter or thing occurring
between the Bank and Borrower, or (vii) any bankruptcy, insolvency,
reorganization, liquidation, arrangement, assignment for the
benefit of creditors, receivership, trusteeship or similar
proceeding affecting Borrower, whether or not notice thereof is
given to Holdings;

(e) this guaranty shall survive for as long as any of
the obligations of Borrower hereunder or under the Letter of Credit
Agreements shall exist.

7.03. Further Covenants of Holdings Relating to the
---------------------------------------------
Guaranty. Holdings covenants and agrees that (i) whenever at any
- --------
time, or from time to time, Holdings, shall make any payment to the
Bank on account of the liability of Holdings hereunder, Holdings
will notify the Bank in writing that such payment is for such

<PAGE>

purpose, and (ii) in any action or proceeding brought on, under or
by virtue of this guaranty, Holdings shall and does hereby waive
trial by jury.

7.04. Reinstatement. The obligations of Holdings, under
-------------
this Section 7 shall be automatically reinstated if and to the
extent that for any reason any payment by or on behalf of Borrower
is rescinded or must be otherwise restored by the Bank whether as a
result of any proceedings in bankruptcy or reorganization or
otherwise and Holdings agrees that it will reimburse the Bank on
demand for all reasonable costs and expenses (including, without
limitation, fees and disbursements of counsel) incurred by the Bank
in connection with such rescission or restoration.

7.05. Subrogation. Holdings hereby agrees that until
-----------
the payment and satisfaction in full of all Guaranteed Obligations
and the termination of the Commitment of the Bank hereunder it
shall not exercise any right or remedy arising by reason of any
performance by it of its guarantee in this Section 7, whether by
subrogation or otherwise, against Borrower.

7.06. Remedies. Holdings, agrees that, as between
--------
Holdings and the Bank, the obligations of Borrower under this
Agreement and the Note hereunder may be declared to be forthwith
due and payable as provided in Section 12 for purposes hereof
notwithstanding any stay, injunction or other prohibition
preventing such declaration as against Borrower and that, in the
event of such declaration, such obligations (whether or not due and
payable by Borrower) shall forthwith become due and payable by
Holdings for purposes of this Section 7.

Section 8. Conditions of Lending.
---------------------

8.01. Initial Borrowing. The obligation of the Bank to
-----------------
make the initial borrowing to Borrower or issue the initial Letter
of Credit is subject to the fulfillment to the satisfaction of the
Bank of each of the following conditions immediately prior to or
contemporaneously with such borrowing:

(i) Signatures. Holdings and Borrower shall have
----------
certified to the Bank the name and signature of each officer of
such party authorized to execute and deliver this Agreement and, in
the case of Borrower, its Note and to effect borrowings and other
transactions hereunder and thereunder. The Bank may conclusively
rely on each such certification until it shall have received notice
to the contrary in writing from Holdings or Borrower, respectively.

(ii) Proof of Corporate Action. The Bank shall have
-------------------------
received a certified copy of all corporate action taken by Holdings
and Borrower to authorize the execution, delivery and performance
of this Agreement and, in the case of Borrower, its Note and any
borrowings and other transactions hereunder and thereunder, and

<PAGE>

such other papers as the Bank or counsel to the Bank shall
reasonably require.

(iii) Note. The Bank shall have received the Note, in
----
the form of Exhibit A, of Borrower which Note shall have been duly
executed and which shall constitute the valid and legally binding
obligations of Borrower, legally enforceable in accordance with its
terms.

(iv) Opinion of Counsel to Borrower. The Bank shall
------------------------------
have received an opinion of counsel to Holdings and Borrower, dated
the date of the initial borrowing and in form attached hereto as
Exhibit C.

(v) Financial Statements. The Bank shall have received
--------------------
from Holdings audited consolidated financial statements for the
1992 fiscal year of Holdings and its Subsidiaries.

(vi) Other Matters Satisfactory. All legal matters
--------------------------
incident to the transactions hereby contemplated shall be
satisfactory to the Bank and its counsel.

8.02. Each Loan. The obligation of the Bank to make any
---------
Loan hereunder (including the initial borrowing) to Borrower or
issue any Letter of Credit is subject to the additional conditions
precedent that (i) the Bank shall have received a notice of
borrowing pursuant to Section 3.01, (ii) no Default shall have
occurred and be continuing on the date of, and after giving effect
to, such borrowing, and (iii) the representations of the Borrower
and Holdings in Section 9 shall be true and correct on and as of
such date with the same force and effect as if made on and as of
such date, and Borrower shall be deemed to have so certified to the
Bank.

Section 9. Representations and Warranties.
------------------------------

9.01. Representations and Warranties. Holdings and
------------------------------
Borrower hereby jointly and severally represent and warrant to the
Bank that:

(a) Schedule 1 correctly sets forth the name of each
Subsidiary of Holdings, its jurisdiction of incorporation, the
name of its immediate parent or parents and the percentage of each
class of its issued and outstanding capital stock owned by Holdings
and any Subsidiary of Holdings, respectively, if any; the
corporations listed on Schedule 1 are the only Subsidiaries of
Holdings as of the date of this Agreement; and Holdings and each of
its Subsidiaries are duly incorporated and organized and validly
existing under the laws of the jurisdiction in which they are
incorporated, in good standing therein, and duly qualified to

<PAGE>

transact business in all places where such qualification is
necessary or advisable;

(b) the execution, delivery and performance by Holdings
and Borrower of this Agreement, and the Note (in the case of
Borrower) to which they are parties, are within their respective
corporate powers, have been duly authorized by all necessary
corporate action and will not violate any provision of law or of
the articles of incorporation or by-laws of Holdings or Borrower or
result in the breach or constitute a default under or require any
consent under any indenture or other agreement or instrument to
which Holdings or any of its Subsidiaries is a party or by which
Holdings or any of its Subsidiaries or their respective properties
may be bound or affected, or cause any of such properties to become
subject to any Lien; this Agreement constitutes the legal, valid
and binding obligation of Holdings and Borrower; and the Note
constitutes the legal, valid and binding obligations of Borrower,
each of which is enforceable against the parties thereto, in
accordance with their respective terms;

(c) the audited consolidated and consolidating financial
statement of Holdings and its Subsidiaries for the fiscal year
ended December 31, 1992 and 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
periods ended on said dates all in conformity with generally
accepted accounting principles consistently applied; and since the
date of such financial statements, there has been no material
adverse change in the business, condition or prospects, financial
or otherwise, of Holdings and its Subsidiaries taken as a whole;

(d) there are no suits, investigations or proceedings
pending or, to the best of their knowledge, threatened, against or
affecting Holdings or its Subsidiaries which, if adversely
determined, would in the aggregate have a material adverse effect
on the financial condition, business or prospects of Holdings and
its Subsidiaries taken as a whole;

(e) Holdings and its Subsidiaries have good record and
marketable title in fee simple to, or valid and subsisting
leasehold interests in, all their respective real properties, and
good title to all their respective other properties, reflected on
the financial statements of Holdings and its Subsidiaries, referred
to in paragraph (c) above, except for property disposed of in the
ordinary course of business, and none of such properties or
documents of title relating to such properties are subject to any
Lien, except Liens for taxes not yet due and Liens which will not
materially interfere with the occupation, use, marketability and
enjoyment of Holdings and its Subsidiaries of such properties and
assets in the normal course of business of Holdings and its
Subsidiaries taken as a whole;

<PAGE>

(f) Holdings and its Subsidiaries have filed all tax
returns required to be filed and paid all taxes due or assessed
indicated thereon, including interest and penalties, except for
taxes which are being contested in good faith and by appropriate
proceedings, and for which Holdings and its Subsidiaries have made
adequate reserves on the books of Holdings and its Subsidiaries;

(g) during the preceding twelve (12) consecutive-month
period, no formal action has been taken to terminate any Pension
Plan (other than a standard termination as defined in section
4041(b) of ERISA for which a commitment to make sufficient is not
required), and no contribution failure has occurred with respect to
any Pension Plan which (i) is sufficient to give rise to a lien
under section 302(f) of ERISA on any assets of the Borrowers or
(ii) when combined with past due required contributions to all
other Pension Plans at that time, exceeds $5,000,000. No condition
exists or event or transaction has occurred with respect to any
Pension Plan which could reasonably be expected to result in civil
or criminal liability, fine or penalty to any Governmental
Authority or any participant or beneficiary in excess of
$1,000,000. Neither the Borrower nor any member of the Controlled
Group has incurred or reasonably expects to incur withdrawal
liability to Multiemployer Plans in an aggregate amount exceeding
$5,000,000, and the Borrower and all members of the Controlled
Group would not become subject to any liability in excess of
$5,000,000 if the Borrower and all members of the Controlled Group
were to withdraw completely from all Multiemployer Plans as of the
date hereof. No action has been taken with respect to a Pension
Plan which could result in the requirement that Borrower or any
other member of the Controlled Group furnish a bond or other
security to the PBGC or such Pension Plan;

(h) Borrower is not engaged principally, or as one of its
important activities, in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning
of Regulation U of the Board of Governors of the Federal Reserve
System), and the purposes for which the Loan will be used will not
be prohibited by or otherwise violate Regulation U;

(i) 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 rule or regulation of any
Governmental Authority in a manner which when taken together with
all other such violations, could have a materially adverse effect
upon the financial position or results of operations of Holdings
and its Subsidiaries taken as a whole; and Holdings and its
Subsidiaries have attained all material consents and approvals of
Governmental Authorities required to conduct their respective
businesses as they are presently operated and such consents and
approvals are final and not subject to review upon appeal or under
any pending or threatened adverse proceeding;

<PAGE>

(j) the outstanding stock of Holdings and its
Subsidiaries has been duly issued and is fully paid and
nonassessable;

(k) no event has occurred or failed to occur which has
not been remedied, cured or waived, the occurrence or non-
occurrence of which constitutes, or which with the giving of notice
or the passage of time or both would constitute, (i) an Event of
Default under this Agreement or (ii) a default under any other
agreement material to the business of Holdings and its Subsidiaries
taken as a whole to which Holdings or any of such Subsidiaries is a
party or by which Holdings or any of such Subsidiaries or any of
their respective properties may be bound; and

(l) to the best of their knowledge, all written
information provided by Holdings and its Subsidiaries to the Bank
in connection with this Agreement, and/or the Loans is complete and
correct in all material respects.

Section 10. Affirmative Covenants. Holdings (and, where
---------------------
applicable, Borrower) agrees that so long as any commitment, amount
or Letter of Credit shall be outstanding hereunder:

10.01. Financial Statements. It will furnish the Bank:
--------------------

(a) within ninety (90) days after the end of each fiscal
year of Holdings, a consolidated balance sheet of Holdings and its
Subsidiaries at the end of such fiscal year, the related financial
statements of income and operations and changes in financial
position and of shareholder's equity for such year, all prepared in
accordance with generally accepted accounting principles audited
by and with the opinion of independent public accountants
reasonably satisfactory to the Bank;

(b) within sixty (60) days after the end of the first,
second and third quarter of each fiscal year of Holdings, a
consolidated balance sheet of Holdings and its Subsidiaries at the
end of such quarters and the related statements of income for such
periods, all prepared in accordance with generally accepted
accounting principles and certified by the chief financial officer
of Holdings;

(c) within ninety (90) days after the end of each fiscal
year, a certificate signed by a Responsible Officer of Holdings
stating whether or not Holdings is in compliance with subsections
11.01, 11.03, 11.04, 11.05, 11.06, 11.07 and 11.08; and

(d) promptly following request therefor, such further
information regarding the business affairs and financial condition
of Holdings and its Subsidiaries as the Bank may reasonably
require.

<PAGE>

The statements to be submitted pursuant to clauses (a) and (b)
of this subsection 10.01 shall be accompanied by a certificate
signed by a Responsible Officer of Holdings stating that (i) the
consolidated statements accompanying such certificate are correct
and complete and fairly present the financial condi0tion and results
of operation of Holdings and its Subsidiaries at the end of such
year or quarterly period, as the case may be, all in conformity
with generally accepted accounting principles consistently applied
and accounting practices standard for the business of Holdings and
its Subsidiaries, and (ii) such Responsible Officer has no
knowledge, except as specifically stated, of an Event of Default
(or event which with notice or the passage of time, or both, would
constitute an Event of Default). The financial statements to be
furnished pursuant to clause (a) above shall be accompanied by a
statement of said public accountants certifying the same to the
effect that no Event of Default (or event which with notice or the
passage of time, or both, would constitute an Event of Default)
arising by virtue of a breach of any of the covenants contained in
subsections 10.04, 11.03, 11.04, 11.05 and 11.07 was discovered to
have occurred and to be continuing or, if such an event was so
discovered, stating the nature thereof. The Bank and its agents
and representatives shall use their respective best efforts in the
ordinary course of business to keep the information provided
hereunder confidential and shall use their respective best efforts
in the ordinary course of business to prevent the disclosure of
such information to any person (other than the Bank's accountants,
auditors, other persons which may become participants pursuant to
Section 13.08 or legal counsel), without obtaining the prior
written consent of Holdings (which consent shall not be
unreasonably withheld).

10.02. Insurance. It shall, and shall cause each of its
---------
Subsidiaries to, maintain in respect of its assets and the assets
of its 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 national reputation.

10.03. Maintain Business. Except as provided in Section
-----------------
11.02 hereof, it shall, and shall cause each of its Subsidiaries
(other than York) to, continue to engage in the same type of
business as it is presently engaged in, and preserve (i) the
corporate existence and good standing of itself and of Borrower and
(ii) all its material rights, privileges and franchises necessary
and desirable in the normal conduct of its business.

10.04. Taxes and Claims. It shall, and shall cause each
----------------
of its Subsidiaries to pay and discharge (i) all taxes, assessments
and government charges or levies imposed on it or its income or
profits or any of its properties prior to the date in which
penalties attach thereto and (ii) all lawful claims which, if

<PAGE>

unpaid, might cause a lien or charge to be created against any of
its properties, except any such tax, assessment, charge or levy the
payment of which is being contested in good faith by appropriate
proceedings and for which it has made adequate reserves on its
books.

10.05. Compliance with Laws. It shall, and shall cause
--------------------
each of its Subsidiaries to, 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 appropriate proceedings, provided however, that such
contest will not cause material harm to any Subsidiary if Holdings
or such Subsidiary shall fail to prevail in such contest.

10.06. Notices. It shall furnish to the Bank a copy 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 would materially and adversely affect the
business and property of Holdings and its Subsidiaries taken as a
whole, (ii) the occurrence of any material default by Holdings or
any of its Subsidiaries under any other material agreement to which
Holdings or any of its Subsidiaries is a party and (iii) 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 (iv) any
material change in SFS's operating procedures relating to the
Client Loan Program.

10.07. Payments of Certain Taxes by Holdings. Whether
-------------------------------------
or not the Loans shall be consummated, it shall, within fifteen
(15) days after the Bank's demand therefor, pay, and save the Bank
harmless against, any and all liability with respect to amounts
payable as a result of (i) any taxes (other than franchise and
income taxes relating solely to interest payments, fees and
premiums hereunder and payments made to the Bank under Section
6.05) imposed which may be determined to be payable in connection
with the execution or enforcement of the Note, this Agreement or
any other document executed in connection therewith or herewith, or
the acquisition by or delivery to the Bank of the Note, this
Agreement or any other document executed in connection therewith or
herewith, or any modification, amendment or alteration, of the
terms or provisions of the Note, this Agreement or any other
document executed in connection therewith or herewith, (ii) any
interest or penalties resulting from any delays in paying any of
such liabilities or taxes, and (iii) any income taxes in respect of

<PAGE>

any reimbursement by Holdings hereunder. The obligations of
Holdings under this Section 10.07 shall survive the payment of the
Note.

10.08. Inspection. It shall give, and shall cause each
----------
of its Subsidiaries to give, upon the request of the Bank, any
representative of the Bank access during normal business hours to
inspect, and permit such representative to inspect, all properties
belonging to it. The Bank and representatives shall use their
respective best efforts in the ordinary course of its business to
keep the information acquired pursuant to this Section 10.08
confidential and shall use their respective best efforts in the
ordinary course of business to prevent the disclosure of such
information to any person (other than the Bank's accountants,
auditors, other persons which may become participants pursuant to
Section 13.08 or legal counsel hereunder), without obtaining the
prior written consent of Holdings (which consent shall not be
unreasonably withheld).

10.09. Authorizations. It shall, and shall cause each
--------------
of its Subsidiaries to obtain at any time and from time to time
(and, once obtained, to maintain) all material authorizations,
licenses, consents or approvals as shall now or hereafter be
necessary or desirable in the reasonable opinion of the Bank under
applicable law or regulation in connection with the making and
performance of this Agreement and the Note by the Borrower or
Holdings, as applicable, and will promptly furnish a copy thereof
to the Bank.

Section 11. Negative Covenants. Except as set forth in
------------------
Section 11.09, Holdings (and where applicable, Borrower) agrees
that so long as any commitment, amount or Letter of Credit shall be
outstanding hereunder:

11.01. Liens. Neither Holdings nor any of its
-----
Subsidiaries will create or permit to exist any Lien (including any
charge upon assets purchased under conditional sales or other title
retention agreements) upon any of the assets of Holdings and its
Subsidiaries whether now owned or hereafter acquired; provided,
however, that this restriction shall not apply to or prevent the
creation or existence of (i) upon notice to the Bank, liens in
favor of the Bank on any such assets; (ii) liens for taxes not yet
due or which are being contested in good faith by appropriate
proceedings; (iii) other liens, incidental to the conduct of its
business or the ownership of its assets, which were not incurred in
connection with the borrowing of money or the obtaining of advances
or credit, and which do not in the aggregate materially detract
from the value of its assets or materially impair the use thereof
in the operation of the business of Holdings and its Subsidiaries
taken as a whole; and (iv) Liens secured by accounts receivable,
such accounts receivable not to exceed $25,000,000 in the
aggregate.

<PAGE>

11.02. Merger, Consolidation, Etc. Neither Holdings nor
--------------------------
any of its Subsidiaries will merge or consolidate with any other
corporation, except that (i) any Subsidiary may merge or
consolidate with, or liquidate into, Holdings (provided that
Holdings shall be the continuing or surviving corporation) or with
any one or more other Subsidiaries, and (ii) Holdings and/or any of
its Subsidiaries may change their state of incorporation to another
state in the United States of America, except Louisiana.

11.03. Limitation on Indebtedness. Neither Holdings nor
--------------------------
any of its Subsidiaries shall create incur, assume or suffer to
exist any Indebtedness in excess of 200% of Consolidated Tangible
Net Worth; provided, however, that Indebtedness which is
subordinated to the Loans and is acceptable to the Bank shall not
be deemed to be Indebtedness under this Section 11.03.

11.04. Times Interest Earned Ratio. Holdings will not
---------------------------
permit Consolidated Earnings Before Interest and Taxes with respect
to any four consecutive quarters to be less than the product of 2.0
times Interest Expense for such four consecutive quarters.

11.05. Tangible Net Worth. On and after December 31,
------------------
1990, Holdings will not at the end of any fiscal quarter permit
Consolidated Tangible Net Worth to be less than an amount equal to
the sum of (a) $110,000,000 and (b) $10,000,000 times the number of
years which have elapsed since December 31, 1990, as of the
December 31 immediately preceding the date of determination of such
amount (unless the date of determination is December 31 in which
case such December shall be used to determine the number of years
which have elapsed).

11.06. Disposition of Assets, Etc. Holdings shall at
---------------------------
all times hold, directly or indirectly, 100% of the capital stock
of each of the Subsidiaries, except Acquavella Modern Art, Parke &
Co. Limited, Parke & Co. Investments Limited and Lexbourne Limited
and except that Borrower may dispose of the capital stock of York
pursuant to any pledge agreement permitted by Section 11.09.

11.07. Compliance with ERISA. Holdings will not, and
---------------------
will not permit any other member of the Controlled Group or any
other party to (a) terminate any Pension Plan (other than a
standard termination as defined in section 4041(b) of ERISA for
which a commitment to make sufficient is not required, (b) fail to
make a required contribution to any Pension Plan (i) if such
failure would be sufficient to give rise to a lien under section
302(f) of ERISA on any assets of the Borrower or Holdings or (ii)
which, when combined with past due required contributions to all
other Pension Plans at that time, would exceed $5,000,000, (c) take
any action with respect to a Pension Plan which could result in the
requirement that Borrower or Holdings or any other member of the
Controlled Group furnish a bond or other security to the PBGC or
such Pension Plan, (d) take any action with respect to any Pension

<PAGE>

Plan which could reasonably be expected to result in the incurrence
by Borrower or Holdings of any civil or criminal liability, fine or
penalty to any Governmental Authority or any participant or
beneficiary in excess of $1,000,000 or (e) completely or partially
withdraw from one or more Multiemployer Plans where the aggregate
amount of the outstanding withdrawal liability incurred with
respect to all Multiemployer Plans could reasonably be expected to
exceed $5,000,000.

11.08. Capital Expenditures. Holdings will not permit
--------------------
the aggregate capital expenditures of Holdings and its Subsidiaries
to exceed $30,000,000 in any fiscal year.

11.09. Limitation on Negative Covenants.
--------------------------------
Notwithstanding any of the foregoing provisions of this Section 11,
Borrower and York may take any and all actions necessary or
desirable to develop the premises located at 1334 York Avenue ,
Borough of Manhattan, New York City, New York (the "Premises") in
any manner whatsoever (including, specifically, exclusively and
with limitation, in the case of Borrower only) as follows: (a)
Borrower may (i) exchange its current lease of the Premises (the
"Lease") for an office condominium in the Premises, provided that
Borrower pays no additional consideration for such condominium
(other than annual common area maintenance fees which shall not be
in excess of $1,031,000 as adjusted for inflation) and the space
covered by such condominium is at least as large as the space
covered by the Lease, (ii) pledge or mortgage the capital stock,
assets and/or income of York and may allow such pledge or mortgage
to be exercised or foreclosed by the pledgee or mortgagee thereof,
(iii) may give a nonrecourse guaranty in favor of a corporation
formed in connection with the development and financing of the
Premises (the "Project Corporation"), provided that the liability
of Borrower on such guaranty is limited to the stock of York, (iv)
subordinate the Lease to any mortgages, provided that a
nondisturbance agreement, reasonably satisfactory to the Bank,
shall have been entered into, and/or place a lien on the Lease in a
form reasonably satisfactory to the Bank, (v) grant easements
allowing access to its premises provided such easements do not
materially interfere with the conduct of Borrower's business, (vi)
indemnify York and the Project Corporation for all liability
directly incurred by York or the Project Corporation as result of
(a) the failure by Borrower to complete renovations of Borrower's
portion of the Premises and the completion of such renovations by
York and/or the Project Corporation, and (b) any uninsured personal
injury or property damage suffered by York or the Project
Corporation or any employee or contractor of York or the Project
Corporation which is caused by Borrower or any contractor hired by
Borrower to complete such renovation and (vii) authorize York
and/or the Project Corporation to enter into and perform its
obligations with respect to the Premises, provided neither Holdings
nor any Subsidiary, other than York, incurs any liability with
respect thereto other than as provided in this Section 11.09, and

<PAGE>

(b) whether or not permitted pursuant to Section 11, York may take
any and all actions necessary or desirable, including, without
limitation, exercising options, borrowing funds, developing
property and constructing structures, granting liens, making loans,
giving guarantees and indemnities, paying fees and purchasing and
selling property including, without limitation, all or any portion
of the Premises (or any interest therein) to develop, construct,
market and sell the Premises (or any portion thereof or interest
therein in the case of any sale) provided, however, that the
maximum liability of Holdings and its Subsidiaries, other than York
being incurred in connection with the Premises, is limited to the
Lease and the equity of York held by Borrower.

Section 12. Default.
-------

12.01. Events of Default. If any one or more of the
-----------------
following events (each of which shall be an "Event of Default")
shall occur while any Commitment or amount is outstanding:

(a) Borrower shall fail to pay to the Bank any principal
amount, interest, fee or other sum when due hereunder or under any
Letter of Credit Agreement; or

(b) any material representation or warranty made or
deemed to have been made by Borrower or Holdings herein or in any
statement or certificate furnished by or on behalf of Borrower or
Holdings in connection with this Agreement or any Letter of Credit
Agreement shall prove to have been incorrect, in any material
respect, when made or deemed to have been made; or

(c) Holdings (or, where applicable, Borrower) shall fail
to observe any of the agreements contained in Sections 10.02,
10.03, 10.05, 10.06, 10.07, 10.08 and Section 11, and, except for
Sections 11.03, 11.04, 11.05 and 11.08, such failure shall continue
unremedied for a period of ten (10) consecutive days from the date
on which Holdings knows or should have known of such failure; or

(d) Borrower or Holdings shall fail to observe any other
material agreement contained in this Agreement or any Letter of
Credit Agreement and such failure shall continue unremedied for a
period of thirty (30) consecutive days from the date on which
Borrower or Holdings knows or should have known of such failure, or
in any case where such observance cannot with due diligence be
completed within a thirty (30) day period, if Borrower or Holdings
shall not commence within said thirty (30) day period and
thereafter diligently prosecute to completion
all action required to remedy the same within a period not to
exceed 180 days; or

(e) Borrower or Holdings shall default on any payment of
principal or interest due and owing on any other obligation for
borrowed money greater than $2,000,000 beyond any period of grace

<PAGE>

provided with respect thereto, or default in the performance or
observance of any other agreement, term or condition contained in
any agreement under which such obligation is created, which default
(either monetary or otherwise) results in the acceleration of such
indebtedness; or

(f) a judgment or judgments for the payment of money in
excess of $5,000,000 in the aggregate shall have been rendered
against Borrower or Holdings, and the same shall have remained
unsatisfied and in effect, without stay of execution, for any
period of sixty (60) consecutive days; or

(g) Borrower or Holdings shall (i) apply for or consent
to the appointment of, or the taking of possession by, a receiver,
custodian, trustee, administrator or liquidator of itself or of all
or a substantial portion of its property, (ii) admit in writing its
inability, or be generally unable or deemed unable under any
applicable law (as the same may be amended from time to time), to
pay its debts as such debts become due or otherwise becomes or is
deemed to be insolvent, (iii) make a general assignment for the
benefit of its creditors or composition or arrangement with said
creditors (or any class of such creditors), (iv) place itself or
allow itself to be placed, voluntarily or involuntarily, under the
protection of the law of any jurisdiction relating to bankruptcy,
insolvency, reorganization, winding-up or composition or adjustment
of debts, or (v) take any corporate action for the purpose of
effecting any of the foregoing; or

(h) a proceeding or case shall be commenced in any court
of competent jurisdiction, seeking (i) the liquidation,
reorganization, dissolution, winding-up, or composition or
readjustment of debts, of Borrower or Holdings, (ii) the
appointment of a trustee, receiver, custodian, liquidator,
administrator or the like of Borrower or Holdings or of all or a
substantial portion of its assets, (iii) similar relief in respect
of Borrower or Holdings under any law relating to bankruptcy,
insolvency, reorganization, winding-up, or composition or
adjustment of debts, without the consent of Borrower or Holdings,
as applicable, and such proceeding or case shall continue
undismissed for a period of one hundred and twenty (120) days, or
an order, judgment or decree approving or ordering any of the
foregoing shall be entered and continue unstayed and in effect for
a period of sixty (60) days, or an order for relief or other legal
instrument of similar effect against Borrower or Holdings shall be
entered in an involuntary case under such law and shall continue
for sixty (60) days ; or

(i) all or a substantial portion of the property of
Borrower or Holdings shall have been condemned, seized or otherwise
appropriated, or custody or control of such property shall have
been assumed by any court or governmental agency of competent

<PAGE>

jurisdiction, and such property shall have been retained for a
period of thirty (30) consecutive days; or

(j) the institution of any formal action by Borrower or
Holdings or any other person to terminate a Pension Plan if as a
result of such termination Borrower or Holdings could be required
to make a contribution to such Pension Plan, or could incur a
liability or obligation to such Pension Plan, in excess of
$5,000,000; a contribution failure occurs with respect to any
Pension Plan sufficient to give rise to a lien under section 302(f)
of ERISA on any assets of Borrower or Holdings; or Borrower or
Holdings or other member of the Controlled Group receives notice
from the sponsor of a Multiemployer Plan that (i) it has completely
or partially withdrawn from one or more Multiemployer Plans and the
aggregate amount of the outstanding withdrawal liability incurred
with respect to all Multiemployer Plans could reasonably be
expected to exceed $5,000,000 or (ii) such Multiemployer Plan has
or will be commencing a proceeding to collect contributions from
Borrower or Holdings or any member of the Controlled Group in an
amount in excess of $5,000,000; or an action with respect to any
Pension Plan occurs which could reasonably be expected to result in
the incurrence by Borrower or Holdings of any civil or criminal
liability, fine or penalty to any Governmental Authority or any
participant or beneficiary in excess of $1,000,000.

Borrower shall pay interest at the Default Rate while such Event of
Default exists and the Bank may, other than upon the occurrence of
an event described in clause (g) or (h) above, by notice to
Borrower, cancel the Loans and the Commitment and/or declare the
full unpaid principal amount outstanding hereunder and under the
Letter of Credit Agreements, accrued interest hereunder (including
interest payable at the Default Rate) and all other sums, penalties
and charges owing hereunder and under the Letter of Credit
Agreements (including, but not limited to, Section 6) to be
immediately due and payable, whereupon such amounts shall be
immediately due and payable, without presentment, demand, protest
or other formalities of any kind, all of which are hereby expressly
waived by Borrower. In the case of the occurrence of an event
referred to in clause (g) or (h) above, the Loans and the
Commitment of the Bank shall be automatically canceled and the full
unpaid principal amount outstanding hereunder and under the Letter
of Credit Agreements, accrued interest hereunder and under the
Letter of Credit Agreements(including interest payable at the
Default Rate) and all other sums, penalties and charges owing
hereunder (including but not limited to Section 6) shall
automatically become immediately due and payable, without
presentment, demand, protest or other formalities of any kind, all
of which are hereby expressly waived by Borrower. Upon the
occurrence of any Event of Default, the Borrower shall immediately
upon demand by Bank deposit with Bank cash collateral in the amount
equal to the maximum amount available to be drawn at any time under
any Letter of Credit then outstanding.

<PAGE>

Section 13. Miscellaneous.
-------------

13.01. Amendment and Waiver. No amendment, modification
--------------------
or waiver of any provision of the Loan Documents, nor consent to
any departure by Borrower or Holdings therefrom, shall in any event
be effective unless the same shall be in writing and signed by the
Bank and the Borrower and Holdings, as applicable.

13.02. Notices, Etc. Except as otherwise provided
------------
herein, notices, approvals and other communications required
hereunder or under any Loan Document shall be in writing and shall
be given to the Bank and the Borrower or Holdings, as applicable,
by ordinary mail, telex or addressed to:

The Borrower or Holdings:

c/o Sotheby's Service Corp.
301 Merritt 7
Norwalk, CT 06851
Attention: Kevin A. Bousquette
Facsimile: (203) 847-4606

The Bank:

Comerica Bank
One Detroit Center
500 Woodward Avenue
Detroit, MI 48226
Attention: Michigan Corporate Division
Facsimile: (313) 567-3727

Notices, approvals and other communications to the Bank, the
Borrower and Holdings shall be effective upon receipt.

13.03. Successors and Assigns. Subject to Section
----------------------
13.08, this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
permitted assigns except that neither Borrower nor Holdings may
assign its rights or obligations hereunder or, in the case of
Borrower, under the Note or any Letter of Credit Agreement without
the prior consent of the Bank. Any assignment of this Agreement to
any person shall also be deemed to be an assignment of the Note to
such person.

13.04. Survival. All representations and warranties
--------
made herein shall survive the making of the Loans hereunder.

13.05. Execution in Counterparts. This Agreement may be
-------------------------
executed in one or more counterparts, each of which, when executed
and delivered, shall be an original and all of which together shall
constitute one and the same instrument.

<PAGE>

13.06. Governing Law. This Agreement shall be deemed to
-------------
have been made under the internal laws in effect in the State of
New York without giving effect to principles of choice of law, and
shall be governed by, and construed and enforced in accordance
with, such laws; provided that the foregoing is not intended to
limit the maximum rate of interest which may be charged or
collected by the Bank hereunder if, under the laws applicable to
it, the Bank may charge or collect such interest at a higher rate
than is permissible under such laws of the State of New York.

13.07. Usury. Anything herein to the contrary
-----
notwithstanding, the obligations of the Borrower and Holdings under
this Agreement shall be subject to the limitation that payments of
interest shall not be required to the extent that receipt of any
such payment by the Bank would be contrary to provisions of law
applicable to the Bank which limits the maximum rate of interest
which may be charged or collected by the Bank.

13.08. Participation, Etc. This Agreement shall be
------------------
binding upon, and shall inure to the benefit of, the Borrower,
Holdings, the Bank and their respective successors and assigns,
except that the Borrower and Holdings may not assign or transfer
their respective rights or obligations hereunder. Provided no
costs are incurred by the Borrower solely as a result of such
assignment or participation, the Bank may assign (in an amount not
less than $5,000,000), or sell participation in, all or any part of
any Loan to another bank (that must have a Moody's bond rating of
BBB or better), in which event (a) in the case of an assignment
upon notice thereof by the Bank to Borrower and Holdings, the
assignee shall have to the extent of such assignment (unless
otherwise provided therein), the same rights, benefits and
obligations as it would have if it were a Bank hereunder; and (b)
in the case of a participation, the participant shall have no
rights under the Loan Documents and all amounts payable by the
Borrower under Section 3 shall be determined as if the Bank has not
sold such participation. The agreement executed by the Bank in
favor of the participant shall not give the participant the right
to require the Bank to take or omit to take any action hereunder
except action directly relating to (i) the extension of a payment
date with respect to any portion of the principal of or interest on
any amount outstanding hereunder allocated to such participant,
(ii) the reduction of the principal amount outstanding hereunder or
(iii) the reduction of the rate of interest payable on such amount
or any amount of fees payable hereunder to a rate or amount, as the
case may be, below that which the participant is entitled to
receive under its agreement with the Bank. The Bank may furnish
any information concerning the Borrower or Holdings in the
possession of the Bank from time to time to assignees and
participants (including prospective or otherwise) which agree in
writing to maintain the confidentiality of such information which
is non-public.

<PAGE>

13.09. Submission of Jurisdiction. Each of Borrower and
--------------------------
Holdings hereby submits to the nonexclusive jurisdiction of the
United States District Court for the Southern District of New York
and of any New York State Court sitting in New York City for
purposes of all legal proceedings arising out of or relating to
this Agreement or the transactions contemplated hereby.

13.10. Merger. Unless otherwise specified in any
------
document, this Agreement and the other documents referred to herein
constitute the sole agreement between the Borrower, Holdings and
the Bank with respect to the Loans hereunder.

13.11. Extension of Maturity Date.
--------------------------
Provided that no Default shall have occurred and be continuing, the
Borrower may annually request an extension of the Maturity Date
then in effect by submitting to the Bank a written request, by May
15 of the applicable year, containing the information in respect of
such extension specified in Exhibit D (the "Extension Request");
the Bank shall notify the Borrower of its approval or rejection of
the extension of the Maturity Date requested in such Extension
Request by July 1, of the applicable year. If the Bank shall
approve in writing the extension of the Maturity Date requested in
such Extension Request by July 1, the Maturity Date shall
automatically and without any further action by any Person be
extended for a maximum of one additional year. If, by July 1 of
the applicable year, the Bank has not approved in writing the
extension of the Maturity Date requested in such Extension Request,
the Maturity Date shall0not be extended pursuant to such Extension
Request.

IN WITNESS WHEREOF, the parties hereto have caused this
REVOLVING CREDIT AGREEMENT to be duly executed on the 31st day of
December, 1993.

SOTHEBY'S HOLDINGS, INC.

By: /s/
---------------------------

SOTHEBY'S, INC.

By: /s/
---------------------------

COMERICA BANK

By: /s/
---------------------------

EXHIBIT 10(v)

SOTHEBY'S HOLDINGS, INC.
and SOTHEBY'S, INC.

BORROWERS

SOTHEBY'S HOLDINGS, INC.,
GUARANTOR

CREDIT SUISSE

$25,000,000.00

REVOLVING CREDIT AGREEMENT
DATED AS OF DECEMBER 1, 1993

<PAGE>

This Table of Contents is not part of the Agreement to which
it is attached but is inserted for convenience only.

Page
----
RECITALS. . . . . . . . . . . . . . . . . . . . . . . . 1

Section 1. Certain Defined Terms; Accounting
Principles . . . . . . . . . . . . . . . . . . . . 2

1.01. Certain Defined Terms . . . . . . . . . . . 2
1.02. Accounting Principles . . . . . . . . . . . 9

Section 2. Loans; Commitment; Etc . . . . . . . . . . 9

2.01. Loans. . . . . . . . . . . . . . . . . . . 9
2.02. Changes of Commitment. . . . . . . . . . . 9
2.03. Commitment Fee. . . . . . . . . . . . . . . 10
2.04. Lending Offices. . . . . . . . . . . . . . 10
2.05. Letters of Credit . . . . . . . . . . . . . 10

Section 3. Borrowings; Prepayments . . . . . . . . . . 11

3.01. Borrowings. . . . . . . . . . . . . . . . . 11
3.02. Prepayments. . . . . . . . . . . . . . . . 11

Section 4. Payments of Principal and Interest; Notes. 11

4.01. Principal. . . . . . . . . . . . . . . . . 11
4.02. Interest. . . . . . . . . . . . . . . . . . 11
4.03. Notes. . . . . . . . . . . . . . . . . . . 12

Section 5. Payments ; Computations; Etc. . . . . . . . 12

5.01. Payments. . . . . . . . . . . . . . . . . . 12
5.02. Computations. . . . . . . . . . . . . . . . 13
5.03. Minimum Amounts of Borrowings and
Prepayments. . . . . . . . . . . . . . . . . 13
5.04. Certain Notices. . . . . . . . . . . . . . 13
5.05. Other Rights. . . . . . . . . . . . . . . . 14

Section 6. Yield Protection; Illegality; Taxes; Etc. . 14

6.01. Additional Costs. . . . . . . . . . . . . . 14
6.02. Limitation on Types of Loans. . . . . . . . 14
6.03. Illegality. . . . . . . . . . . . . . . . . 14
6.04. Certain Prepayments Pursuant to Sections
6.01 and 6.02. . . . . . . . . . . . . . . . 14
6.05. Indemnification. . . . . . . . . . . . . . 14
6.06. Taxes. . . . . . . . . . . . . . . . . . . 14
6.07. Refunds. . . . . . . . . . . . . . . . . . 16

<PAGE>

Section 7. Guaranty. . . . . . . . . . . . . . . . . . 16

7.01. Guaranty of the Loans. . . . . . . . . . . 16
7.02. Terms of Guaranty. . . . . . . . . . . . . 17
7.03. Further Covenants of Holdings Relating to
the Guaranty. . . . . . . . . . . . . . . . . 18
7.04. Reinstatement. . . . . . . . . . . . . . . 18
7.05. Subrogation. . . . . . . . . . . . . . . . 18
7.06. Remedies. . . . . . . . . . . . . . . . . . 18

Section 8. Conditions of Lending. . . . . . . . . . . 19

8.01. Initial Borrowing. . . . . . . . . . . . . 19
8.02. Each Loan. . . . . . . . . . . . . . . . . 19

Section 9. Representations and Warranties. . . . . . . 20

9.01. Representations and Warranties. . . . . . . 20

Section 10. Affirmative Covenants. . . . . . . . . . . 23

10.01. Financial Statements. . . . . . . . . . . 23
10.02. Insurance. . . . . . . . . . . . . . . . . 24
10.03. Maintain Business. . . . . . . . . . . . . 24
10.04. Taxes and Claims. . . . . . . . . . . . . 24
10.05. Compliance with Laws. . . . . . . . . . . 25
10.06. Notices. . . . . . . . . . . . . . . . . . 25
10.07. Payments of Certain Taxes by Holdings. . . 25
10.08. Inspection. . . . . . . . . . . . . . . . 26
10.09. Authorizations. . . . . . . . . . . . . . 26

Section 11. Negative Covenants. . . . . . . . . . . . 26

11.01. Liens. . . . . . . . . . . . . . . . . . . 26
11.02. Merger, Consolidation, Etc. . . . . . . . 27
11.03. Limitation on Indebtedness. . . . . . . . 27
11.04. Times Interest Earned Ratio. . . . . . . . 27
11.05. Tangible Net Worth. . . . . . . . . . . . 27
11.06. Disposition of Assets, Etc. . . . . . . . 27
11.07. Compliance with ERISA . . . . . . . . . . 28
11.08. Capital Expenditures. . . . . . . . . . . 28
11.09. Limitation on Negative Covenants. . . . . 28

Section 12. Default. . . . . . . . . . . . . . . . . . 29

12.01. Events of Default. . . . . . . . . . . . . 29

Section 13. Miscellaneous. . . . . . . . . . . . . . . 32

13.01. Amendment and Waiver. . . . . . . . . . . 32
13.02. Notices, Etc. . . . . . . . . . . . . . . 32
13.03. Successors and Assigns. . . . . . . . . . 33
13.04. Survival. . . . . . . . . . . . . . . . . 33

<PAGE>

iii

13.05. Execution in Counterparts. . . . . . . . . 33
13.06. Governing Law. . . . . . . . . . . . . . . 33
13.07. Usury. . . . . . . . . . . . . . . . . . . 33
13.08. Participation, Etc. . . . . . . . . . . . 34
13.09. Submission of Jurisdiction. . . . . . . . 34
13.10. Merger. . . . . . . . . . . . . . . . . . 35

<PAGE>

Schedules

Schedule 1 - List of Subsidiaries of Holdings

Exhibits

Exhibit A - Form of Promissory Note
Exhibit B-1 - Description of Internal Policies on Client
Loans
Exhibit B-2 - Form of Specific Policies on Client Loans
Exhibit C - Opinion of Counsel

<PAGE>

REVOLVING CREDIT AGREEMENT dated as of
December 1, 1993 among:

SOTHEBY'S HOLDINGS, INC., a Michigan
corporation ("Holdings");

SOTHEBY'S, INC., a New York corporation
("Sotheby's," and together with Holdings, the
"Borrowers");
and

CREDIT SUISSE (the "Bank")

WHEREAS, the Borrowers have requested the Bank to
extend credit to the Borrowers in order to enable either of
them to borrow and repay and reborrow, at any time and from
time to time on or before the Maturity Date (as hereinafter
defined), not in excess of $25,000,000.00 principal amount
at any time outstanding, and the Bank is willing to extend
such credit to the Borrowers upon the terms and conditions
hereinafter set forth. The proceeds of the loans are to be
used for general corporate purposes of the Borrowers. All
of the loans to Sotheby's are to be guaranteed by Holdings.

NOW, THEREFORE, in consideration of the premises
and of the mutual covenants herein contained and intending
to be legally bound hereby, the parties hereto agree as
follows:

Section 1. Certain Defined Terms; Accounting
---------------------------------
Principles
- ----------

1.01. Certain Defined Terms: As used herein, the
----------------------
following terms shall have the following meanings (terms
defined in the singular to have the same meanings when used
in the plural and vice versa):
---- -----

"Advance Agreement" shall mean an agreement,
-----------------
legally enforceable in accordance with its terms, by which a
client borrows money from SFS and, in certain cases, secures
such borrowing with collateral, pursuant to the Client Loan
Program.

"Affiliate" shall mean, as to any person, any
---------
other person which directly or indirectly controls, or is
under common control with, or is controlled by, such person,
and, if such other person is an individual, any member of
the immediate family (including parents, spouse and
children) of such individual and any trust whose principal
beneficiary is such individual or one or more members of
such immediate family and any person who is controlled by

<PAGE>

any such member or trust. As used in this definition,
"control" (including with its correlative meanings,
"controlled by" and "under common control with") shall mean
possession, direct or indirect, of the power to direct or
cause the direction of management or policies (whether
through ownership of securities or partnership or other
ownership interests, by contract or otherwise), provided
that, in any event, any person which owns directly or
indirectly twenty percent (20%) or more of the securities
having ordinary voting power for the election of directors
or other body of a corporation or twenty percent (20%) or
more of the partnership or other ownership interests of any
other person (other than as a limited partner of such other
person) shall be deemed to control such corporation or
partnership. Notwithstanding the foregoing, no individual
shall be deemed to be an Affiliate of a corporation or
partnership solely by reason of his being an officer,
director or partner of such entity and Holdings and its
Subsidiaries shall not be deemed to be Affiliates of each
other.

"Agreement" shall mean this Revolving Credit
---------
Agreement, as the same may be amended, supplemented,
restated or modified from time to time.

"Bank" shall have the meaning set forth in the
----
preamble to this Agreement.

"Borrowers" shall have the meaning set forth in
---------
the preamble to this Agreement.

"Business Day" shall mean a day which is not a
------------
Saturday, Sunday or legal holiday and on which commercial
banks are open for business in New York, New York provided
that if such day relates to the determination of the LIBO
Rate, such day must be a day on which commercial banks are
open for domestic and international business (including
dealings in U.S. Dollar deposits) in London, England and New
York, New York.

"Capital Expenditures" means for any period, the
--------------------
Dollar amount of gross expenditures (including obligations
under Capital Leases) made for fixed assets, real property,
plant and equipment, and all renewals, improvements and
replacements thereto (but not repairs thereof) incurred
during such period.

"Capital Lease" means any lease which has been or
-------------
should be capitalized on the books of the lessee in
accordance with generally accepted accounting principles.

<PAGE>

"CD Based Rate" shall have the meaning set forth
-------------
in the Note in the form of Exhibit A.

"CD Rate Request Amount" shall have the meaning
----------------------
set forth in the Note in the form of Exhibit A.

"Client Loan Program" shall mean SFS's policy (as
-------------------
set forth in Exhibits B-1 and B-2 hereto) of making loans to
Clients of SFS which are either (i) secured by Collateral of
such Clients which has been consigned for sale at auction,
(ii) secured by Collateral of such Clients which remains in
the possession of such Clients or SFS, or (iii) unsecured
loans made to creditworthy Clients.

"Clients" shall mean persons who have entered into
-------
an Advance Agreement with SFS pursuant to the Client Loan
Program.

"Code" shall mean the Internal Revenue Code of
----
1986, as amended from time to time.

"Collateral" shall mean real and/or personal
----------
property of a type customarily dealt in by either Borrower
or its Affiliate or, in the case of real property in which
such Borrower or such Affiliates do not so customarily deal,
such real property which has been appraised by a recognized
expert in appraising property of such type, which property
shall secure an Advance pursuant to the Client Loan Program.

"Commitment" shall mean, $25,000,000.00, as the
----------
same may be terminated or reduced pursuant to Section 2.02.

"Consolidated Earnings Before Interest and Taxes"
-----------------------------------------------
for any relevant period shall mean an amount equal to the
Earnings Before Interest and Taxes of Holdings and its
Subsidiaries, other than York, for such period determined on
a consolidated basis in accordance with generally accepted
accounting principles applied on a consistent basis.

"Consolidated Tangible Net Worth" shall at any
-------------------------------
date mean

(a) stockholder equity, as shown on a consolidated
balance sheet of Holdings and its Subsidiaries, other than
York, prepared as at such date,

minus the sum of

(b) the following items, to the extent reflected as an
asset in such consolidated balance sheet of Holdings and its
Subsidiaries, other than York,

<PAGE>

(i) net intangibles (to the extent not capitalized
in the cost of property, plant and equipment), and

(ii) any surplus resulting from any write-up of
assets subsequent to December 31, 1990.

The foregoing calculation shall be made without
reference to, and shall exclude, adjustments for foreign
currency translation in accordance with Financial Accounting
Standards Board Statement No.52 (FASB-52).

"Controlled Group" means any corporation, trade,
----------------
or business that is, along with either Borrower, a member of
the same controlled group of corporations or controlled
group of trades or businesses, within the meaning of
sections 414 (b) or 414 (c) of the Code, as such Borrower.

"Default" shall mean an Event of Default or an
-------
event which with notice or lapse of time or both would
become an Event of Default.

"Default Rate" shall have the meaning set forth in
------------
the Notes.

"Dollar", "Dollars" and the sign "$" shall mean
------ ------- -
lawful money of the United States of America.

"Domestic Rate" shall mean, for any day, at the
-------------
option of the applicable Borrower, either (a) the CD Based
Rate on such day, or if such day is not a Business Day, on
the next preceding Business Day, (b) the Prime Based Rate,
or (c) the Money Market Based Rate.

"Earnings Before Interest and Taxes" for any
----------------------------------
person and for any relevant period shall mean the sum of (a)
earnings before income taxes and extraordinary credits, as
shown on an income statement of such person prepared for
such period and (b) Interest Expenses, as shown on such
income statement.

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

"Eurodollar Interest Period" shall have the
--------------------------
meaning given such term in the Note in the form of Exhibit A
hereto.

"Eurodollar Rate Request Amount" shall have the
------------------------------
meaning given such term in the Note in the form of Exhibit A
hereto.

<PAGE>

"EuroLoans" shall mean Loans made to Borrowers
---------
which bear interest at a rate based upon the LIBO Rate.

"Event of Default" shall have the meaning set
----------------
forth in Section 12.

"Governmental Authority" shall mean the United
----------------------
States of America, or any other nation or principality
having jurisdiction over the Borrowers, any state or other
political subdivision thereof, and any entity thereof
exercising executive, legislative, judicial, regulatory or
administrative functions.

"Guaranteed Obligations" shall have the meaning
----------------------
set forth in Section 7.01.

"Hereunder", "hereby", "herein", "hereof" and the
--------- ------ ------ ------
like shall mean and refer to this Agreement as a whole and
not merely to the specific section, paragraph or clause in
which the respective word appears.

"Holdings" shall have the meaning set forth in the
--------
preamble to this Agreement.

"Indebtedness" means, in each case, determined in
------------
accordance with generally accepted accounting principles,
(a) all debt, whether or not represented by bonds,
debentures, notes or other securities, for the repayment of
money borrowed, (b) all deferred debt for the payment of the
purchase price of property or assets purchased, (c) all
guarantees, endorsements (other than guarantees and
endorsements in the ordinary course of business, including
without limitation guarantees by the Borrower to its
consignors of a minimum price in connection with the sale of
property), assumptions and letters of credit in respect of,
or to purchase or to otherwise acquire, debt of others
(other than Holdings or its Subsidiaries), (d) all debt
secured by any Lien existing on property owned by Holdings
or any of its Subsidiaries subject to such Lien, whether or
not debt secured thereby shall have been assumed, and (e)
the principal value of all rental payments required to be
made by Holdings or any of its Subsidiaries as lessee, under
Capital Leases having terms (including options to renew or
extend any term, whether or not exercised) of more than one
year.

"Interest Expense" for any person and for any
----------------
relevant period shall mean with respect to all Indebtedness
of such person an amount equal to the sum of all interest
payments for such period.

<PAGE>

"Interest Period" shall mean any of the Interest
---------------
Periods, as defined in the Notes.

"Lease" shall have the meaning set forth in
-----
Section 11.09.

"Letters of Credit" shall have the meaning set
-----------------
forth in Section 2.05.

"Letter of Credit Reserve" shall mean as of any
------------------------
date of determination, an amount equal to the sum of (a) the
aggregate outstanding principal amount of all drafts and
other demands for payment under Letters of Credit issued
hereunder which have been honored by Bank and with respect
to which the Borrower has not satisfied its reimbursement
obligation and (b) the aggregate undrawn principal amount of
all Letters of Credit issued by Bank for the account of the
Borrower which are then outstanding under and pursuant to
this Agreement. The Letter of Credit Reserve shall not
exceed Ten Million Dollars ($10,000,000) at any one time.

"LIBO Rate" shall have the meaning set forth in
---------
the Note in the form of Exhibit A hereto.

"Lien" shall mean any mortgage, lien, pledge,
----
charge, conditional sale, title retention agreement,
financing lease or other security interest, encumbrance or
right of others.

"Loan Documents" shall mean this Agreement, the
--------------
Notes or any other document delivered in connection herewith
or therewith.

"Loans" shall have the meaning set forth in
-----
Section 2.01. For all purposes of this Agreement, all Loans
made by the Bank on any day shall be deemed to be a single
Loan hereunder, except that Loans of different types, or of
the same type but to different Borrowers or having Interest
Periods of different durations or made from Loans of another
type on the same day shall be deemed to be separate Loans
for all purposes of this Agreement.

"Maturity Date" shall mean December 31, 1994.
-------------

"Money Market Based Rate" shall have the meaning
-----------------------
given such term in the Note in the form of Exhibit A hereto.

"Multiemployer Plan" means a multiemployer plan,
------------------
as such term is defined in Section 4001(a)(3) of ERISA, to
which either Borrower or any other member of the Controlled
Group is, or during the preceding five years has been,
obligated to contribute.

<PAGE>

"Notes" shall mean the promissory notes of the
-----
Borrowers provided for by Section 4.03.

"PBGC" means the Pension Benefit Guaranty
----
Corporation and any entity succeeding to any or all of its
functions under ERISA.

"Pension Plan" means a pension plan, as such term
------------
is defined in section 3 (2) of ERISA, which is subject to
Title IV of ERISA (other than a Multiemployer Plan), and to
which any Borrower or any other member of the Controlled
Group may have any liability.

"Premises" shall have the meaning set forth in
--------
Section 11.09.

"Prime Based Rate" shall have the meaning set
----------------
forth in the Note in the form of Exhibit A hereto.

"Principal Office" shall mean the principal office
----------------
of the Bank.

"Project Corporation" shall have the meaning set
-------------------
forth in Section 11.09.

"Quarterly Dates" shall mean the first day of each
---------------
February, May, August and November, the first of which shall
be August 1, 1991 (on which date accrued interest for the
period commencing on the date of the initial borrowing and
ending on July 31, 1991 shall be payable), provided that, if
any such date is not a Business Day, the relevant Quarterly
Date shall be the next succeeding Business Day.

"Responsible Officer" shall mean either of the
-------------------
relevant Borrower's Chief Executive Officer or Chief
Financial Officer.

"SFS" shall mean Sotheby's Financial Services,
----
Inc.

"Sotheby's" shall have the meaning set forth in
---------
the preamble to this Agreement.

"Subsidiary or Subsidiaries" shall mean any
--------------------------
corporation or corporations at least a majority of the
securities of which having ordinary voting power for the
election of directors (other than securities having such

<PAGE>

power only by reason of the happening of a contingency) are
at the time owned by Holdings or any Subsidiary of Holdings.

"Taxes" shall have the meaning set forth in
-----
Section 6.06(a).

"York" shall mean York Avenue Development, Inc., a
----
New York corporation.

1.02. Accounting Principles. All accounting
---------------------
terms not specifically defined herein shall be construed in
accordance with generally accepted accounting principles
applicable in the United States of America and, unless
otherwise expressly provided for herein, all calculations
shall be made in accordance with such principles.

Section 2. Loans; Commitment; Etc.
----------------------

2.01. Loans. The Bank agrees, on the terms of
-----
this Agreement, to make loans (individually, a "Loan" and,
collectively, the "Loans") to the Borrowers during the
period from the date hereof to but not including the
Maturity Date, in a principal amount at any one time
outstanding not exceeding the Bank's Commitment, as such
amount may be increased or decreased or as such Commitment
may be terminated or reduced; provided, however, in no event
shall the sum of the aggregate principal amount of Loans
outstanding at any one time and the Letter of Credit Reserve
exceed the Bank's Commitment, as such Commitment may be
increased or decreased or as such commitment may be
terminated or reduced. Subject to the terms of this
Agreement, during such period each Borrower may borrow,
repay, prepay (as provided in Section 3.02) and reborrow
hereunder.

2.02. Changes of Commitment. (a) Holdings shall
---------------------
have the right to terminate or reduce the Commitment
at any time or from time to time; provided that (i) Holdings
shall give notice of each such termination or reduction to
the Bank as provided in Section 5.04, (ii) each partial
reduction shall be in an amount at least equal to $500,000
and (iii) no such reduction or termination shall reduce the
Bank's Commitment to an amount less than the Letter of
Credit Reserve; and provided, further, that to the extent
that the sum of the amount of the Loans then outstanding and
the Letter of Credit Reserve exceeds the amount of the
Bank's Commitment as then reduced, any such termination or
reduction shall be accompanied by prepayment of the Loans in
the amount of such excess, together with accrued interest in
the amount so prepaid to the date of such prepayment and any
indemnification payment required pursuant to the Notes or

<PAGE>

Section 6. Each notice shall specify the date when the
reduction or termination shall be effective and, in the case
of a reduction, the aggregate amount of such reduction.
Holdings shall have no right to rescind any termination or
reduction pursuant to this Section 2.02 or to restore the
previous obligations of the Bank to lend a greater amount.

2.03. Commitment Fee. In consideration of the
--------------
commitment of the Bank to lend pursuant to this Agreement,
Holdings will pay to the Bank a commitment fee at the rate
of .25% per annum (computed on the basis of a year of 360
days including the first day but excluding the last day) on
an amount equal to the average daily undrawn portion of the
Bank's Commitment calculated for the period from the date
hereof and ending on the Maturity Date or date of the
termination of this Agreement. The commitment fee shall be
payable to the Bank on each Quarterly Date (commencing
January 1, 1994) in arrears for the three month period
ending on the date before such Quarterly Date. The January
1, 1994 payment will be calculated for the period from the
date hereof and ending December 31, 1993. For purposes of
determining the commitment fee, outstanding Letters of
Credit shall be considered usage of the Bank's Commitment.

2.04. Lending Offices. The Loans shall be made
---------------
and maintained at the Bank's Principal Office.

2.05. Letters of Credit. In addition to Loans
-----------------
under the Note to be provided to Company by Bank under and
pursuant to Section 2.01 of this Agreement, Bank may issue,
or commit to issue, from time to time, standby letters of
credit for the account of the Borrower (herein individually
called a "Letter of Credit" and collectively "Letters of
Credit"); provided, however that the sum of the aggregate
amount of Loans outstanding under the Note plus the Letter
of Credit Reserve shall not exceed Twenty-Five Million
Dollars ($25,000,000) at any one time; and provided further
that no Letter of Credit shall, by its terms, have an
expiration date which extends beyond the earlier to occur of
(i) one year from the date of its issuance and (ii) the
Maturity Date. In addition to the terms and conditions of
this Agreement, the issuance of any Letters of Credit shall
also be subject to the terms and conditions of any letter of
credit applications and agreements executed and delivered by
the Borrower unto Bank with respect thereto (the "Letter of
Credit Agreements") and the form of any such letter of
credit must be acceptable to Bank. The Borrower shall pay
the Bank annually in advance a fee as separately agreed for
each Letter of Credit and such other fees and expenses as
are customarily charged by Bank in connection therewith,
which fees and expenses shall be payable at such times as
Bank may require.

<PAGE>

Section 3. Borrowings; Prepayments
-----------------------

3.01. Borrowings. Each of the Borrowers shall
----------
give the Bank telephonic notice (to be promptly confirmed in
writing) of such Borrower's intention to borrow from the
Bank under Section 2.01, which notice shall be given as
provided in Section 5.04. On the date specified by such
Borrower for each borrowing hereunder, the Bank shall,
subject to the terms and conditions of this Agreement, make
available to the Borrower the amount of the Loan to be made
by the Bank to such Borrower by Federal wire transfer to an
account designated by the Borrower or by depositing in
immediately available funds the proceeds thereof, in the
general deposit account of such Borrower, which account
shall be maintained at the Principal Office.

3.02. Prepayments. Unless otherwise provided in
-----------
the Notes, each of the Borrowers shall have the right to
prepay its Loans, without premium, upon two (2) Business
Days' notice (and upon notice prior to 1:00 p.m. on the day
of such prepayment of Prime Based Rate Loans) specifying the
amounts to be repaid and the date on which such prepayment
is to be made, at any time and from time to time in whole or
in part, subject to the payment of all interest and any
penalties and charges specified in this Agreement, which
relate to such prepaid Loan or portion of a Loan; provided,
however, if any prepayment of any EuroLoan or CD Based Rate
Loan shall result in an outstanding principal balance of
such Loan such that the Bank shall be required to fund less
than $500,000 of such Loan, such prepayment shall not be
made unless such Loan is paid in full.

Section 4. Payments of Principal and Interest;
-----------------------------------
Notes.
- -----

4.01. Principal. Each Borrower hereby promises
---------
to pay to the Bank in full the principal amount of the Loans
made by the Bank to such Borrower on the terms set forth in
the applicable Note provided that, when a new Loan is to be
made by the Bank on a date a Borrower is to repay any
principal of an outstanding Loan, the Bank shall apply the
proceeds thereof to the payment of the principal to be
repaid and only an amount equal to the difference between
the principal to be repaid and the amount of the Loan shall
be made available by the Bank to the Borrower as provided in
Section 3.01 or paid by the Borrower to the Bank pursuant to
this Section 4.01, as the case may be.

4.02. Interest. Each Borrower hereby promises to
--------
pay to the Bank interest on the unpaid principal amount of

<PAGE>

each Loan made by the Bank to such Borrower at the rates and
on the terms set forth in the applicable Note.

4.03. Notes. (a) Loans made by the Bank to each
-----
Borrower and the obligation to repay such Loans, shall be
evidenced by a single promissory note of such Borrower
issued to the Bank, substantially in the form of Exhibit A,
dated the date of the initial borrowing payable to the order
of the Bank in a principal amount of up to the Bank's
Commitment as originally in effect and otherwise duly
completed.

(b) The Bank may, and is hereby authorized by the
Borrower to endorse on the grid on the last page of each
Note held by the Bank (or elsewhere on the Bank's books and
records) an appropriate notation evidencing the date and
amount of each borrowing hereunder, as well as the date and
amount of each payment and prepayment by the Borrower with
respect thereto, and any such recordation shall constitute
prima facie evidence of the accuracy of the information so
recorded. The Bank's failure to make notations upon the
Notes as permitted hereby (or elsewhere in the Bank's books
and records) shall not affect the validity of the obligation
of the Borrower to repay the unpaid principal of the Loans
with interest thereon as provided herein and therein.

Section 5. Payments ; Computations; Etc.
-----------------------------

5.01. Payments. All payments under this
--------
Agreement and the Notes shall be made in Dollars in
immediately available funds at the Principal Office not
later than 11:00 a.m. New York City time on the day such
payments are due (each such payment made after such time on
such due date to be deemed to have been made on the next
succeeding Business Day). The Bank may (but shall not be
obligated to) debit any or all accounts of such Borrower
with the Bank the amount of any such payment which is not
made by such time. Each Borrower shall, at the time of
making each payment under this Agreement or its Note,
specify to the Bank the principal or other amount payable by
such Borrower under this Agreement or the Note to which such
payment is to be applied (and in the event that it fails to
so specify, or if a Default or an Event of Default has
occurred and is continuing, the Bank may apply such payment
as it may elect in its sole discretion). If the due date of
any payment under this Agreement or any Note would otherwise
fall on a day which is not a Business Day, such date shall
be extended to the next succeeding Business Day and interest
shall be payable for any principal so extended for the
period of such extension.

<PAGE>

5.02. Computations. Interest on Loans shall be
------------
computed as provided in each Note. Commitment fees
hereunder shall be computed as provided in Section 2.03.

5.03. Minimum Amounts of Borrowings and
---------------------------------
Prepayments. Except for borrowings and prepayments which
- -----------
exhaust the full remaining amount of the Bank's Commitment
(in the case of borrowings) or result in the prepayment of
all Loans of a particular type (in the case of prepayments)
or prepayments made pursuant to Section 3.02 or prepayments
made pursuant to the Notes or Section 6, (i) each borrowing
of a Loan (other than a Loan based upon the Prime Based
Rate) and each optional prepayment of principal of a Loan
(other than a Loan based upon the Prime Based Rate) shall be
in an aggregate amount for such Loan at least equal to
$500,000, or such greater amount in integral multiples of
$50,000 and (ii) each Loan based upon the Prime Based Rate
and each optional prepayment of principal of a Loan based
upon the Prime Based Rate shall be in an amount at least
equal to $100,000 or such greater amount in integral
multiples of $10,000; provided, however, if any prepayment
of any EuroLoan or CD Based Rate Loan shall result in an
outstanding principal balance of such Loan such that the
Bank shall be required to fund less than $500,000 of such
Loan, such prepayment shall not be made unless such Loan is
prepaid in full.

5.04. Certain Notices. Holdings shall give
---------------
notice to the Bank of terminations or reductions of the
Bank's Commitment pursuant to Section 2.02 and a Borrower
shall give notice to the Bank of borrowings of the Loans,
pursuant to Section 3.01, which notices may be made by
telephone and confirmed in writing, shall be irrevocable,
and shall be effective only if received by the Bank not
later than 11:00 a.m. (1:00 p.m. in the case of Prime Based
Rate Loans) New York City time, (i) three (3) Business Days
(in the case of any transaction involving a LIBO Based Rate
Loan or a CD Based Rate Loan) prior to the date of the
related termination, reduction or borrowing or (ii) on the
date of the related termination, reduction or borrowing (in
the case of any transaction involving a Prime Based Rate
Loan or Money Market Based Rate Loan). Each such notice of
reduction shall specify the amount thereof. Each such
notice of borrowing shall specify the duration of the
Interest Periods, the type of Loan or Loans (including the
respective Borrower) and the amount or amounts thereof
(subject to Section 5.03) to be borrowed, the date of
borrowing (which shall be a Business Day) and the type of
interest rate applicable thereto. Each such notice of the
duration of the Interest Period shall specify the Loan to
which such Interest Period is to relate.

<PAGE>

5.05. Other Rights. In addition to (and without
------------
limitation of) any right of set-off, bankers' lien or
counterclaim the Bank may otherwise have, the Bank shall be
entitled, at its option whenever an Event of Default has
occurred and is continuing, to offset balances held by it
for the account of either of the Borrowers at any of its
offices against any amount payable by such Borrower
hereunder (as a Borrower or guarantor) which is not paid
when due, in which case it shall promptly notify such
Borrower thereof, provided, however, that its failure to
give such notice shall not affect the validity thereof.

Section 6. Yield Protection; Illegality; Taxes;
------------------------------------
Etc.
- ----

6.01. Additional Costs. Each Borrower shall pay
----------------
the Bank such additional amount necessary to compensate the
Bank for increased costs as provided in such Borrower's
Note. Any claim by the Bank for additional amounts shall be
accompanied by a certificate from the Bank setting forth the
calculations by which such additional costs were determined,
which certificate shall be presumptive evidence of such
additional costs absent manifest error.

6.02. Limitation on Types of Loans. Borrowings
----------------------------
of any type of Loan shall be subject to availability as
provided in the Notes.

6.03. Illegality. Notwithstanding any other
----------
provision of this Agreement, in the event that it becomes
unlawful for the Bank to (i) honor its obligation to make
EuroLoans of any type hereunder, or (ii) maintain EuroLoans
of any type hereunder, then the Bank shall promptly notify
the Borrowers thereof and the Bank's obligation to make
EuroLoans of such type hereunder shall be suspended and the
Bank may take such other action set forth in the Notes until
such time as the Bank may again make and maintain EuroLoans
of such type, and the Bank's outstanding EuroLoans of such
type shall be prepaid, or converted into Domestic Rate
Loans, in accordance with Section 6.04.

6.04. Certain Prepayments Pursuant to Sections
----------------------------------------
6.01 and 6.02. If EuroLoans are to be prepaid pursuant to
- -------------
the Notes and Section 3.02, such Loans shall be prepaid as
provided in the Notes.

6.05. Indemnification. Each Borrower shall
---------------
indemnify the Bank as provided in such Borrower's Note.

6.06. Taxes. (a) Each of the Borrowers covenants
-----
and agrees that, whether or not any Loans are made or
Letters of Credit issued by the Bank hereunder:

<PAGE>

(i) all payments on account of the principal of
and interest on such Borrower's Loans and Notes, and all
other amounts payable by such Borrower hereunder or under
the Notes or under the Letter of Credit Agreements, to or
for the account of the Bank including, without limitation,
amounts payable under clause (ii) of this Section 6.06(a),
shall be made without any set-off or counterclaim and free
and clear of and without reduction by reason of, all present
and future income, stamp, registration and other taxes and
levies, deductions, charges, compulsory loans and
withholdings whatsoever (other than franchise and other
taxes imposed on the overall net income of the Bank), and
all interest, 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 in connection with Letters of Credit or under such
Notes is made or any taxing authority thereof or therein, on
or in respect of this Agreement, such Loans, such Notes, the
Letters of Credit, 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
such Borrower, for its own account, prior to the date on
which penalties attach thereto;

(ii) each Borrower shall indemnify the Bank against,
and reimburse the Bank on demand for, any Taxes and any
loss, liability, claim or expense, including interest,
penalties and reasonable legal fees and disbursements, which
the Bank may incur at any time arising out of or in
connection with any failure of such Borrower to make any
payments of Taxes when due;

(iii) in the event that any 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, its Loans or Note(s), or the Letter of
Credit Agreements, such Borrower shall pay to the Bank, such
additional amount(s) as may be required, after the deduction
or withholding of Taxes, to enable the Bank to receive from
such Borrower an amount equal to the amount stated to be
payable by such Borrower to the Bank under this Agreement,
the Letter of Credit Agreements or such Borrower's Notes;

(iv) each Borrower shall furnish to the Bank the
official tax receipts in respect of each payment of Taxes

<PAGE>

required under this Section 6.06(a) within thirty (30) days
after the date such payment is due pursuant to applicable
law, and such Borrower shall promptly furnish to the Bank,
at the Bank's request, any other information, documents and
receipts that the Bank may, from time to time, 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 6.06(a); and

(v) in the event that the payments by either Borrower
become exempt from or not subject to Taxes such Borrower
will, upon the reasonable request of the Bank, furnish to
the Bank either a certificate from each appropriate taxing
authority or an opinion of counsel reasonably acceptable to
the Bank, in either case stating that payments hereunder are
exempt from or not subject to Taxes.

(b) The obligations of each Borrower pursuant to
this Section 6.06 shall survive repayment of the Loans.

6.07. Refunds. If, after receiving payment or
-------
reimbursement from any Borrower for any additional costs or
taxes or indemnification for any loss as set forth in the
Notes, the Bank, for its own account, receives a refund or
otherwise receives money from any person (other than such
Borrower, or other persons which become participants or
assignees pursuant to Section 13.08), specifically
referencing such costs, taxes or indemnification and in
reimbursement thereof, which reduces such costs, loss or
taxes to the Bank, the Bank shall refund the amount so
received from such Borrower, up to the amount of such
payment or reimbursement.

Section 7. Guaranty.
--------

7.01. Guaranty of the Loans. Holdings hereby
---------------------
guarantees, absolutely and unconditionally, to the Bank the
full and prompt payment of principal, interest, and all
other charges and sums payable hereunder (including, without
limitation, additional costs, penalties and all other
amounts payable under this Agreement) of Sotheby's and all
obligations of Sotheby's arising in connection with the
Letters of Credit and any Letter of Credit Agreements (the
obligations guaranteed hereunder herein collectively called
the "Guaranteed Obligations"), when and as the same shall
become due and payable, by acceleration or otherwise.
Holdings hereby covenants and agrees to and with the Bank
that if an Event of Default shall have occurred (and be
continuing), Holdings shall forthwith make, or cause to be
made, all payments to the Bank required under this Agreement
or under the Letter of Credit Agreements, and any arrears

<PAGE>

thereof, and will forthwith pay to the Bank all costs that
may arise in consequence of such Event of Default,
including, without limitation, reasonable attorneys' fees
and disbursements incurred in connection with any such Event
of Default or the enforcement of this guaranty or any other
provision of the Agreement.

7.02. Terms of Guaranty. Holdings agrees as
-----------------
follows:

(a) this guaranty is an absolute and
unconditional guaranty of payment (and not of collection);

(b) this guaranty shall be enforceable against
Holdings, without the necessity of giving any notice of non-
payment or default under this Agreement or the Letter of
Credit Agreements or the giving of any notice of acceptance
of this guaranty or the giving of any other notice or demand
to which Holdings might otherwise be entitled, all of which
Holdings hereby expressly waives;

(c) Holdings, hereby expressly agrees that the
validity of this guaranty and the obligations of Holdings
hereunder shall in no way be terminated, affected,
diminished or impaired by reason of (i) the assertion
against Sotheby's of, or the failure to assert against
Sotheby's, any of the rights or remedies reserved to the
Bank pursuant to the terms, covenants and conditions of the
Agreement or the Letter of Credit Agreements or (ii) any
provisions of the Agreement or the Letter of Credit
Agreements not being legal or enforceable. In addition to,
and not in limitation of, the immediately preceding
sentence, Holdings agrees that it shall not be necessary as
a condition to enforcing this guaranty against Holdings that
suit be first instituted against any of the other Borrowers
or that any rights or remedies against Sotheby's be first
exhausted, it being understood and agreed that the liability
of Holdings hereunder shall be primary, direct and in all
respects unconditional subject to no right of set-off
against the Bank;

<PAGE>

of law or otherwise, of any rights against any Sotheby's,
(vi) any dealings or transactions or other matter or thing
occurring between the Bank and Sotheby's, or (vii) any
bankruptcy, insolvency, reorganization, liquidation,
arrangement, assignment for the benefit of creditors,
receivership, trusteeship or similar proceeding affecting
Sotheby's, whether or not notice thereof is given to
Holdings;

(e) this guaranty shall survive for as long as
any of the obligations of Sotheby's hereunder or under the
Letter of Credit Agreements shall exist.

7.03. Further Covenants of Holdings Relating to
-----------------------------------------
the Guaranty. Holdings covenants and agrees that (i)
- ------------
whenever at any time, or from time to time, Holdings, shall
make any payment to the Bank on account of the liability of
Holdings hereunder, Holdings will notify the Bank in writing
that such payment is for such purpose, and (ii) in any
action or proceeding brought on, under or by virtue of this
guaranty, Holdings shall and does hereby waive trial by
jury.

7.04. Reinstatement. The obligations of
-------------
Holdings, under this Section 7 shall be automatically
reinstated if and to the extent that for any reason any
payment by or on behalf of Sotheby's is rescinded or must be
otherwise restored by the Bank whether as a result of any
proceedings in bankruptcy or reorganization or otherwise and
Holdings agrees that it will reimburse the Bank on demand
for all reasonable costs and expenses (including, without
limitation, fees and disbursements of counsel) incurred by
the Bank in connection with such rescission or restoration.

7.05. Subrogation. Holdings hereby agrees that
-----------
until the payment and satisfaction in full of all Guaranteed
Obligations and the termination of the Commitment of the
Bank hereunder it shall not exercise any right or remedy
arising by reason of any performance by it of its guarantee
in this Section 7, whether by subrogation or otherwise,
against Sotheby's.

7.06. Remedies. Holdings, agrees that, as
--------
between Holdings and the Bank, the obligations of Sotheby's
under this Agreement and the Notes hereunder may be declared
to be forthwith due and payable as provided in Section 12
for purposes hereof notwithstanding any stay, injunction or
other prohibition preventing such declaration as against
Sotheby's and that, in the event of such declaration, such
obligations (whether or not due and payable by Sotheby's)
shall forthwith become due and payable by Holdings for
purposes of this Section 7.

<PAGE>

Section 8. Conditions of Lending.
---------------------

8.01. Initial Borrowing. The obligation of the
-----------------
Bank to make the initial borrowing or issue the initial
Letter of Credit to either Borrower is subject to the
fulfillment to the satisfaction of the Bank of each of the
following conditions immediately prior to or
contemporaneously with such borrowing:

(i) Signatures. Holdings and Sotheby's shall
----------
have certified to the Bank the name and signature of each
officer of such Borrower authorized to execute and deliver
this Agreement and its respective Notes and to effect
borrowings and other transactions hereunder and thereunder.
The Bank may conclusively rely on each such certification
until it shall have received notice to the contrary in
writing from Holdings or Sotheby's, respectively.

(ii) Proof of Corporate Action. The Bank shall
-------------------------
have received a certified copy of all corporate action taken
by Holdings and Sotheby's to authorize the execution,
delivery and performance of this Agreement and its
respective Notes, if any, and any borrowings and other
transactions hereunder and thereunder, and such other papers
as the Bank or counsel to the Bank shall reasonably require.

(iii) Notes. The Bank shall have received the
-----
Notes, in the form of Exhibit A, of Holdings and Sotheby's
which Notes shall have been duly executed and which shall
constitute the valid and legally binding obligations of
Holdings and Sotheby's, legally enforceable in accordance
with their respective terms.

(iv) Opinion of Counsel to Sotheby's. The Bank
-------------------------------
shall have received an opinion of counsel to Holdings and
Sotheby's, dated the date of each initial borrowing and in
form attached hereto as Exhibit C.

(v) Financial Statements. The Bank shall have
--------------------
received from Holdings audited consolidated financial
statements for the 1992 fiscal year of Holdings and its
Subsidiaries.

(vi) Other Matters Satisfactory. All legal
--------------------------
matters incident to the transactions hereby contemplated
shall be satisfactory to the Bank and its counsel.

8.02. Each Loan. The obligation of the Bank to
---------
make any Loan hereunder (including the initial borrowing) or
issue any Letter of Credit to either Borrower is subject to
the additional conditions precedent that (i) the Bank shall
have received a notice of borrowing pursuant to Section

<PAGE>

3.01, (ii) no Default shall have occurred and be continuing
on the date of, and after giving effect to, such borrowing,
and (iii) the representations of the Borrowers in Section 9
shall be true and correct on and as of such date with the
same force and effect as if made on and as of such date, and
such Borrower shall be deemed to have so certified to the
Bank.

Section 9. Representations and Warranties.
------------------------------

9.01. Representations and Warranties. Holdings
------------------------------
and Sotheby's hereby jointly and severally represent and
warrant to the Bank that:

(a) Schedule 1 correctly sets forth the name of
each Subsidiary of Holdings, its jurisdiction of
incorporation, the name of its immediate parent or parents
and the percentage of each class of its issued and
outstanding capital stock owned by Holdings and any
Subsidiary of Holdings, respectively, if any; the
corporations listed on Schedule 1 are the only Subsidiaries
of Holdings as of the date of this Agreement; and Holdings
and each of its Subsidiaries are duly incorporated and
organized and validly existing under the laws of the
jurisdiction in which they are incorporated, in good
standing therein, and duly qualified to transact business in
all places where such qualification is necessary or
advisable;

(b) the execution, delivery and performance by
Holdings and Sotheby's of this Agreement, and the Notes to
which they are parties, are within their respective
corporate powers, have been duly authorized by all necessary
corporate action and will not violate any provision of law
or of the articles of incorporation or by-laws of Holdings
or Sotheby's or result in the breach or constitute a default
under or require any consent under any indenture or other
agreement or instrument to which Holdings or any of its
Subsidiaries is a party or by which Holdings or any of its
Subsidiaries or their respective properties may be bound or
affected, or cause any of such properties to become subject
to any Lien; this Agreement constitutes the legal, valid and
binding obligation of Holdings and Sotheby's; and the Notes
to which they are a party constitute the legal, valid and
binding obligations of Holdings and Sotheby's, each of which
is enforceable against the parties thereto, in accordance
with their respective terms;

(c) the audited consolidated and consolidating
financial statement of Holdings and its Subsidiaries for the
fiscal year ended December 31, 1990 and certified by

<PAGE>

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 periods ended on said
dates all in conformity with generally accepted accounting
principles consistently applied; and since the date of such
financial statements, there has been no material adverse
change in the business, condition or prospects, financial or
otherwise, of Holdings and its Subsidiaries taken as a
whole;

(d) there are no suits, investigations or
proceedings pending or, to the best of their knowledge,
threatened, against or affecting Holdings or its
Subsidiaries which, if adversely determined, would in the
aggregate have a material adverse effect on the financial
condition, business or prospects of Holdings and its
Subsidiaries taken as a whole;

(e) Holdings and its Subsidiaries have good
record and marketable title in fee simple to, or valid and
subsisting leasehold interests in, all their respective real
properties, and good title to all their respective other
properties, reflected on the financial statements of
Holdings and its Subsidiaries, referred to in paragraph (c)
above, except for property disposed of in the ordinary
course of business, and none of such properties or documents
of title relating to such properties are subject to any
Lien, except Liens for taxes not yet due and Liens which
will not materially interfere with the occupation, use,
marketability and enjoyment of Holdings and its Subsidiaries
of such properties and assets in the normal course of
business of Holdings and its Subsidiaries taken as a whole;

(f) Holdings and its Subsidiaries have filed all
tax returns required to be filed and paid all taxes due or
assessed indicated thereon, including interest and
penalties, except for taxes which are being contested in
good faith and by appropriate proceedings, and for which
Holdings and its Subsidiaries have made adequate reserves on
the books of Holdings and its Subsidiaries;

<PAGE>

condition exists or event or transaction has occurred with
respect to any Pension Plan which could reasonably be
expected to result in civil or criminal liability, fine or
penalty to any Governmental Authority or any participant or
beneficiary in excess of $1,000,000. Neither of the
Borrowers nor any member of the Controlled Group has
incurred or reasonably expects to incur withdrawal liability
to Multiemployer Plans in an aggregate amount exceeding
$5,000,000, and the Borrowers and all members of the
Controlled Group would not become subject to any liability
in excess of $5,000,000 if the Borrowers and all members of
the Controlled Group were to withdraw completely from all
Multiemployer Plans as of the date hereof. No action has
been taken with respect to a Pension Plan which could result
in the requirement that either Borrower or any other member
of the Controlled Group furnish a bond or other security to
the PBGC or such Pension Plan;

(h) neither Borrower is engaged principally, or
as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System), and the
purposes for which the Loan will be used will not be
prohibited by or otherwise violate Regulation U;

(i) 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
rule or regulation of any Governmental Authority in a manner
which when taken together with all other such violations,
could have a materially adverse effect upon the financial
position or results of operations of Holdings and its
Subsidiaries taken as a whole; and Holdings and its
Subsidiaries have attained all material consents and
approvals of Governmental Authorities required to conduct
their respective businesses as they are presently operated
and such consents and approvals are final and not subject to
review upon appeal or under any pending or threatened
adverse proceeding;

(j) the outstanding stock of Holdings and its
Subsidiaries has been duly issued and is fully paid and
nonassessable;

(k) no event has occurred or failed to occur
which has not been remedied, cured or waived, the occurrence
or non-occurrence of which constitutes, or which with the
giving of notice or the passage of time or both would
constitute, (i) an Event of Default under this Agreement or
(ii) a default under any other agreement material to the
business of Holdings and its Subsidiaries taken as a whole

<PAGE>

to which Holdings or any of such Subsidiaries is a party or
by which Holdings or any of such Subsidiaries or any of
their respective properties may be bound; and

(l) to the best of their knowledge, all written
information provided by Holdings and its Subsidiaries to the
Bank in connection with this Agreement, and/or the Loans is
complete and correct in all material respects.

Section 10. Affirmative Covenants. Holdings
---------------------
(and, where applicable, Sotheby's) agrees that so long as
any commitment shall be outstanding hereunder:

10.01. Financial Statements. It will furnish the
--------------------
Bank:

(a) within ninety (90) days after the end of each
fiscal year of Holdings, a consolidated balance sheet of
Holdings and its Subsidiaries at the end of such fiscal
year, the related financial statements of income and
operations and changes in financial position and of
shareholder's equity for such year, all prepared in
accordance with generally accepted accounting principles
audited by and with the opinion of independent public
accountants reasonably satisfactory to the Bank;

(b) within sixty (60) days after the end of the
first, second and third quarter of each fiscal year of
Holdings, a consolidated balance sheet of Holdings and its
Subsidiaries at the end of such quarters and the related
statements of income for such periods, all prepared in
accordance with generally accepted accounting principles
and certified by the chief financial officer of Holdings;

(c) within ninety (90) days after the end of each
fiscal year, a certificate signed by a Responsible Officer
of Holdings stating whether or not Holdings is in compliance
with subsections 11.01, 11.03, 11.04, 11.05, 11.06, 11.07
and 11.08; and

(d) promptly following request therefor, such
further information regarding the business affairs and
financial condition of Holdings and its Subsidiaries as the
Bank may reasonably require.

<PAGE>

and its Subsidiaries at the end of such year or quarterly
period, as the case may be, all in conformity with generally
accepted accounting principles consistently applied and
accounting practices standard for the business of Holdings
and its Subsidiaries, and (ii) such Responsible Officer has
no knowledge, except as specifically stated, of an Event of
Default (or event which with notice or the passage of time,
or both, would constitute an Event of Default). The
financial statements to be furnished pursuant to clause (a)
above shall be accompanied by a statement of said public
accountants certifying the same to the effect that no Event
of Default (or event which with notice or the passage of
time, or both, would constitute an Event of Default)
arising by virtue of a breach of any of the covenants
contained in subsections 10.04, 11.03, 11.04, 11.05 and
11.07 was discovered to have occurred and to be continuing
or, if such an event was so discovered, stating the nature
thereof. The Bank and its agents and representatives shall
use their respective best efforts in the ordinary course of
business to keep the information provided hereunder
confidential and shall use their respective best efforts in
the ordinary course of business to prevent the disclosure of
such information to any person (other than the Bank's
accountants, auditors, other persons which may become
participants pursuant to Section 13.08 or legal counsel),
without obtaining the prior written consent of Holdings
(which consent shall not be unreasonably withheld).

10.02. Insurance. It shall, and shall cause each
---------
of its Subsidiaries to, maintain in respect of its assets
and the assets of its 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 national
reputation.

10.03. Maintain Business. Except as provided in
-----------------
Section 11.02 hereof, it shall, and shall cause each of its
Subsidiaries (other than York) to, continue to engage in the
same type of business as it is presently engaged in, and
preserve (i) the corporate existence and good standing of
itself and of Sotheby's and (ii) all its material rights,
privileges and franchises necessary and desirable in the
normal conduct of its business.

10.04. Taxes and Claims. It shall, and shall
----------------
cause each of its Subsidiaries to pay and discharge (i) all
taxes, assessments and government charges or levies imposed
on it or its income or profits or any of its properties
prior to the date in which penalties attach thereto and
(ii) all lawful claims which, if unpaid, might cause a lien

<PAGE>

or charge to be created against any of its properties,
except any such tax, assessment, charge or levy the payment
of which is being contested in good faith by appropriate
proceedings and for which it has made adequate reserves on
its books.

10.05. Compliance with Laws. It shall, and shall
--------------------
cause each of its Subsidiaries to, 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 appropriate proceedings, provided however, that such
contest will not cause material harm to any Subsidiary if
Holdings or such Subsidiary shall fail to prevail in such
contest.

10.06. Notices. It shall furnish to the Bank a
-------
copy 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 would materially and adversely affect the
business and property of Holdings and its Subsidiaries taken
as a whole, (ii) the occurrence of any material default by
Holdings or any of its Subsidiaries under any other material
agreement to which Holdings or any of its Subsidiaries is a
party and (iii) 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 (iv) any material
change in SFS's operating procedures relating to the Client
Loan Program.

10.07. Payments of Certain Taxes by Holdings.
-------------------------------------
Whether or not the Loans shall be consummated, it shall,
within fifteen (15) days after the Bank's demand therefor,
pay, and save the Bank harmless against, any and all
liability with respect to amounts payable as a result of (i)
any taxes (other than franchise and income taxes relating
solely to interest payments, fees and premiums hereunder and
payments made to the Bank under Section 6.05) imposed which
may be determined to be payable in connection with the
execution or enforcement of the Notes, this Agreement or any
other document executed in connection therewith or herewith,
or the acquisition by or delivery to the Bank of the Notes,
this Agreement or any other document executed in connection

<PAGE>

therewith or herewith, or any modification, amendment or
alteration, of the terms or provisions of the Notes, this
Agreement or any other document executed in connection
therewith or herewith, (ii) any interest or penalties
resulting from any delays in paying any of such liabilities
or taxes, and (iii) any income taxes in respect of any
reimbursement by Holdings hereunder. The obligations of
Holdings under this Section 10.07 shall survive the payment
of the Notes.

10.08. Inspection. It shall give, and shall
----------
cause each of its Subsidiaries to give, upon the request of
the Bank, any representative of the Bank access during
normal business hours to inspect, and permit such
representative to inspect, all properties belonging to it.
The Bank and representatives shall use their respective best
efforts in the ordinary course of its business to keep the
information acquired pursuant to this Section 10.08
confidential and shall use their respective best efforts in
the ordinary course of business to prevent the disclosure of
such information to any person (other than the Bank's
accountants, auditors, other persons which may become
participants pursuant to Section 13.08 or legal counsel
hereunder), without obtaining the prior written consent of
Holdings (which consent shall not be unreasonably withheld).

10.09. Authorizations. It shall, and shall cause
--------------
each of its Subsidiaries to obtain at any time and from time
to time (and, once obtained, to maintain) all material
authorizations, licenses, consents or approvals as shall now
or hereafter be necessary or desirable in the reasonable
opinion of the Bank under applicable law or regulation in
connection with the making and performance of this Agreement
and the Notes by the Borrowers, and will promptly furnish a
copy thereof to the Bank.

Section 11. Negative Covenants. Except as set
------------------
forth in Section 11.09, Holdings (and where applicable,
Sotheby's) agrees that so long as any commitment shall be
outstanding hereunder:

<PAGE>

the conduct of its business or the ownership of its assets,
which were not incurred in connection with the borrowing of
money or the obtaining of advances or credit, and which do
not in the aggregate materially detract from the value of
its assets or materially impair the use thereof in the
operation of the business of Holdings and its Subsidiaries
taken as a whole; and (iv) Liens secured by accounts
receivable, such accounts receivable not to exceed
$25,000,000 in the aggregate.

11.02. Merger, Consolidation, Etc. Neither
--------------------------
Holdings nor any of its Subsidiaries will merge or
consolidate with any other corporation, except that (i) any
Subsidiary may merge or consolidate with, or liquidate
into, Holdings (provided that Holdings shall be the
continuing or surviving corporation) or with any one or
more other Subsidiaries, and (ii) Holdings and/or any of its
Subsidiaries may change their state of incorporation to
another state in the United States of America, except
Louisiana.

11.03. Limitation on Indebtedness. Neither
--------------------------
Holdings nor any of its Subsidiaries shall create incur,
assume or suffer to exist any Indebtedness in excess of 200%
of Consolidated Tangible Net Worth; provided, however, that
Indebtedness which is subordinated to the Loans and is
acceptable to the Bank shall not be deemed to be
Indebtedness under this Section 11.03.

11.04. Times Interest Earned Ratio. Holdings
---------------------------
will not permit Consolidated Earnings Before Interest and
Taxes with respect to any four consecutive quarters to be
less than the product of 2.0 times Interest Expense for such
four consecutive quarters.

11.05. Tangible Net Worth. On and after December
------------------
31, 1990, Holdings will not at the end of any fiscal quarter
permit Consolidated Tangible Net Worth to be less than an
amount equal to the sum of (a) $110,000,000 and (b)
$10,000,000 times the number of years which have elapsed
since December 31, 1990, as of the December 31 immediately
preceding the date of determination of such amount (unless
the date of determination is December 31 in which case such
December shall be used to determine the number of years
which have elapsed).

11.06. Disposition of Assets, Etc. Holdings
--------------------------
shall at all times hold, directly or indirectly, 100% of the
capital stock of each of the Subsidiaries, except Acquavella
Modern Art, Parke & Co. Limited, Parke & Co. Investments
Limited and Lexbourne Limited and except that Sotheby's may

<PAGE>

dispose of the capital stock of York pursuant to any pledge
agreement permitted by Section 11.09.

11.07. Compliance with ERISA. Holdings will not,
---------------------
and will not permit any other member of the Controlled Group
or any other party to (a) terminate any Pension Plan (other
than a standard termination as defined in section 4041(b) of
ERISA for which a commitment to make sufficient is not
required, (b) fail to make a required contribution to any
Pension Plan (i) if such failure would be sufficient to give
rise to a lien under section 302(f) of ERISA on any assets
of the Borrowers or (ii) which, when combined with past due
required contributions to all other Pension Plans at that
time, would exceed $5,000,000, (c) take any action with
respect to a Pension Plan which could result in the
requirement that any Borrower or any other member of the
Controlled Group furnish a bond or other security to the
PBGC or such Pension Plan, (d) take any action with respect
to any Pension Plan which could reasonably be expected to
result in the incurrence by any Borrower of any civil or
criminal liability, fine or penalty to any Governmental
Authority or any participant or beneficiary in excess of
$1,000,000 or (e) completely or partially withdraw from one
or more Multiemployer Plans where the aggregate amount of
the outstanding withdrawal liability incurred with respect
to all Multiemployer Plans could reasonably be expected to
exceed $5,000,000.

11.08. Capital Expenditures. Holdings will not
--------------------
permit the aggregate capital expenditures of Holdings and
its Subsidiaries to exceed $30,000,000 in any fiscal year.

11.09. Limitation on Negative Covenants.
--------------------------------
Notwithstanding any of the foregoing provisions of this
Section 11, Sotheby's and York may take any and all actions
necessary or desirable to develop the premises located at
1334 York Avenue , Borough of Manhattan, New York City, New
York (the "Premises") in any manner whatsoever (including,
specifically, exclusively and with limitation, in the case
of Sotheby's only) as follows: (a) Sotheby's may (i)
exchange its current lease of the Premises (the "Lease") for
an office condominium in the Premises, provided that
Sotheby's pays no additional consideration for such
condominium (other than annual common area maintenance fees
which shall not be in excess of $1,031,000 as adjusted for
inflation) and the space covered by such condominium is at
least as large as the space covered by the Lease, (ii)
pledge or mortgage the capital stock, assets and/or income
of York and may allow such pledge or mortgage to be
exercised or foreclosed by the pledgee or mortgagee thereof,
(iii) may give a nonrecourse guaranty in favor of a
corporation formed in connection with the development and

<PAGE>

financing of the Premises (the "Project Corporation"),
provided that the liability of Sotheby's on such guaranty is
limited to the stock of York, (iv) subordinate the Lease to
any mortgages, provided that a nondisturbance agreement,
reasonably satisfactory to the Bank, shall have been entered
into, and/or place a lien on the Lease in a form reasonably
satisfactory to the Bank, (v) grant easements allowing
access to its premises provided such easements do not
materially interfere with the conduct of Sotheby's business,
(vi) indemnify York and the Project Corporation for all
liability directly incurred by York or the Project
Corporation as result of (a) the failure by Sotheby's to
complete renovations of Sotheby's portion of the Premises
and the completion of such renovations by York and/or the
Project Corporation, and (b) any uninsured personal injury
or property damage suffered by York or the Project
Corporation or any employee or contractor of York or the
Project Corporation which is caused by Sotheby's or any
contractor hired by Sotheby's to complete such renovation
and (vii) authorize York and/or the Project Corporation to
enter into and perform its obligations with respect to the
Premises, provided neither Holdings nor any Subsidiary,
other than York, incurs any liability with respect thereto
other than as provided in this Section 11.09, and (b)
whether or not permitted pursuant to Section 11, York may
take any and all actions necessary or desirable, including,
without limitation, exercising options, borrowing funds,
developing property and constructing structures, granting
liens, making loans, giving guarantees and indemnities,
paying fees and purchasing and selling property including,
without limitation, all or any portion of the Premises (or
any interest therein) to develop, construct, market and sell
the Premises (or any portion thereof or interest therein in
the case of any sale) provided, however, that the maximum
liability of Holdings and its Subsidiaries, other than York
being incurred in connection with the Premises, is limited
to the Lease and the equity of York held by Sotheby's.

Section 12. Default.
-------

12.01. Events of Default. If any one or more of
-----------------
the following events (each of which shall be an "Event of
Default") shall occur while any commitment is outstanding:

(a) either Borrower shall fail to pay to the Bank
------
any principal amount, interest, fee or other sum when due
hereunder or under any Letter of Credit Agreement; or

(b) any material representation or warranty made
or deemed to have been made by either Borrower herein or in
any statement or certificate furnished by or on behalf of
either Borrower in connection with this Agreement or under

<PAGE>

any letter of Credit Agreement shall prove to have been
incorrect, in any material respect, when made or deemed to
have been made; or

(c) Holdings (or, where applicable, Sotheby's)
shall fail to observe any of the agreements contained in
Section 10.02, 10.03, 10.05, 10.06, 10.07, 10.08 and Section
11 and such failure shall continue unremedied for a period
of ten (10) consecutive days from the date on which Holdings
knows or should have known of such failure; or

(d) either Borrower shall fail to observe any
other material agreement contained in this Agreement or
under any Letter of Credit Agreement and such failure shall
continue unremedied for a period of thirty (30) consecutive
days from the date on which such Borrower knows or should
have known of such failure, or in any case where such
observance cannot with due diligence be completed within a
thirty (30) day period, if such Borrower shall not commence
within said thirty (30) day period and thereafter diligently
prosecute to completion all action required to remedy the
same; or

(e) either Borrower shall default on any payment
of principal or interest due and owing on any other
obligation for borrowed money greater than $2,000,000 beyond
any period of grace provided with respect thereto, or
default in the performance or observance of any other
agreement, term or condition contained in any agreement
under which such obligation is created, which default
(either monetary or otherwise) results in the acceleration
of such indebtedness; or

(f) a judgment or judgments for the payment of
money in excess of $5,000,000 in the aggregate shall have
been rendered against either Borrower, and the same shall
have remained unsatisfied and in effect, without stay of
execution, for any period of sixty (60) consecutive days; or

(g) either Borrower shall (i) apply for or
consent to the appointment of, or the taking of possession
by, a receiver, custodian, trustee, administrator or
liquidator of itself or of all or a substantial portion of
its property, (ii) admit in writing its inability, or be
generally unable or deemed unable under any applicable law
(as the same may be amended from time to time), to pay its
debts as such debts become due or otherwise becomes or is
deemed to be insolvent, (iii) make a general assignment for
the benefit of its creditors or composition or arrangement
with said creditors (or any class of such creditors), (iv)
place itself or allow itself to be placed, voluntarily or
involuntarily, under the protection of the law of any

<PAGE>

jurisdiction relating to bankruptcy, insolvency,
reorganization, winding-up or composition or adjustment of
debts, or (v) take any corporate action for the purpose of
effecting any of the foregoing; or

(h) a proceeding or case shall be commenced in
any court of competent jurisdiction, seeking (i) the
liquidation, reorganization, dissolution, winding-up, or
composition or readjustment of debts, of either Borrower,
(ii) the appointment of a trustee, receiver, custodian,
liquidator, administrator or the like of either Borrower or
of all or a substantial portion of its assets, (iii) similar
relief in respect of either Borrower under any law relating
to bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts, without the consent of
such Borrower, and such proceeding or case shall continue
undismissed for a period of one hundred and twenty (120)
days, or an order, judgment or decree approving or ordering
any of the foregoing shall be entered and continue unstayed
and in effect for a period of sixty (60) days, or an order
for relief or other legal instrument of similar effect
against such Borrower shall be entered in an involuntary
case under such law and shall continue for sixty (60) days ;
or

(i) all or a substantial portion of the property
of either Borrower shall have been condemned, seized or
otherwise appropriated, or custody or control of such
property shall have been assumed by any court or
governmental agency of competent jurisdiction, and such
property shall have been retained for a period of thirty
(30) consecutive days; or

(j) the institution of any formal action by any
Borrower or any other person to terminate a Pension Plan if
as a result of such termination any of the Borrowers could
be required to make a contribution to such Pension Plan, or
could incur a liability or obligation to such Pension Plan,
in excess of $5,000,000; a contribution failure occurs with
respect to any Pension Plan sufficient to give rise to a
lien under section 302(f) of ERISA on any assets of the
Borrowers; or any Borrower or other member of the Controlled
Group receives notice from the sponsor of a Multiemployer
Plan that (i) it has completely or partially withdrawn from
one or more Multiemployer Plans and the aggregate amount of
the outstanding withdrawal liability incurred with respect
to all Multiemployer Plans could reasonably be expected to
exceed $5,000,000 or (ii) such Multiemployer Plan has or
will be commencing a proceeding to collect contributions
from any Borrower or any member of the Controlled Group in
an amount in excess of $5,000,000; or an action with respect
to any Pension Plan occurs which could reasonably be

<PAGE>

expected to result in the incurrence by any Borrower of any
civil or criminal liability, fine or penalty to any
Governmental Authority or any participant or beneficiary in
excess of $1,000,000.

All Borrowers shall pay interest at the Default Rate while
such Event of Default exists and the Bank may, other than
upon the occurrence of an event described in clause (g) or
(h) above, by notice to Holdings, cancel the Loans and the
Commitment and/or declare the full unpaid principal amount
outstanding hereunder and under the Letter of Credit
Agreements, accrued interest hereunder (including interest
payable at the Default Rate) and all other sums, penalties
and charges owing hereunder and under the Letter of Credit
Agreements (including, but not limited to, Section 6) to be
immediately due and payable, whereupon such amounts shall be
immediately due and payable, without presentment, demand,
protest or other formalities of any kind, all of which are
hereby expressly waived by the Borrowers. In the case of
the occurrence of an event referred to in clause (g) or (h)
above, the Loans and the Commitment of the Bank shall be
automatically canceled and the full unpaid principal amount
outstanding hereunder and under the Letter of Credit
Agreements, accrued interest hereunder and under the Letter
of Credit Agreements (including interest payable at the
Default Rate) and all other sums, penalties and charges
owing hereunder (including but not limited to Section 6)
shall automatically become immediately due and payable,
without presentment, demand, protest or other formalities of
any kind, all of which are hereby expressly waived by the
Borrowers. Upon the occurrence of any Event of Default, the
Borrowers shall immediately upon demand by Bank deposit with
Bank cash collateral in the amount equal to the maximum
amount available to be drawn at any time under any Letter of
Credit then outstanding.

Section 13. Miscellaneous.
-------------

13.01. Amendment and Waiver. No amendment,
--------------------
modification or waiver of any provision of the Loan
Documents, nor consent to any departure by either Borrower
therefrom, shall in any event be effective unless the same
shall be in writing and signed by the Bank and the
Borrowers.

13.02. Notices, Etc. Except as otherwise
------------
provided herein, notices, approvals and other communications
required hereunder or under any Loan Document shall be in
writing and shall be given to the Bank and the relevant
Borrower by ordinary mail, telex or addressed to:

<PAGE>

The Borrowers:

c/o Sotheby's Service Corp.
301 Merritt 7
Norwalk, CT, 06851
Attention: Kevin A. Bousquette
Facsimile: (203) 847-4606

The Bank:

Credit Suisse
Tower 49
12 East 49th Street
New York, NY 10017
Attn: Robert B. Potter
Corporate Banking
Facsimile: (212) 238-5439

Notices, approvals and other communications to the Bank and
the Borrowers shall be effective upon receipt.

13.03. Successors and Assigns. Subject to
----------------------
Section 13.08, this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their
respective successors and permitted assigns except that no
Borrower may assign its rights or obligations hereunder or
under its Notes or any Letter of Credit Agreement without
the prior consent of the Bank. Any assignment of this
Agreement to any person shall also be deemed to be an
assignment of the Notes to such person.

13.04. Survival. All representations and
--------
warranties made herein shall survive the making of the Loans
hereunder.

13.05. Execution in Counterparts. This Agreement
-------------------------
may be executed in one or more counterparts, each of which,
when executed and delivered, shall be an original and all of
which together shall constitute one and the same instrument.

13.06. Governing Law. This Agreement shall be
-------------
deemed to have been made under the internal laws in effect
in the State of New York without giving effect to principles
of choice of law, and shall be governed by, and construed
and enforced in accordance with, such laws; provided that
the foregoing is not intended to limit the maximum rate of
interest which may be charged or collected by the Bank
hereunder if, under the laws applicable to it, the Bank may
charge or collect such interest at a higher rate than is
permissible under such laws of the State of New York.

<PAGE>

13.07. Usury. Anything herein to the contrary
-----
notwithstanding, the obligations of the Borrowers under this
Agreement shall be subject to the limitation that payments
of interest shall not be required to the extent that
receipt of any such payment by the Bank would be contrary to
provisions of law applicable to the Bank which limits the
maximum rate of interest which may be charged or collected
by the Bank.

13.08. Participation, Etc. This Agreement shall
------------------
be binding upon, and shall inure to the benefit of, the
Borrowers, the Bank and their respective successors and
assigns, except that the Borrowers may not assign or
transfer their respective rights or obligations hereunder.
Provided no costs are incurred by the Borrowers solely as a
result of such assignment or participation, the Bank may
assign (in an amount not less than $5,000,000), or sell
participation in, all or any part of any Loan to another
bank (that must have a Moody's bond rating of BBB or
better), in which event (a) in the case of an assignment
upon notice thereof by the Bank to Holdings, the assignee
shall have to the extent of such assignment (unless
otherwise provided therein), the same rights, benefits and
obligations as it would have if it were a Bank hereunder;
and (b) in the case of a participation, the participant
shall have no rights under the Loan Documents and all
amounts payable by the Borrowers under Section 3 shall be
determined as if the Bank has not sold such participation.
The agreement executed by the Bank in favor of the
participant shall not give the participant the right to
require the Bank to take or omit to take any action
hereunder except action directly relating to (i) the
extension of a payment date with respect to any portion of
the principal of or interest on any amount outstanding
hereunder allocated to such participant, (ii) the reduction
of the principal amount outstanding hereunder or (iii) the
reduction of the rate of interest payable on such amount or
any amount of fees payable hereunder to a rate or amount, as
the case may be, below that which the participant is
entitled to receive under its agreement with the Bank. The
Bank may furnish any information concerning the Borrowers in
the possession of the Bank from time to time to assignees
and participants (including prospective or otherwise) which
agree in writing to maintain the confidentiality of such
information which is non-public.

13.09. Submission of Jurisdiction. Each Borrower
--------------------------
hereby submits to the nonexclusive jurisdiction of the
United States District Court for the Southern District of
New York and of any New York State Court sitting in New York
City for purposes of all legal proceedings arising out of or

<PAGE>

relating to this Agreement or the transactions contemplated
hereby.

13.10. Merger. Unless otherwise specified in any
------
document, this Agreement and the other documents referred to
herein constitute the sole agreement between the Borrowers
and the Bank with respect to the Loans hereunder.

IN WITNESS WHEREOF, the parties hereto have caused this
REVOLVING CREDIT AGREEMENT to be duly executed as of the
first day of December 1993.

SOTHEBY'S HOLDINGS, INC.

By: /s/
---------------------------------

SOTHEBY'S, INC.

By: /s/
--------------------------------

CREDIT SUISSE

By: /s/
--------------------------------

By:
--------------------------------

EXHIBIT 10(y)

April 5, 1989

William and Elizabeth Ruprecht
c/o Sotheby's, Inc.
1334 York Avenue
New York, N.Y. 10021

RE: Unit 6A, 119 East 84th Street, New York, NY

Dear Mr. and Mrs. Ruprecht:

You have requested a loan in the face amount of three hundred thousand
($300,000.00) dollars (the "Loan") the proceeds of which are to be used by
you in connection with the refinance of unit 6A in the cooperative building
at 119 East 84th Street, New York, NY (the "Property"). Sotheby's, Inc.
("Sotheby's") has approved your application for the Loan on the following
terms and conditions:

The amount of the Loan shall be $300,000.00 consisting of two portions:

1. The first portion (the "First Portion"), in the amount of
$100,000.00, shall be by way of a direct loan arranged by Sotheby's from
from Chase Manhattan Bank, N.A. or another institutional lender as Sotheby's
shall select, which loan shall bear interest at the rate equal to the "prime"
rate as announced, from time to time, by Chase Manhattan Bank, N.A. or the
alternate institutional lender as its "prime" rate, which rate is not
intended to be the lowest rate at which that lender makes loans to its
customers. To induce Chase to extend that loan to you, Sotheby's agrees to
guarantee your prompt payment, when due, of that $100,000.00 portion of the
Loan and you agree to execute whatever documents Chase or the alternate
institutional lender shall require to be executed by you in connection with
that loan.

2. The second portion, in the amount of $200,000.00 (the "Second
Portion"), shall be loaned to you directly by Sotheby's and shall bear interest
on the unpaid balance at a rate equal to the "prime" rate as announced, from
time to time, by the Chase Manhattan Bank, N.A. The rate of interest will be
increased or decreased, without limitation, every three (3) months during the
term of the Loan, depending on fluctuations in Chase Manhattan Bank's "prime"
lending rate. Adjustments to the interest rate will be made on the first of
April, July, September, and December of each year.

3. Payments of accrued interest and principal on the entire Loan shall
be repayable by you as follows:

On the first day of the first calendar month following the closing
of the Loan and on the first day of each month thereafter payments of interest
only in connection with the First Portion shall be due and payable. On the first
of April of each year one-thirtieth (1/30th) of the principal amount of the
First Portion shall be due and payable.

On the first of April of each year one-thirtieth (1/30th) of the
principal amount of the Second Portion and all accrued but unpaid interest shall
be due and payable.

You will irrevocably assign unto Sotheby's any and all right you may
have to receive any future cash bonuses from Sotheby's earned by you in the
course of your employment and you will agree that Sotheby's may apply the full
amount of those bonuses against the unpaid balance of the Loan. Any such payment
shall be applied first to accrued but unpaid interest and then to reduce the
principal indebtedness.

<PAGE>

4. The full amount of the Loan shall be due and payable to Sotheby's,
at its option, on the earlier to occur of the following events:

(i) Ninety (90) days after the date upon which your employment
relationship with Sotheby's is terminated, for any reason, including your
retirement or involuntary termination from employment;

(ii) upon the sale or transfer of the Property;

(iv) on the fifteenth (15th) anniversary of the closing of the Loan;
or

(v) six (6) months after notice for any reason from Sotheby's.

5. As security for the Loan (both portions), you shall provide
Sotheby's with a primary lien (security agreement) upon the (621) shares of the
common stock of 119 East 84th Corp. and the proprietary lease allocated to unit
6A at 119 East 84th Street, New York, NY, subordinate to no other lien. The
obligation will also be evidenced by a promissory note executed by you.

6. At the closing of this refinance of the Property, you will be
required to pay the costs and disbursements in connection with this transaction,
as well as any lien search, filing, recording fees (if any) or any other
charges incurred by Sotheby's in connection therewith.

7. You must personally attend the closing and execute all of the loan
documents presented to you by Sotheby's counsel. All loan documents shall be
in the form and substance satisfactory to Sotheby's and its designated counsel
and the closing of the Loan shall depend upon Sotheby's counsel's complete
satisfaction with the legal or title matters with respect to the Loan and the
Property.

8. Sotheby's may, at its sole option, refuse to close the Loan and
may cancel this commitment for any one or more of the following reasons:

(i) if the Property is altered or damaged in any way;

(ii) if your financial status becomes changed between the date of this
commitment and the date of the closing;

(iii) if there be a material diminution in value of the collateral;

(iv) if the title examination, or the appraisal that Sotheby's may
order on the Property is not acceptable to Sotheby's.

9. If the terms of this commitment are satisfactory would you please
sign one of the enclosed copies and return it to Susan Garbrecht, Senior Vice
President, Director of Human Resources.

Ms. Garbrecht will thereupon give closing instructions to Stephen M.
Pollan, our closing attorney. Mr. Pollan's address is 404 East 79th Street,
New York, New York 10021.

This commitment will remain in full force and effect for thirty (30) days
from the date hereof unless otherwise extended by our mutual agreement.

Very truly yours,

Sotheby's, Inc.

By: /s/ Diana D. Brooks
------------------------
Diana D. Brooks,
President

AGREED TO AND ACCEPTED:

/s/ William Ruprecht
- -----------------------
William Ruprecht

/s/ Elizabeth Ruprecht
- -----------------------
Elizabeth Ruprecht

COVER:

1993 ANNUAL REPORT

SOTHEBY'S
FOUNDED 1744

BACK COVER:

THE WORLD'S LEADING FINE ART AUCTION HOUSE

TABLE OF CONTENTS

1 Letter to Shareholders

THE YEAR IN REVIEW

4 Impressionist and Modern Art

6 Jewelry
8 Other Categories

10 Private Collections
12 The von Thurn und Taxis Collection

13 New Buyers and New Collecting Categories
14 Sotheby's Specialists

16 Our Worldwide Reach (offices and departments)

FINANCIALS

17 Selected Financial Data

18 Management's Discussion and Analysis of
Results of Operations and Financial Condition

24 Consolidated Balance Sheets

25 Consolidated Statements of Income
26 Consolidated Statement of Changes in

Shareholders' Equity
27 Consolidated Statements of Cash Flows

28 Notes to Consolidated Financial Statements
38 Independent Auditors' Report

38 Report of Management
38 Audit and Compensation Committee

Chairman's Letter

39 Shareholder Information
40 Management

<PAGE>

FINANCIAL HIGHLIGHTS

Sotheby's Holdings, Inc. and Subsidiaries

Percent
Increase
Year ended December 31, 1993 1992 (Decrease)
- ----------------------------------------------------------------------------

(Thousands of dollars)
Financial Data

Auction sales $ 1,325,334 $ 1,131,601 17.1%
Auction revenues 234,972 200,883 17.0
Income before taxes 32,157 6,491 395.4
Net income 19,294 3,960 387.2
Cash and cash equivalents 91,840 85,703 7.2

Total debt* 38,583 90,860 (57.5)
Total assets 577,871 595,399 (2.9)
Shareholders' equity 194,632 198,195 (1.8)
Return on average equity 9.8% 1.8% 444.4

Per Share Data
Earnings per share $ 0.35 $ 0.07 400.0%
Cash dividends paid per share 0.42 0.60 (30.0)
Market price per share-
year end close 15.38 12.25 25.6

*Principally commercial paper
- -----------------------------

PAGE 1-3

TO OUR SHAREHOLDERS

This has been a year of recovery for Sotheby's. Worldwide auction sales are up
17% (31% if measured in pounds sterling), while earnings increased from $4.0
million in 1992 to $19.3 million in 1993. The growth in earnings is due largely
to the increase in our buyer's premium, an initiative introduced by Sotheby's
that became effective in January of 1993, as well as to the increase in the
volume of auction sales. While we saw marked improvements in many of the 70
collecting categories we offer, sales in two major markets-impressionist and
modern art and jewelry-increased by $188 million, compared to the total
increase of $194 million in Sotheby's worldwide sales. Additionally, new sales
categories introduced in 1993 brought new buyers into several sectors of the
market, offering promising signs for future growth.

In November Michael L. Ainslie announced his decision to step down from his
position as President and Chief Executive Officer of Sotheby's Holdings, Inc.,
effective March 31, 1994. He remains a Director of the Company, a member of
the Executive Committee of the Board Of Directors and Chairman of Sotheby's
International Realty. Mr. Ainslie led the Company

<PAGE>

over the past decade, strengthening its worldwide position in the auction
business, improving the business discipline of the organization, returning the
Company to solid profitability and putting into place a strong management team.
We are very appreciative of these achievements. Effective April 1, 1994,
Diana D. Brooks becomes President and Chief Executive Officer of Sotheby's
Holdings, Inc. Dede has had a remarkable 14-year career at Sotheby's. Since
her appointment in 1993 as President and Chief Executive Officer of
Sotheby's worldwide auction operations, she has made a number of important
appointments to the senior management of the worldwide auction company which
will provide excellent leadership as we enter an exciting new era of growth.

This worldwide management team includes Kevin A. Bousquette, who has been
appointed Chief Financial Officer of Sotheby's Holdings, Inc. Kevin's strong
background in key financial disciplines such as strategic planning, treasury,
taxes and accounting will be enormously beneficial to Sotheby's. John L.
Marion remains Chairman of Sotheby's North and South America and our Chief
Auctioneer. William F. Ruprecht, who joined Sotheby's in 1980, has been
appointed Managing Director of Sotheby's North and South America. With a
background as worldwide marketing director for Sotheby's, as a specialist
and as an auctioneer, Bill brings to this position a wide range of valuable
experience. Simon de Pury, formerly Deputy Chairman of Sotheby's Europe,
has been promoted to Chairman of Sotheby's Europe. In his new capacity, Simon
will lead our client and business development activities throughout
Europe while remaining Chief European Auctioneer. Henry Wyndham, our new
Chairman of Sotheby's United Kingdom, will be responsible for providing
leadership of all client and business development activities in the United
Kingdom. George Bailey, who has been with Sotheby's for 14 years performing a
variety of functions, including managing our Chester saleroom and more
recently leading our business development team in Europe, has become Managing
Director of Sotheby's Europe. Julian Thompson remains Chairman of
Sotheby's Asia.

During this year we also made two important appointments to our Board of
Directors. We are pleased to welcome Lord Camoys, the Deputy Chairman of
Barclays De Zoete Wedd Holdings Limited, to the new post of Deputy Chairman.
Lord Camoys brings extensive business experience to this newly created post.
We are also delighted that Ambassador Walter J. P. Curley has joined our
Board of Directors. Ambassador Curley served as American Ambassador to France
from 1989-1993 and Ambassador to Ireland from 1975-1977. Mr. Curley has a long
background in finance, having been a partner of John Hay Whitney's at the
venture capital firm of J. H. Whitney & Co. from 1958-1975. His diplomatic
experience and background in finance make him an important addition to our
board.

We are saddened by the death this year of a much-valued member of our advisory
board, The Earl of Westmorland, former Chairman of Sotheby's. During his long
association with us, David Westmorland brought considerable knowledge and wise
counsel and he is greatly missed.

Quality client service around the world was a priority in 1993 and remains an
ongoing goal for Sotheby's. During 1993 we completed important renovations to
our Bond Street Offices in London and to our New York Galleries. Another key
ongoing initiative is continuing enhancement of our worldwide information
systems to facilitate sharing of crucial client and sale information
throughout our international network of specialists.

FINANCIAL HIGHLIGHTS

The improved environment in the art market translated into favorable financial
results for the Company. The 17% increase in auction sales for the year
reflected broad international strength, with sales in North America and
Europe improving by 19% and 18%, respectively.

A NEW INTERNATIONAL MANAGEMENT TEAM BEGINS BUILDING FOR THE FUTURE.

<PAGE>

The improved sales performance translated into net income of $19.3 million
($32.2 million, pre-tax) compared to $4.0 million ($6.5 million, pre-tax)
in 1992. Earnings per share for 1993 were $0.35, compared to $0.07 per share
in 1992, an improvement of $0.28 per share.

Additionally, your Board declared dividends with respect to 1993 which totaled
$0.33 per share. In August the Board adjusted the quarterly dividend rate to
$0.06 per share from $0.15 per share and confirmed a policy of making annual
cash returns to shareholders of up to, but not in excess of, 100% of net
income, consistent with capital requirements.

OUTLOOK

Sotheby's held its first auction-a library of 457 books-on March 11, 1744, and
the Company celebrates its 250th anniversary in 1994. We have begun this
important anniversary year with growing confidence and optimism. A number
of auctions held in early 1994 have performed strongly and so far there has
clearly been an improvement in the breadth and quality of consignments in
several of our important paintings categories, including Impressionist and
Modern art, Contemporary art and Old Master paintings.

A dynamic worldwide management team is in place, the art market recession
appears to be behind us, and we look forward to an exciting and profitable
anniversary year. We fully realize that our position as the world's leading
auction house is only made possible by our outstanding employees around the
world whose expertise, energy and dedication are so essential to our success.
We thank them and we thank you, our shareholders, for your continued support.

(signature)

A. Alfred Taubman
Chairman, Sotheby's Holdings, Inc.

(signature)

Michael L. Ainslie
President and Chief Executive Officer,
Sotheby's Holdings, Inc.

(signature)

Diana D. Brooks
President and Chief Executive Officer Elect,
Sotheby's Holdings, Inc.

ADVISORY BOARD

Giovanni Agnelli

Her Royal Highness
The Infanta
Pilar de Borbon
Duchess of Badajoz

Ann Getty

<PAGE>

Emilio Gioia

Alexis Gregory

Anne Ford Johnson

Sir Quo-Wei Lee

Graham D. Llewellyn

John L. Marion

The Hon. Sir Angus Ogilvy, K.C.V.O.

Carroll Petrie

William Pitt

Mrs. Charles H. Price

Prof. Dr. Werner Schmalenbach

Baron Hans Heinrich
Thyssen-Bornemisza de Kaszon

BOARD OF DIRECTORS

A. Alfred Taubman
Chairman

Max M. Fisher
Vice Chairman

Lord Camoys
Deputy Chairman

Diana D. Brooks
President and Chief
Executive Officer,
Sotheby's Holdings, Inc.

Michael L. Ainslie

Viscount Blakenham
Executive Chairman,
Pearson PLC

Ambassador Walter
J. P. Curley
Chairman,
The French American Foundation

The Rt. Hon.
The Earl of Gowrie
Chairman,
The Arts Council

R. Julian de la M. Thompson
Chairman,
Sotheby's Asia

Leslie H. Wexner
President and Chairman,
The Limited, Inc.

<PAGE>
Pages 4-5

Sotheby's worldwide auction sales in 1993 totaled over $1.3 billion, an
increase of 17% over 1992. Earnings for the year, $19.3 million, also showed
significant improvement. A revival of buyer interest and confidence in
several collecting categories, as well as a rise in the quality of the works
offered, characterized our auctions throughout the year. Overall we sold a
total of 163,000 lots in 1993 compared to 137,000 in 1992, with 88 of
these selling for more than $1 million compared with 70 lots in 1992.
Noteworthy performances came in the two important collecting categories of
Impressionist and Modern art and Jewelry, which together had increased sales
of $188 million. Additionally, a number of other categories also performed
well during 1993. As we begin our 250th anniversary year with a new
world-wide management team in place and the international art market
turning upward, we are confident that Sotheby's will continue its
long-standing role as a leader and innovator.

AMID A BROAD UPSURGE IN AUCTION ACTIVITY, IMPRESSIONIST AND MODERN ART SALES
INCREASED 71 PERCENT.

Perhaps the most dramatic sign of recovery in 1993 came in Sotheby's
worldwide Impressionist and Modern art sales, which rose 71 percent over the
previous year to $258.0 million. These sales were marked by an atmosphere
of intensifying competition among purchasers, particularly for works of
the highest quality coming fresh to the market. The best example of
this came in May when a world record price of $28.6 million was achieved
for Paul Cezanne's Nature Morte: Les Grosses Pommes, marking the first time
since 1990 that any painting had broken the $20 million barrier.

Capping this promising performance, Sotheby's November sales of
Impressionist and Modern art in New York achieved $93.5 million, highlighted
by the Stanley J. Seeger Collection, which brought $32.0 million. This was
the highest sale total for any auction house in this field since 1990
and continued a trend of gradual improvement in Impressionist and Modern
art sales during the preceding 18 months. Atotal of 18 paintings sold
for more than $1 million each in our November auction in New York, including
Matisse's Fatma, La Mulatresse, which sold for $14.3 million. A further sign
of renewed strength in the Impressionist market was seen in our London sales
throughout the year, with established collectors, dealers and new buyers
actively participating.

Pages 6-7

Jewelry also enjoyed great success at Sotheby's in 1993, with sales for the
year surpassing the $200 million mark for the first time in auction history.
Sotheby's holds major jewelry sales in New York, Geneva, St. Moritz
and Hong Kong, and our performance in each of these locales was consistently
strong throughout the year.

Sotheby's successful jewelry sales during 1993 follow a long tradition of
preeminence in this field. Under the leadership of John D. Block in New York
and David Bennett in Geneva, and drawing on our effective approach to
international teamwork, Sotheby's has established the world auction records
for the sale of diamonds, cultured pearls and major colored stones, and it
has conducted the four highest-value jewelry sales in history.

SOTHEBY'S WORLDWIDE JEWELRY SALES PASSED THE $200 MILLION MARK FOR THE
FIRST TIME EVER.

All areas of the jewelry market showed considerable strength in 1993,
including antique and period jewelry, modern and 20th-century jewelry and,
especially, major diamonds and colored stones. The most vivid illustration
of the strength of the jewelry market was provided during an historic
two-day sale in Geneva in November, at which the total of $68.5 million
established a world auction record for any jewelry sale, with ten lots selling
for over $1 million. The highlight of the sale was a spectacular 100.36 carat
diamond which sold for $11.9 million, the second highest price for any stone
sold at auction. As was

<PAGE>

true throughout the year, international dealers from Europe, the United States,
South America, Asia and the Middle East bought actively, as did private
collectors.

Sotheby's winter sale in St. Moritz has become an increasingly important event
in this field, and the 1993 sale total of $23.9 million was the highest ever
there. Jewelry auctions in New York throughout the year were also highly
successful, highlighted by a sale in October which totalled $26.2 million,
with a magnificent cultured pearl necklace bringing $1.2 million.

Pages 8-9

Another encouraging sign in the art market during 1993 was the broad
increase in client participation, with improved sales in a wide spectrum
of collecting categories, both in the fine and decorative arts. Most prominent
were the strong and stable prices achieved in many of our paintings sales.
In addition to Impressionist and Modern paintings, American, Victorian,
19th-Century European and British paintings all saw increased buying
activity this year, and our autumn auctions of Contemporary art
and Old Masters paintings reflected an improvement over the spring auctions.

The November Contemporary art sales in New York brought $21.8 million,
exceeding the spring total of $15.5 million and marking the first time
since the fall of 1989 that auction results in this category exceeded the
pre-sale low estimate. The London Contemporary sales in June and December were
also quite strong, with the June total of $7.3 million the highest there since
June 1991. With major property already consigned for the spring 1994
Contemporary sales, we anticipate continued recovery in this important market.

Other fine arts highlights came in our Old Masters sales, with Canaletto's A
View of Riva Degli Schiavoni, Venice Looking East achieving $2.6 million and a
School of Bruges work entitled Portrait of Jacob Obrecht making $2.4
million, both in New York. In London seven paintings by various artists
depicting the history of the Medici family, owned by Lord Elgin, were
offered as a group and made $2.5 million. In Amsterdam the F. C. Butot
Collection of Old Master paintings and drawings, the single-most comprehensive
group of Dutch Old Masters to have been assembled by a private collector
in Holland since the war, achieved an excellent result of $1.9 million.

SALES IN A BROAD RANGE OF COLLECTING FIELDS, ESPECIALLY PAINTINGS, SHOWED STRONG
IMPROVEMENT IN 1993.

American paintings sales in New York were exceptionally strong during 1993.
The May total of $21.2 million included Childe Hassam's stunning work, A
Room of Flowers, which brought $5.5 million, a record price for American
Impressionism and for the artist. Sales of 19th-Century European paintings were
stronger in 1993. Two Victorian paintings by Sir Lawrence Alma-Tadema
highlighted these auctions on both sides of the Atlantic, with the artist's
Baths of Caracalla fetching $2.5 million in New York and his Caracalla and Geta
making $2.2 million in London. Another Victorian painting, Sir Edward Coley
Burne-Jones' tryptich, The Adoration of the Kings: The Annunciation, brought
$487,800, with the proceeds from the sale funding necessary restoration of the
St. Paul's Brighton Church.

Throughout the year individual works in diverse categories of the decorative
arts achieved strong prices. French furniture and decorations once again had
a fine year, evidenced by our November sale in New York which brought a
total of $7.2 million. English furniture, American furniture,
Antiquities, Books and Manuscripts and Collectibles also fared well.
Among the highlights of the year were a European sculpture entitled The Young
Hercules Reading by the artist Pier Jacopo Alari-Bonalcosi, called Antico,
which made $1.9 million; an Iznik blue and white candlestick which brought
$976,000; a one-page manuscript fragment by Abraham Lincoln, which sold for
$992,500; a photograph by Man Ray, Glass Tears, circa 1930, which made
$193,895; a Pre-Columbian Olmec incised blackware vessel dating from circa
1150--55 B.C., which brought $233,500, establishing a record for a
Pre-Columbian ceramic at auction; a 14th-century blue and white dragon jar,
which fetched $1 million in our 20th

<PAGE>

Anniversary auctions in Hong Kong; and a pair of German Torah finials which
sold for $423,154, a record for Judaica metalwork. These strong results
reaffirmed the demand in the art market for works of the highest quality.

Page 10

Throughout its long history, Sotheby's has offered countless collections of
great diversity. Our very first sale on March 11, 1744, offered a library
of books assembled by an English baronet, and in the intervening
two-and-a-half centuries Sotheby's has become the world's leading auction
house for single-owner sales. In 1993, Sotheby's continued this tradition with
the sale of many outstanding collections, some representing the best of
their kind ever to appear at auction.

A 250-YEAR TRADITION OF OFFERING OUTSTANDING COLLECTIONS CONTINUES.

This was certainly the case with the sale in London of the Greek vases from the
Hirschmann Collection, which was 100% sold and achieved $8.2 million, far
exceeding the estimate of $1.8 million. The Moller Collection of English
furniture and decorations, one of the most celebrated collections of its
kind formed this century, brought $7.2 million, well above estimate. The
library of the late Salman Schocken, representing one of the greatest
collections of early Hebrew books ever assembled, made $1.6 million. A
group of 119 watercolors and oils by the British wildlife artist Archibald
Thorburn, offered by the Thorburn Museum in Cornwall, sold well
above the high estimate, with every lot but one sold. The success of the
auction ensured the survival of the Thorburn Museum.

In New York, Sotheby's major collections in 1993 included an outstanding
private collection of French furniture and decorations offered in November,
which made $12.0 million, one of the highest totals in auction history for
this field. The sale of the Joseph M. Meraux Collection, comprising the
largest and most extensive group of 19th-century clocks ever to appear at
auction, was a triumph, with every one of the 500 lots sold and the total
of $2.7 million doubling the estimate. The Dr. Otto Schafer Collection of
Rembrandt Etchings was offered in New York and made $3.9 million.

page 12-13

New buyers are crucial to the success of our business, and we continue to
seek ways of broadening the auction market to encourage the widest possible
participation. In 1993, we enjoyed extraordinary success in bringing a
great number of new buyers into our salerooms throughout the world. Three
particular events stand out.

House sales, which often take place in charming rural settings, are highly
popular and frequently attract new buyers to the auction market. No
auction ever achieved this more successfully than the spectacular and
elaborate nine-day house sale of selected contents of Schloss St. Emmeram,
the family seat of the Princes von Thurn und Taxis in Regensburg, Bavaria.
The sale was conducted at the request of Her Serene Highness Princess Gloria
von Thurn und Taxis as part of a reorganization of her family affairs
in order to secure the future inheritance of her son, ten-year-old
Prince Albert, following the premature death of her husband, Prince
Johannes, in 1990.

Rarely in its history has Sotheby's organized an auction of such magnitude and
in such an impressive setting. A total of 6,596 lots were listed in the
seven-volume catalogue and included furniture, European works of art, silver,
jewelry, objects of vertu, ceramics and glass, paintings and prints and more
than 75,000 bottles of wine from the cellars of Schloss St. Emmeram. The
Thurn und Taxis house sale was the culmination of 11 months of detailed
planning and dedicated work by a team of 150 employees drawn from Sotheby's
European offices, including personnel from Germany, Holland, Great Britain,
France, Switzerland, Brussels and Austria as well as the United States.
Total attendance for the ten days of public exhibition and nine days of
sales exceeded 48,000 people. For most, it was their first auction experience.
The auction took place in the magnificent saleroom Sotheby's created in the
19th-century riding school at the Schloss. In some of the most competitive
bidding ever witnessed

<PAGE>

at a Sotheby's auction, bids repeatedly exceeded the catalogue estimates.
The total amount raised from this historic sale was $19.3 million, far
exceeding the pre-sale high estimate of $11.6 million.

SOTHEBY'S BROUGHT MANY NEW BUYERS TO THE ART MARKET IN 1993 AND
INTRODUCED NEW COLLECTING FIELDS.

The sale of the Stanley J.Seeger Collection of works by Picasso in New
York was another auction event that brought many new buyers to the
Company in 1993, some of whom might have been considered unlikely
buyers of works by Picasso. Sotheby's marketing strategy to present 88
works by a single artist at one time was vindicated when every one of
the works sold, some bringing many times their estimate. The pre-sale
worldwide marketing effort was intended to create the broadest
possible international competition, and buyers from Zurich, Paris,
London, Mexico, Asia and various parts of the United States competed
fiercely for the Seeger paintings.

Our first-ever sale of Russian space history, which took place in
December in New York, comprised a haunting and spectacular group of
artifacts from the Russian space program. Two space capsules, lunar
rocks, space suits and training suits, diaries and photographs,
celestial globes and a prototype pressure suit for the aborted Soviet
manned lunar program were among the fascinating objects offered.

The sale was preceded by many months of negotiations and planning,
with numerous trips to factories, government ministries and private
homes in Russia, including repeated visits to Star City, the
cosmonauts' training compound. Many of the objects in the sale were
consigned by the cosmonauts themselves or their families, as well as
by the Russian space industries.

The auction of Russian space history successfully inaugurated a new
collecting category, made a total of $6.8 million and brought many new
buyers into our saleroom. While many of these buyers were American,
there was participation from all over the world, as well as
unprecedented media coverage.

pages 14-15

Since our founding in the first half of the 18th century, the growth
and success of our firm has resulted largely from the extraordinary
talents and contributions of our specialists. The art market has
evolved and altered in revolutionary ways since 1744, and the changes
in the last decade have perhaps been the most profound of all.
However, the essential nature of our specialists' work-mastering a
wealth of knowledge in a collecting field and providing the highest
level of personalized service to a diverse clientele-has not
substantially changed since the earliest days of Sotheby's. Through
their scholarship and experience, our specialists all over the world
continue to instill in their clients a sense of loyalty to Sotheby's
that has, in many instances, passed from one generation of collectors
to another.

THE CONTINUITY AND EXPERIENCE OF OUR WORLDWIDE SPECIALIST STAFF IS THE
FOUNDATION OF OUR SUCCESS.

The continuity of our staff has always been essential to our success.
Sotheby's preeminence in the field of Chinese art, for example, dates
back to the 1920s, when the legendary A. J. B. Kiddell began his
59-year career with the firm in London. The legacy of Mr. Kiddell's
long and venerable tenure was the steady growth and strengthening of
Sotheby's worldwide expertise in the various fields of Chinese works of
art, including ceramics, porcelain, paintings, furniture and jadeite
jewelry. Many of our current specialists in these fields were tutored
by Mr. Kiddell.

One of these is Julian Thompson, the Chairman of Sotheby's Asia, who
has given 31 years of distinguished service to Sotheby's. Mr. Thompson
is a recognized authority in Chinese ceramics, a field which has
enjoyed spectacular growth in the past ten years. Mr. Thompson has
ably guided Sotheby's expansion in Asia through the opening of offices
in Taipei, Singapore, Tokyo

<PAGE>

and Seoul, thus enhancing Sotheby's leadership in Asia. He has been
especially prominent in the growth of our sales in Hong Kong, where
in 1993 we celebrated our 20th anniversary.

Felicity Nicholson, the head of Sotheby's Antiquities department in
London, celebrated her 40th anniversary with the firm in 1993 with the
sale of the Hirschmann Collection, reaffirming Sotheby's worldwide
leadership in this field. During the year, she also initiated and
organized the series of lectures held at Sotheby's, "Sheer Pleasure,"
which aided the British Museum Society and the Venice in Peril Fund.

In New York, Robert Woolley and Letitia Roberts both celebrated their
25th anniversary with Sotheby's in 1993. Their contributions to the
firm over the years have been extraordinary. Mr. Woolley is the head of
the Decorative Arts division and a specialist in Russian works of art,
and one of our senior auctioneers. He is also renowned as the leading
charity auctioneer in America and has given selfiessly of his time to a
host of causes, notably Planned Parenthood, the American Cancer
Society as well as numerous AIDSorganizations. Ms. Roberts, director
of the Porcelain department in New York, is one of the world's leading
specialists in her field. In 1993, she offered an important private
collection of English ceramics which brought $1.8 million,
illustrating the continued vitality of this market.

Such expertise and the loyalty which many of our specialists have
inspired in our clients has established the foundation for our
continuing growth in the coming years.

pages 16

SOTHEBY'S DIVERSE AUCTION SERVICES ARE OFFERED THROUGHOUT THE WORLD.

Sotheby's held approximately 550 auctions worldwide in 1993, in over
70 collecting areas. This year our worldwide average total price paid
per lot was approximately $8,100. More than one-half of the 163,000
items sold in 1993 brought less than $5,000.

The Wide World
of Sotheby's Services

Appraisals
Educational Studies
Expert Restoration Services
Financial Services
International Realty Company
Museum Services
Trust and Estate Services

Principal
Salerooms

United Kingdom
United States

Worldwide Salerooms

Australia
Canada
Germany
Holland
Hong Kong
Israel
Italy

<PAGE>

Monaco

Spain
Switzerland

Taiwan

Worldwide
Offices and Locations

Argentina
Austria
Belgium
Brazil
Cyprus
Denmark
Finland
France
Hungary
Iceland
India
Ireland
Japan
Liechtenstein
Luxembourg
Mexico
Norway
Portugal
Singapore
South Korea
Sweden
Syria
Venezuela

Sotheby's Auction Categories

Fine Art

American Paintings, Drawings and Sculpture
British Paintings and Drawings
Contemporary Paintings, Drawings and Sculpture
Impressionist and Modern Paintings, Drawings and Sculpture
Latin American Paintings, Drawings and Sculpture
19th-Century European Paintings, Drawings and Sculpture
Old Master 19th- and 20th-Century Prints
Old Master Paintings and Drawings
Scottish Paintings and Drawings
Topographical Paintings and Drawings
Victorian Paintings

Decorative and Applied Arts

American Indian
Americana
Antiquities
Applied Arts
Art Nouveau and Art Deco
Chinese Art

<PAGE>

Clocks, Watches and Scientific Instruments
English Furniture and Decorations
European Works of Art and Tapestries
French and Continental Furniture
Indian and Southeast Asian Works of Art
Islamic Works of Art
Japanese Art
Judaica
Korean Art
19th-Century Furniture and Decorations
Paperweights
Photographs
Porcelain, Ceramics and Glass
Pre-Columbian Art
Rugs and Carpets
Russian Works of Art and Objects of Vertu
Silver
Tribal Art

Books and Manuscripts

Jewelry

Additional Categories

Arms and Armour
Collectibles
Coins and Medals
Garden Statuary
Musical Instruments
Postage Stamps
Sporting Guns
Vintage Vehicles
Wines and Spirits
Space Artifacts

<PAGE>

FINANCIALS

Selected Financial Data

Year ended December 31, 1993 1992 1991 1990 1989
(Thousands of dollars, except per share data)
<S> <C> <C> <C> <C> <C>
Results of Operations:
Auction
Auction sales $1,325,334 $1,131,601 $1,104,391 $2,446,453 $2,946,444

Revenues $ 234,972 $ 200,883 $ 193,905 $ 347,216 $ 410,233
Restructuring charge (4,855) (13,564)
Operating income (loss) 31,466 (1,993) 12,079 139,077 176,986
Income before taxes 34,233 4,021 18,896 154,351 185,845

Financial Services
Revenues 7,600 14,462 20,620 23,085 18,805
Income before taxes 2,803 5,211 7,807 8,053 6,287

Real Estate
Revenues 9,758 9,625 7,833 8,123 12,960
Income before taxes 2,071 2,091 312 52 1,984

Corporate operating expenses (7,370) (6,177) (5,545) (7,204) (6,500)
Other non-operating income (expense) 420 1,345 28 (691) 280

Consolidated
Revenues 252,330 224,970 222,358 378,424 441,998
Operating income (loss) 28,970 (868) 14,653 139,978 178,757
Income before taxes 32,157 6,491 21,498 154,561 187,896

Net Income $ 19,294 $ 3,960 $ 13,114 $ 94,682 $ 112,737

Earnings Per Share $ 0.35 $ 0.07 $ 0.25 $ 1.66 $ 1.96

Cash dividends declared per share $ 0.42 $ 0.60 $ 0.95 $ 1.45 $ 0.61

December 31, 1993 1992 1991 1990 1989
(Thousands of dollars)
Balance Sheet:

Working capital1 $ 123,964 $ 178,626 $ 219,994 $ 212,112 $ 168,574
Total assets 577,871 595,399 670,700 811,461 1,000,495

Commercial paper1 34,000 86,400 82,670 40,000 15,000
Shareholders' equity 194,632 198,195 246,328 278,199 243,384

</TABLE>

Auction sales represent sales at the hammer price plus buyer's premium.

1 Prior year amounts have been restated to conform to current year's
presentation.

<PAGE>

Management's Discussion and Analysis of Results of Operations and
Financial Condition

Results of Operations
Years Ended December 31, 1993 and 1992

AUCTION The recovery in the art auction market which began in 1992
strengthened during 1993. Auction sales for Sotheby's Holdings, Inc.
and Subsidiaries (the "Company") totaled $1,325.3 million during 1993,
an increase of $193.7 million, or 17%, over the previous year. Higher
sales volume was responsible for $148.0 million of the increase, while
the remaining $45.7 million of growth resulted from the increase in
the rate of buyer's premium. Prior to 1993, in most locations the
buyer's premium had been 10% of the hammer price on any lot sold.
Effective January 1, 1993, the buyer's premium increased to 15% on
lots sold for $50,000 or less in North America. On lots of higher
value 15% is charged on the first $50,000 and 10% thereafter.
Generally, similar structures were simultaneously implemented
throughout most of the rest of Sotheby's auction operations. The
increase in 1993 auction sales was driven by increased sales of
Impressionist and Modern art and unusually strong sales of Jewelry,
which increased by approximately $107.4 million and $80.4 million,
respectively, compared to 1992.

Following is a geographical breakdown of the Company's auction sales
for 1993 and 1992:

1993 1992

North America $654,984 $551,075
Europe 627,475 531,072
Asia 42,875 49,454

Total $1,325,334 $1,131,601

Market improvements were seen during 1993 in both North America and
Europe with sales growth of $103.9 million (19%) and $96.4 million
(18%), respectively, while Asian sales declined $6.6 million, or 13%.
Auction sales for Europe and Asia were negatively affected by
translation to U.S. dollars, which reduced total auction sales by
$56.1 million. The increase in North American auction sales was due
primarily to the higher level of sales of Impressionist and Modern art
in New York. The growth in European auction sales resulted largely
from Jewelry sales in Geneva and sales of Impressionist and Modern art
in London. In addition, European sales benefited from the sale of art
and precious objects from the von Thurn und Taxis collection held in
Germany. The decline in Asian sales was due to a reduction in the
number of sales held in Asia compared to the prior year due to the
elimination of auctions in Japan and India and the cancellation of a
sale in Taiwan.

Worldwide revenues from auction operations ("Auction") increased $34.1
million, or 17%, to $235.0 million. The unfavorable impact of
translating revenues outside North America into U.S. dollars reduced
1993 auction revenues by $12.6 million. The increase in Auction
revenues was primarily attributable to increased commissions (which
are principally buyer's premium, vendor's commission and expense
recoveries). The growth in commissions resulted from the increase in
the rate of buyer's premium, as discussed above, and, to a lesser
extent, from the greater volume of auction sales. The increase in
commissions was mitigated, in part, by declines in the realized rate
of vendor's commission and other commission revenue areas. The lower
vendor's commission rate resulted from pressures to price
competitively as well as from a change in the relative mix of auction
sales. During 1993, an increasing proportion of the Company's sales
were by departments that have historically generated lower than
average vendor's commissions.

During 1993, the Company continued to review its worldwide business
structure, with particular emphasis on operations in Europe and Asia.
As a result of this review, the Company recorded non-recurring
reorganization charges of over $2.4 million during 1993 (of which $2.0
million related to Auction). These charges were principally for costs
associated with changes in personnel.

Direct costs of services, which consist largely of catalogue
production, distribution and mailing costs, decreased by $3.2 million,
or 6%, from 1992 in spite of the greater volume of sales. Translating
these expenses into U.S. dollars accounted for $1.9 million of the
decrease. Direct costs of services as a percentage of sales, excluding
the impact of foreign currency movements, was 3.6% in 1993 compared to
4.5% in 1992.

Salaries and related costs increased by $4.3 million, or 6%, in 1993.
This increase reflects incentive compensation, merit adjustments and
increased overtime resulting from the higher level of sales activity,
as well as a majority of the reorganization charges discussed above.
These factors were partially offset by the impact of foreign currency
translation, which reduced salaries and related costs by $4.5 million.

<PAGE>

General and administrative expenses increased by $1.6 million, or 2%,
in 1993. After eliminating the impact of foreign currency translation,
general and administrative expenses increased by $7.8 million over
1992. This increase reflects balance sheet strengthening and increases
in various other expenses associated with the higher level of sales,
as well as modest reorganization costs associated with the realignment
of certain overseas locations.

Inventory and other auction-related activities generated a pre-tax
loss of $0.9 million in 1993, compared to pre-tax income of $1.8
million in 1992. These activities include net gains on sales of
inventories, including the Company's share of earnings from the sale
of inventory through the Acquavella Modern Art Partnership ("AMA"),
and income earned from guarantees, offset by expenses provided for
writedowns of inventory to estimated realizable value. In 1993,
earnings continued to be generated from AMA and other sales of
inventory, but at very modest levels which were lower than the prior
year. A provision for the writedown to estimated realizable value of
inventory relating to a single isolated transaction more than offset
these earnings in 1993.

During 1992, the Company recorded a $4.9 million restructuring charge
to provide for staff termination and other reorganization costs
relating to a full-scale restructuring to streamline operations, with
particular emphasis on the European auction operation.

Auction recorded operating income of $31.5 million in 1993, an
increase of $33.5 million compared to 1992's operating loss of $2.0
million. The increase in operating income is due to the increase in
the rate of the buyer's premium and greater sales volume, offset by
reductions in vendor's commissions, expense recoveries and various
other revenues.

Auction's interest income, which is earned on short-term investments
of excess cash, declined by $1.7 million in 1993 compared to 1992
largely due to lower average rates of interest earned on invested
funds. Interest expense is incurred on borrowings to fund short-term
cash requirements, including the client loan portfolio of the
Company's subsidiary, Sotheby's Financial Services, Inc. ("Financial
Services"). The decrease of $1.9 million in interest expense is
largely due to a lower average level of borrowed funds in Europe.

As noted above, Auction funds a portion of the loan portfolio of
Financial Services. Net interest charged to Financial Services on
borrowings from Auction totaled $2.0 million and $5.4 million in 1993
and 1992, respectively (see Note C to the Consolidated Financial
Statements). The 1993 amount represents interest income of $2.5
million on borrowings by Financial Services from Auction, net of
interest expense on special financing programs of $0.5 million charged
by Financial Services to Auction. The $3.4 million decrease in net
interest income from Financial Services results from the lower level
of Auction funding required for the smaller Financial Services loan
portfolio and, to a lesser extent, lower interest rates in 1993.

FINANCIAL SERVICES Revenues from Financial Services decreased to $7.6
million in 1993 from $14.5 million in 1992 due to a decrease in the
average outstanding loan portfolio and, to a lesser extent, to lower
rates of interest earned on outstanding loans. Average month-end
portfolio balances for the years ended December 31, 1993 and 1992 were
approximately $112.2 million and $163.2 million, respectively. The
average interest rate charged to borrowers decreased to 6.8% in 1993
from 9.2% in 1992. The smaller balance reflects the Company's policy,
since 1990, of reducing the portfolio in response to general economic
as well as market conditions. The decline in portfolio size should
reverse in 1994 as the Company is experiencing a substantial increase
in demand for loans. Any increase in the portfolio is currently
expected to be funded, in substantial part, through borrowings under
existing commercial paper arrangements.

Income before taxes declined $2.4 million, or 46%, compared to the
prior year. The decrease is principally a result of the smaller client
loan portfolio, partially offset by reduced provisions for loan
losses.

REAL ESTATE Revenues from Real Estate increased to $9.8 million in
1993 from $9.6 million in 1992, while operating expenses increased
slightly. The increase in revenues reflects a higher level of property
sales partially offset by lower commission rates. Income before taxes
of $2.1 million was unchanged compared to the prior year.

CORPORATE Corporate expenses of $7.4 million in 1993 were $1.2 million
higher than 1992. This increase is largely due to an increase in costs
associated with severance and worldwide marketing and promotion.

INCOME TAXES The consolidated effective tax rate increased to 40% for
the year ended December 31, 1993 from 39% during 1992. The increased
tax rate reflects the net impact on the Company of the Omnibus Budget
Reconciliation Act of 1993 which was enacted during the third quarter
of 1993.

<PAGE>

NET INCOME AND EARNINGS PER SHARE Net income for 1993 was $19.3
million, an increase of $15.3 million over 1992. Earnings per share
increased $0.28 per share to $0.35 per share in 1993. These increases
were driven by the growth in 1993 auction revenue which resulted
principally from the increase in the rate of buyer's premium and
auction sales compared to 1992. The effect of foreign currency
translation on net income and earnings per share was not material.

<PAGE>

Results of Operations
Years Ended December 31, 1992 and 1991

AUCTION During 1992, the Company's auction sales increased modestly
despite a difficult art market. Auction sales increased $27.2 million,
or 2%, to $1,131.6 million for the year ended December 31, 1992.
Following is a geographical breakdown of the Company's auction sales
for 1992 and 1991:

1992 1991

North America $ 551,075 $ 504,331
Europe 531,072 550,382
Asia 49,454 49,678

Total $ 1,131,601 $ 1,104,391

In North America, sales increased $46.7 million, or 9%, indicating
that a modest recovery was underway. In Asia, auction sales remained
relatively stable, while in Europe sales declined $19.3 million, or
4%. Although concrete signs of recovery were less evident in Europe
during 1992, the European art market seemed to be stabilizing as
buyers and sellers continued to adjust to new and often lower price
levels. The unfavorable impact of translating sales outside North
America into U.S. dollars reduced sales by $4.0 million.

Worldwide revenues from Auction increased $7.0 million, or 4%, in
1992. Revenues increased $5.0 million in North America primarily as a
result of the growth in auction sales discussed above. In Europe,
modest declines in commissions resulting from the lower level of
auction sales were more than offset by increases in other auction
revenue. Were it not for the unfavorable impact of translating
revenues outside North America to U.S. dollars, Auction revenues would
have increased $7.9 million.

During 1992, the Company continued to closely monitor costs in a
difficult environment, while also responding to future opportunities.
Direct costs of services declined $0.3 million in 1992 despite the
slight increase in worldwide auction sales. Salaries and related costs
increased less than 1% in 1992 (or approximately $0.6 million) as a
result of the unfavorable impact of foreign exchange. After
eliminating the impact of foreign exchange, salaries and related costs
decreased $0.1 million in 1992. The savings achieved reflect the full
year impact of 1991 headcount reductions partially offset by nominal
salary increases in North America. General and administrative costs
increased 2%, or $1.0 million, in 1992; the unfavorable impact of
translating these costs to U.S. dollars was responsible for $0.6
million of the increase. The remainder of the increase reflected costs
associated with opening three international sales centers in 1992
(Spain, Taiwan and India) and the installation of new computer
software. These initiatives were undertaken to enhance the Company's
ability to grow in an improving market. Depreciation and amortization
expense increased $0.7 million in 1992 due to the amortization of
capital improvements made to our London auction facility.

Inventory and other auction-related activities contributed $1.8
million to pre-tax income during 1992, while these activities
contributed $15.9 million in 1991. This decrease in income was due
primarily to the lower level of earnings generated by AMA.

While signs of improvement were evident in 1992, the Company continued
to streamline its operations, with particular emphasis on the European
auction operation. A full--scale restructuring was initiated to ensure
greater future profitability and $4.9 million was provided for staff
termination and other reorganization costs.

Auction recorded an operating loss of $2.0 million in 1992 compared to
operating income of $12.1 million in 1991. The $14.1 million decline
was largely due to a lower level of earnings from AMA, which accounted
for $16.1 million of the decline, and costs associated with
restructuring ($4.9 million). While progress was made in returning
Europe to profitability in 1992, Europe experienced a $7.9 million
auction operating loss before the restructuring charge, as compared to
a $17.4 million loss in 1991. Asia's profitability declined, reflecting
increased costs associated with the opening of two new Asian sales
centers in Taiwan and India.

Interest income in 1992 remained at levels comparable to 1991.
Interest expense decreased due to a lower average level of borrowed
funds and lower interest rates than in 1991. During 1992, the lower
level of borrowings resulted from a smaller worldwide client loan
portfolio and reduced borrowings in Europe.

<PAGE>

Net interest charged to Financial Services during 1992 represented
interest income of $5.4 million on borrowings by Financial Services
from Auction. The decrease of $5.1 million, or 49%, compared to 1991
resulted from the lower level of Auction funding required for the
smaller loan portfolio and from lower interest rates in 1992 when
compared to 1991.

FINANCIAL SERVICES Revenues from Financial Services decreased to $14.5
million in 1992 from $20.6 million in 1991 principally due to
decreases in both the average interest rate charged to borrowers and
the average size of the client loan portfolio. The average interest
rate charged to borrowers decreased to 9.2% in 1992 from 11.4% in 1991
as a result of the changes in the average prime rate for the periods.
Average month-end portfolio balances for the years ended December 31,
1992 and 1991 were approximately $163.2 million and $183.9 million,
respectively. This decrease reflected the Company's decision to reduce
its portfolio during a difficult phase of the art market.

Non-interest related expenses of Financial Services, consisting
primarily of salaries and related costs, professional fees and loan
loss provisions, increased to $3.9 million in 1992 from $2.3 million
in 1991 as a result of increased loan loss reserves. Financial
Services recorded income before taxes of $5.2 million for the year
ended December 31, 1992 compared to $7.8 million for the prior year.

REAL ESTATE Real Estate's revenues increased $1.8 million, reflecting
growth in property sales of $131.5 million. Real Estate recorded
income before taxes of $2.1 million for the year ended December 31,
1992 compared to $0.3 million for the prior year. During 1992,
operating expenses remained at 1991 levels despite the increased sales
activity.

INCOME TAXES The Company's income taxes for the year ended December
31, 1992 decreased $5.9 million to $2.5 million due to lower earnings.

NET INCOME AND EARNINGS PER SHARE Earnings per share decreased $0.18,
or 72%, to $0.07 per share in 1992. The percentage decrease in
earnings per share was slightly greater than the 70% decrease in net
income due to an increase in the number of weighted average shares
outstanding.

Liquidity and Capital Resources

The Company's net cash position (cash and cash equivalents less total
debt) totaled $53.3 million at December 31, 1993, compared to a net
debt position (total debt less cash and cash equivalents) of $5.1
million and $54.4 million at December 31, 1992 and 1991, respectively.
The Company's client loan portfolio, consisting of loans which
generally have a maturity of one year or less, decreased to $98.4
million at December 31, 1993 from $117.6 million and $190.4 million at
December 31, 1992 and 1991, respectively.

The Company relies on internally generated funds and borrowings to
meet its financing requirements. The Company may issue up to $200
million of notes pursuant to its U.S. commercial paper program, of
which $166 million was available at December 31, 1993. The Company
supports any notes issued under this program with lines of credit. The
Company has $175 million available under committed Revolving Credit
Facilities and $30 million available under short-term lines of credit.
Additionally, the Company had a European commercial paper program
available during 1993, 1992 and 1991 for the issuance of up to $200
million of notes. This program was discontinued in March of 1994.

Net cash flows provided by operations totaled $71.5 million, $37.7
million and $32.7 million for the years ended December 31, 1993, 1992
and 1991, respectively. During 1993, net repayments on commercial
paper borrowings totaled $52.4 million while in 1992 and 1991 net
borrowings of commercial paper totaled $3.7 million and $42.7 million,
respectively. In addition to cash generated from operations and
borrowings under commercial paper arrangements, collections on the
client loan portfolio have been a significant source of cash for the
Company. The most significant uses of cash were repayments of
commercial paper, funding the client loan portfolio and payments of
shareholder dividends. In 1993 and 1992 net collections on the client
loan portfolio were $16.7 million and $62.8 million, respectively,
while in 1991 net funding of the portfolio was $27.9 million. The
Company paid dividends to shareholders of $23.2 million in 1993 (of
which $8.3 million was declared and paid in 1993 in respect of 1992).
During the third quarter of 1993, the Company announced a reduction in
the quarterly dividend on common shares to $0.06 per share. In 1992,
the Company paid $31.8 million in dividends (of which $7.7 million was
declared and paid in 1992 in respect of 1991). In 1991, the Company
paid dividends of $48.2 million (of which $25.3 million was declared
and paid in respect of 1990). In the first quarter of 1994, the Company
declared and paid dividends of $3.3 million in respect of the fourth
quarter of 1993.

Capital expenditures, consisting primarily of office and auction
facility refurbishment and the acquisition of computer equipment,
totaled $8.3 million for 1993, $9.9 million for 1992 and $11.3 million
for 1991.

<PAGE>

From time to time, the Company has off-balance sheet commitments which
include short-term commitments to consignors that property will sell
at a minimum price and legally binding lending commitments in
conjunction with the client loan program (see Notes D and N to the
Consolidated Financial Statements). The Company does not believe that
material liquidity risk exists relating to these commitments.

The Company believes that the working capital requirements of AMA will
be adequately satisfied by sales of its inventory. In spite of the
slowdown in the volume of sales, the Company expects that the sale of
the remaining inventory will be a source of cash over the next several
years as the art market recovers.

Outlook

The Company is encouraged by the growth in worldwide auction sales
during 1993, which has been driven primarily by increased sales of
Impressionist and Modern art and exceptional sales of Jewelry. The
Company believes that the upward trend in the marketplace established
during 1993 is the best indication of a recovery in the art market
since the onset of the art market recession. However, 1993 represents
the first full year of recovery in the market and 1994 will be a test
of the firmness and continuity of that recovery. Additionally, the
Company will continue to closely monitor costs in order to ensure
increased profitability in the future.

The Company believes that operating cash flows will be adequate to meet
normal working capital requirements and that the commercial paper
program and credit facilities will continue to be adequate to fund the
Company's client loan program, peak working capital requirements and
other short-term commitments to consignors.

The Company evaluates, on an ongoing basis, the adequacy of its
principal auction premises for the requirements of the present and
future conduct of its business. Any significant alteration to these
premises may require additional capital resources.

<PAGE>

Seasonality

The worldwide art auction market has two principal selling seasons,
spring and fall. During the summer and winter, sales are considerably
lower. The table below demonstrates that at least 80% of the Company's
auction sales are derived from the second and fourth quarters of the
year (see Note P to the Consolidated Financial Statements).

Percentage of Annual
Auction Sales

1993 1992 1991

January--March 10% 12% 11%
April--June 38 38 37
July--September 6 8 7
October--December 46 42 45

100% 100% 100%

Future Impact of Recently Issued
Accounting Standards

In November of 1992, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 112,
"Employers' Accounting for Postemployment Benefits," which will be
adopted by the Company in the first quarter of 1994. Adoption of this
standard will not have a material impact in the year of adoption or on
future results of operations.

In May of 1993, the FASB issued SFAS No. 114, "Accounting by Creditors
for Impairment of a Loan," which must be adopted by the Company by
1995. The impact of implementing the new standard, which the Company
expects to adopt effective January 1, 1995, is currently not expected
to materially affect the financial statements.

<PAGE>
Consolidated Balance Sheets

<TABLE><CAPTION>
December 31, 1993 1992
(Thousands of dollars)

<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 91,840 $ 85,703
Accounts and notes receivable, net of allowance
for doubtful accounts of $10,596 and $12,930 -- Note D
Auction operations 166,962 164,378
Finance operations 98,419 117,600
Other 12,670 9,647

Total Accounts and Notes Receivable, Net 278,051 291,625
Inventory, net -- Note E 81,369 87,121
Deferred income taxes -- Note H 8,675 9,991
Prepaid expenses -- Note L 11,880 13,685

Total Current Assets 471,815 488,125

Properties, less allowance for depreciation
and amortization of $51,100 and $50,916 -- Notes F and I 65,078 65,715
Intangible assets, less allowance for
amortization of $44,464 and $43,510 29,633 31,789
Other assets -- Note M 11,345 9,770

Total Assets $ 577,871 $ 595,399
Liabilities and Shareholders' Equity
Current Liabilities
Due to consignors -- Note D $ 205,873 $ 171,335
Short-term borrowings -- Note G 4,583 4,460
Accounts payable and accrued liabilities -- Note E 95,043 87,106
Deferred revenues 6,165 6,169
Accrued income taxes -- Note H 36,187 40,429

Total Current Liabilities 347,851 309,499
Long-term Liabilities
Commercial paper -- Note G 34,000 86,400
Other long-term obligations -- Note H 1,388 1,305
Total Liabilities 383,239 397,204

Shareholders' Equity -- Notes J and N:
Common stock, $.10 par value:
Authorized shares -- 125,000,000 of Class A and 75,000,000 of Class B
Issued and outstanding shares 35,399,497 and 33,231,485 of Class A,
and 20,096,469 and 21,600,497 of Class B at December 31, 1993
and 1992, respectively 5,550 5,483
Additional paid-in capital 80,509 77,594
Retained earnings 129,637 133,542
Foreign currency translation adjustments (21,064) (18,424)

Total Shareholders' Equity 194,632 198,195
Total Liabilities and Shareholders' Equity $ 577,871 $ 595,399

</TABLE>

See accompanying Notes to Consolidated Financial Statements

<PAGE>

Consolidated Statements of Income
Year ended December 31,
<TABLE><CAPTION>
1993 1992 1991
(Thousands of dollars, except per share data)
<S> <C> <C> <C>
AUCTION
Revenues $ 234,972 $ 200,883 $ 193,905

Direct costs of services (47,352) (50,556) (50,826)
Salaries and related costs -- Note L (79,030) (74,763) (74,189)
General and administrative expenses -- Note I (68,391) (66,742) (65,721)
Depreciation and amortization (7,846) (7,731) (6,986)
Operating income (loss) before inventory and other
auction-related activities and restructuring charge 32,353 1,091 (3,817)
Income (loss) from inventory and other auction-
related activities -- Notes B and E (887) 1,771 15,896
Restructuring charge -- Note K (4,855)

Operating income (loss) -- Auction 31,466 (1,993) 12,079

Interest income 5,082 6,786 7,190
Interest expense -- Note G (4,281) (6,156) (10,846)
Net interest charged to Financial Services -- Note C 1,966 5,384 10,473

Income before taxes -- Auction 34,233 4,021 18,896
FINANCIAL SERVICES
Revenues 7,600 14,462 20,620
General and administrative expenses (2,831) (3,867) (2,340)
Net interest expense from Auction -- Note C (1,966) (5,384) (10,473)
Income before taxes -- Financial Services 2,803 5,211 7,807

REAL ESTATE
Revenues 9,758 9,625 7,833
Operating expenses (7,687) (7,534) (7,521)
Income before taxes -- Real Estate 2,071 2,091 312

Corporate operating expenses (7,370) (6,177) (5,545)
Other non-operating income 420 1,345 28
CONSOLIDATED
Revenues 252,330 224,970 222,358

Operating income (loss) 28,970 (868) 14,653
Net interest income (expense) 2,767 6,014 6,817
Other non-operating income 420 1,345 28
Income before taxes 32,157 6,491 21,498
Income taxes -- Note H (12,863) (2,531) (8,384)

Net Income $ 19,294 $ 3,960 $ 13,114
Earnings Per Share $ 0.35 $ 0.07 $ 0.25

</TABLE>

See accompanying Notes to Consolidated Financial Statements

<PAGE>

Consolidated Statement of Changes in Shareholders' Equity
<TABLE><CAPTION>
Foreign
Additional Currency
Common Paid-in Retained Translation
Stock Capital Earnings Adjustment
(Thousands of dollars)
<S> <C> <C> <C> <C>
Balance at December 31, 1990 $ 5,046 $ 60,689 $ 196,416 $ 16,048
Stock options exercised 105 1,521
Tax benefit associated with exercise
of stock options 2,082
Foreign currency translation (505)
Net income 13,114
Dividends (48,188)
Balance at December 31, 1991 $ 5,151 $ 64,292 $ 161,342 $ 15,543

Stock options exercised 332 4,748
Tax benefit associated with exercise
of stock options 8,554
Foreign currency translation (33,967)
Net income 3,960
Dividends (31,760)

Balance at December 31, 1992 $ 5,483 $ 77,594 $ 133,542 $ (18,424)
Stock options exercised 67 1,985
Tax benefit associated with exercise
of stock options 930
Foreign currency translation (2,640)
Net income 19,294
Dividends (23,199)
Balance at December 31, 1993 $5,550 $ 80,509 $ 129,637 $ (21,064)

</TABLE>

See accompanying Notes to Consolidated Financial Statements

<PAGE>

Consolidated Statements of Cash Flows

<TABLE><CAPTION>
Year ended December 31, 1993 1992 1991
(Thousands of dollars)

<S> <C> <C> <C>
Operating Activities:
Net income $ 19,294 $ 3,960 $ 13,114
Adjustments to reconcile net income to net cash provided by
operating activities before working capital items:
Depreciation and amortization 8,294 8,172 7,429
Deferred income taxes 1,227 (1,662) (19,398)
Tax benefit of stock option exercises 930 8,554 2,082
Asset provisions 9,554 6,147 10,762
Other (428) (557) (777)
Net cash provided by operating activities before working capital
items 38,871 24,614 13,212
Working capital items net of effects from business acquired:
Decrease (increase) in prepaid expenses 1,805 1,904 (2,999)
Decrease (increase) in accounts receivable (9,079) 29,742 121,468
Decrease in inventory 1,698 12,311 23,890
Increase (decrease) in due to consignors 34,538 (8,781) (124,346)
Increase (decrease) in income taxes payable (4,242) (8,540) 12,866
Increase (decrease) in other current liabilities 7,932 (13,524) (11,358)

Net cash provided by operating activities 71,523 37,726 32,733

Investing Activities:
Finance operation loans (119,915) (49,965) (141,009)
Collections on finance operation loans 136,581 112,794 113,084
Capital expenditures (8,344) (9,924) (11,280)
Payment for business acquired, net of cash acquired -- Note O 1,146
Increase in investment in affiliate (1,394)

Net cash provided (used) by investing activities 8,322 52,657 (39,205)

Financing Activities:
Increase (decrease) in commercial paper (52,400) 3,730 42,670
Increase (decrease) in short-term borrowings 114 (10,615) (15,332)
Proceeds from exercise of stock options 2,052 5,080 1,626
Dividends paid (23,199) (31,760) (48,188)

Net cash used by financing activities (73,433) (33,565) (19,224)
Effect of exchange rate changes on cash (275) (14,383) 2,564

Increase (Decrease) in Cash and Cash Equivalents 6,137 42,435 (23,132)
Cash and Cash Equivalents at Beginning of Year 85,703 43,268 66,400
Cash and Cash Equivalents at End of Year $ 91,840 $ 85,703 $ 43,268
</TABLE>
See accompanying Notes to Consolidated Financial Statements

<PAGE>

Notes to Consolidated Financial Statements

Note A-Organization and Business

The primary line of business of Sotheby's Holdings, Inc. and
Subsidiaries (the "Company") is conducting auctions and private sales
of fine art, jewelry and decorative art. Auction activities occur
primarily in New York and London, but are also conducted elsewhere in
North America, Europe and Asia. In addition, the Company is engaged in
art-related financing and in marketing and brokering luxury real
estate.

Note B-Summary of Significant Accounting Policies

Principles of Consolidation - The consolidated financial statements
include the accounts of Sotheby's Holdings, Inc. and its wholly-owned
subsidiaries.

Revenue Recognition - Auction commission revenue is generally recognized
at the date of the related sale. Financial Services interest income is
recognized using the interest method. Commissions on real estate
transactions are recognized when received. Catalogue subscription
revenue is recognized over the twelve-month period of the subscription
from the date of receipt of the proceeds. Other revenue is recognized
at the time service is rendered by the Company.

Properties - Properties, consisting primarily of buildings and
improvements, furniture and fixtures and equipment, are stated on the
basis of cost. Depreciation is computed principally on the
straight-line method over estimated useful lives for financial
reporting purposes and by accelerated methods for income tax purposes.
Leaseholds and leasehold improvements are amortized over the lesser of
the life of the lease or the estimated useful life of the improvement.
Amortization of leased assets is included in depreciation and
amortization expense.

General and administrative expenses include repairs and maintenance
and the cost of computer software in the year of purchase.

Direct Costs of Services - Direct costs of services primarily include
the costs of obtaining and marketing property for auctions.

Income (Loss) from Inventory and Other Auction-Related Activities -
These activities include net gains on sales of inventories, including
the Company's share of earnings from the sale of inventory through the
Acquavella Modern Art Partnership ("AMA"), income earned from
guarantees and provisions for writedowns of inventories to estimated
realizable value.

Cash Equivalents - Cash equivalents are liquid investments, comprised
primarily of bank and time deposits with an original maturity of less
than three months. These investments are carried at cost, which
approximates market value.

Financial Instruments - The carrying amounts of cash and cash
equivalents, accounts receivable, short-term borrowings, due to
consignors, accounts payable and accrued liabilities, and commercial
paper are a reasonable estimate of their fair value. The fair value of
notes receivable from finance operations is estimated using the current
rates at which similar loans would be made to borrowers for the same
remaining maturities.

Inventory - Inventory consists of objects obtained as a result of the
auction process and artwork acquired through the purchase of the
Pierre Matisse Gallery Corporation (see Note E). Inventory is valued
at the lower of cost or management's estimate of realizable value.

Intangible Assets - Intangible assets include goodwill, lease rights and
subscriber lists. Goodwill is being amortized over forty years. The
amounts assigned to the other intangible assets are amortized on a
straight-line basis over periods not to exceed twenty-five years.

Earnings Per Share - Earnings per share is based on the weighted average
number of outstanding shares of common stock and common stock
equivalents (stock options). Weighted average number of shares for the
earnings per share computation were as follows: 1993-55,861,424;
1992-54,387,412; and 1991-53,308,745. Fully diluted earnings per
share, assuming the maximum dilutive effect of stock options, has not
been presented because the effects are not material. Weighted average
number of shares for the fully diluted earnings per share computation
were as follows: 1993-55,909,007; 1992-54,393,960; and
1991-53,317,634.

Foreign Currency Translation - Assets and liabilities of foreign
subsidiaries are translated at year-end rates of exchange. Income
statement amounts are translated using monthly average exchange rates
for the year. Gains and losses resulting from translating foreign
currency financial statements are accumulated in a separate component
of shareholders' equity until the subsidiary is sold or substantially
liquidated.

Reclassifications - Certain amounts in the 1992 and 1991 financial
statements have been reclassified to conform with the 1993
presentation.

<PAGE>

Note C-Business Segment and Geographic Data

The Company operates in three business segments -- Auction, Financial
Services and Real Estate. Through its Auction segment, the Company
conducts auctions and private sales of fine art, jewelry and decorative
art. Through its Financial Services segment, the Company makes loans
on a regular basis to consignors, dealers and collectors. Through its
Real Estate segment, the Company is engaged in marketing and brokering
luxury real estate.

Certain industry segment information relating to operating revenues
and profitability required to be included pursuant to Statement of
Financial Accounting Standards ("SFAS") No. 14 is included in the
consolidated statements of income. In the consolidated statements of
income, income before taxes for Financial Services and Real Estate is
also operating income as defined by the Statement.

Financial Services recognizes revenue at the contractual rates for
loans and advances. For special financing arrangements with below
market interest rates, Auction is charged the differential and
Financial Services realizes rates approximating market. Financial
Services reports interest expense at a rate of interest approximating
the Company's actual short-term borrowing rates. Amounts borrowed from
Auction are based on the average loan portfolio balance less an
assumed level of capital in Financial Services.

In the Consolidated Financial Statements, the captions identifying
intersegment transactions represent interest on borrowings by
Financial Services from Auction and interest on special financing
programs charged by Financial Services to Auction.

A summary of information about the Company's operations by business
segment and by geographic area follows:

<PAGE>

Business Segment Data

December 31, 1993 1992 1991
(Thousands of dollars)

Identifiable Assets

Auction $463,119 $461,153 $463,059
Financial Services 98,419 117,600 190,400
Real Estate 1,513 2,483 2,511
Corporate 14,820 14,163 14,730

Total $577,871 $595,399 $670,700

Depreciation and Amortization

Auction $ 7,846 $ 7,731 $ 6,986
Real Estate 186 179 181
Corporate 262 262 262

Total $ 8,294 $ 8,172 $ 7,429

Capital Expenditures

Auction $ 8,099 $ 9,596 $ 11,224
Real Estate 245 328 56

Total $ 8,344 $ 9,924 $ 11,280

Geographic Data In the following table (which includes Auction, Financial
Services, Real Estate and Corporate), North America includes the United
States and Canada; Europe includes the United Kingdom, Ireland and continental
Europe; and Asia primarily includes operations in Hong Kong, Taiwan, Japan and
Australia.

Year ended December 31, 1993 1992 1991
(Thousands of dollars)

Revenues

North America $127,813 $108,722 $107,667
Europe 116,396 107,647 106,718
Asia 8,121 8,601 7,973

Total $252,330 $224,970 $222,358

Operating Income (Loss)

North America $ 26,081 $ 13,577 $ 29,804
Europe 11,003 (8,229) (10,884)
Asia (744) (39) 1,278
Corporate (7,370) (6,177) (5,545)

Total $ 28,970 $ (868) $ 14,653

Identifiable Assets

North America $309,876 $309,987 $366,935
Europe 258,883 272,039 293,754
Asia 9,112 13,373 10,011

Total $577,871 $595,399 $670,700

<PAGE>

Note D-Accounts and Notes Receivable and Due to Consignors

Accounts and notes receivable consist of the following:

December 31, 1993 1992

(Thousands of dollars)
Auction operations:

Auction receivables $170,490 $166,777
Advances for consignors 2,201 5,241

Other receivables 767 457
Allowance for doubtful accounts (6,496) (8,097)

166,962 164,378
Finance operations:
General purpose secured loans 61,366 89,124
Cash advances to consignors 30,667 22,024
Other guaranteed loans 10,000 10,206
Allowance for doubtful accounts (3,614) (3,754)

98,419 117,600
Other:
Other receivables 13,156 10,726
Allowance for doubtful accounts (486) (1,079)
12,670 9,647

Total $278,051 $291,625

Auction receivables included $5.3 million and $1.8 million at December
31, 1993 and 1992, respectively, relating to the purchase of art
objects at auction by employees, officers, directors and other related
parties.

Under the standard terms and conditions of the Company's auction
sales, the Company is not obligated to pay consignors if it has not
been paid by the purchaser. If the purchaser defaults on payment, the
Company may cancel the sale and return the property to the owner,
re-offer the property at public auction or contact other bidders to
negotiate a private sale.

In certain situations, when the purchaser takes possession of the
property before payment is made, the Company is liable to the seller
for the net sale proceeds. As of December 31, 1993 and 1992, accounts
and notes receivable included approximately $80.1 million and $41.4
million, respectively, of such sales. Amounts outstanding in the prior
year which remained outstanding at December 31, 1993 totaled $1.2
million. Management believes that adequate allowances have been
established to provide for potential losses on these amounts.

The average interest rates charged on finance receivables were 6.8% and
9.2% at December 31, 1993 and 1992, respectively.

The estimated fair value of finance receivables was $97.2 million and
$117.2 million at December 31, 1993 and 1992, respectively.

In May of 1993, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 114, "Accounting by Creditors for Impairment of a
Loan," which must be adopted by the Company by 1995. Under SFAS No.
114, impairment is generally measured based on the present value of
expected future principal and interest cash flows, discounted at the
loan's effective interest rate, and a valuation allowance is
established relating to those impaired loans. Impairment may also be
measured based on the fair value of the collateral, if the loan is
collateral dependent. A loan is considered impaired under the
Statement when, based on current information and events, it is
probable that the Company will be unable to collect all amounts due.
Presently, credit losses on the client loan portfolio are accounted
for through the allowance for doubtful accounts, which is adequate to
absorb losses inherent in this portfolio. The impact of implementing
the new standard, which the Company expects to adopt effective January
1, 1995, currently is not expected to materially affect the financial
statements.

<PAGE>

Note E-Inventory

Inventory at December 31, 1993 and 1992 consists of objects obtained
as a result of the auction process ($17.4 million and $22.7 million,
respectively) and artwork acquired through the purchase of the Pierre
Matisse Gallery Corporation ("Matisse") ($64.0 million and $64.4
million, respectively).

Objects are obtained through the auction process primarily as a result
of honoring authenticity claims of purchasers, foreclosing on accounts
receivable after the consignor has been paid and purchasing property
at the minimum price assured by the Company.

On May 23, 1990, the Company purchased the common stock of Matisse for
approximately $153.1 million. The assets of Matisse consisted of a
collection of fine art (the "Matisse inventory"). Upon consummation of
the purchase, the Company contributed the Matisse inventory to AMA and
entered into the AMA partnership agreement with Acquavella
Contemporary Art, Inc. to sell the Matisse inventory. Since the
Company's investment in the partnership is represented by the
estimated fair value of the contributed inventory, this investment is
reflected as inventory (at its net realizable value) in the
Consolidated Financial Statements. According to the terms of the
partnership agreement, each partner has a 50% interest in the earnings
of AMA and all cash available for distribution will be initially
distributed to the Company until the Company receives $270.3 million,
together with a return equal to the prime rate (as defined).
Thereafter, cash distributions will be made on a 50-50 basis. To the
extent that the partnership requires working capital, the Company has
agreed to lend the same to the partnership.

<PAGE>

During the years ended December 31, 1993, 1992 and 1991, proceeds from
the sale of the Matisse inventory received by AMA totaled $2.6
million, $6.8 million and $84.7 million, respectively, resulting in
gains to the Company, net of assumed tax liabilities, of $0.9 million,
$1.7 million and $17.8 million, respectively. These gains are included
in income from inventory and other auction-related activities in the
Consolidated Financial Statements.

Cash distributed to the Company in accordance with the partnership
agreement totaled $278.5 million through December 31, 1993. Amounts
distributed to the Company in excess of the cost of the inventory sold
plus related income taxes and profits are included in accounts payable
and accrued liabilities. Such amounts totaled $36.3 million and $37.5
million as of December 31, 1993 and 1992, respectively.

The inventory and related allowances to adjust the cost of inventory
to management's estimated realizable value is as follows:

December 31, 1993 1992

(Thousands of dollars)

Inventory, at cost $ 95,703 $105,758
Realizable value allowances (14,334) (18,637)

Total $ 81,369 $ 87,121

Note F-Properties

Properties consist of the following:

December 31, 1993 1992
(Thousands of dollars)
Land $ 170 $ 170
Building and
building improvements 32,000 32,934
Leaseholds and
leasehold improvements 34,480 32,503

Furniture, fixtures and equipment 44,887 44,537
Other 4,641 6,487

116,178 116,631

Less: Accumulated depreciation (51,100) (50,916)
Total $ 65,078 $ 65,715

<PAGE>

Note G-Credit Arrangements

Short-term borrowings consist of the following:

December 31, 1993 1992

(Thousands of dollars)

Other bank lines of credit $ 1,238 $ 1,293
Notes payable 3,336 3,060
Other short-term obligations 9 107

Total $ 4,583 $ 4,460

Other Bank Lines of Credit - At December 31, 1993 and 1992, $1.2 million
and $1.3 million, respectively, were outstanding under lines of credit
at weighted average interest rates of 10.84% and 9.39%, respectively.
In addition, at December 31, 1993 and 1992, the Company had $30.0
million available under short-term lines of credit.

Notes Payable - York Avenue Development, Inc. ("York") has signed a
demand note payable to Taubman York Avenue Associates, Inc. (see Note
I). The note bears interest at prime +1% and is nonrecourse to the
Company or any of its subsidiaries in the event of default by York.

Commercial Paper - Subject to the covenants of the Revolving Credit
Facilities discussed below, the Company may issue up to $200 million
in notes under its U.S. commercial paper program. At December 31, 1993
and 1992, commercial paper borrowings amounting to $34.0 million and
$86.4 million, respectively, have been classified on the consolidated
balance sheets as long-term liabilities based on the Company's intent
and ability to maintain or refinance these obligations on a long-term
basis. The notes do not bear interest but are issued at a discount,
which is negotiated by the Company and purchaser prior to each
issuance. The weighted average interest rates on these notes was 3.54%
and 4.04% at December 31, 1993 and 1992, respectively. During 1993 and 1992,
the Company had a Euro-commercial paper program available to issue up to
$200 million in notes. This program was discontinued in March of 1994.

Revolving Credit Facilities - The Company has a $75 million Revolving
Credit Facility ("Revolver") available. Borrowings under the Revolver
are permitted through December 31, 1994. Borrowings are at one of
several interest rates, at the option of the Company. Interest rates
are based on the prime rate, a LIBOR-based rate, a CD-based rate or a
money-market rate. Commitment fees on the unused portion of the
Revolver were 0.19% in 1993, 1992 and 1991. Fees totaled $0.1 million
for each of the years ended December 31, 1993, 1992 and 1991.

The Company has separate and conforming Revolving Credit Agreements
("Revolver II") with five banks for a total of $100 million, with
maturity dates ranging from one to two years. Similar to the Revolver,
borrowings are at one of several interest rates, at the option of the
Company. Commitment fees on the unused portion of Revolver II were
0.25% in 1993, 1992 and 1991. Fees totaled $0.3 million, $0.2 million
and $0.1 million for the years ended December 31, 1993, 1992 and 1991,
respectively.

The Revolving Credit Facilities contain financial and business
covenants that include limitations on the Company's capital
expenditures and its ability to incur debt, a minimum ratio of
consolidated earnings before interest and taxes to interest expense
and, in the case of the Revolver only, an event of default if there
are defaults in the repayment of advances to clients aggregating more
than $15 million. The Company is permitted to pay dividends. However,
the Company's consolidated tangible net worth, as defined, may not be
less than $100 million plus $10 million times the number of years
elapsed since December 31, 1989. At December 31, 1993 and 1992,
consolidated tangible net worth was $187.6 million and $186.3 million,
respectively.

Interest paid on borrowings totaled $4.5 million, $6.2 million and
$10.8 million in the years ended December 31, 1993, 1992 and 1991,
respectively.

<PAGE>

Note H-Income Taxes

Year ended December 31, 1993 1992 1991

(Thousands of dollars)

Income Before Taxes:

Domestic $ 17,180 $ 8,981 $ 33,123

Foreign 14,977 (2,490) (11,625)

Total $ 32,157 $ 6,491 $ 21,498

Income Taxes:
Current:

Federal $ 3,877 $ 2,450 $ 30,561
State and local 3,340 998 3,372
Foreign 4,419 745 (6,151)

$ 11,636 $ 4,193 $ 27,782
- -----------------------------------------------------
Deferred:
Federal 1,227 850 (19,267)

Foreign (2,512) (131)
1,227 (1,662) (19,398)

Total $ 12,863 $ 2,531 $ 8,384
- -----------------------------------------------------

<PAGE>

Deferred income taxes result from the tax effects of items reported in
different periods for tax and financial reporting purposes. These items
for 1992 and 1991 are as follows:

Year ended December 31, 1992 1991

(Thousands of dollars)

Deferred Federal Income Taxes:

Taxable partnership income
in excess of book $ (145) $ (20,186)

General accrued liabilities 158
Bonus 953 946

All other items (116) (27)

850 (19,267)

Deferred Foreign Income Taxes:

Tax loss carryforwards (2,512)
All other items (131)

(2,512) (131)

Total $(1,662) $ (19,398)

As required by SFAS No. 109, the components of deferred income tax
assets and liabilities are disclosed below:

December 31, 1993 1992

(Thousands of dollars)

Current Deferred Tax Assets:

Taxable loss carryforwards $ 2,874 $ 2,874

Asset provisions and
accrued liabilities 5,801 7,117

Total $ 8,675 $ 9,991

Current Deferred Tax Liability:

Basis difference in
purchased inventory $ 16,039 $ 16,039

Noncurrent Deferred Tax
Liability:

Depreciation $ 1,167 $ 1,256

<PAGE>

The effective tax rate varied from the statutory rate as follows:

Year ended December 31, 1993 1992 1991

(Thousands of dollars)

Statutory federal income
tax rate 35.0% 34.0% 34.0%

State and local taxes,
net of federal tax
benefit 6.8 10.1 10.4

Foreign taxes at rates less
than U.S. rates (2.6) (14.2) (10.8)

Taxable foreign source
income 4.9 6.6 4.1

Other (4.1) 2.5 1.3

Effective income tax rate 40.0% 39.0% 39.0%
- -----------------------------------------------------

Undistributed earnings of foreign subsidiaries included in
consolidated retained earnings at December 31, 1993 and 1992 amounted
to $15.3 million and $14.3 million, respectively. Such amounts are
considered to be reinvested indefinitely or will be distributed from
income that would not incur a significant tax consequence and,
therefore, no provision has been made for taxes that would be payable
upon distribution of these earnings.

Total income tax payments, net of refunds, during 1993, 1992 and 1991
were $9.2 million, $5.2 million and $36.5 million, respectively.

Taxing authorities periodically challenge positions taken by the
Company on its tax returns. On the basis of information presently
available, it is the opinion of management that any assessments
resulting from current tax audits will not have a material effect on
the financial position of the Company.

In 1992, the Company adopted SFAS No. 109, "Accounting for Income
Taxes." SFAS No. 109 establishes financial accounting and reporting
standards for the effects of income taxes that result from activities
during the current and preceding years. The Statement requires an
asset and liability approach for financial accounting and reporting for
income taxes. It also requires the Company to adjust its deferred tax
balances in the period of enactment for the effect of enacted changes
in tax rates. The effect of this change was not material for the year
ended December 31, 1992.

Note I-Lease Commitments

The Company conducts its business on premises leased in various
locations under long-term operating leases expiring through 2060. Net
rental payments under operating leases amounted to $11.1 million,
$12.0 million and $11.4 million, respectively, for the years ended
December 31, 1993, 1992 and 1991.

Properties under capital leases, which relate primarily to computer
and office equipment, are not material. Future minimum lease payments
under noncancelable operating leases in effect at December 31, 1993
are as follows:

Operating Leases

(Thousands of dollars)

1994 $ 8,216
1995 7,427
1996 6,415
1997 4,877
1998 3,933
Thereafter 49,652

Total future minimum lease payments $ 80,520

<PAGE>

In addition to the above rentals, under the terms of certain of the
leases, the Company pays real estate taxes, utility costs and other
increases based on a price-level index.

Operating leases include a lease expiring in 2009 (which can be
extended until 2039) on the North American headquarters building in
New York City (the "York Property"). York Avenue Development, Inc.
("York"), a wholly-owned subsidiary of Sotheby's, Inc. (itself a
wholly-owned subsidiary of the Company), holds a purchase option on
the York Property. The option can be exercised anytime until January
31, 1999 for ten times the rent at the date the option is exercised
plus a profit--sharing arrangement of from $5 million to $10 million,
or at defined dates in 1999, 2004 and 2009 for ten times the rent at
the date the option is exercised, subject to certain limitations.

The Company has reached an agreement with Taubman York Avenue
Associates, Inc. ("Associates") under which Associates will assist
York in developing and financing a new mixed-use tower (the "New
Tower") over the existing four-story building on the York Property, if
the Company chooses to develop the New Tower. Associates is controlled
by the largest shareholder and Chairman of the Company. Under the
Agreement:

(i) York will be responsible at its sole cost and expense for
developing the New Tower (but without recourse to the Company or
any of its other subsidiaries);

(ii) The investment of Sotheby's, Inc. in the development of the New
Tower will be limited to its pre-development costs, which totaled
$2.8 million at December 31, 1993;

(iii) Associates will lend funds and provide certain guarantees,
including guarantees that may be required by any construction
lender in order to provide the necessary resources for the
development of the New Tower; and

(iv) York will indemnify Associates against liabilities arising from
the construction of the New Tower and any guarantees given by
Associates.

If the New Tower is developed, under the agreement with Associates,
Sotheby's, Inc. will either acquire a condominium to be composed of
the existing building and the first floor of the New Tower (the
"Condominium") for $1.00 or lease the Condominium from York for $1.00
per year under a long-term lease. In addition, York is entitled to
receive 10% of the first $15.0 million of the cash profits plus 25% of
any cash profits in excess of $15.0 million from the development of the
New Tower. Associates will receive the remainder of the cash profits
from the development of the New Tower.

If construction does not begin on or before September 30, 1997,
Associates' arrangements with Sotheby's Inc. and York will terminate.

Note J-Shareholders' Equity

Common Stock and Public Offering - Effective May 13, 1988, 11,006,214
shares of Class A Common Stock were sold in an initial public
offering. Effective June 30, 1992, an additional 11,000,000 shares of
Class A Common Stock were sold in a secondary public offering. All
proceeds from the sales were received by the selling shareholders in
exchange for the shares sold. The Class A Common Stock is traded on
stock exchanges in both the United States and the United Kingdom.

Each share of Class A Common Stock is entitled to one vote and each
share of Class B Common Stock is entitled to ten votes. Both classes
of Common Stock share equally in dividend distributions.

Preferred Stock - In addition to Class A and B Common Stock outstanding,
the Company has the authority to issue 50,000,000 shares of Preferred
Stock, no par value. No such shares were issued and outstanding at
December 31, 1993 and 1992.

1987 Stock Option Plan - At December 31, 1993, the Company has reserved
10,039,000 shares of Class B Common Stock for issuance in connection
with the 1987 Stock Option Plan (the "Plan").

<PAGE>

Pursuant to the Plan, options are granted with an exercise price equal
to or greater than fair market value at the date of grant. For options
granted through September 1992, options vest and become exercisable
ratably during each of the fourth, fifth and sixth years after the date
of grant. For options granted subsequent to September 1992, options
vest and become exercisable ratably in each of the second, third,
fourth, fifth and sixth years after the date of grant (except in the
U.K. where options vest three-fifths in the fourth year and one-fifth in
each of the fifth and sixth years after the date of grant). The options
are exercisable into shares of Class B Common Stock, which are either
authorized but unissued shares or reacquired shares. The shares of
Class B Common Stock issued upon exercise are convertible into an
equivalent number of shares of Class A Common Stock. Under the current
rules of the New York Stock Exchange, substantially all options
granted after April 1988 may only be exercised if the optionee agrees
to convert Class B shares to Class A shares.

At December 31, 1993 and 1992, there were outstanding options for the
purchase of 5,229,977 and 3,817,659 shares, respectively, at prices
ranging from $1.50 to $22.62 per share. Stock option transactions
during 1993, 1992 and 1991 are summarized as follows (shares in
thousands):

Shares Reserved for Options Outstanding

Issuance under the Plan Shares Prices

Initial grant

September 1, 1987 12,507 7,628 $1.50

Balance at
December 31, 1990 11,073 7,391 $1.50-22.62

Options granted 160 $10.50-13.75
Options canceled (147) $1.50-12.19
Options exercised (1,045) (1,045) $1.50-12.19
Balance at
December 31, 1991 10,028 6,359 $1.50-22.62

Options granted 919 $10.62-13.25
Options canceled (136) $1.50-13.25
Options exercised (3,325) (3,325) $1.50-12.19

Balance at
December 31, 1992 6,703 3,817 $1.50-22.62

Options granted 2,350 $12.50-13.38
Options canceled (273) $10.50-15.50
Options exercised (664) (664) $1.50-13.38
Increase in shares
reserved 4,000

Balance at
December 31, 1993 10,039 5,230 $1.50-22.62

In January 1994, the Company approved an additional aggregate grant of
843,000 options pursuant to the 1987 stock option plan.

Stock Repurchase Program During 1990, the Company authorized a stock
repurchase program (the "repurchase program") to acquire up to
3,000,000 shares of its outstanding Class A common stock through open
market or other transactions. As of December 31, 1993 one million
shares have been repurchased under this program.

Note K-Restructuring Charge

During 1992, the Company incurred costs in its auction operations as a
result of restructuring activities. These included termination costs
related to staff reductions ($3.2 million), reorganization costs ($1.2
million) and lease cancellations and accelerated depreciation of
capital improvements ($0.5 million).

<PAGE>

Note L-Pension and Incentive Bonus Arrangements

The Company has a U.S. defined contribution plan that covers employees
after 90 days of service. The Company contributes 2% of each
participant's compensation to the plan. In addition, participants may
elect to contribute between 2% and 12% of their compensation, up to
the maximum amount allowable under IRS regulations, on a pre-tax
basis. Employee savings are matched by a Company contribution of up to
an additional 3% of the participant's compensation. The Company's
contributions amounted to $1.4 million, $1.2 million and $1.0 million
for the years ended December 31, 1993, 1992 and 1991, respectively.

The Company also has a defined benefit pension plan covering employees
in the United Kingdom. The U.K. pension plan covers substantially all
U.K. employees and contributions to the plan are funded annually.

The components of the net pension expense for this pension plan
follow:

Year ended December 31, 1993 1992 1991

(Thousands of dollars)

Service cost $ 2,582 $ 3,472 $ 2,731

Interest cost on
projected benefit
obligations 4,546 5,317 4,347

Actual return on plan
assets (20,327) (2,504) (15,694)

Net amortization and
deferral 14,105 (4,331) 9,943

Net pension expense $ 906 $ 1,954 $ 1,327

The funded status of the plan is as follows:

December 31, 1993 1992

(Thousands of dollars)

Accumulated vested
benefit obligations $ 54,609 $ 45,921

Effect of future salary increases 6,832 10,026

Total projected benefit obligations 61,441 55,947

Plan assets at fair market value,
primarily stocks and bonds 79,566 62,543

Excess of plan assets over
projected benefit obligations 18,125 6,596

Unrecognized net transition asset (3,978) (4,520)

Unrecognized net gain (11,815) (100)

Prepaid pension cost recognized in
consolidated balance sheet $ 2,332 $ 1,976

The weighted-average discount rate used in determining actuarial
values for the U.K. pension plan was 7.5% in 1993 and 8.5% in 1992;
the increase in future compensation levels was 7.0% in 1993 and 8.0%
in 1992; and the expected weighted-average long-term rate of return
on plan assets was 9.0% in 1993 and 9.5% in 1992.

In November of 1992, the FASB issued SFAS No. 112, "Employers'
Accounting for Postemployment Benefits," which will be adopted by the
Company in the first quarter of 1994. Under SFAS No. 112, employers
must recognize the cost of benefits provided to former or inactive, but
not retired, employees when an event occurs indicating payment of
benefits is probable. If the benefits accumulate or vest, the cost must
be recognized over the active service life of the employee. The
Company's postemployment benefits, including salary continuation and
health care insurance for disabled employees, do not accumulate or
vest and are currently recognized when benefits are paid or funded.
Adoption of this standard will not have a material impact in the year
of adoption or on future results of operations.

<PAGE>

Note M-Related Party Transactions

Members of the Board of Directors, the Advisory Board and employees
are not charged the vendor's commission on property sold at auction
for their benefit. In addition, the Company has a term loan program
whereby the Company lends money to certain officers and staff to
purchase a residence under term notes bearing interest at an annual
rate equal to the prime rate minus 1-2%. This program is available to
employees at the Company's discretion. Outstanding under this program
were loans amounting to $4.2 million and $3.0 million at December 31,
1993 and 1992, respectively. See Notes G, N and I for additional
related party disclosure.

Note N-Commitments and Contingencies

Legal Actions - The Company, in the normal course of business, is a
defendant in various legal actions.

Lending and Other Contingencies - In conjunction with the client loan
program, the Company enters into legally binding arrangements to lend,
on a collateralized basis, to potential consignors and other
individuals who have collections of fine art or other objects. Unfunded
commitments to extend additional credit were approximately $9.9
million and $27.1 million at December 31, 1993 and February 28, 1994,
respectively.

In certain instances, consignor advances are made with recourse
limited only to the works of art consigned for sale and pledged as
security for the loan, or with recourse limited to the consigned works
and to other works of art owned by the consignor but not pledged as
security. As of February 28, 1994, $11.5 million of these consignor
advances were outstanding.

The Company has a mortgage guarantee program whereby the employee
borrows from a bank on a demand basis and pays an annual interest rate
equal to the prime rate. All of the repayment obligations of the
employee are guaranteed by the Company. These obligations totaled $2.0
million at December 31, 1993 and February 28, 1994.

In the opinion of management, the commitments and contingencies
described above currently are not expected to have a material adverse
effect on the Company's financial statements.

Note O-Supplemental Cash Flow Information

In 1992, the Company purchased a business for $4.8 million. In
conjunction with the acquisition, liabilities were assumed as follows
(in thousands):

Fair value of assets acquired $ 12,620
Cash paid 4,845
Liabilities assumed $ 7,775

<PAGE>

Note P-Quarterly Results (Unaudited)

<TABLE>
<CAPTION>
First Second Third Fourth
(Thousands of dollars)

1993
AUCTION
<S> <C> <C> <C> <C>
Auction sales $ 129,585 $ 505,653 $ 84,667 $ 605,429
Revenues 31,882 82,637 20,768 99,685
Operating income (loss) (9,600) 27,035 (21,184) 35,215
Income (loss) before taxes (8,620) 27,636 (20,409) 35,626
FINANCIAL SERVICES
Revenues 2,305 1,732 1,760 1,803
Income before taxes 920 525 726 632

REAL ESTATE
Revenues 2,359 3,035 2,152 2,212
Income before taxes 486 880 433 272

Corporate operating expenses (1,639) (1,418) (2,049) (2,264)
Other non-operating income (expense) 345 (36) 108 3

CONSOLIDATED
Operating income (loss) (9,833) 27,022 (22,074) 33,855
Income (loss) before taxes (8,508) 27,587 (21,191) 34,269
Net Income (Loss) $ (5,190) $ 16,637 $ (12,714) $ 20,561
Earnings (Loss) Per Share $ (0.09) $ 0.30 $ (0.23) $ 0.36

1992
AUCTION

Auction sales $ 141,359 $ 426,353 $ 88,729 $ 475,160
Revenues 30,423 70,592 20,534 79,334
Operating income (loss) (10,505) 17,375 (24,617) 15,754
Income (loss) before taxes (9,816) 18,869 (23,088) 18,056
FINANCIAL SERVICES
Revenues 4,176 4,214 3,291 2,781
Income before taxes 1,801 15 1,811 1,584

REAL ESTATE

Revenues 1,770 3,096 2,420 2,339
Income before taxes 1 912 415 763

Corporate operating expenses (1,366) (1,356) (1,628) (1,827)
Other non-operating income (expense) 50 (22) 800 517

CONSOLIDATED

Operating income (loss) (10,069) 16,946 (24,019) 16,274
Income (loss) before taxes (9,330) 18,418 (21,690) 19,093
Net Income (Loss) $ (5,691) $ 11,235 $ (13,231) $ 11,647

Earnings (Loss) Per Share $ (0.11) $ 0.20 $ (0.25) $ 0.21

</TABLE>

<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Directors and Shareholders of
Sotheby's Holdings, Inc.:

We have audited the accompanying consolidated balance sheets of
Sotheby's Holdings, Inc. and subsidiaries as of December 31, 1993 and
1992, and the related consolidated statements of income, changes in
shareholders' equity and cash flows for each of the three years in the
period ended December 31, 1993. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly,
in all material respects, the financial position of Sotheby's Holdings,
Inc. and subsidiaries at December 31, 1993 and 1992, and the results
of their operations and their cash flows for each of the three years in
the period ended December 31, 1993 in conformity with generally
accepted accounting principles.

Deloitte & Touche
New York, New York
February 28, 1994

REPORT OF MANAGEMENT

The Company's consolidated financial statements were prepared by
management, which is responsible for their integrity and objectivity.
The financial statements have been prepared in accordance with
generally accepted accounting principles and, as such, include amounts
based on management's best estimates and judgments.

Management is further responsible for maintaining a system of internal
control structure and related policies and procedures designed to
provide reasonable assurance that assets are adequately safeguarded
and that the accounting records reflect transactions executed in
accordance with management's authorization.

Kevin A. Bousquette
Senior Vice President and
Chief Financial Officer

Thomas F. Gannalo
Vice President, Controller
and Chief Accounting Officer

AUDIT AND COMPENSATION
COMMITTEE CHAIRMAN'S LETTER

The Audit and Compensation Committee (the "Committee") of the Board
of Directors consisted of three independent Directors. Information as
to these persons, as well as the scope of duties of the Committee, is
provided in the Proxy Statement. During 1993, the Committee met six
times and reviewed with Deloitte & Touche, the Director of the
Internal Audit Department and management the various audit activities
and plans, together with the results of selected internal audits. The
Committee also reviewed the reporting of consolidated financial results
and the adequacy of internal controls. The committee recommended the
appointment of Deloitte & Touche as independent public accountants and
considered factors related to their independence. Deloitte & Touche
and the Director of the Internal Audit Department met privately with
the Committee on occasion to encourage confidential discussion as to
any auditing matters.

Max M. Fisher
Chairman, Audit and
Compensation Committee

<PAGE>

SHAREHOLDER INFORMATION

Administrative Offices

c/o Sotheby's Service Corporation
301 Merritt 7
Norwalk, Connecticut 06851

Transfer Agents

Mellon Securities Trust Company
85 Challenger Road
Overpeck Centre
Ridgefield Park, New Jersey 07660

National Westminster Bank PLC
Registrar's Department
P.O. Box No. 82
Caxton House, Redcliffe Way
Bristol BS99 7NH England

Common Stock Information

Sotheby's Holdings, Inc. Class A Common Stock is listed on the New
York Stock Exchange (symbol: BID) and the London Stock Exchange.

Annual Meeting

The Annual Meeting of Shareholders will be held at Sotheby's, 34-35
New Bond Street, London, on Wednesday, June 22, 1994, at 10:00 AM.

Form 10-K and Shareholder Information

The 1993 annual report filed with the Securities and Exchange
Commission and other investor information may be obtained by writing
to:

Shareholder Relations
Sotheby's
1334 York Avenue
New York, New York 10021
(212) 606-7507

U.K. Corporate Secretary's Office
Sotheby's
34-35 New Bond Street
London W1A 2AA
071-408-5257

Certified Public Accountants

Deloitte & Touche
1633 Broadway
New York, New York 10019

<PAGE>

Common Stock Price

The quarterly price ranges and dividends per share of Class A Common
Stock in 1993 and 1992 were as follows:

1993 High Low Cash
Dividends
Per Share

First $ 14 1/4 $ 12 1/4 $ 0.15
Second 14 7/8 11 3/8 0.15
Third 13 1/8 10 3/4 0.06
Fourth 17 1/4 11 3/4 0.06

1992 High Low Cash
Dividends
Per Share

First $ 15 3/8 $ 10 3/4 $ 0.15
Second 15 5/8 11 3/8 0.15
Third 13 7/8 10 1/4 0.15
Fourth 12 3/8 9 5/8 0.15

The Company also has Class B Common Stock convertible on a
share-for-share basis into Class A Common Stock. There is no public
market for the Class B Common Stock. Cash dividends are payable
equally on the Class A and B Common Stock.

The number of holders of record of the Class A Common Stock as of
March 11, 1994 was 1,483. The number of holders of record of the Class
B Common Stock as of March 11, 1994 was 44.

<PAGE>

SOTHEBY'S HOLDINGS, INC.

A. Alfred Taubman
Chairman

Max M. Fisher
Vice Chairman

Lord Camoys
Deputy Chairman

Diana D. Brooks
President and Chief Executive Officer

Kevin A. Bousquette
Senior Vice President and
Chief Financial Officer

Jeffrey H. Miro
Secretary

<PAGE>

SOTHEBY'S
(AUCTION OPERATIONS)

Sotheby's North
and South America

John L. Marion
Chairman

Diana D. Brooks
President and Chief Executive Officer

William F. Ruprecht
Managing Director and
Executive Vice President

SOTHEBY'S EUROPE

Simon de Pury
Chairman

Henry Wyndham
Chairman
United Kingdom

George Bailey
Managing Director

SOTHEBY'S ASIA

R. Julian de la M. Thompson
Chairman

<PAGE>

SOTHEBY'S FINANCIAL SERVICES

Mitchell Zuckerman
President

SOTHEBY'S
INTERNATIONAL REALTY

Michael L. Ainslie
Chairman

Stuart N. Siegel
President

OTHER CORPORATE OFFICERS

Susan Alexander
Senior Vice President, Human Resources

Diana Phillips
Senior Vice President, Public Relations

Marjorie E. Stone
Senior Vice President, General Counsel

John S. Brittain, Jr.
Vice President and Treasurer

Richard J. Cody
Vice President and Director of Taxes

Thomas F. Gannalo
Vice President, Controller and
Chief Accounting Officer

Joseph A. Williams
Vice President, Information Systems

ENDPAPERS

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SOTHEBY'SDIVERSEAUCTIONSERVICESAREOFFEREDTHROUGHOUTTHEWORLD

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<PAGE>

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TOKYO.TORONTO.TURIN.VIENNA.WASHINGTOND.C..ZURICH#

Photography

Ken Adlard, Noel Allum, Grant Deudney, Jerry Fetzer, David Grollman,
David Hays, Fraser Marr, Michael Oldford, Donna Schou, Joanne Savio

Editorial and Design

Sotheby's, New York

APPENDIX:

Description of illustrations:

Front Cover:

Paul Cezanne's Nature Morte: Les Grosse Pommes brought $28.6 million
in our spring auction in New York.

Page 1:

1) above center: Sotheby's headquarters on

New Bond Street in London.

2) Michael L. Ainslie,

Diana D. Brooks,

A. Alfred Taubman

Page 2

Above center: Lord Camoys, Viscount Blakenham, Ambassador Max M.
Fisher,

Walter J. P. Curley

Page 3

1) Above center:

Sotheby's New York headquarters.

2) Right: Dede Brooks

with our European senior management team,

George Bailey, Henry Wyndham, Simon de Pury.

Page 4

Henri Matisse's work of 1951, La Vis, the first great cut-out by the
artist ever to appear at auction, brought $13.8 million in New York.

Page 5

1) Honore Daumier's

Le Fardeau (La Blanchisseuse) sold in London for $2.5 million,
a record for the artist.

<PAGE>

2) Right: This lush, sun-dappled landscape by Pierre-Auguste Renoir,
Femmes dans Un Jardin, brought $6.8 million in New York.

3) Above center: Michel Strauss and David Nash of our Worldwide
Impressionist and Modern Art Department have each been with Sotheby's
for more than 30 years and are recognized internationally for their
expertise. They stand beside Paul Cezanne's Nature Morte: Les Grosses
Pommes. Six bidders competed actively for this masterpiece which sold
for $28.6 million, the ninth highest price for a painting at auction.

Page 6

1) In our 20th anniversary sale in Hong Kong we sold this magnificent
Jadeite and Diamond Ring for $770,000.

2) Above center: This magnificent 100.36 Carat Diamond fetched $12.8
million in our record-breaking Jewelry auction in Geneva.

3) Below: Our International Jewelry Department, directed by John Block
and David Bennett, works together to make Sotheby's the worldwide
leader in this category.

Page 7

The Magnificent Arcot No. 1 Diamond and Diamond Necklace by Van Cleef
& Arpels is an historically important piece that was given as a gift
by the Nawab of Arcot to Queen Charlotte, consort of George III, in
1777, at the time of the British colonization of the Indian
subcontinent. It brought $1.4 million at Sotheby's Geneva.

Page 8

1) Above center: William Merritt Chase's breathtaking pastel, Peonies,
brought $4.0 million, a record for the artist, in our auction of
American paintings.

2) Below: Sir Lawrence Alma-Tadema's The Baths of Caracalla sold for
$2.5 million, an artist record in U.S. dollars.

3) Cy Twombly's painting, Untitled, from 1969, fetched $1.7 million in
our fall sale of Contemporary art in New York.

4) Below center: In our Old Master paintings auction in New York,
Canaletto's A View of Riva Degli Schiavoni, Venice Looking East, sold
for $2.6 million.

Page 9

1) Antico's The Young Hercules Reading brought the very strong price
of $1.9 million in our auction of European Sculpture and Works of Art
in London.

2) Above center: The Bo Ju Gui, an important archaic bronze ritual
food vessel, sold in London in June for $1.4 million.

3) Above: This manuscript fragment in Abraham Lincoln's handwriting
contains one of his most passionate indictments of slavery.

4) Below: A world record for an Islamic object was set when this Iznik
Blue and White Pottery Candlestick brought $976,000 in a London auction.

<PAGE>

Page 10

1) Below: Rembrandt's Faust brought $178,500 at the sale of The Dr.
Otto Schafer Collection of Rembrandt Etchings. The collection
comprised 72 prints of unusually high quality, spanning the entire
period of Rembrandt's career.

2)Above: In Zurich and New York this autumn we successfully sold Greek
and Roman coins on behalf of the Agent Numismatic Fine Art
International for $6.3 million. This Marcus Junius Brutus Coin brought
$359,000.

3) Below: A world record for a classical antiquity was
set when this Caeretan Hydria from the Hirschmann Collection brought
$3.3 million.

Page 11

The highly successful sale
of the Moller Collection included a Pair of George II Mahogany
Commodes (one of the pair shown here), formerly in the Collection of
the Earl of Buckinghamshire at Hampden House, which brought $1.5
million.

Page 12

photos 1, 2 and 3:

The sale in Regensburg, which took place from October 12--21, involved
a great variety of objects, all with the impeccable Thurn und Taxis
provenance and nearly all in excellent condition. An interna-tional
team of six Sotheby's multi-lingual auctioneers conducted the 23 sales
sessions in five languages. Simon de Pury, Chairman of Sotheby's Europe
and Chief European Auctioneer, taking one of the sessions.

4) The majority of the works had originally been bought for Schloss
St. Emmeram, although included were many items from the contents of 25
other castles which have passed out of the family's ownership during
the past seven decades.

Photos 5 and 6 :

Buyers who could not attend the sales in person left an unprecedented
45,000 order bids on the antiques and works of art and 20,000 order
bids on the 75,000 bottles of wine.

<PAGE>

Page 13

1) Below right: David N. Redden, a Senior Vice President and
specialist in charge of our auction of Russian Space History, selling
Alexei Leonov's training suit for the first-ever spacewalk for
$255,500.

2) Below left: The Kosmos 1443 (interior view), the first space
capsule ever sold at auction, brought $552,500.

3) Above center: John L. Marion , Chairman of Sotheby's North and
South America and Chief Auctioneer, and Alexander Apsis, director of
Impressionist and Modern art in New York, at the auction of the
Stanley J. Seeger Collection.

4) Above: Picasso's Femmes et Enfants au Bord de la Mer from the
Stanley J. Seeger Collection sold for $4.4 million, well above the
pre-sale high estimate.

Page 14

1) Above center: Dede Brooks with Peter Rathbone and Dara Mitchell in
front of Childe Hassam's The Room of Flowers. Mr. Rathbone, Senior
Vice President and director of the American paintings department, has
been with Sotheby's for 21 years.

2) Below left:

Julian Thompson, Chairman of Sotheby's Asia.

3) Below right:

Felicity Nicholson, director of our Antiquities department in London.

Page 15

1) Above: Letitia Roberts, Senior Vice President and director of our
Porcelain department in New York holds an extremely rare Staffordshire
Creamware Teaparty Group which brought $453,500, a record for English
pottery and ceramics at auction.

2) Below right: Robert Woolley, Executive Vice President of Sotheby's
North America, conducts more than thirty benefit auctions each year,
and has raised $20 million for various charitable causes in the United
States and Canada.

3) Above center:

Dr. Christoph Graf Douglas, a Senior Director in charge of our German
operation, has been with Sotheby's for six years. Under his direction
we conducted the historic and highly successful auction of the
Property from the Princely Collections of von Thurn und Taxis.

4) Above: Simon Taylor,

a Senior Director and head of our British pictures department joined
Sotheby's 14 years ago. This year sales of British pictures enjoyed
tremendous success, led by the outstanding auction of watercolors and
oils by Archibald Thorburn.

EXHIBIT 21

SUBSIDIARIES OF SOTHEBY'S HOLDINGS, INC.

The subsidiaries of Sotheby's Holdings, Inc., which are wholly owned
except where indicated, are as follows:

JURISDICTION OF
INCORPORATION
---------------
Sotheby's Holdings, Inc. ................................ Michigan
Sotheby Parke Bernet Stamp Auction, Inc. .............. Connecticut
Sotheby's Art Sales Corp. ............................. New York
Sotheby's (Canada), Inc. .............................. Canada
Sotheby's Financial Services, Inc. .................... Nevada
SFS California, Inc. ................................ Nevada
Sotheby's International Realty, Inc. .................. Michigan
Sotheby's International Realty Affiliates, Inc. ..... New York
Sotheby's International Realty of Colorado, Inc. .... Michigan
Sotheby's International Realty Ltd. ................. United Kingdom
Sotheby's International Realty S.A. ................. Spain
Sotheby's Service Corporation ......................... Delaware
SPTC, Inc. ............................................ Nevada
Sotheby's Nevada, Inc. .............................. Nevada
Acquavella Modern Art (50%) ....................... Nevada
SFS Holdings, Inc. .................................... Delaware
Fine Art Insurance Ltd. ............................. Bermuda
Sotheby's Inc. ........................................ New York
Edmund Peel Fine Art Ltd. ........................... Jersey
Edmund Peel Fine Art S.L. ......................... Spain
Edmund Peel y Asociados S.A. ................... Spain
Etablissement Sotheby ............................... Liechtenstein
Oatshare Limited .................................... United Kingdom
International Art & Antique Loss Register
Ltd. (20%) ..................................... United Kingdom
Sotheby International Travel Limited .............. United Kingdom
Sotheby's ......................................... United Kingdom
Art Development (India) Ltd. .................... United Kingdom
Sotheby's India Pvt. Ltd. (India) (50%) ....... United Kingdom
The Bond Street Kiosk Ltd. ...................... United Kingdom
Clark Nelson Limited (USA) ...................... New York
Lexbourne Limited (50%) ......................... United Kingdom
Parke & Co. Limited (55%) ....................... United Kingdom
Sotheby's London ................................ United Kingdom
Sotheby's Espana S.A. ........................... Spain
Suitlast Ltd. ................................... United Kingdom
Sotheby's Financial Services Ltd. ................. United Kingdom
Sotheby Parke Bernet, Inc. .......................... Delaware
Sotheby Parke Bernet Nederland B.V. ................. Netherlands
Sotheby Mak van Waay B.V. ....................... Netherlands
Sotheby's Israel, Ltd. .......................... Israel
Sotheby's A.G. ...................................... Switzerland
Sotheby's Scandinavia A.B. .......................... Sweden
Sotheby's Asia Inc. ................................. Michigan
Sotheby's Australia Pty. Ltd. (50.5%) ............... Australia
Sotheby's Deutschland GmbH .......................... West Germany
Sotheby's Kunstauktionen G.m.b.H. ................. Austria
Sotheby's Hungary Ltd. ............................ Hungary
Sotheby's France S.A.R.L. ........................... France
Sotheby's Holdings International, Inc. .............. Michigan
Sotheby's International Ltd. ...................... United Kingdom
Sotheby's Hong Kong Ltd. ............................ Hong Kong
Sotheby's Monaco S.A.M. ........................... Monaco
Sotheby's Taiwan Limited .......................... Taiwan
Sotheby's Australia Pty. Ltd. (49.5%) ............. Australia
Sotheby's Italia s.r.l. ............................. Italy
Sotheby's Japan Ltd. ................................ Japan
Sotheby's Special Sales, Inc. ....................... Delaware
York Avenue Development, Inc. ....................... New York

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in Registration
Statement No. 33-26008 of Sotheby's Holdings, Inc. on Form
S-8 of our reports dated February 28, 1994, appearing in and
incorporated by reference in the Annual Report on Form 10-K
of Sotheby's Holdings, Inc. for the year ended December 31,
1993.

DELOITTE & TOUCHE

New York, New York
March 31, 1994

POWER OF ATTORNEY
-----------------

The undersigned, a Director of Sotheby's Holdings, Inc., a
Michigan corporation (the "Company"), does hereby constitute and
appoint Kevin A. Bousquette and Thomas F. Gannalo and each of
them, with full power of substitution, as his true and lawful
attorney and agent to execute in his name and on his behalf as a
Director of the Company, the Company's Annual Report on Form
10-K for the year ended December 31, 1993, and any and all
amendments thereto, to be filed with the Securities and Exchange
Commission (the "Commission") pursuant to the Securities Exchange
Act of 1934, as amended (the "Act"), and any and all instruments
which such attorneys and agents, or either of them, may deem
necessary or advisable to enable the Company to comply with the
Act, the rules, regulations and requirements of the Commission in
respect thereof and the securities or "Blue Sky" laws of any
State or other governmental subdivision; and the undersigned does
hereby ratify and confirm as his own act and deed all that such
attorneys and agents, and each of them, shall do or cause
to be done by virtue hereof. Each such attorney or agent shall
have, and may exercise, all of the powers hereby conferred.

IN WITNESS WHEREOF, the undersigned has hereunto subscribed
his signature this 2nd day of March, 1994.

/S/
___________________________

Viscount Blakenham

<PAGE>

POWER OF ATTORNEY
-----------------

The undersigned, a Director of Sotheby's Holdings, Inc., a
Michigan corporation (the "Company"), does hereby constitute
and appoint Kevin A. Bousquette and Thomas F. Gannalo and
each of them, with full power of substitution, as her true and
lawful attorney and agent to execute in her name and on her
behalf as a Director of the Company, the Company's Annual Report
on Form 10-K for the year ended December 31, 1993, and
any and all amendments thereto, to be filed with
the Securities and Exchange Commission (the "Commission")
pursuant to the Securities Exchange Act of 1934, as amended
(the "Act"), and any and all instruments which such attorneys
and agents, or either of them, may deem necessary or advisable
to enable the Company to comply with the Act, the
rules, regulations and requirements of the Commission in respect
thereof and the securities or "Blue Sky" laws of any State or
other governmental subdivision; and the undersigned does hereby
ratify and confirm as her own act and deed all that such
attorneys and agents, and each of them, shall do or cause to be
done by virtue hereof. Each such attorney or agent shall have,
and may exercise, all of the powers hereby conferred.

IN WITNESS WHEREOF, the undersigned has hereunto subscribed
her signature this 28th day of March, 1994.

/S/
___________________________
Diana D. Brooks
<PAGE>

POWER OF ATTORNEY
-----------------

The undersigned, a Director of Sotheby's Holdings, Inc., a
Michigan corporation (the "Company"), does hereby constitute
and appoint Kevin A. Bousquette and Thomas F. Gannalo and
each of them, with full power of substitution, as his true
and lawful attorney and agent to execute
in his name and on his behalf as a Director of the Company, the
Company's Annual Report on Form 10-K for the
year ended December 31, 1993, and any and all amendments
thereto, to be filed with the Securities and Exchange Commission
(the "Commission") pursuant to the Securities Exchange Act
of 1934, as amended (the "Act"), and any and all instruments
which such attorneys and agents, or either of them, may deem
necessary or advisable to enable the Company to comply with the
Act, the rules, regulations and requirements of the Commission in
respect thereof and the securities or "Blue Sky" laws of any
State or other governmental subdivision; and the undersigned does
hereby ratify and confirm as his own act and deed all that
such attorneys and agents, and each of them, shall do or cause
to be done by virtue hereof. Each such attorney or agent shall
have, and may exercise, all of the powers hereby conferred.

IN WITNESS WHEREOF, the undersigned has hereunto subscribed
his signature this 28th day of February, 1994.

/S/
___________________________
Lord Camoys

<PAGE>

POWER OF ATTORNEY
-----------------

The undersigned, a Director of Sotheby's Holdings, Inc., a
Michigan corporation (the "Company"), does hereby constitute
and appoint Kevin A. Bousquette and Thomas F. Gannalo and
each of them, with full power of substitution, as his true and
lawful attorney and agent to execute in his name and on his behalf
as a Director of the Company, the Company's Annual Report on Form
10-K for the year ended December 31, 1993, and any and all
amendments thereto, to be filed with the Securities and Exchange
Commission (the "Commission") pursuant to the Securities Exchange
Act of 1934, as amended (the "Act"), and any and all instruments
which such attorneys and agents, or either of them, may deem
necessary or advisable to enable the Company to comply with the Act,
the rules, regulations and requirements of the Commission in respect
thereof and the securities or "Blue Sky" laws of any State or other
governmental subdivision; and the undersigned does hereby ratify and
confirm as his own act and deed all that such attorneys and
agents, and each of them, shall do or cause to be done by virtue
hereof. Each such attorney or agent shall have, and may exercise,
all of the powers hereby conferred.

IN WITNESS WHEREOF, the undersigned has hereunto subscribed
his signature this 28th day of March, 1994.

/S/
___________________________
Walter J.P. Curley
<PAGE>

POWER OF ATTORNEY
-----------------

The undersigned, a Director of Sotheby's Holdings, Inc., a
Michigan corporation (the "Company"), does hereby constitute
and appoint Kevin A. Bousquette and Thomas F. Gannalo and
each of them, with full power of substitution, as his true and
lawful attorney and agent to execute in his name and on his behalf
as a Director of the Company, the Company's Annual Report on Form
10-K for the year ended December 31, 1993, and any and all
amendments thereto, to be filed with the Securities and Exchange
Commission (the "Commission") pursuant to the Securities Exchange Act
of 1934, as amended (the "Act"), and any and all instruments
which such attorneys and agents, or either of them, may deem necessary
or advisable to enable the Company to comply with the Act, the
rules, regulations and requirements of the Commission in respect
thereof and the securities or "Blue Sky" laws of any State or other
governmental subdivision; and the undersigned does hereby ratify and
confirm as his own act and deed all that such attorneys and
agents, and each of them, shall do or cause to be done by virtue hereof.
Each such attorney or agent shall have, and may exercise, all of the
powers hereby conferred.

IN WITNESS WHEREOF, the undersigned has hereunto subscribed
his signature this 1st day of March, 1994.

/S/
___________________________
Max M. Fisher
<PAGE>

POWER OF ATTORNEY
-----------------

The undersigned, a Director of Sotheby's Holdings, Inc., a
Michigan corporation (the "Company"), does hereby constitute
and appoint Kevin A. Bousquette and Thomas F. Gannalo and
each of them, with full power of substitution, as his true and
lawful attorney and agent to execute in his name and on his behalf
as a Director of the Company, the Company's Annual Report on Form
10-K for the year ended December 31, 1993, and any and all
amendments thereto, to be filed with the Securities and Exchange
Commission (the "Commission") pursuant to the Securities Exchange Act
of 1934, as amended (the "Act"), and any and all instruments
which such attorneys and agents, or either of them, may deem necessary
or advisable to enable the Company to comply with the Act, the
rules, regulations and requirements of the Commission in respect
thereof and the securities or "Blue Sky" laws of any State or other
governmental subdivision; and the undersigned does hereby ratify and
confirm as his own act and deed all that such attorneys and
agents, and each of them, shall do or cause to be done by virtue hereof.
Each such attorney or agent shall have, and may exercise, all of the
powers hereby conferred.

IN WITNESS WHEREOF, the undersigned has hereunto subscribed
his signature this 25th day of February, 1994.

/S/
_______________________________
The Rt. Hon The Earl of Gowrie
<PAGE>

POWER OF ATTORNEY
-----------------

The undersigned, a Director of Sotheby's Holdings, Inc., a
Michigan corporation (the "Company"), does hereby constitute and
appoint Kevin A. Bousquette and Thomas F. Gannalo and each of them,
with full power of substitution, as his true and lawful attorney and
agent to execute in his name and on his behalf as a Director of the
Company, the Company's Annual Report on Form 10-K for the year ended
December 31, 1993, and any and all amendments thereto, to be filed with
the Securities and Exchange Commission (the "Commission")
pursuant to the Securities Exchange Act of 1934, as amended (the "Act"),
and any and all instruments which such attorneys and agents, or
either of them, may deem necessary or advisable to enable the
Company to comply with the Act, the rules, regulations and requirements of
the Commission in respect thereof and the securities or "Blue Sky" laws of
any State or other governmental subdivision; and the undersigned does hereby
ratify and confirm as his own act and deed all that such attorneys and
agents, and each of them, shall do or cause to be done by virtue hereof.
Each such attorney or agent shall have, and may exercise, all of the
powers hereby conferred.

IN WITNESS WHEREOF, the undersigned has hereunto subscribed
his signature this 28th day of March, 1994.

/S/
___________________________
A. Alfred Taubman
<PAGE>

POWER OF ATTORNEY
-----------------

The undersigned, a Director of Sotheby's Holdings, Inc., a
Michigan corporation (the "Company"), does hereby constitute
and appoint Kevin A. Bousquette and Thomas F. Gannalo and
each of them, with full power of substitution, as his true and
lawful attorney and agent to execute in his name and on his behalf
as a Director of the Company, the Company's Annual Report on Form
10-K for the year ended December 31, 1993, and any and all
amendments thereto, to be filed with the Securities and Exchange
Commission (the "Commission") pursuant to the Securities Exchange Act
of 1934, as amended (the "Act"), and any and all instruments
which such attorneys and agents, or either of them, may deem necessary
or advisable to enable the Company to comply with the Act, the
rules, regulations and requirements of the Commission in respect
thereof and the securities or "Blue Sky" laws of any State or other
governmental subdivision; and the undersigned does hereby ratify and
confirm as his own act and deed all that such attorneys and
agents, and each of them, shall do or cause to be done by virtue hereof.
Each such attorney or agent shall have, and may exercise, all of the
powers hereby conferred.

IN WITNESS WHEREOF, the undersigned has hereunto subscribed
his signature this 22nd day of February, 1994.

/S/
___________________________
R. Julian de la M. Thompson
<PAGE>

POWER OF ATTORNEY
-----------------

The undersigned, a Director of Sotheby's Holdings, Inc., a
Michigan corporation (the "Company"), does hereby constitute
and appoint Kevin A. Bousquette and Thomas F. Gannalo and
each of them, with full power of substitution, as his true and
lawful attorney and agent to execute in his name and on his behalf
as a Director of the Company, the Company's Annual Report on Form
10-K for the year ended December 31, 1993, and any and all
amendments thereto, to be filed with the Securities and Exchange
Commission (the "Commission") pursuant to the Securities Exchange Act
of 1934, as amended (the "Act"), and any and all instruments
which such attorneys and agents, or either of them, may deem necessary
or advisable to enable the Company to comply with the Act, the
rules, regulations and requirements of the Commission in respect
thereof and the securities or "Blue Sky" laws of any State or other
governmental subdivision; and the undersigned does hereby ratify and
confirm as his own act and deed all that such attorneys and
agents, and each of them, shall do or cause to be done by virtue
hereof. Each such attorney or agent shall have, and may exercise,
all of the powers hereby conferred.

IN WITNESS WHEREOF, the undersigned has hereunto subscribed
his signature this 28th day of March, 1994.

/S/
___________________________
Leslie H. Wexner