SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 1994
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 (IRS Employer
incorporation or organization) Identification No.)
500 North Woodward Avenue, Suite 100
Bloomfield Hills, Michigan 48304
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, include area code: (313) 646-2400
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X . No .
As of July 31, 1994, there were outstanding 36,685,499 shares of Class A
Limited Voting Common Stock, par value $0.10 per share, and 19,093,971 shares
of Class B Common Stock, par value $0.10 per share, of the Registrant. Each
share of Class B Common Stock is freely convertible into one share of Class
A Limited Voting Common Stock.
<PAGE>
PART 1: FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
CONSOLIDATED BALANCE SHEETS
Sotheby's Holdings, Inc. and Subsidiaries
(Thousands of dollars)
<CAPTION>
June 30, December 31,
1994 1993
----------- -----------
(Unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $50,391 $91,840
Accounts and notes receivable, net of allowance
for doubtful accounts of $10,456 and $10,596
Auction operations 194,019 166,962
Finance operations 131,810 98,419
Other 15,867 12,670
----------- -----------
Total Accounts and Notes Receivable, Net 341,696 278,051
Inventory, net 80,919 81,369
Deferred income taxes 8,604 8,675
Prepaid expenses 10,619 11,880
----------- -----------
Total Current Assets 492,229 471,815
Properties, less allowance for depreciation
and amortization of $51,453 and $51,100 65,717 65,078
Intangible assets, less allowance for
amortization of $27,193 and $25,866 29,586 29,633
Other assets 13,705 11,345
----------- -----------
Total Assets $601,237 $577,871
=========== ===========
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
Sotheby's Holdings, Inc. and Subsidiaries
(Thousands of dollars)
<CAPTION>
June 30, December 31,
1994 1993
----------- -----------
(Unaudited)
<S> <C> <C>
Liabilities and Shareholders' Equity
Current Liabilities:
Due to consignors $215,352 $205,873
Short-term borrowings 10,170 4,583
Accounts payable and accrued liabilities 82,824 95,043
Deferred revenues 5,409 6,165
Accrued income taxes 49,186 36,187
----------- -----------
Total Current Liabilities 362,941 347,851
Long-term Liabilities:
Commercial paper 26,500 34,000
Other long-term obligations 1,427 1,388
----------- -----------
Total Liabilities 390,868 383,239
Shareholders' Equity =========== ===========
Common Stock, $0.10 par value:
Authorized shares - 125,000,000 of Class A and 75,000,000
of Class B
Issued and outstanding shares - 36,663,999 and 35,399,497
of Class A, and 19,093,971 and 20,096,469 of Class B, at
June 30, 1994 and December 31, 1993, respectively 5,576 5,550
Additional paid-in capital 83,156 80,509
Retained earnings 136,934 129,637
Foreign currency translation adjustments (15,297) (21,064)
----------- -----------
Total Shareholders' Equity 210,369 194,632
----------- -----------
Total Liabilities and Shareholders' Equity $601,237 $577,871
=========== ===========
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Sotheby's Holdings, Inc. and Subsidiaries
(Thousands of dollars, except per share data)
<CAPTION>
For The Second Quarter For The Six Months
Ended June 30, Ended June 30,
---------------------- -------------------
1994 1993 1994 1993
-------- -------- -------- --------
<S>
Auction: <C> <C> <C> <C>
Revenues $87,591 $82,637 $122,250 $114,519
Direct costs of services (16,358) (14,621) (23,668) (21,779)
Salaries and related costs (22,275) (18,688) (41,835) (36,531)
General and administrative expenses (16,314) (19,545) (31,936) (34,525)
Depreciation and amortization (2,034) (1,855) (3,870) (3,683)
Operating income before inventory and other -------- -------- -------- --------
auction-related activities 30,610 27,928 20,941 18,001
Income (loss) from inventory and other
auction-related activities 389 (893) 704 (566)
-------- -------- -------- --------
Operating income - Auction 30,999 27,035 21,645 17,435
Interest income 775 1,354 2,102 3,076
Interest expense (1,075) (1,202) (1,705) (2,531)
Net interest charged to Financial Services 526 449 861 1,036
-------- -------- -------- --------
Income before taxes - Auction 31,225 27,636 22,903 19,016
Financial Services:
Revenues 2,358 1,732 4,034 4,037
General and administrative expenses (624) (758) (1,223) (1,556)
Net interest expense from Auction (526) (449) (861) (1,036)
-------- -------- -------- --------
Income before taxes - Financial Services 1,208 525 1,950 1,445
Real Estate:
Revenues 3,459 3,035 6,076 5,394
Operating expenses (2,228) (2,155) (4,336) (4,028)
-------- -------- -------- --------
Income before taxes - Real Estate 1,231 880 1,740 1,366
-------- -------- -------- --------
Corporate operating expenses (1,727) (1,418) (3,232) (3,057)
Other non-operating income (expense) (163) (36) (65) 309
-------- -------- -------- --------
Consolidated:
Revenues 93,408 87,404 132,360 123,950
Operating income 31,711 27,022 22,103 17,189
Net interest income 226 601 1,258 1,581
Other non-operating income (expense) (163) (36) (65) 309
-------- -------- -------- --------
Income before taxes 31,774 27,587 23,296 19,079
Income taxes (12,709) (10,950) (9,318) (7,632)
-------- -------- -------- --------
Net income $19,065 $16,637 $13,978 $11,447
======== ======== ======== ========
Net Income Per Share $0.34 $0.30 $0.25 $0.21
======== ======== ======== ========
Weighted Average Shares Outstanding 56,695,269 56,389,781 56,145,643 55,752,939
========== ========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Sotheby's Holdings, Inc. and Subsidiaries
(Thousands of Dollars)
<CAPTION>
For The Six Months Ended June 30, 1994 1993
------- -------
<S> <C> <C>
Operating Activities:
Net Income $13,978 $11,447
Adjustments to reconcile net income to net cash
(used) provided by operating activities before
working capital items:
Depreciation and amortization 4,097 3,901
Tax benefit of stock option exercises 780 605
Asset provisions 2,990 5,379
Other (2,304) 416
------- -------
Net cash provided by operating activities
before working capital items 19,541 21,748
------- -------
Working capital items:
Decrease (Increase) in prepaid expenses 1,261 (1,610)
Increase in accounts receivable (32,064) (21,697)
(Increase) Decrease in inventory (580) 543
Increase in due to consignors 9,479 53,593
Increase in income taxes payable 13,070 7,105
Decrease in other current liabilities (12,975) (2,131)
------- -------
Net cash (used) provided by operating activities (2,268) 57,551
------- -------
Investing Activities:
Finance operation loans (32,289) 20,547
Capital expenditures (2,201) (1,949)
------- -------
Net cash (used) provided by investing activities (34,490) 18,598
------- -------
Financing Activities:
Decrease in commercial paper (7,500) (22,400)
Increase (Decrease) in short-term borrowings 5,587 (4,132)
Proceeds from exercise of stock options 1,893 1,122
Dividends paid (6,682) (16,547)
------- -------
Net cash used by financing activities (6,702) (41,957)
------- -------
Effect of exchange rate changes on cash 2,011 (1,209)
------- -------
(Decrease) Increase in Cash and Cash Equivalents (41,449) 32,983
Cash and Cash Equivalents at Beginning of Period 91,840 85,703
------- -------
Cash and Cash Equivalents at End of Period $50,391 $118,686
======= =======
</TABLE>
<PAGE>
SOTHEBY'S HOLDINGS, INC.
AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. The consolidated financial statements included herein have been
prepared by Sotheby's Holdings, Inc. (together with its subsidiaries,
the "Company") pursuant to the rules and regulations of the Securities
and Exchange Commission. These consolidated financial statements
should be read in conjunction with the consolidated financial
statements and the notes thereto incorporated by reference in the
Company's Annual Report on Form 10-K for the year ended December 31,
1993 (the "Annual Report"). Reference should be made to the Annual
Report for industry segment information required to be included under
Financial Accounting Standards Board Statement No. 14.
In the opinion of the management of the Company, all adjustments,
consisting of normal recurring adjustments, necessary for a fair
presentation of the results of operations for the second quarter and
six month periods ended June 30, 1994 and 1993 have been included.
Certain amounts for the six months ended June 30, 1993 have been
reclassified to conform to the 1994 presentation.
2. Credit Arrangements
At June 30, 1994, there were $26.5 million of outstanding commercial
paper notes sold to dealers at weighted average discount rates of
4.6%. These notes 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. Short term borrowings totaled $10.2 million at June 30, 1994
and consisted primarily of outstanding amounts under a bank line of
credit which bears interest at LIBOR plus 5/8% as well as a demand
note payable which bears interest at prime plus 1%.
On August 3, 1994, the Company entered into a $300 million Bank Credit
Agreement (the "Agreement"). Borrowings under the Agreement are
permitted to January 31, 1998 in either U.S. dollars or U.K.
pounds sterling. The interest rate is based on LIBOR. The facility fee
for the $300 million committed amount is 0.15% per annum. The
Agreement contains certain financial covenants. The Company is
permitted to pay dividends, however, consolidated tangible net
worth, as defined, may not be less than $150 million. On August 3,
1994, all pre-existing revolving credit facilities were discontinued.
3. Commitments and Contingencies
In conjunction with the client loan program, the Company enters into
legally binding arrangements to lend, on a collateralized basis, to
<PAGE>
potential consignors and other individuals who have collections of
fine art and other objects. Unfunded commitments to extend additional
credit were approximately $4.3 million at June 30, 1994 and $15.1
million at August 8, 1994.
In addition, the Company, in the normal course of business, is a
defendant in various legal actions.
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.
4. Seasonality of Business
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.
<TABLE>
<CAPTION>
Percentage of
Annual
Auction Sales
--------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
January - March 10% 12% 11%
April - June 38% 38% 37%
July - September 6% 8% 7%
October - December 46% 42% 45%
---- ---- ----
100% 100% 100%
==== ==== ====
</TABLE>
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
RESULTS OF OPERATIONS
Auction
The worldwide auction business is highly seasonal in nature, with two
principal selling seasons, spring and fall. Accordingly, second quarter
results reflect higher auction sales than the first quarter and higher
operating margins due to the fixed nature of many of the operating
expenses. (See Note 4 in the Notes to the Consolidated Financial
Statements for additional information.)
Following is a geographical breakdown of the Company's auction sales for
the second quarter and six month periods ended June 30, 1994 and 1993
(in thousands):
<TABLE>
<CAPTION>
For the Second Quarter For the Six Months
Ended June 30 Ended June 30
-------------------------- -----------------------
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
North America $281,610 $265,683 $383,550 $336,526
Europe 223,496 223,499 282,837 281,967
Asia 25,693 16,471 25,693 16,745
-------- -------- -------- --------
Total $530,799 $505,653 $692,080 $635,238
======== ======== ======== ========
</TABLE>
For the quarter ended June 30, 1994, worldwide auction sales increased
$25.1 million, or 5%, to $530.8 million. This increase was attributable
to North America, with growth of $15.9 million, or 6%, over 1993 levels,
and Asia, where sales increased by $9.2 million, or 56%. European sales
were flat when compared to the second quarter of 1993. For the six
months ended June 30, 1994, worldwide auction sales increased $56.8
million, or 9%, compared to the first six months of 1993. North
American sales increased $47.0 million, or 14%, while Asian sales
increased $8.9 million. European sales were flat when compared to the
first six months of 1993. The increase in North American sales for both
the second quarter and first half of 1994 was largely due to single
owner sales. North American second quarter sales also benefitted from
increases in Jewelry sales as well as other selling categories, most
notably Contemporary Art and Latin American Paintings. The increases
in these categories more than offset a decline in sales of Impressionist
and Modern Paintings in the second quarter. The increase in Asian sales
for the second quarter was driven by the Taiwan Paintings sale as well
as increased sales in Hong Kong. Movements in year-to-year exchange
rates did not materially affect sales for the second quarter and first
half of 1994.
<PAGE>
Revenues from auction operations ("Auction") for the second quarter of
1994 increased $5.0 million, or 6%, and, for the first six months of
l994, increased $7.8 million, or 7%, over the comparable periods of
the prior year. The increase in Auction revenues for both the second
quarter and first six months of 1994 was attributable to increased
commissions (which are principally buyer's premium, vendor's commission
and expense recoveries). The growth in commissions for the second quarter
and first half of 1994 resulted principally from the greater volume of
auction sales discussed above. Higher rates of commission realized during
the second quarter of 1994, and to a much lesser extent in the first half
of 1994, also contributed to the increase in commission revenues over prior
year periods. The increase in commissions in the first half of 1994 was
offset, in part, by reductions in other revenue areas. The impact of
translating results outside North America to U.S. dollars did not have
a material impact on revenues in either the second quarter or first half
of 1994.
Auction's operating expenses (which include Auction's direct costs of
services, salaries and related costs, general and administrative
expenses as well as depreciation and amortization) totalled $57.0
million for the second quarter of 1994, an increase of $2.3 million, or
4%, over 1993's second quarter. For the first six months of 1994,
operating expenses increased to $101.3 million, an increase of $4.8
million, or 5%, over the previous year's first six months. The increase
in both second quarter and first half Auction operating expenses was
primarily attributable to increased salaries and related costs as well
as direct costs of services, offset, in part, by decreases in general
and administrative expenses. The increase in salaries and related costs
for the second quarter and first half of 1994 is principally due to:
incentive compensation, which, in 1993, was recorded in the second half of
the year, primarily in the fourth quarter; salary increases at the
beginning of 1994 and; salary adjustments put into effect during the course
of 1993 (following several years of very restrained compensation growth).
Direct costs of services, which consist largely of catalogue production,
distribution and mailing costs, were up approximately $1.7 million in the
second quarter of 1994 and $1.9 million for the first half of 1994,
resulting from the increased sales activity. Direct costs of services as a
percentage of sales is up slightly in the second quarter and is flat for
the first six months of 1994 when compared to the same periods in 1993.
General and administrative expenses decreased $3.2 million, or 17%, for
the second quarter and $2.6 million, or 8%, for the first six months of
1994. The decrease in general and administrative expenses reflects
lower levels of various provisions for reserves recorded in 1994 when
compared to 1993.
Income from inventory and other auction-related activities includes net
gains on sales of inventory (including gains on sales of inventory
obtained as a result of the auction process and the Company's share of
earnings from the sale of inventory through the Acquavella Modern Art
Partnership), net of provisions for writedowns of inventory to estimated
realizable value. For the quarter ended June 30, 1994, inventory and
other auction-related activities generated pre-tax income of $0.4
<PAGE>
million compared to a pre-tax loss of $0.9 million for the second
quarter of 1993. For the six months ended June 30, 1994, income from
inventory and other auction-related activities contributed $0.7 million
to pre-tax income compared to a pre-tax loss of $0.6 million for the
comparable period of the prior year. The increase in second quarter and
half-year results is largely due to a reduction in provisions for
writedowns of inventory to estimated realizable value, as well as
increased earnings from inventory sold during the period.
Auction's operating income increased $4.0 million, or 15%, to $31.0
million for the quarter ended June 30, 1994. Year-to-year exchange rate
movements did not have a material effect on Auction's second quarter
operating income. North American Auction operating income increased
$0.9 million, or 5%, in the second quarter of 1994. European Auction
operating income increased $2.0 million, or 21%, over the second quarter of
1993, while Asian operating income increased $1.1 million, from $0.4
million in 1993's second quarter to $1.5 million in 1994. For the six
months ended June 30, 1994, Auction's operating income increased $4.2
million, or 24%, compared to the first six months of the previous year.
Excluding the impact of translating foreign currencies to U.S dollars,
total Auction operating income increased by $3.7 million. In North
America, Auction operating income increased $2.6 million, or 16%, from
$16.2 million in the first six months of 1993 to $18.8 million in the first
six months of 1994. Excluding the impact of foreign currency translation,
European operating income increased $0.3 million, while in Asia the
operating loss decreased by $0.8 million.
Auction's interest income, which is earned on short-term investments of
excess cash, decreased in the first six months of 1994 compared to the
first six months of 1993 due primarily to a lower level of invested funds
in Europe when compared to the prior year. Interest expense decreased due
to a lower average level of commercial paper borrowings compared to the
first six months of 1993.
Financial Services
Revenues from Financial Services increased to $2.4 million for the
second quarter of 1994 from $1.7 million last year. The growth in
revenues was due to higher rates of interest earned on outstanding loans
and, to a lesser extent, to an increase in the average outstanding loan
portfolio. Average month-end portfolio balances for the three months
ended June 30, 1994 and 1993 were approximately $124 million and $113
million, respectively. For the first six months of 1994, revenues from
Financial Services were flat when compared to the same period last year.
For the second quarter of 1994, income before taxes increased $0.7
million from the comparable period in 1993. Lower levels of bad debt
reserves in the 1994 second quarter, when compared to 1993, added to the
impact of higher revenues. For the first half of 1994, income before
taxes increased $0.5 million, principally due to a reduction in the
current year provision for bad debts when compared to the prior period.
<PAGE>
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
June 30, 1994, $9.5 million of these consignor advances were
outstanding.
Real Estate
Both revenues and pre-tax income from Sotheby's International Realty,
Inc. ("Real Estate") increased $0.4 million over the second quarter of
1993. This increase reflects a higher level of property sales offset,
in part, by lower commission rates. For the first six months of 1994,
Real Estate's revenues increased $0.7 million while pre-tax income
increased $0.4 million. An increase in property sales for the first six
months of 1994 was offset, in part, by a decrease in the commission rate
as well as increased operating expenses, principally salaries and
related costs.
Provision for Income Taxes
The consolidated effective tax rate was 40% in the first six months of
1994 and 1993.
Net Income and Earnings per Share
For the second quarter of 1994, net income increased 15% to $19.1
million, compared to net income of $16.6 million in the second quarter
of 1993. For the first six months of 1994, net income increased to
$14.0 million, from $11.4 million in the first six months of 1993.
Earnings per share for the second quarter of 1994 increased to $0.34
from $0.30 in the second quarter of 1993. Earnings per share for the
six months ended June 30, 1994 totalled $0.25, compared to $0.21 per
share in the first six months of 1993.
LIQUIDITY AND CAPITAL RESOURCES
The Company's net cash position (cash and cash equivalents, less total
debt, which includes short-term borrowings and commercial paper)
totalled $13.7 million at June 30, 1994 compared to $53.3 million at
December 31, 1993. Working capital (current assets less current
liabilities) at June 30, 1994 was $129.3 million compared to $124.0
million at December 31, 1993.
The Company relies on internally generated funds and borrowings to meet
its financing requirements. The Company may issue up to $200 million
of short-term notes pursuant to its U.S. commercial paper program, of
which $26.5 million was issued and outstanding at June 30, 1994. The
Company had cash and cash equivalents of $50.4 million at June 30, 1994.
The Company supports any short-term notes issued under its U.S. commercial
<PAGE>
paper program with committed credit facilities. Prior to August 3, 1994,
the Company had $175 million available under committed revolving credit
facilities and $30 million available under a line of credit. These
arrangements were discontinued effective August 3, 1994, at which date the
Company entered into a new Bank Credit Agreement which provides $300
million of committed available financing to January 31, 1998 (See Note 2).
For the six months ended June 30, 1994, cash used by operating
activities totaled $2.3 million compared to $57.6 million of cash
provided by operations for the corresponding period of 1993. The
Company's primary source of liquidity for the first six months of 1994
was from short term borrowings, while the most significant cash
uses were derived from net funding of the client loan portfolio,
repayment of commercial paper borrowings and payment of shareholder
dividends. The Company's primary sources of liquidity for the first six
months of 1993 were derived from operations as well as the net reduction
of the client loan portfolio. The most significant cash uses
for this period were repayment of commercial paper borrowings and
shareholder dividends.
The Company paid dividends to shareholders of $6.7 million during the
first six months of 1994 (of which $3.3 million was in respect of 1993)
and $16.5 million during the first six months of 1993 (of which $8.3
million was in respect of 1992).
Capital expenditures, consisting primarily of office and auction
facility refurbishment and the acquisition of computer equipment,
totalled $2.2 million for the first six months of 1994 and $1.9 million
for the first six months of 1993.
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
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 utilization of additional capital resources.
<PAGE>
PART II, OTHER INFORMATION
SOTHEBY'S HOLDINGS, INC.
AND SUBSIDIARIES
ITEM 4. Submission of Matters to a Vote of Security-Holders
On June 22, 1994, the Company held its annual meeting of shareholders.
The matters on which the shareholders voted were: the election of three
directors by the holders of Class A Limited Voting Common Stock; the
election of six directors by the holders of Class B Common Stock; and the
ratification of the Board's selection of Deloitte & Touche as the Company's
independent auditors for the year ending December 31, 1994. All nominees
were elected, and all other proposals passed. The results of the voting
are shown below:
<TABLE>
<CAPTION>
ELECTION OF CLASS A DIRECTORS
NOMINEES VOTES FOR VOTES AGAINST VOTES WITHHELD
- - -------- ---------- ------------- --------------
<S> <C> <C> <C>
A. Alfred Taubman 28,650,014 0 817,282
Max M. Fisher 28,648,673 0 816,623
Walter J. P. Curley 28,688,848 0 778,448
</TABLE>
<TABLE>
<CAPTION>
ELECTION OF CLASS B DIRECTORS
NOMINEES VOTES FOR VOTES AGAINST VOTES WITHHELD
- - -------- ----------- ------------- --------------
<S> <C> <C> <C>
Michael L. Ainslie 178,377,000 0 0
Viscount Blakenham 178,377,000 0 0
Diana D. Brooks 178,377,000 0 0
Lord Camoys 178,377,000 0 0
The Rt. Hon. Earl of Gowrie 178,377,000 0 0
R. Julian de la M. Thompson 178,377,000 0 0
Leslie H. Wexner 178,377,000 0 0
</TABLE>
RATIFICATION OF AUDITORS
207,392,570 Votes were cast for ratification;
52,316 Votes were cast against ratification; and
399,410 Votes abstained (including broker non-votes).
<PAGE>
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
4. Credit Agreement Dated as of
August 3, 1994, Among Sotheby's Holdings,
Inc., Sotheby's, Inc., Oatshare Limited,
Sotheby's, and Chemical Bank.
(b) Reports on Form 8-K
No report on Form 8-K as been filed for the
quarter ended June 30, 1994.
<PAGE>
SOTHEBY'S HOLDINGS, INC.
AND SUBSIDIARIES
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Company has duly caused this report to be signed this
15th day of August, 1994, on its behalf by the undersigned,
thereunto duly authorized and in the capacity indicated.
SOTHEBY'S HOLDINGS, INC.
By: Thomas F. Gannalo
------------------------
Vice President &
Chief Accounting Officer
<PAGE>
EXECUTION COPY
=============================================================================
CREDIT AGREEMENT
Dated as of August 3, 1994,
Among
SOTHEBY'S HOLDINGS, INC.,
SOTHEBY'S, INC.,
OATSHARE LIMITED,
SOTHEBY'S,
THE LENDERS NAMED HEREIN
and
CHEMICAL BANK,
as Administrative Agent
=============================================================================
[CS&M Ref. No. 6700-229]
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
Definitions
-----------
SECTION 1.01. Defined Terms 1
SECTION 1.02. Terms Generally 19
ARTICLE II
The Credits
-----------
SECTION 2.01. Commitments 20
SECTION 2.02. Loans 21
SECTION 2.03. Competitive Bid Procedure 23
SECTION 2.04. Standby Borrowing Procedure 26
SECTION 2.05. Refinancings 27
SECTION 2.06. Fees 28
SECTION 2.07. Repayment of Loans 29
SECTION 2.08. Interest on Loans 30
SECTION 2.09. Default Interest 31
SECTION 2.10. Alternate Rate of Interest 31
SECTION 2.11. Termination and Reduction of
Commitments 31
SECTION 2.12. Prepayment 32
SECTION 2.13. Reserve Requirements; Change in
Circumstances 33
SECTION 2.14. Change in Legality 35
SECTION 2.15. Indemnity 36
SECTION 2.16. Pro Rata Treatment 37
SECTION 2.17. Sharing of Setoffs 38
SECTION 2.18. Payments 39
SECTION 2.19. Taxes 39
SECTION 2.20. Assignment of Commitments Under
Certain Circumstances 42
ARTICLE III
Representations and Warranties
------------------------------
SECTION 3.01. Corporate Existence and Good Standing 43
SECTION 3.02. Corporate Power, Authorization and Compliance
with the Law 43
SECTION 3.03. Financial Information; Absence of Material
Adverse Change 44
SECTION 3.04. Employee Benefit Plans 44
SECTION 3.05. Environmental Matters 45
SECTION 3.06. Litigation 45
<PAGE>
SECTION 3.07. Taxes 45
SECTION 3.08. Subsidiaries 45
SECTION 3.09. Investment Company Act 45
SECTION 3.10. No Material Misstatements 45
SECTION 3.11. Federal Reserve Regulations 46
SECTION 3.12. Title to Properties 46
SECTION 3.13. Use of Proceeds 46
ARTICLE IV
Conditions of Lending
---------------------
SECTION 4.01. All Borrowings 47
SECTION 4.02. Closing Date 47
ARTICLE V
Affirmative Covenants
---------------------
SECTION 5.01. Financial Statements 49
SECTION 5.02. Payments and Obligations 50
SECTION 5.03. Maintain Property and Insurance 50
SECTION 5.04. Maintain Existence 51
SECTION 5.05. Compliance with Laws 51
SECTION 5.06. Inspection 51
SECTION 5.07. ERISA 51
ARTICLE VI
Negative Covenants
------------------
SECTION 6.01. Liens 52
SECTION 6.02. Subsidiary Indebtedness 54
SECTION 6.03. Consolidations, Mergers and Sales of Assets 54
SECTION 6.04. Lines of Business 55
SECTION 6.05. Transactions with Affiliates 55
SECTION 6.06. Restrictions on Dividends 55
SECTION 6.07. Consolidated Leverage Ratio 55
SECTION 6.08. Consolidated Tangible Net Worth 55
SECTION 6.09. Consolidated Coverage Ratio 55
ARTICLE VII
Events of Default 56
ARTICLE VIII
The Administrative Agent 60
<PAGE>
ARTICLE IX
Guarantee
---------
SECTION 9.01. Guarantee 63
SECTION 9.02. Obligations Unconditional 64
SECTION 9.03. Reinstatement 65
SECTION 9.04. Subrogation 65
SECTION 9.05. Remedies 65
SECTION 9.06. Continuing Guarantee 65
ARTICLE X
Miscellaneous
-------------
SECTION 10.01. Notices 66
SECTION 10.02. Survival of Agreement 66
SECTION 10.03. Binding Effect 67
SECTION 10.04. Successors and Assigns 67
SECTION 10.05. Expenses; Indemnity 71
SECTION 10.06. Right of Setoff 72
SECTION 10.07. Applicable Law 72
SECTION 10.08. Waivers; Amendment 72
SECTION 10.09. Interest Rate Limitation 73
SECTION 10.10. Entire Agreement 74
SECTION 10.11. Waiver of Jury Trial 74
SECTION 10.12. Severability 74
SECTION 10.13. Judgment Currency 74
SECTION 10.14. Counterparts 75
SECTION 10.15. Headings 76
SECTION 10.16. Jurisdiction; Consent to Service of Process 76
SECTION 10.17. Confidentiality 77
<PAGE>
Exhibit A-1 Form of Competitive Bid Request
Exhibit A-2 Form of Notice of Competitive Bid Request
Exhibit A-3 Form of Competitive Bid
Exhibit A-4 Form of Competitive Bid Accept/Reject Letter
Exhibit A-5 Form of Standby Borrowing Request
Exhibit B Administrative Questionnaire
Exhibit C Form of Assignment and Acceptance
Exhibit D-1 Form of Opinion of Counsel for Sotheby's
Holdings, Inc. and Sotheby's, Inc.
Exhibit D-2 Form of Opinion of Counsel for Oatshare Limited
and Sotheby's
Schedule 2.01 Commitments
Schedule 3.06 Litigation
Schedule 3.08 Subsidiaries
Schedule 6.01 Liens
<PAGE>
CREDIT AGREEMENT dated as of August 3, 1994, among
SOTHEBY'S HOLDINGS, INC., a Michigan corporation
("Holdings"), SOTHEBY'S, INC., a New York corporation,
OATSHARE LIMITED, a company registered in England, and
SOTHEBY'S, a company registered in England (each referred to
individually as a "Borrower" and collectively as the
"Borrowers"); the lenders listed in Schedule 2.01 hereto or
subsequently becoming parties hereto as provided herein (the
"Lenders"); and CHEMICAL BANK, a New York banking
corporation, as administrative agent for the Lenders (in
such capacity, the "Administrative Agent").
The Borrowers have requested the Lenders to extend credit to
enable the Borrowers to borrow on a standby revolving credit
basis on and after the date hereof and at any time and from
time to time prior to the Maturity Date (as herein defined)
a principal amount not in excess of $300,000,000 or an
equivalent amount in U.K. Pounds Sterling at any time
outstanding. The Borrowers have also requested the Lenders
to provide a procedure pursuant to which any Borrower may
invite the Lenders to bid on an uncommitted basis on short-
term borrowings by such Borrower. The proceeds of such
borrowings are to be used for general corporate purposes
including, without limitation, refinancing commercial paper
or other borrowings, and providing funds for capital
expenditures and working capital. The Lenders are willing
to extend such credit to the Borrowers on the terms and
subject to the conditions herein set forth.
Accordingly, the parties hereto agree as follows:
ARTICLE I. DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Agreement,
the following terms shall have the meanings specified below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR
Loans.
<PAGE>
"ABR Loan" shall mean any Standby Loan bearing interest at a
rate determined by reference to the Alternate Base Rate in
accordance with the provisions of Article II.
"Administrative Fees" shall have the meaning assigned to
such term in Section 2.06(b).
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form of Exhibit B hereto.
"Affiliate" shall mean any person (other than a Subsidiary)
that directly, or indirectly through one or more
intermediaries, Controls or is Controlled by or is under
common Control with Holdings.
"Alternate Base Rate" shall mean, for any day, a rate per
annum (rounded upwards, if necessary, to the next 1/16 of
1%) equal to the greater of (a) the Prime Rate in effect on
such day and (b) the Federal Funds Effective Rate in effect
on such day plus 1/2 of 1%. For purposes hereof, "Prime
Rate" shall mean the rate of interest per annum publicly
announced from time to time by the Administrative Agent as
its prime rate in effect at its principal office in New York
City; each change in the Prime Rate shall be effective on
the date such change is publicly announced as effective.
"Federal Funds Effective Rate" shall mean, for any day, the
weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of
New York, or, if such rate is not so published for any day
which is a Business Day, the average of the quotations for
the day of such transactions received by the Administrative
Agent from three Federal funds brokers of recognized stand-
ing selected by it. If for any reason the Administrative
Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to
ascertain the Federal Funds Effective Rate for any reason,
including the inability of the Administrative Agent to
obtain sufficient quotations in accordance with the terms
thereof, the Alternate Base Rate shall be determined without
regard to clause (b) of the first sentence of this
definition until the circumstances giving rise to such
inability no longer exist.
"Alternative Currency" shall mean U.K. Pounds
Sterling.
<PAGE>
"Alternative Currency Borrowing" shall mean a
Borrowing comprised of Alternative Currency Loans.
"Alternative Currency Equivalent" shall mean, with
respect to an amount of Dollars on any date in relation to
the Alternative Currency, the amount of the Alternative
Currency that may be purchased with such amount of Dollars
at the Spot Exchange Rate with respect to Dollars on such
date.
"Alternative Currency Loan" shall mean any Loan denominated
in the Alternative Currency.
"Applicable Margin" shall mean on any date, (A) with respect
to ABR Loans, 0% and (B) with respect to Eurocurrency Loans,
the applicable spreads set forth below based upon the
ratings applicable on such date to the non-credit enhanced
commercial paper of Holdings (the "Index Debt"):
Eurocurrency
Loan Spread
------------
Category 1
- - ----------
A-1+/F1/D1 .200%
Category 2
- - ----------
A-1/F1/D1 .250%
Category 3
- - ----------
A-2/F2/D2 .300%
Category 4
- - ----------
Lower than A-2/F2/D2 .350%
For purposes of determining the Applicable Margin for
Eurocurrency Loans, (a) if S&P, Fitch or Duff & Phelps shall
not have in effect a rating for Index Debt because of an
action (or failure to take action) on the part of Holdings
or any Subsidiary, then such rating agency will be deemed to
have established a rating for Index Debt in Category 4,
(b) if the ratings established or deemed to have been
<PAGE>
established by S&P, Fitch, and Duff and Phelps shall fall
within different Categories, the inferior (or numerically
highest) rating shall be excluded and the Applicable Margin
shall be determined by reference to the inferior (or
numerically higher) of the two remaining ratings; and (c) if
any rating established or deemed to have been established by
S&P, Fitch or Duff and Phelps shall be changed (other than
as a result of a change in the rating system of either S&P,
Fitch or Duff and Phelps), such change shall be effective as
of the date on which such change is first announced by the
rating agency making such change. Each change in the
Applicable Margin shall apply to all Eurocurrency Loans that
are outstanding at any time during the period commencing on
the effective date of such change and ending on the date
immediately preceding the effective date of the next such
change. If (a) the rating system of S&P, Fitch or Duff and
Phelps shall change, (b) any such rating agency shall cease
to be in the business of rating corporate debt obligations
or (c) any such rating agency shall otherwise cease to have
in effect a rating for Index Debt (other than because of an
action (or failure to take action) on the part of Holdings
or any Subsidiary, then the Borrowers and the Lenders shall
negotiate in good faith to amend the references to specific
ratings in this definition to reflect such changed rating
system or the non-availability of ratings from such rating
agency, and pending any such amendment the Applicable Margin
shall be determined by reference to the ratings in effect
immediately prior to such change or cessation.
"Applicable Percentage" shall mean, with respect to any
Lender at any time, the percentage of the Total Commitment
represented by such Lender's Commitment at such time.
"Assigned Dollar Value" shall mean, in respect of any
Borrowing denominated in the Alternative Currency, the
Dollar Equivalent thereof determined based upon the
applicable Spot Exchange Rate as of the Denomination Date
for such Borrowing.
"Assignment and Acceptance Agreement" shall mean an
assignment and acceptance agreement entered into by a Lender
and an assignee, and accepted by the Administrative Agent
and, where required, the Borrowers, in the form of Exhibit C
or such other form as shall be approved by the
Administrative Agent.
"Board" shall mean the Board of Governors of the
Federal Reserve System of the United States.
"Borrowers" shall mean Sotheby's Holdings, Inc. Sotheby's,
Inc., Oatshare Limited and Sotheby's.
"Borrowing" shall mean a group of Loans of a single Type
made by the Lenders (or in the case of a Competitive
Borrowing, by the Lender or Lenders whose Competitive Bids
have been accepted pursuant to Section 2.03).
"Borrowing Request" shall mean a request by a Borrower for a
Loan.
"Business Day" shall mean any day (other than a day which is
a Saturday, Sunday or legal holiday in the State of New
York) on which banks are open for business in New York
City; provided, however, that, when used in connection with
a Eurocurrency Loan, the term "Business Day" shall also
exclude any day on which banks are not open for dealings in
deposits in Dollars or Sterling, as the case may be, in the
London interbank market.
"Capital Lease Obligations" of any person shall mean the
obligations of such person to pay rent or other amounts
under any lease of (or other arrangement conveying the right
to use) real or personal property, or a combination thereof,
which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such
person under GAAP and, for the purposes of this Agreement,
the amount of such obligations at any time shall be the
capitalized amount thereof at such time determined in
accordance with GAAP.
"Closing Date" shall mean the date of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as the
same may be amended from time to time.
"Commitment" shall mean, with respect to each Lender, the
commitment of such Lender hereunder as set forth in
Schedule 2.01 hereto, as such Lender's Commitment may be
permanently terminated or reduced from time to time pursuant
to Section 2.11.
<PAGE>
"Competitive Bid" shall mean an offer by a Lender to make a
Competitive Loan pursuant to Section 2.03.
"Competitive Bid Accept/Reject Letter" shall mean a
notification made by a Borrower pursuant to Section 2.03(d)
in the form of Exhibit A-4.
"Competitive Bid Rate" shall mean, as to any Competitive Bid
made by a Lender pursuant to Section 2.03(b), (i) in the
case of a Eurocurrency Loan, the the sum of the LIBO Rate
plus the Competitive Margin and (ii) in the case of a Fixed
Rate Loan, the fixed rate of interest offered by the Lender
making such Competitive Bid.
"Competitive Bid Request" shall mean a request made pursuant
to Section 2.03 in the form of Exhibit A-1.
"Competitive Borrowing" shall mean a borrowing consisting of
a Competitive Loan or concurrent Competitive Loans from the
Lender or Lenders whose Competitive Bids for such Borrowing
have been accepted by a Borrower under the bidding procedure
described in Section 2.03.
"Competitive Loan" shall mean a loan from a Lender to a
Borrower pursuant to the bidding procedure described in
Section 2.03. Each Competitive Loan shall be a Eurocurrency
Competitive Loan or a Fixed Rate Loan.
"Competitive Margin" shall mean, as to any Eurocurrency
Competitive Loan, the margin (expressed as a percentage rate
per annum in the form of a decimal to no more than four
decimal places) to be added to or subtracted from the LIBO
Rate in order to determine the interest rate applicable to
such Loan, as specified in the Competitive Bid relating to
such Loan.
"Consolidated Coverage Ratio" shall mean with respect to
Holdings and its consolidated subsidiaries for any period,
the ratio of (a) Consolidated EBITDA for such period to (b)
Consolidated Interest Expense for such period.
"Consolidated EBITDA" with respect to Holdings and its
consolidated subsidiaries for any period shall mean the sum
of (a) Consolidated Net Income for such period, (b)
Consolidated Interest Expense for such period, (c) all
Federal, state, local and foreign income taxes deducted in
<PAGE>
determining such Consolidated Net Income and (d) depreci-
ation, amortization and other non-cash charges deducted in
determining such Consolidated Net Income.
"Consolidated Interest Expense" shall mean with respect to
Holdings and its consolidated subsidiaries for any period,
the consolidated gross interest expense of Holdings and its
consolidated subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP consistently
applied.
"Consolidated Leverage Ratio" shall mean, as to Holdings and
its consolidated subsidiaries, the ratio of (a) the
consolidated Indebtedness of Holdings and its consolidated
subsidiaries to (b) the sum of the consolidated Indebtedness
of Holdings and its consolidated subsidiaries and
Consolidated Net Worth.
"Consolidated Net Income" shall mean, for Holdings and its
consolidated subsidiaries for any period, the aggregate net
income (or net deficit) of such persons determined on a
consolidated basis for such period, in accordance with GAAP
on a basis consistent with that used in preparing the
Financial Statements referred to in Section 3.03; provided,
however, that the term "Consolidated Net Income" shall
exclude any extraordinary gains and losses.
"Consolidated Net Worth" shall mean at any date
shareholders' equity, as shown on a consolidated balance
sheet of Holdings and its Subsidiaries prepared in
accordance with GAAP at such date.
"Consolidated Tangible Net Worth" shall mean at any date (a)
Consolidated Net Worth at such date minus (b) to the extent
reflected as assets in a consolidated balance sheet of
Holdings and its Subsidiaries at such date, net intangibles
(to the extent not capitalized in the cost of property,
plant and equipment). The foregoing calculation shall be
made without reference to, and shall exclude, adjustments
for foreign currency translation in accordance with
Statement of Financial Accounting Standards No. 52 (SFAS-
52).
"Control" shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the
management or policies of a person, whether through the
ownership of voting securities, by contract or otherwise,
<PAGE>
and the terms "Controlling" and "Controlled" shall have
meanings correlative thereto.
"Default" shall mean any event or condition which upon
notice, lapse of time or both would constitute an Event of
Default.
"Denomination Date" shall mean, in relation to any
Alternative Currency Borrowing, the date that is three
Business Days before the date such Borrowing is made.
"Dollar Equivalent" shall mean, with respect to an amount of
the Alternative Currency on any date, the amount of Dollars
that may be purchased with such amount of such Alternative
Currency at the Spot Exchange Rate with respect to the
Alternative Currency on such date.
"Dollars" or "$" shall mean lawful money of the United
States of America.
"Duff and Phelps" shall mean Duff and Phelps Credit Rating
Co.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as the same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether
or not incorporated) that together with the Borrowers is
treated as a single employer under Section 414 of the Code.
"Eurocurrency Borrowing" shall mean a Borrowing comprised of
Eurocurrency Loans.
"Eurocurrency Competitive Borrowing" shall mean a
Competitive Borrowing comprised of Eurocurrency Competitive
Loans.
"Eurocurrency Competitive Loan" shall mean any Competitive
Loan bearing interest at a rate determined by reference to
the LIBO Rate in accordance with the provisions of
Article II.
"Eurocurrency Loan" shall mean any Eurocurrency Competitive
Loan or Eurocurrency Standby Loan.
<PAGE>
"Eurocurrency Standby Borrowing" shall mean a Standby
Borrowing comprised of Eurocurrency Standby Loans.
"Eurocurrency Standby Loan" shall mean any Standby Loan
bearing interest at a rate determined by reference to the
LIBO Rate in accordance with the provisions of Article II.
"Existing Credit Agreements" shall mean (a) the $75,000,000
Revolving Credit Agreement dated as of October 23, 1986, as
amended and as restated as of February 15, 1988, among the
Borrowers and certain other subsidiaries of Holdings,
certain lenders and The Chase Manhattan Bank (National
Association), as agent, and (b) the five Revolving Credit
Agreements dated as of various dates, between Holdings and
the various lenders party thereto aggregating $100,000,000
in commitments.
"Event of Default" shall have the meaning assigned to such
term in Article VII.
"Facility Fee" shall have the meaning assigned to such term
in Section 2.06(a).
"Facility Fee Percentage" shall mean on any date, the
applicable percentage set forth below based upon the ratings
applicable on such date to Holdings' Index Debt:
Facility
Fee
Percentage
----------
Category 1
- - ----------
A-1+/F1/D1 .125%
Category 2
- - ----------
A-1/F1/D1 .150%
Category 3
- - ----------
A-2/F2/D2 .200%
Category 4
- - ----------
Lower than A-2/F2/D2 .300%
<PAGE>
For purposes of the foregoing, (a) if S&P, Fitch or Duff and
Phelps shall not have in effect a rating for Index Debt
because of an action (or failure to take action) on the part
of Holdings or any Subsidiary, then such rating agency will
be deemed to have established a rating for Index Debt in
Category 4; (b) if the ratings established or deemed to have
been established by S&P, Moody's, and Duff and Phelps shall
fall within different Categories, the inferior (or
numerically highest) rating shall be excluded and the
Facility Fee Percentage shall be determined by reference to
the inferior (or numerically higher) of the two remaining
ratings; and (c) if any rating established or deemed to have
been established by S&P, Fitch or Duff and Phelps shall be
changed (other than as a result of a change in the rating
system of S&P, Fitch or Duff and Phelps), such change shall
be effective as of the date on which such change is first
announced by the rating agency making such change. Each
change in the Facility Fee Percentage shall apply during the
period commencing on the effective date of such change and
ending on the date immediately preceding the effective date
of the next such change. If (a) the rating system of S&P,
Fitch or Duff and Phelps shall change, (b) any such rating
agency shall cease to be in the business of rating corporate
debt obligations or (c) any such rating agency shall
otherwise cease to have in effect a rating for Index Debt
(other than because of an action (or failure to take action)
on the part of Holdings or any Subsidiary, then the
Borrowers and the Lenders shall negotiate in good faith to
amend the references to specific ratings in this definition
to reflect such changed rating system or the non-
availability of ratings from such rating agency, and pending
any such amendment the Facility Fee Percentage shall be
determined by reference to the ratings in effect immediately
prior to such change or cessation.
"Fees" shall mean the Administrative Fees, the Facility Fee
and the Utilization Fee.
"Financial Officer" of any corporation shall mean the Chief
Financial Officer, principal accounting officer, Treasurer
or Controller of such corporation.
"Fitch" shall mean Fitch Investors Service, Inc.
"Fixed Rate Borrowing" shall mean a Borrowing comprised of
Fixed Rate Loans.
<PAGE>
"Fixed Rate Loan" shall mean any Competitive Loan bearing
interest at a fixed percentage rate per annum (expressed in
the form of a decimal to no more than four decimal places)
specified by the Lender making such Loan in its Competitive
Bid.
"GAAP" shall mean United States generally accepted
accounting principles, applied on a basis consistent with
the financial statements referred to in Section 3.03.
"Governmental Authority" shall mean any Federal, state,
local or foreign court or governmental agency, authority,
instrumentality or regulatory body.
"Guarantee" of or by any person shall mean any obligation,
contingent or otherwise, of such person guaranteeing or
having the economic effect of guaranteeing any Indebtedness
of any other person (the "primary obligor") in any manner,
whether directly or indirectly, and including any obligation
of such person, direct or indirect, (a) to purchase or pay
(or advance or supply funds for the purchase or payment of)
such Indebtedness or to purchase (or to advance or supply
funds for the purchase of) any security for the payment of
such Indebtedness, (b) to purchase property, securities or
services for the purpose of assuring the owner of such
Indebtedness of the payment of such Indebtedness or (c) to
maintain working capital, equity capital or other financial
statement condition or liquidity of the primary obligor so
as to enable the primary obligor to pay such Indebtedness;
provided, however, that the term Guarantee shall not include
endorsements for collection or deposit, or guarantees in the
ordinary course of business including, without limitation,
guarantees by the Borrowers to consignors of minimum prices
in connection with sales of property.
"Guarantor" shall mean the Borrowers in their capacity as
guarantors under Section 9.01 except that Oatshare Limited
and Sotheby's will not be Guarantors in respect of any
obligations of Holdings and Sotheby's, Inc.
"Indebtedness" of any person shall mean, without
duplication, (a) all obligations of such person for borrowed
money or with respect to deposits or advances of any kind,
(b) all obligations of such person evidenced by bonds,
debentures, notes or similar instruments, (c) all obliga-
tions of such person upon which interest charges are cus-
tomarily paid, (d) all obligations of such person under
<PAGE>
conditional sale or other title retention agreements relat-
ing to property or assets purchased by such person, (e) all
obligations of such person issued or assumed as the deferred
purchase price of property or services, (f) all Indebtedness
of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise,
to be secured by) any Lien on property owned or acquired by
such person, whether or not the obligations secured thereby
have been assumed, (g) all Guarantees by such person of
Indebtedness of others, (h) all Capital Lease Obligations of
such person, (i) all obligations of such person in respect
of interest rate protection agreements, foreign currency
exchange agreements or other interest or exchange rate
hedging arrangements and (j) all obligations of such person
as an account party in respect of letters of credit and
bankers' acceptances; provided, however, that Indebtedness
shall not include trade accounts payable in the ordinary
course of business (whether or not any such trade accounts
have terms providing a discount if paid within a certain
time or an interest factor if not paid within a certain
time), and for purposes of determining compliance with the
financial covenants contained in Sections 6.02, 6.07 and
6.09, Indebtedness will not include the items referred to in
(i) and (j) above. The Indebtedness of any person shall
include the Indebtedness of any partnership in which such
person is a general partner to the extent that the
Indebtedness of such partnership is attributed to such
person in accordance with GAAP.
"Index Debt" shall have the meaning given such term under
Applicable Margin.
"Interest Payment Date" shall mean, with respect to any
Loan, the last day of each Interest Period applicable
thereto and, in the case of a Eurocurrency Loan with an
Interest Period of more than three months' duration or a
Fixed Rate Loan with an Interest Period of more than
90 days' duration, each day that would have been an Interest
Payment Date for such Loan had successive Interest Periods
of three months' duration or 90 days duration, as the case
may be, been applicable to such Loan and, in addition, the
date of any refinancing of such Loan with a Loan of a
different Type.
"Interest Period" shall mean (a) as to any Eurocurrency
Borrowing, the period commencing on the date of such
Borrowing and ending on the numerically corresponding day
<PAGE>
(or, if there is no numerically corresponding day, on the
last day) in the calendar month that is 1, 2, 3, 6 or 9
months thereafter, as the applicable Borrower may elect,
(b) as to any ABR Borrowing, a period commencing on the date
of such Loan and ending on the earlier of the next
succeeding March 31, June 30, September 30 and December 31
or the date on which such Loan is repaid or prepaid and
(c) as to any Fixed Rate Borrowing, the period commencing on
the date of such Borrowing and ending on the date specified
in the Competitive Bids in which the offer to make the Fixed
Rate Loans comprising such Borrowing were extended, which
shall not be earlier than 7 days after the date of such
Borrowing or later than 360 days after the date of such
Borrowing; provided, however, that if any Interest Period
would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day
unless, in the case of Eurocurrency Loans only, such next
succeeding Business Day would fall in the next calendar
month, in which case such Interest Period shall end on the
next preceding Business Day. Interest shall accrue from and
including the first day of an Interest Period to but
excluding the last day of such Interest Period.
"LIBO Rate" shall mean, with respect to any Eurocurrency
Borrowing for any Interest Period, an interest rate per
annum (rounded upwards, if necessary, to the next 1/16 of
1%) equal to the rate at which deposits in the currency in
which such Borrowing is denominated approximately equal in
principal amount to the Loan of the Administrative Agent, in
its capacity as a Lender (or, if the Administrative Agent is
not a Lender in respect of such Borrowing, then the Loan of
the Lender in respect of such Borrowing with the greatest
Loan amount), included in such Eurocurrency Borrowing, and
for a maturity comparable to such Interest Period are
offered to the principal London office of the Administrative
Agent in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, on the date
that is two Business Days prior to the commencement of such
Interest Period.
"Lien" shall mean with respect to any asset, (a) any
mortgage, deed of trust, lien, pledge, encumbrance, charge
or security interest in or on such asset, (b) the interest
of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement
relating to such asset and (c) in the case of securities,
any purchase option, call or similar right of a third party
with respect to such securities.
<PAGE>
"Loan" shall mean any Competitive Loan or Standby Loan.
"Loan Documents" shall mean this Agreement and the
Engagement Letter dated June 23, 1994 among the
Administrative Agent, Chemical Securities Inc. and the
Borrowers.
"Margin Stock" shall have the meaning given such term under
Regulation U.
"Material Adverse Change" or "Material Adverse Effect" shall
mean a materially adverse change in, or a materially adverse
effect on, the business, assets, operations or financial
condition of Holdings and its Subsidiaries taken as a whole.
"Material Subsidiary" shall mean at any time (a) each
Subsidiary that is a Borrower and (b) any other Subsidiary
that either (i) has a Subsidiary Net Worth at such time in
excess of 2.5% of Consolidated Net Worth at such time or
(ii) has consolidated assets in excess of 5% of the
consolidated assets of Holdings and its consolidated
subsidiaries at such time.
"Maturity Date" shall mean January 31, 1998.
"Multiemployer Plan" shall mean a multiemployer plan as
defined in Section 4001(a)(3) of ERISA to which the
Borrowers or any ERISA Affiliate (other than one considered
an ERISA Affiliate only pursuant to subsection (m) or (o) of
Code Section 414) is making or accruing an obligation to
make contributions, or has within any of the preceding five
plan years made or accrued an obligation to make
contributions.
"Obligation Currency" shall have the meaning assigned to
such term in Section 10.13.
"Other Taxes" shall have the meaning assigned to such term
in Section 2.19(b).
"PBGC" shall mean the Pension Benefit Guaranty Corporation
referred to and defined in ERISA.
"person" shall mean any natural person, corporation,
business trust, joint venture, association, company,
partnership or government, or any agency or political
subdivision thereof.
<PAGE>
"Plan" shall mean any employee pension benefit plan (other
than a Multiemployer Plan) subject to the provisions of
Title IV of ERISA or Section 412 of the Code which is
maintained for current or former employees, or any
beneficiary thereof, of the Borrowers or any ERISA
Affiliate.
"Register" shall have the meaning given such term in
Section 10.04(d).
"Regulation D" shall mean Regulation D of the Board as from
time to time in effect and all official rulings and
interpretations thereunder or thereof.
"Regulation G" shall mean Regulation G of the Board as from
time to time in effect and all official rulings and
interpretations thereunder or thereof.
"Regulation U" shall mean Regulation U of the Board as from
time to time in effect and all official rulings and
interpretations thereunder or thereof.
"Regulation X" shall mean Regulation X of the Board as from
time to time in effect and all official rulings and
interpretations thereunder or thereof.
"Reportable Event" shall mean any reportable event as
defined in Section 4043(b) of ERISA or the regulations
issued thereunder with respect to a Plan (other than a Plan
maintained by an ERISA Affiliate that is considered an ERISA
Affiliate only pursuant to subsection (m) or (o) of Code
Section 414).
"Required Lenders" shall mean, at any time, Lenders having
Commitments representing at least 51% of the Total
Commitment or, after the Commitments shall have been
terminated or for purposes of acceleration pursuant to
paragraph (a) of Article VII, Lenders holding Loans
representing at least 51% of the aggregate principal amount
of the Loans outstanding. For purposes of determining the
Required Lenders, any Loans denominated in the Alternative
Currency shall be translated into Dollars at the Spot
Exchange Rate in effect on the applicable Denomination Date.
<PAGE>
"Responsible Officer" of any corporation shall mean any
executive officer or Financial Officer of such corporation
and any other officer or similar official thereof
responsible for the administration of the obligations of
such corporation in respect of this Agreement.
"S&P" shall mean Standard and Poor's Ratings Group, a
division of McGraw-Hill, Inc.
"Spot Exchange Rate" shall mean, on any day, (a) with
respect to the Alternative Currency in relation to Dollars,
the spot rate at which Dollars are offered on such day by
Chemical Bank in London for the Alternative Currency at
approximately 11:00 a.m. (London time), and (b) with respect
to Dollars in relation to the Alternative Currency, the spot
rate at which the Alternative Currency is offered on such
day by Chemical Bank in London for Dollars at approximately
11:00 a.m. (London time). For purposes of determining the
Spot Exchange Rate in connection with an Alternative
Currency Borrowing, such Spot Exchange Rate shall be
determined as of the Denomination Date for such Borrowing
with respect to transactions in the Alternative Currency
that will settle on the date of such Borrowing. Each
determination of a Spot Exchange Rate will be made by the
Administrative Agent and will be conclusive absent manifest
error.
"Standby Borrowing" shall mean a borrowing consisting of
simultaneous Standby Loans from each of the Lenders.
"Standby Borrowing Request" shall mean a request made
pursuant to Section 2.04 in the form of Exhibit A-5.
"Standby Loan" shall mean a revolving loan made by a Lender
pursuant to Section 2.04. Each Standby Loan shall be a
Eurocurrency Standby Loan or an ABR Loan.
"Standby Loan Exposure" shall mean, with respect to any
Lender at any time, the sum of (a) the aggregate principal
amount at such time of all outstanding Standby Loans of such
Lender denominated in Dollars, plus (b) the Assigned Dollar
Value at such time of the aggregate principal amount at such
time of all outstanding Standby Loans of such Lender that
are Alternative Currency Loans.
<PAGE>
"Sterling" shall mean lawful money of the United Kingdom.
"subsidiary" shall mean, with respect to any person (herein
referred to as the "parent"), any corporation, partnership,
association or other business entity (a) of which securities
or other ownership interests representing more than 50% of
the equity or more than 50% of the ordinary voting power or
more than 50% of the general partnership interests are, at
the time any determination is being made, owned, Controlled
or held, or (b) which is, at the time any determination is
made, otherwise Controlled by the parent or one or more
subsidiaries of the parent or by the parent and one or more
subsidiaries of the parent.
"Subsidiary" shall mean any subsidiary of Holdings.
"Subsidiary Net Worth" shall mean, as to any Subsidiary at
any date, shareholder's equity of such Subsidiary and its
consolidated subsidiaries at such date determined in
accordance with GAAP.
"Taxes" shall have the meaning assigned to such term in
Section 2.19(a).
"Total Commitment" shall mean, at any time, the aggregate
amount of the Commitments, as in effect at such time.
"Transferee" shall have the meaning assigned to such term in
Section 2.19(a).
"Type", when used in respect of any Loan or Borrowing, shall
refer to the rate by reference to which interest on such
Loan or on the Loans comprising such Borrowing is determined
and the currency in which such Loan or the Loans comprising
such Borrowings are denominated. For purposes hereof, the
term "rate" shall include the LIBO Rate, the Alternate Base
Rate and the Fixed Rate, and the term "currency" shall
include Dollars and the Alternative Currency.
"Utilization Fee" shall have the meaning assigned to such
term in Section 2.06(c).
<PAGE>
"Utilization Fee Percentage" shall mean on any date, the
applicable percentage set forth below based upon the ratings
applicable on such date to Holdings' Index Debt:
Utilization
Fee
Percentage
----------
Category 1
- - ----------
A-1+/F1/D1 .0625%
Category 2
- - ----------
A-1/F1/D1 .100%
Category 3
- - ----------
A-2/F2/D2 .100%
Category 4
- - ----------
Lower than A-2/F2/D2 .125%
For purposes of the foregoing, (a) if S&P, Fitch or Duff and
Phelps shall not have in effect a rating for Index Debt
because of an action (or failure to take action) on the part
of Holdings or any Subsidiary, then such rating agency will
be deemed to have established a rating for Index Debt in
Category 4; (b) if the ratings established or deemed to have
been established by S&P, Fitch, and Duff and Phelps shall
fall within different Categories, the inferior (or
numerically highest) rating shall be excluded and the
Utilization Fee Percentage shall be determined by reference
to the inferior (or numerically higher) of the two remaining
ratings; and (c) if any rating established or deemed to have
been established by S&P, Fitch or Duff and Phelps shall be
changed (other than as a result of a change in the rating
system of S&P, Fitch or Duff and Phelps), such change shall
be effective as of the date on which such change is first
announced by the rating agency making such change. Each
change in the Utilization Fee Percentage shall apply during
the period commencing on the effective date of such change
and ending on the date immediately preceding the effective
date of the next such change. If (a) the rating system of
S&P, Fitch or Duff and Phelps shall change, (b) any such
rating agency shall cease to be in the business of rating
corporate debt obligations or (c) any such rating agency
<PAGE>
shall otherwise cease to have in effect a rating for Index
Debt (other than because of an action (or failure to take
action) on the part of Holdings or any Subsidiary, then the
Borrowers and the Lenders shall negotiate in good faith to
amend the references to specific ratings in this definition
to reflect such changed rating system or the non-
availability of ratings from such rating agency, and pending
any such amendment the Utilization Fee Percentage shall be
determined by reference to the ratings in effect immediately
prior to such change or cessation.
"Withdrawal Liability" shall mean liability to a
Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Terms Generally. The definitions in
Section 1.01 shall apply equally to both the singular and
plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include",
"includes" and "including" shall be deemed to be followed by
the phrase "without limitation". All references herein to
Articles, Sections, Exhibits and Schedules shall be deemed
references to Articles and Sections of, and Exhibits and
Schedules to, this Agreement unless the context shall
otherwise require. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time
to time; provided, however, that if the Borrowers notify the
Administrative Agent that the Borrowers wish to amend any
covenant in Article VI or any related definition to
eliminate the effect of any change in GAAP occurring after
the date of this Agreement on the operation of such covenant
(or if the Administrative Agent notifies the Borrowers that
the Required Lenders wish to amend Article VI or any related
definition for such purpose), then the Borrowers' compliance
with such covenant shall be determined on the basis of GAAP
in effect immediately before the relevant change in GAAP
became effective, until either such notice is withdrawn or
such covenant is amended in a manner satisfactory to the
Borrowers and the Required Lenders. The phrase "the date of
this Agreement" or "the date hereof", or words of similar
effect, when used herein, shall mean August 3, 1994.
<PAGE>
ARTICLE II. THE CREDITS
SECTION 2.01. Commitments. (a) Subject to the terms and
conditions and relying upon the representations and
warranties herein set forth, each Lender agrees, severally
and not jointly, to make Standby Loans to the Borrowers, at
any time and from time to time on and after the date hereof
and until the earlier of the Maturity Date and the
termination of the Commitment of such Lender, in Dollars or
the Alternative Currency (as specified in the Standby
Borrowing Requests with respect thereto), in an aggregate
principal amount at any time outstanding that will not
result in such Lender's Standby Loan Exposure exceeding such
Lender's Commitment, subject, however, to the conditions
that (i) at no time shall (A) the sum of (I) the aggregate
Standby Loan Exposures of all the Lenders, plus (II) the
outstanding aggregate principal amount or Assigned Dollar
Value of all Competitive Loans made by all Lenders, exceed
(B) the Total Commitment and (ii) at all times the
outstanding aggregate principal amount of all Standby Loans
made by each Lender shall equal such Lender's Applicable
Percentage of the outstanding aggregate principal amount of
all Standby Loans. Each Lender's Commitment is set forth
opposite its name in Schedule 2.01. Such Commitments may be
terminated or reduced from time to time pursuant to Sec-
tion 2.11. Within the foregoing limits, the Borrowers may
borrow, pay or prepay and reborrow hereunder, on and after
the date hereof and prior to the Maturity Date, subject to
the terms, conditions and limitations set forth herein.
(b) For purposes of paragraph (a) above, if the Dollar
Equivalent of an outstanding Borrowing denominated in the
Alternative Currency, determined by the Administrative Agent
based upon the applicable Spot Exchange Rate as of the date
that is three Business Days before the end of the Interest
Period with respect to such Borrowing, does not exceed by
more than 5% the Assigned Dollar Value of such Borrowing,
and if the entire amount of such Borrowing is to be
refinanced with a new Borrowing of equivalent amount in the
same currency and by the same Borrower, then such Borrowing
shall continue to have the same Assigned Dollar Value as in
effect prior to such refinancing. The Administrative Agent
shall determine the applicable Spot Exchange Rate as of the
date three Business Days before the end of an Interest
Period with respect to a Borrowing denominated in the
Alternative Currency and shall promptly notify the Borrower
and the Lenders whether the Dollar Equivalent of such
<PAGE>
Borrowing exceeds by more than 5% the Assigned Dollar Value
thereof.
SECTION 2.02. Loans. (a) Each Standby Loan shall be made
as part of a Borrowing consisting of Loans made by the
Lenders ratably in accordance with their applicable
Commitments; provided, however, that the failure of any
Lender to make any Standby Loan shall not in itself relieve
any other Lender of its obligation to lend hereunder (it
being understood, however, that no Lender shall be
responsible for the failure of any other Lender to make any
Loan required to be made by such other Lender). Each
Competitive Loan shall be made in accordance with the
procedures set forth in Section 2.03. The Competitive Loans
and Standby Loans comprising any Borrowing shall be in (i)
an aggregate principal amount or Assigned Dollar Value which
is not less than $10,000,000 (or the Alternative Currency
Equivalent of such amount in the case of an Alternative
Currency Borrowing) and, except in the case of Alternative
Currency Borrowing, an integral multiple of $1,000,000 or
(ii) an aggregate principal amount equal to the remaining
balance of the available Commitments (or the Alternative
Currency Equivalent thereof in the case of an Alternative
Currency Borrowing).
(b) Each Competitive Borrowing shall be comprised entirely
of Eurocurrency Competitive Loans or Fixed Rate Loans, and
each Standby Borrowing shall be comprised entirely of
Eurocurrency Standby Loans or ABR Loans, as the Borrowers
may request pursuant to Section 2.03 or 2.04, as applicable.
Each Lender may at its option make any Eurocurrency Loan by
causing any domestic or foreign branch or Affiliate of such
Lender to make such Loan; provided that any exercise of such
option shall not affect the obligation of the applicable
Borrower to repay such Loan in accordance with the terms of
this Agreement. Borrowings of more than one Type may be
outstanding at the same time; provided, however, that none
of the Borrowers shall be entitled to request any Borrowing
which, if made, would result in an aggregate of more than
twenty separate Standby Borrowings being outstanding
hereunder at any one time. For purposes of the foregoing,
Borrowings having different Interest Periods or denominated
in different currencies, regardless of whether they commence
on the same date, shall be considered separate Borrowings.
(c) Subject to Section 2.05, each Lender shall make each
Loan to be made by it hereunder on the proposed date thereof
<PAGE>
by wire transfer to such account as the Administrative Agent
may designate in federal funds (in the case of any Loan
denominated in Dollars) or such other immediately available
funds as may then be customary for the settlement of
international transactions in U.K. Pounds Sterling not later
than 11:00 a.m., New York City time, in the case of fundings
to an account in New York City, or 11:00 a.m., local time,
in the case of fundings to an account(s) in another
jurisdiction, and the Administrative Agent shall by 12:00
(noon), New York City time, in the case of fundings to an
account in New York City, or 12:00 (noon), local time, in
the case of fundings to an account in another jurisdiction,
credit the amounts so received to an account designated by
the applicable Borrower in the applicable Borrowing Request,
which account must be in the country of the currency of the
Loan (it being understood that the funding may be for the
credit of an account outside such country) or, if a
Borrowing shall not occur on such date because any condition
precedent herein specified shall not have been met, return
the amounts so received to the respective Lenders.
Competitive Loans shall be made by the Lender or Lenders
whose Competitive Bids therefor are accepted pursuant to
Section 2.03 in the amounts so accepted and Standby Loans
shall be made by the Lenders pro rata in accordance with
Section 2.16. Unless the Administrative Agent shall have
received notice from a Lender prior to the date of any
Borrowing that such Lender will not make available to the
Administrative Agent such Lender's portion of such
Borrowing, the Administrative Agent may assume that such
Lender has made such portion available to the Administrative
Agent on the date of such Borrowing in accordance with this
paragraph (c) and the Administrative Agent may, in reliance
upon such assumption, make available to the applicable
Borrower on such date a corresponding amount in the required
currency. If the Administrative Agent shall have so made
funds available then to the extent that such Lender shall
not have made such portion available to the Administrative
Agent, such Lender and the applicable Borrower severally
agree to repay to the Administrative Agent forthwith on
demand such corresponding amount together with interest
thereon in such currency, for each day from the date such
amount is made available to the applicable Borrower until
the date such amount is repaid to the Administrative Agent
at (i) in the case of the Borrower, the interest rate
applicable at the time to the Loans comprising such
Borrowing and (ii) in the case of such Lender, a rate
determined by the Administrative Agent to represent its cost
of overnight or short-term funds in the relevant currency
<PAGE>
(which determination shall be conclusive absent manifest
error). If such Lender shall repay to the Administrative
Agent such corresponding amount, such amount shall
constitute such Lender's Loan as part of such Borrowing for
purposes of this Agreement.
(d) Notwithstanding any other provision of this Agreement,
no Borrower shall be entitled to request any Borrowing if
the Interest Period requested with respect thereto would end
after the Maturity Date.
SECTION 2.03. Competitive Bid Procedure. (a) In order to
request Competitive Bids, the applicable Borrower shall hand
deliver or telecopy to the Administrative Agent a duly
completed Competitive Bid Request in the form of Exhibit A-
1, to be received by the Administrative Agent (i) in the
case of a Eurocurrency Competitive Borrowing, not later than
10:00 a.m., New York City time, four Business Days before a
proposed Competitive Borrowing and (ii) in the case of a
Fixed Rate Borrowing, not later than 10:00 a.m., New York
City time, one Business Day before a proposed Competitive
Borrowing. No ABR Loan shall be requested in, or made
pursuant to, a Competitive Bid Request. A Competitive Bid
Request that does not conform substantially to the format of
Exhibit A-1 may be rejected in the Administrative Agent's
sole discretion reasonably exercised, and the Administrative
Agent shall promptly notify the applicable Borrower of such
rejection by telecopier. Such request shall in each case
refer to this Agreement and specify (A) whether the
Borrowing then being requested is to be a Eurocurrency
Borrowing or a Fixed Rate Borrowing, (B) the date of such
Borrowing (which shall be a Business Day), (C) the aggregate
principal amount of the Borrowing, (D) the currency of such
Borrowing and (E) the Interest Period with respect thereto
(which may not end after the Maturity Date). If no election
as to the currency of Borrowing is specified in any
Competitive Bid Request, then the applicable Borrower shall
be deemed to have requested Borrowings in Dollars. Promptly
after its receipt of a Competitive Bid Request that is not
rejected as aforesaid, the Administrative Agent shall invite
by telecopier (in the form set forth in Exhibit A-2) the
Lenders to bid, on the terms and conditions of this
Agreement, to make Competitive Loans pursuant to the
Competitive Bid Request.
(b) Each Lender may, in its sole discretion, make one or
more Competitive Bids to a Borrower responsive to a
Competitive Bid Request. Each Competitive Bid by a Lender
<PAGE>
must be received by the Administrative Agent via telecopier,
in the form of Exhibit A-3, (i) in the case of Eurocurrency
Competitive Borrowing not later than 9:30 a.m., New York
City time, three Business Days before a proposed Competitive
Borrowing and (ii) in the case of a Fixed Rate Borrowing,
not later than 9:30 a.m., New York City time, on the day of
a proposed Competitive Borrowing. Multiple bids will be
accepted by the Administrative Agent. Competitive Bids that
do not conform substantially to the format of Exhibit A-3
may be rejected by the Administrative Agent after conferring
with, and upon the instruction of, the applicable Borrower,
and the Administrative Agent shall notify the Lender making
such nonconforming bid of such rejection as soon as
practicable. Each Competitive Bid shall refer to this
Agreement and specify (A) the principal amount (which
(x) shall be in a minimum principal amount or Assigned
Dollar Value of $10,000,000 and (except in the case of
Alternative Currency Borrowings) in an integral multiple of
$1,000,000, (y) shall be expressed in Dollars or, in the
case of an Alternative Currency Borrowing, in that
Alternative Currency and (z) may equal the entire principal
amount of the Competitive Borrowing requested by the
Borrower) of the Competitive Loan or Loans that the Lender
is willing to make to the applicable Borrower, (B) the
Competitive Bid Rate or Rates at which the Lender is
prepared to make the Competitive Loan or Loans and (C) the
Interest Period and the last day thereof. If any Lender
shall elect not to make a Competitive Bid, such Lender shall
so notify the Administrative Agent by telecopier (I) in the
case of Eurocurrency Competitive Loans, not later than 9:30
a.m., New York City time, three Business Days before a
proposed Competitive Borrowing and (II) in the case of Fixed
Rate Loans, not later than 9:30 a.m., New York City time, on
the day of a proposed Competitive Borrowing (in the event of
an Alternative Currency Borrowing no later than 11:00 a.m.
London time, two Business Days prior); provided, however,
that failure by any Lender to give such notice shall not
cause such Lender to be obligated to make any Competitive
Loan as part of such Competitive Borrowing . A Competitive
Bid submitted by a Lender pursuant to this paragraph (b)
shall be irrevocable.
(c) The Administrative Agent shall promptly notify the
applicable Borrower by telecopier of all the Competitive
Bids made, the Competitive Bid Rate and the principal amount
of each Competitive Loan in respect of which a Competitive
Bid was made and the identity of the Lender that made each
bid. The Administrative Agent shall send a copy of all
<PAGE>
Competitive Bids to the applicable Borrower for its records
as soon as practicable after completion of the bidding
process set forth in this Section 2.03.
(d) The applicable Borrower may in its sole and absolute
discretion, subject only to the provisions of this para-
graph (d), accept or reject any Competitive Bid referred to
in paragraph (c) above. The Borrower shall notify the
Administrative Agent by telephone, confirmed by telecopier
in the form of a Competitive Bid Accept/Reject Letter,
whether and to what extent it has decided to accept or
reject any of or all the bids referred to in paragraph (c)
above, (x) in the case of a Eurocurrency Competitive Borrow-
ing, not later than 10:30 a.m., New York City time, three
Business Days before a proposed Competitive Borrowing, and
(y) in the case of a Fixed Rate Borrowing, not later than
10:30 a.m., New York City time, on the day of a proposed
Competitive Borrowing; provided, however, that (i) the
failure by the applicable Borrower to give such notice shall
be deemed to be a rejection of all the bids referred to in
paragraph (c) above, (ii) such Borrower shall not accept a
bid made at a particular Competitive Bid Rate if the
Borrower has decided to reject a bid made at a lower
Competitive Bid Rate, (iii) the aggregate amount of the
Competitive Bids accepted by such Borrower shall not exceed
the principal amount specified in the Competitive Bid
Request, (iv) if such Borrower shall accept a bid or bids
made at a particular Competitive Bid Rate but the amount of
such bid or bids shall cause the total amount of bids to be
accepted by the Borrower to exceed the amount specified in
the Competitive Bid Request, then such Borrower shall accept
a portion of such bid or bids in an amount equal to the
amount specified in the Competitive Bid Request less the
amount of all other Competitive Bids accepted with respect
to such Competitive Bid Request, which acceptance, in the
case of multiple bids at such Competitive Bid Rate, shall be
made pro rata in accordance with the amount of each such bid
at such Competitive Bid Rate, and (v) except pursuant to
<PAGE>
clause (iv) above, no bid shall be accepted for a
Competitive Loan unless such Competitive Loan is in (x) a
minimum principal amount or Assigned Dollar Value of
$10,000,000 and (except in the case of Alternative Currency
Borrowings) an integral multiple of $1,000,000 or (y) an
aggregate principal amount equal to the remaining balance of
the available applicable Commitments; provided further,
however, that if a Competitive Loan must be in an amount
less than $10,000,000 because of the provisions of
clause (iv) above, such Competitive Loan may be for a
minimum of $1,000,000 or any integral multiple thereof, and
in calculating the pro rata allocation of acceptances of
portions of multiple bids at a particular Competitive Bid
Rate pursuant to clause (iv) the amounts shall be rounded to
integral multiples of $1,000,000 in a manner which shall be
in the discretion of the applicable Borrower. A notice
given by the applicable Borrower pursuant to this
paragraph (d) shall be irrevocable.
(e) The Administrative Agent shall promptly notify each
bidding Lender whether or not its Competitive Bid has been
accepted (and if so, in what amount and at what Competitive
Bid Rate) by telecopy sent by the Administrative Agent, and
each successful bidder will thereupon become bound, subject
to the other applicable conditions hereof, to make the
Competitive Loan in respect of which its bid has been
accepted.
(f) A Competitive Bid Request shall not be made within five
Business Days after the date of any previous Competitive Bid
Request.
(g) If the Administrative Agent shall elect to submit a
Competitive Bid in its capacity as a Lender, it shall submit
such bid directly to the applicable Borrower one quarter of
an hour earlier than the latest time at which the other
Lenders are required to submit their bids to the
Administrative Agent pursuant to paragraph (b) above.
(h) All notices required by this Section 2.03 shall be
given in accordance with Section 10.01.
SECTION 2.04. Standby Borrowing Procedure. In order to
request a Standby Borrowing, the applicable Borrower shall
give telephonic notice to the Administrative Agent
(confirmed by hand delivery or telecopy of a duly completed
Standby Borrowing Request in the form of Exhibit A-5),
(a) in the case of a Eurocurrency Standby Borrowing, not
later than 12:00 noon, New York City time, three Business
Days before a proposed borrowing and (b) in the case of an
ABR Borrowing, not later than 11:00 a.m., New York City
time, on the Business Day of a proposed borrowing; provided,
however, that Borrowing Requests with respect to Borrowings
to be made on the Closing Date may, at the discretion of the
Administrative Agent, be delivered later than the times
specified above (but in no event later than the time
necessary to effect the funding of the Loan). No Fixed Rate
<PAGE>
Loan shall be requested or made pursuant to a Standby
Borrowing Request. Such notice shall be irrevocable and
shall in each case specify (i) whether the Borrowing then
being requested is to be a Eurocurrency Borrowing or an ABR
Borrowing; (ii) the date of such Borrowing (which shall be a
Business Day), (iii) the aggregate principal amount of such
Borrowing, (iv) the currency of such Borrowing (which, in
the case of an ABR Borrowing, shall be Dollars) and (v) if
such Borrowing is to be a Eurocurrency Borrowing, the
Interest Period with respect thereto. If no election as to
the currency of Borrowing is specified in any Standby
Borrowing Request, then the applicable Borrower shall be
deemed to have requested a Borrowing in Dollars. If no
election as to the Type of Borrowing is specified, then the
requested Borrowing shall be an ABR Borrowing if denominated
in Dollars or a Eurocurrency Borrowing if denominated in the
Alternative Currency. If no Interest Period with respect to
any Eurocurrency Borrowing is specified, then the applicable
Borrower shall be deemed to have selected an Interest Period
of one month's duration. If the applicable Borrower shall
not have given notice in accordance with this Section 2.04
of its election to refinance a Standby Borrowing prior to
the end of the Interest Period in effect for such Borrowing,
then such Borrower shall (unless such Borrowing is repaid at
the end of such Interest Period) be deemed to have given
notice of an election to refinance such Borrowing with an
ABR Borrowing if denominated in Dollars or a Eurocurrency
Borrowing in the same currency and with an Interest Period
of one month if denominated in the Alternative Currency.
The Administrative Agent shall promptly advise the Lenders
of any notice given pursuant to this Section 2.04 (and the
contents thereof), of each Lender's portion of the requested
Borrowing and, in the case of an Alternative Currency
Borrowing, of the Dollar Equivalent of the Alternative
Currency amount specified in the applicable Borrowing
Request and the Spot Exchange Rate utilized to determine
such Dollar Equivalent. Subject to Section 2.01(b), if the
Dollar Equivalent of a Lender's portion of any such
Borrowing would exceed such Lender's remaining available
Commitment, such availability to be determined by the
Administrative Agent, then such Lender's portion of such
Borrowing shall be reduced to the Alternative Currency
Equivalent of such Lender's remaining available Commitment.
SECTION 2.05. Refinancings. Each Borrower may refinance
all or any part of any Competitive Borrowing or Standby
Borrowing with a Competitive Borrowing or a Standby
Borrowing of the same or a different Type made pursuant to
<PAGE>
Section 2.03 or Section 2.04, subject to the conditions and
limitations set forth herein and elsewhere in this Agree-
ment, including refinancings of Competitive Borrowings with
Standby Borrowings and Standby Borrowings with Competitive
Borrowings. Any Borrowing or part thereof in a particular
currency so refinanced shall be deemed to be repaid in
accordance with Section 2.07 with the proceeds of a new
Borrowing hereunder and the proceeds of the new Borrowing
under the same currency, to the extent they do not exceed
the principal amount of the Borrowing being refinanced,
shall not be paid by the Lenders to the Administrative Agent
or by the Administrative Agent to the applicable Borrower
pursuant to Section 2.02(c); provided, however, that in the
case of any refinancing of a Borrowing with another
Borrowing in the same currency, (i) if the principal amount
extended by a Lender in a refinancing is greater than the
principal amount extended by such Lender in the Borrowing
being refinanced, then such Lender shall pay such difference
to the Administrative Agent for distribution to the Lenders
described in (ii) below, (ii) if the principal amount
extended by a Lender in the Borrowing being refinanced is
greater than the principal amount being extended by such
Lender in the refinancing, the Administrative Agent shall
return the difference to such Lender out of amounts received
pursuant to (i) above, and (iii) to the extent any Lender
fails to pay the Administrative Agent amounts due from it
pursuant to (i) above, any Loan or portion thereof being
refinanced with such amounts shall not be deemed repaid in
accordance with Section 2.07 and shall be payable by the
applicable Borrower.
SECTION 2.06. Fees. (a) Holdings agrees to pay to each
Lender, through the Administrative Agent, on each March 31,
June 30, September 30 and December 31 and on the Maturity
Date, a facility fee (a "Facility Fee") equal to the
Facility Fee Percentage of the daily average amount of the
Commitment of such Lender, whether used or unused (and
whether or not the conditions set forth in Section 4.01
shall have been satisfied), during the preceding quarter (or
shorter period commencing with the date hereof or ending
with the Maturity Date or any date on which the Commitment
<PAGE>
of such Lender shall be terminated. All Facility Fees shall
be computed on the basis of the actual number of days
elapsed in a year of 360 days. The Facility Fee due to each
Lender shall commence to accrue on the date of this
Agreement and shall cease to accrue on the earlier of the
Maturity Date and the date on which the Commitment of such
Lender shall have been terminated and the Loans of such
Lender shall have been repaid.
(b) Holdings agrees to pay the Administrative Agent, for
its own account, the fees set forth in the Engagement Letter
dated June 23, 1994, among the Administrative Agent,
Chemical Securities Inc. and the Borrowers (the
"Administrative Fees") at the times and in the amounts set
forth therein.
(c) Holdings agrees to pay to each Lender, through the
Administrative Agent, on each March 31, June 30,
September 30 and December 31 and on each date on which the
Commitment of such Lender shall be terminated or reduced as
provided herein, a utilization fee (a "Utilization Fee")
equal to the Utilization Fee Percentage of the sum of the
outstanding principal amount (or Assigned Dollar Value, in
the case of Loans denominated in the Alternative Currency)
of the Loans of such Lender for each day on which the sum of
the outstanding aggregate principal amount (or Assigned
Dollar Value) of Loans exceeds 50% of the Total Commitment.
All Utilization Fees shall be computed on the basis of the
actual number of days elapsed in a year of 360 days.
(d) All Fees shall be paid on the dates due, in immediately
available funds, to the Administrative Agent for
distribution, if and as applicable, among the Lenders.
Once paid, none of the Fees shall be refundable except in
the case of errors.
SECTION 2.07. Repayment of Loans. (a) The outstanding
principal balance of each Loan made by each Lender to each
Borrower shall be payable on the last day of the Interest
Period applicable to such Loan and on the Maturity Date.
Each Loan shall bear interest from the date of the Borrowing
of which such Loan is a part on the outstanding principal
balance thereof as set forth in Section 2.08.
(b) Each Lender shall, and is hereby authorized by the
Borrowers to, maintain, in accordance with its usual
practice, records evidencing the indebtedness of each
Borrower to such Lender hereunder from time to time,
including the date, amount, currency and Type of and the
Interest Period applicable to each Loan made by such Lender
from time to time and the amounts of principal and interest
paid to such Lender from time to time in respect of each
such Loan.
<PAGE>
(c) The entries made in the records maintained pursuant to
paragraph (b) of this Section 2.07 and in the Register
maintained by the Administrative Agent pursuant to
Section 10.04(d) shall be prima facie evidence of the
existence and amounts of the obligations of each Borrower to
which such entries relate; provided, however, that the
failure of any Lender or the Administrative Agent to
maintain or to make any entry in such records or the
Register, as applicable, or any error therein shall not in
any manner affect the obligation of any Borrower to repay
any Loans in accordance with the terms of this Agreement.
SECTION 2.08. Interest on Loans. (a) Subject to the
provisions of Section 2.09, the Loans comprising each
Eurocurrency Borrowing shall bear interest (computed on the
basis of the actual number of days elapsed over a year of
360 days, at a rate per annum equal to (i) in the case of
each Eurocurrency Standby Loan, the LIBO Rate for the
Interest Period in effect for the Borrowing of which such
Loan is part plus the Applicable Margin from time to time in
effect and (ii) in the case of each Eurocurrency Competitive
Loan, the LIBO Rate for the Interest Period in effect for
the Borrowing of which such Loan is a part plus the
Competitive Margin offered by the Lender making such Loan
and accepted by the Borrower pursuant to Section 2.03.
(b) Subject to the provisions of Section 2.09, the Loans
comprising each ABR Borrowing shall bear interest (computed
on the basis of the actual number of days elapsed over a
year of 365 or 366 days, as applicable, when determined by
reference to the Prime Rate and over a year of 360 days at
all other times) at a rate per annum equal to the Alternate
Base Rate.
(c) Subject to the provisions of Section 2.09, each Fixed
Rate Loan shall bear interest at a rate per annum (computed
on the basis of the actual number of days elapsed over a
year of 360 days) equal to the fixed rate of interest
offered by the Lender making such Loan and accepted by the
Borrower pursuant to Section 2.03.
(d) Interest on each Loan shall be payable in arrears on
each Interest Payment Date applicable to such Loan except as
otherwise provided in this Agreement. The applicable LIBO
Rate or Alternate Base Rate for each Interest Period or day
within an Interest Period, as the case may be, shall be
determined by the Administrative Agent, and such
<PAGE>
determination shall be conclusive absent manifest error.
SECTION 2.09. Default Interest. If any Borrower shall
default in the payment of the principal of or interest on
any Loan or any other amount becoming due hereunder, whether
by scheduled maturity, notice of prepayment, acceleration or
otherwise, such Borrower shall on demand from time to time
from the Administrative Agent pay interest, to the extent
permitted by law, on such defaulted amount up to (but not
including) the date of actual payment (after as well as
before judgment) at a rate per annum (computed on the basis
of the actual number of days elapsed over a year of 360
days) equal to the Alternate Base Rate plus 2% per annum
(or, in the case of the principal of any Loan, if higher,
the rate of interest otherwise applicable, or most recently
applicable, to such Loan hereunder plus 2% per annum).
SECTION 2.10. Alternate Rate of Interest. In the event,
and on each occasion, that on the day two Business Days
prior to the commencement of any Interest Period for a
Eurocurrency Borrowing of any Type the Administrative Agent
shall have determined that Dollar deposits or deposits in
the Alternative Currency in which such Borrowing is to be
denominated in the principal amounts of the Loans comprising
such Borrowing are not generally available in the London
interbank market, or that the rates at which such deposits
are being offered will not adequately and fairly reflect the
cost to any Lender of making or maintaining its Eurocurrency
Loan during such Interest Period, or that reasonable means
do not exist for ascertaining the LIBO Rate, the
Administrative Agent shall, as soon as practicable
thereafter, give written or telecopy notice of such
determination to the applicable Borrower and the Lenders.
In the event of any such determination, until the
Administrative Agent shall have advised the applicable
Borrower and the Lenders that the circumstances giving rise
to such notice no longer exist, (i) any request by a
Borrower for a Eurocurrency Competitive Borrowing pursuant
to Section 2.03 shall be of no force or effect and shall be
denied by the Administrative Agent and (ii) any request by a
Borrower for a Eurocurrency Standby Borrowing of the
affected Type or in the affected currency shall be deemed to
be a request for an ABR Borrowing denominated in Dollars.
Each determination by the Administrative Agent hereunder
shall be conclusive absent manifest error.
<PAGE>
SECTION 2.11. Termination and Reduction of Commitments.
(a) The Commitments shall be automatically terminated at
the Administrative Agent's close of business in New York
City on the Maturity Date.
(b) Upon at least three Business Days' prior irrevocable
written or telecopy notice to the Administrative Agent,
Holdings (on behalf of all the Borrowers) may at any time in
whole permanently terminate, or from time to time in part
permanently reduce, the Total Commitment; provided, however,
that (i) each partial reduction of the Total Commitment
shall be in an integral multiple of $1,000,000 and in a
minimum principal amount of $5,000,000 or if less, the
remaining total Commitment and (ii) no such termination or
reduction shall be made which would reduce the Total
Commitment to an amount less than the aggregate outstanding
principal amount of the Competitive Loans and Standby Loans.
(c) Each reduction in the Total Commitment hereunder shall
be made ratably among the Lenders in accordance with their
respective Commitments. Holdings shall pay to the
Administrative Agent for the account of the Lenders, on the
date of each termination or reduction, the Facility Fees on
the amount of the Commitments so terminated or reduced
accrued to but not including the date of such termination or
reduction.
SECTION 2.12. Prepayment. (a) Each Borrower shall have
the right at any time and from time to time to prepay any
Standby Borrowing, in whole or in part, upon giving written
or telecopy notice (or telephone notice promptly confirmed
by written or telecopy notice) to the Administrative Agent:
(i) in the case of Eurocurrency Loans no later than 12:00
noon, New York City time, three Business Days prior to
prepayment and (ii) in the case of ABR Loans, no later than
11:00 a.m., New York City time, on the Business Day of the
prepayment; provided, however, that each partial prepayment
shall be in an amount which is an integral multiple of
$1,000,000 and not less than $5,000,000. No Borrower shall
not have the right to prepay any Competitive Borrowing.
(b) On the date of any termination or reduction of the
Commitments pursuant to Section 2.11, the Borrowers shall
pay or prepay so much of the Standby Borrowings as shall be
necessary in order that the aggregate outstanding principal
amount of all Loans will not exceed the Total Commitment
<PAGE>
after giving effect to such termination or reduction.
(c) Each notice of prepayment under this Section 2.12 shall
specify the prepayment date and the principal amount of each
Borrowing (or portion thereof) to be prepaid, shall be
irrevocable and shall commit the applicable Borrower to
prepay such Borrowing (or portion thereof) by the amount
stated therein on the date stated therein. All prepayments
under this Section 2.12 shall be subject to Section 2.15 but
otherwise without premium or penalty.
SECTION 2.13. Reserve Requirements; Change in
Circumstances. (a) Notwithstanding any other provision
herein, if after the date of this Agreement any change in
applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged
with the interpretation or administration thereof (whether
or not having the force of law) shall change the basis of
taxation of payments to any Lender (or any lending office of
any Lender) of the principal of or interest on any
Eurocurrency Loan or Fixed Rate Loan made by such Lender or
any Fees or other amounts payable hereunder (other than
changes in respect of taxes imposed on the overall net
income or capital stock of such Lender by the jurisdiction
in which such Lender has its principal office or by any
political subdivision or taxing authority therein), or shall
impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits
with or for the account of or credit extended by such Lender
(or any lending office of such Lender), or shall impose on
such Lender or the London interbank market any other
condition affecting this Agreement or any Eurocurrency Loan
or Fixed Rate Loan made by such Lender, and the result of
any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurocurrency Loan or
Fixed Rate Loan or to reduce the amount of any sum received
or receivable by such Lender hereunder (whether of
principal, interest or otherwise) by an amount deemed by
such Lender to be material, then Holdings shall (or shall
cause the Borrowers to) pay to such Lender upon demand such
additional amount or amounts as will compensate such Lender
for such additional costs incurred or reduction suffered.
Notwithstanding the foregoing, no Lender shall be entitled
to request compensation under this paragraph with respect to
any Competitive Loan if (i) it shall have been aware of the
change giving rise to such request at the time of submission
of the Competitive Bid pursuant to which such Competitive
<PAGE>
Loan shall have been made; or (ii) if it is not the general
practice of such Lender to demand compensation in similar
circumstances under comparable provisions of other
comparable credit agreements.
(b) If any Lender shall have determined that any change
after the date hereof in the applicability of any law, rule,
regulation or guideline adopted pursuant to or arising out
of the July 1988 report of the Basel Committee on Banking
Regulations and Supervisory Practices entitled
"International Convergence of Capital Measurement and
Capital Standards", or the adoption after the date hereof of
any other law, rule, regulation or guideline regarding
capital adequacy, or any change in any of the foregoing or
in the interpretation or administration of any of the
foregoing by any governmental authority, central bank or
comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or any
lending office of such Lender) or any Lender's holding
company with any request or directive regarding capital
adequacy (whether or not having the force of law) of any
such authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on such
Lender's capital or on the capital of such Lender's holding
company, if any, as a consequence of this Agreement or the
Loans made by such Lender pursuant hereto to a level below
that which such Lender or such Lender's holding company
could have achieved but for such applicability, adoption,
change or compliance (taking into consideration such
Lender's policies and the policies of such Lender's holding
company with respect to capital adequacy) by an amount
deemed by such Lender to be material, then from time to time
Holdings shall (or shall cause the responsible Borrower to)
pay to such Lender such additional amount or amounts as will
compensate such Lender or such Lender's holding company for
any such reduction suffered. Notwithstanding the foregoing,
no Lender shall be entitled to request compensation under
this paragraph with respect to any Competitive Loan if it is
not the general practice of such Lender to demand
compensation in similar circumstances under comparable
provisions of other comparable credit agreements.
(c) A certificate of a Lender setting forth such amount or
amounts as shall be necessary to compensate such Lender as
specified in paragraph (a) or (b) above, as the case may be,
shall be delivered to Holdings and shall be conclusive
absent manifest error. Holdings shall (or shall cause the
responsible Borrower to) pay each Lender the amount shown as
<PAGE>
due on any such certificate delivered by it within 10 days
after the receipt of the same.
(d) Except as provided below in this paragraph (d), failure
on the part of any Lender to demand compensation for any
increased costs or reduction in amounts received or
receivable or reduction in return on capital with respect to
any period shall not constitute a waiver of such Lender's
right to demand compensation with respect to such period or
any other period. The protection of this Section shall be
available to each Lender regardless of any possible
contention of the invalidity or inapplicability of the law,
rule, regulation, guideline or other change or condition
which shall have occurred or been imposed. No Lender shall
be entitled to compensation under this Section 2.13 for any
costs incurred or reductions suffered with respect to any
date unless it shall have notified Holdings that it will
demand compensation for such costs or reductions not more
than 90 days after the later of (i) such date and (ii) the
date on which it shall have become aware of such costs or
reductions.
SECTION 2.14. Change in Legality. (a) Notwith-standing
any other provision herein, if, after the date hereof,
(i) any change in any law or regulation or in the
interpretation thereof by any Governmental Authority charged
with the administration or interpretation thereof shall make
it unlawful for any Lender to make or maintain any
Eurocurrency Loan or Alternative Currency Loan or to give
effect to its obligations as contemplated hereby with
respect to any Eurocurrency Loan or Alternative Currency
Loan, or (ii) there shall have occurred any change in
national or international financial, political or economic
conditions (including the imposition of or any change in
exchange controls) or currency exchange rates which would
make it impracticable for any Lender to make Loans
denominated in the Alternative Currency or to any Borrower,
then, by written notice to the Borrowers and to the
Administrative Agent, such Lender may:
(i) declare that Eurocurrency Loans or Alternative Currency
Loans (in the affected currency or to the affected
Borrower), as the case may be, will not thereafter (for the
duration of such unlawfulness or impracticability) be made
by such Lender hereunder, whereupon such Lender shall not
submit a Competitive Bid in response to a request for such
Alternative Currency Loans or Eurocurrency Competitive Loans
<PAGE>
and any request by a Borrower for a Eurocurrency Standby
Borrowing or Alternative Currency Borrowing (in the affected
currency or to the affected Borrower), as the case may be,
shall, as to such Lender only, be deemed a request for an
ABR Loan or a Loan denominated in Dollars, as the case may
be, unless such declaration shall be subsequently withdrawn
(or, if a Loan to the requesting Borrower cannot be made for
the reasons specified above, such request shall be deemed to
have been withdrawn); and
(ii) require that all outstanding Eurocurrency Loans or
Alternative Currency Loans (in the affected currency or to
the affected Borrower), as the case may be, made by it be
converted to ABR Loans or Loans denominated in Dollars, as
the case may be, in which event all such Eurocurrency Loans
or Alternative Currency Loans (in the affected currency or
to the affected Borrower) shall be automatically converted
to ABR Loans or Loans denominated in Dollars, as the case
may be, as of the effective date of such notice as provided
in paragraph (b) below.
In the event any Lender shall exercise its rights under (i)
or (ii) above, all payments and prepayments of principal
which would otherwise have been applied to repay the
Eurocurrency Loans or Alternative Currency Loans, as the
case may be, that would have been made by such Lender or the
converted Eurocurrency Loans or Alternative Currency Loans,
as the case may be, of such Lender shall instead be applied
to repay the ABR Loans or Loans denominated in Dollars, as
the case may be, made by such Lender in lieu of, or
resulting from the conversion of, such Eurocurrency Loans or
Loans denominated in Dollars, as the case may be.
(b) For purposes of this Section 2.14, a notice to the
Borrowers by any Lender shall be effective as to each Loan,
if lawful, on the last day of the Interest Period currently
applicable to such Loan; in all other cases such notice
shall be effective on the date of receipt by the Borrowers.
SECTION 2.15. Indemnity. The Borrowers agree to indemnify
each Lender against any actual loss or expense which such
Lender may sustain or incur as a consequence of (a) any
failure by such Borrower to fulfill on the date of any bor-
rowing hereunder the applicable conditions set forth in
Article IV, (b) any failure by such Borrower to borrow or to
<PAGE>
refinance or continue any Loan hereunder after irrevocable
notice of such borrowing, refinancing or continuation has
been given or deemed given pursuant to Section 2.03 or 2.04,
(c) any payment, prepayment, conversion or transfer of a
Eurocurrency Loan or Fixed Rate Loan required by any other
provision of this Agreement or otherwise made or deemed made
on a date other than the last day of the Interest Period
applicable thereto, (d) any default in payment or prepayment
of the principal amount of any Loan or any part thereof or
interest accrued thereon, as and when due and payable (at
the due date thereof, whether by scheduled maturity,
acceleration, irrevocable notice of prepayment or otherwise)
or (e) the occurrence of any other Event of Default,
including, in each such case, any actual loss or reasonable
expense sustained or incurred or to be sustained or incurred
in liquidating or employing deposits from third parties
acquired to effect or maintain such Loan or any part thereof
as a Eurocurrency Loan or Fixed Rate Loan. Such loss or
reasonable expense shall include an amount equal to the
excess, if any, as reasonably determined by such Lender, of
(i) its cost of obtaining the funds for the Loan being paid,
prepaid, converted, transferred or not borrowed (assumed to
be the LIBO Rate or, in the case of a Fixed Rate Loan, the
fixed rate of interest applicable thereto) for the period
from the date of such payment, prepayment, conversion,
transfer or failure to borrow to the last day of the
Interest Period for such Loan (or, in the case of a failure
to borrow, the Interest Period for such Loan which would
have commenced on the date of such failure) over (ii) the
amount of interest (as reasonably determined by such Lender)
that would be realized by such Lender in reemploying the
funds so paid, prepaid, converted, transferred or not bor-
rowed for such period or Interest Period, as the case may
be. A certificate of any Lender setting forth any amount or
amounts which such Lender is entitled to receive pursuant to
this Section shall be delivered to the Borrowers and shall
be conclusive absent manifest error.
SECTION 2.16. Pro Rata Treatment. Except as required under
Section 2.14, each Standby Borrowing, each payment or
prepayment of principal of any Standby Borrowing, each
payment of interest on the Standby Loans, each payment of
the Facility Fees and Utilization Fees, each reduction of
the Commitments and each refinancing of any Borrowing with a
Standby Borrowing of any Type, shall be allocated pro rata
among the Lenders in accordance with their respective
Commitments (or, if such Commitments shall have expired or
<PAGE>
been terminated, in accordance with the respective principal
amounts of their outstanding Standby Loans). Each payment
of principal of any Competitive Borrowing shall be allocated
pro rata among the Lenders participating in such Borrowing
in accordance with the respective principal amounts of their
outstanding Competitive Loans comprising such Borrowing.
Each payment of interest on any Competitive Borrowing shall
be allocated pro rata among the Lenders participating in
such Borrowing in accordance with the respective amounts of
accrued and unpaid interest on their outstanding Competitive
Loans comprising such Borrowing. For purposes of
determining (i) the aggregate available Commitments of the
Lenders at any time and (ii) the available Commitment of
each Lender, each outstanding Competitive Borrowing shall be
deemed to have utilized the Commitments of the Lenders
(including those Lenders which shall not have made Loans as
part of such Competitive Borrowing) pro rata in accordance
with such respective Commitments. Each Lender agrees that
in computing such Lender's portion of any Borrowing to be
made hereunder, the Administrative Agent may, in its
discretion, round each Lender's percentage of such Borrowing
to the next higher or lower whole Dollar (or comparable unit
of the Alternative Currency) amount.
SECTION 2.17. Sharing of Setoffs. Each Lender agrees that
if it shall, through the exercise of a right of banker's
lien, setoff or counterclaim against any Borrower, or
pursuant to a secured claim under Section 506 of Title 11 of
the United States Code or other security or interest arising
from, or in lieu of, such secured claim, received by such
Lender under any applicable bankruptcy, insolvency or other
similar law or otherwise, or by any other means, obtain
payment (voluntary or involuntary) in respect of any Standby
Loan or Standby Loans as a result of which the unpaid
principal portion of its Standby Loans shall be
proportionately less than the unpaid principal portion of
the Standby Loans of any other Lender, it shall be deemed
simultaneously to have purchased from such other Lender at
face value, and shall promptly pay to such other Lender the
purchase price for, a participation in the Standby Loans of
such other Lender, so that the aggregate unpaid principal
amount of the Standby Loans and participations in the
Standby Loans held by each Lender shall be in the same
proportion to the aggregate unpaid principal amount of all
Standby Loans then outstanding as the principal amount of
its Standby Loans prior to such exercise of banker's lien,
<PAGE>
setoff or counterclaim or other event was to the principal
amount of all Standby Loans outstanding prior to such
exercise of banker's lien, setoff or counterclaim or other
event; provided, however, that, if any such purchase or
purchases or adjustments shall be made pursuant to this
Section 2.17 and the payment giving rise thereto shall
thereafter be recovered, such purchase or purchases or
adjustments shall be rescinded to the extent of such
recovery and the purchase price or prices or adjustment
restored without interest. The Borrowers expressly consent
to the foregoing arrangements and agree that any Lender
holding a participation in a Standby Loan deemed to have
been so purchased may exercise any and all rights of
banker's lien, setoff or counterclaim with respect to any
and all moneys owing by such Borrower to such Lender by
reason thereof as fully as if such Lender had made a Standby
Loan directly to such Borrower in the amount of such
participation.
SECTION 2.18. Payments. (a) Each Borrower shall make each
payment (including principal of or interest on any Borrowing
or any Fees or other amounts) hereunder and under each other
Loan Document not later than 12:00 noon, local time at the
place of payment, on the date when due in immediately
available funds. Each such payment shall be made to the
Administrative Agent at its offices at 270 Park Avenue, New
York, New York. Each such payment (other than principal of
and interest on Alternative Currency Loans, which shall be
made in the Alternative Currency) shall be made in Dollars
and each Alternative Currency payment should be made at the
offices of the Administrative Agent at 125 London Wall,
London, England ECZY5AJ, or any other account that the
Administrative Agent may designate.
(b) Whenever any payment (including principal of or
interest on any Borrowing or any Fees or other amounts)
hereunder or under any other Loan Document shall become due,
or otherwise would occur, on a day that is not a Business
Day, such payment may be made on the next succeeding
Business Day, and such extension of time shall in such case
be included in the computation of interest or Fees, if
applicable.
SECTION 2.19. Taxes. (a) Each Borrower covenants and
agrees that, whether or not any Loans are made by the
Lenders hereunder:
(i) all payments on account of the principal of and interest
on the Loans, and all other amounts payable by each Borrower
hereunder, to or for the account of the Lenders including,
<PAGE>
without limitation, amounts payable under clause (ii) of
this Section 2.19(a), shall be made without any setoff or
counterclaim and free and clear of, and without reduction by
reason of, all present and future income, stamp,
documentary, registration, excise, property and other taxes
and levies, deductions, charges, compulsory loans and
withholdings whatsoever (other than income or franchise
taxes imposed on the overall net income or capital stock of
the Agent or any Lender, including any transferee or
assignee thereof ("Transferee"), by the taxing authority of
the jurisdiction in which the Agent or such Lender, as
applicable, has its principal lending office or under the
laws of which the Agent or such Lender, as applicable, is
organized) 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 is made or any taxing authority
thereof or therein, on or in respect of this Agreement, the
recording, registration, notarization or other formalization
of any thereof, the enforcement thereof or the introduction
thereof in any judicial proceedings, or on or in respect of
any payments of principal, interest, premiums, charges, fees
or other amounts made on, under or in respect of any thereof
(hereinafter called "Taxes"), all of which will be paid by
the appropriate Borrower, for its own account, prior to the
date on which penalties attach thereto;
(ii) the Borrowers shall indemnify the Agent against, and
reimburse the Agent and Lenders (or Transferees) on demand
for, any Taxes and any loss, liability, claim or expense
arising therefrom or with respect thereto including
interest, penalties and reasonable legal fees and
disbursements, which the Agent may incur, whether or not
such Taxes were correctly or legally asserted by the
relevant taxing authority. A certificate as to the amount
of such Tax, loss, liability, claim or expense prepared by
the Agent, absent manifest error, shall be final, conclusive
and binding for all purposes. Such indemnification shall be
made within 30 days after the date the Agent makes a written
demand therefor;
<PAGE>
(iii) in the event that a Borrower is required by applicable
law, decree or regulation to deduct or withhold Taxes from
any amounts payable on, under or in respect to this
Agreement, such Borrower shall pay to the Agent, such
additional amount(s) as may be required, after the deduction
or withholding of Taxes (including any deduction or
withholding of Taxes with respect to such additional
amounts), to enable the Agent to receive from such Borrower
an amount equal to the amount stated to be payable by such
Borrower to the Agent under this Agreement;
(iv) each Borrower shall furnish to the Agent the official
tax receipts in respect of each payment of Taxes required
under this Section 2.19(a) within thirty (30) days after the
date such payment is due pursuant to applicable law, and
each Borrower shall promptly furnish to the Bank, at the
Agent's request, any other information, documents and
receipts that the Agent may, from time to time, reasonably
require to establish to its reasonable satisfaction that
full and timely payment has been made of all Taxes required
to be paid under this Section 2.19(a);
(v) in the event that the payments by a Borrower become
exempt from or not subject to Taxes, such Borrower will,
upon the reasonable request of the Agent, furnish to the
Agent either a certificate from each appropriate taxing
authority or an opinion of counsel reasonably acceptable to
the Agent, in either case stating that payments hereunder
are exempt from or not subject to taxes; and
(vi) if a Lender (or Transferee) or the Agent shall become
aware that it is entitled to receive a refund in respect of
Taxes as to which it has been indemnified by the Borrower,
or with respect to which the Borrower has paid additional
amounts, pursuant to this Section 2.19, it shall promptly
notify the Borrower of the availability of such refund and
shall, within 30 days after receipt of a request by the
Borrower make a claim to the relevant taxing authority or
other Governmental Authority for such refund at the
Borrower's expense. If any Lender (or Transferee) or the
Agent receives a refund (including pursuant to a claim for
refund made pursuant to the preceding sentence) in respect
of any Taxes as to which it has been indemnified by the
Borrower or with respect to which the Borrower has paid
<PAGE>
additional amounts pursuant to this Section 2.19, it shall
promptly repay such refund (but only to the extent of
indemnity payments made, or additional amounts paid, by the
Borrower under this Section 2.19 with respect to the Taxes
giving rise to such refund), net of all out-of-pocket
expenses of such Lender (or Transferee) or the Agent to the
Borrower, provided that the Borrower, upon the request of
such Lender (or Transferee) or the Agent, agrees to return
such refund (plus penalties, interest or other charges) to
such Lender (or Transferee) or the Agent in the event such
Lender (or Transferee) or the Agent is required to repay
such refund to the relevant taxing authority or other
Governmental Authority.
(b) Without prejudice to the survival of any other
agreement contained herein, the agreements and obligations
of each Borrower pursuant to this Section 2.19 shall survive
the payment in full of the principal of and interest on the
Loans.
SECTION 2.20. Assignment of Commitments Under Certain
Circumstances. (a) Any Lender (or Transferee) claiming any
additional amounts payable pursuant to Section 2.13 or
Section 2.19 shall use reasonable efforts (consistent with
legal and regulatory restrictions) to file any certificate
or document requested by a Borrower or to change the
jurisdiction of its applicable lending office if the making
of such a filing or change would avoid the need for or
reduce the amount of any such additional amounts which may
thereafter accrue and would not, in the judgment of such
Lender (or Transferee), be otherwise disadvantageous to such
Lender (or Transferee).
(b) In the event that any Lender shall have delivered a
notice or certificate pursuant to Section 2.13 or 2.14, or a
Borrower shall be required to make additional payments to
any Lender under Section 2.19, Holdings shall have the
right, at its own expense, upon notice to such Lender and
the Administrative Agent, to require such Lender to transfer
and assign without recourse (in accordance with and subject
to the restrictions contained in Section 10.04) all its
interests, rights and obligations under this Agreement to
another financial institution approved by the Administrative
Agent (which approval shall not be unreasonably withheld)
which shall assume such obligations; provided that (i) no
such assignment shall conflict with any law, rule or
<PAGE>
regulation or order of any Governmental Authority and (ii) a
Borrower or the assignee, as the case may be, shall pay to
the affected Lender in immediately available funds on the
date of such assignment the principal of and interest
accrued to the date of payment on the Loans made by it
hereunder and all other amounts accrued for its account or
owed to it hereunder.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
Holdings and each Borrower represents and warrants that:
SECTION 3.01. Corporate Existence and Good Standing.
Holdings and each of its Material Subsidiaries: (a) is a
corporation, partnership or other entity duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its organization; (b) has all requisite
corporate or other power, and has all material governmental
licenses, authorizations, consents and approvals, necessary
to own its assets and carry on its business as now being or
as proposed to be conducted; and (c) is qualified to do
business and is in good standing in all jurisdictions in
which the nature of the business conducted by it makes such
qualification necessary and where failure so to qualify or
to be in good standing could reasonably be expected to
(either individually or in the aggregate) result in a
Material Adverse Effect.
SECTION 3.02. Corporate Power, Authorization and Compliance
with the Law. (a) The execution, delivery and performance
by the Borrowers of this Agreement, are within their
respective corporate powers, have been duly authorized by
all necessary corporate action and will not violate any
provision of law of or the articles of incorporation, by-
laws or memorandum or articles of association of any
Borrower, or result in the breach of or constitute a default
under or require any consent under any indenture or other
material agreement or instrument to which any Borrower or
any of its Subsidiaries is a party or by which any Borrower
or any of its Subsidiaries or its respective properties may
be bound or affected, or cause any of its properties to
become subject to any Lien; this Agreement constitutes the
legal, valid and binding obligation of each Borrower
enforceable against such Borrower in accordance with its
terms.
(b) The conduct by Holdings and its Subsidiaries of their
respective businesses as they are presently operated does
<PAGE>
not violate any material provision of law or material rule
or regulation of any Governmental Authority in a manner
which, when taken together with all other such violations,
could reasonably be expected to result in a Materially
Adverse Effect; and Holdings and its Subsidiaries have
obtained all material consents and approvals of Governmental
Authorities required to conduct their respective businesses
as they are presently operated, except to the extent that
failure to obtain any such consents or approvals could not
reasonably be expected to result in a Material Adverse
Effect.
SECTION 3.03. Financial Information; Absence of Material
Adverse Change. (a) The audited consolidated financial
statements of Holdings and its Subsidiaries for the fiscal
year ended December 31, 1993, certified by independent
public accountants selected by Holdings, and the unaudited
consolidated financial statements for the fiscal quarter
ended March 31, 1994, fairly present the financial condition
of Holdings and its Subsidiaries at the dates of such
statements and the results of their respective operations
for the periods ended on said dates, all in conformity with
generally accepted accounting principles consistently
applied.
(b) The consolidating balance sheets by geographic region of
Holdings and its Subsidiaries as of December 31, 1993, and
March 31, 1994, were prepared by management of Holdings in
good faith.
(c) Since December 31, 1993, there has occurred no Material
Adverse Change.
SECTION 3.04. Employee Benefit Plans. Each of the
Borrowers and its ERISA Affiliates are in compliance in all
material respects with the applicable provisions of ERISA
and the Code and the regulations and published
interpretations thereunder. No Reportable Event has
occurred in respect of any Plan of any Borrower or any ERISA
Affiliate. The present value of all benefit liabilities of
all underfunded Plans (based on those assumptions used to
fund each such Plan) did not, as of the last annual
valuation dates applicable thereto, exceed by more than
$5,000,000 the value of the assets of all such underfunded
Plans. Neither the Borrowers nor any ERISA Affiliate have
incurred any Withdrawal Liability that materially adversely
affects the financial condition of any Borrower and its
ERISA Affiliates taken as a whole. Neither the Borrowers
<PAGE>
nor any ERISA Affiliate have received any notification that
any Multiemployer Plan is in reorganization or has been
terminated, within the meaning of Title IV of ERISA, and no
Multiemployer Plan is reasonably expected to be in
reorganization or to be terminated, where such
reorganization or termination has resulted or can reasonably
be expected to result in an increase in the contributions
required to be made to such Plan that would materially and
adversely affect the financial condition of any Borrower and
its ERISA Affiliates taken as a whole.
SECTION 3.05. Environmental Matters. The Borrowers are
aware of no events, conditions or circumstances involving
environmental pollution or contamination or employee health
or safety that could reasonably be expected to result in a
Material Adverse Change.
SECTION 3.06. Litigation. There are no suits,
investigations or proceedings pending or, to the best of its
knowledge, threatened, against or affecting Holdings or its
Subsidiaries which call into question the validity of this
Agreement or could reasonably be expected to result in a
Material Adverse Effect.
SECTION 3.07. Taxes. Holdings and its Subsidiaries have
filed all Federal and other material tax returns required to
be filed and paid all Federal and other material taxes due
or assessed indicated thereon, including interest and
penalties, except for taxes which are being contested in
good faith and by applicable proceedings, and for which
Holdings and its Subsidiaries have made adequate reserves on
the books of Holdings and its Subsidiaries.
SECTION 3.08. Subsidiaries. Schedule 3.08, as the same
shall be updated by Holdings from time to time by means of
one or more notices delivered to the Administrative Agent,
correctly sets forth the name of each Subsidiary of
Holdings, its jurisdiction of incorporation and the
percentage of each class of issued and outstanding capital
stock owned by Holdings and any Subsidiary, respectively, if
any; the corporations listed on Schedule 3.08 are the only
Subsidiaries of Holdings as of the date of this Agreement.
SECTION 3.09. Investment Company Act. Neither Holdings nor
any of its Subsidiaries is an "investment company", or a
<PAGE>
company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended.
SECTION 3.10. No Material Misstatements. No information,
report, financial statement, exhibit or schedule furnished
by or on behalf of any Borrower to the Administrative Agent
or any Lender in connection with this Agreement or included
herein or delivered pursuant hereto contained or contains
any material misstatement of fact or omitted or omits any
material fact necessary to make the statements therein, in
the light of the circumstances under which they were made,
or are made, not misleading.
SECTION 3.11. Federal Reserve Regulations. (a) Neither
Holdings, nor any of its Subsidiaries is engaged
principally, or as one if its important activities, in the
business of extending credit for the purpose of purchasing
or carrying Margin Stock.
(b) No part of the proceeds of any Loan will be used,
whether directly or indirectly, and whether immediately,
incidentally or ultimately, (i) to purchase or carry Margin
Stock or to extend credit to others for the purpose of
purchasing or carrying Margin Stock or to refund
indebtedness originally incurred for such purpose, or (ii)
for any purpose which entails a violation of, or which is
inconsistent with, the provisions of the Regulations of the
Board, including Regulation G, U or X.
SECTION 3.12.Title to Properties. Holdings and its
Subsidiaries have good title in fee simple to, or valid and
subsisting leasehold interests in, all their respective
material real properties, and good title to all their
respective material other properties, reflected on the
financial statements of Holdings and its Subsidiaries
referred to in Section 3.03 above, except 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 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.
SECTION 3.13. Use of Proceeds. The Borrowers will use the
proceeds of the Loans only for the purposes specified in the
preamble to this Agreement.
<PAGE>
ARTICLE IV. CONDITIONS OF LENDING
The obligations of the Lenders to make Loans hereunder are
subject to the satisfaction of the following conditions:
SECTION 4.01. All Borrowings. On the date of each
Borrowing, including each Borrowing in which Loans are
refinanced with new Loans as contemplated by Section 2.05:
(a) The Administrative Agent shall have received a notice
of such Borrowing as required by Section 2.03 or 2.04, as
applicable.
(b) The representations and warranties set forth in
Article III hereof shall be true and correct in all material
respects on and as of the date of such Borrowing with the
same effect as though made on and as of such date, except
for Section 3.03(c) and 3.06 in the case of refinancing
which does not increase the aggregate principal amount of
the Loans outstanding, and to the extent such representa-
tions and warranties expressly relate to an earlier date.
(c) Each Borrower shall be in compliance with all the terms
and provisions set forth herein and at the time of and
immediately after such Borrowing no Event of Default or
Default shall have occurred and be continuing.
Each Borrowing shall be deemed to constitute a representa-
tion and warranty by each Borrower on the date of such Bor-
rowing as to the matters specified in paragraphs (b) and (c)
of this Section 4.01.
SECTION 4.02. Closing Date. On the Closing Date:
(a) The Administrative Agent shall have received the
favorable written opinions of Miro Miro & Weiner and
Freshfields, counsel for the Borrowers, dated the Closing
Date and addressed to the Lenders, to the effect set forth
in Exhibit D-1 and D-2; the Borrowers hereby instruct such
counsel to deliver such opinions to the Adminstrative Agent.
(b) All legal matters incident to this Agreement and the
borrowings hereunder shall be satisfactory to the Lenders
<PAGE>
and to Cravath, Swaine & Moore, counsel for the
Administrative Agent.
(c) The Administrative Agent shall have received (i) a copy
of the certificate or articles of incorporation including
all amendments thereto, of Sotheby's Holdings, Inc. and
Sotheby's, Inc., certified as of a recent date by the
Secretary of State or a comparable official of such
Borrower's jurisdiction of incorporation, a certificate as
to the good standing of such Borrowers as of a recent date,
from such Secretary of State or comparable official and a
copy of the Secretary's certificate for Oatshare Limited and
Sotheby's to the foregoing effect; (ii) a certificate of the
Secretary or Assistant Secretary of each Borrower dated the
Closing Date and certifying (A) that attached thereto is a
true and complete copy of the by-laws of such Borrower as in
effect on the Closing Date and at all times since a date
prior to the date of the resolutions described in clause (B)
below, (B) that attached thereto is a true and complete copy
of resolutions duly adopted by the Board of Directors of
such Borrower authorizing the execution, delivery and
performance of the Loan Documents and the borrowings
hereunder, and that such resolutions have not been modified,
rescinded or amended and are in full force and effect,
(C) that the certificate of incorporation of such Borrower
has not been amended since the date of the last amendment
thereto shown on the certificate of good standing or the
certified copy of the certificate of incorporation furnished
pursuant to clause (i) above, and (D) as to the incumbency
and specimen signature of each officer executing any Loan
Document or any other document delivered in connection
herewith on behalf of such Borrower; (iii) a certificate of
another officer as to the incumbency and specimen signature
of the Secretary or Assistant Secretary executing the
certificate pursuant to (ii) above; and (iv) such other
documents as Cravath, Swaine & Moore, counsel for the
Administrative Agent, may reasonably request.
(d) The Administrative Agent shall have received a
certificate of Holdings, dated the Closing Date and signed
by a Financial Officer of Holdings, confirming compliance
<PAGE>
with the conditions precedent set forth in paragraphs (b)
and (c) of Section 4.01.
(e) The Administrative Agent shall have received all Fees
and other amounts due and payable on or prior to the Closing
Date.
(f)The commitments under the Existing Credit Agreements
shall have been terminated and all principal and interest
outstanding thereunder shall have been paid in full.
ARTICLE V. AFFIRMATIVE COVENANTS
The Borrowers covenant and agree with each Lender that, so
long as this Agreement shall remain in effect or the
principal of or interest on any Loan, any Fees or any other
expenses or amounts payable under any Loan Document shall be
unpaid, unless the Required Lenders shall otherwise consent
in writing, Holdings will, and will cause each of its
Subsidiaries to:
SECTION 5.01. Financial Statements. In the case of
Holdings, furnish to the Agent and each Lender:
(a) within 90 days after the end of each fiscal year, (i) a
consolidated balance sheet at the end of such fiscal year
and the related statements of income and operations and
changes in financial position and of shareholder's equity
for such year, all prepared in accordance with GAAP and
audited by and accompanied by the opinion of Deloitte &
Touche or other independent public accountants reasonably
satisfactory to the Required Lenders and (ii) a
consolidating balance sheet by geographic region;
(b) within 60 days after the end of the first, second and
third quarter of each fiscal year, a consolidated balance
sheet (and a consolidating balance sheet by geographic
region) at the end of such quarter and the related statement
of income for such period, all prepared in accordance with
GAAP and certified by the Financial Officer of Holdings;
(c) at the time of each delivery of financial statements
pursuant to (a) or (b) above, a certificate signed by a
Responsible Officer of Holdings stating whether or not
Holdings and its Subsidiaries are in compliance with
Article VI;
<PAGE>
(d) promptly after the filing thereof, copies of all forms
and reports filed by it with the Securities and Exchange
Commission and, promptly after knowledge thereof shall have
come to the attention of any Responsible Officer, written
notice of (i) any threatened or pending litigation or
arbitral or governmental or administrative proceeding
against Holdings or any of its Subsidiaries which could
reasonably be expected to result in a Material Adverse
Effect and (ii) any Event of Default (or event which with
notice or the passage of time or both would constitute an
Event of Default) together with a statement by a Responsible
Officer describing the action, if any, which Holdings
proposes to take with respect thereto; and
(e) promptly following request therefor, such further
information regarding the business affairs and financial
condition of Holdings and its Subsidiaries as the
Administrative Agent or any Lender may reasonably require.
SECTION 5.02. Payment of Obligations. (a) Pay and
discharge or cause to be paid and discharged promptly when
due all material and lawful taxes, assessments and
governmental charges or levies imposed upon it or upon its
income or profits or in respect of its property, before the
same shall become in default, as well as all material and
lawful claims which, if unpaid, might become a lien or
charge upon such properties or any part thereof; provided,
however, that neither Holdings nor any of the Subsidiaries
shall be required to pay and discharge or to cause to be
paid and discharged any such tax, assessment, charge, levy
or claim so long as the validity, applicability or amount
thereof shall be contested in good faith by applicable
proceedings and Holdings or such Subsidiary, as the case may
be, shall have set aside on its books reserves reasonably
deemed adequate by it with respect thereto.
SECTION 5.03. Maintain Property and Insurance. (a)
Maintain and preserve all properties which are used in the
conduct of the business of Holdings and the Material
Subsidiaries in good working order and condition, ordinary
wear and tear excepted, and (b) maintain in respect of the
assets of Holdings and the Material Subsidiaries, insurance
in such amounts and against such risks as is generally
maintained by companies operating similar businesses in the
same general area. All insurance policies hereunder shall
<PAGE>
be maintained with sound and reputable insurance carriers of
recognized standing.
SECTION 5.04. Maintain Existence. Preserve (a) the
corporate existence and good standing of Holdings and the
Material Subsidiaries and (b) all the material rights,
privileges and franchises necessary and desirable in the
normal conduct of the business of Holdings and the Material
Subsidiaries.
SECTION 5.05. Compliance with Laws. Comply with the
requirements of all applicable laws (including ERISA),
regulations and orders of any Governmental Authority, a
violation of which would materially affect the business or
financial condition of Holdings and its Subsidiaries taken
as a whole, except any such law, regulation or order which
is being contested by Holdings or any Subsidiary in good
faith by applicable proceedings.
SECTION 5.06. Inspection. Give, upon the request of any
Lender upon reasonable advance notice, any representative of
such Lender access during normal business hours to inspect,
and permit such representative to inspect, all properties
belonging to it and permit such representative to examine,
copy and make extracts from, financial records relating to
its affairs, as such representative may reasonably require.
SECTION 5.07. ERISA. (a) Comply in all material respects
with the applicable provisions of ERISA and the Code and
(b) furnish to the Administrative Agent and each Lender
(i) as soon as possible, and in any event within 30 days
after any Responsible Officer of Holdings or any ERISA
Affiliate either knows or has reason to know that any
Reportable Event has occurred that alone or together with
any other Reportable Event could reasonably be expected to
result in liability of Holdings to the PBGC in an aggregate
amount exceeding $5,000,000, a statement of a Financial
Officer setting forth details as to such Reportable Event
and the action proposed to be taken with respect thereto,
together with a copy of the notice, if any, of such Report-
able Event given to the PBGC, (ii) promptly after receipt
thereof, a copy of any notice Holdings or any ERISA
Affiliate may receive from the PBGC relating to the
intention of the PBGC to terminate any Plan or Plans (other
than a Plan maintained by an ERISA Affiliate which is
considered an ERISA Affiliate only pursuant to subsec-
tion (m) or (o) of Section 414 of the Code) or to appoint a
<PAGE>
trustee to administer any Plan or Plans, (iii) within 10
days after the due date for filing with the PBGC pursuant to
Section 412(n) of the Code of a notice of failure to make a
required installment or other payment with respect to a
Plan, a statement of a Financial Officer setting forth
details as to such failure and the action proposed to be
taken with respect thereto, together with a copy of such
notice given to the PBGC and (iv) promptly and in any event
within 30 days after receipt thereof by any Borrower or any
ERISA Affiliate from the sponsor of a Multiemployer Plan, a
copy of each notice received by such Borrower or any ERISA
Affiliate concerning (A) the imposition of Withdrawal
Liability or (B) a determination that a Multiemployer Plan
is, or is expected to be, terminated or in reorganization,
both within the meaning of Title IV of ERISA.
ARTICLE VI. NEGATIVE COVENANTS
The Borrowers covenant and agree with each Lender that, so
long as this Agreement shall remain in effect or the
principal of or interest on any Loan, any Fees or any other
expenses or amounts payable under any Loan Document shall be
unpaid, unless the Required Lenders shall otherwise consent
in writing, Holdings will not, either directly or
indirectly, and will not cause or permit any of its
Subsidiaries to:
SECTION 6.01. Liens. Incur, create, assume or permit to
exist any mortgage, pledge, security interest, lien, charge
or other encumbrance of any nature whatsoever (including
conditional sales or other title retention agreement) on any
of its property or assets, whether owned at the date hereof
or hereafter acquired, other than:
(a) liens incurred or pledges and deposits made in
connection with workmen's compensation, unemployment
insurance, old-age pensions, social security and public
liability and similar legislation;
(b) liens securing the performance of bids, tenders, leases,
contracts (other than for the repayment of borrowed money),
statutory obligations, surety and appeal bonds and other
obligations of like nature, incurred incident to and in the
ordinary course of business;
<PAGE>
(c) statutory liens of landlords and other liens imposed by
law, such as carriers', warehousemen's, mechanics',
materialmen's and vendors' liens, incurred in good faith in
the ordinary course of business;
(d) liens securing the payment of taxes, assessments and
governmental charges or levies, either (i) not delinquent or
(ii) being contested in good faith by appropriate
proceedings with adequate reserves;
(e) zoning restrictions, easements, licenses, reservations,
restrictions on the use of real property or minor
irregularities incident thereto which do not in the
aggregate materially detract from the value of the property
or assets of Holdings and the Subsidiaries taken as a whole
or materially impair the operation of the business of
Holdings and the Subsidiaries taken as a whole;
(f) liens incurred in the ordinary course of business
provided that these liens are not given as security for
Indebtedness;
(g) liens on property or assets of any Subsidiary securing
Indebtedness of such Subsidiary to Holdings or to a wholly
owned Subsidiary of Holdings;
(h) liens for judgments or awards, so long as the finality
of such judgment or award is being contested in good faith
and execution thereof is stayed; provided that the aggregate
amount of liens permitted by this clause may not exceed
$10,000,000;
(i) any lien existing on any property or assets of any
corporation at the time it becomes a Subsidiary of Holdings,
or existing prior to the time of acquisition upon any
property or assets acquired by Holdings or any of it
Subsidiaries through purchase, merger or consolidation or
otherwise, whether or not assumed by Holdings or such
Subsidiary;
(j) any lien placed upon property or assets within 90 days
of the time of acquisition of such property or assets by
Holdings or any of its Subsidiaries to secure all or a
portion of (or to secure Indebtedness incurred to pay all or
a portion of) the purchase price thereof, provided that any
such lien shall not encumber any other property or assets of
Holdings or any Subsidiary;
(k) liens, other than the liens permitted by clauses (a)
through (j) above (including any such liens in existence as
of the date hereof), existing as of the date hereof and set
forth on Schedule 6.01; provided, however, that no such lien
shall be permitted under this clause (k) if it extends to
property other than the property subject to such lien on the
date hereof;
(l) any lien renewing, extending or refunding any lien
permitted by clause (i), (j) or (k) above, provided that the
principal amount secured is not increased, and the lien is
not extended to other property; and
(m) liens, in addition to the liens permitted by clauses (a)
through (l) above, securing obligations in an aggregate
amount not greater than 10% of Consolidated Net Worth.
SECTION 6.02. Subsidiary Indebtedness. Permit any
Subsidiary to create, incur, assume or permit to exist any
Indebtedness except:
(a) in the case of any Subsidiary that is a Borrower,
Indebtedness under this Agreement;
(b) Indebtedness of any Subsidiary the proceeds of which are
used by such Subsidiary to make secured loans to consignors,
dealers or clients in the ordinary course of business of the
Borrowers and their subsidiaries and in a manner that is
consistent with established practices pursuant to the
auction finance business of the Borrowers and their
subsidiaries;
(c) Indebtedness of any Subsidiary to another Subsidiary or
any Borrower;
(d) Indebtedness of any Subsidiary outstanding on the date
hereof or available to any Subsidiary under credit
facilities existing on the date hereof, not in excess of
$20,000,000 in the aggregate with respect to all
Subsidiaries; and
(e) other Indebtedness, provided that the aggregate
principal amount of all such other Indebtedness of all
<PAGE>
Subsidiaries outstanding at any time (excluding amounts
permitted under clauses (a) through (d) above) does not
exceed 10% of Consolidated Net Worth at such time.
SECTION 6.03. Consolidations, Mergers, and Sales of Assets.
(a) Merge or consolidate with any other corporation, except
that (i) any Borrower may merge or consolidate with a
Subsidiary so long as the Borrower is the surviving entity
in such merger or consolidation or (ii) any Borrower may
merge or consolidate with any other Person so long as the
Borrower is the surviving entity in such merger or
consolidation and, after giving effect to such merger or
consolidation, no Event of Default exists.
(b) Sell, lease, transfer or otherwise dispose of all or a
substantial part of its assets, other than assets no longer
used or useful in the conduct of its business or leases for
space used in the ordinary course of business which are near
the end of their term, except dispositions in the ordinary
course of business for a full and adequate consideration.
SECTION 6.04. Lines of Business. Engage to any substantial
extent in any line or lines of business activity
fundamentally different from the business presently engaged
in.
SECTION 6.05. Transactions with Affiliates. Sell or
transfer any property or assets to, or purchase or acquire
any property or assets from, or otherwise engage in any
other transactions with, any of its Affiliates, except that
as long as no Default or Event of Default shall have
occurred and be continuing, Holdings or any of its
Subsidiaries may engage in any of the foregoing transactions
in the ordinary course of business at prices and on terms
and conditions not less favorable to Holdings or any
Subsidiary than could be obtained on an arm's-length basis
from unrelated third parties.
SECTION 6.06. Restrictions on Dividends. Enter into any
agreement, contract or arrangement which expressly limits
the right of any Subsidiary to pay dividends to its parent
corporation.
SECTION 6.07. Consolidated Leverage Ratio. Permit the
Consolidated Leverage Ratio at any time to exceed .65 to
1.0.
<PAGE>
SECTION 6.08. Consolidated Tangible Net Worth. Permit
Consolidated Tangible Net Worth to be less than
$150,000,000.
SECTION 6.09.Consolidated Coverage Ratio. At any time when
the Consolidated Leverage Ratio exceeds .50 to 1.0, permit
the Consolidated Coverage Ratio for the period of four
consecutive financial quarters most recently ended to be
less than 3.0 to 1.0.
ARTICLE VII. EVENTS OF DEFAULT
In case of the happening of any of the following events
("Events of Default"):
(a) default shall be made in the payment of any principal of
any Loan when and as the same shall become due and payable,
whether at the due date thereof or at a date fixed for
prepayment thereof or by acceleration thereof or otherwise;
(b) default shall be made in the payment of any interest on
any Loan or any Fee or any other amount due under any Loan
Document, when and as the same shall become due and payable,
and such default shall continue unremedied for a period of
five days;
(c) default shall be made in the due observance or
performance by a Borrower or any Subsidiary of any other
covenant, condition or agreement contained in Section
5.04(a) or in Article VI;
(d) default shall be made in the due observance or
performance by a Borrower or any Subsidiary of any other
covenant, condition or agreement contained in any Loan
Document and such default shall continue unremedied for a
period of 30 days after notice thereof from the
Administrative Agent or any Lender to such Borrower;
(e) Holdings or any Subsidiary shall fail to pay any
Indebtedness greater than $1,000,000, or fail during any 30-
day period to pay Indebtedness aggregating more than
$1,000,000, owing by Holdings or such Subsidiary, or any
interest or premium thereon aggregating $1,000,000 or more,
when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) and such
<PAGE>
failure shall continue after the applicable grace period, if
any, specified in the agreement or instrument relating to
such Indebtedness;
(f) Any event or condition shall occur or exist under any
agreement or instrument of Holdings or any Subsidiary
evidencing or securing or relating to any Indebtedness
exceeding $10,000,000, if the effect of such event or
condition is to accelerate, or to permit the holder or
holders of such Indebtedness or the trustee or trustees
under any such agreement or instrument to accelerate, the
maturity of such Indebtedness;
(g) any representation or warranty made or deemed made in or
in connection with any Loan Document or the borrowings
hereunder, or any representation, warranty, statement or
information contained in any report, certificate, financial
statement or other instrument furnished in connection with
or pursuant to any Loan Document, shall prove to have been
false or misleading in any material respect when so made,
deemed made or furnished;
(h)(i) a Reportable Event or Reportable Events, or a failure
to make a required installment or other payment (within the
meaning of Section 412(n)(1) of the Code), shall have
occurred with respect to any Plan or Plans that reasonably
could be expected to result in liability of Holdings to the
PBGC or to a Plan in an aggregate amount exceeding
$5,000,000 and, within 30 days after the reporting of any
such Reportable Event to the Agent or after the receipt by
the Agent of a statement required pursuant to
Section 5.07(b(iii) hereof, the Agent shall have notified
the Borrower in writing that (A) the Required Lenders have
made a determination that, on the basis of such Reportable
Event or Reportable Events or the failure to make a required
payment, there are reasonable grounds for the termination of
such Plan or Plans by the PBGC, the appointment by the
appropriate United States district court of a trustee to
administer such Plan or Plans or the imposition of a lien in
favor of a Plan and (B) as a result thereof an Event of
Default exists hereunder; or (ii) a trustee shall be
appointed by a United States district court to administer
<PAGE>
any such Plan or Plans; or (iii) the PBGC shall institute
proceedings (including giving notice of intent thereof) to
terminate any such Plan or Plans;
(i)(i) the Borrowers or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that it has
incurred Withdrawal Liability to such Multiemployer Plan,
(ii) such Borrower or such ERISA Affiliate does not have
reasonable grounds for contesting such Withdrawal Liability
or is not contesting such Withdrawal Liability in a timely
and appropriate manner and (iii) the amount of such
Withdrawal Liability specified in such notice, when
aggregated with all other amounts required to be paid to
Multiemployer Plans in connection with Withdrawal
Liabilities (determined as of the date or dates of such
notification), either (A) exceeds $5,000,000 or requires
payments exceeding $1,000,000 in any year or (B) is less
than $5,000,000 but any Withdrawal Liability payment remains
unpaid 30 days after such payment is due; or
(j) the Borrower or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or is being
terminated, within the meaning of Title IV of ERISA, if
solely as a result of such reorganization or termination the
aggregate annual contributions of the Borrower and its ERISA
Affiliates to all Multiemployer Plans that are then in
reorganization or have been or are being terminated have
been or will be increased over the amounts required to be
contributed to such Multiemployer Plans for their most
recently completed plan years by an amount exceeding
$1,000,000;
(k) a judgment or judgments for the payment of money in
excess of $5,000,000 in the aggregate shall have been
rendered against Holdings or any Subsidiary and the same
shall have remained unsatisfied and in effect, without stay
of execution, for any period of sixty (60) days; or
(l) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of Holdings or
any Material Subsidiary, or of a substantial part of the
property or assets of Holdings or any Material Subsidiary,
under Title 11 of the United States Code, as now constituted
<PAGE>
or hereafter amended, or any other Federal or state
bankruptcy, insolvency, receivership or similar law (or
similar statute or law in any other jurisdiction), (ii) the
appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for Holdings or any Material
Subsidiary or for a substantial part of the property or
assets of Holdings or a Material Subsidiary or (iii) the
winding-up or liquidation of Holdings or any Material
Subsidiary; and such proceeding or petition shall continue
undismissed for 30 days or an order or decree approving or
ordering any of the foregoing shall be entered;
(m) Holdings or any Material Subsidiary shall (i) volun-
tarily commence any proceeding or file any petition seeking
relief under Title 11 of the United States Code, as now
constituted or hereafter amended, or any other Federal or
state bankruptcy, insolvency, receivership or similar law
(or similar statute or law in any other jurisdiction),
(ii) consent to the institution of, or fail to contest in a
timely and applicable manner, any proceeding or the filing
of any petition described in (g) above, (iii) apply for or
consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for
Holdings or any Material Subsidiary or for a substantial
part of the property or assets of Holdings or any Material
Subsidiary, (iv) file an answer admitting the Material
allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of
creditors, (vi) become unable, admit in writing its
inability or fail generally to pay its debts as they become
due or (vii) take any action for the purpose of effecting
any of the foregoing;
then, and in every such event (other than an event with
respect to any Borrower described in paragraph (l) or (m)
above), and at any time thereafter during the continuance of
such event, the Administrative Agent shall at the request of
the Required Lenders, by notice to the Borrowers, take
either or both of the following actions, at the same or
different times: (i) terminate forthwith the Commitments
and (ii) declare the Loans then outstanding to be forthwith
due and payable in whole or in part, whereupon the principal
of the Loans so declared to be due and payable, together
with accrued interest thereon and any unpaid accrued Fees
<PAGE>
and all other liabilities of the Borrowers accrued
hereunder, shall become forthwith due and payable, without
presentment, demand, protest or any other notice of any
kind, all of which are hereby expressly waived by the
Borrowers, anything contained herein to the contrary
notwithstanding; and, in any event with respect to a
Borrower described in paragraph (l) or (m) above, the
Commitments shall automatically terminate and the principal
of the Loans then outstanding, together with accrued
interest thereon and any unpaid accrued Fees and all other
liabilities of the Borrowers accrued hereunder, shall
automatically become due and payable, without presentment,
demand, protest or any other notice of any kind, all of
which are hereby expressly waived by the Borrowers, anything
contained herein to the contrary notwithstanding.
ARTICLE VIII. THE ADMINISTRATIVE AGENT
In order to expedite the transactions contemplated by this
Agreement, Chemical Bank is hereby appointed to act as
Administrative Agent on behalf of the Lenders. Each of the
Lenders hereby irrevocably authorizes the Administrative
Agent to take such actions on behalf of such Lender and to
exercise such powers as are specifically delegated to the
Administrative Agent by the terms and provisions hereof,
together with such actions and powers as are reasonably
incidental thereto. The Administrative Agent is hereby
expressly authorized by the Lenders, without hereby limiting
any implied authority, (a) to receive on behalf of the
Lenders all payments of principal of and interest on the
Loans and all other amounts due to the Lenders hereunder,
and promptly to distribute to each Lender its proper share
of each payment so received; (b) as provided in Article VII,
to give notice on behalf of each of the Lenders to the
Borrowers of any Event of Default specified in this
Agreement of which the Administrative Agent has actual
knowledge acquired in connection with its agency hereunder;
and (c) to distribute to each Lender copies of all notices,
financial statements and other materials delivered by any
Borrower pursuant to this Agreement as received by the
Administrative Agent.
Neither the Administrative Agent nor any of its directors,
officers, employees or agents shall be liable as such for
any action taken or omitted by any of them except for its or
his own gross negligence or wilful misconduct, or be respon-
sible for any statement, warranty or representation herein
or the contents of any document delivered in connection
<PAGE>
herewith, or be required to ascertain or to make any inquiry
concerning the performance or observance by the Borrowers of
any of the terms, conditions, covenants or agreements
contained in any Loan Document. The Administrative Agent
shall not be responsible to the Lenders for the due
execution, genuineness, validity, enforceability or
effectiveness of this Agreement, or any other Loan Documents
or other instruments or agreements. The Administrative
Agent shall in all cases be fully protected in acting, or
refraining from acting, in accordance with written
instructions signed by the Required Lenders and, except as
otherwise specifically provided herein, such instructions
and any action or inaction pursuant thereto shall be binding
on all the Lenders. The Administrative Agent shall, in the
absence of knowledge to the contrary, be entitled to rely on
any instrument or document believed by it in good faith to
be genuine and correct and to have been signed or sent by
the proper person or persons. Neither the Administrative
Agent nor any of its directors, officers, employees or
agents shall have any responsibility to the Borrowers on
account of the failure of or delay in performance or breach
by any Lender of any of its obligations hereunder or to any
Lender on account of the failure of or delay in performance
or breach by any other Lender or a Borrower of any of their
respective obligations hereunder or under any other Loan
Document or in connection herewith or therewith. The
Administrative Agent may execute any and all duties here-
under by or through agents or employees and shall be enti-
tled to rely upon the advice of legal counsel selected by it
with respect to all matters arising hereunder and shall not
be liable for any action taken or suffered in good faith by
it in accordance with the advice of such counsel.
The Lenders hereby acknowledge that the Administrative Agent
shall be under no duty to take any discretionary action
permitted to be taken by it pursuant to the provisions of
this Agreement unless it shall be requested in writing to do
so by the Required Lenders.
Subject to the appointment and acceptance of a successor
Administrative Agent as provided below, the Administrative
Agent may resign at any time by notifying the Lenders and
the Borrowers. Upon any such resignation, the Required
Lenders shall have the right to appoint a successor. If no
successor shall have been so appointed by the Required
Lenders and shall have accepted such appointment within 30
days after the retiring Administrative Agent gives notice of
<PAGE>
its resignation, then the retiring Administrative Agent may,
on behalf of the Lenders, appoint a successor Administrative
Agent which shall be a bank with an office in New York, New
York, having a combined capital and surplus of at least
$500,000,000 or an Affiliate of any such bank. Upon the
acceptance of any appointment as Administrative Agent
hereunder by a successor bank, such successor shall succeed
to and become vested with all the rights, powers, privileges
and duties of the retiring Administrative Agent and the
retiring Administrative Agent shall be discharged from its
duties and obligations hereunder. After the Administrative
Agent's resignation hereunder, the provisions of this
Article and Section 10.05 shall continue in effect for its
benefit in respect of any actions taken or omitted to be
taken by it while it was acting as Administrative Agent.
With respect to the Loans made by it hereunder, the
Administrative Agent in its individual capacity and not as
Administrative Agent shall have the same rights and powers
as any other Lender and may exercise the same as though it
were not the Administrative Agent, and the Administrative
Agent and its Affiliates may accept deposits from, lend
money to and generally engage in any kind of business with
Holdings or any Subsidiary or other Affiliate thereof as if
it were not the Administrative Agent.
Each Lender agrees (a) to reimburse the Administrative
Agent, on demand, in the amount of its pro rata share (based
on its Commitment hereunder or, if the Commitments shall
have been terminated, its outstanding Loans) of any expenses
incurred for the benefit of the Lenders by the
Administrative Agent, including counsel fees and compensa-
tion of agents and employees paid for services rendered on
behalf of the Lenders, which shall not have been reimbursed
by one of the Borrowers and (b) to indemnify and hold
harmless the Administrative Agent and any of its directors,
officers, employees or agents, on demand, in the amount of
such pro rata share, from and against any and all
liabilities, taxes, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against it in its capacity as the
Administrative Agent or any of them in any way relating to
or arising out of this Agreement or any other Loan Document
or any action taken or omitted by it or any of them under
this Agreement or any other Loan Document, to the extent the
same shall not have been reimbursed by the Borrowers;
<PAGE>
provided that no Lender shall be liable to the
Administrative Agent for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the
gross negligence or wilful misconduct of the Administrative
Agent or any of its directors, officers, employees or
agents.
Each Lender acknowledges that it has, independently and
without reliance upon the Administrative Agent or any other
Lender and based on such documents and information as it has
deemed applicable, made its own credit analysis and decision
to enter into this Agreement. Each Lender also acknowledges
that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such
documents and information as it shall from time to time deem
applicable, continue to make its own decisions in taking or
not taking action under or based upon this Agreement or any
other Loan Document, any related agreement or any document
furnished hereunder or thereunder.
ARTICLE IX. GUARANTEE
SECTION 9.01. Guarantee. (a) Subject to the last sentence
of this Section 9.01(a), each Guarantor hereby guarantees to
each Lender and the Administrative Agent and their
respective successors and assigns the prompt payment in full
when due (whether at stated maturity, by acceleration, by
optional prepayment or otherwise) of the principal of and
interest (accruing at the rate specified herein after the
filing or commencement of any bankruptcy or similar
proceeding) on the Loans made by the Lenders to any Borrower
and all other amounts from time to time owing to the Lenders
or the Administrative Agent by any Borrower under this
Agreement, strictly in accordance with the terms thereof
(such obligations being herein collectively called the
"Guaranteed Obligations"). Each Guarantor hereby further
agrees that if any Borrower shall fail to pay in full when
due (whether at stated maturity, by acceleration, by
optional prepayment or otherwise) any of the Guaranteed
Obligations, the Guarantor will promptly pay the same,
without any demand or notice whatsoever, and that in the
case of any extension of time of payment or renewal of any
of the Guaranteed Obligations, the same will be promptly
paid in full when due (whether at extended maturity, by
acceleration or otherwise) in accordance with the terms of
<PAGE>
such extension or renewal. Notwithstanding anything in this
Article IX to the contrary, Oatshare Limited and Sotheby's
will not be liable as Guarantors for the obligations of
Sotheby's Holdings, Inc. and Sotheby's, Inc.
(b) Anything herein to the contrary notwithstanding, the
maximum liability of each Guarantor hereunder shall in no
event exceed the amount which can be guaranteed by such
Guarantor under applicable federal and state laws relating
to the insolvency of debtors.
SECTION 9.02. Obligations Unconditional. The obligations
of each Guarantor under Section 9.01 hereof are absolute and
unconditional irrespective of the value, genuineness,
validity, regularity or enforceability of the obligations of
any Borrower under this Agreement or any other agreement or
instrument referred to herein or therein, or any
substitution, release or exchange of any other guarantee of
or security for any of the Guaranteed Obligations, and, to
the fullest extent permitted by applicable law, irrespective
of any other circumstance whatsoever which might otherwise
constitute a legal or equitable discharge or defense of a
surety or guarantor, it being the intent of this
Section 9.02 that the obligations of each Guarantor
hereunder shall be absolute and unconditional under any and
all circumstances. Without limiting the generality of the
foregoing, it is agreed that the occurrence of any one or
more of the following shall not affect the liability of any
Guarantor hereunder:
(a) at any time or from time to time, without notice to the
Guarantors, the time for any performance of or compliance
with any of the Guaranteed Obligations shall be extended, or
such performance or compliance shall be waived;
(b) any of the acts mentioned in any of the provisions of
this Agreement or any other agreement or instrument referred
to herein or therein shall be done or omitted; or
(c) the maturity of any of the Guaranteed Obligations shall
be accelerated, or any of the Guaranteed Obligations shall
be modified, supplemented or amended in any respect, or any
right under this Agreement or any other agreement or
instrument referred to herein or therein shall be waived or
any other guarantee of any of the Guaranteed Obligations or
<PAGE>
any security therefor shall be released or exchanged in
whole or in part or otherwise dealt with.
Each Guarantor hereby expressly waives diligence,
presentment, demand of payment, protest and all notices
whatsoever, and any requirement that the Administrative
Agent or any Lender exhaust any right, power or remedy or
proceed against any Borrower under this Agreement or any
other agreement or instrument referred to herein or therein,
or against any other person under any other guarantee of, or
security for, any of the Guaranteed Obligations.
SECTION 9.03. Reinstatement. The obligations of each
Guarantor under this Article IX shall be automatically
reinstated if and to the extent that for any reason any
payment by or on behalf of any Borrower in respect of the
Guaranteed Obligations is rescinded or must be otherwise
restored by any holder of any of the Guaranteed Obligations,
whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that
it will indemnify the Administrative Agent and each Lender
on demand for all reasonable costs and expenses (including,
without limitation, fees of counsel) incurred by the
Administrative Agent or such Lender in connection with such
rescission or restoration.
SECTION 9.04. Subrogation. Each Guarantor hereby
irrevocably waives all rights of subrogation or
contribution, whether arising by operation of law
(including, without limitation, any such right arising under
Title 11 of the United States Code) or otherwise, by reason
of any payment by it pursuant to the provisions of this
Article IX and further agrees for the benefit of each of its
creditors (including, without limitation, each Lender and
the Administrative Agent) that any such payment by it of the
Guaranteed Obligations of any Borrower shall constitute a
contribution of capital or a dividend, as the case may be,
by such Guarantor to such Borrower.
SECTION 9.05. Remedies. Each Guarantor agrees
that, as between the Guarantors and the Lenders, the
obligations of any Borrower under this Agreement may be
declared to be forthwith due and payable as provided in
Article VII hereof (and shall be deemed to have become
automatically due and payable in the circumstances provided
in said Article VII) for purposes of Section 9.01 hereof
notwithstanding any stay, injunction or other prohibition
preventing such declaration (or preventing such obligations
<PAGE>
from becoming automatically due and payable) as against any
Borrower and that, in the event of such declaration (or such
obligations being deemed to have become automatically due
and payable), such obligations (whether or not due and
payable by such Approved Borrower) shall forthwith become
due and payable by each Guarantor for purposes of such
Section 9.01.
SECTION 9.06. Continuing Guarantee. The guarantee in this
Article IX is a continuing guarantee, and shall apply to all
Guaranteed Obligations whenever arising.
ARTICLE X. MISCELLANEOUS
SECTION 10.01. Notices. Notices and other communications
provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by
certified or registered mail or sent by telecopy, as
follows:
(a) if to any Borrower, to it in care of Holdings at 1334
York Avenue, New York, New York 10021, Attention of John S.
Brittain, Jr., Treasurer (Telecopy No. (212) 606-7287);
(b) if to the Administrative Agent, to Chemical Bank Agency
Services Corporation, Grand Central Tower, 140 East
45th Street, New York, New York 10017, Attention of Meline
Kasparian (Telecopy No. 212-622-0002), with copies to
Chemical Bank, 270 Park Avenue, New York, New York 10017,
Attention of Laura Thorne (Telecopy No. 212-270-7138); and
(c) if to a Lender, to it at its address (or telecopy
number) set forth in Schedule 2.01 or in the Assignment and
Acceptance pursuant to which such Lender shall have become a
party hereto.
All notices and other communications given to any party
hereto in accordance with the provisions of this Agreement
shall be deemed to have been given on the date of receipt if
delivered by hand or overnight courier service or sent by
telecopy, or on the date five Business Days after dispatch
by certified or registered mail, in each case delivered,
sent or mailed (properly addressed) to such party as
provided in this Section 10.01 or in accordance with the
<PAGE>
latest unrevoked direction from such party given in
accordance with this Section 10.01.
SECTION 10.02. Survival of Agreement. All covenants,
agreements, representations and warranties made by the
Borrowers herein and in the certificates or other instru-
ments prepared or delivered in connection with or pursuant
to this Agreement or any other Loan Document shall be
considered to have been relied upon by the Lenders and shall
survive the making by the Lenders of the Loans, regardless
of any investigation made by the Lenders or on their behalf,
and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any Fee
or any other amount payable under this Agreement or any
other Loan Document is outstanding and unpaid and so long as
the Commitments have not been terminated.
SECTION 10.03. Binding Effect. This Agreement shall become
effective when it shall have been executed by the Borrowers
and the Administrative Agent and when the Administrative
Agent shall have received copies hereof which, when taken
together, bear the signatures of each Lender, and thereafter
shall be binding upon and inure to the benefit of the
Borrowers, the Administrative Agent and each Lender and
their respective successors and assigns, except that the
Borrowers shall not have the right to assign rights
hereunder or any interest herein without the prior consent
of all the Lenders.
SECTION 10.04. Successors and Assigns. (a) Whenever in
this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the successors and
assigns of such party; and all covenants, promises and
agreements by or on behalf of the Borrowers, the
Administrative Agent or the Lenders that are contained in
this Agreement shall bind and inure to the benefit of their
respective successors and assigns.
(b) Each Lender may assign to one or more assignees all or
a portion of its interests, rights and obligations under
this Agreement (including all or a portion of its Commitment
or outstanding Loans at the time owing to it); provided,
however, that (i) except in the case of an assignment to a
Lender or an affiliate of such Lender, Holdings and the
Administrative Agent must give their prior written consent
to such assignment (which consent shall not be unreasonably
withheld), (ii) each such assignment shall be of a constant,
and not a varying, percentage of all the assigning Lender's
<PAGE>
rights and obligations under this Agreement, (iii) the
amount of the Commitment of the assigning Lender subject to
each such assignment (determined as of the date the
Assignment and Acceptance Agreement with respect to such
assignment is delivered to the Administrative Agent) shall
not be less than $10,000,000 (or, if smaller, such Lender's
remaining Commitment) and the amount of the Commitment of
such Lender remaining after such assignment shall not be
less than $10,000,000 or shall be zero, (iv) the parties to
each such assignment shall execute and deliver to the
Administrative Agent an Assignment and Acceptance Agreement
and a processing and recordation fee of $4,000 and (v) the
assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire. Upon
acceptance and recording pursuant to paragraph (e) of this
Section 10.04, from and after the effective date specified
in each Assignment and Acceptance Agreement, which effective
date shall be at least five Business Days after the
execution thereof, (A) the assignee thereunder shall be a
party hereto and, to the extent of the interest assigned by
such Assignment and Acceptance Agreement, have the rights
and obligations of a Lender under this Agreement and (B) the
assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Acceptance
Agreement, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance
Agreement covering all or the remaining portion of an
assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto (but
shall continue to be entitled to the benefits of Sec-
tions 2.13, 2.15, 2.19 and 10.05, as well as to any Fees
accrued for its account hereunder and not yet paid)).
Notwithstanding the foregoing, any Lender assigning its
rights and obligations under this Agreement may retain any
Competitive Loans made by it outstanding at such time, and
in such case shall retain its rights hereunder in respect of
any Loans so retained until such Loans have been repaid in
full in accordance with this Agreement.
(c) By executing and delivering an Assignment and
Acceptance Agreement, the assigning Lender thereunder and
the assignee thereunder shall be deemed to confirm to and
agree with each other and the other parties hereto as
follows: (i) such assigning Lender warrants that it is the
legal and beneficial owner of the interest being assigned
thereby free and clear of any adverse claim and that its
Commitment, if any, and the outstanding balances of its
Standby Loans and Competitive Loans, if any, in each case
<PAGE>
without giving effect to assignments thereof which have not
become effective, are as set forth in such Assignment and
Acceptance Agreement, (ii) except as set forth in (i) above,
such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to any
statements, warranties or representations made in or in
connection with this Agreement, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value
of this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto or the
financial condition of the Borrowers or any Subsidiary or
the performance or observance by any Borrower of any of its
obligations under this Agreement, any other Loan Document or
any other instrument or document furnished pursuant hereto;
(iii) such assignee represents and warrants that it is
legally authorized to enter into such Assignment and
Acceptance Agreement; (iv) such assignee confirms that it
has received a copy of this Agreement, together with copies
of the most recent financial statements delivered pursuant
to Section 5.01 and such other documents and information as
it has deemed applicable to make its own credit analysis and
decision to enter into such Assignment and Acceptance;
(v) such assignee will independently and without reliance
upon the Administrative Agent, such assigning Lender or any
other Lender and based on such documents and information as
it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under
this Agreement; (vi) such assignee appoints and authorizes
the Administrative Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement as
are delegated to the Administrative Agent by the terms
hereof, together with such powers as are reasonably
incidental thereto; and (vii) such assignee agrees that it
will perform in accordance with their terms all the obliga-
tions which by the terms of this Agreement are required to
be performed by it as a Lender.
(d) The Administrative Agent shall maintain at one of its
offices in The City of New York a copy of each Assignment
and Acceptance Agreement delivered to it and a register for
the recordation of the names and addresses of the Lenders,
and the Commitment of, and principal amount of the Loans
owing to, each Lender pursuant to the terms hereof from time
to time (the "Register"). The entries in the Register shall
be conclusive in the absence of manifest error and the
Borrower, the Administrative Agent and the Lenders may treat
each person whose name is recorded in the Register pursuant
to the terms hereof as a Lender hereunder for all purposes
<PAGE>
of this Agreement. The Register shall be available for
inspection by the Borrowers and any Lender, at any
reasonable time and from time to time upon reasonable prior
notice.
(e) Upon its receipt of a duly completed Assignment and
Acceptance Agreement executed by an assigning Lender and an
assignee, an Administrative Questionnaire completed in
respect of the assignee (unless the assignee shall already
be a Lender hereunder), the processing and recordation fee
referred to in paragraph (b) above and, as required, the
written consent of Holdings and the Administrative Agent to
such assignment, the Administrative Agent shall (i) accept
such Assignment and Acceptance Agreement, (ii) record the
information contained therein in the Register and (iii) give
prompt notice thereof to the Lenders.
(f) Each Lender may without the consent of Holdings or the
Administrative Agent sell participations to one or more
banks or other entities in all or a portion of its rights
and obligations under this Agreement (including all or a
portion of its Commitment and the Loans owing to it);
provided, however, that (i) such Lender's obligations under
this Agreement shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties hereto
for the performance of such obligations, (iii) the
participating banks or other entities shall be entitled to
the benefit of the cost protection provisions contained in
Sections 2.13, 2.15 and 2.19 to the same extent as if they
were Lenders and (iv) the Borrowers, the Administrative
Agent and the other Lenders shall continue to deal solely
and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement, and
such Lender shall retain the sole right to enforce the
obligations of the Borrowers relating to the Loans and to
approve any amendment, modification or waiver of any
provision of this Agreement (other than amendments,
modifications or waivers decreasing any fees payable
hereunder or the amount of principal of or the rate at which
interest is payable on the Loans, extending any scheduled
principal payment date or date fixed for the payment of
interest on the Loans or changing or extending the
Commitments).
(g) Any Lender or participant may, in connection with any
assignment or participation or proposed assignment or
participation pursuant to this Section 10.04, disclose to
<PAGE>
the assignee or participant or proposed assignee or partici-
pant any information relating to the Borrowers furnished to
such Lender by or on behalf of the Borrowers; provided that,
prior to any such disclosure of information designated by
the Borrowers as confidential, each such assignee or
participant or proposed assignee or participant shall
execute an agreement whereby such assignee or participant
shall agree (subject to customary exceptions) to preserve
the confidentiality of such confidential information. It is
understood that confidential information relating to the
Borrowers would not be provided in connection with
assignments or participations of Competitive Loans.
(h) Any Lender may at any time assign all or any portion of
its rights under this Agreement to a Federal Reserve Bank;
provided that no such assignment shall release a Lender from
any of its obligations hereunder. In order to facilitate
such an assignment to a Federal Reserve Bank, the applicable
Borrower shall, at the request of the assigning Lender, duly
execute and deliver to the assigning Lender a promissory
note or notes evidencing the Loans made to such Borrower by
the assigning Lender hereunder.
(i) The Borrowers shall not assign or delegate any of their
rights or duties hereunder, except pursuant to a merger
permitted by Section 6.03.
SECTION 10.05. Expenses; Indemnity. (a) Each Borrower
agrees to pay all reasonable out-of-pocket expenses incurred
by the Administrative Agent in connection with the
preparation of this Agreement and the other Loan Documents
or in connection with any amendments, modifications or
waivers of the provisions hereof or thereof (whether or not
the transactions hereby contemplated shall be consummated)
or incurred by the Administrative Agent or any Lender in
connection with the enforcement or protection of their
rights in connection with this Agreement and the other Loan
Documents or in connection with the Loans made hereunder,
including the reasonable fees, charges and disbursements of
Cravath, Swaine & Moore, counsel for the Administrative
Agent, and, in connection with any such enforcement or
protection, the reasonable fees, charges and disbursements
of any other counsel for the Administrative Agent or any
Lender. Each Borrower further agrees that it shall indem-
nify the Lenders from and hold them harmless against any
documentary taxes, assessments or charges made by any
Governmental Authority by reason of the execution and
<PAGE>
delivery of this Agreement or any of the other Loan Docu-
ments.
(b) Each Borrower agrees to indemnify the Administrative
Agent, each Lender and each of their respective directors,
officers, employees and agents (each such person being
called an "Indemnitee") against, and to hold each Indemnitee
harmless from, any and all actual losses, claims, damages,
liabilities and related expenses, including reasonable
counsel fees, charges and disbursements, incurred by or as-
serted against any Indemnitee arising out of, in any way
connected with, or as a result of (i) the execution or
delivery of this Agreement or any other Loan Document or any
agreement or instrument contemplated thereby, the perfor-
mance by the parties thereto of their respective obligations
thereunder or the consummation of the transactions
contemplated thereby, (ii) the actual or proposed use of the
proceeds of the Loans or (iii) any claim, litigation,
investigation or proceeding relating to any of the forego-
ing, whether or not any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indem-
nitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses are determined by a
court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or
wilful misconduct of such Indemnitee.
(c) The provisions of this Section 10.05 shall remain
operative and in full force and effect regardless of the
expiration of the term of this Agreement, the consummation
of the transactions contemplated hereby, the repayment of
any of the Loans, the invalidity or unenforceability of any
term or provision of this Agreement or any other Loan
Document, or any investigation made by or on behalf of the
Administrative Agent or any Lender. All amounts due under
this Section 10.05 shall be payable on written demand
therefor.
SECTION 10.06. Right of Setoff. If an Event of Default
shall have occurred and be continuing, each Lender is hereby
authorized at any time and from time to time, to the fullest
extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time
owing by such Lender to or for the credit or the account of
any Borrower against any of and all the obligations of such
Borrower now or hereafter existing under this Agreement,
<PAGE>
irrespective of whether or not such Lender shall have made
any demand under this Agreement or such other Loan Document
and although such obligations may be unmatured. The rights
of each Lender under this Section are in addition to other
rights and remedies (including other rights of setoff) which
such Lender may have.
SECTION 10.07. Applicable Law. THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 10.08. Waivers; Amendment. (a) No failure or
delay of the Administrative Agent or any Lender in
exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and
remedies of the Administrative Agent and the Lenders
hereunder are cumulative and are not exclusive of any rights
or remedies which they would otherwise have. No waiver of
any provision of this Agreement or consent to any departure
by any Borrower therefrom shall in any event be effective
unless the same shall be permitted by paragraph (b) below,
and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given.
No notice or demand on any Borrower in any case shall
entitle such Borrower to any other or further notice or
demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement
or agreements in writing entered into by the Borrowers and
the Required Lenders; provided, however, that no such
agreement shall (i) decrease the principal amount of, or
extend the maturity of or any scheduled principal payment
date or date for the payment of any interest on any Loan, or
waive or excuse any such payment or any part thereof, or
decrease the rate of interest on any Loan, without the prior
written consent of each Lender affected thereby, (ii) change
or extend the Commitment or decrease the Utilization Fees or
Facility Fees of any Lender or extend any payment date
therefor without the prior written consent of such Lender,
or (iii) amend or modify the provisions of Section 2.16, the
provisions of Article IX, the provisions of this Section or
the definition of the term "Required Lenders", without the
<PAGE>
prior written consent of each Lender; provided further that
no such agreement shall amend, modify or otherwise affect
the rights or duties of the Administrative Agent hereunder
without the prior written consent of the Administrative
Agent.
SECTION 10.09. Interest Rate Limitation. Notwithstanding
anything herein to the contrary, if at any time the
applicable interest rate, together with all fees and charges
which are treated as interest under applicable law
(collectively the "Charges"), as provided for herein or in
any other document executed in connection herewith, or
otherwise contracted for, charged, received, taken or
reserved by any Lender, shall exceed the maximum lawful rate
(the "Maximum Rate") which may be contracted for, charged,
taken, received or reserved by such Lender in accordance
with applicable law, the rate of interest payable on the
Loans of such Lender, together with all Charges payable to
such Lender, shall be limited to the Maximum Rate.
SECTION 10.10. Entire Agreement. This Agreement and the
other Loan Documents constitute the entire contract between
the parties relative to the subject matter hereof. Any
previous agreement among the parties with respect to the
subject matter hereof is superseded by this Agreement and
the other Loan Documents. Nothing in this Agreement or in
the other Loan Documents, expressed or implied, is intended
to confer upon any party other than the parties hereto and
thereto any rights, remedies, obligations or liabilities
under or by reason of this Agreement or the other Loan
Documents.
SECTION 10.11. Waiver of Jury Trial. Each party hereto
hereby waives, to the fullest extent permitted by applicable
law, any right it may have to a trial by jury in respect of
any litigation directly or indirectly arising out of, under
or in connection with this Agreement or any of the other
Loan Documents. Each party hereto (a) certifies that no
representative, agent or attorney of any other party has
represented, expressly or otherwise, that such other party
would not, in the event of litigation, seek to enforce the
foregoing waiver and (b) acknowledges that it and the other
parties hereto have been induced to enter into this Agree-
ment and the other Loan Documents, as applicable, by, among
other things, the mutual waivers and certifications in this
Section 10.11.
<PAGE>
SECTION 10.12. Severability. In the event any one or more
of the provisions contained in this Agreement or in any
other Loan Document should be held invalid, illegal or
unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein
and therein shall not in any way be affected or impaired
thereby. The parties shall endeavor in good-faith negotia-
tions to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 10.13. Judgment Currency. (a) The Borrowers'
obligations hereunder and under the other Loan Documents to
make payments in Dollars or in the Alternative Currency
(the "Obligation Currency") shall not be discharged or
satisfied by any tender or recovery pursuant to any judgment
expressed in or converted into any currency other than the
Obligation Currency, except to the extent that such tender
or recovery results in the effective receipt by the
Administrative Agent or a Lender of the full amount of the
Obligation Currency expressed to be payable to the
Administrative Agent or such Lender under this Agreement or
the other Loan Documents. If, for the purpose of obtaining
or enforcing judgment against any Borrower or in any court
or in any jurisdiction, it becomes necessary to convert into
or from any currency other than the Obligation Currency
(such other currency being hereinafter referred to as the
"Judgment Currency") an amount due in the Obligation
Currency, the conversion shall be made at the Alternative
Currency Equivalent or Dollar Equivalent, in the case of any
Alternative Currency or Dollars, and, in the case of other
currencies, the rate of exchange (as quoted by the
Administrative Agent or if the Administrative Agent does not
quote a rate of exchange on such currency, by a known dealer
in such currency designated by the Administrative Agent)
determined, in each case, as of the date immediately
preceding the day on which the judgment is given (such
Business Day being hereinafter referred to as the "Judgment
Currency Conversion Date").
(b) If there is a change in the rate of exchange prevailing
between the Judgment Currency Conversion Date and the date
of actual payment of the amount due, the Borrower covenants
and agrees to pay, or cause to be paid, as a separate
obligation and notwithstanding any judgment, such additional
amounts, if any (but in any event not a lesser amount), as
may be necessary to ensure that the amount paid in the
Judgment Currency, when converted at the rate of exchange
prevailing on the date of payment, will produce the amount
of the Obligation Currency which could have been purchased
<PAGE>
with the amount of Judgment Currency stipulated in the
judgment or judicial award at the rate of exchange
prevailing on the Judgment Currency Conversion Date.
(c) For purposes of determining the Alternative Currency
Equivalent or Dollar Equivalent or rate of exchange for this
Section, such amounts shall include any premium and costs
payable in connection with the purchase of the Obligation
Currency.
SECTION 10.14. Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall
constitute an original but all of which when taken together
shall constitute but one contract, and shall become effec-
tive as provided in Section 10.03.
SECTION 10.15. Headings. Article and Section headings and
the Table of Contents used herein are for convenience of
reference only, are not part of this Agreement and are not
to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 10.16. Jurisdiction; Consent to Service of Process.
(a) Each Borrower hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive
jurisdiction of any New York State court or Federal court of
the United States of America sitting in New York City, and
any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement or
the other Loan Documents, or for recognition or enforcement
of any judgment, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the
parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced
in other jurisdictions by suit on the judgment or in any
other manner provided by law. Nothing in this Agreement
shall affect any right that any Lender may otherwise have to
bring any action or proceeding relating to this Agreement or
the other Loan Documents against any Borrower or its proper-
ties in the courts of any jurisdiction.
<PAGE>
(b) Each Borrower hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively
do so, any objection which it may now or hereafter have to
the laying of venue of any suit, action or proceeding
arising out of or relating to this agreement or the other
Loan Documents in any New York State or Federal court. Each
of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or
proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in
Section 10.01. Nothing in this Agreement will affect the
right of any party to this Agreement to serve process in any
other manner permitted by law.
SECTION 10.17. Confidentiality. Except as otherwise
provided in Section 10.04(g), the Administrative Agent and
each of the Lenders agrees to keep confidential (and (i) to
cause its respective officers, directors and employees to
keep confidential and (ii) to use its best efforts to cause
its respective agents and representatives to keep
confidential) the Information (as defined below) and all
copies thereof, extracts therefrom and analyses or other
materials based thereon, except that the Agent or any Lender
shall be permitted to disclose Information (a) to such of
its respective Affiliates, officers, directors employees,
agents and representatives as need to know such Information,
(b) to the extent requested by any bank regulatory
authority, (c)(i) to the extent otherwise required by
applicable laws and regulations or by any subpoena or
similar legal process or (ii) in connection with the
enforcement of this Agreement, (d) to the extent such
Information (i) becomes publicly available other than as a
result of a breach of this Agreement or (ii) becomes
available to the Administrative Agent or any Lender on a
nonconfidential basis from a source other than the Borrowers
or (e) to the extent Holdings shall have consented to such
disclosure in writing. For the purposes of this Section,
"Information" shall mean all information that is received
from and relates to Holdings or any of its Subsidiaries
other than any such information available to the
Administrative Agent or any Lender on a nonconfidential
basis prior to its disclosure thereto by Holdings or any
such Subsidiary. The provisions of this Section 10.17 shall
remain operative and in full force and effect regardless of
the expiration of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the Borrowers (in their capacity as
Borrowers and Guarantors), the Administrative Agent and the
Lenders have caused this Agreement to be duly executed by
their respective authorized officers as of the day and year
first above written.
SOTHEBY'S HOLDINGS, INC.,
by
John S. Brittain, Jr.
--------------------------
John S. Brittain, Jr.
Treasurer
SOTHEBY'S HOLDINGS, INC.,
by
Arlene Kick
--------------------------
Arlene Kick
Treasurer
OATSHARE LIMITED,
by
Michael Curle
--------------------------
Michael Curle
Director
SOTHEBY'S,
by
D. D. Brooks
--------------------------
D. D. Brooks
Director
CHEMICAL BANK, individually and
as Administrative Agent,
by
Laura E. Thorne
--------------------------
Laura E. Thorne
Vice President
<PAGE>
CHASE MANHATTAN BANK, N.A.,
by
David B. Townsend
--------------------------
David B. Townsend
Managing Director
THE BANK OF NEW YORK,
by
David K. Nichols
--------------------------
David K. Nichols
Senior Vice President
THE BANK OF NOVA SCOTIA,
by
J. Alan Edwards
--------------------------
J. Alan Edwards
Vice President
BARCLAYS BANK PLC,
by
Pierre Duleyrie
--------------------------
Pierre Duleyrie
Associate Director
COMERICA BANK,
by
Phyllis D. McCann
--------------------------
Phyllis D. McCann
Assistant Vice President
CREDIT LYONNAIS CAYMAN ISLAND
BRANCH,
by
Mary E. Collier
--------------------------
Mary E. Collier
Authorized Signature
<PAGE>
CREDIT SUISSE,
by
Scott E. Zoellner
--------------------------
Scott E. Zoellner
Associate
by
Michael C. Mast
--------------------------
Michael C. Mast
Member of Senior Management
THE MITSUBISHI BANK, LIMITED,
by
Paula Mueller
--------------------------
Paula Mueller
Vice President
NATIONAL WESTMINSTER BANK PLC,
by
Jordan R. Fragiacomo
--------------------------
Jordan R. Fragiacomo
Vice President
NBD BANK, N.A.,
by
Carolyn J. Parks
--------------------------
Carolyn J. Parks
Vice President
THE SUMITOMO BANK, LIMITED
(NEW YORK BRANCH),
by
S. Higashi
--------------------------
S. Higashi
Joint General Manager
<PAGE>
UNION BANK OF SWITZERLAND,
by
Paul R. Morrison
--------------------------
Paul R. Morrison
by
Dieter Hoeppli
--------------------------
Dieter Hoeppli
Assistant Vice President
<PAGE>
