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 Quarterly Period Ended June 30, 1996
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, including area code: (810) 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, 1996, there were outstanding 38,158,364 shares of Class A
Limited Voting Common Stock, par value $0.10 per share, and 17,263,474
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 STATEMENTS OF INCOME
Sotheby's Holdings, Inc. and Subsidiaries
(Thousands of dollars, except per share data)
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenues:
Auction $ 115,784 $ 100,940 $ 149,546 $ 136,491
Other 8,814 7,613 15,848 14,516
Total revenues 124,598 108,553 165,394 151,007
Expenses:
Direct costs of services (24,155) (18,676) (32,948) (28,100)
Salaries and related costs (29,547) (27,164) (54,942) (51,155)
General and administrative (20,845) (19,630) (39,082) (38,108)
Depreciation and amortization (2,246) (2,352) (4,527) (4,543)
Total expenses (76,793) (67,822) (131,499) (121,906)
Operating income 47,805 40,731 33,895 29,101
Interest income 877 706 1,964 1,394
Interest expense (653) (1,464) (1,586) (2,694)
Other income/(expense) (411) (126) (251) 57
Income before taxes 47,618 39,847 34,022 27,858
Income taxes (19,048) (16,178) (13,609) (11,143)
Net Income $ 28,570 $ 23,669 $ 20,413 $ 16,715
Earnings Per Share $ 0.50 $ 0.42 $ 0.36 $ 0.30
Weighted Average Shares Outstanding (in millions) 56.8 56.8 56.4 56.3
Prior period amounts have been restated to conform to current year presentation
See accompanying Notes to the Consolidated Financial Statements
</TABLE>
<PAGE>
<TABLE>
Consolidated Balance Sheets
Sotheby's Holdings, Inc. and Subsidiaries
(Thousands of dollars)
<CAPTION>
June 30, December 31,
1996 1995
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 28,186 $ 40,713
Accounts and notes receivable, net of allowance
for doubtful accounts of $11,283 and $12,578
Accounts receivable 238,788 215,221
Notes receivable 98,946 98,711
Other 20,100 21,200
Total Accounts and Notes Receivable, Net 357,834 335,132
Inventory, net 17,784 22,798
Deferred income taxes 6,352 8,434
Prepaid expenses 12,010 11,936
Total Current Assets 422,166 419,013
Notes receivable 48,734 42,670
Properties, less allowance for depreciation
and amortization of $64,436 and $63,898 63,917 65,320
Intangible assets, less allowance for
amortization of $14,524 and $13,986 27,408 28,123
Investment in partnership 36,040 38,801
Other assets 5,972 6,177
Total Assets $ 604,237 $ 600,104
Liabilities And Shareholders' Equity
Current Liabilities
Due to consignors $ 221,817 $ 224,223
Short-term borrowings 8,374 5,816
Accounts payable and accrued liabilities 62,769 67,579
Deferred revenue 6,617 5,709
Accrued income taxes 31,642 14,292
Total Current Liabilities 331,219 317,619
Long-Term Liabilities
Commercial paper 25,000 38,000
Deferred income taxes 14,862 15,801
Other long-term obligations 1,201 1,202
Total Liabilities 372,282 372,622
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 - 38,269,070 and 38,466,478 of Class A, and
17,263,474 and 17,278,667 of Class B, at June 30, 1996 and
December 31, 1995, respectively 5,553 5,575
Additional paid-in capital 75,228 81,051
Retained earnings 167,164 155,688
Foreign currency translation adjustments (15,990) (14,832)
Total Shareholders' Equity 231,955 227,482
Total Liabilities And Shareholders' Equity $ 604,237 $ 600,104
See accompanying Notes to the Consolidated Financial Statements
</TABLE>
<PAGE>
<TABLE>
Consolidated Statements of Cash Flows
Sotheby's Holdings, Inc. and Subsidiaries
(Thousands of dollars)
<CAPTION>
Six Months Ended June 30, 1996 1995
<S> <C> <C>
Operating Activities:
Net income $ 20,413 $ 16,715
Adjustments to reconcile net income to net cash
provided(used) in operating activities:
Depreciation and amortization 4,527 4,543
Deferred income taxes 1,143 1,166
Tax benefit of stock option exercises 1,109 42
Asset provisions 2,725 2,574
Other 279 62
Changes in assets and liabilities:
Increase in prepaid expenses (74) (1,048)
Increase in accounts receivable (24,869) (91,877)
Decrease (increase) in inventory 2,751 (18,728)
Decrease in other assets 161 1,198
Increase (decrease) in due to consignors (2,406) 62,259
Increase in accrued income taxes 17,350 13,096
Increase (decrease) in other liabilities (3,657) 2,295
Net cash provided (used) by operating activities 19,452 (7,703)
Investing Activities:
Increase in notes receivable (54,393) (47,418)
Collections of notes receivable 47,245 49,852
Capital expenditures (2,867) (3,035)
Decrease in investment in partnership 2,761 755
Net cash provided (used) by investing activities (7,254) 154
Financing Activities:
Decrease in commercial paper (13,000) (17,500)
Increase in short term borrowings 2,558 13,120
Proceeds from exercise of stock options 1,954 202
Repurchase of common stock (8,973) 0
Dividends (8,937) (6,701)
Net cash used by financing activities (26,398) (10,879)
Effect of exchange rate changes on cash 1,673 (4,384)
Decrease in cash and cash equivalents (12,527) (22,812)
Cash and cash equivalents at beginning of period 40,713 34,987
Cash and cash equivalents at end of period $ 28,186 $ 12,175
See accompanying Notes to the Consolidated Financial Statements
</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, 1995 (the "Annual Report").
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 three and six
month periods ended June 30, 1996 and 1995 have been included.
Certain prior period amounts have been restated to conform to the
current year's presentation.
In January of 1996, the Company adopted Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of". The
adoption of this standard did not have a material impact on the
Company's financial statements.
2. Notes Receivable
As of June 30, 1996, an amount equal to approximately 31% of the
Company's notes receivable (including current and non-current) was
extended to one borrower. At August 14, 1996 the loan value was 56%
of the low auction estimate of the collateral securing the loan. No
other individual loan amounted to more than 5% of total assets.
Interest income on impaired loans is recognized to the extent cash
is received. Where there is doubt regarding the ultimate
collectibility of principal for impaired loans, cash receipts,
whether designated as principal or interest, are thereafter
applied to reduce the recorded investment in the loan. Following
are the changes in the allowance for credit losses relating to
both current and non current notes receivable for the six months
ended June 30, 1996 and 1995 (in thousands):
<PAGE>
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Allowance for credit losses
at December 31, 1995 and 1994 $2,848 $2,292
Provisions 198 202
Writeoffs (374) (134)
Other (7) 24
Allowance for credit losses
at June 30, 1996 and 1995 $2,665 $2,384
</TABLE>
3. Credit Arrangements
At June 30, 1996, pursuant to the Company's $200 million U.S.
commercial paper program, there were $25.0 million of outstanding
commercial paper notes sold to dealers at weighted average discount
rates of 5.5% with average maturities of 24.2 days. These notes
have been classified on the consolidated balance sheet as long-term
liabilities based on the Company's ability to maintain or refinance
these obligations on a long-term basis. At June 30, 1996, the
Company also had $8.4 million outstanding under domestic and
foreign bank lines of credit at weighted average interest rates of
7.2%.
On July 11, 1996, the Company entered into an amended and restated
$300 million Bank Credit Agreement (the "Credit Agreement").
Borrowings under the Credit Agreement are permitted to July 11,
2001 in either U.S. dollars or U.K. pounds sterling. The interest
rate applicable to borrowings under the facility is based on the
London Interbank Offer Rate ("LIBOR"). The facility fee for the
$300 million committed amount is 0.10% per annum. The Credit
Agreement contains certain financial covenants. The Company is
permitted to pay dividends, however, the Company is required to
maintain consolidated tangible net worth, as defined, of at least
$150 million. At June 30, 1996 consolidated tangible net worth, as
defined, was $220.5 million. The Credit Agreement represents an
amendment and restatement of the Company's former $300 million
credit agreement which was executed in August 1994.
<PAGE>
4. Stockholders' Equity
In June of 1996, the Company authorized an increase in the number
of shares of its outstanding Class A Common Stock to be acquired
under the November 1995 stock repurchase program to 4 million
shares. As of June 30, 1996, the Company had repurchased 920,000
shares under this program.
5. Commitments and Contingencies
The Company, in the normal course of business, is a defendant in
various legal actions.
In conjunction with the client loan program, the Company enters
into legally binding arrangements to lend, on a collateralized
basis, to potential consignors and other individuals who have
collections of fine art and other objects. Unfunded commitments to
extend additional credit were approximately $12.0 million at June
30, 1996.
On certain occasions, the Company will guarantee to the consignor a
minimum price in connection with the sale of property at auction.
The Company must perform under its guarantee only in the event that
(a) the property fails to sell and the consignor prefers to be paid
the minimum price rather than retain ownership of the unsold
property, resulting in the Company's purchase of the property at
the minimum price or (b) the property sells for less than the
minimum price and the Company must pay the difference between the
sale price at auction and the minimum price. At August 14, 1996,
the Company had outstanding guarantees totaling approximately $28
million which covers auction property having a mid-estimate sales
price of approximately $38 million. Under the auction guarantees,
the Company participates in a share of the proceeds if the property
under guarantee sells above a minimum price. In addition, the
Company is obligated under the terms of certain auction guarantees
to advance funds prior to the auction sale up to the amount of the
guarantee at the option of the consignor.
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 consolidated financial statements.
<PAGE>
6. 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
1995 1994 1993
<S> <C> <C> <C>
January - March 11% 12% 10%
April - June 39% 40% 38%
July - September 7% 8% 6%
October - December 43% 40% 46%
100% 100% 100%
</TABLE>
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
The worldwide auction business is highly seasonal in nature, with
two principal selling seasons, spring and fall. Accordingly, first
and third quarter results reflect lower auction sales and lower
operating margins than the second and fourth quarters due to the
fixed nature of many of the operating expenses. (See Note 6 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,
1996 and 1995 (in thousands):
<TABLE>
<CAPTION>
For the Second Quarter For the Six Months
Ended June 30, Ended June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
North America $314,937 $352,746 $405,430 $459,043
Europe 288,562 284,532 352,225 353,916
Asia 27,482 18,521 28,361 18,521
Total $630,981 $655,799 $786,016 $831,480
</TABLE>
For the quarter ended June 30, 1996, worldwide auction sales of
$631.0 million decreased $24.8 million compared to the second
quarter of 1995. For the six months ended June 30, 1996 worldwide
auction sales decreased $45.5 million compared to 1995. Auction
sales recorded by the Company's foreign operations were negatively
affected by translation into U.S. dollars, which decreased auction
sales by $13.5 million and $14.4 million for the quarter and six
months ended June 30, 1996, respectively. The decrease in sales was
largely attributable to a decline in worldwide single-owner sales.
For the second quarter of 1996 worldwide auction revenues increased
$14.8 million, or 15%, to $115.8 million. Excluding foreign
currency exchange rate movements, auction revenue increased $17.3
million or 17%. For the six months ended June 30, 1996 auction
revenues increased $13.1 million, or 10%, compared to 1995.
Excluding foreign currency exchange rate movements, auction revenue
increased $15.8 million or 12% compared to the prior year. Auction
revenue as a percentage of sales for the three months ended June
30, 1996 was 18.3% compared to 15.4% for the three months ended
June 30, 1995. Auction revenue as a percentage of sales for the
first six months of 1996 was 19.0% compared to 16.4% for 1995.
These increases were largely attributable to the positive impact of
our new seller's commission schedule, the sale of the property from
the Estate of Jacqueline Kennedy Onassis as well as a reduction in
single-owner sales which yield lower than average commission rates.
Other revenues, which include revenues from art-related financing
activities, real estate operations, other auction-related services
and principal activities, increased $1.2 million in the second
quarter of 1996 when compared to the second quarter of 1995. For
the six months ended June 30, 1996 other revenue increased $1.3
million compared to 1995. These increases were principally due to
an increase in revenues from real estate operations due to stronger
sales in the U.S.
<PAGE>
Direct costs of services (which consist largely of catalogue
production and distribution costs as well as corporate marketing
and sale marketing expenses) totaled $24.2 million in the second
quarter of 1996 compared to $18.7 million in 1995, an increase of
$5.5 million. For the six months ended June 30, 1996, direct costs
of services increased $4.8 million compared to 1995. Excluding
foreign currency exchange rate movements, direct costs increased
$6.0 and $5.5 million for the three and six months ended June 30,
1996, respectively. These increases were primarily due to an
increase in catalogue expenses relating to the sale of the property
from the Estate of Jacqueline Kennedy Onassis which were fully
recovered and are reflected in auction revenue. Excluding foreign
currency exchange rate movements and the costs associated with the
sale of property from the Estate of Jacqueline Kennedy Onassis,
direct costs increased $0.6 million and $0.1 million in the three
and six months periods ended June 30, 1996, respectively. Excluding
foreign currency exchange rate movements and the costs associated
with the sale of the property from the Estate of Jacqueline Kennedy
Onassis, direct costs as a percentage of auction sales totaled 3.0%
and 3.5% for the three and six month periods ended June 30, 1996
compared to 2.8% and 3.4% for the three and six month periods ended
June 30, 1995, respectively.
All other operating expenses (which include salaries and related
costs, general and administrative expenses as well as depreciation
and amortization) totaled $52.6 million for the second quarter of
1996, an increase of $3.5 million, or 7%, over 1995's second
quarter. For the six months ended June 30, 1996, these expenses
increased $4.7 million, or 5%, to $98.6 million compared to the
prior year. Excluding foreign currency exchange rate movements, all
other operating expenses increased $4.8 million and $6.6 million
for the three and six months ended June 30, 1996. Excluding foreign
currency exchange rate movements, the increases in all other
operating expenses for the quarter and six months ended June 30,
1996 were principally due to an increase in salaries and related
costs.
Interest income increased $0.2 million and $0.6 million for the
three and six months ended June 30, 1996, respectively, due largely
to higher cash balances in Europe. Interest expense decreased $0.8
million and $1.1 million for the three and six months ended June
30, 1996, respectively, partially due to a decline in the average
amount of commercial paper outstanding and, to a lesser extent, the
average interest rate paid on commercial paper borrowings.
The consolidated effective tax rate was 40% and 41% for the second
quarter of 1996 and 1995, respectively. The consolidated effective
tax rate for the first six months of 1996 and 1995 was 40%. The
increase in tax expense in the three and six month periods was due
to an increase in pre-tax income.
For the second quarter of 1996, net income increased 21%, to $28.6
million from net income of $23.7 million in the second quarter of
1995. The earnings per share for the second quarter of 1996
increased 19% to $0.50 from $0.42 in the second quarter of 1995.
For the six months ended June 30, 1996, net income increased 22% to
$20.4 million from $16.7 million in 1995. Earnings per share for
the first six months increased 20% to $0.36 from $.30 in 1995.
Excluding movements in foreign currency exchange rates, net income
increased $5.7 million, or 24%, and $4.1 million, or 25% for the
three and six month periods ended June 30, 1996, respectively.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's net debt position (total debt, which includes short-
term borrowings and commercial paper, less cash and cash
equivalents) totaled $5.2 million at June 30, 1996 compared to $3.1
million at December 31, 1995. Working capital (current assets less
current liabilities) at June 30, 1996 was $90.9 million compared to
$101.4 million at December 31, 1995.
The Company's client loan portfolio increased to $150.3 million at
June 30, 1996 from $144.2 million at December 31, 1995. These
amounts include $48.7 million and $42.7 million of loans which have
a maturity of more than one year at June 30, 1996 and December 31,
1995, respectively.
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 $25.0 million was issued and outstanding at June
30, 1996. The Company supports any short-term notes issued under
its U.S. commercial paper program with committed credit facilities.
The Company maintains $300 million of committed and available
financing pursuant to a Bank Credit Agreement which was amended and
restated on July 11, 1996 (See Note 3 in the Notes to the
Consolidated Financial Statements for additional information). The
Credit Agreement provides the Company $300 million of committed
financing to July 11, 2001.
For the six months ended June 30, 1996, the Company's primary
sources of liquidity were derived from available cash balances
supplemented by operations. The most significant cash uses during
the first six months of 1996 were the net repayment of commercial
paper borrowings, repurchases of common stock, the payment of
shareholder dividends and net funding of the client loan portfolio.
For the six months ended June 30, 1995, the Company's primary
sources of liquidity were derived from available cash balances
supplemented by short-term borrowings. The most significant cash
uses during the first six months of 1995 were repayment of
commercial paper borrowings, operations and payment of shareholder
dividends.
Capital expenditures, consisting primarily of office and auction
facility refurbishment and the acquisition of computer equipment,
totaled $2.9 and $3.0 million for the first six months of 1996 and
1995, respectively.
In certain instances, consignor advances are made with recourse
limited only to the works of art consigned for sale and pledged as
security for the loan. As of June 30, 1996, no such advances were
outstanding. From time to time, the Company has off-balance sheet
commitments to consignors that property will sell at a minimum
price and legally binding lending commitments in conjunction with
the client loan program. See Note 5 in the Notes to the
Consolidated Financial Statements for additional information. The
Company does not believe that material liquidity risk exists
relating to these commitments.
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
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 which
the Company believes is adequately available.
<PAGE>
FORWARD-LOOKING STATEMENTS
This form 10Q contains certain forward-looking statements, as such
term is defined in Section 27A of the Securities Act of 1933, as
amended, relating to future events and the financial performance of
the Company, particularly with respect to the adequacy of working
capital as well as additional capital necessary for relocation of
all or a portion of the Company. Such statements are only
predictions and involve risks and uncertainties, resulting in the
possibility that the actual events or performance will differ
materially from such predictions. Major factors which the Company
believes could cause the actual results to differ materially from
the predicted results in the forward-looking statements include, but
are not limited to, the following, which are not listed in any
particular rank order:
(1) The Company's business is seasonal, with peak revenues and
operating income occurring in the second and fourth quarters of each
year as a result of the traditional spring and fall art auction
season.
(2) The overall strength of the international economy and financial
markets and, in particular, the economies of the United States, the
United Kingdom, and the major countries of Continental Europe and
Asia (principally Japan and Hong Kong).
(3) Competition with other auctioneers and art dealers.
(4) The volume of consigned property and the marketability at
auction of such property.
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
On June 19, 1996, the Company held it annual meeting of
shareholders. The matters on which the shareholders voted were: (i) the
election of three directors by the holders of Class A Limited Voting
Common Stock; (ii) the election of seven directors by the holders of
Class B Limited Voting Common Stock; (iii) the approval of the adoption
of the Sotheby's Holdings, Inc. 1997 Stock Option Plan; (iv) the
approval of the adoption of the Sotheby's Holdings, Inc. Performance
Share Purchase Plan; (v) the ratification of the Sotheby's Holdings,
Inc. Director Stock Ownership Plan; and (vi) the ratification of the
Board's selection of Deloitte & Touche LLP as the Company's independent
auditors for the year ended December 31, 1996. All nominees were
elected, and all proposals passed. The results of the voting are shown
below:
<TABLE>
ELECTION OF CLASS A DIRECTORS
<CAPTION>
NOMINEES FOR AGAINST WITHHELD
<S> <C> <C> <C>
A. Alfred Taubman 29,321,190 0 859,180
Max M. Fisher 29,319,695 0 860,675
Walter J.P. Curley 29,303,082 0 877,288
</TABLE>
<TABLE>
ELECTION OF CLASS B DIRECTORS
<CAPTION>
NOMINEES FOR AGAINST WITHHELD
<S> <C> <C> <C>
Viscount Blakenham 170,441,060 0 0
Diana D. Brooks 170,441,060 0 0
Lord Camoys 170,441,060 0 0
The Rt. Hon. The Earl
of Gowrie 170,441,060 0 0
The Marquess of
Hartington 170,441,060 0 0
Simon de Pury 170,441,060 0 0
R. Julian de la M.
Thompson 170,441,060 0 0
</TABLE>
APPROVAL OF THE SOTHEBY'S HOLDINGS, INC. 1997 STOCK OPTION PLAN
194,213,525 Votes were cast;
187,856,819 Votes were cast for the Resolution;
5,284,903 Votes were cast against the Resolution; and
1,071,803 Votes were abstained
APPROVAL OF THE SOTHEBY'S HOLDINGS, INC. PERFORMANCE SHARE PURCHASE
PLAN
194,213,524 Votes were cast;
187,309,839 Votes were cast for the Resolution;
5,822,749 Votes were cast against the Resolution; and
1,080,936 Votes were abstained
APPROVAL OF THE SOTHEBY'S HOLDINGS, INC. DIRECTOR STOCK OWNERSHIP PLAN
200,621,129 Votes were cast;
197,882,000 Votes were cast for the Resolution;
1,655,928 Votes were cast against the Resolution; and
1,083,201 Votes were abstained
RATIFICATION OF INDEPENDENT AUDITORS
200,621,429 Votes were cast;
200,561,980 Votes were cast for the Resolution;
43,040 Votes were cast against the Resolution; and
16,409 Votes were abstained
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a)Exhibits
10 (a). Sotheby's Holdings, Inc. Performance
Share Purchase Plan
10 (b). Sotheby's Holdings, Inc. 1997 Stock
Option Plan
10 (c). Amended and Restated Credit Agreement
Dated as of July 11, 1996, Among Sotheby's
Holdings, Inc., Sotheby's, Inc., Oatshare Ltd.,
Sotheby's, the lenders named therein and The
Chase Manhattan Bank, N.A.
27. Financial Data Schedule
(b)Reports on Form 8-K
No report on Form 8-K has been filed for the
quarter ended June 30, 1996.
<PAGE>
Exhibit Index
<TABLE>
<CAPTION>
Exhibit No. Description
<C> <S>
10 (a). Sotheby's Holdings, Inc. Performance Share
Purchase Plan
10 (b). Sotheby's Holdings, Inc. 1997 Stock
Option Plan
10 (c). Amended and Restated Credit Agreement Dated
as of July 11, 1996, Among Sotheby's Holdings,
Inc., Sotheby's, Inc.,Oatshare Ltd., Sotheby's,
the lenders named therein and The Chase
Manhattan Bank, N.A.
27. Financial Data Schedule
</TABLE>
<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
the 14th day of August, 1996, on its behalf by the undersigned,
thereunto duly authorized and in the capacity indicated.
SOTHEBY'S HOLDINGS, INC.
By: PATRICIA A. CARBERRY
Patricia A. Carberry
Vice President, Controller
and Chief Accounting Officer
SOTHEBY'S HOLDINGS, INC.
PERFORMANCE SHARE PURCHASE PLAN
JANUARY 1, 1996
ARTICLE 1
BACKGROUND AND PURPOSE OF THE PLAN; ADOPTION OF THE PLAN; TERM.
1.1 Purpose of the Plan. The Sotheby's Holdings, Inc. Performance Share
Purchase Plan, as the same may be amended from time to time (the "Plan"), is
intended to provide incentives to selected key executives of the Corporation to
promote the success of the Corporation's long-term business objectives, to
encourage a proprietary interest in the Corporation, and to attract and retain
key executives with outstanding qualifications.
Options granted under the Plan ("Purchase Rights") are not intended to be
"incentive stock options," as defined in section 422 of the Internal Revenue
Code of 1986, as amended (the "Code").
1.2 Adoption and Term. The Plan has been approved by the Board of Directors
of the Corporation and, subject to the approval of a majority of the voting
power of the shareholders of the Corporation, is effective as of January 1,
1996. Prior to such approval, Purchase Rights may be granted under the Plan but
shall not be exercisable until such approval has been obtained. The Plan will
remain in effect until terminated or abandoned by action of the Board of
Directors.
ARTICLE 2
DEFINITIONS
In the Plan, whenever the context so indicates, the singular or plural
number, and the masculine, feminine or neuter gender shall each be deemed to
include the other, the terms "he," "his," and "him" shall refer to an Optionee,
and the capitalized terms shall have the following meanings:
2.1 "Adjusted Performance Goal" is defined in Section 8.4 hereof.
2.2 "Adjusted Performance Period" is defined in Section 8.4 hereof.
2.3 "Articles of Incorporation" means the Amended and Restated Articles of
Incorporation of the Corporation, as the same may be amended from time to time.
2.4 "Base Period" means, for any Purchase Right for which the Performance
Goal established by the Committee is a specified increase in one or more
business criteria of the Corporation, as contemplated by Article 8 of the Plan,
the period of the same number of full Fiscal Years as the Performance Period
established in connection with such grant and immediately preceding the
commencement of such Performance Period, or such other period as the Committee
may establish at the time of grant.
2.5 "Beneficiary" means (i) an individual, trust, or estate, who or which,
by will or by operation of the laws of descent and distribution, succeeds to the
rights and obligations of an Optionee under the Plan and the Purchase Right
Agreement upon the Optionee's death; or (ii) an individual who, as a result of
designation by an Optionee, succeeds to the rights and obligations of such
Optionee under the Plan and the Purchase Right Agreement upon such Optionee's
death.
2.6 "Board of Directors" means the Board of Directors of Sotheby's
Holdings, Inc.
2.7 "Business Day" means any Day on which the New York Stock Exchange is
open for trading.
2.8 "Class A Common Stock" means the Class A Limited Voting Common Stock
of the Corporation, par value $0.10 per share, entitling every holder thereof,
on all matters submitted to a vote of the shareholders of the Corporation, to
cast one vote for each share standing in his or her name.
2.9 "Class B Common Stock" means the Class B Common Stock of the
Corporation, par value $0.10 per share, entitling every holder thereof, on all
matters submitted to a vote of the shareholders of the Corporation, to cast 10
votes for each share standing in his or her name.
2.10 "Code" means the Internal Revenue Code of 1986, as amended from time
to time (or any corresponding provisions of succeeding law).
2.11 "Common Stock" means the Class A Common Stock and the Class B Common
Stock.
2.12 "Compensation Committee" or "Committee" means the Audit and
Compensation Committee established by the Board of Directors, or such other
committee as the Board may establish and assign the responsibility of
administering this Plan; provided, however, that the Committee shall be
comprised solely of two or more members of the Board, as determined by the Board
from time to time, each of whom shall be (i) a "disinterested person" as that
term is defined and interpreted pursuant to Rule 16b-3 promulgated under Section
16 of the Exchange Act and (ii) an "outside director" as that term is defined
and interpreted pursuant to section 162(m) of the Code and the regulations
thereunder.
2.13 "Confidential Information" means, with respect to the Corporation and
its Subsidiaries, any confidential information regarding the financial
situations and particular needs of the Corporation and its Subsidiaries as well
as of, or relating to, their customers and clients (including, without
limitation, consignors, buyers and principals), the identity of such Persons,
client lists, documents and information regarding the Corporation's and any
Subsidiary's sales data, marketing, operational and appraisal techniques,
contracts, pricing, costs and profits, and any other information maintained as
proprietary or as trade secrets or as confidential.
2.14 "Corporation" means Sotheby's Holdings, Inc., a Michigan corporation,
and any successor in interest to the business of the Corporation that has, by
agreement, adopted the Plan.
2.15 "Date of Exercise," with respect to a Purchase Right, means the date
on which such Purchase Right is exercised pursuant to the Plan.
2.16 "Date of Grant," with respect to a Purchase Right, means the date on
which the Compensation Committee grants such Purchase Right pursuant to the
Plan.
2.17 "Day" means each calendar day, including Saturdays, Sundays, and legal
holidays; provided, however, that if the Day on which a period of time for
consent or approval or other action ends is not a Business Day, such period
shall end on the next Business Day.
2.18 "Disability" or "Disabled" means, with respect to an Employee, a
physical or mental condition resulting from any medically determinable physical
or mental impairment that renders such Employee incapable of engaging in any
substantial gainful employment and that can be expected to result in death or
that has lasted or can be expected to last for a continuous period of not less
than three hundred sixty-five (365) Days. Notwithstanding the foregoing, an
Employee shall not be deemed to be Disabled as a result of any condition that:
(a) was contracted, suffered, or incurred while such Employee was
engaged in, or resulted from such Employee having engaged in, a felonious
activity;
<PAGE>
(b) resulted from an intentionally self-inflicted injury or an
addiction to drugs, alcohol, or substances which are not administered under
the direction of a licensed physician as part of a medical treatment plan;
or
(c) resulted from service in the Armed Forces of the United States for
which such Employee received a disability benefit or pension from the
United States, or from service in the armed forces of any other country
irrespective of any disability benefit or pension.
The Disability of an Employee and the date upon which an Employee ceases to
be employed by reason of Disability shall be determined by the Compensation
Committee in accordance with uniform principles consistently applied, upon the
basis of such evidence as the Compensation Committee deems necessary and
desirable, and its good faith determination shall be conclusive for all purposes
of this Plan and the relevant Purchase Right Agreement. The Compensation
Committee shall have the right to require an Employee to submit to an
examination by a physician or physicians and to submit to such reexaminations as
the Compensation Committee shall require in order to make a determination
concerning the Employee's physical or mental condition; provided, however, that
(i) an Employee may not be required to undergo a medical examination more often
than once each one hundred eighty (180) Days nor at any time after the normal
date of the Employee's Retirement, and (ii) the fees and expenses of any such
medical examination(s) shall be considered expenses of administering the Plan.
If any Employee engages in any occupation or employment (except for
rehabilitation as determined by the Compensation Committee) for remuneration or
profit, which activity would be inconsistent with the finding of Disability, or
if the Compensation Committee determines on the basis of a medical examination
that an Employee no longer has a Disability, or if an Employee refuses to submit
to any medical examination properly requested by the Compensation Committee,
then in any such event, the Employee shall be deemed to have recovered from such
Disability.
2.19 "Dividend Equivalents" are defined in Section 7.1 hereof.
2.20 "Earnings Per Share," for any Fiscal Year, means the Net Income for
such Fiscal Year divided by the number of shares of Common Stock outstanding, on
a fully diluted basis as determined for purposes of reporting to shareholders,
as of the close of business on the New York Stock Exchange on December 31 of
such Fiscal Year. For any Performance Goal established by the Committee,
Earnings Per Share shall be calculated without regard to any change in
accounting standards that may be required by the Financial Accounting Standards
Board after the goal is established; provided, however, that if any such change
in accounting standards relates to an accounting item that, prior to the
establishment of the Performance Goal, did not exist relative to the
Corporation, the accounting change shall be incorporated in calculating Earnings
per Share for such Performance Goal.
2.21 "Employee" means an individual who is and continues to be employed by
the Corporation or a Subsidiary (while a corporation continues to be a
Subsidiary), as determined by the Committee. An Employee shall cease to be an
Employee upon the voluntary or involuntary termination of his employment with
the Corporation or a Subsidiary for any reason, including death, Disability,
Retirement, or with or without cause. Whether an authorized leave of absence, or
an absence due to military or government service, Disability, or any other
reason, constitutes a cessation of employment shall be determined by the
Compensation Committee, in its sole discretion.
2.22 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
2.23 "Exercise Price," with respect to a Purchase Right, means the price
per share of Option Stock designated by the Committee on the Date of Grant of
such Purchase Right, or designated pursuant to applicable resolution of the
Committee, as the price at which such Option Stock may be purchased, once
vested. Notwithstanding the foregoing, in no event shall the Exercise Price of
any
<PAGE>
Option Stock be less than 25% of the Fair Market Value of such Option Stock,
determined as of the Date of Grant.
2.24 "Expiration Date" is defined in Section 9.2 hereof.
2.25 "Fair Market Value" means the value of each share of Option Stock,
determined for a particular date as follows:
(a) if the Class B Common Stock is listed or admitted for trading on
any United States national securities exchange, the value of each share of
Option Stock shall be the closing price per share of Class B Common Stock
on such exchange (or, if listed on more than one exchange, the principal
said exchange) on the relevant Valuation Date hereunder;
(b) if the Class B Common Stock is not traded on any United States
national securities exchange, but is quoted on the National Association of
Securities Dealers, Inc. Automated Quotation System (the "NASDAQ System")
or any similar system of automated dissemination of quotations of prices in
common use, the value of each share of Option Stock shall be the price per
share equal to the mean between the closing high bid and the low asked
quotations on such system on the relevant Valuation Date hereunder;
(c) if neither clause (a) nor clause (b) of this definition is
applicable with respect to the Class B Common Stock, but either clause (a)
or clause (b) is applicable with respect to the Class A Common Stock, the
value of each share of Option Stock shall be the closing price as described
in
clause (a) above or the mean between the closing high bid and the low asked
quotations as described in clause (b) above, respectively, of the Class A
Common Stock, as the case may be; or
(d) if neither paragraph (a) nor paragraph (b) nor paragraph (c) of
this definition is applicable, the value of each share of Option Stock
shall be the fair market value as determined by the Committee, in good
faith and in accordance with uniform principles consistently applied, on
the last day of the Fiscal Year immediately preceding the relevant date
hereunder.
2.26 "Fiscal Year" means the fiscal year of the Corporation.
2.27 "Fractional Share" means a portion of, or less than the whole of, a
share of Common Stock.
2.28 "Key Employee" means an executive officer of the Corporation and/or
its Subsidiaries (including Subsidiaries which become such after adoption of the
Plan) and any other Employee of the Corporation or any Subsidiary who is so
designated by the Compensation Committee.
2.29 "Minimum Exercise Price," with respect to a Purchase Right, means an
Exercise Price equal to 25% of the Fair Market Value of the Option Stock subject
to such Purchase Right, determined as of the Date of Grant.
2.30 "Named Executive" means any Key Employee whose compensation from the
Corporation is subject to section 162(m) of the Code or any successor section
thereto; whether a Key Employee is a Named Executive shall be determined as of
the Date of Grant of a Purchase Right to such Key Employee.
2.31 "Net Income," for any Fiscal Year, means the net income of the
Corporation for such Fiscal Year, determined in the same manner as reported to
shareholders, but in any event (a) after reduction for the expenses of this Plan
and (b) for any Performance Goal established by the Committee, Net Income will
be calculated without regard to any change in accounting standards that may be
required by the Financial Accounting Standards Board after the goal is
established; provided, however, that if any such change in accounting standards
relates to an accounting item that, prior to the establishment
<PAGE>
of the Performance Goal, did not exist relative to the Corporation, the
accounting change shall be incorporated in calculating Net Income for such
Performance Goal.
2.32 "Optionee" means a Key Employee or a former Key Employee who has
received a Purchase Right.
2.33 "Option Stock" means, with respect to any Purchase Right granted
pursuant to the Plan, those shares of Class B Common Stock made the subject of
such Purchase Right.
2.34 "Performance Goal" is defined in Section 8.1 hereof.
2.35 "Performance Period" means, with respect to any Purchase Right for
which the Compensation Committee has established a related Performance Goal, the
period over which the Performance Goal is measured; provided, however, that a
Performance Period may not be less than one year or more than seven years in
duration.
2.36 "Person" or "Persons" means an individual, a partnership (general or
limited), corporation, joint venture, business trust, cooperative, association,
or other form of business organization, whether or not regarded as a legal
entity under applicable law, a trust (inter vivos or testamentary), an estate of
a deceased, insane, or incompetent person, a quasi-governmental entity, a
government or any agency, authority, political subdivision, or other
instrumentality thereof, or any other entity.
2.37 "Plan" is defined in Section 1.1 hereof.
2.38 "Purchase Right" is defined in Section 1.1 hereof.
2.39 "Purchase Right Agreement" is defined in Section 13.3 hereof.
2.40 "Reporting Person" means any and all Optionees subject to Section 16
of the Exchange Act.
2.41 "Return on Equity," for any Fiscal Year, means the Net Income for such
Fiscal Year divided by total shareholders' equity as of December 31 of the
immediately preceding Fiscal Year or as of such other date or dates specifically
established by the Committee. For any Performance Goal established by the
Committee, Return on Equity shall be calculated without regard to any change in
accounting standards that may be required by the Financial Accounting Standards
Board after the goal is established; provided, however, that if any such change
in accounting standards relates to an accounting item that, prior to the
establishment of the Performance Goal, did not exist relative to the
Corporation, the accounting change shall be incorporated in calculating Return
on Equity for such Performance Goal.
2.42 "Retirement" means the voluntary termination of employment by an
Employee after reaching the age of sixty-five (65) years or upon such earlier
date as required by local law or as otherwise determined or approved by the
Compensation Committee.
2.43 "Subsidiary" means any corporation at least fifty percent (50%) of the
total combined voting power of which is owned by the Corporation or another
Subsidiary.
2.44 "Termination for Cause" means termination of employment by reason of
an Optionee's action or repeated acts, including without limitation, the
commission of a felony, fraud, willful misconduct or the unauthorized use or
disclosure of Confidential Information, which has resulted or is likely to
result in damage to the Corporation, as determined by the Compensation Committee
in its sole and absolute discretion.
<PAGE>
2.45 "Transfer" means any assignment, sale, transfer, conveyance, mortgage
or other encumbrance, pledge, or other disposition or act of alienation, whether
voluntary or involuntary, or by operation of law.
2.46 "Valuation Date," with respect to a Purchase Right, means the Business
Day immediately preceding the Date of Grant of such Purchase Right or the
Business Day immediately preceding the Date of Exercise, as applicable. Whenever
reference is made to a Valuation Date, it shall mean, with respect to the Common
Stock, as at the close of trading on such Valuation Date, and with respect to
any other item, midnight in Detroit, Michigan at the end of such Valuation Date.
ARTICLE 3
ADMINISTRATION.
3.1 Administration. The Plan shall be administered by the Committee in
accordance with this Article 3. Subject to the terms and conditions of the Plan,
the Compensation Committee shall have the sole discretionary authority:
(a) to authorize the granting of Purchase Rights;
(b) to select the Key Employees who are to be granted Purchase Rights
under the Plan and determine, subject to the limitations provided in
Section 6.1 hereof, the number of shares of Option Stock to be optioned to
each Key Employee;
(c) to prescribe, subject to the limitations set forth in the last
sentence of Section 2.23, the Exercise Prices of Purchase Rights granted
under the Plan to such Key Employees;
(d) to prescribe the Performance Goal(s) and any related Performance
Period(s) applicable to Purchase Rights granted under the Plan;
(e) to construe and interpret the Plan;
(f) to establish and modify administrative rules for the Plan;
(g) to impose such conditions and restrictions, not inconsistent with
the terms of the Plan, on Purchase Rights as it determines appropriate;
(h) to execute or cause to be executed Purchase Right Agreements;
(i) to cancel Purchase Rights and to substitute new Purchase Rights
with the consent of an Optionee;
(j) to certify, where appropriate and in accordance with the
requirements of section 162(m)(4)(c) of the Code (or any successor section
thereto) and the Regulations thereunder, that the Performance Goal(s)
established by the Compensation Committee in connection with a Purchase
Right granted under the Plan has been satisfied; and
(k) generally to exercise such power and perform such other acts in
connection with the Plan and the Purchase Rights and to make all
determinations and establish all such goals, dates, criteria or matters
under the Plan as it may deem necessary or advisable or as required,
provided or contemplated hereunder.
Action taken or not taken by the Compensation Committee on one or more
occasions shall be without obligation to take or not take such action on any
other occasion(s).
<PAGE>
The Compensation Committee may delegate to one or more Persons any of its
powers, hereinbefore or hereinafter provided or conferred, or designate one or
more Persons to do or perform those matters to be done or performed by the
Compensation Committee, including administration of the Plan. Any Person or
Persons delegated to or designated by the Compensation Committee shall be
subject to the same obligations and requirements imposed on the Compensation
Committee and its members under the Plan, including the requirements set forth
in Section 2.12 as to the constituency of the Committee.
Notwithstanding any other provision in this Plan to the contrary, if a
Purchase Right grant is intended to qualify as "other performance-based
compensation" within the meaning of section 162(m) of the Code, then, to the
extent required to qualify such grant as "other performance-based compensation"
under section 162(m), the Committee shall not be entitled to exercise any
discretion otherwise authorized under this Plan with respect to such grant if
the ability to exercise such discretion (as opposed to the exercise of such
discretion) would cause such grant to fail to qualify as such "other
performance-based compensation."
3.2 Expenses of Administration. The Corporation shall pay all costs and
expenses of administering the Plan.
3.3 Indemnification. The Compensation Committee, members of the
Compensation Committee, and each Person or Persons delegated to or designated by
the Compensation Committee, and the shareholders, directors, officers, attorneys
and agents of the Corporation, shall be entitled to indemnification and
reimbursement from the Corporation for any action or any failure to act in
connection with services performed by or on behalf of the Compensation Committee
for the benefit of the Corporation to the fullest extent provided or permitted
by the Corporation's Articles of Incorporation and by any insurance policy or
other agreement intended for the benefit of the Compensation Committee as a
committee of the Board of Directors or otherwise, or by any applicable law.
ARTICLE 4
SHARES OF COMMON STOCK SUBJECT TO THE PLAN
4.1 Shares Subject to the Plan. The Option Stock to be made the subject of
Purchase Rights granted under the Plan shall be shares of the Corporation's
authorized but unissued or reacquired Class B Common Stock. Subject to
adjustment as provided in Section 10.3 hereof, the aggregate number of shares of
Class B Common Stock which may be issued by the Corporation under the Plan is
2,000,000 shares of Class B Common Stock. The aggregate number of shares of
Option Stock outstanding at any time shall not exceed the relevant number of
shares of Class B Common Stock remaining available for issuance under the Plan.
After termination of the Plan, the number of shares of Class B Common Stock
reserved for purposes of the Plan from time to time shall be only such number of
shares as are issuable under then outstanding Purchase Rights.
4.2 Shares of Common Stock Subject to Expired or Terminated Options. In the
event that an outstanding Purchase Right is surrendered, expires, is cancelled
or is otherwise terminated for any reason before it shall have been fully
exercised, all shares of Option Stock allocable to the unexercised portion of
such Purchase Right shall again be available for Purchase Rights subsequently
granted under the Plan.
<PAGE>
ARTICLE 5
PARTICIPATION
Only Key Employees of the Corporation, as determined by the Committee at
the time a grant is made, shall be eligible to receive grants of Purchase Rights
under the Plan. The Optionees shall be such individuals as the Compensation
Committee may select from among the Key Employees. In making such selections,
the Committee may take into account the nature of the services rendered by such
Key Employees, their present and potential contributions to the Corporation's
success, and such other factors as the Committee in its discretion shall deem
relevant.
ARTICLE 6
PURCHASE RIGHTS
6.1 Power to Grant Purchase Rights. The maximum aggregate number of shares
of Common Stock with respect to which Purchase Rights may be granted to any one
Key Employee during a Fiscal Year shall be limited to 200,000 shares. For
purposes of calculating the number of shares with respect to which Purchase
Rights have been granted to a Key Employee for any Fiscal Year, any shares
subject to a Purchase Right that is granted and subsequently cancelled or
surrendered during such Fiscal Year shall continue to be counted against the
maximum number of shares which may be granted to such Key Employee pursuant to
the Plan during such Fiscal Year. Notwithstanding the foregoing, to the extent
an adjustment is made to the number of shares subject to a Purchase Right to
reflect a change in the capitalization of the Corporation, the additional
shares, if any, subject to such Purchase Right shall not be counted against the
maximum number of shares for which Purchase Rights may be granted to the
applicable Optionee. Subject to this maximum share limitation, the Committee may
grant to such Key Employees as the Committee may select, in accordance with
Article 5 hereof, Purchase Rights entitling the Optionee to purchase shares of
Class B Common Stock from the Corporation in such quantity and on such terms and
subject to such conditions not inconsistent with the terms of the Plan, as may
be established by the Compensation Committee at the time of grant or pursuant to
applicable resolution of the Compensation Committee.
6.2 Modification, Extension, and Renewal of Purchase Rights. Subject to the
provisions of Section 9.2, the Compensation Committee may modify, extend, or
renew outstanding Purchase Rights, or accept the cancellation or surrender of
outstanding Purchase Rights (to the extent not previously exercised) for the
granting of new Purchase Rights in substitution therefor. Notwithstanding the
foregoing, no modification of a Purchase Right shall, without the consent of the
Optionee, alter or impair any rights or obligations under any Purchase Right
previously granted.
6.3 Optionee to Have No Rights as a Shareholder. An Optionee, or a
transferee of an Optionee, shall have no rights as a shareholder of the
Corporation with respect to the shares of Common Stock made subject to a
Purchase Right unless and until such Optionee exercises such Purchase Right and
is issued the shares purchased thereby. Except as provided in Section 10.3
hereof, no adjustment shall be made for dividends (ordinary or extraordinary,
whether in cash, securities, or other property), distributions, or other rights
with respect to any shares of Common Stock prior to the exercise of such
Purchase Right.
<PAGE>
ARTICLE 7
DIVIDEND EQUIVALENTS
7.1 Accrual of Dividend Equivalents. Subject to the following provisions of
this Section 7.1, and unless the Committee shall specifically determine
otherwise, each Key Employee granted a Purchase Right shall be entitled, upon
the achievement of the Performance Goal for such Purchase Right and satisfaction
of the time vesting requirements, to receive cash payments in an amount equal to
the cash dividends that would have been paid ("Dividend Equivalents") on the
shares subject to the unexercised portion of such Purchase Right if such portion
had been exercised. For purposes of calculating Dividend Equivalents under this
Section 7.1, the "unexercised portion of a Purchase Right" shall be determined
as of the close of trading on the New York Stock Exchange on the record date set
by the Board of Directors for determining those shareholders of the Corporation
entitled to receive a dividend. Dividend Equivalents shall accrue with respect
to the unexercised portion of the Purchase Right during the term of the Purchase
Right (i.e., from and after the Date of Grant of such Purchase Right until the
Purchase Right is fully exercised, expires, or is otherwise terminated) without
regard to the achievement of Performance Goals or time vesting; provided,
however, that the Dividend Equivalents accrued with respect to any Option Stock
shall not become payable to the Optionee until such time, if any, as the Option
Stock becomes exercisable in accordance with the provisions of Section 8.5
hereof. Further provided that, in the event the term of a Purchase Right is
extended by the Committee pursuant to Section 6.2 hereof, Dividend Equivalents
shall cease with respect to such Purchase Right during such extension period
unless the Committee specifically provides otherwise at the time of such
extension.
7.2 Payment of Dividend Equivalents. Upon a Purchase Right's becoming
exercisable (i.e., when the Performance Goal for such Purchase Right has been
achieved and the related time vesting requirements have been satisfied), or as
soon thereafter as administratively practicable, the Corporation shall pay to
the Optionee all Dividend Equivalents that have accrued with respect to the
exercisable portion of such Purchase Right. Thereafter, as long as such Purchase
Right, or any portion thereof, remains exercisable, Dividend Equivalents shall
continue to be paid, with respect to the exercisable portion of such Purchase
Right, on or about the same dates that cash dividends are paid to the
shareholders of the Corporation. Notwithstanding the foregoing, in the event a
Purchase Right is forfeited or terminates for any reason, all accrued but unpaid
Dividend Equivalents with respect to such Purchase Right shall be forfeited at
the same time.
7.3 Treatment as Compensation. Dividend Equivalents paid to an Optionee
shall be treated as compensation to the Optionee from the Corporation, subject
to the withholding provisions of Section 9.15.
ARTICLE 8
ESTABLISHMENT OF PERFORMANCE GOALS;
DETERMINATION OF PERFORMANCE GOAL ACHIEVEMENT; TIME VESTING
8.1 Performance Goals. As used herein, the term "Performance Goal" means,
with respect to a Purchase Right, a target performance goal measured in terms of
one or both of the following business criteria of the Corporation, as
established by the Compensation Committee for a given Performance Period and, if
applicable, a related Base Period: Earnings Per Share and Return on Equity.
In the event the Committee establishes alternative Performance Goals in
connection with a Purchase Right, the Performance Period and the Base Period
established for each Performance Goal by the Committee need not be identical.
<PAGE>
8.2 Establishment of Performance Goals and Performance Periods. The
Compensation Committee shall establish the Performance Goal(s) and Performance
Period (and, if it shall determine that there shall be a Base Period that is
different than the Performance Period, a related Base Period) applicable to each
Purchase Right granted or to be granted to a Key Employee during a Fiscal Year;
provided, however, that any Performance Goal established by the Compensation
Committee in connection with a Purchase Right granted or to be granted to a
Named Executive during a Fiscal Year shall be established by the Compensation
Committee, in writing, prior to the expiration of the first 90 days of the
related Performance Period (e.g., for a Performance Period beginning January 1st
of any Fiscal Year, the Performance Goal for a Named Executive must be
established in writing on or before March 30th of such Fiscal Year). The
Committee is authorized to establish Performance Goals and Performance (and
Base) Periods on a grant-by-grant basis. Notwithstanding the foregoing, the
Committee may establish from time to time, by a continuing resolution,
Performance Goals which shall apply to all subsequent grants under the Plan
unless and until the Committee specifically provides otherwise in connection
with a subsequent grant or grants of Purchase Rights.
8.3 Performance Goal Achievement. A Performance Goal established in
connection with a Purchase Right shall have been achieved if, at the end of the
relevant Performance Period (or Adjusted Performance Period, as applicable), the
actual measurement of, or increase in, Earnings Per Share and/or Return on
Equity for the Performance Period, as the case may be, equals or exceeds the
goal(s) established by the Compensation Committee in connection with such
Purchase Right. Such Performance Goal shall be deemed achieved as of the close
of business on the last day of the relevant Performance Period (or Adjusted
Performance Period, as applicable), notwithstanding that the Committee may not
certify such achievement until a later date.
8.4 Automatic Adjustment of Performance Goal and Performance Period. In the
event a Performance Goal established in connection with a Purchase Right is not
achieved during the initial Performance Period established by the Compensation
Committee, the following adjustments shall occur automatically: (a) the
Performance Goal for such Purchase Right shall automatically be increased by one
percentage point, or such other amount as the Committee may specifically
establish at the time of grant (the "Adjusted Performance Goal"), and (b) the
Performance Period for such Purchase Right shall automatically be extended one
year (the "Adjusted Performance Period"). If the Adjusted Performance Goal is
achieved at the end of such Adjusted Performance Period, then the relevant
Purchase Rights shall become exercisable immediately, or, if later, upon the
satisfaction of the time vesting requirements described in Section 8.5.
In the event the Adjusted Performance Goal is not achieved at the end of
the Adjusted Performance Period as described above, then the Adjusted
Performance Goal for such Purchase Right shall automatically be further
increased by one percentage point, or such other amount as the Committee may
specifically establish at the time of grant, and the Adjusted Performance Period
shall automatically be extended one additional year. The Adjusted Performance
Goal and the Adjusted Performance Period shall continue to be further adjusted
automatically in this manner (i.e., the Adjusted Performance Goal will increase
by one percentage point (or such other amount as the Committee may establish at
the time of grant) and the Adjusted Performance Period will extend one year) at
the end of each Fiscal Year in which the Adjusted Performance Goal is not
achieved, until such time as the Adjusted Performance Goal is achieved or the
Purchase Right expires or is otherwise terminated, whichever occurs first.
Notwithstanding the foregoing, unless the Compensation Committee specifically
provides otherwise at the time of grant of a Purchase Right, the Adjusted
Performance Period, if any, for such Purchase Right shall not exceed five years,
and in no event shall the maximum Adjusted Performance Period exceed seven
years. In the event the Adjusted Performance Goal for a Purchase Right shall not
have been achieved by the end of the maximum Adjusted Performance Period for
such Purchase Right (e.g., five years), the Purchase Right shall terminate
effective as of the last day of such maximum Adjusted Performance Period.
<PAGE>
8.5 Time Vesting and Exercisability of Purchase Rights. Except in the case
of the death, Disability, or Retirement of an Optionee, and subject to the
provisions of Section 9.3 hereof, no portion of a Purchase Right granted under
the Plan may be exercised until the Optionee has completed three (3) years of
employment with the Corporation after the Date of Grant of such Purchase Right
and has achieved the Performance Goal established in connection with such
Purchase Right. Except in the case of the death, Disability, or Retirement of an
Optionee, and provided the Optionee has completed three (3) years of employment
with the Corporation after the Date of Grant of a Purchase Right and also has
achieved the Performance Goal established in connection with such Purchase
Right, subject, however, to the provisions of Section 9.3 hereof, such Purchase
Right shall become exercisable as follows: (i) on the third (3rd) anniversary of
the Date of Grant of such Purchase Right, to the extent of one-third ( 1/3) of
the shares of Option Stock; (ii) on the fourth (4th) anniversary of the Date of
Grant of such Purchase Right, to the extent of two-thirds ( 2/3) of the shares
of Option Stock; and (iii) on the fifth (5th) anniversary of the Date of Grant
of such Purchase Right, to the extent of all of the shares of Option Stock. In
the event the Optionee has not achieved the Performance Goal (or Adjusted
Performance Goal, as the case may be) as of the third, fourth or fifth
anniversary date of the Date of Grant of such Purchase Right, the Purchase Right
shall nevertheless "time vest" but shall not become exercisable until such
Performance Goal (or Adjusted Performance Goal, as the case may be) has been
achieved.
For purposes of this Section 8.5, in determining the number of "shares of
Option Stock" subject to such Purchase Right, account shall be taken of any
adjustments made to the shares as described in Section 10.3 hereof after the
Date of Grant of the Purchase Right, such that the number of shares of Option
Stock with respect to which an Optionee's Purchase Right is time vested shall be
redetermined at the time of an adjustment, and the number of shares of Option
Stock with respect to which an Optionee's Purchase Right becomes time vested on
any anniversary date shall be determined by reference to the number of shares of
Option Stock then subject to such Purchase Right, taking any adjustments
previously made into account.
ARTICLE 9
Exercise of Purchase Rights; Expiration of Purchase Rights
9.1 Prohibition Against Exercise of Out-of-the-Money Purchase Rights. The
exercise of any Purchase Right shall not be permitted if the aggregate Fair
Market Value of the shares of Common Stock that would be acquired upon such
exercise, determined as of the Date of Exercise, is less than the Exercise Price
of such shares of Common Stock, also determined as of the Date of Exercise.
9.2 Expiration Date. Notwithstanding any other provision of the Plan, no
Purchase Right granted to an Employee who is a resident of the United Kingdom on
the Date of Grant of such Purchase Right shall be exercisable after the seventh
(7th) anniversary date of the Date of Grant of such Purchase Right, and no other
Purchase Right granted under the Plan shall be exercisable after the tenth
(10th) anniversary date of the Date of Grant of such Purchase Right. Each such
date of expiration is herein referred to as an "Expiration Date."
9.3 Acceleration of Exercise Time. Notwithstanding anything to the contrary
in the Plan, the Compensation Committee, in its discretion, may accelerate the
exercisability of a Purchase Right, in whole or in part, (a) in the case of an
Optionee other than a Named Executive, at any time more than six (6) months
after the Date of Grant of such Purchase Right, without regard to whether the
Performance Goal established in connection with such Purchase Right has been
achieved, and (b) in the case of a Named Executive (determined at the time
acceleration is considered by the Committee), at any time more than six (6)
months after the Date of Grant of such Purchase Right, provided the Performance
Goal established in connection with such Purchase Right has been achieved.
<PAGE>
9.4 Termination of Employment (Except by Death, Disability, or Retirement)
Within Three Years After Date of Grant. Except in the case of the death,
Disability, or Retirement of an Optionee, or as otherwise permitted under
Section 9.3 hereof, if an Optionee ceases to be an Employee for any reason
within three (3) years after the Date of Grant to such Optionee of a Purchase
Right under the Plan, such Optionee's right to exercise such Purchase Right or
any part thereof shall be forfeited immediately and permanently.
9.5 Termination of Employment (Except by Death, Disability, or Retirement)
More Than Three Years After Date of Grant. Except in the case of the death,
Disability, or Retirement of an Optionee, if an Optionee ceases to be an
Employee for any reason more than three (3) years after the Date of Grant to
such Optionee of a Purchase Right under the Plan, such Optionee shall have the
right, subject to the provisions of Sections 9.1, 9.2 and 9.9 hereof, to
exercise such Purchase Right, in full or in part, at any time within one (1)
year after his cessation of employment, but only to the extent that, on the date
of such cessation of employment, such Purchase Right had become exercisable
pursuant to the terms of Article 8 hereof and the applicable Purchase Right had
not previously been exercised. To the extent such Purchase Right is not
exercisable on the date of such cessation of employment, it shall be forfeited
immediately and permanently on such date. Notwithstanding the foregoing,
including without limitation Section 8.5 hereof, a Purchase Right shall cease
entirely to be exercisable and shall be forfeited immediately and permanently on
the date of an Optionee's cessation of employment if such cessation is a
Termination For Cause (as defined in Section 2.44 hereof).
9.6 Death of Optionee. In the event an Optionee ceases to be an Employee at
anytime by reason of his death and has not fully exercised his Purchase Rights,
then, provided the Performance Goal established in connection with any such
Purchase Right has been achieved, such Purchase Right shall vest immediately and
fully, and the executor, administrator, or other personal representative of the
Optionee's estate, or the trustee of any trust receiving such Purchase Right as
a result of such Optionee's death, or any heir, successor, assign, or other
transferee of the Optionee receiving such Purchase Right by will or by the laws
of descent and distribution, shall have the right, subject to the provisions of
Sections 9.1, 9.2, 9.9 and 9.16 hereof, to exercise such Purchase Right, in full
or in part, at any time within one (1) year after the date of the Optionee's
death.
9.7 Disability of Optionee. In the event an Optionee ceases to be an
Employee at any time by reason of Disability and has not fully exercised his
Purchase Rights, then, provided the Performance Goal established in connection
with any such Purchase Right has been achieved, such Purchase Right shall vest
immediately and fully, and the Optionee or his guardian or other legal
representative, shall have the right, subject to the provisions of Sections 9.1,
9.2, 9.9, and 9.16 hereof, to exercise such Purchase Right, in full or in part,
at any time within two (2) years after the date upon which the Optionee ceases
to be employed by reason of Disability.
9.8 Retirement of Optionee. If an Optionee ceases to be an Employee at any
time by reason of Retirement and has not fully exercised his Purchase Rights,
then, provided the Performance Goal established in connection with any such
Purchase Right has been achieved, such Purchase Right shall time vest
immediately and fully, and such Optionee shall have the right, subject to the
provisions of Sections 9.1, 9.2, 9.9, and 9.16 hereof, to exercise such Purchase
Right, in full or in part, at any time within two (2) years after the date upon
which the Optionee ceases to be employed by reason of Retirement.
9.9 Forfeiture of Purchase Right Gain and Unexercised Purchase Rights if
Optionee Engages in Certain Activities. If at any time (a) within the term of a
Purchase Right or (b) within one year after termination of employment (for any
reason) or (c) within one year after the Optionee exercises any portion of a
Purchase Right, the Optionee, without the written permission of the Corporation
(or any of its Subsidiaries), (i) engages in any activity in competition with
any activity of the Corporation (or any of its Subsidiaries); (ii) engages in
any conduct related to the Optionee's employment for which either
<PAGE>
criminal or civil penalties against him may be sought; (iii) violates the
Corporation's (or any Subsidiary's) policies, including, without limitation, the
Corporation's insider trading policy and the Corporation's Conflict of Interest
Policy (including the House Rules); (iv) accepts employment with or serves as a
consultant, advisor or in any other capacity to an employer that is in
competition with or acting against the interests of the Corporation (or any of
its Subsidiaries), including employing or recruiting any employee of the
Corporation (or any of its Subsidiaries); (v) discloses or misuses any
Confidential Information or material concerning the Corporation (or any of its
Subsidiaries); or (vi) participates in an attempt to obtain control of the
Corporation that is "hostile" (i.e., not approved by the Board of Directors),
then (1) the Purchase Right (or any unexercised portion thereof) shall terminate
and be forfeited effective as of the date on which the Optionee engages in any
such activity, unless terminated sooner by operation of another term or
condition of the Purchase Right or the Plan, and (2) the Optionee shall be
obligated to pay to the Corporation (or its designee) the amount of any gain
realized from the exercise of all or a portion of a Purchase Right, exercised at
any time (x) within one year prior to the Optionee's termination of employment,
(y) within one year prior to the Optionee's engaging in any such activity, or
(z) after engaging in any such activity, as the case may be. For purposes of
this Section 9.9, "gain" shall mean the difference between the Exercise Price of
a Purchase Right and the aggregate Fair Market Value of any exercised portion of
such Purchase Right, determined as of the Date of Exercise.
9.10 Right of Set-Off. The Corporation shall be entitled to deduct the
amounts the Optionee owes the Corporation (or its designee) under Section 9.9
above, in whole or in part, from any amounts the Corporation (or any of its
Subsidiaries) owes the Optionee from time to time (including amounts owed to him
or her as wages or other compensation, fringe benefits, or vacation pay, as well
as any other amounts owed to the Optionee by the Corporation (or any of its
Subsidiaries)). Whether or not the Corporation elects to make any set-off in
whole or in part, if the Corporation does not recover by means of set-off the
full amount the Optionee owes it, calculated as set forth above, the Optionee
shall be obligated to pay immediately the unpaid balance to the Corporation (or
its designee).
9.11 Compensation Committee Discretion. The Optionee may be released from
his or her obligations under Sections 9.9 and 9.10 above only if the
Compensation Committee (or its duly appointed agent) determines in its sole
discretion that such action is in the best interests of the Corporation.
9.12 Exercise Procedures. Each Purchase Right granted under the Plan shall
be exercised by written notice to the Compensation Committee, which notice must
be received by the Compensation Committee on or before the earlier of (i) the
date such Purchase Right expires pursuant to Section 9.2 hereof, and (ii) the
last date on which such Purchase Right may be exercised as provided in Sections
9.5 through 9.8 hereof, as applicable.
9.13 Payment of the Exercise Price. The Exercise Price, in United States
dollars, times the number of shares of Option Stock being exercised under a
Purchase Right shall be paid in full at the time of exercise: (i) in cash or by
certified check, in United States currency; (ii) in the discretion of the
Committee, by the delivery of shares of Common Stock with a Fair Market Value at
the time of exercise equal to the Exercise Price; (iii) in the discretion of the
Committee, by delivery to the Corporation or its designated agent of an executed
irrevocable option exercise form together with irrevocable instructions to a
broker/dealer to sell (or margin) a sufficient portion of the shares and deliver
the sale (or margin loan) proceeds directly to the Corporation to pay for the
Exercise Price, or (iv) in the discretion of the Committee, a combination of the
methods described in (i), (ii) and (iii).
9.14 Issuance of Shares. The Corporation, as soon as is reasonably
practicable after its receipt of a proper notice of exercise and the Exercise
Price, and without transfer or issue tax or other incidental expense to the
Person exercising the Purchase Right, shall deliver to such Person at the
principal office of the Corporation, or at such other location as may be
acceptable to the Corporation and such Person,
<PAGE>
one (1) or more stock certificates for the shares of Option Stock with respect
to which the Purchase Right is exercised. Such shares shall be fully paid and
nonassessable and shall be issued in the name of such Person. However, at the
request of the Optionee, such shares may be issued in the names of the Optionee
and his or her spouse (a) as joint tenants with the right of survivorship, (b)
as community property, or (c) as tenants in common without the right of
survivorship. The Optionee may also request that such shares be issued to a
revocable trust established on behalf of the Optionee and his or her spouse.
Notwithstanding the foregoing, in the case of a Named Executive exercising a
Purchase Right, shares will not be issued prior to the date on which the
Committee certifies, in writing, that the Performance Goal established in
connection with such Purchase Right has been achieved.
9.15 Taxes. The Corporation shall be entitled, if the Compensation
Committee deems it necessary or desirable, to withhold (or secure payment from
an Optionee or Beneficiary in lieu of withholding) the amount of any withholding
or other tax required by law to be withheld or paid by the Corporation with
respect to any amount payable and/or shares of Common Stock issuable under such
Optionee's Purchase Right, and the Corporation may defer payment or issuance of
the shares of Common Stock upon such Optionee's exercise of a Purchase Right
unless indemnified to its satisfaction against any liability for such tax. The
amount of any such withholding shall be determined by the Corporation.
9.16 Prohibition Against Exercise of Purchase Right within Six (6) Months
of Date of Grant. Notwithstanding any other provision of the Plan, no Purchase
Right which, but for this Section 9.16, is exercisable shall be exercised within
six (6) months from the Date of Grant.
9.17 Automatic Conversion of Class B Common Stock to Class A Common
Stock. Notwithstanding any other provision of the Plan, the right of an Optionee
to acquire and hold shares of Class B Common Stock pursuant to the Plan, shall
be subject to the provisions of the Amended and Restated Articles of
Incorporation of the Corporation, including without limitation Section 2.E(6) of
Article III (as the same or any other provision of the Articles may be amended),
which section provides as follows:
"Exercise of Stock Option. In the event that any person who is
not an employee acquires shares of Class B Common Stock pursuant
to the exercise of an option described in Section 2.E.(1)(iv) of
this Article III, such shares shall, immediately after issuance
to such person, be converted to an equal number of shares of
Class A Common Stock, without any action on the part of anyone."
ARTICLE 10
Amendment and Termination of the Plan; Reorganizations and Recapitalizations of
the Corporation
10.1 Amendment of the Plan. The Compensation Committee, with the approval
or at the direction of, or subject to the subsequent ratification by the Board
of Directors, may from time to time suspend or discontinue the Plan or revise or
amend the Plan in any respect whatsoever; provided, however, that to the extent
necessary and desirable to comply with Rule 16b-3 under the Exchange Act and
with section 162(m) of the Code (or any other applicable law or regulation,
including the requirements of any stock exchange on which the Common Stock is
listed or quoted), shareholder approval of any plan amendment with respect to
which applicable law or regulation requires shareholder approval shall be
obtained in such a manner and to such a degree as is required by the applicable
law or regulation. In the event of such a revision or amendment to the Plan, all
outstanding Purchase Rights shall be adjusted to be consistent with the terms
and provisions of the Plan, and in such manner as the Compensation Committee may
deem equitable or as may be required pursuant to applicable law; provided,
however, that except with the written consent of an Optionee or as otherwise
specifically provided herein with respect to a replacement plan, no amendment,
suspension, termination or
<PAGE>
modification of the Plan shall adversely affect the rights of an Optionee under
any Purchase Right previously granted to such Optionee under the Plan.
10.2 Termination of the Plan. The Compensation Committee, with the approval
or at the direction of, or subject to the subsequent ratification by the Board
of Directors, shall have the right and power to terminate the Plan at any time,
and no Purchase Right shall be granted under the Plan after the termination of
the Plan. The termination of the Plan shall not have any other effect, and any
Purchase Right outstanding at the time of the termination of the Plan may be
exercised after termination of the Plan, at any time prior to the Expiration
Date of such Purchase Right and to the same extent and subject to the same terms
and conditions, including forfeiture, that would have applied to such Purchase
Right if the Plan had not been terminated.
10.3 Reorganizations and Recapitalizations of the Corporation.
(a) The existence of this Plan and Purchase Rights granted hereunder
shall not affect in any way the right or power of the Corporation or its
shareholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Corporation's
capital structure or its business, or any merger or consolidation of the
Corporation, or any issue of bonds, debentures, preferred or prior
preference stocks ahead of or affecting the shares or the rights thereof,
or the dissolution or liquidation of the Corporation, or any sale or
transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise.
(b) Except as hereinafter provided, the issue by the Corporation of
shares of stock of any class, or securities convertible into shares of
stock of any class, for cash or property, or for labor or services, either
upon direct sale or upon exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Corporation
convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number of
shares subject to Purchase Rights granted hereunder.
(c) The shares with respect to which Purchase Rights may be granted
hereunder are shares of Class B Common Stock of the Corporation as
presently constituted, but if, and whenever, prior to the delivery by the
Corporation of all of the shares which are subject to the Purchase Rights
or rights granted hereunder, the Corporation shall effect a subdivision or
consolidation of shares or other capital readjustments, the payment of a
stock dividend or other increase or reduction of the number of outstanding
shares of either Class A or Class B Common Stock or both,without receiving
or paying compensation therefor in money, services or property, the number
of shares subject to the Plan shall be proportionately adjusted and the
number of shares with respect to which Purchase Rights granted hereunder
may thereafter be exercised shall:
(i) in the event of an increase in the number of outstanding
shares, be proportionately increased, and the cash consideration (if
any) payable per share shall be proportionately reduced; and
(ii) in the event of a reduction in the number of outstanding
shares, be proportionately reduced, and the cash consideration (if any)
payable per share shall be proportionately increased.
(d) If the Corporation merges with one or more corporations, or
consolidates with one or more corporations and the Corporation shall be the
surviving corporation, thereafter, upon any exercise of Purchase Rights
granted hereunder, the recipient shall, at no additional cost (other than
the Exercise Price and any tax withholding amounts), be entitled to receive
(subject to any required action by shareholders) in lieu of the number of
shares as to which such Purchase Rights shall then be exercisable the
number and class of shares of stock or other securities to which the
recipient
<PAGE>
would have been entitled pursuant to the terms of the agreement of merger
or consolidation, if immediately prior to such merger or consolidation the
recipient had been the holder of record of the number of shares of Class B
Common Stock of the Corporation equal to the number of shares as to which
such Purchase Rights shall be exercisable. A reorganization, merger or
consolidation in which the Corporation is not the surviving corporation, or
a liquidation or dissolution of the Corporation, shall automatically and
without any further action cause any outstanding Purchase Rights which have
not yet become exercisable in accordance with the provisions of Article 8
to terminate and be cancelled as of the effective date of such
reorganization, merger or consolidation, or dissolution or liquidation of
the Corporation, unless the agreement of reorganization, merger or
consolidation otherwise provides.
(e) To the extent that any of the adjustments described in
subparagraphs (c) and (d) of this Section 10.3 relate to securities of the
Corporation, such adjustments shall be made by the Committee, whose
determination shall be conclusive and binding on all persons, subject to
obtaining the agreement of the Corporation's auditors to such adjustments;
provided, however, that the number of shares covered by any Purchase Right
or to which such Purchase Right relates shall always be a whole number.
ARTICLE 11
Compliance With Other Laws and Regulations
11.1 Exemption or Qualification. The Plan, the grant and exercise of
Purchase Rights under the Plan, and the obligation of the Corporation to sell
and deliver Option Stock under such Purchase Rights shall be subject to all
applicable federal and state laws, rules, and regulations and to such approvals
by any government or regulatory agency as may be required. Each Purchase Right
shall be subject to the requirement that if at any time the Committee shall
determine, in its discretion, that the listing, registration or qualification of
the shares covered thereby under any securities exchange or under any state or
federal law or the consent or approval of any governmental regulatory body is
necessary or desirable as a condition of, or in connection with, the granting of
such Purchase Right or the issue or purchase of shares thereunder, such Purchase
Right may not be exercised in whole or in part unless and until such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Compensation Committee.
Stock certificates evidencing such shares acquired under the Plan pursuant to an
unregistered transaction shall bear the following restrictive legend and such
other restrictive legends as are required or deemed advisable under the
provisions of any applicable law:
"THE SALE OF THE SECURITIES REPRESENTED HEREBY HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"). ANY
TRANSFER OF SUCH SECURITIES WILL BE INVALID UNLESS A
REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH
TRANSFER OR, IN THE OPINION OF COUNSEL FOR THE ISSUER, SUCH
REGISTRATION IS UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY
WITH THE ACT."
Any determination by the Corporation and its counsel in connection with any
of the matters set forth in this Section 11.1 shall be conclusive and binding on
all Persons.
11.2 Representation. The Compensation Committee may require that any Person
who is granted a Purchase Right under the Plan represent and agree in writing
that if the shares of Common Stock made subject to the Purchase Right are
issuable under an exemption from registration requirements, the shares will be
"restricted" securities which may be resold only in compliance with the
applicable
<PAGE>
securities laws, and that such Person is acquiring the shares issued upon
exercise of a Purchase Right for investment purposes and not with a view toward
distribution.
11.3 Exchange of Certificates. If, in the opinion of the Corporation and
its counsel, any legend placed on a stock certificate representing shares of
Class B Common Stock sold under the Plan is no longer required, the holder of
such certificate shall be entitled to exchange such certificate for a
certificate representing the same number of such shares but lacking such legend.
ARTICLE 12
Restrictions on Transfer
An Optionee's rights and interests under the Plan may not be assigned or
transferred other than by will or the laws of descent and distribution, and
during the lifetime of an Optionee, only the Optionee personally (or the
Optionee's personal representative) may exercise the Optionee's rights under the
Plan. No purported assignment or transfer of a Purchase Right granted under the
Plan, whether voluntary or involuntary, by operation of law or otherwise, shall
vest in the purported transferee or assignee any interest or right therein
whatsoever but immediately upon any such purported assignment or transfer, or
any attempt to make the same, such Purchase Right thereunder shall terminate and
become of no further effect. An Optionee's Beneficiary may exercise the
Optionee's rights to the extent they are exercisable under the Plan following
the death of the Optionee.
ARTICLE 13
General Provisions
13.1 No Right to Continued Employment. No Employee or any other Person
shall have any claim or right to be granted a Purchase Right under the Plan.
Neither the adoption and maintenance of the Plan nor the granting of Purchase
Rights pursuant to the Plan shall be deemed to constitute a contract of
employment between the Corporation and any Employee or to be a condition of the
employment of any Person. The Plan and any Purchase Right granted under the Plan
shall not confer upon any Optionee any right with respect to continued
employment by the Corporation, nor shall they interfere in any way with the
right of the Corporation to terminate the employment of any Optionee at any
time, and for any reason, with or without cause, it being acknowledged, unless
expressly provided otherwise in writing, that the employment of any Optionee is
and continues to be "at will."
13.2 Elimination of Fractional Shares. If under any provision of the Plan
that requires a computation of the number of exercisable shares of Option Stock
subject to a Purchase Right, the number so computed is not a whole number of
shares of Option Stock, such number of shares of Option Stock shall be rounded
down to the next whole number.
13.3 Purchase Right Agreements. The terms of any Purchase Right shall be as
set forth in a written agreement (a "Purchase Right Agreement") in such form as
the Compensation Committee shall from time to time determine. Each Purchase
Right Agreement shall comply with and be subject to the terms and conditions of
the Plan and such other terms and conditions as the Compensation Committee may
deem appropriate. No Person shall have any rights under any Purchase Right
granted under the Plan unless and until the Corporation and the Optionee have
executed a Purchase Right Agreement setting forth the number of Purchase Rights
granted and the terms and conditions of the Purchase Rights.
13.4 Plan Provisions Control Purchase Right Terms. The terms of the Plan
shall govern all Purchase Rights granted under the Plan, and in no event shall
the Compensation Committee have the
<PAGE>
power to grant any Purchase Right under the Plan which is contrary to any of the
provisions of the Plan. In the event that any provision of a Purchase Right
Agreement shall conflict with any term in the Plan as of the Date of Grant of
such Purchase Right, the term in the Plan shall control.
13.5 Dealings with Beneficiaries or Representatives of an Optionee. The
Compensation Committee may require such proper proof of death and such evidence
of the right of any Person other than an Optionee to exercise any Purchase Right
granted under the Plan, as the Compensation Committee deems necessary or
advisable. The Compensation Committee's determination of death or Disability and
of the right of any Person other than an Optionee to exercise a Purchase Right
shall be conclusive. The Compensation Committee, in its discretion, may require
from any Person, other than an Optionee, exercising any Purchase Right under the
Plan, such security and indemnity as the Compensation Committee, in its
discretion, deems necessary or advisable. The issuance of and acceptance of
shares of Common Stock upon the exercise of a Purchase Right shall constitute a
complete acquittance and discharge of full liability of the Corporation under
the Plan, and the Compensation Committee shall be entitled to demand a receipt
and/or acquittance in full satisfaction of all claims against the Corporation.
13.6 Name of Plan. This Plan shall be known as "Sotheby's Holdings, Inc.
Performance Share Purchase Plan."
13.7 Inspection of Records. Copies of the Plan, records reflecting each
Optionee's Purchase Rights, and any other documents and records that an Optionee
is entitled by law to inspect shall be open to inspection by the Optionee and
his duly authorized representative(s) at the office of the Corporation at any
reasonable business hour.
13.8 Word Meanings. The words such as "herein," "hereinafter," "hereof,"
and "hereunder" refer to this Plan as a whole and not merely to a subdivision in
which such words appear unless the context otherwise requires.
13.9 Section Titles. Section titles are for descriptive purposes only and
shall not control or alter the meaning of the Plan as set forth in the text.
13.10 Severability. Whenever possible, each provision in the Plan and every
Purchase Right at any time granted under the Plan shall be interpreted in such a
manner as to be effective and valid under applicable law, but if any provision
of the Plan or any Purchase Right at any time granted under the Plan shall be
held to be prohibited or invalid under applicable law, then, (i) such provision
shall be deemed amended to accomplish the objectives of the provision as
originally written to the fullest extent permitted by law, and (ii) all other
provisions of the Plan and every other Purchase Right at any time granted under
the Plan shall remain in full force and effect.
13.11 Compliance with Section 16(b) of the Securities Exchange Act. With
respect to Reporting Persons, transactions under this Plan are intended to
comply with all applicable conditions of Rule 16b-3 or its successors under the
Exchange Act and in all events the Plan shall be construed in accordance with
Rule 16b-3. To the extent any provision of the Plan or action by the Committee
fails to so comply, it shall be deemed null and void to the extent permitted by
law and deemed advisable by the Committee. The Board of Directors, in its
absolute discretion, may bifurcate the Plan so as to restrict, limit or
condition the use of any provision of the Plan to participants who are officers
or directors of the Corporation, subject to Section 16 of the Exchange Act
without so restricting, limiting or conditioning the Plan with respect to other
participants.
13.12 Compliance with Code Section 162(m). This Plan is intended to comply
with all applicable provisions of section 162(m) of the Code. To the extent any
provision of the Plan or action by the Committee fails to so comply, it shall be
deemed null and void to the extent permitted by law and
<PAGE>
deemed advisable by the Committee. The Board of Directors, in its absolute
discretion, may bifurcate the Plan so as to restrict, limit or condition the use
of any provision of the Plan to participants who are Named Executives of the
Corporation without so restricting, limiting or conditioning the Plan with
respect to other participants.
13.13 Strict Construction. No rule of strict construction shall be implied
against the Committee, the Corporation or any other Person in the interpretation
of any of the terms of the Plan, any Purchase Right granted under the Plan or
any rule or procedure established by the Compensation Committee.
13.14 Choice of Law. All determinations made and actions taken pursuant to
the Plan shall be governed by the internal laws of the State of Michigan and
construed in accordance therewith.
13.15 Execution. To record the adoption of the Plan, subject to the
approval of the Corporation's shareholders, the Corporation has caused the
execution hereof as of this 26th day of April, 1996.
SOTHEBY'S, HOLDINGS, INC.,
a Michigan corporation
By /s/ DIANA D. BROOKS
...................................
President and Chief Executive Officer
SOTHEBY'S HOLDINGS, INC. 1997 STOCK OPTION PLAN
EFFECTIVE JANUARY 1, 1997
ARTICLE 1
BACKGROUND AND PURPOSE OF THE PLAN; ADOPTION OF THE PLAN; TERM
1.1 Purpose of the Plan. The Sotheby's Holdings, Inc. 1997 Stock Option
Plan, as the same may be amended from time to time (the "Plan"), is intended to
provide a means by which employees of the Corporation and its Subsidiaries can
acquire and maintain stock ownership, thereby promoting their commitment to the
success of the Corporation; to provide an incentive to employees to remain in
the employ of the Corporation and its Subsidiaries; and to attract new employees
with outstanding qualifications.
Options granted under the Plan are not intended to be "incentive stock
options," as defined in section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), or to provide any United States income tax benefits to any
Optionee.
1.2 Adoption and Term. The Plan has been approved by the Board of Directors
of the Corporation and, subject to the approval of a majority of the voting
power of the shareholders of the Corporation, is effective January 1, 1997. The
Plan will remain in effect until terminated or abandoned by action of the Board
of Directors.
ARTICLE 2
DEFINITIONS
In the Plan, whenever the context so indicates, the singular or plural
number, and the masculine, feminine or neuter gender shall each be deemed to
include the other, the terms "he," "his," and "him" shall refer to an Optionee,
and the capitalized terms shall have the following meanings:
2.1 "Articles of Incorporation" means the Amended and Restated Articles of
Incorporation of the Corporation, as the same may be amended from time to time.
2.2 "Beneficiary" means (i) an individual, trust, or estate, who or which,
by will or by operation of the laws of descent and distribution, succeeds to the
rights and obligations of an Optionee under the Plan and the Option Agreement
upon the Optionee's death; or (ii) an individual who, as a result of designation
by an Optionee, succeeds to the rights and obligations of such Optionee under
the Plan and the Option Agreement upon such Optionee's death.
2.3 "Board of Directors" means the Board of Directors of the Corporation.
2.4 "Business Day" means any Day on which the New York Stock Exchange is
open for trading.
2.5 "Class A Common Stock" means the Class A Limited Voting Common Stock of
the Corporation, par value $0.10 per share, entitling every holder thereof, on
all matters submitted to a vote of the shareholders of the Corporation, to cast
one vote for each share standing in his name.
2.6 "Class B Common Stock" means the Class B Common Stock of the
Corporation, par value $0.10 per share, entitling every holder thereof, on all
matters submitted to a vote of the shareholders of the Corporation, to cast 10
votes for each share standing in his name.
2.7 "Code" means the Internal Revenue Code of 1986, as amended from time to
time (or any corresponding provisions of succeeding law).
<PAGE>
2.8 "Common Stock" means the Class A Common Stock and the Class B Common
Stock.
2.9 "Confidential Information" means, with respect to the Corporation and
its Subsidiaries, any confidential information regarding the financial
situations and particular needs of the Corporation and its Subsidiaries as well
as of, or relating to, their customers and clients (including, without
limitation, consignors, buyers and principals), the identity of such Persons,
client lists, documents and information regarding the Corporation's and any
Subsidiary's sales data, marketing, operational and appraisal techniques,
contracts, pricing, costs and profits, and any other information maintained as
proprietary or as trade secrets or as confidential.
2.10 "Corporation" means Sotheby's Holdings, Inc., a Michigan corporation,
and any successor in interest to the business of the Corporation that has, by
agreement, adopted the Plan.
2.11 "Compensation Committee" or "Committee" means the Audit and
Compensation Committee established by the Board of Directors, or such other
committee as the Board may establish and assign the responsibility of
administering this Plan; provided, however, that the Committee shall be
comprised solely of two or more members of the Board, as determined by the Board
from time to time, each of whom shall be (i) a "disinterested person" as that
term is defined and interpreted pursuant to Rule 16b-3 promulgated under Section
16 of the Exchange Act and (ii) an "outside director" as that term is defined
and interpreted pursuant to section 162(m) of the Code and the regulations
thereunder.
2.12 "Date of Exercise", with respect to an Option, means the date on which
such Option is exercised pursuant to the Plan.
2.13 "Date of Grant", with respect to an Option, means the date on which
the Compensation Committee grants such Option pursuant to the Plan.
2.14 "Day" means each calendar day, including Saturdays, Sundays, and legal
holidays; provided, however, that if the Day on which a period of time for
consent or approval or other action ends is not a Business Day, such period
shall end on the next Business Day.
2.15 "Disability" or "Disabled" means, with respect to an Employee, a
physical or mental condition resulting from any medically determinable physical
or mental impairment that renders such Employee incapable of engaging in any
substantial gainful employment and that can be expected to result in death or
that has lasted or can be expected to last for a continuous period of not less
than three hundred sixty-five (365) Days. Notwithstanding the foregoing, an
Employee shall not be deemed to be Disabled as a result of any condition that:
(a) was contracted, suffered, or incurred while such Employee was
engaged in, or resulted from such Employee having engaged in, a felonious
activity;
(b) resulted from an intentionally self-inflicted injury or an
addiction to drugs, alcohol, or substances which are not administered under
the direction of a licensed physician as part of a medical treatment plan;
or
(c) resulted from service in the Armed Forces of the United States for
which such Employee received a disability benefit or pension from the
United States, or from service in the armed forces of any other country
irrespective of any disability benefit or pension.
The Disability of an Employee and the date upon which an Employee ceases to
be employed by reason of Disability shall be determined by the Compensation
Committee in accordance with uniform principles consistently applied, upon the
basis of such evidence as the Compensation Committee deems necessary and
desirable, and its good faith determination shall be conclusive for all purposes
of this Plan and the relevant Option Agreement. The Compensation Committee shall
have the right to require an
<PAGE>
Employee to submit to an examination by a physician or physicians and to submit
to such reexaminations as the Compensation Committee shall require in order to
make a determination concerning the Employee's physical or mental condition;
provided, however, that (i) an Employee may not be required to undergo a medical
examination more often than once each one hundred eighty (180) Days nor at any
time after the normal date of the Employee's Retirement, and (ii) the fees and
expenses of any such medical examination(s) shall be considered expenses of
administering the Plan. If any Employee engages in any occupation or employment
(except for rehabilitation as determined by the Compensation Committee) for
remuneration or profit, which activity would be inconsistent with the finding of
Disability, or if the Compensation Committee determines on the basis of a
medical examination that an Employee no longer has a Disability, or if an
Employee refuses to submit to any medical examination properly requested by the
Compensation Committee, then in any such event, the Employee shall be deemed to
have recovered from such Disability.
2.16 "Employee" means an individual who is and continues to be employed
(within the meaning of section 3401 of the Code and the regulations promulgated
thereunder) by the Corporation or a Subsidiary (while a corporation continues to
be a Subsidiary) including officers (whether or not they may also be directors)
of the Corporation or a Subsidiary. An Employee shall cease to be an Employee
upon the voluntary or involuntary termination of his employment with the
Corporation or a Subsidiary for any reason, including death, Disability,
Retirement, or with or without cause. Whether an authorized leave of absence, or
an absence due to military or government service, Disability, or any other
reason, constitutes a cessation of employment shall be determined by the
Compensation Committee, in its sole discretion.
2.17 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
2.18 "Exercise Price", with respect to an Option, means the price per share
at which an Optionee may exercise his Option to acquire all or a portion of the
shares of Common Stock that are the subject of such Option, as determined by the
Compensation Committee on the Date of Grant. Notwithstanding the foregoing, in
no event shall the Exercise Price of any Option Stock be less than the Fair
Market Value of such Option Stock, determined as of the Date of Grant.
2.19 "Fair Market Value" means the value of each share of Option Stock,
determined for a particular date as follows:
(a) if the Class B Common Stock is listed or admitted for trading on
any United States national securities exchange, the value of each share of
Option Stock shall be the closing price per share of Class B Common Stock
on such exchange (or, if listed on more than one United States exchange,
the principal said exchange) on the relevant Valuation Date hereunder;
(b) if the Class B Common Stock is not traded on any United States
national securities exchange, but is quoted on the National Association of
Securities Dealers, Inc. Automated Quotation System (the "NASDAQ System")
or any similar system of automated dissemination of quotations of prices in
common use, the value of each share of Option Stock shall be the price per
share equal to the mean between the closing high bid and the low asked
quotations on such system on the relevant Valuation Date hereunder;
(c) if neither clause (a) nor clause (b) of this definition is
applicable with respect to the Class B Common Stock, but either clause (a)
or clause (b) is applicable with respect to the Class A Common Stock, the
value of each share of Option Stock shall be the closing price as described
in clause (a) above or the mean between the closing high bid and the low
asked quotations as described in clause (b) above, respectively, of the
Class A Common Stock, as the case may be; or
(d) if neither paragraph (a) nor paragraph (b) nor paragraph (c) of
this definition is applicable, the value of each share of Option Stock
shall be the fair market value as determined by
<PAGE>
the Committee, in good faith and in accordance with uniform principles
consistently applied, on the last day of the relevant Fiscal Year
immediately preceding the relevant date hereunder. Such uniform principles
shall be the same principles applied by the Shares Valuation Division of
the UK Inland Revenue as of the date the Committee makes such good faith
determination of the fair market value of each share of Option Stock.
2.20 "Fiscal Year" means the fiscal year of the Corporation.
2.21 "Fractional Share" means a portion of, or less than the whole of, a
share of Common Stock.
2.22 "Option" means any stock option granted pursuant to the Plan.
2.23 "Option Agreement" is defined in Section 7.1 hereof.
2.24 "Optionee" means an Employee or a former Employee who has received an
Option.
2.25 "Option Stock" means those shares of Class B Common Stock made the
subject of any Option granted pursuant to the Plan.
2.26 "Person" or "Persons" means an individual, a partnership (general or
limited), corporation, joint venture, business trust, cooperative, association,
or other form of business organization, whether or not regarded as a legal
entity under applicable law, a trust (inter vivos or testamentary), an estate of
a deceased, insane, or incompetent person, a quasi-governmental entity, a
government or any agency, authority, political subdivision, or other
instrumentality thereof, or any other entity.
2.27 "Plan" is defined in Section 1.1 hereof.
2.28 "Reporting Person" means any and all Employees subject to Section 16
of the Exchange Act.
2.29 "Retirement" means the termination of employment by an Employee after
the attainment of the age of sixty-five (65) years or upon such earlier date as
required by local law or as otherwise determined or approved by the Compensation
Committee.
2.30 "Subsidiary" means any corporation at least 50% of the total combined
voting power of which is owned by the Corporation or another Subsidiary.
2.31 "Termination for Cause" means termination of employment by reason of
an Optionee's action or repeated acts, including without limitation, the
commission of a felony, fraud, willful misconduct or the unauthorized use of
Confidential Information, which has resulted, or is likely to result, in damage
to the Corporation, as determined by the Compensation Committee in its sole and
absolute discretion.
2.32 "Transfer" means any assignment, sale, transfer, conveyance, mortgage
or other encumbrance, pledge, or other disposition or act of alienation, whether
voluntary or involuntary, or by operation of law.
2.33 "UK" or "United Kingdom" means the United Kingdom of Great Britain and
Northern Ireland.
2.34 "Valuation Date" means, with respect to an Option, the Business Day
immediately preceding either the Date of Grant of such Option or the Date of
Exercise, as applicable. Whenever reference is made to a Valuation Date, it
shall mean, with respect to the Common Stock, as at the close of trading
<PAGE>
on such Valuation Date, and with respect to any other item, midnight in Detroit,
Michigan at the end of such Valuation Date.
ARTICLE 3
ADMINISTRATION
3.1 Administration. The Plan shall be administered by the Committee in
accordance with this Article 3. Subject to the terms and conditions of the Plan,
the Committee shall have the sole discretionary authority:
(a) to authorize the granting of Options;
(b) to select any Reporting Persons who are to be granted Options
under the Plan and to determine, subject to the limitations provided in
Section 6.1 hereof, the number of shares of Option Stock to be granted to
each Reporting Person;
(c) to prescribe, subject to the limitation set forth in the last
sentence of Section 2.18, the Exercise Price of Options granted under the
Plan;
(d) to construe and interpret the Plan;
(e) to establish and modify administrative rules for the Plan;
(f) to impose such conditions and restrictions with respect to
Options, not inconsistent with the terms of the Plan, as it determines
appropriate;
(g) to execute or cause to be executed Option Agreements;
(h) to cancel Options and to substitute new Options with the consent
of an Optionee; and
(i) generally, to exercise such power and perform such other acts in
connection with the Plan and the Options and to make all determinations
under the Plan as it may deem necessary or advisable or as required,
provided or contemplated hereunder.
Action taken or not taken by the Compensation Committee on one or more
occasions shall be without obligation to take or not take such action on any
other occasion(s).
The Committee may delegate to one or more Persons any of its powers, other
than its power to authorize the granting of Options, hereinbefore or hereinafter
provided or conferred, or designate one or more Persons to do or perform those
matters to be done or performed by the Compensation Committee, including
administration of the Plan. Notwithstanding the foregoing, the Committee may not
delegate a power if the delegation of such power would cause the Plan to fail to
satisfy the plan administration requirements set forth in Rule 16b-3(c)
promulgated under the Exchange Act or section 162(m) of the Code and the
regulations promulgated thereunder. Any Person or Persons delegated or
designated by the Committee shall be subject to the same obligations and
requirements imposed on the Committee and its members under the Plan.
3.2 Expenses of Administration. The Corporation shall pay all costs and
expenses of administering the Plan.
3.3 Indemnification. The Committee, members of the Committee, and each
Person or Persons designated or delegated by the Committee, and the
shareholders, directors and officers of the Corporation, shall be entitled to
indemnification and reimbursement from the Corporation for any action or any
failure to act in connection with services performed by or on behalf of the
Committee for the benefit of
<PAGE>
the Corporation to the fullest extent provided or permitted by the Corporation's
Articles of Incorporation and by any insurance policy or other agreement
intended for the benefit of the Committee as a committee of the Board of
Directors or otherwise, or by any applicable law.
ARTICLE 4
SHARES OF COMMON STOCK SUBJECT TO THE PLAN
4.1 Shares Subject to the Plan. The Option Stock to be made the subject of
Options granted under the Plan shall be shares of the Corporation's authorized
but unissued or reacquired Class B Common Stock. Subject to adjustment as
provided in Section 8.3 hereof, the aggregate number of shares of Class B Common
Stock that may be issued by the Corporation upon the exercise of Options under
the Plan is 6,000,000 shares of Class B Common Stock. The aggregate number of
shares of Option Stock outstanding at any time shall not exceed the relevant
number of shares of Class B Common Stock remaining available for issuance under
the Plan. After termination of the Plan, the number of shares of Class B Common
Stock reserved for purposes of the Plan from time to time shall be only such
number of shares as are issuable under then outstanding Options.
4.2 Shares of Common Stock Subject to Terminated or Expired Options. In the
event that any outstanding Option is surrendered, expires or is terminated for
any reason before it shall have been fully exercised, all shares of Option Stock
allocable to the unexercised portion of such Option shall again be available for
Options subsequently granted under the Plan.
ARTICLE 5
PARTICIPATION
All Employees shall be eligible to receive grants of Options under the
Plan. The Optionees shall be such individuals as the Compensation Committee may
select from among the Employees (who may include officers). In making such
selections, the Committee may take into account the nature of the services
rendered by such Employees, their present and potential contributions to the
Corporation's success, and such other factors as the Committee in its discretion
shall deem relevant.
ARTICLE 6
OPTIONS
6.1 Power to Grant Options. The maximum aggregate number of shares of
Common Stock with respect to which Options may be granted to any one Employee
during a Fiscal Year shall be limited to 400,000 shares. For purposes of
calculating the number of shares with respect to which Options have been granted
to an Employee for any Fiscal Year, any shares subject to an Option that is
granted and subsequently cancelled or surrendered during such Fiscal Year shall
continue to be counted against the maximum number of shares which may be granted
to such Employee pursuant to the Plan during such Fiscal Year. Notwithstanding
the foregoing, to the extent an adjustment is made to the number of shares
subject to an Option to reflect a change in the corporate capitalization of the
Corporation, the additional shares, if any, subject to such Option shall not be
counted against the maximum number of shares for which Options may be granted to
the applicable Optionee. Subject to this maximum share limitation, the Committee
may grant to such Employees as the Committee may select, in accordance with
Article 5 hereof, Options entitling the Optionee to purchase shares of Common
Stock from the Corporation in such quantity, and on such terms and subject to
such conditions not inconsistent with the terms of the Plan, as may be
established by the Compensation Committee at the time of grant or pursuant to
applicable resolution of the Compensation Committee.
<PAGE>
6.2 Option Grants to UK Employees. Any Options granted under the Plan to an
Employee who is a resident of the United Kingdom on the Date of Grant of such
Option shall be granted by the Committee first under the UK Sub-Plan (Article
12) to the extent such grant will take effect under Section 12.3 of the UK
Sub-Plan. Any portion of an Option granted to a UK resident which does not take
effect under the UK Sub-Plan as a result of the limitations provided in Section
12.3 thereof, shall automatically be deemed granted under the Plan subject only
to the provisions of Articles 1 through 11 of the Plan and not subject to
Article 12.
6.3 Modification, Extension, and Renewal of Options. The Compensation
Committee may modify, extend, or renew outstanding Options, or accept the
cancellation or surrender of outstanding Options (to the extent not previously
exercised) for the granting of new Options in substitution therefor.
Notwithstanding the foregoing, no modification of an Option shall, without the
consent of the Optionee, alter or impair any rights or obligations under any
Option previously granted.
6.4 Optionee to Have No Rights as a Shareholder. An Optionee, or a
transferee of an Optionee, shall have no rights as a shareholder of the
Corporation with respect to the shares of Common Stock made subject to an Option
unless and until such Optionee exercises such Option and is issued the shares
purchased thereby. No adjustments shall be made for distributions, allocations,
or other rights with respect to any shares of Common Stock prior to the exercise
of such Option.
ARTICLE 7
TERMS AND CONDITIONS OF OPTIONS
7.1 Option Agreements. The terms of any Option shall be as set forth in a
written stock option agreement (an "Option Agreement") in such form as the
Committee shall from time to time determine. Each Option Agreement shall comply
with and be subject to the terms and conditions of the Plan and such other terms
and conditions as the Committee may deem appropriate. No Person shall have any
rights under any Option granted under the Plan unless and until the Corporation
and the Optionee have executed an Option Agreement setting forth the grant and
the terms and conditions of the Option.
7.2 Plan Provisions Control Option Terms. The terms of the Plan shall
govern all Options granted under the Plan, and in no event shall the
Compensation Committee have the power to grant any Option under the Plan which
is contrary to any of the provisions of the Plan. In the event that any
provision of an Option granted under the Plan shall conflict with any term in
the Plan as constituted on the Date of Grant of such Option, the term in the
Plan constituted on the Date of Grant of such Option shall control.
7.3 Conditions for Exercise (Vesting). Except in the case of the death,
Disability, or Retirement of an Optionee, and subject to the provisions of
Section 7.6 hereof, no portion of an Option granted under the Plan may be
exercised until the Optionee has completed one (1) year of employment with the
Corporation after the Date of Grant of such Option. Except in the case of the
death, Disability, or Retirement of an Optionee, and provided that an Optionee
has completed one (1) year of employment with the Corporation after the Date of
Grant of an Option, each Option granted under this Plan shall become exercisable
(i.e., it shall "vest") as follows:
(a) Each Option granted under this Plan shall become vested and
exercisable (i) on the first (1st) anniversary of the Date of Grant of such
Option, to the extent of twenty percent (20%) of the shares made subject to
such Option; and (ii) on each of the second (2nd) through fifth (5th)
anniversaries of the Date of Grant of such Option, to the extent of an
additional twenty percent (20%) of the shares made subject to such Option.
<PAGE>
(b) For purposes of this Section 7.3, in determining the "shares made
subject to such Option," account shall be taken of any adjustments made to
the shares as described in Section 8.3 hereof after the Date of Grant of
the Option, such that the number of shares of Class B Common Stock with
respect to which an Optionee's Option is vested shall be redetermined at
the time of an adjustment, and the number of shares of Class B Common Stock
with respect to which an Optionee's Option becomes vested on any
anniversary date shall be determined by reference to the number of shares
of Class B Common Stock then subject to such Option, taking any adjustments
previously made into account.
7.4 Prohibition Against Exercise of Out-of-the-Money Options. The exercise
of any Option shall not be permitted if the Fair Market Value per share of Class
B Common Stock that would be acquired upon such exercise, determined as of the
Date of Exercise, is less than the Exercise Price of such Option.
7.5 Expiration Date. Notwithstanding any other provision of the Plan, no
Option shall be exercisable after the tenth (10th) anniversary date of the Date
of Grant of such Option.
7.6 Acceleration of Exercise Time. Notwithstanding anything to the contrary
in the Plan, including Sections 7.3, 7.7 and 7.8 hereof, the Compensation
Committee, in its discretion, may allow the exercise, in whole or in part, at
any time more than six (6) months after the Date of Grant of any Option held by
an Optionee, which Option has not previously become exercisable.
7.7 Termination of Employment (Except by Reason of Death, Disability, or
Retirement) Within One Year After Date of Grant. Except in the case of the
death, Disability, or Retirement of an Optionee, if an Optionee ceases to be an
Employee for any reason within one (1) year after the Date of Grant to such
Optionee of an Option under the Plan, such Optionee's right to exercise such
Option or any part thereof shall be forfeited immediately and permanently.
7.8 Termination of Employment (Except by Reason of Death, Disability, or
Retirement) More Than One Year After Date of Grant. Except in the case of the
death, Disability, or Retirement of an Optionee, if an Optionee ceases to be an
Employee for any reason more than one (1) year after the Date of Grant to such
Optionee of an Option under the Plan, such Optionee shall have the right,
subject to the restrictions of Sections 7.4 and 7.5 hereof, to exercise such
Option, in full or in part, at any time within one (1) year after his or her
termination of employment, but only to the extent that, on the date of such
termination of employment, such Optionee's right to exercise such Option had
vested pursuant to the terms of Section 7.3 or Section 7.6 hereof and had not
previously been exercised. Notwithstanding the foregoing, including without
limitation Section 7.3 hereof, an Option shall cease to be exercisable and shall
be forfeited immediately and permanently on the date of an Optionee's cessation
of employment if such cessation is a Termination For Cause (as defined in
Section 2.31 hereof).
7.9 Death of Optionee. In the event an Optionee ceases to be an Employee at
any time by reason of his death and has not fully exercised his Options, then
any outstanding Options of such Optionee shall vest immediately and fully, and
the executor, administrator, or other personal representative of the Optionee's
estate, or the trustee of any trust receiving such Options as a result of such
Optionee's death, or any heir, successor, assign, or other transferee of the
Optionee receiving such Options by will or by the laws of descent and
distribution, shall have the right, subject to the restrictions of Sections 7.4
and 7.5 hereof, to exercise such Options, in full or in part, at any time within
one (1) year after the date of the Optionee's death.
7.10 Disability of Optionee. In the event an Optionee ceases to be an
Employee at any time by reason of Disability and has not fully exercised his
Options, then any outstanding Option(s) of such Optionee shall vest immediately
and fully, and such Optionee or his guardian or other legal representative,
shall have the right, subject to the restrictions of Sections 7.4 and 7.5
hereof, to exercise such Options, in full or in part, at any time within two (2)
years after the date of the Optionee's termination of employment by reason of
Disability.
<PAGE>
7.11 Retirement of Optionee. If an Optionee ceases to be an Employee at any
time by reason of Retirement and has not fully exercised his Options, then any
Options of such Optionee shall vest immediately and fully, and such Optionee
shall have the right, subject to the restrictions of Sections 7.4 and 7.5
hereof, to exercise such Options, in full or in part, at any time within two (2)
years after the date of the Optionee's Retirement.
7.12 Exercise Procedures. Each Option granted under the Plan shall be
exercised by providing written notice to the Compensation Committee, together
with payment of the Exercise Price, which notice and payment must be received by
the Compensation Committee on or before the earlier of (i) the date such Option
expires pursuant to Section 7.5 hereof, and (ii) the last date on which such
Option may be exercised as provided in Sections 7.8 through 7.11 hereof, as
applicable.
7.13 Payment of the Exercise Price. The Exercise Price times the number of
the shares of Option Stock to be purchased upon exercise of an Option granted
under the Plan shall be paid in full at the time of exercise: (i) in cash or by
certified check, in United States dollars; (ii) in the discretion of the
Committee, by the delivery of shares of Common Stock with a Fair Market Value at
the time of exercise equal to the Exercise Price times the number of shares of
Option Stock being purchased; or (iii) in the discretion of the Committee, by
delivery to the Corporation or its designated agent of an executed irrevocable
exercise form together with irrevocable instructions to a broker/dealer to sell
(or margin) a sufficient number of the shares and deliver the sale (or margin
loan) proceeds directly to the Corporation to pay the aggregate Exercise Price,
or (iv) in the discretion of the Committee, a combination of the methods
described in (i), (ii) and (iii).
7.14 Taxes. The Corporation shall be entitled, if the Committee deems it
necessary or desirable, to withhold (or secure payment in cash in United States
dollars from an Optionee or Beneficiary in lieu of withholding) the amount of
any withholding or other tax required by law to be withheld or paid by the
Corporation with respect to any amount payable and/or shares of Common Stock
issuable under such Optionee's Option, and the Corporation may defer payment or
issuance of the shares of Common Stock upon such Optionee's exercise of an
Option unless indemnified to its satisfaction against any liability for such
tax. The amount of any such withholding shall be determined by the Corporation.
7.15 Surrender of Options. Any Option granted under the Plan may be
surrendered to the Corporation for cancellation on such terms as the Committee
and the Optionee agree, including, but not limited to, terms which provide that
upon such surrender the Corporation shall pay to the Optionee cash or shares of
Common Stock or a combination of cash and shares of Common Stock.
7.16 Prohibition Against Exercise of Option Within Six (6) Months of Date
of Grant. Notwithstanding any other provision of the Plan, no Option which, but
for this Section 7.16, is exercisable shall be exercised within six (6) months
from the Date of Grant.
7.17 Automatic Conversion of Class B Common Stock to Class A Common
Stock. Notwithstanding any other provision of the Plan, the right of an Optionee
to hold shares of Class B Common Stock pursuant to the Plan shall be subject to
the provisions of the Amended and Restated Articles of Incorporation of the
Corporation, including without limitation Section 2.E.(6) of Article III, which
section provides as follows:
"Exercise of Stock Option. In the event that any person who is not an
employee acquires shares of Class B Common Stock pursuant to the
exercise of an option described in Section 2.E.(1)(iv) of this Article
III, such shares shall, immediately after issuance to such person, be
converted to an equal number of shares of Class A Common Stock, without
any action on the part of anyone."
<PAGE>
7.18 Issuance of Class A Common Stock. This Section 7.18 applies if at any
time that shares of any class of the Corporation's capital stock are listed on a
national securities exchange, the rules of such exchange or of any governmental
agency of the United States of America require the delisting of such shares if
the Corporation issues shares of Class B Common Stock. In that event, upon the
exercise of outstanding Options granted under the Plan (including Options
granted pursuant to Article 12 of the Plan), the Corporation shall treat a
notice of exercise as a notice to the Corporation to deliver the same number of
shares of Class A Common Stock as the number of shares of Class B Common Stock
that the Corporation would otherwise have been required to deliver. Accordingly,
the Plan shall be operated first on the basis that an Option granted under the
Plan is simply in respect of shares of Class B Common Stock and shall in
addition be operated on the basis that the relevant Option is instead in respect
of Class A Common Stock.
ARTICLE 8
AMENDMENT AND TERMINATION OF THE PLAN; REORGANIZATIONS AND
RECAPITALIZATIONS OF THE CORPORATION
8.1 Amendment of the Plan. The Compensation Committee may from time to time
suspend or discontinue the Plan or revise or amend the Plan in any respect
whatsoever; provided, however, that to the extent necessary and desirable to
comply with Rule 16b-3 under the Exchange Act and with section 162(m) of the
Code (or any other applicable law or regulation, including the requirements of
any stock exchange on which the Common Stock is listed or quoted), shareholder
approval of any plan amendment shall be obtained in such a manner and to such a
degree as is required by the applicable law or regulation. In the event of a
revision or amendment to the Plan, all outstanding Options shall be adjusted to
be consistent with the terms and provisions of the Plan, as revised or amended,
and in such manner as the Compensation Committee may deem equitable or as may be
required pursuant to applicable law; provided, however, that except with the
written consent of an Optionee or as otherwise specifically provided herein with
respect to a replacement plan, no amendment, suspension, termination or
modification of the Plan shall alter or impair the rights of an Optionee under
any Option previously granted to such Optionee under the Plan.
8.2 Termination of the Plan. The Compensation Committee, with the approval
or at the direction of the Board of Directors, and the Board of Directors shall
have the right and power to terminate the Plan at any time, and no Option shall
be granted under the Plan after the termination of the Plan. The termination of
the Plan shall not have any other effect, and any Option outstanding at the time
of the termination of the Plan may be exercised after termination of the Plan,
at any time prior to the expiration date of such Option and to the same extent
and subject to the same terms and conditions, as provided in Article 7 hereof,
that would have applied to such Option if the Plan had not been terminated.
8.3 Reorganizations and Recapitalizations of the Corporation.
(a) The existence of this Plan and Options granted hereunder shall not
affect in any way the right or power of the Corporation or its shareholders
to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Corporation's capital structure or
its business, or any merger or consolidation of the Corporation, or any
issue of bonds, debentures, preferred or prior preference stocks ahead of
or affecting the shares or the rights thereof, or the dissolution or
liquidation of the Corporation, or any sale or transfer of all or any part
of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
(b) Except as hereinafter provided, the issue by the Corporation of
shares of stock of any class, or securities convertible into shares of
stock of any class, for cash or property, or for labor or services, either
upon direct sale or upon exercise of rights or warrants to subscribe
therefor, or upon
<PAGE>
conversion of shares or obligations of the Corporation convertible into
such shares or other securities, shall not affect, and no adjustment by
reason thereof shall be made with respect to, the number of shares subject
to Options granted hereunder.
(c) The shares with respect to which Options may be granted hereunder
are shares of Class B Common Stock of the Corporation as presently
constituted, but if, and whenever, prior to the delivery by the Corporation
of all of the shares which are subject to the Options or rights granted
hereunder, the Corporation shall effect a subdivision or consolidation of
shares or other capital readjustments, the payment of a stock dividend or
other increase or reduction of the number of outstanding shares of either
Class A or Class B Common Stock or both,without receiving compensation
therefor in money, services or property, the number of shares subject to
the Plan shall be proportionately adjusted and the number of shares with
respect to which Options granted hereunder may thereafter be exercised
shall:
(i) in the event of an increase in the number of outstanding
shares, be proportionately increased, and the cash consideration (if
any) payable per share shall be proportionately reduced; and
(ii) in the event of a reduction in the number of outstanding
shares, be proportionately reduced, and the cash consideration (if any)
payable per share shall be proportionately increased.
(d) If the Corporation merges with one or more corporations, or
consolidates with one or more corporations and the Corporation shall be the
surviving corporation, thereafter, upon any exercise of Options granted
hereunder, the recipient shall, at no additional cost (other than the
Exercise Price and any tax withholding amounts) be entitled to receive
(subject to any required action by shareholders) in lieu of the number of
shares as to which such Options shall then be exercisable the number and
class of shares of stock or other securities to which the recipient would
have been entitled pursuant to the terms of the agreement of merger or
consolidation, if immediately prior to such merger or consolidation the
recipient had been the holder of record of the number of shares of Class B
Common Stock of the Corporation equal to the number of shares as to which
such Options shall be exercisable. A reorganization, merger or
consolidation in which the Corporation is not the surviving corporation, or
a liquidation or dissolution of the Corporation, shall automatically and
without any further action cause any outstanding Options which have not yet
become exercisable in accordance with Article 7 to terminate and be
cancelled as of the effective date of such reorganization, merger or
consolidation, or dissolution or liquidation of the Corporation, unless the
agreement of reorganization, merger or consolidation otherwise provides.
(e) To the extent that any of the adjustments described in
subparagraphs (c) and (d) of this Section 8.3 relate to securities of the
Corporation, such adjustments shall be made by the Committee, whose
determination shall be conclusive and binding on all persons, subject to
obtaining the agreement of the Corporation's auditors to such adjustments.
ARTICLE 9
COMPLIANCE WITH OTHER LAWS AND REGULATIONS
9.1 Registration or Qualification of Securities. The Plan, the grant and
exercise of Options under the Plan, and the obligation of the Corporation to
sell and deliver shares of Common Stock under such Options shall be subject to
all applicable federal and state laws, rules, and regulations and to such
approvals by any government or regulatory agency as may be required. Each Option
shall be subject to the requirement that if at any time the Compensation
Committee shall determine, in its discretion, that the listing, registration or
qualification of the shares covered thereby under any securities exchange or
under any state or federal law or the consent or approval of any governmental
regulatory body is
<PAGE>
necessary or desirable as a condition of, or in connection with, the granting of
such Option or the issue or purchase of shares thereunder, such Option may not
be exercised in whole or in part unless and until such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Compensation Committee. Stock certificates
evidencing such shares acquired under the Plan pursuant to an unregistered
transaction shall bear the following restrictive legend and such other
restrictive legends as are required or deemed advisable under the provisions of
any applicable law:
"THE SALE OF THE SECURITIES REPRESENTED HEREBY HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT"). ANY TRANSFER OF SUCH
SECURITIES WILL BE INVALID UNLESS A REGISTRATION STATEMENT UNDER THE ACT
IS IN EFFECT AS TO SUCH TRANSFER OR, IN THE OPINION OF COUNSEL FOR THE
ISSUER, SUCH REGISTRATION IS UNNECESSARY IN ORDER FOR SUCH TRANSFER TO
COMPLY WITH THE ACT."
Any determination by the Corporation and its counsel in connection with any
of the matters set forth in this Section 9.1 shall be conclusive and binding on
all Persons.
9.2 Representation. The Compensation Committee may require that any Person
who is granted an Option under the Plan represent and agree in writing that if
the shares of Common Stock made subject to the Option are issuable under an
exemption from registration requirements, the shares will be "restricted"
securities which may be resold only in compliance with the applicable securities
laws, and that such Person is acquiring the shares issued upon exercise of an
Option for investment purposes and not with a view toward distribution.
9.3 Exchange of Certificates. If, in the opinion of the Corporation and its
counsel, any legend placed on a stock certificate representing shares of Class B
Common Stock sold under the Plan is no longer required, the holder of such
certificate shall be entitled to exchange such certificate for a certificate
representing the same number of such shares but lacking such legend.
ARTICLE 10
RESTRICTIONS ON TRANSFER
10.1 Restrictions on Transfer. An Optionee's rights and interests under the
Plan may not be assigned or transferred other than by will or the laws of
descent and distribution, and during the lifetime of an Optionee, only the
Optionee personally (or the Optionee's personal representative) may exercise the
Optionee's rights under the Plan. No purported assignment or transfer of an
Option granted under the Plan, whether voluntary or involuntary, by operation of
law or otherwise, shall vest in the purported transferee or assignee any
interest or right therein whatsoever but immediately upon any such purported
assignment or transfer, or any attempt to make the same, such Option thereunder
shall terminate and become of no further effect. An Optionee's Beneficiary may
exercise the Optionee's rights to the extent they are exercisable under the Plan
following the death of the Optionee.
ARTICLE 11
GENERAL PROVISIONS
11.1 No Right to Continued Employment. No Employee or any other Person
shall have any claim or right to be granted an Option under the Plan. Neither
the adoption and maintenance of the Plan nor the granting of Options pursuant to
the Plan shall be deemed to constitute a contract of employment between the
Corporation and any Employee or to be a condition of the employment of any
<PAGE>
Person. The Plan and any Option granted under the Plan shall not confer upon any
Optionee any right with respect to continued employment by the Corporation, nor
shall they interfere in any way with the right of the Corporation to terminate
the employment of any Optionee at any time, and for any reason, with or without
cause, it being acknowledged, unless expressly provided otherwise in writing,
that the employment of any Optionee is and continues to be "at will."
11.2 Beneficiaries or Representatives of an Optionee. The Compensation
Committee may require such proper proof of death and such evidence of the right
of any Person other than an Optionee to exercise any Option granted under the
Plan, as the Compensation Committee deems necessary or advisable. The
Compensation Committee's determination of death or Disability and of the right
of any Person other than an Optionee to exercise an Option shall be conclusive.
The Compensation Committee, in its discretion, may require from any Person,
other than an Optionee, exercising any Option under the Plan, such security and
indemnity as the Compensation Committee, in its discretion, deems necessary or
advisable. The issuance of and acceptance of any shares of Common Stock upon the
exercise of an Option hereunder, shall constitute a complete acquittance and
discharge of full liability of the Corporation under the Plan, and the
Compensation Committee shall be entitled to demand a receipt and/or acquittance
in full satisfaction of all claims against the Corporation.
11.3 Elimination of Fractional Shares. If under any provision of the Plan
that requires a computation of the number of shares of Option Stock subject to
an Option, the number so computed is not a whole number of shares of Option
Stock, such number of shares of Option Stock shall be rounded down to the next
whole number.
11.4 Name of Plan. This Plan shall be known as "Sotheby's Holdings, Inc.
1997 Stock Option Plan."
11.5 Inspection of Records. Copies of the Plan, records reflecting each
Optionee's Options, and any other documents and records that an Optionee is
entitled by law to inspect shall be open to inspection by the Optionee and his
duly authorized representative(s) at the office of the Corporation at any
reasonable business hour.
11.6 Statement to Optionees. Within a reasonable time after the last day of
each Fiscal Year, the Committee shall furnish to each Optionee a statement
setting forth the Optionee's total number of shares of the Option Stock made the
subject of an Option(s) under the Plan, the date on which such Option(s)
was/were granted, the Fair Market Value of such shares as of the date of the
grant, the Fair Market Value of such shares as of the last day of such Fiscal
Year, and such other information as the Committee shall deem advisable to
furnish.
11.7 Word Meanings. The words such as "herein," "hereinafter," "hereof,"
and "hereunder" refer to this Plan as a whole and not merely to a subdivision in
which such words appear unless the context otherwise requires.
11.8 Section Titles. Section titles are for descriptive purposes only and
shall not control or alter the meaning of the Plan as set forth in the text.
11.9 Severability. Whenever possible, each provision in the Plan and every
Option at any time granted under the Plan shall be interpreted in such a manner
as to be effective and valid under applicable law, but if any provision of the
Plan or any Option at any time granted under the Plan shall be held to be
prohibited or invalid under applicable law, then, (i) such provision shall be
deemed amended to accomplish the objectives of the provision as originally
written to the fullest extent permitted by law, and (ii) all other provisions of
the Plan and every other Option at any time granted under the Plan shall remain
in full force and effect.
<PAGE>
11.10 Compliance with Section 16(b) of the Securities Exchange Act. With
respect to Reporting Persons, transactions under this Plan are intended to
comply with all applicable conditions of Rule 16b-3 or its successors under the
Exchange Act and in all events the Plan shall be construed in accordance with
Rule 16b-3. To the extent any provision of the Plan or action by the
Compensation Committee fails to so comply, it shall be deemed null and void to
the extent permitted by law and deemed advisable by the Compensation Committee.
The Compensation Committee, in its absolute discretion, may bifurcate the Plan
so as to restrict, limit or condition the use of any provision of the Plan to
participants who are officers or directors of the Corporation, subject to
Section 16 of the Exchange Act without so restricting, limiting or conditioning
the Plan with respect to other participants.
11.11 Compliance with Code Section 162(m). This Plan is intended to comply
with all applicable provisions of section 162(m) of the Code. To the extent any
provision of the Plan or action by the Compensation Committee fails to so
comply, it shall be deemed null and void to the extent permitted by law and
deemed advisable by the Compensation Committee.
11.12 Strict Construction. No rule of strict construction shall be implied
against the Compensation Committee, the Corporation or any other Person in the
interpretation of any of the terms of the Plan, any Option granted under the
Plan or any rule or procedure established by the Compensation Committee.
11.13 Choice of Law. All determinations made and actions taken pursuant to
the Plan shall be governed by the internal laws of the State of Michigan and
construed in accordance therewith.
ARTICLE 12
UK SUB-PLAN; OPTIONS GRANTED TO UNITED KINGDOM RESIDENTS
All Options granted under this Article 12 (also referred to as the "UK
Sub-Plan") to an employee who is a resident of the United Kingdom shall comply
with the terms of this UK Sub-Plan. In the event any other provision of the Plan
conflicts with a provision of this Article 12, the provision in Article 12 shall
control with respect to any Option granted under Article 12 (i.e., under the UK
Sub-Plan). No other Option granted under the Plan shall be subject to the
provisions of this Article 12.
12.1 Definitions. The following terms shall have the following meanings for
purposes of this UK Sub-Plan:
(a) "Associated Company" has the meaning as in Section 416 of the
Taxes Act.
(b) "Company" means Sotheby's Holdings, Inc.
(c) "Control" has the meaning as in Section 840 of the Taxes Act.
(d) "Fair Market Value" means the fair market value of the relevant
shares at the relevant date, as determined in accordance with the
provisions of Part VIII of the UK Taxation of Chargeable Gains Act 1992 and
agreed with the Shares Valuation Division of the UK Inland Revenue.
(e) "Outstanding Options" means all Options granted under this UK
Sub-Plan, and all options granted under any other scheme approved under
Schedule 9 and established by the Company or any Associated Company
thereof, which have not been exercised and have not lapsed at the relevant
time.
(f) "B.P." or "pounds" means pounds sterling, the lawful currency of
the United Kingdom.
(g) "Schedule 9" means Schedule 9 to the Taxes Act.
<PAGE>
(h) "Shares" means shares of Class B Common Stock in the Company,
which satisfy the provisions of paragraphs 10 through 14 of Schedule 9.
(i) "Sterling Equivalent" means, in relation to U.S. dollars, the
amount obtained from applying the mid-market rate of exchange for spot
sterling at the close of business in New York on the relevant date to the
relevant amount; and in relation to any other currency, the amount of
sterling required to purchase the relevant amount of that currency at the
mid-market spot rate of exchange for that currency at the close of business
in London on the relevant date.
(j) "Taxes Act" means the Income and Corporation Taxes Act 1988 of the
United Kingdom.
(k) "Year of Assessment" means a year beginning in any 6 April and
ending on the following 5 April.
12.2 Eligibility. An Option under the UK Sub-Plan may be granted only to a
UK resident who is a director or employee of the Company or a Subsidiary; who is
required to devote to his duties not less than 25 hours (or in the case of an
employee not a director of the Company or a Subsidiary, 20 hours) per week
(excluding meal breaks); and who is not precluded by paragraph 8 of Schedule 9
from participating in the UK Sub-Plan.
12.3 Limitation on Grants Under the UK Sub-Plan. Any Option granted under
the UK Sub-Plan to a UK resident shall be limited and take effect so that
immediately following such grant the aggregate Exercise Prices of shares subject
to such person's Outstanding Options (converted to their Sterling Equivalents at
the date of such grant) shall not exceed thirty thousand pounds (B.P.30,000).
12.4 Limitations on Exercise. No Option granted under the UK Sub-Plan may
be exercised if at the time of the proposed exercise the person is precluded by
paragraph 8 of Schedule 9 from participating in the UK Sub-Plan.
12.5 Exercise Price. The Exercise Price of any Option granted under the UK
Sub-Plan shall not be manifestly less than the Fair Market Value at the date the
Option is granted or the nominal value of the Shares.
12.6 Death of an Optionee. On the death of an employee, any unexercised
Option granted to him under the UK Sub-Plan may be exercised after his death by
his personal representatives only.
12.7 Modification of Options. No modification (as referred to in Section
6.3 of the Plan) or adjustment (as referred to in Sections 8.3(c), (d) or (e) of
the Plan) may be made to Options granted under the UK Sub-Plan without the prior
consent of the Board of the UK Inland Revenue.
12.8 Amendments. No revision or amendment (as referred to in Section 8.1 of
the Plan) may be made to the UK Sub-Plan without the prior consent of the Board
of the UK Inland Revenue.
12.9 Share Certificates and Taxes. The Company shall within 30 days of
receipt of all documents, information and payments which are due on exercise of
an Option issue to the employee exercising the Option certificates representing
the number of Shares purchased on exercise, and shall pay all original issue or
transfer taxes and all other fees and expenses incidental to such delivery.
12.10 Share Reserves. The Company shall maintain sufficient Shares to meet
all Outstanding Options under the UK Sub-Plan and all Shares in respect of which
any Option is exercisable under the UK Sub-Plan shall rank equally and rateably
with all issued Shares of the same class in the Company.
12.11 Vesting. Except in the case of the death, Disability, or Retirement
of an Optionee, each Option granted under the UK Sub-Plan shall become
exercisable (i) on the third (3rd) anniversary date
<PAGE>
of the Date of Grant of such Option, to the extent of sixty percent (60%) of the
number of shares made subject to such Option; (ii) on the fourth anniversary
date of the Date of Grant of such Option, to the extent of eighty percent (80%)
of the number of shares made subject to such Option; and (iii) on the fifth
(5th) anniversary date of the Date of Grant of such Option to the extent of one
hundred percent (100%) of the number of shares made subject to such Option.
12.12 Acceleration of Vesting. The Committee shall not exercise its
discretion under Section 7.6 of the Plan to provide that any Option granted
under the UK Sub-Plan may be exercised less than three (3) years after the Date
of Grant of such Option.
To record the adoption of the Plan, the Corporation has caused the
execution hereof as of this 8th day of May, 1996.
SOTHEBY'S HOLDINGS, INC.,
a Michigan corporation
By: /s/ Diana D. Brooks
..................................
Its: President and Chief
Executive Officer
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of July 11, 1996,
Among
SOTHEBY'S HOLDINGS, INC.,
SOTHEBY'S, INC.,
OATSHARE LIMITED,
SOTHEBY'S,
THE LENDERS NAMED HEREIN
and
THE CHASE MANHATTAN BANK, N.A.
as Administrative Agent
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Definitions
SECTION 1.01. Defined Terms 1
SECTION 1.02. Terms Generally 15
ARTICLE II
The Credits
SECTION 2.01. Commitments 15
SECTION 2.02. Loans 16
SECTION 2.03. Competitive Bid Procedure 17
SECTION 2.04. Standby Borrowing Procedure 20
SECTION 2.05. Refinancings 21
SECTION 2.06. Fees 21
SECTION 2.07. Repayment of Loans 22
SECTION 2.08. Interest on Loans 22
SECTION 2.09. Default Interest 23
SECTION 2.10. Alternate Rate of Interest 23
SECTION 2.11. Termination and Reduction of 23
Commitments
SECTION 2.12. Prepayment 24
SECTION 2.13. Reserve Requirements; Change in 24
Circumstances
SECTION 2.14. Change in Legality 26
SECTION 2.15. Indemnity 27
SECTION 2.16. Pro Rata Treatment 27
SECTION 2.17. Sharing of Setoffs 28
SECTION 2.18. Payments 29
SECTION 2.19. Taxes 29
SECTION 2.20. Assignment of Commitments Under
Certain Circumstances 31
ARTICLE III
Representations and Warranties
SECTION 3.01. Corporate Existence and Good Standing 31
SECTION 3.02. Corporate Power, Authorization and
Compliance with the Law 32
SECTION 3.03. Financial Information; Absence of
Material Adverse Change 32
SECTION 3.04. Employee Benefit Plans 32
SECTION 3.05. Environmental Matters 33
SECTION 3.06. Litigation 33
SECTION 3.07. Taxes 33
SECTION 3.08. Subsidiaries 33
<PAGE>
SECTION 3.09. Investment Company Act 33
SECTION 3.10. No Material Misstatements 33
SECTION 3.11. Federal Reserve Regulations 33
SECTION 3.12. Title to Properties 34
SECTION 3.13. Use of Proceeds 34
ARTICLE IV
Conditions of Lending
SECTION 4.01. All Borrowings 34
SECTION 4.02. Closing Date 35
ARTICLE V
Affirmative Covenants
SECTION 5.01. Financial Statements 36
SECTION 5.02. Payments and Obligations 36
SECTION 5.03. Maintain Property and Insurance 37
SECTION 5.04. Maintain Existence 37
SECTION 5.05. Compliance with Laws 37
SECTION 5.06. Inspection 37
SECTION 5.07. ERISA 37
ARTICLE VI
Negative Covenants
SECTION 6.01. Liens 38
SECTION 6.02. Subsidiary Indebtedness 39
SECTION 6.03. Consolidations, Mergers and Sales of 40
Assets
SECTION 6.04. Lines of Business. 40
SECTION 6.05. Transactions with Affiliates 40
SECTION 6.06. Restrictions on Dividends 40
SECTION 6.07. Consolidated Leverage Ratio 40
SECTION 6.08. Consolidated Tangible Net Worth 40
SECTION 6.09. Consolidated Coverage Ratio . . . . . 40
ARTICLE VII
Events of Default 41
ARTICLE VIII
The Administrative Agent 43
ARTICLE IX
<PAGE>
Guarantee
SECTION 9.01. Guarantee 46
SECTION 9.02. Obligations Unconditional 46
SECTION 9.03. Reinstatement 47
SECTION 9.04. Subrogation 47
SECTION 9.05. Remedies 47
SECTION 9.06. Continuing Guarantee 48
ARTICLE X
Miscellaneous
SECTION 10.01. Notices 48
SECTION 10.02. Survival of Agreement 48
SECTION 10.03. Binding Effect 48
SECTION 10.04. Successors and Assigns 49
SECTION 10.05. Expenses; Indemnity 51
SECTION 10.06. Right of Setoff 52
SECTION 10.07. Applicable Law 52
SECTION 10.08. Waivers; Amendment 53
SECTION 10.09. Interest Rate Limitation 53
SECTION 10.10. Entire Agreement 53
SECTION 10.11. Waiver of Jury Trial 54
SECTION 10.12. Severability 54
SECTION 10.13. Judgment Currency 54
SECTION 10.14. Counterparts 55
SECTION 10.15. Headings 55
SECTION 10.16. Jurisdiction; Consent to Service of 55
Process
SECTION 10.17. Confidentiality 55
<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 3.08 Subsidiaries
Schedule 6.01 Liens
<PAGE>
AMENDMENT AND RESTATEMENT
dated as of July 11, 1996, of the 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 THE
CHASE MANHATTAN BANK, N.A., a New York
banking corporation, as administrative agent
for the Lenders (in such capacity, the
"Administrative Agent").
The Borrowers have requested the Lenders and the
Agent to enter into this Amendment and Restatement and, upon
the terms set forth herein, 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 enter into this Amendment and Restatement and 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.
"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.
<PAGE>
"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 pub
lished for any day which is a Business Day, the average of
the quotations for the day of such transactions received by
the Administrative Agent from three Federal funds brokers of
recognized standing selected by it. If for any reason the
Administrative Agent shall have determined (which determina
tion 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.
"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.
<PAGE>
"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 Sotheby's, Inc. (the
"Index Debt"):
<TABLE>
<CAPTION>
Eurocurrency
Loan Spread
<S> <C>
Category 1
A-1+/F1/D1 .145%
Category 2
A-1/F1/D1 .150%
Category 3
A-2/F2/D2 .250%
Category 4
Lower than A-2/F2/D2 .300%
</TABLE>
<PAGE>
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
established by S&P, Fitch, and Duff & Phelps shall fall
within different Categories, the rating in the inferior (or
numerically highest) Category shall be excluded and the
Applicable Margin shall be determined by reference to
whichever of the two remaining ratings is in the inferior
(or numerically higher) Category; provided, that if the
rating of S&P shall be excluded pursuant to this clause (b),
the Applicable Margin shall in no event be determined by
reference to a Category superior to (numerically lower than)
Category 2; and (c) if any rating established or deemed to
have been established by S&P, Fitch or Duff & Phelps shall
be changed (other than as a result of a change in the rating
system of either S&P, Fitch or Duff & 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 & 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.
<PAGE>
"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 combina
tion thereof, which obligations are required to be classi
fied 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.
"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.
<PAGE>
"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
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.
<PAGE>
"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,
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 & Phelps" shall mean Duff & Phelps Inc.
"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.
"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 the Index Debt:
<TABLE>
<CAPTION>
Facility
Fee
Percentage
<S> <C>
Category 1
A-1+/F1/D1 .08%
Category 2
A-1/F1/D1 .10%
Category 3
A-2/F2/D2 .15%
Category 4
Lower than A-2/F2/D2 .20%
</TABLE>
<PAGE>
For purposes of the foregoing, (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 established by S&P, Moody's, and Duff & Phelps shall
fall within different Categories, the rating in the inferior
(or numerically highest) Category shall be excluded and the
Facility Fee Percentage shall be determined by reference to
whichever of the two remaining ratings is in the inferior
(or numerically higher) Category; provided, that if the
rating of S&P shall be excluded pursuant to this clause (b),
the Facility Fee Percentage shall in no event be determined
by reference to a Category superior to (numerically lower
than) Category 2; and (c) if any rating established or
deemed to have been established by S&P, Fitch or Duff &
Phelps shall be changed (other than as a result of a change
in the rating system of S&P, Fitch or Duff & 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 & 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.
"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.
<PAGE>
"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 guaran
teeing 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.
<PAGE>
"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
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.
<PAGE>
"Interest Period" shall mean (a) as to any
Eurocurrency Borrowing, the period commencing on the date of
such Borrowing and ending on the numerically corresponding
day (or, if there is no numerically corresponding day, on
the last day) in the calendar month that is 1, 2, 3, 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.
"Loan" shall mean any Competitive Loan or Standby
Loan.
"Loan Documents" shall mean this Agreement and the
Engagement Letter dated June 12, 1996 among the
Administrative Agent, Chase Securities Inc. and the
Borrowers.
"Margin Stock" shall have the meaning given such
term under Regulation U.
<PAGE>
"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 July 11, 2001.
"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.
"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.
<PAGE>
"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.
"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 The Chase Manhattan Bank, N.A. 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 The Chase Manhattan Bank,
N.A. 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.
<PAGE>
"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.
"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).
"Utilization Fee Percentage" shall mean on any
date, the applicable percentage set forth below based upon
the ratings applicable on such date to the Index Debt:
<PAGE>
<TABLE>
<CAPTION>
Utilization
Fee
Percentage
<S> <C>
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%
</TABLE>
For purposes of the foregoing, (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 established by S&P, Fitch, and Duff & Phelps shall fall
within different Categories, the rating in the inferior (or
numerically highest) Category shall be excluded and the
Utilization Fee shall be determined by reference to
whichever of the two remaining ratings is in the inferior
(or numerically higher) Category; provided, that if the
rating of S&P shall be excluded pursuant to this clause (b),
the Utilization Fee Percentage shall in no event be
determined by reference to a Category superior to
(numerically lower than) Category 2; and (c) if any rating
established or deemed to have been established by S&P, Fitch
or Duff & Phelps shall be changed (other than as a result of
a change in the rating system of S&P, Fitch or Duff &
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 &
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 Utilization Fee
Percentage shall be determined by reference to the ratings
in effect immediately prior to such change or cessation.
<PAGE>
"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 July 11, 1996.
<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
accordance with the terms hereof, 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 Section 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 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).
<PAGE>
(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 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
(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.
<PAGE>
(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.
<PAGE>
(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
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 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.
<PAGE>
(d) The applicable Borrower may in its sole and
absolute discretion, subject only to the provisions of this
paragraph (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
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.
<PAGE>
(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
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.
<PAGE>
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
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
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 12, 1996, among the
Administrative Agent, Chase Securities Inc. and the
Borrowers (the "Administrative Fees") at the times and in
the amounts set forth therein.
<PAGE>
(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.
(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.
<PAGE>
(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 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 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 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.
<PAGE>
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
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.
<PAGE>
(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 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) Notwithstanding 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 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.
<PAGE>
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 borrowing hereunder the applicable conditions set forth
in Article IV, (b) any failure by such Borrower to borrow or
to 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 borrowed for such period or Interest
Period, as the case may be. A certificate of any Lender
setting forth any amount or amounts which such Lender is
entitled to receive pursuant to this Section shall be
delivered to the Borrowers and shall be conclusive absent
manifest error.
<PAGE>
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
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,
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.
<PAGE>
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 appli
cable.
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, 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 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.
<PAGE>
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 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.
<PAGE>
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 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, 1995, certified by
independent public accountants selected by Holdings, and the
unaudited consolidated financial statements for the fiscal
quarter ended March 31, 1996, 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,
1995, and March 31, 1996, were prepared by management of
Holdings in good faith.
(c) Since December 31, 1995, there has occurred
no Material Adverse Change.
SECTION 3.04. Employee Benefit Plans. Each of
the Borrowers and its ERISA Affiliates are in compliance in
all material respects with the applicable provisions of
ERISA and the Code and the regulations and published
interpretations thereunder. No Reportable Event has
occurred in respect of any Plan of any Borrower or any ERISA
Affiliate. The present value of all benefit liabilities of
all underfunded Plans (based on those assumptions used to
fund each such Plan) did not, as of the last annual
valuation dates applicable thereto, exceed by more than
$5,000,000 the value of the assets of all such underfunded
Plans. Neither the Borrowers nor any ERISA Affiliate have
incurred any Withdrawal Liability that materially adversely
affects the financial condition of any Borrower and its
ERISA Affiliates taken as a whole. Neither the Borrowers
nor any ERISA Affiliate have received any notification that
any Multiemployer Plan is in reorganization or has been
terminated, within the meaning of Title IV of ERISA, and no
Multiemployer Plan is reasonably expected to be in
reorganization or to be terminated, where such
reorganization or termination has resulted or can reasonably
be expected to result in an increase in the contributions
required to be made to such Plan that would materially and
adversely affect the financial condition of any Borrower and
its ERISA Affiliates taken as a whole.
<PAGE>
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 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.
<PAGE>
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.
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 representations and warranties
expressly relate to an earlier date.
(c) Each Borrower shall be in compliance with all
the terms and provisions set forth herein and at the
time of and immediately after such Borrowing no Event
of Default or Default shall have occurred and be
continuing.
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.
<PAGE>
SECTION 4.02. Closing Date. On the Closing Date:
(a) The Administrative Agent shall have received
the favorable written opinions of Miro Weiner & Kramer
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 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 resolu
tions 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 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.
<PAGE>
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;
(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.
<PAGE>
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
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
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.
<PAGE>
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;
(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;
<PAGE>
(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 its 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 not prohibited under any other
Section of 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 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.
<PAGE>
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.
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.
<PAGE>
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 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;
<PAGE>
(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 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
<PAGE>
(l) an involuntary proceeding shall be commenced
or an involuntary petition shall be filed in a court of
competent jurisdiction seeking (i) relief in respect of
Holdings or any Material Subsidiary, or of a
substantial part of the property or assets of Holdings
or any Material Subsidiary, under Title 11 of the
United States Code, as now constituted or hereafter
amended, or any other Federal or state bankruptcy,
insolvency, receivership or similar law (or similar
statute or law in any other jurisdiction), (ii) the
appointment of a receiver, trustee, custodian, seques
trator, conservator or similar official for Holdings or
any Material Subsidiary or for a substantial part of
the property or assets of Holdings or a Material
Subsidiary or (iii) the winding-up or liquidation of
Holdings or any Material Subsidiary; and such
proceeding or petition shall continue undismissed for
30 days or an order or decree approving or ordering any
of the foregoing shall be entered;
(m) Holdings or any Material Subsidiary shall
(i) voluntarily commence any proceeding or file any
petition seeking relief under Title 11 of the United
States Code, as now constituted or hereafter amended,
or any other Federal or state bankruptcy, insolvency,
receivership or similar law (or similar statute or law
in any other jurisdiction), (ii) consent to the
institution of, or fail to contest in a timely and
applicable manner, any proceeding or the filing of any
petition described in (g) above, (iii) apply for or
consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar offi
cial 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 admit
ting 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
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.
<PAGE>
ARTICLE VIII. THE ADMINISTRATIVE AGENT
In order to expedite the transactions contemplated
by this Agreement, The Chase Manhattan Bank, N.A. 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 provi
sions 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 responsible for any statement, warranty or representation
herein or the contents of any document delivered in connec
tion 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 hereunder by or through agents or
employees and shall be entitled 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.
<PAGE>
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 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 compensation 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;
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.
<PAGE>
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
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;
<PAGE>
(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 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
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.
<PAGE>
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 commu
nications 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., Senior Vice
President (Telecopy No. (212) 606-7287);
(b) if to the Administrative Agent, to The Chase
Manhattan Bank, N.A., Agent Bank Services Group, Grand
Central Tower, 140 East 45th Street, New York, New
York 10017, Attention of Meline Kasparian (Telecopy No.
212-622-0002), with copies to The Chase Manhattan Bank,
N.A., 270 Park Avenue, New York, New York 10017,
Attention of William Rindfuss (Telecopy No. 212-270-
1474); and
(c) if to a Lender, to it at its address (or tele
copy 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
latest unrevoked direction from such party given in
accordance with this Section 10.01.
SECTION 10.02. Survival of Agreement. All cove
nants, 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.
<PAGE>
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) When
ever 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 rights and obligations under this Agree
ment, (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 Sections 2.13, 2.15, 2.19 and 10.05, as well as
to any Fees accrued for its account hereunder and not yet
paid)). 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.
<PAGE>
(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
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 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.
<PAGE>
(e) Upon its receipt of a duly completed Assign
ment 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
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 partici
pant or proposed assignee or participant shall execute an
agreement whereby such assignee or participant shall agree
(subject to customary exceptions) to preserve the confiden
tiality 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.
<PAGE>
(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 Govern
mental Authority by reason of the execution and delivery of
this Agreement or any of the other Loan Documents.
(b) Each Borrower agrees to indemnify the
Administrative Agent, each Lender and each of their
respective directors, officers, employees and agents (each
such person being called an "Indemnitee") against, and to
hold each Indemnitee harmless from, any and all actual
losses, claims, damages, liabilities and related expenses,
including reasonable counsel fees, charges and
disbursements, incurred by or asserted against any
Indemnitee arising out of, in any way connected with, or as
a result of (i) the execution or delivery of this Agreement
or any other Loan Document or any agreement or instrument
contemplated thereby, the performance by the parties thereto
of their respective obligations thereunder or the
consummation of the transactions contemplated thereby, (ii)
the actual or proposed use of the proceeds of the Loans or
(iii) any claim, litigation, investigation or proceeding
relating to any of the foregoing, whether or not any Indem
nitee is a party thereto; provided that such indemnity shall
not, as to any Indemnitee, be available to the extent that
such losses, claims, damages, liabilities or related ex
penses 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 Indem
nitee.
(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 consumma
tion 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.
<PAGE>
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 indebted
ness at any time owing by such Lender to or for the credit
or the account of any Borrower against any of and all the
obligations of such Borrower now or hereafter existing under
this Agreement, irrespective of whether or not such Lender
shall have made any demand under this Agreement or such
other Loan Document and although such obligations may be
unmatured. The rights of each Lender under this Section are
in addition to other rights and remedies (including other
rights of setoff) which such Lender may have.
SECTION 10.07. Applicable Law. THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK.
SECTION 10.08. Waivers; Amendment. (a) No
failure or delay of the Administrative Agent or any Lender
in exercising any power or right hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise
of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and
remedies of the Administrative Agent 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 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.
<PAGE>
SECTION 10.09. Interest Rate Limitation. Notwith
standing 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.
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.
<PAGE>
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 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 Agree
ment and are not to affect the construction of, or to be
taken into consideration in interpreting, this Agreement.
<PAGE>
SECTION 10.16. Jurisdiction; Consent to Service
of Process. (a) Each Borrower hereby irrevocably and uncon
ditionally 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.
(b) Each Borrower hereby irrevocably and uncondi
tionally waives, to the fullest extent it may legally and
effectively do so, any objection which it may now or here
after 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 /s/ John S. Brittain, Jr.
Name: John S. Brittain, Jr.
Title: Senior Vice President &
Treasurer
SOTHEBY'S, INC.,
by /s/ Arlene Kick
Name: Arlene Kick
Title: Treasurer
OATSHARE LIMITED,
by /s/ M.G.L. Curle
Name: M.G.L. Curle
Title: Director
SOTHEBY'S,
by /s/ H. Wyndham
Name: H. Wyndham
Title: Director
THE CHASE MANHATTAN BANK, N.A.,
individually and
as Administrative Agent,
by /s/ William Rindfuss
Name: William Rindfuss
Title: Vice President
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY,
by /s/ Paula Mueller
Name: Paula Mueller
Title: Vice President
BARCLAYS BANK PLC,
by /s/ Jan Bishop
Name: Jan Bishop
Title: Senior Vice President
THE BANK OF NEW YORK,
by /s/ William A. Kerr
Name: William A. Kerr
Title: Vice President
COMERICA BANK,
by /s/ Phyllis McCann
Name: Phyllis McCann
Title: Vice President
CREDIT LYONNAIS NEW YORK
BRANCH,
by /s/ Robert Ivosevich
Name: Robert Ivosevich
Title: Senior Vice President
THE FIRST NATIONAL BANK OF
CHICAGO,
by /s/ Maureen C. Oliveri
Name: Maureen C. Oliveri
Title: ITS:AVP
UNION BANK OF SWITZERLAND, NEW
YORK BRANCH,
by /s/ Daniel R. Strickford
Name: Daniel R. Strickford
Title: Assistant Vice President
by /s/ Laurent J. Chaix
Name: Laurent J. Chaix
Title: Vice President
THE BANK OF NOVA SCOTIA,
by /s/ J. Alan Edwards
Name: J. Alan Edwards
Title: Authorized Signatory
BAYERISCHE VEREINSBANK AG, NEW
YORK BRANCH,
by /s/ Marianne Weinzinger
Name: Marianne Weinzinger
Title: Vice President
by /s/ Walter H. Eckmeier
Name: Walter H. Eckmeier
Title: Vice President
BANCA COMMERCIALE ITALIANA, NEW
YORK BRANCH
by /s/ Charles P. Dougherty
Name: Charles P. Dougherty
Title: Vice President
by /s/ Tiziano Gallonetto
Name: Tiziano Gallonetto
Title: Assistant Vice President
EXHIBIT A-1
FORM OF COMPETITIVE BID REQUEST
The Chase Manhattan Bank, N.A.,
as Administrative Agent for
the Lenders referred to below,
270 Park Avenue
New York, NY 10017
Attention:
[Date]
Dear Sirs:
The undersigned, [Sotheby's Holdings, Inc.,
Sotheby's, Inc., Oatshare Limited or Sotheby's](the
"Borrower"), refers to the $300,000,000 Amended and Restated
Credit Agreement dated as of July 11, 1996 (as it may
hereafter be amended, restated, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among
the Borrowers and Lenders named therein and The Chase
Manhattan Bank, N.A., as Administrative Agent. Capitalized
terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Credit
Agreement. [Sotheby's Holdings, Inc., Sotheby's, Inc.,
Oatshare Limited or Sotheby's] hereby gives you notice
pursuant to Section 2.03(a) of the Credit Agreement that it
requests a Competitive Borrowing under the Credit Agreement,
and in that connection sets forth below the terms on which
such Competitive Borrowing is requested to be made:
(A) Date of Competitive Borrowing
(which is a Business Day)
(B) Principal Amount of
Competitive Borrowing / 1
(C) Interest rate basis / 2
(D) Interest Period and the last
day thereof / 3
Upon acceptance of any or all of the Loans offered
by the Lenders in response to this request, [Sotheby's
Holdings, Inc., Sotheby's, Inc., Oatshare Limited or
Sotheby's] shall be deemed to have represented and warranted
that the conditions to lending specified in Section 4.02(c)
and (d) of the Credit Agreement have been satisfied.
Very truly yours,
[Sotheby's Holdings, Inc.,
Sotheby's, Inc., Oatshare
Limited or Sotheby's],
by_________________________
Title: [Responsible Officer]
<PAGE>
EXHIBIT A-2
FORM OF NOTICE OF COMPETITIVE BID REQUEST
[Name of Lender]
[Address]
New York, New York
Attention:
[Date]
Dear Sirs:
Reference is made to the $300,000,000 Amended and
Restated Credit Agreement dated as of July 11, 1996 (as it
may hereafter be amended, restated, supplemented or
otherwise modified from time to time, the "Credit
Agreement"), among the Borrowers and Lenders named therein
and The Chase Manhattan Bank, N.A., as Administrative Agent.
Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the
Credit Agreement. [Sotheby's Holdings, Inc., Sotheby's,
Inc., Oatshare Limited or Sotheby's] made a Competitive Bid
Request on , 19 , pursuant to Section 2.03(a)
of the Credit Agreement, and in that connection you are
invited to submit a Competitive Bid by [Date]/[Time]. / 4
Your Competitive Bid must comply with Section 2.03(b) of the
Credit Agreement and the terms set forth below on which the
Competitive Bid Request was made:
(A) Date of Competitive Borrowing
(B) Principal amount of
Competitive Borrowing
(C) Interest rate basis
(D) Interest Period and the last
day thereof
Very truly yours,
The Chase Manhattan Bank, N.A.,
as Administrative Agent,
By______________________
Title:
<PAGE>
EXHIBIT A-3
FORM OF COMPETITIVE BID
The Chase Manhattan Bank, N.A.,
as Administrative Agent for
the Lenders referred to below,
270 Park Avenue
New York, NY 10017
Attention:
[Date]
Dear Sirs:
The undersigned, [Name of Lender], refers to the
$300,000,000 Amended and Restated Credit Agreement dated as
of July 11, 1996 (as it may hereafter be amended, restated,
supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrowers and Lenders named
therein and The Chase Manhattan Bank, N.A., as
Administrative Agent. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to
such terms in the Credit Agreement. The undersigned hereby
makes a Competitive Bid pursuant to Section 2.03(b) of the
Credit Agreement, in response to the Competitive Bid Request
made by the Borrower on , 19 , and in that
connection sets forth below the terms on which such
Competitive Bid is made:
(A) Principal Amount / 5
(B) Competitive Bid Rate / 6
(C) Interest Period and last
day thereof
The undersigned hereby confirms that it is
prepared, subject to the conditions set forth in the Credit
Agreement, to extend credit to the Borrower on the requested
date of Competitive Bid Borrowing upon acceptance by the
Borrower of this bid in accordance with Section 2.03(d) of
the Credit Agreement.
Very truly yours,
[NAME OF LENDER],
by_______________________
Title:
<PAGE>
EXHIBIT A-4
FORM OF COMPETITIVE BID ACCEPT/REJECT LETTER
The Chase Manhattan Bank, N.A.,
as Administrative Agent
for the Lenders referred to below
270 Park Avenue
New York, NY 10017
Attention: [ ]
[Date]
Dear Sirs:
The undersigned, [Sotheby's Holdings, Inc.,
Sotheby's, Inc., Oatshare Limited or Sotheby's] (the
"Borrower"), refers to the $300,000,000 Amended and Restated
Credit Agreement dated as of July 11, 1996 (as it may
hereafter be amended, restated, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among
the Borrowers and Lenders named therein and The Chase
Manhattan Bank, N.A., as Administrative Agent for the
Lenders.
In accordance with Section 2.03(c) of the Credit
Agreement, we have received a summary of bids in connection
with our Competitive Bid Request dated and in
accordance with Section 2.03(d) of the Credit Agreement, we
hereby accept the following bids for maturity on [date]:
Principal Amount Fixed Rate/Margin Lender
$ [%] [+/-. %]
$
We hereby reject the following bids:
Principal Amount Fixed Rate/Margin Lender
$ [%] [+/-. %]
$
The $ should be deposited in The Chase Manhattan
Bank, N.A. account number [ ] on [date].
Very truly yours,
[Sotheby's Holdings, Inc.,
Sotheby's, Inc., Oatshare
Limited or Sotheby's],
by
Name:
Title:
<PAGE>
EXHIBIT A-5
FORM OF STANDBY BORROWING REQUEST
The Chase Manhattan Bank, N.A.,
as Administrative Agent
for the Lenders referred to below
270 Park Avenue
New York, NY 10017
Attention:
[Date]
Dear Sirs:
The undersigned, [Sotheby's Holdings, Inc.,
Sotheby's, Inc., Oatshare Limited or Sotheby's] (the
"Borrower"), refers to the $300,000,000 Amended and Restated
Credit Agreement dated as of July 11, 1996 (as it may
hereafter be amended, restated, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among
the Borrowers and Lenders named therein and The Chase
Manhattan Bank, N.A., as Administrative Agent. Capitalized
terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Credit
Agreement. [Sotheby's Holdings, Inc., Sotheby's, Inc.,
Oatshare Limited or Sotheby's] hereby gives you notice
pursuant to Section 2.04 of the Credit Agreement that it
requests a Standby Borrowing under the Credit Agreement, and
in that connection sets forth below the terms on which such
Standby Borrowing is requested to be made:
(A) Date of Standby Borrowing
(which is a Business Day)
(B) Principal Amount of
Standby Borrowing / 7
(C) Interest rate basis / 8
(D) Interest Period and the last
day thereof / 9
Upon acceptance of any or all of the Loans made by
the Banks in response to this request, the Borrower shall be
deemed to have represented and warranted that the conditions
to lending specified in Section 4.02(c) and (d) of the
Credit Agreement have been satisfied.
Very truly yours,
[Sotheby's Holdings, Inc.,
Sotheby's, Inc., Oatshare
Limited or Sotheby's],
by
Title:
<PAGE>
Exhibit B
Chase
The Chase Manhattan Bank, N.A.
140 East 45th Street
New York, NY 10017-3162
Tel 212/622-0001
Fax 212/622-0002
Telex 353006 ABSC NYK
SOTHEBY'S HOLDINGS, INC.
ADMINISTRATIVE QUESTIONNAIRE
Please accurately complete the following information and
return via FAX to the attention of Janet Belden at The Chase
Manhattan Bank, N.A. as soon as possible.
FAX Number: 212-622-0122
LEGAL NAME TO APPEAR IN DOCUMENTATION:
GENERAL INFORMATION - DOMESTIC LENDING OFFICE:
Institution Name:
Street Address:
City, State, Zip Code:
GENERAL INFORMATION - EURODOLLAR LENDING OFFICE:
Institution Name:
Street Address:
City, State, Zip Code:
CONTACTS/NOTIFICATION METHODS:
CREDIT CONTACTS:
Primary Contact:
Street Address:
City, State, Zip Code:
Phone Number:
FAX Number:
Backup Contact:
Street Address:
City, State, Zip Code:
Phone Number:
FAX Number:
TAX WITHHOLDING:
Non Resident Alien _____ Y* _____N
* Form 4224 Enclosed
Tax ID Number
CONTACTS/NOTIFICATION METHODS:
ADMINISTRATIVE CONTACTS - BORROWINGS, PAYDOWNS, INTEREST,
FEES, ETC.
Contact:
Street Address:
City, State, Zip Code:
Phone Number:
FAX Number:
BID LOAN NOTIFICATION:
Contact:
Street Address:
City, State, Zip Code:
Phone Number:
FAX Number:
PAYMENT INSTRUCTIONS:
Name of Bank where funds are to be transferred:
Routing Transit/ABA number of Bank where funds are to be
transferred:
Name of Account, if applicable:
Account Number:
Additional Information:
It is very important that all of the above information is
accurately filled in and returned promptly. If there is
someone other than yourself who should receive this
questionnaire, please notify us of their name and FAX number
and we will FAX them a copy of the questionnaire. If you
have any questions, please call me on 212-622-0011.
<PAGE>
FOREIGN CURRENCY: POUNDS STERLING
CONTACTS/NOTIFICATION METHODS:
ADMINISTRATIVE CONTACTS - BORROWINGS, PAYDOWNS, INTEREST,
FEES, ETC.
Contact:
Street Address:
City, State, Zip Code:
Phone Number:
FAX Number:
PAYMENT INSTRUCTIONS:
Name of Bank where funds are to be transferred:
Routing Transit/ABA number of Bank where funds are to be
transferred:
Name of Account, if applicable:
Account Number:
Additional Information:
<PAGE>
EXHIBIT C
[FORM OF]
ASSIGNMENT AND ACCEPTANCE
Reference is made to the $300,000,000 Amended and
Restated Credit Agreement dated as of July 11, 1996 (the
"Credit Agreement"), among Sotheby's Holdings, Inc., a
Michigan corporation, Sotheby's, Inc., a New York
corporation, Oatshare Limited, a company registered in
England and Sotheby's, a company registered in England, the
Lenders named therein and The Chase Manhattan Bank, N.A., as
administrative agent for the Lenders (in such capacity, the
"Administrative Agent"). Terms defined in the Credit
Agreement are used herein with the same meanings.
The Assignor hereby sells and assigns, without
recourse, to the Assignee, and the Assignee hereby purchases
and assumes, without recourse, from the Assignor, effective
as of the Effective Date set forth on the reverse hereof,
the interests set forth on the reverse hereof (the "Assigned
Interest") in the Assignor's rights and obligations under
the Credit Agreement, including, without limitation, the
interests set forth on the reverse hereof in the Commitment
of the Assignor on the Effective Date and Competitive Loans
and Standby Loans owing to the Assignor which are
outstanding on the Effective Date, together with unpaid
interest accrued on the assigned Loans to the Effective Date
and the amount, if any, set forth on the reverse hereof of
the Fees accrued to the Effective Date for the account of
the Assignor. Each of the Assignor and the Assignee hereby
makes and agrees to be bound by all the representations,
warranties and agreements set forth in Section 10.04 of the
Credit Agreement, a copy of which has been received by each
such party. From and after the Effective Date (i) the
Assignee shall be a party to and be bound by the provisions
of the Credit Agreement and, to the extent of the interests
assigned by this Assignment and Acceptance, have the rights
and obligations of a Lender thereunder and under the Loan
Documents and (ii) the Assignor shall, to the extent of the
interests assigned by this Assignment and Acceptance,
relinquish its rights and be released from its obligations
under the Credit Agreement.
This Assignment and Acceptance is being delivered
to the Administrative Agent together with (i) if the
Assignee is organized under the laws of a jurisdiction
outside the United States, the forms specified in
Section 2.19(i) of the Credit Agreement, duly completed and
executed by such Assignee, (ii) if the Assignee is not
already a Lender under the Credit Agreement, an
Administrative Questionnaire in the form of Exhibit B to the
Credit Agreement and (iii) the Assignee shall pay all fees
as specified in Section 10.04(b) of the Credit Agreement.
This Assignment and Acceptance shall be governed
by and construed in accordance with the laws of the State of
New York applicable to agreements made within such State,
without regard to conflicts of law provisions and principles
of such State.
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
Effective Date of Assignment
(may not be fewer than 5 Business
Days after the Date of Assignment):
<PAGE>
Percentage
Assigned of
Facility/Commit-
ment (set forth,
to at least 8
Principal Amount decimals, as a
Assigned (and percentage of
identifying the Facility and
information as the aggregate
to individual Commitments of
CompCompetitive all Lenders
Facility Loans) thereunder)
Commitment $ %
Assigned
Standby Loans:
Competitive
Loans:
Fee Assigned (if any):
The terms set forth above and on the
reverse side hereof are hereby agreed to:
Accepted
_____________, as Assignor [Sotheby's Holdings, Inc.,
Sotheby's, Inc., Oatshare Limited
or Sotheby's]
By:_____________________ By:________________________
Name: Name:
Title: Title:
Acknowledged
________________, as Assignor The Chase Manhattan Bank,
N.A., as administrative agent
By:_____________________ By:______________________
Name: Name:
Title: Title:
_______________________________
1/ Not less that $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 Borrowings) in integral multiples of
$1,000,000.
2/ Eurodollar Loan or Fixed Rate Loan.
3/ Which shall be subject to the definition of
"Interest Period" and end not later than the Maturity Date.
4/ The Competitive Bid must be received by the Agent
(i) in the case of Eurodollar 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 then 9:30 a.m., New York City
time, on the day of a proposed Competitive Borrowing.
5/ Not less than $10,000,000 and (except in the case of
Alternative Currency Borrowings) in integral multiples of
$1,000,000.
6/ i.e., LIBO Rate + or - %, in the case of
Eurodollar Loans or %, in the case of Fixed Rate Loans.
7/ 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 Borrowings) in integral mutliples of
$1,000,000.
8/ Eurodollar Loan or ABR Loan.
9/ Which shall be subject to the definition of
"Interest Period" and end not later than the Maturity Date.
<PAGE>
EXHIBIT D-1
Miro Weiner & Kramer Letterhead
July 11, 1996
The Chase Manhattan Bank, N.A.,
as Administrative Agent
270 Park Avenue
New York, New York 10017-2029
Lenders who are party to the Credit
Agreement described below (the "Lenders")
Re: Loan in the Maximum Aggregate Principal amount of $300,000,000 from
the Lenders to Sotheby's Holdings, Inc., Sotheby's, Inc., Oatshare Limited
and Sotheby's
Ladies and Gentlemen:
We have acted as counsel to Sotheby's Holdings, Inc., a Michigan
corporation, as borrower and guarantor ("Holdings"), and to Sotheby's, Inc.,
a New York corporation, as borrower and guarantor, in connection with the
execution and delivery by Holdings and Sotheby's, Inc. of that certain
Amended and Restated Credit Agreement, dated as of July 11, 1996 (the
"Credit Agreement"), among Holdings, Sotheby's, Inc., Oatshare Limited, a
company registered in England, and Sotheby's, a company registered in England
(collectively, the "Borrowers"), The Chase Manhattan Bank, N.A., as
Administrative Agent, and the Lenders. This opinion is being delivered to the
Lenders pursuant to Section 4.02(a) of the Credit Agreement. Terms used in
this opinion that are defined in the Credit Agreement and not otherwise
defined in this opinion have the meanings ascribed to them in the Credit
Agreement.
In rendering this opinion, we have examined each of the following documents:
(1) Credit Agreement;
(2) the Articles of Incorporation of Holdings;
(3) the By-laws of Holdings;
(4) The Certificate of Good Standing with respect to Holdings, issued by
the Michigan Department of Commerce date July 3, 1996 (the "Holdings
Certificate of Good Standing");
(5) the Certificate of Incorporation of Sotheby's, Inc.;
(6) the By-laws of Sotheby's, Inc.;
(7) the Certificate of Good Standing with respect to Sotheby's, Inc.
issued by the State of New York, Department of State, Secretary of
State, dated July 3, 1996 (the "Sotheby's, Inc. Certificate of Good
Standing").
<PAGE>
In addition, we have examined such records of Holdings and Sotheby's, Inc.,
and such agreements, certificates of public officials, certificates of
officers or other representatives of Holdings and Sotheby's, Inc. and such
other documents, certificates and records as we have deemed necessary or
appropriate as a basis for the opinions set forth herein.
Our opinions are subject in all respects to the following assumptions,
exceptions and qualifications, without which we would not render the opinions
contained in this letter:
A. The following opinions are given as of the date hereof, are limited
to the effect of the internal laws of the States of Michigan
and New York (excluding any political subdivision thereof) and the
federal laws of the United States and are based upon the law (as the
law is presently interpreted by regulations or published opinions)
and the state of facts which exist as of the date hereof. Any change
in law may be applied retroactively, and we express no opinion with
respect to the possible effect of such retroactive application. We
assume no responsibility to advise you of any subsequent changes in
the existing law or state of facts, nor do we assume responsibility
to update this opinion with respect to any matters set forth herein.
Wherever in this opinion we have made an assumption or we have done
so in each case with your permission. For purposes of the opinions
expressed herein, we have determined, assuming the constitutionality
of Section 5-1401 of the New York General Obligations Law, that a New
York court would find that the Credit Agreement is governed by the
laws of the State of New York. However, to the extent that an action
is brought in a jurisdiction other than New York against Holdings or
Sotheby's, Inc. with respect to the Credit Agreement or if such
provision of the New York General Obligations Law is found to be
unconstitutional, we have assumed that the choice of New York law
would govern. In rendering this opinion, we have relied upon the
representations and warranties set forth in the Credit Agreement.
B. We have made no inquiry or investigation whatsoever concerning the
status, power, and authority of the Lenders. We have assumed that
each of the Lenders (i) was duly organized, is validly existing, and
is in good standing under the laws of the jurisdiction in which it
was organized, (ii) has the requisite power and authority to enter
into the Credit Agreement and to perform all of its obligations
thereunder, and (iii) has duly authorized, executed and delivered the
Credit Agreement.
<PAGE>
C. We express no opinion with respect to the effect of any, and assume
compliance by each of the Lenders with all, laws and regulations
applicable to the Lenders or the transaction contemplated by the
Credit Agreement because of the nature of the business of each of the
Lenders. We have assumed that each of the Lenders (i) has qualified
to transact business or conduct affairs in the State of New York or
(ii) is not required to qualify to transact business or conduct
affairs in the State of New York.
D. We have assumed the authenticity of all documents submitted to us as
originals and the conformity to authentic original documents of all
documents submitted to us as certified, conformed or photographic
copies. We have further assumed the genuineness of all signatures
(other than those of the officers of Holdings and Sotheby's, Inc.) on
the Credit Agreement.
E. We have assumed that parties executing the Credit Agreement, other
than Holdings or Sotheby's, Inc., had the power, corporate or
otherwise, to enter into and perform all obligations thereunder and
have also assumed, other than with respect to Holdings and Sotheby's,
Inc., the due authorization by all requisite action, corporate or
otherwise, execution and delivery by such parties of such document and
the validity and binding effect thereof.
F. No opinion is expressed with respect to the applicability of,
compliance with, or consequences of any state or federal laws
regarding environmental, health, discrimination, labor, taxation,
employment, zoning, antitrust, securities, building construction or
bank regulatory matters.
G. Enforcement of the Credit Agreement is subject to, and may be limited
or prohibited by,inter alia (i) the rights of the United States under
the Federal Tax Lien Act of 1966, as amended, (ii) the application of
general principles of equity, the limits of specific performance and
injunctive relief, and the exercise of judicial discretion, and (iii)
all applicable bankruptcy, reorganization, insolvency, arrangement,
fraudulent conveyance, moratorium and other similar laws related to or
affecting the enforcement or creditors' rights generally from time to
time in effect.
H. Notwithstanding anything contained in the Credit Agreement that may
imply otherwise, a court could refuse to enforce, or could enjoin the
exercise of, any remedies under, or provisions of the Credit Agreement
, including, without limitation, the acceleration of any Borrowings
under the Credit Agreement by reason of waiver or by reason of any
unconscionable or inequitable conduct or as a result of fraud on the
part of any party. Similarly, a court could enjoin any party from
pursuing any remedy if the pursuit thereof was predicated upon a
breach that the court concluded was not material or did not affect the
party pursuing such remedy.
I. We express no opinion as to the enforceability of any provisions of
the Credit Agreement purporting to waive rights or defenses
(including, without limitation, rights to notice and hearing, the
right to a jury trial and any waiver of the defense of inconvenient
forum) of Holdings or Sotheby's, Inc., or any affiliate or related
entity of either of them.
J. We express no opinion regarding the enforceability of any provisions
in the Credit Agreement which purport to require payment or
reimbursement of attorneys' fees, paralegal fees, court costs,
appraisals, title costs, litigation expenses or similar costs and
expenses.
K. In addition to the assumptions, exceptions and qualifications
contained above in this opinion letter, certain rights, covenants,
remedies, consents, authorizations, releases, stipulations, and
waivers (including, without limitation, provisions in the Credit
Agreement that the stated rights and remedies are not exclusive, that
the rights and remedies are cumulative, or that the election of some
particular remedy or remedies does not or do not preclude recourse to
one or more other remedies) provided for in the Credit Agreement
may be unenforceable, unavailable, or ineffective, but the inclusion
of such matters will not (i) cause the Credit Agreement to be
either wholly unenforceable or wholly invalid or (ii) preclude
the judicial enforcement of Holdings' or Sotheby's, Inc.'s obligations
to repay money borrowed pursuant to the Credit Agreement.
<PAGE>
L. This Opinion does not extend to, and may not be distributed to or used
or relied upon by, any person other than the Lenders and the
Administrative Agent. This opinion is limited to the matters expressly
set forth herein, and notwithstanding the foregoing assumptions,
exceptions and qualification, no opinion is to be implied or may be
inferred beyond the matters expressly so stated.
M. In rendering the opinions set forth below as to the good standing of
Holdings in the State of Michigan, we have relied exclusively on the
Holdings Certificate of Good Standing. We have conducted no other
investigations. We have assumed that there has been no change in the
status of Holdings since July 3, 1996 (i.e., the date of the Holdings
Certificate of Good Standing) and that the Holdings Certificate of
Good Standing has not been canceled or revoked. To our actual
knowledge, without having made any independent investigation or
inquiry, there has been no change in such status or such
cancellation or revocation.
N. In rendering the opinions set forth below as to the good standing of
Sotheby's, Inc. in the State of New York, we have relied exclusively
on the Sotheby's, Inc. Certificate of Good Standing. We have conducted
no other investigations. We have assumed that there has been no change
in the status of Sotheby's, Inc. since July 3, 1996 (i.e., the date of
the Sotheby's, Inc. Certificate of Good Standing) and that the
Sotheby's, Inc. Certificate of Good Standing has not been canceled or
revoked. To our actual knowledge, without having made nay independent
investigation or inquiry, there has been no change in such status or
such cancellation or revocation.
O. As used in this opinion, the term "our actual knowledge" means the
current conscious knowledge (excluding, inter alia, constructive and
imputed knowledge) of the attorneys employed by this firm.
Based upon and subject to the foregoing, it is our opinion that:
1. Holdings has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of Michigan
and has all requisite authority to conduct its business in every
jurisdiction where such qualification is or will be required where the
failure to so qualify could reasonable be expected to result in a
Material Adverse Effect.
2. Sotheby's, Inc. has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of Michigan
and has all requisite authority to conduct its business in every
jurisdiction where such qualification is or will be required where the
failure to so qualify could reasonable be expected to result in a
Material Adverse Effect.
3. The execution and delivery by Holdings and Sotheby's, Inc. of the
Credit Agreement, the Borrowings under the Credit Agreement and the
performance by each of Holdings and Sotheby's, Inc of their respective
Obligations have been duly authorized by all requisite corporation
action and proceedings (including any required approval of
shareholders) on the part of each of Holdings and Sotheby's, Inc. and
will not:
(a) violate any provisions of law, statute, rule or regulation
(including, without limitation, the Margin Regulations),
or the articles of incorporation or certificate of
incorporation or other constitutive documents or by-laws of
Holdings or any Material Subsidiary;
(b) to our actual knowledge violate any order of any Governmental
Authority;
(c) to our actual knowledge violate or result in a default under
any provision of any material indenture or other material
agreement or material instrument to which either Holding's or
Sotheby's, Inc. is a party or by which either of them or any of
their property or assets is or may be bound; and
(d) to our actual knowledge result in the creation or imposition of
any Lien upon or with respect to any property or assets now
owned or hereafter acquired by Holdings or Sotheby's, Inc.
4. The Credit Agreement has been duly executed and delivered by each of
Holdings and Sotheby's, Inc. and constitutes legal, valid and
binding obligations of each of Holdings and Sotheby's, Inc.
enforceable against Holdings and Sotheby's , Inc. in accordance with
its terms.
<PAGE>
5. Except as disclosed in Section 3.06 of the Credit Agreement, there
is to our actual knowledge no litigation or proceeding pending or
threatened against any of the Borrowers which could reasonably be
expected to result in a Material Adverse Effect.
Very truly yours,
Miro, Weiner & Kramer
<PAGE>
EXHIBIT D-2
Freshfields Letterhead
To: The Chase Manhattan Bank, N. A.
(as administrative agent) and to all
of the lenders who are party to the
Credit Agreement (as defined below)
11 July 1996
Dear Sirs
Amended and Restated $300,000,000 Credit Agreement dated as
of 11 July 1996 among Sotheby's Holdings, Inc., Sotheby's,
Inc., Oatshare Limited, Sotheby's, the Lenders referred to
therein and The Chase Manhattan Bank, N.A. (as
Administrative Agent) (the Credit Agreement)
Introduction
1. We have acted as advisers as to English law to Sotheby's
and Oatshare Limited (the Companies) in relation to the
Credit Agreement. We have been asked to provide an opinion
to you in connection with the obligations of Companies
pursuant to the Credit Agreement.
2. In connection with the above-mentioned transaction, we
have examined the following documents:
(i) a certificate of the Secretary of Sotheby's dated 11
July 1996;
(ii) a certificate of the Secretary of Oatshare Limited
dated 11 July 1996; and
(iii) a copy of the executed Credit Agreement,
and relied upon the statements as to factual matters
contained in or made pursuant to each of the above-mentioned
documents.
3. This opinion is confined to matters of English law.
Accordingly, we express no opinion herein with regard to any
system of law other than laws of England as currently
applied by the English courts. In particular, we express no
opinion on European Community law as it affects any
jurisdiction other than England. This opinion is to be
governed by and construed in accordance with English law as
at the date of this opinion. To the extent that the laws of
the State of New York may be relevant, we have made no
independent investigation thereof and our opinion is subject
to the effect of such laws.
Assumptions
4. In considering the above documents and in rendering this
opinion we have with your consent and without any further
enquiry assumed:
(a) the genuineness of all signatures on, and the
authenticity and completeness of, all documents submitted to
us whether as originals or copies;
(b) the conformity to originals of all documents supplied to
us as photocopies or facsimile copies;
(c) that each of the statements contained in the
certificates referred to at paragraphs 2(i) and 2(ii) above
is true and correct as at the date hereof;
(d) that the Credit Agreement has been duly authorized,
executed and delivered by each of the parties thereto in
accordance with all applicable laws (other than, in the case
of the Companies, the laws of England);
<PAGE>
(e) that the Credit Agreement constitutes legal, valid and
binding obligations of each of the parties thereto
enforceable in accordance with its terms under all
applicable laws including the laws of the State of New York
by which it is expressed to be governed (other than, in the
case of the Companies, the laws of England) and assumed that
satisfactory evidence of the laws of the State of New York
which is required to be pleaded and proved as a fact in any
proceedings before the English Courts, could be pleaded and
proved;
(f) that the Credit Agreement has been delivered by each
party thereto and is not subject to any escrow or other
similar arrangement;
(g) that the Credit Agreement has been entered into for bona
fide commercial reasons and on arm's length terms by each of
the parties thereto;
(h) that the directors of each of the Companies in
authorising execution of the Credit Agreement have exercised
their powers in accordance with their duties under all
applicable laws and the relevant Memorandum and Articles of
Association. Whilst we have not made any enquiries in this
regard, we are not aware of any matters that indicate that
these duties have not been complied with; and
(i) that the information revealed by our searches of the
public microfiche of each of the Companies kept at the
Companies Registration Office in London referred to in
paragraph 5 (a)(i) below and our oral enquiry today of the
Central Registry of Winding up Petitions referred to in
paragraph 5(a)(ii) below was accurate in all respects and
has not since the time of such search or enquiry been
altered.
Opinion
5. On the basis of, and subject to, the foregoing and the
matters set out in paragraphs 6 and 7 below and any matters
not disclosed to us, and having regard to such
considerations of English law in force as at the date of
this letter as we consider relevant, we are of the opinion
that:
(a) the Companies have each been duly incorporated in Great
Britain and registered in England and Wales and:
(i) our searches of 9 July 1996 of the public microfiche of
each of the Companies kept at the Companies Registration
office in London revealed no order or resolution for the
winding up of either of the Companies and no notice of
appointment in respect of either of the Companies of a
liquidator, receiver, administrative receiver or
administrator;
(ii) the Central Registry of Winding up Petitions has
confirmed in response to our oral enquiry made today that no
petition for the winding up of either of the Companies has
been presented within the period of six months covered by
such enquiry;
(b) each of the Companies has the requisite corporate
capacity to enter into the Credit Agreement and to perform
its obligations thereunder;
(c) the execution and performance of the Credit Agreement
has been duly authorised by all necessary corporate action
on the part of each of the Companies and the Credit
Agreement has been duly executed by each of the Companies,
which execution and performance do not and will not result
in any violation by either of the Companies of any term of
its Memorandum Articles of Association or of any law or
regulation having force of law in England and applicable to
it;
(d) the obligation of each of the Companies under the Credit
Agreement will be recognised by, and enforceable in, the
English courts;
(e) no consents, licenses, approvals or authorisation of any
governmental or other authority or agency in the United
Kingdom are required by law in connection with the
execution, delivery and performance of the Credit Agreement
by either of the Companies;
(f) no filing or registration of the Credit Agreement is
necessary under English law; and
(g) the choice of the laws of the State of New York to
govern the Credit Agreement will be recognised and upheld
by the English courts.
<PAGE>
Qualifications
6. Our opinion is subject to the following qualifications:
(a) the searches at the Companies Registration Office
referred to in paragraph 5(a)(i) are not conclusively
capable of revealing whether or not:
(i) a winding up order has been made or a resolution passed
for the winding up of a company; or
(ii) an administration order has not been made; or
(iii) a receiver, administrative receiver, administrator or
liquidator has been appointed,
as notice of these matters may not be filed with the
Registrar of Companies immediately and, when filed, may not
be entered on public microfiche of the relevant company
immediately. In addition, those searches are not capable of
revealing, prior to the making of the relevant order,
whether or not a winding up petition or petition for an
administration order has been presented;
(b) the enquiry at the Central Registry of Winding up
Petitions referred to in paragraph 5(a)(ii) relates only to
the compulsory winding up and is not conclusively capable of
revealing whether or not a winding up petition in respect of
a compulsory winding up has been presented since details of
the petition may not have been entered on the records of the
Central Registry of Winding up Petitions immediately or, in
the case of a petition presented to a County Court, may not
have been notified to the Central Registry and entered on
such records at all, and the response to an enquiry only
relates to the period of six months prior to the date when
the enquiry was made;
(c) the choice of the laws of the State of New York to
govern the Credit Agreement would not be recognised or
upheld if there were reason for avoiding the choice of law
on the grounds that its application would be manifestly
incompatible with public policy. The choice of laws of the
State of New York would not be upheld, for example, if it
was made with the intention of evading the law of
jurisdiction with which the contract had it most substantial
connection and which, in the absence of the laws if the
State of New York, would have invalidated the contract or
been inconsistent therewith;
(d) English courts can give judgments in currencies other
than sterling if, subject to the terms of the contract, it
is the currency which most fairly expresses the plaintiff's
loss but such judgment may be required to be converted into
sterling for enforcement purposes;
(e) an English court has power to stay an action where it is
shown that there is some other forum, having competent
jurisdiction, which is more appropriate for the trial of the
action, that is in which the case can be tried more suitably
for the interests of all parties and the ends of justice,
and where staying the action is not inconsistent with the
EEC Convention on Jurisdiction and the Enforcement of
Judgments in Civil and Commercial Matters of 1968 (as
amended) and subordinate legislation made thereunder or with
the Lugano Convention on Jurisdiction and the Enforcement of
Judgments in Civil and Commercial Matters of 1988 as applied
by virtue of the Civil Jurisdiction and Judgments Act 1991;
(f) under the rules of procedure applicable, an English
court may, at its discretion, order a plaintiff in an
action, being a party who is not ordinarily resident in some
part of the United kingdom, to provide security for costs;
<PAGE>
(g) section 2.09 of the Credit Agreement would be
enforceable if the provisions of that clause were held to
constitute a penalty and not a genuine and reasonable pre-
estimate of the loss likely to be suffered as a result of
the default in payment of the amount in question. We express
no opinion on whether any such provision does constitute
such a genuine and reasonable pre-estimate;
(h) in some circumstances an English court would not give
effect to section 10.12 of the Credit Agreement in
particular if to do so would not accord with public policy
or would involve the court in making a new contract for the
parties;
(i) an English court may refuse to give effect to any
provision in an agreement (i) for the payment of expenses in
respect of the costs of enforcement (actual or contemplated)
or of unsuccessful litigation brought before an English
court or where the court has itself made an order for the
costs or (ii) which would be inconsistent with English
public policy;
(j) the term "enforceable" as used in this opinion means
that the obligations assumed by the relevant party under the
relevant document are of the type which the English courts
enforce. This opinion is not to be taken to imply that any
obligation would necessarily be capable of enforcement in
all circumstances in accordance with its terms. In
particular:
(i) an English court will not necessarily grant any remedy
the availability of which is subject to equitable
considerations or which is otherwise in the discretion of
the court. In particular, orders for specific performance
and injunctions are, in general, discretionary remedies
under English law and specific performance is not available
where damages are considered by the court to be an adequate
alternative remedy;
(ii) claims may become barred under the Limitation Act 1980
or the Foreign Limitation Periods Act 1984 or may be or
become subject to the defense or set-off or to counterclaim;
and
(iii) where obligations are to be performed in a
jurisdiction outside England, they may not be
enforceable in England to the extent that performance would
be illegal under the laws, or contrary to the exchange
control regulations, of the other jurisdiction;
(k) this opinion is subject to all applicable laws relating
to insolvency, bankruptcy, administration, reorganisation,
liquidation or analogous circumstances.
<PAGE>
Observations
7. We should also like to make the following observations:
(a) it should be understood that we have not been
responsible for investigating or verifying the accuracy of
the facts, including statements of foreign law, or the
reasonableness of any statement of opinion or intention,
contained in or relevant to the Credit Agreement, or that no
material facts have been omitted therefrom;
(b) we have not considered the particular circumstances of
any of the Lenders nor the effect of any such particular
circumstances on the Credit Agreement or the effect of the
transaction contemplated by any document referred to herein
on any such circumstances; and
(c) we have not been involved in the detailed preparation of
the Credit Agreement and have reviewed the document only for
the limited purpose of giving this opinion in relation to
the Companies. Accordingly, we express no view as to the
suitability of the Credit Agreement or of its provisions or
its general compliance with market practice or any
commercial aspects of such document.
Benefit of opinion
8. This opinion is addressed to you solely for your own
benefit in relation to the Credit Agreement and, except with
our prior written consent, is no to be transmitted or
disclosed to or used or relied upon by any other person or
used or relied upon by you for any other purpose.
Yours faithfully
Freshfields
<PAGE>
SCHEDULE 2.01
Lenders
Revolving
Name and Address Credit
of Lender Commitment
The Chase Manhattan Bank, N.A. $75,000,000
270 Park Avenue
New York, NY 10017
Telecopier No. (212) 270-1474
Attention of Mr. William Rindfuss
The Bank of New York $25,000,000
One Wall Street
New York, NY 10286
Telecopier No. (212) 635-1480
Attention of Mr. William G. C. Dakin
The Bank of Nova Scotia $25,000,000
One Liberty Plaza
New York, NY 10006
Telecopier No. (212) 225-5090
Attention of Ms. Leslie Colin
Barclays Bank PLC $25,000,000
222 Broadway, 12th Floor
New York, NY 10016
Telecopier No. (212) 412-7590
Attention of Mr. Matthew Tuck
Comerica Bank $25,000,000
One Detroit Center
500 Woodward Avenue
Detroit, MI 48226
Telecopier No. (313) 222-9516
Attention of Ms. Phyllis D. McCann
Bank of Tokyo-Mitsubishi Trust Co. $25,000,000
1251 Avenue of the Americas
12th Floor
New York, NY 10116
Telecopier No. (212) 782-6445
Attention of Ms. Paula Mueller
The First National Bank of Chicago $25,000,000
153 West 51st Street, 8th Floor
New York, NY 10019
Telecopier No. (212) 373-1388
Attention of Ms. Anna Hoffman
Union Bank of Switzerland, $25,000,000
New York Branch
299 Park Avenue
New York, NY 10171
Telecopier No. (212) 821-3383
Attention of Mr. Daniel Strickford
Bayerishe Vereinsbank AG, $25,000,000
New York Branch
335 Madison Avenue, 19th Floor
New York, NY 10017
Telecopier No. (212) 880-9724
Attention of Ms. Marianne Weinzinger
Credit Lyonnais New York Branch $15,000,000
1301 Avenue of the Americas
New York, NY 10019
Telecopier No. (212) 459-3179
Attention of Ms. Silvana Burdick
Banca Commerciale Italiana $10,000,000
One Williams Street
New York, NY 10004
Telecopier No. (212) 809-2124
Attention of Mr. Charles Dougherty
<PAGE>
Schedule 3.08
Subsidiaries of Sotheby's Holdings, Inc.
The subsidiaries of Sotheby's Holding, Inc., which Jurisdiction of
are wholly owned except where indicated, are as follows: Incorporation
Sotheby's Holdings, Inc. Michigan
Sotheby Parke Bernet Stamp Auction, Inc. Connecticut
Sotheby's Asia, Inc. Michigan
Sotheby's Hong Kong Ltd. Hong Kong
Sotheby's Japan Ltd. Japan
Sotheby's Australia Pty. Ltd. (50.249%) Australia
Sotheby's Asia Ltd. Bermuda
Sotheby's Australia Pty. Ltd.(49.751%) Australia
Sotheby's Taiwan Ltd. Taiwan
Sotheby's Monaco S.A.M. Monaco
Sotheby's Art Sales Corp. New York
Sotheby's (Canada), Inc. Canada
Sotheby's Financial Services, Inc. Nevada
SFS California, Inc. Nevada
Sotheby's International Realty, Inc. Michigan
Sotheby's International Realty Affiliates, Inc. New York
Sotheby's International Realty of Colorado, Inc. Michigan
Sotheby's International Realty Ltd. United Kingdom
Sotheby's Service Corporation Delaware
SPTC, Inc. Nevada
Sotheby's Nevada, Inc. Nevada
Acquavella Modern Art (50%) Nevada
SFS Holding, Inc. Delaware
Fine Art Insurance Ltd. Bermuda
York Warehouse, Inc. New York
Sotheby's, Inc. New York
Sotheby's Jersey Ltd. Jersey
Sotheby's Fine Art S.L. Spain
Sotheby's Peel y Asociados S.A. Spain
Etablissement Sotheby Liechtenstein
Oatshare Limited United Kingdom
Int'l Art & Antique Loss Register Ltd. (20%) United Kingdom
Sotheby's International Travel Limited United Kingdom
Sotheby's United Kingdom
Art Development (India) Ltd. United Kingdom
Sotheby's India Pvt. Ltd. (50%) United Kingdom
Lexbourne Limited (50%) United Kingdom
Sotheby's London United Kingdom
Sotheby's Inst. for Fine & Deco. Arts Ltd. United Kingdom
Sotheby's Espana S.A. Spain
Suitlast Limited United Kingdom
Sotheby's Financial Services Ltd. United Kingdom
Sotheby Parke Bernet, Inc. Delaware
Advisory Services S.A. (1%) Argentina
Sotheby Parke Bernet Nederland B.V. Netherlands
Sotheby Mak van Waay B.V. Netherlands
Sotheby's Israel, Ltd. Israel
Sotheby's A.G. Switzerland
Sotheby's Scandinavia A.B. Sweden
Sotheby's Italia S.R.L. Italy
Sotheby's Deutschland GmbH West Germany
Sotheby's Kunstauktinen GmbH Austria
Sotheby's Hungary Ltd. Hungary
Sotheby's France S.A.R.L. France
Sotheby's Holdings International, Inc. Michigan
Fine Art Finance Corp. Delaware
Advisory Services S.A. (99%) Argentina
York Avenue Development, Inc. New York
York Storage, Inc. New York
<PAGE>
SCHEDULE 6.01
Liens
None
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 28,186
<SECURITIES> 0
<RECEIVABLES> 357,834
<ALLOWANCES> 11,283
<INVENTORY> 17,784
<CURRENT-ASSETS> 422,166
<PP&E> 63,917
<DEPRECIATION> 64,436
<TOTAL-ASSETS> 604,237
<CURRENT-LIABILITIES> 331,219
<BONDS> 25,000
<COMMON> 5,553
0
0
<OTHER-SE> 226,402
<TOTAL-LIABILITY-AND-EQUITY> 604,237
<SALES> 0
<TOTAL-REVENUES> 165,394
<CGS> 0
<TOTAL-COSTS> 32,948
<OTHER-EXPENSES> 56,940
<LOSS-PROVISION> 625
<INTEREST-EXPENSE> 1,586
<INCOME-PRETAX> 34,022
<INCOME-TAX> 13,609
<INCOME-CONTINUING> 20,413
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,413
<EPS-PRIMARY> 0.36
<EPS-DILUTED> 0.36
</TABLE>
