Credit Agreement

On August 31, 2009, in order to obtain longer term financing with a more flexible covenant package, Sotheby's and certain of its wholly-owned subsidiaries (collectively the "Borrowers"), entered into a Credit Agreement (the "Credit Agreement") with General Electric Capital Corporation ("GE Capital"), as Agent, GE Capital Markets, Inc. and HSBC Bank PLC as Joint Lead Arrangers and Joint Bookrunners, and the lenders named therein (collectively, the "Lenders"). In connection with the entry into the Credit Agreement, Sotheby's terminated its senior secured revolving credit facility agented by Bank of America, N.A. (the "BofA Credit Agreement"), as discussed in Item 1.02 below.

The following summary does not purport to be a complete summary of the Credit Agreement and is qualified in its entirety by reference to the Credit Agreement, a copy of which is filed herewith as Exhibit 10.1 and is incorporated by reference herein. Terms used, but not defined, in this Form 8-K have the meanings set forth in the Credit Agreement.

The Credit Agreement provides for a $200 million revolving credit facility to the Borrowers (the "Revolving Credit Facility"), with a sublimit of $50 million for borrowings by the U.K. Borrowers (as defined below). Borrowings under the Revolving Credit Facility may be used for general corporate purposes, including working capital and capital expenditures, and may be made from time to time until maturity on August 31, 2012. Up to $10 million of the Revolving Credit Facility may be used to issue letters of credit. Borrowings under the Revolving Credit Facility are limited by a borrowing base, which is equal to 85% of Eligible Art Loans (as defined below), plus 30% of Eligible Art Inventory (as defined below, but subject to a maximum amount of $50 million), plus 15% of Consolidated Net Tangible Assets (as defined below, but subject to a maximum balance of $20 million), subject to certain reserves. As of August 31, 2009, the borrowing capacity under the Credit Agreement was $136 million, as calculated under the borrowing base.

Borrowings under the Revolving Credit Facility are available in either Dollars (to Borrowers located in the United States ("U.S. Borrowers")) or Pounds Sterling (to Borrowers located in England ("U.K. Borrowers")). Borrowings shall, at the Borrowers' option, be either Dollar Index Rate Loans (for U.S. Borrowers only) or LIBOR Loans. Dollar Index Rate Loans bear interest from the applicable borrowing date at a rate per annum equal to (a) the highest of (i) the "Prime Rate" as quoted in The Wall Street Journal, (ii) the Federal Funds Rate plus 3%, or (iii) the LIBOR Rate plus 1.0%, plus (b) the Applicable Margin, as defined in the Credit Agreement and which is generally 3.0% to 3.5% based upon the level of outstanding borrowings under the Revolving Credit Facility. The LIBOR Rate for Dollars or Sterling, as the case may be, for an Interest Period is equal to (x) the highest of (i) the offered rate for deposits in such currency for a period equal to such Interest Period on the Reuters Screen LIBOR01 Page, (ii) if the Interest Period is less than three months, the offered rate for deposits in such currency on the Reuters Screen for an Interest Period of three months, and (iii) 2%, plus (y) the Applicable Margin, as defined in the Credit Agreement, and which is generally 4.0% to 4.5% based upon the level of outstanding borrowings under the Revolving Credit Facility.

The Borrowers have the right to prepay loans under the Revolving Credit Facility, in whole or in part, at any time prior to maturity. If the Borrowers prepay or terminate the Revolving Credit Facility prior to the second anniversary of the closing, the Borrowers shall pay a fee of 1% if the prepayment occurs prior to the first anniversary or .50% if the prepayment occurs after the first anniversary and prior to the second anniversary. The Credit Agreement also includes certain mandatory prepayment provisions with respect to the Revolving Credit Facility in the event of dispositions of property or other events that result in certain net cash proceeds.

The U.S. Borrowers and, subject to certain limitations, the U.K. Borrowers, are jointly and severally liable for all obligations under the Credit Agreement pursuant to the terms and conditions set forth in the Credit Agreement. In addition, certain subsidiaries of the Borrowers guaranty the obligations of the Borrowers under the Credit Agreement. The obligations under the Credit Agreement are secured by liens on all or substantially all of the personal property of the Borrowers and the guarantors.

On August 31, 2009, in connection with the execution of the Credit Agreement discussed in Item 1.01 above, Sotheby's terminated the BofA Credit Agreement. The BofA Credit Agreement provided for borrowings of up to $150 million and was available through September 7, 2010.

As a result of the termination of the BofA Credit Agreement, in the third quarter of 2009, Sotheby's expensed approximately $2.6 million in fees related to the BofA Credit Agreement, which were previously

The disclosure set forth under Item 1.01 above is incorporated herein by reference.

On September 1, 2009, Sotheby's issued a press release with respect to its entry into the Credit Agreement. A copy of the press release is furnished as Exhibit 99.1 hereto.

(d) Exhibits

 Exhibit     Description of Exhibit
 No.
 10.1        Credit Agreement, dated as of August 31, 2009, among Sotheby's, certain of its subsidiaries,
             General Electric Capital Corporation, as Agent and Lender, and the other lenders party thereto

 99.1        Press Release of Sotheby's, dated September 1, 2009.

FORWARD LOOKING STATEMENTS

This Form 8-K contains certain forward looking statements; as such term is defined in Section 21E of the Securities Exchange Act of 1934, as amended, relating to future events and the financial performance of Sotheby's. 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.