8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	June 21, 2017
	Date of Report (Date of Earliest Event Reported)
	Sotheby's
(Exact name of registrant as specified in its charter)
Delaware	1-9750	38-2478409
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)
1334 York Avenue
New York, NY		10021
(Address of principal executive offices)		(Zip Code)
	(212) 606-7000
(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry Into a Material Definitive Agreement.

On June 21, 2017, 1334 York, LLC as borrower (the “Borrower”) and Sotheby’s as guarantor entered into a First Amendment to the Loan Agreement and Guaranty of Recourse Carveouts (the “First Amendment”), with HSBC Bank USA, National Association, (“HSBC”) in its capacity as administrative agent (“Agent”) and the lenders named therein (the “Lenders”), which modified the Loan Agreement (as defined below). The Borrower is a separate legal entity of Sotheby's that maintains its own books and records and whose results are ultimately consolidated into Sotheby’s Consolidated Financial Statements.

The First Amendment amends the Loan Agreement, dated as of July 1, 2015, among Borrower, HSBC as Agent and the lenders named therein (the “Loan Agreement”), which provided for a seven-year mortgage loan (the “Loan”) in the amount of $325 million. The Loan is secured by the land and building located at 1334 York Avenue, New York, New York, which is home to Sotheby’s sole North American auction salesroom and principal North American exhibition space, as well as its corporate offices. The Loan Agreement was disclosed in a Current Report on Form 8-K filed by Sotheby’s on July 6, 2015.  Terms used herein, but not defined, have the meanings ascribed to such terms in the Loan Agreement.

The First Amendment, among other things, modifies the Loan Agreement as follows:

• The amount of net worth which Sotheby’s must maintain has been reduced from $425 million to $325 million in order to provide continued flexibility to Sotheby’s regarding potential share repurchases. Sotheby’s net worth as of March 31, 2017 was approximately $490 million.

• The Borrower is partially prepaying the Loan in the amount of $32 million on July 3, 2017, consisting of $25 million from the Borrower’s current cash balances and $7 million from the cash management account (the “Cash Management Account”) for the Loan held in escrow by the Agent for the benefit of the Lenders.

• Thereafter, the Borrower will make annual prepayments on the Loan each July from any excess cash flow that may be in the Cash Management Account, in a total aggregate amount not to exceed $25 million.

The summary set forth herein does not purport to be a complete summary of the First Amendment, and is qualified in its entirety by reference to the First Amendment, a copy of which is filed herewith as Exhibit 10.1 and is incorporated by reference herein.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

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

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits
Exhibit	Description of Exhibit
No.
10.1	First Amendment to Loan Agreement and Guaranty of Recourse Carveouts, dated as of June 21, 2017, among 1334 York, LLC, as Borrower, Sotheby’s, as Guarantor, HSBC Bank USA, National Association, as Agent, and HSBC Bank USA, National Association, Industrial and Commercial Bank of China Limited, New York Branch, ING Capital LLC, Raymond James Bank, N.A., TIAA-CREF Trust Company, FSB, Aozora Bank, LTD. and Midfirst Bank, as Lenders.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

SOTHEBY'S
By:	/s/ David G. Schwartz
	David G. Schwartz
	Senior Vice President,
	Chief Securities Counsel and
	Corporate Secretary
Date:	June 21, 2017

Exhibit Index

Exhibit No.Description

10.1 First Amendment to Loan Agreement and Guaranty of Recourse Carveouts, dated as of June 21, 2017, among 1334 York, LLC, as Borrower, Sotheby’s, as Guarantor, HSBC Bank USA, National Association, as Agent, and HSBC Bank USA, National Association, Industrial and Commercial Bank of China Limited, New York Branch, ING Capital LLC, Raymond James Bank, N.A., TIAA-CREF Trust Company, FSB, Aozora Bank, LTD. and Midfirst Bank, as Lenders.

EX-10.1

HSBC Loan #: 11-4004213

FIRST AMENDMENT TO LOAN AGREEMENTAND GUARANTY OF RECOURSE CARVEOUTS

Dated as of June 21, 2017

Between

1334 YORK, LLC, as Borrower,

and

SOTHEBY’S, as Guarantor

and

HSBC BANK USA, NATIONAL ASSOCIATION,as Agent,

and

THE LENDERS NAMED HEREIN,
as Lenders

Location: 1334 York Avenue, New York New York

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FIRST AMENDMENT TO LOAN AGREEMENTAND GUARANTY OF RECOURSE CARVEOUTS

THIS FIRST AMENDMENT TO LOAN AGREEMENT AND GUARANTY OF RECOURSE CARVEOUTS, dated as of June 21, 2017 (as amended, restated, replaced, supplemented or otherwise modified from time to time, this “First Amendment”), between 1334 YORK, LLC, a Delaware limited liability company(“Borrower”), having an address at 1334 York Avenue, New York, New York 10021, SOTHEBY’S, a Delaware corporation, having an address at 1334 York Avenue, New York, New York 10021 (“Guarantor”), and HSBC BANK USA, NATIONAL ASSOCIATION, a bank organized under the laws of the United States of America, having an address at 452 Fifth Avenue, New York, New York 10018, as administrative agent (including any of its successors and assigns, “Agent”) for itself and the other Lenders signatory hereto (collectively, together with such other co‑lenders as may exist from time to time, “Lenders”).

W I T N E S S E T H :

WHEREAS, Borrower, Agent and Lendersentered into that certain Loan Agreement, dated as of July 1, 2015 (as amended, restated, replaced, supplemented or otherwise modified from time to time the “Loan Agreement”), and Guarantor made that certain Guaranty of Recourse Carveouts for the benefit of Agent for the benefit of Lenders, dated as of July 1, 2015 (as amended, restated, replaced, supplemented or otherwise modified from time to time, the “Guaranty”). Capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in the Loan Agreement; and

WHEREAS, Borrower, Agent and Lenders desire to enter into this First Amendment to amend the Loan Documents as set forth below.

NOW, THEREFORE, in consideration of the covenants set forth in this First Amendment and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the parties hereto hereby agree, represent and warrant as follows:

1.Amendments to Loan Agreement.

(a)Reduction of Net Worth Covenant. The amount of “$425,000,000” in Section 4.1.12(d) of the Loan Agreement is hereby deleted and replaced with “$325,000,000” in such instance in such section.

(b)Reduction of Loan Amount. On or as of July 3, 2017, Borrower shall prepay the Loan in compliance with Section 2.5.1(b) of the Loan Agreement in an amount equal to $32,000,000.00, consisting of (a) a $25,000,000.00 cash payment by Borrower and (b) an application by Agent of $7,000,000.00 projected to be held in the Restricted Account as of July 1, 2017, together with all other costs and expenses as set forth in Section 2.5.1(b) of the Loan Agreement in connection with such prepayment, provided, however, that notwithstanding anything to the contrary set forth

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in the Loan Agreement, the Agent and Lenders agree that Borrower is hereby deemed to have provided notice of all prepayments of the Loan contemplated pursuant to this Section 1(b) of this First Amendment and shall not be required to provide any notice of any additional prepayments of the Loan applied by Lender pursuant to Section 1(c) of this First Amendment.

(c)Commitment to Annual Prepayments. On July 1, 2018 (or if not a Business Day, the next succeeding Business Day) and on July 1 (or, if July 1 is not a Business Day, the next succeeding Business Day) of each subsequent Fiscal Year thereafter (to the extent the Loan shall remain outstanding on any such date) (each such date, the “Pay Down Date”), Agent shall apply to the prepayment of the outstanding principal amount of the Loan any amounts then on deposit in accordance with the requirements of the Loan Documents in the Restricted Account until such time as the Loan has been prepaid by Borrower from any funds on deposit in the Restricted Account in an aggregate amount of up to, but in no event exceeding, $25,000,000.00 on a cumulative basis when taking into account all such payments on each such Pay Down Date.

2.Borrower Representations and Warranties. Borrower hereby represents and warrants as of the date hereof to Agent and the Lenders that:

(a)The outstanding principal balance of the Loan as of the date hereof is $310,957,131.00. The outstanding principal balance of the Loan on July 3, 2017 including after giving effect to the prepayment of the Loan upon the terms set forth in  Section 1(b) above will be $278,301,634.00.

(b)Borrower has no claims, counterclaims, defenses or set-offs with respect to the Loan or the Loan Documents, as modified by this First Amendment.

(c)Each and all representations and warranties of Borrower in the Loan Documents are true and correct on the date hereof (after giving effect to this First Amendment) except to the extent (x) any such representation and warranty is by its terms expressly applicable only as of the Closing Date, including without limitation the representation and warranty with respect to the rent roll attached as Schedule 3.1.21(a) of the Loan Agreement or (y) disclosed to Agent in writing on or prior to the date hereof.

(d)Borrower acknowledges that the initial Amortization Schedule attached to the Loan Agreement as Schedule 2.4.1 remains in full force and effect with respect to the monthly principal payments set forth thereon; provided, however, that (i) the final repayment of the principal balance of the Loan due to Lenders shall be the actual outstanding principal balance of the Loan as of such date after taking into account the aggregate amount of (A) all prepayments of the principal balance of the Loan made by Borrower as of such date and (B) all scheduled payments of principal made by Borrower on each monthly Payment Date in accordance with the Amortization Schedule as of such date and (ii) the amounts set forth in the columns entitled “Starting Principal Balance” and “Ending Principal Balance” on the initial Amortization Schedule shall no longer be applicable and instead, the principal balance of the Loan on any date shall be an amount equal to the principal balance set forth in such columns on the initial Amortization Schedule reduced by the aggregate amount of all prepayments of the principal amount of the Loan made by Borrower as of such date.

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For the avoidance of doubt, Agent and Lenders acknowledge that interest payable on the Loan pursuant to the terms of the Loan Documents at any time while the Loan is outstanding shall be payable on the outstanding principal balance of the Loan on the applicable date of determination in accordance with the terms of Section 2.2.1 of the Loan Agreement.

(e)Agent and Lenders acknowledge and agree that, notwithstanding anything to the contrary set forth in Section 4.1.15 of the Loan Agreement, Borrower is hereby permitted to modify, amend or supplement the terms of any Interest Rate Protection Agreement entered into by Borrower in accordance with the terms of the Loan Documents, if and to the extent required to reflect any principal prepayment of the Loan made by Borrower in accordance with the terms of the Loan Documents, including the principal prepayments of the Loan made in accordance with this First Amendment.

(f)Borrower is validly existing under the laws of the State of Delaware and has the requisite power and authority to execute and deliver this First Amendment and to perform the Loan Documents, as applicable, as amended by this First Amendment. The execution and delivery of this First Amendment and the performance of the Loan Documents, as applicable, as modified by this First Amendment, have been duly authorized by all requisite action by or on behalf of Borrower. This First Amendment has been duly executed and delivered on behalf of Borrower.

(g)No consent, approval, authorization or order of any court or Governmental Authority or other Person is required for the execution, delivery and performance by Borrower of, or compliance by Borrower with, this First Amendment or the other Loan Documents or the consummation of the transactions contemplated hereby and thereby, other than those which have been or will be obtained by Borrower.

3.Amendment to Guaranty. The amount of “$425,000,000” in the definition of “Required Minimum Net Worth” in Section 1.2 of the Guaranty is hereby deleted and replaced with “$325,000,000” in such instance in such section.

4.Reaffirmation of Guaranty and Environmental Indemnity. In connection with this First Amendment, Guarantor hereby:

(a)Consents to and acknowledges this First Amendment and the modifications and transactions contemplated hereby and acknowledges and agrees that neither this First Amendment nor any documents entered into in connection with this First Amendment shall (i) constitute, or be deemed to constitute, a novation, release, waiver or satisfaction of Guarantor’s obligations under the Guaranty, the Environmental Indemnity or any other Loan Documents or (ii) impair, reduce or otherwise affect the nature of the obligations of Guarantor under the Guaranty, except as specifically provided in Section 3 of this First Amendment, or the Environmental Indemnity; and

(b)Acknowledges that the Guaranty, as modified by this First Amendment, and the Environmental Indemnity and the obligations of Guarantor contained therein are hereby ratified and confirmed, are continuing and remain in full force and effect and constitute the valid and legally

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binding obligations of Guarantor, except to the extent modified pursuant to this First Amendment or any amendments to such Loan Documents entered into in connection with this First Amendment.

(c)Acknowledges that this reaffirmation of the Guaranty, as modified by this First Amendment, and the Environmental Indemnity is for the benefit of Agent and the Lenders.

(d)Acknowledges and agrees that its ratifications and reaffirmations set forth in this First Amendment are not required by the Loan Documents and that Agent’s request in this First Amendment or in any other Loan Document that Guarantor ratify and reaffirm the Guaranty, as modified by this First Amendment, and the Environmental Indemnity and the obligations owed thereunder shall not be deemed in any way to create such a requirement or any duty or obligation or otherwise require Agent to obtain any ratifications, reaffirmations, consents or waivers that are not otherwise expressly required under the Guaranty, as modified by this First Amendment, or the Environmental Indemnity.

5.Expenses. Borrower shall pay to Agent and Lenders all reasonable out-of-pocket costs and expenses incurred by Agent and Lenders in connection with this First Amendment (including, without limitation, reasonable attorneys’ fees and disbursements and filing and recording costs).

6.Other References. All references in the Loan Documents to the Loan Agreement shall mean the Loan Agreement, as modified by this First Amendment, as the same may hereafter be supplemented, amended, modified, extended, renewed, restated or replaced from time to time. All references in the Loan Documents to the Guaranty shall mean the Guaranty, as modified by this First Amendment, as the same may hereafter be supplemented, amended, modified, extended, renewed, restated or replaced from time to time.

7.Continued Force and Effect. This First Amendment is not intended to, and shall not be construed to, effect a novation, and except as expressly provided in this First Amendment, neither the Loan Agreement nor any of the other Loan Documents have been modified, amended, cancelled, terminated, released, satisfied, superseded or otherwise invalidated by execution of this First Amendment. In the event of any conflict between the terms of this First Amendment and the terms of the Loan Agreement or any of the other Loan Documents, the terms of this First Amendment shall control.

8.Governing Law. This First Amendment shall be governed by, and construed in accordance with, the laws of the State of New York pursuant to Section 5-1401 of the General Obligations Law without regard to its principles of conflicts of laws.

9.Successors and Assigns. This First Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and permitted assigns.

10.Modifications.No modification, amendment, extension, discharge, termination or waiver of any provision of this First Amendment, shall in any event be effective unless the same shall be in a writing signed by the party against whom enforcement is sought, and then such waiver

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or consent shall be effective only in the specific instance, and for the specific purpose, for which given.

11.Entire Agreement. This First Amendment contains the entire agreement of the parties hereto in respect of the transactions contemplated hereby, and all prior agreements among or between such parties, whether oral or written are superseded by the terms of this First Amendment.

12.Interpretation. Wherever possible, each provision of this First Amendment shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this First Amendment shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this First Amendment.

13.Headings. The Section headings in this First Amendment are included herein for convenience of reference only and shall not constitute a part of this First Amendment for any other purpose.

14.Counterparts. This First Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which, when taken together, shall constitute one and the same instrument and shall become effective when copies hereof, when taken together, bear the signatures of each of the parties hereto and it shall not be necessary in making proof of this instrument to produce or account for original signatures or more than one of such fully executed counterparts. Electronically delivered copies of signature pages hereto shall be deemed to have the same effect as originals thereof.

[SIGNATURE PAGES TO FOLLOW]

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IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be duly executed by their duly authorized representatives, all as of the day and year first above written.

BORROWER:

1334 YORK, LLC

By: /s/Michael L. Gillis    
Name: Michael L. Gillis
Title: VP, Treasurer

WITH RESPECT TO SECTIONS 3 and 4 ONLY:

GUARANTOR:

SOTHEBY’S, a Delaware corporation

By: /s/ Michael Goss    
Name:
Title:

[SIGNATURES CONTINUED ON NEXT PAGE]

AGENT:

HSBC BANK USA, NATIONAL ASSOCIATION, a bank organized under the laws of the United States of America, as Agent

By: /s/Gregory Kinsey    
Name: Gregory Kinsey
Title: Vice President

LENDER:

HSBC BANK USA, NATIONAL ASSOCIATION, a bank organized under the laws of the United States of America

By: /s/Gregory Kinsey    
Name: Gregory Kinsey
Title: Vice President

INDUSTRIAL AND COMMERCIAL BANK OF CHINA LIMITED, NEW YORK BRANCH

By: /s/Jerome Sanzo    
Name: Jerome Sanzo
Title: Executive Director

By: /s/Ran (Vivian) Zhang    
Name: Ran (Vivian) Zhang
Title: Vice President

ING CAPITAL LLC

By: /s/Elizabeth M. Whitworth    
Name: Elizabeth M. Whitworth
Title: Director

By: /s/Victor Sanchez    
Name: Victor Sanchez
Title: Director

RAYMOND JAMES BANK, N.A., a national banking association

By: /s/Douglas S. Marron    
Name: Douglas S. Marron
Title: Senior Vice President

TIAA-CREF TRUST COMPANY, FSB, a federal savings bank

By: /s/Edward E. Randall    
Name: Edward E. Randall
Title: Head of Corporate Lending

AOZORA BANK, LTD.

By:     /s/Atsushi Goto    
Name: Atsushi Goto
Title: General Manager

MIDFIRST BANK, a federally chartered savings association

By: /s/Darrin Rigler
Name: Darrin Rigler
Title: SVP