SOTHEBY'S

SOTHEBY'S HOLDINGS, INC.
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
TO BE HELD MAY 8, 2006

To the Shareholders of
       SOTHEBY'S HOLDINGS, INC.

       The Annual Meeting of Shareholders of SOTHEBY'S HOLDINGS, INC. (the “Company”) will be held on Monday, May 8, 2006, at the offices of Sotheby's, Inc., 1334 York Avenue, New York, New York, at 10:30 a.m., local time, for the following purposes:

       The Board of Directors has fixed the close of business on March 24, 2006 as the record date for determining the shareholders that are entitled to notice of, and to vote at, the annual meeting or any adjournment or postponement thereof.

Bloomfield Hills, Michigan
April 12, 2006

       SHAREHOLDERS WHO DO NOT INTEND TO ATTEND THE MEETING IN PERSON ARE REQUESTED TO SIGN AND DATE THE ENCLOSED PROXY AND TO RETURN IT IN THE ACCOMPANYING ENVELOPE OR TO VOTE BY TELEPHONE OR BY INTERNET IN ACCORDANCE WITH THE INSTRUCTIONS ON THE PROXY CARD. ANY PROXY MAY BE REVOKED IN THE MANNER DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT AT ANY TIME BEFORE IT HAS BEEN VOTED AT THE MEETING.

SOTHEBY'S HOLDINGS, INC.
38500 Woodward Avenue
Suite 100
Bloomfield Hills, Michigan 48304

PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 8, 2006
ANNUAL MEETING AND RELATED INFORMATION

What is the purpose of the Annual Meeting?

       At the Sotheby's Holdings, Inc. (the “Company”) 2006 Annual Meeting of Shareholders (including any adjournment or postponement, the “Meeting”), shareholders will consider and vote upon:

Why am I receiving this Proxy Statement?

       This Proxy Statement is furnished in connection with the solicitation of proxies by and on behalf of the Board of Directors of the Company, for use at the Meeting to be held, for the purposes set forth in the accompanying Notice of Annual Meeting, on Monday, May 8, 2006, at the office of Sotheby's, Inc., 1334 York Avenue, New York, New York, at 10:30 a.m., local time. The Company expects to first mail this Proxy Statement and the accompanying materials on or about April 12, 2006.

Who is entitled to vote?

       Shareholders of record of the Company's Class A Common Stock as of the close of business on March 24, 2006 (the “Record Date”). At the close of business on the Record Date, 59,733,442 shares of Class A Stock were outstanding. Each share of Class A Common Stock is entitled to one vote on each matter to be considered at the Meeting.

How has the Company's 2005 recapitalization transaction affected who is entitled to vote?

       The Company entered into a transaction (the “Recapitalization”) with affiliates of A. Alfred Taubman and his family (collectively, the “Shareholders”), which includes Robert S. Taubman, a Company director and the son of A. Alfred Taubman, in which all shares of the Company's Class B Common Stock (the “Class B Common Stock”) held by the Shareholders were either purchased by the Company for cash or converted into shares of the Company's Class A Common Stock. Upon completion of the Recapitalization, the remaining outstanding shares of the Class B Common Stock constituted less than fifty percent of the aggregate voting power of the Company's outstanding capital stock. As a result, pursuant to the Company's Third Amended and Restated Articles of Incorporation, each remaining outstanding share of Class B Common Stock was automatically converted into one share of Class A Common Stock without any action on the part of the holder thereof. For further discussion regarding the Recapitalization, see “Certain Transactions” below.

       As a result of the Recapitalization, no shares of the Company's Class B Common Stock remain issued and outstanding, and the dual-class, super-voting share structure of the Company was effectively eliminated. Consequently, the only shares outstanding of the Company are shares of its Class A Common Stock.

How do I vote my shares?

       You may vote your shares of Class A Common Stock by completing the accompanying proxy card and returning it in the enclosed envelope. In addition, you may vote by telephone or via the Internet pursuant to the instructions contained in the proxy card.

What is the effect of my completing and returning the proxy card?

       A valid proxy from a shareholder will be voted as specified in each proxy card at the Meeting. Any shareholder giving a proxy in the proxy card provided or by telephone or the Internet, pursuant to instructions contained in that card, retains the power to revoke the proxy by written notice to the Company at any time prior to its exercise.

How will my shares be voted by the proxies?

       Unless a shareholder provides contrary instructions on the proxy card, all shares of Class A Common Stock represented by valid proxy cards received pursuant to this solicitation (and not revoked before they are voted) will be voted FOR Proposals 1, 2, 3, 4, 5 and 6. The Company knows of no business other than that set forth above to be transacted at the Meeting, but if other matters requiring a vote do arise, it is the intention of Michael I. Sovern and William F. Ruprecht, the persons named in the proxy card and to whom you are granting your proxy, to vote in accordance with their judgment on such matters.

Can I vote in person at the Meeting?

       Yes. Please note, however, that attendance at the Meeting alone will not result in the revocation of your proxy unless you affirmatively indicate at the Meeting that you intend to vote your shares in person.

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What constitutes a “quorum” for the transaction of business at the Meeting?

       The holders of the number of shares possessing a majority of the voting power of all shares entitled to vote at the Meeting, present in person or by proxy, constitutes a quorum for the Meeting.

How many votes are needed to approve a Proposal?

       For Proposal 1, the election of directors, a plurality of the votes cast at the Meeting is required to elect each of the nominees for director. Proposal 2 requires the affirmative vote of the holders of a majority of the outstanding shares of Class A Common Stock entitled to vote. The approval of Proposals 3, 4, 5 and 6 each requires the affirmative vote of a majority of the votes cast by the shareholders present in person or by proxy and entitled to vote.

The approval of Proposal 2, concerning the reincorporation of the Company in Delaware, Proposal 3, concerning actions by shareholders by written consent, and Proposal 4, concerning the calling of special meetings of shareholders, are each conditioned upon the approval of the others. Consequently, a vote against one or more of Proposals 2, 3 and 4 will have the effect of a vote against the other linked proposals.

       Abstentions and broker non-votes (where a broker or nominee is not permitted to vote on a matter without specific instructions from the beneficial owner) are not counted as votes cast on any matter to which they relate, but are counted in determining the presence of a quorum. Proposal 1, the election of directors, is considered a routine matter for which brokers may vote without specific instructions from the beneficial owner. Proposals 2, 3, 4 and 5 are not considered routine matters; accordingly, brokers may not vote on those proposals without such specific instructions. Proposal 6 is considered a routine matter for which brokers may vote without specific instructions from the beneficial owner.

       Abstentions and broker non-votes have no effect on the outcome of Proposal 1 or Proposal 6, but do have the effect of negative votes with respect to Proposals 2, 3, 4 and 5.

Who is paying the costs of this proxy solicitation?

       The Company is paying the costs of this proxy solicitation. The Company has retained Mackenzie Partners, Inc. to assist in the solicitation of votes for a fee of approximately $12,500, plus transaction fees and reimbursement of out-of-pocket expenses. Following the mailing of proxy solicitation materials, proxies may be solicited by directors, officers and employees of the Company and its subsidiaries personally, by telephone or otherwise. Such persons will not receive any fees or other compensation for such solicitation. In addition, the Company will reimburse brokers, custodians, nominees and other persons holding shares of Common Stock for others for their reasonable expenses in sending proxy materials to the beneficial owners of such shares and in obtaining their proxies.

ANNUAL REPORT

       The Annual Report on Form 10-K of the Company for the year ended December 31, 2005, which includes financial statements audited by Deloitte & Touche LLP, independent auditors, and their report thereon dated March 16, 2006 is being mailed with this Proxy Statement to each of the Company's shareholders of record at the close of business on March 24, 2006. ALSO, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2005, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WILL BE SENT TO ANY SHAREHOLDER, WITHOUT CHARGE, UPON WRITTEN REQUEST TO INVESTOR RELATIONS, 1334 YORK AVENUE, NEW YORK, NEW YORK 10021, WITHIN ONE BUSINESS DAY OF THE RECEIPT OF SUCH REQUEST.

PROPOSAL 1—ELECTION OF DIRECTORS

       The Nominating and Corporate Governance Committee of the Board of Directors has recommended to the Board, and the Board has nominated, nine incumbent directors to be elected at the Meeting. The remaining incumbent director, Jeffrey H. Miro, is not standing for reelection to the Board. The Company's shareholders elect directors by a plurality of the votes cast at the Meeting.

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Directors serve until the next annual meeting and until their respective successors have been elected and qualified.

       The shares of Class A Common Stock represented by the enclosed Proxy, if given and unless otherwise specified, will be voted by the persons named as proxies for the election of the following nine individuals nominated by the Board of Directors. The principal occupation and certain other biographical information regarding each nominee are also set forth below.

       Lord Blakenham became a director of the Company in 1987. >From 1983 to 1997, he was Executive Chairman of Pearson plc, a British media company serving worldwide information, education and entertainment markets, and served as the non-executive Chairman of MEPC plc, a commercial real estate investment and development company, from 1993 to 1998. Lord Blakenham is currently a director of LaFarge SA and from 2001 to 2005 was the President of the British Trust for Ornithology. From 1997 to 2003, he served as Chairman of the Board of Trustees of the Royal Botanical Gardens, Kew and has also served as Chairman of Japan 2001, a Japanese cultural festival, and as a director of the UK-Japan 21st Century Group.

       Mr. Dodge became a director of the Company in August 2000 and is the principal of a private real estate development company, Windover Development LLC. Until February 2004, he served as the Chairman of the Board of Directors of American Tower Corporation, an owner and operator of broadcast and communications towers throughout the United States, and as President and Chief Executive Officer of that company until October 2003. Mr. Dodge had served in those positions since that company's formation in July 1995. He also serves as a director of Nextel Partners, Inc., a wireless telecommunications company. Until November 2002, Mr. Dodge served as a director of Citizens Financial Group, Inc., a financial services holding company.

       The Duke of Devonshire, formerly the Marquess of Hartington, became a director of the Company in September 1994 and assumed the role of Deputy Chairman of the Company in April 1996. He serves as a director of a number of private companies.

       Mr. Questrom became a director of the Company in December 2004. From 2000 to December 2004, he was the Chairman and Chief Executive Officer of J.C. Penney Company. Between May 1999 and January 2001, Mr. Questrom served as Chairman of the Board of Barneys New York, Inc., a fashion retailer, and between May 1999 and September 2000, as Chief Executive Officer and President of that company. He also is a principal of AEA Investors, Inc., a partner in Mellon Ventures and a director of the National Retail Federation. Previously, Mr. Questrom was Chairman and Chief Executive Officer of Neiman Marcus and also has served as Chairman and Chief Executive Officer of Federated Department Stores, Inc.

       Mr. Ruprecht became a director and the President and Chief Executive Officer of the Company in February 2000 and served as Executive Vice President of the Company and Managing Director of Sotheby's North and South America from February 1994 until February 2000. From 1992 to February 1994, he served as Director of Marketing for the Company worldwide and also oversaw a number of specialist departments. From 1986 to 1992, Mr. Ruprecht served as Director of Marketing for Sotheby's, Inc.

       Mr. Sovern became a director and Chairman of the Board of the Company in February 2000 and is President Emeritus and the Chancellor Kent Professor of Law of Columbia University. Since 1960, he

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has been a professor of law at Columbia University and served as the President of Columbia University from 1980 until 1993. Mr. Sovern is a member of the Board of Directors of Comcast Corporation and Sequa Corp. He also has served as the President of the Shubert Foundation since 1996 and serves as the Honorary Chairman of the Japan Society and Chairman Emeritus of the American Academy in Rome.

       Mr. Stewart became a director of the Company in April 2003. He is Visiting Professor, Harris School of Public Policy of the University of Chicago and served as the President and Chief Executive Officer of The Chicago Community Trust from 2000 until July 2004 and as President of that organization until 2005. From 1999 to 2000, Mr. Stewart served as Senior Program Officer and Special Advisor to the President, Carnegie Corporation of New York and from 1987 to 1999, he was the President of The College Board, the association of high schools and colleges. He served as President and Chief Executive Officer of Spelman College from 1976 to 1987. Mr. Stewart was also a director of The New York Times Company and The Campbell Soup Company.

       Mr. Taubman became a director of the Company in August 2000. He is chairman, president and chief executive officer of Taubman Centers, Inc. Mr. Taubman joined the Taubman organization in 1976, was elected executive vice president in 1984, chief operating officer in 1988, president and chief executive officer in 1990 and chairman in 2001. He has headed Taubman Centers and served on its board of directors since the company's initial public offering in 1992. Mr. Taubman is a member of the board of directors of Comerica Incorporated. He serves as a director of the Real Estate Roundtable in Washington, D.C., as a trustee of the Urban Land Institute (ULI) and on the Board of Governors of the National Association of Real Estate Investment Trusts (NAREIT). Mr. Taubman is immediate past chairman of ULI's Detroit Regional District Council and a member and past trustee of the International Council of Shopping Centers.

       Mr. Woodhead became a director of the Company in February 2000. He was appointed Executive Vice President of the Company and Chief Executive of Sotheby's Europe in December 1998 and in 1999 also became Chief Executive of Sotheby's Asia. He was Co-Managing Director, Sotheby's Europe from January until December 1998. From 1992 until 1997, he was the Chief Executive of the London Commodity Exchange.

       It is not contemplated that any of the nominees will be unable or unwilling to serve; however, if any nominee is unable or unwilling to serve, it is intended that the shares represented by the Proxy, if given and unless otherwise specified therein, will be voted for a substitute nominee or nominees designated by the Board of Directors.

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MANAGEMENT

Executive Officers

       Officers of the Company are appointed by the Board of Directors and serve at the discretion of the Board of Directors. The executive officers of the Company (including certain officers of certain principal subsidiaries and divisions) are listed below, as is biographical information for each person, unless that person has been nominated for a director position, in which case such executive officer's biography is contained under the caption “Proposal 1—Election of Directors”:

       Ms. Alexander was appointed Executive Vice President and Worldwide Head of Human Resources of the Company in October 2004. From January 1986 to October 2004, she served as Senior Vice President and Worldwide Head of Human Resources of the Company and has been employed by the Company since 1984.

       Mr. Bailey became the Managing Director of Sotheby's Europe in 1994. Since 1979, he has served in a number of different executive positions with Sotheby's.

       Mr. Buckley became the Managing Director of Sotheby's North American regional auction business in January 2002. >From 1999 to 2002, he served in various senior executive positions, including as Managing Director of Sothebys.com. Mr. Buckley also served as head of marketing operations for Sotheby's North America from 1996 to 1999, having joined the Company in 1989.

       Ms. Phillips became an Executive Vice President of the Company in October 2004. She became Worldwide Director of Press and Corporate Affairs in 1988 and was promoted to Senior Vice President in 1990. She joined Sotheby's in 1985 as Manger of Corporate Information for Sotheby's North America. Prior to joining Sotheby's, she was with Hill & Knowlton the international public relations firm.

       Mr. Pillsbury was appointed Executive Vice President and Worldwide General Counsel in February 2001. Mr. Pillsbury previously served as Senior Vice President and General Counsel of the Company from January 1998 until February 2001. From 1993 until January 1998, he was Senior Counsel to the law firm Davis Polk & Wardwell; from 1973 until 1993, he was a partner of that firm. Mr. Pillsbury also is a Director of The Chamber Music Society of Lincoln Center and a member of the Distribution Committee of the New York Community Trust.

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       Mr. Sheridan was appointed Executive Vice President and Chief Financial Officer of the Company in February 2001. From November 1996 until February 2001, he served as Senior Vice President and Chief Financial Officer of the Company. Mr. Sheridan also serves as a director of Alliance One.

       Dr. Ulmer became a Senior Vice President and Chief Technology Officer of the Company in January 2000 and served as Senior Vice President of Information Technology of the Company from June 1997 until January 2000. In January 2006, he was given added responsibility for strategic planning, adding the title of Chief Strategy Officer to his existing titles.

       Mr. Wickstrom became the Managing Director of Sotheby's Global Auction Division in January 2002. In 2001, he was appointed Director of Strategic Projects of the Company, having previously served as a Senior Vice President and Associate General Counsel of the Company since 1996.

       Mr. Zuckerman has been President of Sotheby's Financial Services, Inc. since 1988 and Sotheby's Ventures, LLC since 1997.

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CORPORATE GOVERNANCE

Board of Directors Generally

       Board of Directors Meetings and Attendance. The Board of Directors of the Company met seven times during 2005. Each director attended at least 75% of the meetings of the Board and the committees of the Board on which he served during the applicable time period.

       Annual Meeting Attendance by Directors. With respect to the Annual Meeting, the Company expects all Board members to make every effort to attend but also recognizes that unavoidable scheduling conflicts and special individual circumstances need to be taken into account in applying this policy. All of the Board members standing for reelection at the Company's 2005 Annual Meeting of Shareholders attended that meeting.

       Board Sessions of Non-Management Directors. As required by corporate governance rules of The New York Stock Exchange, Inc. (“NYSE”) on which the Company's Class A Common Stock is listed, the non-management directors of the Board of Directors meet at regularly scheduled executive sessions without management. The Board has chosen Mr. Sovern, the Company's Chairman of the Board, to be the chairman of these sessions.

Board Committees

       Audit Committee. The primary purpose of the Audit Committee of the Board of Directors is to assist the Board in fulfilling its responsibility to insure the integrity of the Company's financial reports. In carrying out its purpose, the Committee serves as an independent and objective monitor of the Company's financial reporting process and internal control systems, including the activities of the Company's independent auditor and internal audit function. The Audit Committee met four times during 2005. Its members are Mr. Dodge (Chairman), Lord Blakenham and Mr. Questrom.

       The Company's Board of Directors has determined that all members of the Audit Committee are financially literate under the applicable corporate governance rules of the NYSE. In addition, the Board has determined that Steven B. Dodge meets the definition of “audit committee financial expert” contained in applicable rules of the Securities and Exchange Commission (“SEC”).

       The Audit Committee operates under a charter that conforms to applicable SEC and NYSE rules.

       Compensation Committee. The Compensation Committee undertakes the responsibilities of the Board relating to the compensation of the Company's employees and, in particular, the compensation of the Company's Chief Executive Officer and other executive officers. Its prime responsibilities are to review, evaluate and approve the Company's compensation and other benefit plans, policies and programs. The Compensation Committee met six times during 2005. Its members are Mr. Taubman (Chairman), The Duke of Devonshire, Mr. Miro and Mr. Stewart.

       A Section 162(m) Sub-Committee of the Compensation Committee (the “Section 162(m) Sub-Committee”) also exists and meets as is necessary to oversee and approve certain compensation awards to senior executives in order for the Company to be permitted to deduct such awards as an expense and to comply with certain SEC rules concerning the exemption of employee benefit plan grants from “short swing” trading liability under those rules. Its members are Mr. Taubman and Mr. Stewart.

       The Compensation Committee operates under a charter that conforms to applicable SEC and NYSE rules.

       Executive Committee. The Executive Committee considers and takes certain corporate action in between regularly scheduled meetings of the Board of Directors. This committee took action by unanimous written consent during 2005 on 12 occasions, after briefing of individual committee members by the appropriate executive officers. The members of the Committee also consulted with each other on these occasions by telephone, but did not hold formal meetings during 2005. Its members are Mr. Sovern (Chairman), Mr. Dodge and Mr. Ruprecht.

       Nominating and Corporate Governance Committee. Formed in April 2005, the Nominating and Corporate Governance Committee assists the Board in identifying individuals qualified to become Board members and recommends director nominees to be nominated by the Board to stand for election

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as directors at each annual meeting of shareholders of the Company and to fill vacancies on the Board. Prior to April 2005, the Board has accomplished this through a process guided by its Chairman, Mr. Sovern, and Messrs. Taubman and Ruprecht, in consultation with the company's principal shareholders.

       The Committee is also responsible for recommending to the Board appropriate Corporate Governance Guidelines applicable to the Company. This committee did not meet during 2005, in part because of its existence for only a portion of the year. This committee has already held one meeting during 2006 in connection with nominations for directors to be elected at the Meeting, review of the Company's Corporate Governance Guidelines and other governance matters. Its current members are Mr. Sovern (Chairman) and Mr. Dodge.

       The Nominating and Corporate Governance Committee operates under a charter that conforms to applicable SEC and NYSE rules.

       Special Committee. The Board formed the Special Committee in July 2005 to carefully examine all details of the Recapitalization. The Special Committee consisted of four disinterested directors, Messrs. Sovern, Dodge, Questrom and Stewart. After careful deliberation and negotiation and based on the advice of independent legal and financial advisors retained by this committee, the Special Committee unanimously recommended that the Company's Board of Directors approve the Recapitalization. This committee met ten times during 2005.

Director Independence and Governance Guidelines

       Generally. NYSE corporate governance rules require, among other things, that a majority of a company's directors are “independent” under those rules. The Board of Directors is responsible for determining whether directors are “independent” within these rules. To determine whether a particular director is independent, the Board has examined the various relationships of each director to the Company as required by NYSE rules.

       Categorical Standards. As permitted by these rules, the Board has adopted the following categorical standards to identify immaterial relationships with the Company that would not disqualify a director from being deemed independent:

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       For purposes of the foregoing standards, an “immediate family member” includes a Director's spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law, and anyone (other than domestic employees) who shares the Director's home. When applying the look-back provisions in these standards, individuals who are no longer immediate family members as a result of legal separation or divorce, or those who have died or become incapacitated will not be deemed to be “immediate family members.”

       Board Independence Determinations. Upon reviewing each Director's relationships with the Company, after considering all applicable NYSE rules and the stated categorical standards, the Board of Directors has determined that all directors other than the Duke of Devonshire and Messrs. Ruprecht and Woodhead are independent under NYSE rules and the stated categorical standards. The Duke of Devonshire is not independent because of the annual consulting fee he receives from the Company, and Messrs. Ruprecht and Woodhead are not independent as they are, respectively, the President and Chief Executive Officer and an Executive Vice President of the Company. At its February 2006 meeting, the Board of Directors also reviewed the independence of Robert S. Taubman as a result of his interest in the Recapitalization. Though his interest in this transaction may be viewed as being a direct or indirect material one under SEC rules requiring disclosure (see “Certain Transactions” below), the Board has determined that he continues to be independent under NYSE rules and the stated categorical standards. The NYSE rules focus on the independence of directors from management, and the Board believes that Mr. Taubman's interest in any consideration paid to him and his family in the Recapitalization does not affect his independence from management.

       The Board of Directors determined that each member of the Audit and Nominating and Governance Committees is independent under NYSE rules. Other than the Duke of Devonshire, the Board also determined that each member of the Compensation Committee is independent under NYSE rules. NYSE rules require that each member of the Compensation Committee be independent, with certain exceptions. In connection with the Company's ceasing to be a “controlled company” under NYSE rules as a result of the Recapitalization, the Duke of Devonshire may continue to serve on the Compensation Committee during a transition period lasting through September 6, 2007, even though he is not independent.

Corporate Governance Guidelines

       As required by NYSE rules, the Company has adopted Corporate Governance Guidelines concerning board sessions without management, director education and other matters.

Ethical Conduct

       For many years, the Company has had Compliance Policies applicable to all employees. These cover such issues as ethical conduct, conflicts of interest, maintenance of confidentiality of Company and client information and compliance with laws, including specific policies regarding observing export/import, money laundering, data protection and antitrust laws. The Company has an international Compliance Department led by a Worldwide Compliance Director with responsibility for regularly training all relevant employees about the Company's Compliance Policies, auditing compliance with the Compliance Policies and assisting the Company and its employees in interpreting and enforcing the Compliance Policies. To comply with NYSE rules regarding ethical conduct, the Company has incorporated many of these policies in its Code of Business Conduct and Ethics.

       In lieu of reporting any amendments to or waivers with respect to this Code as they may affect or be granted to the Chief Executive Officer, the Chief Financial Officer and certain other senior financial officers on SEC Form 8-K, the Company will disclose any such amendments or waivers by posting information concerning any amendment or waiver on the Company's website, www.sothebys.com. No such amendments or waivers occurred during 2005.

Availability of Corporate Governance Documents

       Copies of the Audit Committee Charter, Compensation Committee Charter, Nominating and Corporate Governance Committee Charter, Corporate Governance Guidelines, and Code of Business

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Conduct and Ethics are available on the Company's website, www.sothebys.com. In addition, shareholders may obtain a copy of any of these documents by writing to the Company's Investor Relations Department at 1334 York Avenue, New York, New York 10021.

Shareholder Nomination of Director Candidates

       The Company does not have a formal policy with respect to director candidates nominated by shareholders and believes that historically the Board process has been effective in assuring that the Company's Class A Common Stock shareholders have appropriate input into the process of determining nominees for election as Directors who will represent their best interests. Since April 2005, the Board has delegated the function of identifying possible director nominees to its Nominating and Corporate Governance Committee. Prior to April 2005, The Board has accomplished this through a process guided by its Chairman, Mr. Sovern, and Messrs. Taubman and Ruprecht, in consultation with the Company's principal shareholders.

Shareholder Communications with Directors

       Shareholders may communicate with the Board of Directors, including the non-management directors (individually or as a group), by sending written communication to the directors c/o the Company's Worldwide General Counsel, 1334 York Avenue, New York, New York 10021. All such communications will be reviewed by the Worldwide General Counsel, or his designee, to determine which communications will be forwarded to the directors. All communications will be forwarded except those that are solicitations or otherwise relate to improper or irrelevant topics, as determined in the sole discretion of the Worldwide General Counsel or his designee. The Worldwide General Counsel shall maintain copies of all such communications received and forwarded to the Board of Directors and shall report to the Board on the number and nature of communications that were not determined to be forwarded.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

       The following table sets forth certain information regarding the beneficial ownership of the Company's Common Stock as of March 24, 2006, the most recent practicable date for the calculation of the ownership table, by (i) each director of the Company; (ii) the Chief Executive Officer and the other four most highly compensated executive officers of the Company Named; (iii) all executive officers and directors of the Company as a group; and (iv) each stockholder known by the Company to be the beneficial owner of more than 5% of the outstanding shares of Class A Common Stock. In compiling the table, the Company has relied upon information supplied by such persons and upon information contained in SEC filings.

       Under applicable rules of the Securities Exchange Act of 1934 (the “Exchange Act”), a person is deemed to beneficially own shares of Common Stock if that person directly or indirectly has or shares voting power or investment power with respect to those shares. Except as indicated in the footnotes to the table, the individuals and entities named in the table have sole voting and investment power with respect to all shares of Common Stock that they respectively own beneficially.

       Under applicable Exchange Act rules, a person is also deemed to beneficially own shares which the person has the right to acquire within sixty (60) days. For example, if an individual owns options to acquire 1,000 shares of Class A Common Stock and those options are or would be exercisable on or before May 18, 2006, that individual will also be deemed to own those 1,000 shares of Class A Common Stock as of March 20, 2006.

       Each owner of unvested shares of Class A Common Stock (“Restricted Stock”) issued under the Company's 2003 Restricted Stock Plan, as amended (the “Existing Restricted Stock Plan”), whether directly or through the Company's Executive Bonus Plan, has the right to vote those shares and receive dividends, if any, with respect to those shares but does not have the right to sell, or otherwise transfer those shares until vesting has occurred.

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COMPENSATION OF EXECUTIVE OFFICERS

       The following table sets forth all compensation of the Chief Executive Officer and each of the other four most highly compensated executive officers (collectively, the “Named Executive Officers” and, individually, a “Named Executive Officer”) of the Company during each of the last three years.

Summary Compensation Table

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Retirement Plans and Other Compensation

U.K. Pension Plan

       Sotheby's (U.K.) maintains a funded defined benefit pension plan for its employees who are residents of the United Kingdom and were employed by the Company before April 1, 2004. Mr. Bailey and Mr. Woodhead are the only Named Executive Officers who participate in the plan. As of December 31, 2005, Mr. Bailey has twenty-six years and two months of credited service with the Company, and Mr. Woodhead has seven years and eleven months of credited service with the Company.

       Standard pension benefits at normal retirement age (age 65) under the plan for employees contributing 4% of salary are 1/60th of the employee's final pensionable salary for every year of service up to a maximum of 40 years. For participants contributing 2% of salary, the benefits accrue at half the rate indicated above. Benefits are paid monthly commencing at retirement. The compensation covered by the plan is the employee's pensionable earnings (subject to the limitation described below), which includes “Salary,” but excludes “Bonus” and “Other Annual Compensation” disclosed in the Summary Compensation Table.

       The plan also provides for a benefit on death while an employee in the amount of four times the employee's base salary at the time of death plus the refund of the employee's contributions to the plan and provides for a pension of 33¹⁄3% of the employee's base salary at the date of death to be paid to the employee's spouse, or proportionately less if the employee has elected to contribute at the reduced rate.

       The table below sets forth the estimated annual benefits (in pounds sterling) payable upon retirement under the plan assuming the employee contributes at 4% of base salary. Through April 5, 2006, U.K. tax regulations limit the pensionable salary with respect to which pension benefits may be based to a maximum of £102,000, and £105,600 for U.K. tax years 2004-2005 and 2005-2006, respectively for members of the pension plan who became participants after 1989. Under the new tax rules effective April 6, 2006, the benefits provided and associated costs are expected to remain largely unchanged. Sotheby's (U.K.) expects, however, that it may be able to take advantage of some new flexibility in the rules.

Pension Table

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Bonuses

       The Company's officers are eligible to receive incentive bonuses. Bonuses are recommended by management and approved by the Compensation Committee. Actual awards are a function of the Company's after-tax worldwide profit and each individual's performance. Every supervisor conducts an employee review. As part of the review, the supervisor and the employee determine future objectives against which the employee's performance will be measured. In addition, the program allows the Compensation Committee the discretion to address exceptional performance and unusual circumstances. However, bonus payments under the Company's annual incentive plan are limited for senior executives who participate in the Company's Executive Bonus Plan.

       Bonuses paid to senior executives, including the Named Executive Officers, outside of the Executive Bonus Plan are “discretionary” bonuses and are referred to in this Proxy Statement using that term. A discretionary bonus is a bonus that is paid to a Company employee based on prior performance as determined in the Company's discretion rather than being based on objective performance criteria determined in advance by the Compensation Committee or its Section 162(m) Sub-Committee. In contrast, bonuses, whether in cash or restricted stock, paid under the Executive Bonus Plan are based on pre-determined objective performance criteria, such as Company net income levels.

Benefit Equalization Plans

       United States. The total annual contributions by the employee and employer to the Company's Retirement Savings Plan, which is the Company's U.S. qualified defined contribution plan, are subject to certain limitations imposed by the Internal Revenue Code. The Company has an unfunded deferred compensation Benefit Equalization Plan that is available to officers of the rank of senior vice president and above of the Company who are affected by such limitations. Participants may enter into agreements pursuant to which their salaries will be reduced and the Company will maintain accounts on their behalf, in the amount of the difference between the contribution election made in the participant's Benefit Equalization Plan salary reduction agreement and the aggregate amount of contributions actually permitted to be made by the participant under the Company's Retirement Savings Plan.

       Participants may elect to contribute up to 12% of their eligible compensation, and participant contributions are matched by a Company contribution of up to 6% of the participant's eligible compensation. Participants are also eligible to share in Company profit sharing contributions if the Company, in its discretion, makes a profit sharing contribution under the Retirement Saving Plan for that year. With respect to 2005, the Company made such a contribution to each participant's account equal to 3% of the participant's eligible compensation. Benefits under the Benefit Equalization Plan are paid to a participant in a lump sum payment six (6) months following the participant's termination of employment with the Company. Amounts contributed by the Company on behalf of the Named Executive Officers of the Company in 2005 pursuant to benefit equalization agreements have been included in the Summary Compensation Table and are accrued for in the Company's balance sheet.

       United Kingdom. The total benefits that may be provided from the Company's U.K. qualified defined benefit Pension Plan is subject to certain limitations under applicable law for each participant. For Mr. Woodhead, an agreement has been entered into whereby the maximum allowable benefit under the plan will be supplemented so as to provide a total pension of 2.667% of his salary for each year of service, this pension being payable from age 65. The benefits relating to service prior to April 1, 2004 are subject to actuarial adjustment to reflect payment from age 65 rather than age 60, which was the previous normal retirement age for Pension Plan purposes. Under the Company's agreement with Mr. Woodhead, the intention is that one-third of this benefit will be funded by Mr. Woodhead and two-thirds will be funded by the Company. Retirement benefits before or after age 65, and other options that apply, will be as far as possible identical to the normal terms of the U.K. qualified pension plan. The Company maintains a provision on its balance sheet in an amount sufficient to account for the difference between the aggregate value of the benefits under the agreement referred to above that would have accrued in respect of Mr. Woodhead under the U.K. qualified plan in the absence of the limitations mentioned above and the aggregate value of the benefits actually available in respect of Mr. Woodhead within the U.K. qualified plan. The amount contributed by the Company under Mr.

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Woodhead's agreement in 2005 has been included in the Summary Compensation Table and is accrued for in the Company's balance sheet.

Employment Agreements and Related Matters

       A description of certain material terms of agreements or arrangements with Messrs. Bailey, Ruprecht, Sheridan, Woodhead, and Zuckerman follows below.

       William F. Ruprecht. Effective as of April 1, 2006, the Company and Mr. Ruprecht agreed on the terms of his employment for the five-year period ending March 31, 2011. This arrangement supersedes his previous employment agreement. Under the new arrangement Mr. Ruprecht's annual base salary is $700,000. He will also be entitled to receive annual cash bonuses based on his own and the Company's performance in relation to a number of management and other objectives determined each year by the Board of Directors and the Compensation Committee. His annual target bonus will be 1.5 times his base salary, and his bonus will be subject to a cap specified in his terms of employment and is not subject to a floor or minimum payment.

       In an effort to encourage and reward the growth of the Company and the creation of shareholder value, the Company has agreed to grant Mr. Ruprecht a one time award of 300,000 shares of restricted stock that will only vest and create value for Mr. Ruprecht at the end of the third and fifth years of his employment arrangement, and only if certain objective performance and market-based criteria are satisfied. These criteria are based on either a specified compound increase in shareholder value as measured by stock price and dividends, if any, or a specified compound cumulative increase in the Company's net income. As he has in the past three years under his previous employment agreement, Mr. Ruprecht received a 2006 equity award of restricted shares of stock. This award of 78,785 restricted stock shares, which was received on March 31, 2006, had a fair market value equal to $2,050,000 on the date of grant and will vest in equal annual installments over four years. Mr. Ruprecht is no longer eligible to participate in the Company's Executive Bonus Plan, but instead, beginning in 2007, will be entitled to a restricted stock grant in each year, subject to agreed minimum and maximum levels, the value of which will be determined based on the extent to which the performance criteria for the Executive Bonus Plan have been satisfied.

       Mr. Ruprecht's employment arrangement may be terminated at any time by the Company or Mr. Ruprecht prior to the expiration of the five-year term. If his employment is terminated by the Company for Cause or by Mr. Ruprecht without Good Reason, as such terms are defined in his terms of employment, Mr. Ruprecht will be paid only accrued base salary and benefits. If the Company terminates Mr. Ruprecht's employment without Cause or he terminates his employment for Good Reason during the five-year term, he will be entitled to a diminished benefit (as compared to the terms of his prior employment agreement) that includes, among other things, (1) accrued but unpaid salary through the termination date, (2) a cash payment of $3.5 million, (3) the immediate vesting of certain shares of restricted stock held by him pursuant to a formula described in his terms of employment, and (4) health benefits for him and his family for three years following the date of his termination. Mr. Ruprecht may terminate his employment for Good Reason if, among other things, the Company fails to provide the cash compensation or equity compensation described above.

       If Mr. Ruprecht's employment is terminated under certain circumstances following a Change of Control (as defined in his terms of employment), the Company will pay him the compensation and benefits to which he would have been entitled had he been terminated by the Company without Cause, as described above, except that he will receive a $4 million termination payment, not a $3.5 million termination payment. If the Internal Revenue Service determines that any Change of Control or other payment to Mr. Ruprecht is subject to a federal excise tax, he is entitled to receive reimbursement for any such tax obligation on an after-tax basis.

       At or after expiration of the five-year term, if the Company terminates Mr. Ruprecht's employment without Cause or he decides to terminate his employment, he will receive a diminished benefit (as compared to the terms of his prior employment agreement) of, among other things, $2,000,000 in exchange for a covenant not to compete with the Company for 12 months. If, on or before December 31, 2010, the Company has not offered to continue his employment for at least one year with the same

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base salary and bonus opportunity that he is then receiving, but without any obligation by the Company to award him any additional equity compensation, he will forfeit some unvested restricted stock grants from prior years, but will be entitled to the immediate partial vesting of certain shares of restricted stock held by him pursuant to a formula described in his terms of employment.

       Robin G. Woodhead. Mr. Woodhead and the Company entered into an employment agreement, dated October 24, 1997, as supplemented by letters from the Company dated May 16, 2002 and October 16, 2000, and the severance plan agreement, dated September 28, 2000. Certain provisions of a retention bonus agreement between the Company and Mr. Woodhead that has terminated survived such termination, including that he and the Company are each required to provide the other with six months' notice that his employment with the Company will terminate. In partial consideration for payments under the foregoing agreements, he is bound by certain covenants not to compete with the Company in certain jurisdictions and not to solicit employees of the Company or certain of its clients with whom he has had dealings.

       George Bailey. The two-year term of the employment agreement between the Company and Mr. Bailey expired on February 12, 2003. By the agreement's terms, however, the minimum base salary, undertakings and non-compete provisions described below do survive the end of the term. He and the Company are each required to provide the other with six months' notice that his employment with the Company will terminate. In partial consideration for payments under the foregoing agreements, he is bound by certain covenants not to compete with the Company in certain jurisdictions and not to solicit employees of the Company or certain of its clients with whom he has had dealings.

       William S. Sheridan. The employment agreement between the Company and Mr. Sheridan has a three-year term that expires on June 30, 2006, subject to earlier termination by the Company or him under certain conditions. Under this agreement, the Company pays him a minimum annual base salary of $600,000, and he is eligible to receive bonuses. In partial consideration for the foregoing payments, he has agreed to be bound by a covenant not to compete with the Company in certain jurisdictions until the earlier of (i) six months after the end of his employment agreement term or (ii) twelve months after the termination of his employment with the Company. During the applicable non-compete period, he also has agreed not to solicit employees of the Company. The Company and Mr. Sheridan expect in the near future to commence discussions regarding the terms of his employment and compensation after the expiration of his current agreement.

       Mitchell Zuckerman. The two-year term of the employment agreement between the Company and Mr. Zuckerman expired on February 5, 2003. By the agreement's terms, however, the minimum base salary, undertakings and non-compete provisions described below do survive the end of the term. He and the Company are each required to provide the other with six months' notice that his employment with the Company will terminate. In partial consideration for payments under this agreement, he is bound by certain covenants not to compete with the Company in certain jurisdictions and not to solicit employees of the Company or certain of its clients with whom he has had dealings.

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STOCK OPTIONS

       The Company did not make any option grants under the Stock Option Plan to the Named Executive Officers during 2005 or in 2006 with respect to 2005 performance. As described under “Report of Compensation Committee-Philosophy” below, the Company intends for the foreseeable future to favor restricted stock over stock options as a form of equity compensation for senior executives.

Aggregate Option Exercises in 2005 and Year-End Option Values

Equity Compensation Plans

       The following table provides information as of December 31, 2005 with respect to shares of the Company's common stock that may be issued under its existing equity compensation plans, including the Sotheby's Holdings 1987 Stock Option Plan, the Stock Option Plan, the Existing Restricted Stock Plan and the Sotheby's Holdings, Inc. 1998 Stock Compensation Plan for Non-Employee Directors (the “Directors Stock Plan”):

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COMPENSATION OF DIRECTORS

       Through May 5, 2005, each non-employee director generally received a fee of $1,000 for each Board meeting attended by such director, and a fee of $500 ($1,000 for each Executive Committee member) for each committee meeting ($1,000 for the chairman of the committee) attended by such director, in addition to reimbursement of expenses. Members of the Special Committee received a fee of $10,000 and a per meeting fee of $1,000. All of the foregoing fees were paid in cash. Because Mr. Sovern receives his director compensation under his contract, he is not paid customary board or committee fees nor does he receive grants under the Directors Stock Plan; however, he did receive compensation as a member of the Special Committee in the amounts described above.

       Pursuant to the Directors Stock Plan, with respect to Board service through May 5, 2005, each non-employee director (other than Mr. Sovern) received 565 shares of Class A Common Stock and/or deferred stock compensation units equivalent to such shares, if so elected by a director. All deferred stock compensation units will accrue dividend equivalents.

       Effective May 5, 2005, the Board of Directors amended the Directors Stock Plan and the cash compensation of non-employee directors as follows:

REPORT OF THE COMPENSATION COMMITTEE

       The Compensation Committee is responsible to the Board of Directors for advising the Board with respect to compensation matters and employee benefit plans of the Company. In addition to the President and Chief Executive Officer of the Company, William F. Ruprecht, the Company's Named Executive Officers are Robin G. Woodhead, George Bailey, William S. Sheridan, and Mitchell Zuckerman.

       The Section 162(m) Sub-Committee (the “Sub-Committee”) of the Compensation Committee is responsible for approving performance-based cash compensation, restricted stock awards, stock options, and other forms of equity compensation and administering performance criteria with respect to Named Executive Officers under the Company's equity compensation plans. In order to comply with certain SEC rules concerning the exemption of employee benefit plan grants from “short swing” trading liability under those rules, the Sub-Committee also approves equity compensation awards to certain senior executives, including the Chief Executive Officer and the other Named Executive Officers.

       The Compensation Committee has authority to grant restricted stock awards under the Existing Restricted Stock Plan (whether directly through that plan or indirectly through the Executive Bonus Plan) and stock options under the Stock Option Plan to all individuals other than the Named Executive Officers and certain other senior executives. As of December 31, 2005, except for the Directors Stock Plan, none of the members of the Compensation Committee or the Sub-Committee participated in any of the plans administered by the Committee or the Sub-Committee. All references in this report to the “Committee” shall mean the Compensation Committee or the Sub-Committee, as applicable.

       The members of the Compensation Committee consist of Messrs. Taubman (Chairman), Miro and Stewart and the Duke of Devonshire. Other than the Duke of Devonshire, the Board also determined that each member of the Compensation Committee is independent under NYSE rules. NYSE rules require that each member of the Compensation Committee be independent, with certain exceptions. In connection with the Company's ceasing to be a “controlled company” under NYSE rules as a result of the Recapitalization, the Duke of Devonshire may continue to serve on the Compensation Committee during a transition period lasting through September 6, 2007, even though he is not independent.

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       The members of the Section 162(m) Subcommittee consist of Messrs. Stewart and Taubman, each of whom qualifies as an “outside director” and a “non-employee director” as required under Section 162(m) and the rules adopted under Section 16 of the Exchange Act, respectively.

Philosophy

       The Company has a long-standing philosophy of establishing compensation levels that are designed to both attract and retain executives with outstanding leadership ability and experience and be competitive in the market. Compensation for executive officers has been comprised of three major components: salary, cash bonuses and equity-based incentives.

       The Committee considers the following factors in determining an executive officer's total compensation, including equity-based incentives: (i) Company performance, (ii) individual performance and job responsibilities, (iii) historical compensation levels and restricted stock awards and stock option grants by the Company and (iv) recommendations of management.

       The Company's compensation philosophy has evolved towards having a greater proportion of employment compensation be variable and dependent upon the Company's profitability. The adoption of the Executive Bonus Plan by the Company's shareholders in 2005 reflects a significant step in this direction. Moreover, deferred vesting of restricted stock issued under the Existing Restricted Stock Plan and the Executive Bonus Plan is also intended to encourage employee retention.

       As part of this compensation shift, the Company's compensation philosophy has also evolved towards a preference for grants of restricted stock as opposed to stock options as a form of equity compensation.

Annual Compensation

Salary

       The Committee sets base salaries for executives that both reflect the job responsibilities of each individual and are consistent with base salaries paid for competitive positions in the market. With respect to the Named Executive Officers, including the Chief Executive Officer, the Company has consulted from time to time with nationally and internationally recognized independent compensation consulting firms in designing compensation packages for those individuals.

Annual Cash Incentives

       The Company's bonus program for all bonus-eligible employees, including the Chief Executive Officer (“CEO”) and the other Named Executive Officers, is based upon the achievement of both Company and individual objectives. Positions within the Company have been separated into salary grades, with bonus opportunities gradually increased through the grades. Within each grade there is a range of bonus targets. With respect to Named Executive Officers, the bonus targets for 2005 ranged from 48% to 100% of base salaries. Bonus targets are established in the first quarter of each year. At the end of each year, the total amount available for bonuses to be paid to eligible employees is subject to the approval of the Committee. The Committee also must approve the specific bonus amounts awarded to senior management. Targets and bonus opportunities are communicated to employees each year.

       The discretionary bonuses described above are separate from the cash performance bonus component that may be awarded to participants in the Executive Bonus Plan. See “Long Term Compensation” below in this report.

       The Company has an annual employee review process. As part of the review, the supervisor and the employee will determine future objectives against which the employee's performance will be measured. If all objectives are met, the employee can receive up to 100% of the bonus target amount. The employee's receipt of greater than or less than the employee's personal bonus target also depends upon the Company's profitability.

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       In 2005, the Company substantially exceeded its performance goal. This level of performance was reflected in the Company's achieving its highest annual revenues in its history in 2005 and its 2005 income from continuing operations being the highest in 15 years for the Company. In addition, the Named Executive Officers as well as other senior management exceeded their individual performance objectives. As a result of the outstanding performance of each of the Named Executive Officers, the Committee awarded bonuses in excess of each Named Executive Officer's individual performance target.

Long-Term Compensation

       The purpose of the Executive Bonus Plan, the Existing Restricted Stock Plan and the Stock Option Plan is to provide employees with long-term incentives that link their interests with the interests of shareholders. In addition, the vesting schedules of equity awards under each of these plans encourages key employees to continue in the employment of the Company. Stock option and restricted stock grants to the Named Executive Officers are based on each individual's current and expected future contribution to the Company, as well as competitive market practice and related factors listed above.

       The Committee believes that providing senior executives with direct stock ownership in the Company through time vesting of restricted stock is more compatible with the Company's goals of attracting and retaining key personnel than the continued use of stock options.

       In 2005, the Committee also achieved its goal of implementing a performance-based formula for equity compensation as a result of the adoption of the Executive Bonus Plan, 50% of any performance bonuses paid to participants in the Executive Bonus Plan are paid in the form of restricted stock grants while the remaining 50% of such performance bonus is paid in cash to the participants. All restricted stock performance awards under the Executive Bonus Plan are made pursuant to the Existing Restricted Stock Plan.

       Bonuses paid under the Executive Bonus Plan are based on Company net income or other performance criteria established by the Committee, and performance bonuses are payable under the Executive Bonus Plan in each year only if pre-established financial criteria are met. A participant is eligible to receive a performance bonus only if the Company achieves the minimum level of performance under the performance criteria for the applicable year, as determined by the Committee. The amount of each bonus increase depends on the achievement by the Company of certain threshold levels in excess of the base level.

       For 2005, the Committee used Company net income as the criterion in determining whether participants are to receive performance bonuses under the Executive Bonus Plan and has also adopted Company net income as the criterion for such awards with respect to 2006.

       The Company's shift to restricted stock, particularly with objective performance-based criteria, as the favored form of equity compensation for senior executives is reflected in the proposed reduction in shares reserved for issuance under the Stock Option Plan and the increase in shares reserved for issuance under the Amended and Restated Restricted Stock Plan for which the Company is requesting shareholder approval at the Meeting. A summary of the Amended and Restated Restricted Stock Plan is contained under the caption “Proposal 5—Approval of Amended and Restated Restricted Stock Plan.”

       Though the Committee is not presently inclined to utilize the Stock Option Plan in any significant way on an ongoing basis, the Committee may from time to time grant stock options as it deems desirable under the Stock Option Plan in the future.

CEO Compensation

       The Section 162(m) Sub-Committee and the Compensation Committee each meet, independently of the Board, to review the CEO's performance, determine annual and long-term compensation for the CEO, and set the CEO's bonus target. The Company entered into an employment agreement with Mr. Ruprecht in 2003 that expires as of June 30, 2006 (the “2003 Employment Agreement”). The Company recently agreed to a new employment arrangement with Mr. Ruprecht, effective April 1, 2006,

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in connection with his compensation and other employment arrangements for the next five years. For a summary of this arrangement, see “Compensation of Executive Officers—Employment Agreements and Related Matters” above. In entering into the new employment arrangement with Mr. Ruprecht, the Committee engaged a nationally recognized compensation consulting firm to assist it in determining appropriate compensation for him.

       Under the 2003 Employment Agreement, which applied to Mr. Ruprecht's employment during 2005, the Company paid Mr. Ruprecht $650,000 in base salary and the Committee awarded him a discretionary bonus of $975,000. Because the Company exceeded its net income performance target for 2005, in accordance with the Executive Bonus Plan, the Committee granted Mr. Ruprecht 28,059 shares of Class A Common Stock in the form of restricted stock and awarded him a performance-based cash bonus of $568,750. The Company believes that Mr. Ruprecht's individual 2005 performance was outstanding, exceeding his excellent performance in 2004, and deserving of the compensation package paid to him for the following reasons, among others:

       The Committee will continue to retain compensation consultants from time to time to provide it with advice concerning the CEO compensation package as well as comparative data for companies with characteristics similar to the Company. This ongoing input will assist the Section 162(m) Sub-Committee in making reasonable judgments regarding the appropriate level of compensation for Mr. Ruprecht.

Compensation Deductibility

       The Committee has taken into consideration Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), and related regulations as they relate to compensation paid to the Named Executive Officers. In order to preserve the deductibility for federal income tax purposes of certain compensation in excess of $1 million that may be paid to a Named Executive Officer, the applicable requirements of Section 162(m) of the Code (“Section 162(m)”) have been incorporated into the Company's existing equity compensation plans and will be incorporated into the 2006 Restricted Stock Plan. With respect to the Named Executive Officers, the Section 162(m) Sub-Committee establishes equity compensation grants and otherwise takes actions relating to the Named Executive Officers under the Executive Bonus Plan, the Existing Restricted Stock Plan, to the extent that a restricted stock award would be eligible for the described deductibility, and the Stock Option Plan.

       The Company's implementation of the Executive Bonus Plan is in part helpful in this area as it is has already resulted in increased deductibility of certain compensation under Section 162(m) because of the performance formula component of the Executive Bonus Plan for cash bonuses and restricted stock grants to Named Executive Officers. Discretionary bonuses and restricted stock awards that are not subject to objective performance criteria are not deductible under Section 162(m).

The Compensation Committee
Robert S. Taubman, Chairman
The Duke of Devonshire
Jeffrey H. Miro
Donald M. Stewart

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REPORT OF THE AUDIT COMMITTEE

       The audit committee of the Board of Directors of the Company is composed of three independent directors, each of whom meets the criteria for “independence” under applicable rules of the SEC and the NYSE, and operates under a written charter adopted by the Board of Directors. As set forth in its charter, the Audit Committee (among other responsibilities) oversees the Company's financial reporting process on behalf of the Board of Directors. The Company's management is primarily responsible for the Company's internal controls and for preparing the Company's financial statements contained in the Company's public reports. The Company's independent auditor, the registered public accounting firm of Deloitte & Touche LLP, is responsible for expressing opinions on the conformity of the Company's audited consolidated financial statements with U.S. generally accepted accounting principles and on management's assessment of the effectiveness of the Company's internal control over financial reporting. In addition, Deloitte & Touche LLP must express its independent opinion on the effectiveness of the Company's internal controls over financial reporting.

       The Audit Committee has reviewed and discussed with each of management and Deloitte & Touche LLP, as appropriate, the Company's audited consolidated financial statements, management's assessment of the effectiveness of the Company's internal control over financial reporting and, finally, the independent auditor's opinions on, respectively, the Company's audited consolidated financial statements, management's internal control assessment and Deloitte & Touche LLP's separate evaluation of the effectiveness of the Company's internal control over financial reporting. In addition, the Audit Committee has discussed with Deloitte & Touche LLP the matters required to be discussed by Statement on Auditing Standards No. 61, “Communications with Audit Committees.” The Audit Committee has received the written disclosures from Deloitte & Touche LLP required by Independence Standards Board Standard No. 1, “Independence Discussions with Audit Committees,” and has discussed Deloitte & Touche LLP's independence with that firm. The Audit Committee has concluded that Deloitte & Touche is “independent” from both the Company and management within the meaning of applicable requirements of the SEC and the Public Company Accounting Oversight Board.

       Based on the foregoing considerations, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements for the fiscal year ended December 31, 2005 be included in the Company's 2005 Annual Report for filing with the SEC.

       This report is respectfully submitted by the Audit Committee of the Board of Directors.

Steven B. Dodge (Chairman)
Michael Blakenham
Allen Questrom

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PROPOSAL 2—REINCORPORATION OF COMPANY

Introduction

       At the Meeting, shareholders will be asked to vote upon the reincorporation of the Company from Michigan to Delaware. The reincorporation will be accomplished by merging the Company into Sotheby's Delaware, Inc., a newly-formed, wholly-owned subsidiary of the Company that is incorporated in Delaware (the “reincorporation”). This section of the Proxy Statement refers to Sotheby's Holdings, Inc., the Michigan corporation, as “Sotheby's Michigan” or the “Company” and to Sotheby's Delaware, Inc., the Delaware corporation, as “Sotheby's Delaware” or the “surviving corporation.” As part of the reincorporation, the name of the surviving corporation will be changed to “Sotheby's.”

       Prior to the Recapitalization that was completed in September 2005, the Company had a dual-class, super-voting share structure under which the shares of Class B Common Stock carried ten votes per share and were entitled as a class to elect 75% of the members of the Company's Board of Directors. Under this structure, A. Alfred Taubman, his family and affiliates owned approximately 22% of the total shares outstanding but were entitled to cast approximately 62% of the total votes and elect 75% of the members of the Company's Board of Directors. Also, the Company was treated as a “controlled company” exempt from certain of the New York Stock Exchange director independence and other corporate governance requirements. While the Recapitalization resulted in the conversion of all the outstanding shares of Class B Common Stock not repurchased into shares of Class A Common Stock carrying only one vote per share (and thus as a practical matter eliminated the dual-class structure), the Company's Board of Directors believes that it would now be appropriate to permanently eliminate the Class B Common Stock from the Company's authorized capitalization and thereby eliminate the possibility of the future issuance of shares of Class B Common Stock carrying ten votes per share. The proposed reincorporation of the Company in Delaware would accomplish this objective. Accordingly, the Board of Directors believes that reincorporation in Delaware is the natural conclusion to the actions that the Company has been taking over the last year, including the Recapitalization process, to bring its corporate governance in line with contemporary best practices. Reincorporation in Delaware will allow the Company and its shareholders to benefit from what we believe to be the most comprehensive, widely used and extensively interpreted body of state corporate law and a court system that facilitates quick, efficient and informed resolutions of corporate litigation. Delaware is the nationally recognized leader in adopting and implementing comprehensive and flexible corporate law. Approximately one-half of the Fortune 500 companies are incorporated in Delaware.

       The reincorporation will not result in any change in the headquarters, business, or principal facilities of the Company. The Company's management, including all directors and officers, will remain the same after the reincorporation. There will be no new employee benefit plans in connection with the reincorporation and there is no other direct or indirect interest of the current directors or executive officers in the reincorporation. However, the reincorporation will result in certain changes of a legal nature, the most significant of which are described below under the heading “Comparison of Shareholder Rights Before and After the Reincorporation.”

       Sotheby's Delaware was incorporated under the laws of the State of Delaware on March 30, 2006. Sotheby's Delaware is wholly owned by Sotheby's Michigan. The address and phone number of Sotheby's Delaware are the same as the address and phone number of the Company. Immediately prior to the reincorporation, Sotheby's Delaware will have only nominal assets and no liabilities and will not have carried on any business.

The Reincorporation

       Subject to the conditions described below, the reincorporation will be effected pursuant to the merger agreement, a copy of which is attached as Appendix A and which is incorporated into this Proxy Statement by reference. The merger agreement was unanimously approved by the Board of Directors and entered into by the Company and Sotheby's Delaware on March 31, 2006. Upon completion of the reincorporation, the Company will cease to exist as a separate corporate entity and Sotheby's Delaware, as the surviving corporation, will succeed to all of the Company's rights, assets, liabilities and

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obligations. Following the reincorporation, Sotheby's Delaware will continue to operate the business of the Company under the name Sotheby's. The discussion of the reincorporation set forth below is qualified in its entirety by reference to the merger agreement.

       Upon completion of the reincorporation, each issued and outstanding share of Class A Common Stock of Sotheby's Michigan (referred to in this section as “Sotheby's Michigan Common Stock”) would be converted into one share of common stock, par value $0.01 per share, of Sotheby's Delaware (“Sotheby's Delaware Common Stock”). Each stock certificate formerly representing Sotheby's Michigan Common Stock would continue to represent the same number of shares of Sotheby's Delaware Common Stock. If the reincorporation is completed, shareholders would not need to exchange their existing stock certificates of Sotheby's Michigan for stock certificates of Sotheby's Delaware. Shareholders may, however, exchange their certificates if they choose to do so. If the reincorporation is completed, Sotheby's Delaware may decide to issue substitute stock certificates in the future to replace the current certificates that are outstanding. If Sotheby's Delaware decides to do so in the future, it will inform the shareholders at that time.

       Pursuant to the merger agreement, Sotheby's Michigan and Sotheby's Delaware will take all actions that Delaware law and Michigan law require to complete the reincorporation. Sotheby's Delaware will also qualify to do business as a foreign corporation in the states in which Sotheby's Michigan is currently qualified to do business, to the extent necessary.

       The merger agreement provides that the respective obligations of Sotheby's Michigan and Sotheby's Delaware under the merger agreement are subject to the following conditions:

       The NYSE lists Sotheby's Michigan Common Stock under the symbol “BID.” The Company plans to file a listing application with the NYSE for the listing of the common stock of the surviving corporation under the name “Sotheby's” and the existing symbol BID. We expect that the NYSE will approve this application prior to completion of the reincorporation.

       If the reincorporation is completed, all employee benefit plans (including stock option, restricted stock and other equity-based plans) of Sotheby's Michigan would be continued by Sotheby's Delaware, and each stock option, share of restricted stock, and other equity-based award issued and outstanding pursuant to such plans would be converted automatically into a stock option, share of restricted stock, or other equity-based award with respect to the same number of shares of Sotheby's Delaware Common Stock, upon the same terms and subject to the same conditions as set forth in the applicable plan under which the award was granted and in the agreement reflecting the award.

       If the shareholders of the Company approve the reincorporation, the reincorporation merger will be completed as soon as practicable after the Meeting. The merger agreement, however, provides that the Board of Directors of Sotheby's Michigan may abandon the reincorporation merger for any reason, notwithstanding shareholder approval, at any time prior to the effectiveness of the merger. If the shareholders of the Company do not approve the reincorporation, Sotheby's Michigan would continue to operate as a Michigan corporation.

Principal Reasons for the Reincorporation Proposal

       While Sotheby's traces its history back to 1744, the current Michigan corporation was formed on August 26, 1983 in connection with a going-private transaction led by businessman A. Alfred Taubman. The incorporators chose to incorporate in the State of Michigan at that time because the laws of Michigan were suitable for the Company's operations, and because Michigan was where Mr. Taubman's

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business interests were based. In September 2005, the Company effected the Recapitalization in which Mr. Taubman, his family and affiliates exchanged their shares of Class B Common Stock (which carried ten votes per share) for cash and shares of Class A Common Stock (which carry one vote per share), thus effectively eliminating the Company's dual-class, super-voting share structure and the controlling rights of the Class B shareholders. The Board of Directors believes that reincorporation in Delaware is the natural conclusion to the actions that the Company has been taking over the past year, including the Recapitalization process, to bring its corporate governance in line with contemporary best practices. The Board believes that incorporation in Delaware would be more consistent with the interests of its current shareholder base. For many years, Delaware has been the leader in adopting, construing and implementing comprehensive, flexible corporate laws that are responsive to legal and business needs. Delaware has established progressive principles of corporate governance that the Company could draw upon when making business and legal decisions. In addition, an extensive body of case law has developed in Delaware over the years that clarifies the duties of directors and that defines and protects the rights of shareholders under a variety of contexts where other state laws offer little or no guidance. For these reasons, the Company has determined that Delaware law would better suit the current needs of the Company and its shareholders than Michigan law does.

       In general, the Company believes that Delaware provides a more appropriate and flexible corporate and legal environment in which to operate than currently exists in Michigan and that the Company and its shareholders would benefit from such an environment. The Board of Directors of the Company has considered the following benefits available to Delaware corporations in deciding to propose reincorporation in Delaware:

       Additionally, the Board of Directors believes that, as a Delaware corporation, the Company would be better able to continue to attract and retain qualified directors and officers than it would be able to as a Michigan corporation, in part, because many candidates will already be familiar with Delaware corporate law from their past business experience.

Anti-Takeover Implications

       Delaware, like many other states (including Michigan), permits a corporation to include in its certificate of incorporation or by-laws or to otherwise adopt measures that may have the effect of reducing a corporation's vulnerability to unsolicited takeover attempts. Certain provisions of Delaware (and Michigan) law may have a similar effect. The Board of Directors of the Company, however, is not proposing the reincorporation to prevent a change in control of the Company and is not aware of any current attempt by any person to acquire control of the Company or to obtain representation on the Company's Board of Directors. The Board of Directors of the Company has no current plans to take any other action designed to make it more difficult for a third party to acquire control of the Company.

       While the reincorporation is not being undertaken to prevent or make more difficult a change in control of the Company, the reincorporation will not be completed unless the written consent proposal and the special meeting proposal, each set forth below, are adopted, and the adoption of each of these

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proposals could under some circumstances make it more difficult for a third party to acquire the Company without first gaining the approval of the Board of Directors.

No Change in the Board Members, Business, Management, Employee Benefit Plans or Location of Principal Facilities of the Company

       The reincorporation would effect only a change in the legal domicile of the Company and certain other changes of a legal nature, the most significant of which are described in this Proxy Statement. The reincorporation would NOT result in any change in the headquarters, business, management, fiscal year, assets or liabilities, employee benefit plans, or location of the principal facilities of the Company. Assuming that the reincorporation is completed, the directors and officers of Sotheby's Michigan immediately prior to the reincorporation would become the directors and officers of Sotheby's Delaware. All employee benefit plans (including stock option, restricted stock and other equity-based plans) of Sotheby's Michigan would be continued by Sotheby's Delaware, and each stock option, share of restricted stock and other equity-based award issued and outstanding pursuant to such plans would automatically be converted into a stock option, share of restricted stock or other equity-based award with respect to the same number of shares of Sotheby's Delaware, upon the same terms and subject to the same conditions as set forth in the applicable plan under which the award was granted and in the agreement reflecting the award. Approval of the reincorporation proposal would constitute approval of the assumption of these plans by Sotheby's Delaware. Assuming the reincorporation is completed, Sotheby's Delaware would continue other employee benefit arrangements of Sotheby's Michigan upon the terms and subject to the conditions currently in effect.

Comparison of Shareholder Rights Before and After the Reincorporation

       Because of differences between the Michigan Business Corporation Act (the “MBCA”) and the DGCL, as well as differences between the Company's organizational documents before and after the reincorporation, the reincorporation will result in some changes in the rights of the Company's shareholders. Set forth below is a table that summarizes some of the most significant differences in the rights of the shareholders of the Company before and after the reincorporation, as a result of the differences between the MBCA and the DGCL, and the differences between the current Articles of Incorporation of the Company (the “Michigan Articles”) and the By-Laws of the Company (the “Michigan By-Laws”) and the Certificate of Incorporation of Sotheby's Delaware that will be in effect following completion of the reincorporation merger (the “Delaware Certificate”) and the By-Laws of Sotheby's Delaware that will be in effect following completion of the reincorporation merger (the “Delaware By-Laws”). The summary of the differences is significant because if the reincorporation is completed, the Certificate of Incorporation and By-Laws of Sotheby's Delaware in effect immediately prior to the reincorporation merger will become the Certificate of Incorporation and By-Laws of the surviving corporation, except that the name of Sotheby's Delaware will be changed to Sotheby's. The Delaware Certificate and the Delaware By-Laws are attached as Appendix B and C, respectively, and are incorporated herein by reference. All statements in this Proxy Statement concerning such documents are qualified by reference to the complete provisions of the Michigan Articles, the Michigan By-Laws, the Delaware Certificate and the Delaware By-Laws. The table below is not intended to be relied upon as an exhaustive list of all the differences. The description of Sotheby's Michigan in the table below relates only to the Class A Common Stock. The Michigan Articles also authorize Sotheby's Michigan to issue Class B Common Stock (the special rights of which are not described below), but no such shares are currently outstanding. In connection with the Recapitalization, all of the outstanding shares of Class B Common Stock were repurchased or converted into Class A Common Stock. Sotheby's Michigan has no current intention of issuing any additional shares of Class B Common Stock, and if the reincorporation is completed, Sotheby's Delaware will not have the ability to issue such Class B shares.

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No Dissenters' Rights

       Because shares of Sotheby's Michigan Common Stock are listed on the NYSE, Michigan law does not provide for dissenters' rights for holders of Sotheby's Michigan Common Stock in connection with the reincorporation.

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Accounting Treatment of the Reincorporation

       The reincorporation would be accounted for as a reverse merger whereby, for accounting purposes, the Company would be considered the acquiror and the surviving corporation would be treated as the successor to the historical operations of the Company. Accordingly, the historical financial statements of the Company, which the Company previously reported to the SEC on Forms 10-K and 10-Q, among other forms, as of and for all periods through the date of this Proxy Statement, would be treated as the financial statements of the surviving corporation.

Regulatory Approval

       To the Company's knowledge, the only required regulatory or governmental approval or filings necessary in connection with the consummation of the reincorporation merger would be the filing of articles of merger with the Bureau of Commercial Services of the Michigan Department of Labor & Economic Growth and the filing of a certificate of merger with the Secretary of State of Delaware.

Certain Federal Income Tax Consequences

       The Company has been advised by its counsel that, for U.S. federal income tax purposes, no gain or loss would be recognized by the shareholders of the Company as a result of the consummation of the reincorporation merger and no gain or loss would be recognized by Sotheby's Michigan or Sotheby's Delaware. In addition, counsel has advised the Company that each former holder of Sotheby's Michigan Common Stock would have the same basis in the common stock of Sotheby's Delaware received or deemed received by such person pursuant to the reincorporation merger as such holder had in the Sotheby's Michigan Common Stock held by such person immediately prior to the consummation of the reincorporation merger, and such person's holding period with respect to such common stock of Sotheby's Delaware would include the period during which such holder held the corresponding Sotheby's Michigan Common Stock, provided the latter was held by such person as a capital asset immediately prior to the consummation of the reincorporation merger.

       State, local or foreign income tax consequences to shareholders may vary from the U.S. federal income tax consequences described above. SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISERS AS TO THE EFFECT OF THE REINCORPORATION UNDER APPLICABLE FEDERAL, STATE, LOCAL OR FOREIGN INCOME TAX LAWS.

Vote Required for the Reincorporation Proposal

       To approve the proposed merger agreement, Michigan law requires the affirmative vote of the holders of a majority of the outstanding shares of Class A Common Stock entitled to vote. A vote in favor of the reincorporation proposal is a vote to approve the merger agreement and therefore the reincorporation merger. A vote in favor of the reincorporation proposal also effectively constitutes approval of the Certificate of Incorporation of Sotheby's Delaware and the By-Laws of Sotheby's Delaware, subject to approval of the written consent proposal and special meeting proposal described below. If the shareholders approve the merger agreement and the reincorporation is completed, the Delaware Certificate and the Delaware By-Laws in effect immediately prior to the effective date of the reincorporation merger would, respectively, become the Certificate of Incorporation and By-Laws of the surviving corporation. Abstentions and broker “non-votes” are not votes cast affirmatively and consequently will have the effect of votes against the proposal.

       The approval of each of the written consent proposal and the special meeting proposal, each set forth below, is a condition to approval of the reincorporation. Thus, a vote against the written consent proposal or the special meeting proposal would have the effect of a vote against the reincorporation. Conversely, a vote against the reincorporation would have the effect of a vote against the written consent proposal and the special meeting proposal.

Board Recommendation

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE
REINCORPORATION PROPOSAL

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PROPOSAL 3—WRITTEN CONSENT

       Under the MBCA, a corporation's articles of incorporation may provide that any action required or permitted to be taken at an annual or special meeting of the corporation's shareholders may be taken without a meeting, without prior notice to shareholders, and without a shareholder vote, if written consents setting forth the action to be taken are signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take that action if it were taken at a meeting at which all shares entitled to vote on the action were present and voted. The Michigan Articles currently permit shareholder action by written consent under those circumstances.

       Under Delaware law, unless a corporation's certificate of incorporation provides otherwise, any action required or permitted to be taken by the corporation's stockholders may be taken without a meeting or notice to stockholders and without a stockholder vote, if a written consent setting forth the action to be taken is signed by the holders of shares of outstanding stock having the requisite number of votes that would be necessary to authorize such action if it were taken at a meeting of stockholders.

       Prior to the Company's recent Recapitalization, the Company had a dual-class voting structure, which would have made it impractical for anyone to make an unsolicited bid for the Company. Given the elimination of the controlling rights of the Class B shareholders, the Board of Directors believes it is appropriate to ensure that any future proposal to acquire the Company is subject to normal rules of corporate procedure. Accordingly, the Board of Directors proposes to include a provision in the Delaware Certificate and a corresponding provision in the Delaware By-Laws that would eliminate the ability of shareholders to act by written consent without a meeting.

       The written consent proposal, by eliminating the ability to act by written consent, will give all shareholders of the Company an equal opportunity to participate in determining the outcome of any proposed action requiring shareholder approval and will prevent the holders of a majority of the voting stock from using the written consent procedure to take shareholder action without affording all shareholders an opportunity to participate. This proposal will require that shareholder actions be taken only at an annual or special meeting of shareholders in accordance with the advance notice provisions of the Delaware By-Laws. This will ensure that shareholders will have sufficient time to weigh the arguments presented by both sides in connection with any contested shareholder vote. In addition, if the special meeting proposal (Proposal 4, below) is adopted, shareholders will not have the ability to call a special meeting of shareholders of the Company to take corporate action between annual meetings. Accordingly, the written consent proposal in conjunction with the special meeting proposal could have the effect of discouraging, delaying or making more difficult a change in control of the Company. For example, a proposal for the removal of directors for cause could, if the Board of Directors desired, be delayed until the next annual meeting of the Company's shareholders. Although we believe that these provisions are intended to ensure an orderly process of shareholder democracy and may provide for an opportunity to maximize shareholder value in the event of an acquisition proposal by requiring potential acquirers to negotiate with the Company's Board of Directors, these provisions will apply even to unsolicited acquisition proposals that may be considered beneficial by some shareholders.

       For more information about the rights of the Company's shareholders following completion of the reincorporation, see “Comparison of Shareholder Rights Before and After the Reincorporation.” You should also carefully read the full text of the form of Delaware Certificate, which is attached as Appendix B to this Proxy Statement.

No Dissenters' Rights

       Michigan law does not provide for dissenters' rights for holders of Sotheby's Michigan Common Stock in connection with the written consent proposal.

Required Vote

       The affirmative vote of the majority of the votes cast by the holders of shares of Class A Common Stock represented in person or by proxy and entitled to vote at the Meeting, assuming a quorum is present, is required to approve the written consent proposal. Abstentions and broker “non-votes” are not votes cast affirmatively and consequently will have the same effect as votes against the proposal.

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       Approval of the reincorporation is conditioned on approval of the written consent proposal. As a result, a vote against the written consent proposal would have the effect of a vote against the reincorporation. Conversely, approval of the written consent proposal is conditioned on approval of the reincorporation. Thus, a vote against the reincorporation would have the effect of a vote against the written consent proposal.

Board Recommendation

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE WRITTEN CONSENT PROPOSAL

PROPOSAL 4—SPECIAL MEETING

       Michigan law provides that a special meeting of shareholders may be called by the board, or by officers, directors or shareholders as provided in a company's by-laws. The Michigan By-Laws provide that a special meeting of shareholders may only be called by the Chairman of the Board or the President, or pursuant to a resolution of the Board of Directors (i.e., special meetings may not ordinarily be called by shareholders). However, Michigan law provides that upon application of the holders of not less than 10% of all the shares entitled to vote at a meeting, the circuit court, for good cause shown, may order a special meeting of shareholders to be called and held at such time and place, upon such notice and for the transaction of such business as may be designated in the order.

       Delaware law provides that a special meeting of stockholders may be called by the board of directors or by such person or persons as may be authorized by a corporation's certificate of incorporation or by-laws. The Delaware Certificate provides that special meetings may only be called by the Chairman of the Board, the President, the Board of Directors or a committee of the Board of Directors. Because Michigan law would no longer apply following the reincorporation, if the special meeting proposal is adopted, holders of not less than 10% of the shares entitled to vote will no longer be able to petition a court to order a special shareholder meeting (except that, under Delaware law, if there is a failure to hold an annual meeting for 30 days after the designated date (or 13 months after the last annual meeting), the Delaware Court of Chancery may order a meeting to be held upon the application of any stockholder). See also “Comparison of Shareholder Rights Before and After the Reincorporation” for information regarding the ability under Delaware law of stockholders holding at least 10% of the outstanding shares to petition the Court of Chancery to order an election of directors where the remaining number of directors in office is less than a majority of the whole board. The inability for shareholders under normal circumstances to call a special meeting would mean that certain shareholder proposals, such as a proposed amendment to the by-laws or a proposal for the removal of directors, could not be voted on until the next annual meeting of the Company's shareholders, unless the Board agreed to call a special meeting. Prior to the Company's recent Recapitalization, the Company had a dual-class voting structure, which would have made it impractical for anyone to make an unsolicited bid for the Company. Given the elimination of the controlling rights of the Class B shareholders, the Board of Directors believes it is appropriate to ensure that any future proposal to acquire the Company is subject to normal rules of corporate procedure. Accordingly, the Board of Directors did not include a provision in the Delaware Certificate and a corresponding provision in the Delaware By-Laws that would give the shareholders the right to call a special meeting akin to the right available under Michigan law. However, the Board can still call a special meeting of the shareholders if issues arise that require a special shareholder meeting.

       For more information about the rights of the Company's shareholders following completion of the reincorporation, see “Comparison of Shareholder Rights Before and After the Reincorporation.” You should also carefully read the full text of the form of Delaware Certificate, which is attached as Appendix B to this Proxy Statement.

No Dissenters' Rights

       Michigan law does not provide for dissenters' rights for holders of Sotheby's Michigan Common Stock in connection with the special meeting proposal.

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Required Vote

       The affirmative vote of the majority of the votes cast by the holders of shares of Class A Common Stock represented in person or by proxy and entitled to vote at the Meeting, assuming a quorum is present, is required to approve the special meeting proposal. Abstentions and broker “non-votes” are not votes cast affirmatively and consequently will have the same effect as votes against the proposal.

       Approval of the reincorporation is conditioned on approval of the special meeting proposal. As a result, a vote against the special meeting proposal would have the effect of a vote against the reincorporation. Conversely, approval of the special meeting proposal is conditioned on approval of the reincorporation. Thus, a vote against the reincorporation would have the effect of a vote against the special meeting proposal.

Board Recommendation

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE SPECIAL MEETING PROPOSAL.

PROPOSAL 5—APPROVAL OF AMENDED AND RESTATED RESTRICTED STOCK PLAN

Background

       In March 2006, the Board of Directors approved the adoption of the Amended and Restated Restricted Stock Plan, effective May 8, 2006, subject to shareholder approval. The Board believes the Amended and Restated Restricted Stock Plan, which amends and restates the Existing Restricted Stock Plan, is necessary and desirable for several reasons:

Related Reduction in Shares Reserved Under the Stock Option Plan

       Subject to shareholder approval of the Amended and Restated Restricted Stock Plan, the Committee has approved an amendment to the Stock Option Plan to reduce the number of shares reserved for issuance under that Stock Option Plan, by 6,955,500 shares, from 14,900,000 to 7,944,500 shares. The Stock Option Plan amendment is contingent on shareholder approval of the Amended and Restated Restricted Stock Plan in order to further demonstrate the Company's commitment to actual stock ownership in the Company by executives rather than the mere possibility of such ownership that is typical of stock option plans. The Company also believes it is prudent to refrain from requesting increases in authorized shares for issuance under one equity compensation plan without reducing the shares available for issuance under another plan that diverges from the Company's present compensation planning. As a result of substantially reducing the shares available for issuance under the Stock Option Plan, the Company believes that it is taking appropriate action.

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Number of Shares Available for Future Grants Under Plans

       The effect of the Amended and Restated Restricted Stock Plan and the Stock Option Plan amendment on shares reserved for issuance as well as shares available for future grants under each plan is illustrated in the following tables:

Principal Features of the Amended and Restated Restricted Stock Plan

       The following summary describes the principal features of the Amended and Restated Restricted Stock Plan and is qualified in its entirety by reference to this plan, a copy of which is attached to this Proxy Statement as Appendix D.

       Administration. The Amended and Restated Restricted Stock Plan is administered by the Committee (and, with respect to certain matters, the Section 162(m) Sub-Committee), which presently consists of five directors of the Company. The Committee has all powers and discretion necessary and appropriate to administer the Amended and Restated Restricted Stock Plan and to control its operation.

       Eligible Participants. The Committee will select those employees who are eligible to participate in the Amended and Restated Restricted Stock Plan based on recommendation from the Company's management.

       Number of Shares Subject to the Amended and Restated Restricted Stock Plan, Maximum Awards. A total of 6,500,000 shares of Class A Common Stock are reserved for issuance as Restricted Stock pursuant to the Amended and Restated Restricted Stock Plan. A single participant may not be awarded more than 1,000,000 shares of Restricted Stock during any thirty-six month period. Any shares that are forfeited will again be available for awards under the Amended and Restated Restricted Stock Plan. In addition, shares that are withheld in satisfaction of tax withholding obligations are again available for awards under the Amended and Restated Restricted Stock Plan prior to April 29, 2013.

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       Restricted Stock Awards. Shares issued under the Amended and Restated Restricted Stock Plan are considered “restricted” because they are subject to forfeiture and restrictions on transfer prior to vesting. Restricted Stock issued under the Amended and Restated Restricted Stock Plan will be subject to such restrictions and conditions, including time vesting and vesting based on satisfaction of performance criteria, as the Committee may determine. The issuance of Restricted Stock under the Amended and Restated Restricted Stock Plan is evidenced by a written agreement between the Company and the participant. The award agreement specifies the number of shares of Restricted Stock issued, the vesting period, and such other terms and conditions as the Committee, in its discretion, determines.

       Vesting Schedule. Restricted Stock granted under the Amended and Restated Restricted Stock Plan generally vests over a four (4) year period in which 25% of the shares vest on the first, second, third and fourth anniversaries of the date of grant.

       Acceleration of Vesting. The Committee, in its discretion, and subject to Code Section 162(m), may accelerate the vesting of a participant's Restricted Stock awards provided, however, that no acceleration will result in vesting over a period of less than three (3) years unless such acceleration is on account of the participant's death, Disability, Retirement, termination of employment or a Change of Control of the Company (as such terms are defined in the Amended and Restated Restricted Stock Plan).

United States Income Tax Consequences

       General. A participant will not recognize any income for federal income tax purposes at the time the participant is awarded Restricted Stock under the Amended and Restated Restricted Stock Plan. However, upon the lapse of a restriction, i.e., vesting of shares, the participant will realize ordinary income for federal income tax purposes in an amount equal to the then fair market value of the unrestricted shares. The income realized will be subject to tax withholding by the Company either through withholding shares issued upon vesting or by securing from the participant payment in cash. Generally, the Company will be entitled to a federal income tax deduction in the same amount and at the same time as the ordinary income realized by employees upon vesting of the Restricted Stock.

       Section 162(m). Subject to certain exceptions, Code Section 162(m) places a $1 million annual limit on a corporation's tax deduction for compensation paid to a Named Executive Officer. Compensation in excess of $1 million will, however, continue to be tax deductible by a corporation if such compensation satisfies the applicable requirements under Section 162(m) for “performance-based compensation” (the “Performance Exception”). Restricted Stock awards that provide time vesting restrictions do not satisfy the Performance Exception. Restricted Stock awards that provide performance-based criteria may satisfy the Performance Exception and such awards issued to the Named Executive Officers will be approved by the Section 162(m) Sub-Committee.

       The foregoing summary of the effects of United States income taxation upon the employee and the Company with respect to awards under the Amended and Restated Restricted Stock Plan does not purport to be complete, and reference should be made to the applicable provisions of the Code. In addition, this summary does not discuss the provisions of the income tax laws of any municipality, state or foreign country in which the employee may reside.

New Plan Benefits

       Because the criteria for Restricted Stock awards under the Amended and Restated Restricted Stock Plan will be determined in the Committee's or Section 162(m) Sub-Committee's discretion, and because Named Executive Officers receive Restricted Stock awards based on Company performance under the Executive Bonus Plan, the Company is not presently able to determine the Restricted Stock that may be awarded to each Named Executive Officer, all current executive officers as a group, or all employees (including current officers who are not executive officers). Non-employee Directors are not eligible to participate in the Amended and Restated Restricted Stock Plan.

       However, assuming that the Amended and Restated Restricted Stock Plan had been in effect with respect to calendar year 2005, the Company would have awarded (and in fact did award under the Existing Restricted Stock Plan directly and indirectly through the Executive Bonus Plan) the following

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number of shares of restricted stock under the Amended and Restated Restricted Stock Plan directly and under the Executive Bonus Plan indirectly:

Board Recommendation

       The Board of Directors continues to believe that stock-based incentives are important in attracting and retaining the services of outstanding personnel and in encouraging such employees to have greater stock ownership in the Company, thereby aligning their interests closely with those of the shareholders. In order to further the foregoing objectives and to enhance the retentive and incentive impact of outstanding equity compensation awards, the Board believes that it is desirable to adopt the Amended and Restated Restricted Stock Plan.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE
AMENDED AND RESTATED RESTRICTED STOCK PLAN PROPOSAL

Required Approval

       The affirmative vote of a majority of the votes cast at the Meeting by the holders of Class A Common Stock is required for approval of the Amended and Restated Restricted Stock Plan.

PERFORMANCE GRAPH

       The following graph compares the Company's cumulative total shareholder return on its Class A Common Stock (for the five year period from December 31, 2000 to December 31, 2005) with the cumulative return of the Standard & Poor's MidCap 400 Stock Index (“S&P Midcap 400”) and the Company's Peer Group (“Peer Group”). The Peer Group consists of Nordstrom, Inc., Saks Holdings, Inc., Tiffany & Co. and a new addition for this year, Movado, Inc. Movado, Inc. replaces The Neiman-Marcus Group, Inc., which was acquired by private investors in May 2005, as a result of which that company's stock ceased trading publicly.

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       The Company believes the members of this Peer Group to be purveyors of luxury goods appealing to a segment of the population consistent with the Company's own clientele as no other auction house of comparable market share or capitalization is publicly traded.

       The graph reflects an investment of $100 in the Company's Class A Common Stock, the S&P MidCap 400, which includes the Company, and the Company's Peer Group, respectively, on December 31, 2000, and a reinvestment of dividends at the average of the closing stock prices at the beginning and end of each quarter.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

       Section 16(a) of the Exchange Act requires the Company's executive officers and directors, and persons who own more than ten percent of a registered class of the Company's equity securities, to file reports of ownership and changes in ownership of equity securities with the SEC. Officers, directors, and greater than ten percent shareholders are required by the SEC regulation to furnish the Company with copies of all Section 16(a) forms that they file.

       Based solely upon a review of Forms 3 and Forms 4 furnished to the Company pursuant to Rule 16a-3 under the Exchange Act during the Company's most recent fiscal year, and Forms 5 with respect to the Company's most recent fiscal year, the Company believes that all such forms required to

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be filed pursuant to Section 16(a) were timely filed as necessary, by the executive officers, directors and security holders required to file same during the fiscal year ended December 31, 2005.

CERTAIN COMPENSATION ARRANGEMENTS

       The Company is paying Mr. Sovern $310,000 for his seventh year of service as Chairman of the Board and as a director of the Company. This amount is payable in equal monthly installments, but will be paid in full in the event of a change in control of the Company or his being terminated without cause prior to February 21, 2007. See “Compensation of Directors.”

       The Duke of Devonshire, the Deputy Chairman of the Company, provides consulting services to the Company and is paid $117,189 per year for such services.

CERTAIN TRANSACTIONS

       In connection with the Recapitalization, which occurred on September 7, 2005, the Company entered into a Transaction Agreement (the “Agreement”) with various affiliates of A. Alfred Taubman and his family (the “Shareholders”). Prior to completion of the transactions contemplated by the Agreement, the Shareholders were the Company's controlling shareholders, holding in the aggregate 14,034,158 shares of Class B Common Stock, representing approximately 62.4% of the aggregate voting power of the Company's capital stock. Robert S. Taubman, A. Alfred Taubman's son, is a director of the Company.

       Pursuant to the Agreement, the Company agreed to exchange all 14,034,158 shares of Class B Stock owned by the Shareholders for $168,409,896 in cash and 7.1 million shares of the Company's Class A Common Stock. In the Agreement, each Shareholder agreed to a customary standstill lasting until the earlier of the (1) fourth anniversary of the Recapitalization or (2) 30 days after the date on which (a) the Shareholders, together with their affiliates, own, in the aggregate, securities representing less than ten percent of the Company's total outstanding voting power and (b) no affiliate of any Shareholder is a member of the board of directors of the Company (however, if such 30th day would otherwise occur on or before the second anniversary of the Recapitalization, such 30th day would not be deemed to occur until such second anniversary). Under the standstill, each Shareholder agreed, among other things, unless requested by the Company, not to acquire or propose to acquire ownership of or the ability to vote any securities or other property of the Company or any of its subsidiaries. A. Alfred Taubman is either an affiliate of or has an interest in certain of the Shareholders. In addition, Robert S. Taubman is an affiliate of or has a beneficial interest in certain of the Shareholders. Accordingly, each of them may be deemed to have material direct and indirect interests in the consideration paid to the Shareholders in the Recapitalization.

       In addition, a subsidiary of the Company has entered into a contract with the Chatsworth House Trust, of which the Duke of Devonshire, the Deputy Chairman of the Company, is the Chairman, to pay a fee of $180,290 plus a share in any net revenue to conduct an exhibition and sale at Chatsworth during 2006.

       From time to time, officers, directors and principal shareholders of the Company and members of their immediate families purchase or sell property through the Company at public auction or in private transactions in the ordinary course of business.

PROPOSAL 6—RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS

       Deloitte & Touche LLP has been the independent auditors for the Company since 1983. The Audit Committee of the Board of Directors has selected Deloitte & Touche LLP as the independent auditors for 2006. Although shareholder approval of the appointment is not required by law and is not binding on the Audit Committee, the Committee will take the appointment of Deloitte & Touche LLP under advisement if such appointment is not approved by the affirmative vote of a majority of the votes cast at the Meeting.

       The Company expects that representatives of Deloitte & Touche LLP will be present at the Meeting and will be afforded an opportunity to make a statement if they desire to do so. The Company

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also expects such representatives of Deloitte & Touche LLP to be available at that time to respond to appropriate questions addressed to the officer presiding at the Meeting.

Independent Auditors' Fees

       The following table summarizes the aggregate fees billed to Sotheby's Holdings, Inc. by Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates (collectively, the “Deloitte Entities”) for the years ended December 31, 2005 and 2004:

       In considering the nature of the services provided by the Deloitte Entities, the Audit Committee determined that such services are compatible with the provision of independent audit services. The Audit Committee discussed these services with the independent auditor and Company management to determine that they are permitted under the rules and regulations concerning auditor independence promulgated by the SEC to implement the Sarbanes-Oxley Act of 2002, as well as the American Institute of Certified Public Accountants.

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       The Audit Committee has established a policy requiring the pre-approval of all audit and non-audit services provided to the Company by the Deloitte Entities. The policy provides for pre-approval of audit, audit related and tax services specified by the Audit Committee. The Audit Committee may delegate to one or more of its members authority to pre-approve permitted services, consisting of audit services, audit related services and tax services. Any pre-approval decision made by such designated member(s) shall be reported to the Audit Committee at its next regularly scheduled meeting.

Board Recommendation

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE INDEPENDENT AUDITOR RATIFICATION PROPOSAL.

PROPOSALS OF SECURITY HOLDERS

       Any shareholder proposal intended to be included in the Proxy Statement for the annual meeting to be held in 2007 must be received by the Secretary of the Company at 1334 York Avenue, New York, New York 10028 by the close of business on December 13, 2006. If the date of such meeting is changed by more than 30 days from the date such meeting is scheduled to be held, the proposal must be received by the Company at a reasonable time before the solicitation of proxies for such meeting is made. A person may submit only one proposal for inclusion in the proxy materials, and under certain circumstances enumerated in the SEC's rules relating to the solicitation of proxies, the Company may be entitled to omit the proposal and any statement in support thereof (which in the aggregate may not exceed 500 words in length) from its proxy statement and form of proxy.

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APPENDIX A

AGREEMENT AND PLAN OF MERGER

MARCH 31, 2006

between

Sotheby's Holdings, Inc., a Michigan corporation (Sotheby's Michigan)

and

Sotheby's Delaware, Inc., a Delaware corporation (Sotheby's Delaware)

CONTENTS

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER, dated March 31, 2006 (the Agreement), is

BETWEEN

Sotheby's Michigan and Sotheby's Delaware are sometimes hereinafter collectively referred to as the Constituent Corporations.

WHEREAS

NOW THEREFORE, in consideration of the mutual agreements and covenants set forth herein, Sotheby's Michigan and Sotheby's Delaware hereby agree, subject to the terms and conditions hereinafter set forth, as follows:

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[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, Sotheby's Michigan and Sotheby's Delaware have caused this Agreement to be executed as of the day and year first above written by their respective duly authorized officers.

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APPENDIX B

CERTIFICATE OF INCORPORATION
OF
SOTHEBY'S

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APPENDIX C

BY-LAWS OF
SOTHEBY'S

(a Delaware corporation, the “Corporation”)

ARTICLE I
STOCKHOLDERS

       Section 1.1. Annual Meetings. An annual meeting of stockholders shall be held for the election of Directors, and, subject to Section 1.12 of these By-Laws to conduct such other proper business as may be brought before the meeting, at such date, time and place, either within or without the State of Delaware, as may be designated by resolution of the Board of Directors.

       Section 1.2. Special Meetings. Subject to the rights of holders of shares of any class or series of Preferred Stock in respect of meetings of the holders of such shares, special meetings of stockholders for any purpose or purposes may be called at any time by the Chairman of the Board, if any, the President and Chief Executive Officer, the Board of Directors, or by a committee of the Board of Directors that has been duly designated by the Board of Directors and whose powers and authority, as expressly provided in a resolution of the Board of Directors, include the power to call such meetings, but such special meetings may not be called by any other person or persons. Business transacted at any special meeting of stockholders shall be limited to matters relating to the purpose or purposes stated in the notice of such special meeting.

       Section 1.3. Notice of Meetings. Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given in writing or by electronic transmission in accordance with applicable law to each stockholder of record entitled to vote at such meeting. Such notice shall state the place, date and hour of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Unless otherwise provided by law, the Certificate of Incorporation or these By-Laws, the notice of any meeting shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting. If mailed, such notice shall be deemed to be given when deposited in the United States mail, postage prepaid, directed to the stockholder at the address of such stockholder as it appears on the records of the Corporation.

       Section 1.4. Adjournments. Any meeting of stockholders, annual or special, may be adjourned from time to time by the chairman of such meeting, whether or not there is a quorum present at such meeting, to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the Corporation may transact any business that might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

       Section 1.5. Quorum. Except as otherwise provided by law, the Certificate of Incorporation or these By-Laws, at each meeting of stockholders the presence in person or by proxy of the holders of shares of capital stock of the Corporation having a majority of the votes that could be cast by the holders of all outstanding shares of capital stock of the Corporation entitled to vote at the meeting shall be necessary and sufficient to constitute a quorum. In the absence of a quorum, the chairman of such meeting may adjourn the meeting from time to time in the manner provided in Section 1.4 of these By-Laws until a quorum shall attend. Shares of capital stock of the Corporation belonging to the Corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the Corporation, shall neither be entitled to vote nor be counted for purposes of determining whether a quorum is present at any meeting of stockholders; provided, however, that the foregoing shall not limit the right of the Corporation to vote capital stock, including but not limited to its own capital stock, held by it (or any other corporation) in a fiduciary capacity. The stockholders present at a duly called meeting at which a quorum is present may continue

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to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.

       Section 1.6. Organization. Meetings of stockholders shall be presided over by the Chairman of the Board, if any, or in the absence of the Chairman of the Board by the Vice Chairman of the Board, if any, or in the absence of the Vice Chairman of the Board by the President and Chief Executive Officer, or in the absence of the President and Chief Executive Officer by any Vice President, or in the absence of the foregoing persons by a chairman designated by the Board of Directors, or in the absence of such designation by a chairman chosen at the meeting. The Secretary shall act as secretary of the meeting, but the chairman of the meeting may appoint any person to act as secretary of the meeting. The chairman of the meeting shall announce at the meeting of stockholders the date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote.

       Section 1.7. Voting; Proxies. Except as otherwise provided by the Certificate of Incorporation of the Corporation, each stockholder entitled to vote at any meeting of stockholders shall be entitled to one vote for each share of capital stock of the Corporation held by such stockholder that has voting power upon the matter in question. Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for him by proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A stockholder may revoke any proxy that is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or by delivering a proxy in accordance with applicable law bearing a later date to the Secretary of the Corporation. Voting at meetings of stockholders need not be by written ballot and, unless otherwise required by law, need not be conducted by inspectors of election. At all meetings of stockholders for the election of Directors, a plurality of the votes cast shall be sufficient to elect Directors. All other matters considered at a meeting of stockholders shall, unless otherwise provided by law, the Certificate of Incorporation or these By-Laws, be decided by a majority of the votes that could be cast by the holders of all outstanding shares of capital stock of the Corporation entitled to vote thereon that are present in person or by proxy at such meeting (assuming that a quorum is present).

       Section 1.8. Fixing Date for Determination of Stockholders of Record. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of capital stock of the Corporation or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors and which record date: (a) in the case of determination of stockholders entitled to vote at any meeting of stockholders or adjournment thereof, shall, unless otherwise required by law, not be more than sixty (60) nor less than ten (10) days before the date of such meeting; and (b) in the case of any other action, shall not be more than sixty (60) days prior to such other action. If no record date is fixed: (i) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; and (ii) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

       Section 1.9. List of Stockholders Entitled to Vote. The Secretary shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at such meeting, arranged in alphabetical order, and showing the address of each stockholder and the number and class of shares of capital stock of the Corporation registered in the name of each stockholder. Nothing in this Section 1.9 shall require the Corporation to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder for any purpose germane to the meeting for a period of at least ten (10) days prior to

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the meeting: (a) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (b) during ordinary business hours, at the principal place of business of the Corporation. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. Upon the willful neglect or refusal of the Directors to produce such a list at any meeting for the election of Directors held at a place, or to open such a list to examination on a reasonably accessible electronic network during any meeting for the election of directors held solely by means of remote communication, they shall be ineligible for election to any office at such meeting. The stock ledger shall be the only evidence as to which stockholders are entitled to examine the list of stockholders or to vote in person or by proxy at any meeting of stockholders.

       Section 1.10. No Action By Consent of Stockholders. No action required to be taken or that may be taken at an annual or special meeting of stockholders of the Corporation may be taken without a meeting, and the power of stockholders to take action by consent in writing, without a meeting, is expressly denied.

       Section 1.11. Conduct of Meetings. The Board of Directors may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as may be adopted by the Board of Directors, the chairman of any meeting of stockholders shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the chairman of the meeting, may include, without limitation, the following: (a) the establishment of an agenda or order of business for the meeting; (b) rules and procedures for maintaining order at the meeting and the safety of those present; (c) limitations on attendance at or participation in the meeting to stockholders of record, their duly authorized and constituted proxies or such other persons as the chairman of the meeting shall determine; (d) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (e) limitations on the time allotted to questions or comments by participants. Unless and to the extent determined by the Board of Directors or the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

       Section 1.12. Advance Notice of Stockholder Business. At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (b) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (c) otherwise properly brought before the meeting by a stockholder of the Corporation who was a stockholder of record at the time of giving of notice provided for in this Section 1.12. For business to be properly brought before an annual meeting by a stockholder of record, the stockholder must have given timely notice thereof in writing to the Secretary. To be timely, a stockholder's notice must be delivered to, or mailed and received by, the Secretary at the principal executive offices of the Corporation not later than the close of business on the sixtieth (60th) day nor earlier than the close of business on the ninetieth (90th) day prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is more than thirty (30) days before or more than sixty (60) days after such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the ninetieth (90th) day prior to such annual meeting and not later than the close of business on the later of the sixtieth (60th) day prior to such annual meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made by the Corporation. In no event shall the public announcement of an adjournment of an annual meeting commence a new time period for the giving of a stockholder's notice as described above. A

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stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and address, as they appear on the Corporation's books, of the stockholder proposing such business, and, if applicable, the beneficial owner on whose behalf the stockholder is acting, (iii) the class and number of shares of capital stock of the Corporation that are owned of record by the stockholder, and, if applicable, beneficially by the beneficial owner, and (iv) any material interest of the stockholder or, if applicable, the beneficial owner in such business. Notwithstanding anything in these By-Laws to the contrary, no business shall be conducted at any annual meeting except in accordance with the procedures set forth in this Section 1.12. The chairman of the annual meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting and in accordance with the provisions of this Section 1.12, and if the chairman should so determine, the chairman shall so declare to the meeting, and any such business not properly brought before the meeting shall not be transacted.

       Section 1.13. Notice of Stockholder Nominees. Only persons who are nominated in accordance with the procedures set forth in this Section 1.13 shall be eligible for election as Directors. Nominations of persons for election to the Board of Directors may be made at a meeting of stockholders by or at the direction of the Board of Directors or by any stockholder entitled to vote for the election of Directors at the meeting who complies with the notice procedures set forth in this Section 1.13. Such nominations, other than those made by or at the direction of the Board of Directors, shall be made pursuant to timely notice in writing to the Secretary. To be timely, a stockholder's notice shall be delivered to, or mailed and received by, the Secretary at the principal executive offices of the Corporation not later than the close of business on the sixtieth (60th) day nor earlier than the close of business on the ninetieth (90th) day prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is more than thirty (30) days before or more than sixty (60) days after such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the ninetieth (90th) day prior to such annual meeting and not later than the close of business on the later of the sixtieth (60th) day prior to such annual meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made by the Corporation. In no event shall the public announcement of an adjournment of an annual meeting commence a new time period for the giving of a stockholder's notice as described above. Such stockholder's notice to the Secretary shall set forth: (a) as to each person whom the stockholder proposes to nominate for election or reelection as a Director, (i) the name, age, business address and residence address of such person, (ii) the principal occupation or employment of such person, (iii) the class and number of shares of capital stock of the Corporation that are beneficially owned by such person, and (iv) any other information relating to such person that is required to be disclosed in solicitations of proxies for election of Directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including, without limitation, such persons' written consent to being named in the proxy statement as a nominee and to serving as a Director if elected); and (b) as to the stockholder giving the notice (i) the name and address, as they appear on the Corporation's books, of such stockholder and (ii) the class and number of shares of capital stock of the Corporation that are beneficially owned by such stockholder. At the request of the Board of Directors any person nominated by the Board of Directors for election as a Director shall furnish to the Secretary that information required to be set forth in a stockholder's notice of nomination that pertains to the nominee. No person shall be eligible for election as a Director unless nominated in accordance with the procedures set forth in this Section 1.13. The chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the procedures prescribed by these By-Laws, and if the chairman should so determine, the chairman shall so declare to the meeting, and the defective nomination shall be disregarded.

       Section 1.14. Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation's notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which Directors are to be elected pursuant to the Corporation's notice of meeting (a) by or at the direction of the Board of Directors or (b) provided that the Board of

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Directors has determined that Directors shall be elected at such meeting, by any stockholder of the Corporation who is a stockholder of record at the time of giving of notice provided for in this Section 1.14, who shall be entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 1.14. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more Directors to the Board of Directors, any such stockholder may nominate a person or persons (as the case may be), for election to such position(s) as specified in the Corporation's notice of meeting, if the stockholder's notice required by Section 1.13 of these By-Laws shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the ninetieth (90th) day prior to such special meeting and not later than the close of business on the later of the sixtieth (60th) day prior to such special meeting or the tenth (10th) day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement of an adjournment of a special meeting commence a new time period for the giving of a stockholder's notice as described above.

ARTICLE II
BOARD OF DIRECTORS

       Section 2.1. Number; Qualifications. The Board of Directors shall consist of one or more members, the number thereof to be determined from time to time by resolution of the Board of Directors. Directors need not be stockholders. The Board of Directors may, if it so determines, choose a Chairman of the Board and a Vice Chairman of the Board from among its members. No decrease in the number of authorized Directors shall shorten the term of any incumbent Director.

       Section 2.2. Election; Resignation; Vacancies; Removal. The Board of Directors shall initially consist of the persons named as Directors by the incorporator, and each Director so elected shall hold office until such Director's successor is elected and qualified. At the first annual meeting of stockholders and at each annual meeting thereafter, the stockholders shall elect Directors each of whom shall hold office until such Director's successor is elected and qualified. Any Director may resign at any time upon written notice to the Corporation. Any newly created Directorship or any vacancy occurring in the Board of Directors for any cause may be filled solely by a majority of the remaining members of the Board of Directors, although such majority is less than a quorum or by a single remaining Director, and each Director so elected shall hold office until such Director's successor is elected and qualified. Subject to the rights of holders of shares of any class or series of Preferred Stock with respect to such class or series of Preferred Stock, any director, or the entire Board of Directors, may be removed from office at any time, either with or without cause, by the affirmative vote of the holders of a majority of the shares then entitled to vote at an election of Directors.

       Section 2.3. Regular Meetings. Regular meetings of the Board of Directors may be held at such places within or without the State of Delaware and at such times as the Board of Directors may from time to time determine, and, if so determined, notices thereof need not be given.

       Section 2.4. Special Meetings. Special meetings of the Board of Directors may be held at any time or place within or without the State of Delaware whenever called by the Chairman of the Board, the President and Chief Executive Officer, the Secretary, or any other Director. Notice of a special meeting of the Board of Directors shall be given by the person or persons calling the meeting at least twenty-four hours before the special meeting, unless such notice is waived by each Director who is not present for such special meeting.

       Section 2.5. Telephonic Meetings Permitted. Directors, or any member of any committee designated by the Board of Directors, may participate in a meeting thereof by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this By-Law shall constitute presence in person at such meeting.

       Section 2.6. Quorum; Vote Required for Action. At all meetings of the Board of Directors a majority of the whole Board of Directors (including any vacancies) shall constitute a quorum for the transaction of business. Except in cases in which the Certificate of Incorporation or these By-Laws

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otherwise provide, the vote of a majority of the Directors present at a meeting at which a quorum is present shall be the act of the Board of Directors.

       Section 2.7. Organization. Meetings of the Board of Directors shall be presided over by the Chairman of the Board, if any, or in the absence of the Chairman of the Board by the Vice Chairman of the Board, if any, or in the absence of the Vice Chairman of the Board by the President and Chief Executive Officer, or in their absence by a chairman chosen at the meeting. The Secretary shall act as secretary of the meeting, but the chairman of the meeting may appoint any person to act as secretary of the meeting.

       Section 2.8. Informal Action by Directors. Unless otherwise restricted by the Certificate of Incorporation or these By-Laws, any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting if all Directors or members of such committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or paper evidence of the electronic transmission are filed with the minutes of proceedings of the Board of Directors or such committee.

       Section 2.9. Compensation. By resolution of the Board of Directors an annual or other fee as well as a fixed sum and expenses may be allowed for service as a member of the Board of Directors, for attendance by a member of such committee at each annual or special meeting of the Board of Directors and for attendance by a member of such committee at each meeting of any committee designated by the Board of Directors; provided, however, that nothing herein contained shall be construed to preclude any Director from serving the Corporation in any other capacity and receiving compensation therefor.

ARTICLE III
COMMITTEES

       Section 3.1. Committees. The Board of Directors may by resolution designate one or more committees, each committee to consist of one or more of the Directors. The Board of Directors may designate one or more Directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee, to the extent permitted by law and to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers that may require it.

       Section 3.2. Committee Rules. Unless the Board of Directors otherwise provides, each committee designated by the Board of Directors may make, alter and repeal rules for the conduct of its business. In the absence of such rules each committee shall conduct its business in the same manner as the Board of Directors conducts its business pursuant to Article II of these By-Laws.

ARTICLE IV
ADVISORY COMMITTEE

       Section 4.1. Advisory Committee: Constitution and Powers. The President and Chief Executive Officer, in consultation with the Chairman of the Board, if any may designate an advisory committee (to be known as the “Advisory Committee” or “Advisory Board”), the members of which need not be Directors but shall be prominent members of the art or business communities of the world. The Advisory Committee and its members shall advise the Corporation as to matters relating to conditions in the national and international art markets and shall recommend actions that the Corporation may take in respect thereto. The compensation, if any, of the members of the Advisory Committee shall be fixed from time to time by the President and Chief Executive Officer, in consultation with the Chairman of the Board, if any. The Advisory Committee, as such, shall have no rights, powers, duties, authority, or responsibilities in respect of the Corporation or its shareholders but shall be entitled to all of the indemnifications to which a member of the Board of Directors is entitled.

       Section 4.2. Meetings of Advisory Committee. Meetings of the Advisory Committee shall be held at such time(s) and place(s), as shall from time to time be determined by resolution of the Advisory

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Committee or by its chairman, who shall be elected by the Board of Directors or appointed by the President and Chief Executive Officer. In case the day so determined shall be a legal holiday, such meeting shall be held on the next succeeding day, not a legal holiday, at the same hour.

       Section 4.3. Vacancies in Advisory Committee. Any newly created memberships and vacancies occurring in the Advisory Committee may be filled by the President and Chief Executive Officer, in consultation with the Chairman of the Board, if any.

ARTICLE V
OFFICERS

       Section 5.1. Officers; Election; Qualifications; Term of Office; Resignation; Removal; Vacancies. The Board of Directors shall elect a President and Chief Executive Officer and a Secretary. The Board of Directors may also choose a Chairman of the Board, one or more Vice Chairmen of the Board, one or more Vice Presidents (who may be further designated as Executive Vice Presidents or Senior Vice Presidents), one or more Assistant Secretaries, a Chief Financial Officer, a Treasurer and one or more Assistant Treasurers and such other officers as the Board of Directors may from time to time determine. Each such officer shall hold office until the first meeting of the Board of Directors after the annual meeting of stockholders next succeeding his election, and until such officer's successor is elected and qualified or until his earlier resignation or removal. Any officer may resign at any time upon written notice to the Corporation. The Board of Directors may remove any officer with or without cause at any time, but such removal shall be without prejudice to the contractual rights of such officer, if any, with the Corporation. Any number of offices may be held by the same person. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise may be filled for the unexpired portion of the term by the Board of Directors at any regular or special meeting.

       Section 5.2. Powers and Duties of Executive Officers. The officers of the Corporation shall have such powers and duties in the management of the Corporation as may be prescribed in a resolution by the Board of Directors and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the Board of Directors. The Board of Directors may require any officer, agent or employee to give security for the faithful performance of his duties.

ARTICLE VI
STOCK

       Section 6.1. Stock Certificates. Every holder of stock shall be entitled to have a certificate signed by or in the name of the Corporation by the Chairman or Vice Chairman of the Board of Directors, if any, or the President and Chief Executive Officer or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, of the Corporation certifying the number and class of shares of capital stock of the Corporation owned by such stockholder; provided that the Board of Directors may provide by resolution that some or all classes of its capital stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Any of or all the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent, or registrar at the date of issue.

       Section 6.2. Lost, Stolen or Destroyed Stock Certificates; Issuance of New Certificates. The Corporation may issue a new certificate of stock in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or his legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate.

       Section 6.3. Transfer Agents and Registrars. The Board of Directors may appoint, or authorize any officer or officers to appoint, one or more transfer agents and one or more registrars.

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ARTICLE VII
INDEMNIFICATION

       Section 7.1. Right to Indemnification. The Corporation shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it currently exists or may hereafter be amended, any person who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that such person, or a person for whom such person is the legal representative, is or was a Director or officer of the Corporation or, while a Director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or nonprofit entity, including service with respect to employee benefit plans maintained or sponsored by the Corporation (including the heirs, executors, administrators and estate of such person), against all liability and loss suffered and expenses (including attorneys' fees) reasonably incurred by such person in connection with such action, suit or proceeding provided such person shall have acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person's conduct was unlawful. The Corporation shall be required to indemnify a person in connection with a proceeding (or part thereof) initiated by such person only if the proceeding (or part thereof) was authorized by the Board of Directors. The Corporation may, to the extent authorized from time to time by the Board, grant rights to indemnification to any employee or agent of the Corporation to the fullest extent of the provisions of this Article VII with respect to the indemnification of Directors and officers of the Corporation. Without limiting the generality or the effect of the foregoing, the Corporation may enter into one or more agreements with any person that provide for indemnification greater than or different from that provided in this Article VII.

       Section 7.2. Actions by or in the Right of the Corporation. The Corporation shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it currently exists or may hereafter be amended, any person who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that the person is or was a Director or officer of the Corporation, or, while a Director or officer of the Corporation, is or was serving at the request of the Corporation as a director or officer, employee or agent of another corporation, partnership, joint venture, trust, enterprise or nonprofit entity against expenses (including attorneys' fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit provided such person shall have acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the Corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Delaware Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses that the Delaware Court of Chancery or such other court shall deem proper.

       Section 7.3. Prepayment of Expenses. The Corporation shall pay the expenses (including attorneys' fees) of any person entitled to indemnification pursuant to Section 7.1 of these By-Laws or the Certificate of Incorporation of the Corporation incurred in defending any proceeding in advance of its final disposition; provided, however, that the payment of expenses incurred by a Director or officer in advance of the final disposition of the proceeding shall be made only upon receipt of an undertaking by the Director or officer to repay all amounts advanced if it should be ultimately determined that the Director or officer is not entitled to be indemnified under this Article VII or otherwise. The Corporation may, to the extent authorized from time to time by the Board, grant rights to advancement of expenses to any employee or agent of the Corporation to the fullest extent of the provisions of this Article VII with respect to the advancement of expenses of Directors and officers of the Corporation.

       Section 7.4. Claims. If a claim for indemnification or payment of expenses under this Article VII is not paid in full within sixty (60) days after a written claim therefor has been received by the Corporation, the claimant may file suit to recover the unpaid amount of such claim and, if successful in

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whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the Corporation shall have the burden of proving that the claimant was not entitled to the requested indemnification or payment of expenses under applicable law.

       Section 7.5. Non-Exclusivity of Rights. The rights conferred on any person by this Article VII shall not be exclusive of any other rights that such person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, these By-Laws, agreement, vote of stockholders or disinterested Directors or otherwise.

       Section 7.6. Other Indemnification. The Corporation's obligation, if any, to indemnify any person who was or is serving at its request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, enterprise or nonprofit entity shall be reduced by any amount such person may collect as indemnification from such other corporation, partnership, joint venture, trust, enterprise or nonprofit enterprise.

       Section 7.7. Amendment or Repeal. Any repeal or modification of the foregoing provisions of this Article VII shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification.

       Section 7.8. Insurance. The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee, or agent of the corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person's status as such, whether or not the Corporation would have the power to indemnify such person against such liability under the provisions of this Article VII or under the applicable provisions of law.

ARTICLE VIII
MISCELLANEOUS

       Section 8.1. Fiscal Year. The fiscal year of the Corporation shall be determined from time to time by resolution of the Board of Directors.

       Section 8.2. Seal. The corporate seal shall have the name of the Corporation inscribed thereon and shall be in such form as may be approved from time to time by the Board of Directors.

       Section 8.3. Waiver of Notice of Meetings of Stockholders, Directors and Committees. Any written waiver of notice, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at nor the purpose of any regular or special meeting of the stockholders, Directors, or members of a committee of Directors need be specified in any written waiver of notice.

       Section 8.4. Interested Directors; Quorum. No contract or transaction between the Corporation and one or more of its Directors or officers, or between the Corporation and any other corporation, partnership, association, or other organization in which one or more of the Corporation's Directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the Director or officer is present at or participates in the meeting of the Board of Directors or committee thereof that authorizes the contract or transaction, or solely because his or their votes are counted for such purpose, if: (a) the material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested Directors, even though the disinterested Directors be less than a quorum; (b) the material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (c) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified, by the

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Board of Directors, a committee thereof, or the stockholders. Interested Directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee that authorizes the contract or transaction.

       Section 8.5. Form of Records. Any records maintained by the Corporation in the regular course of its business, including its stock ledger, books of account, and minute books, may be kept on, or be in the form of, punch cards, magnetic tape, photographs, microphotographs, or any other information storage device, provided that the records so kept can be converted into clearly legible form within a reasonable time.

       Section 8.6. Amendment of By-Laws. These By-Laws may be altered or repealed, and new By-Laws made, by the Board of Directors, but the stockholders may make additional By-Laws and may alter and repeal any By-Laws whether adopted by them or otherwise.

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APPENDIX D

SOTHEBY'S HOLDINGS, INC.

AMENDED AND RESTATED

RESTRICTED STOCK PLAN

SOTHEBY'S HOLDINGS, INC.
AMENDED AND RESTATED
RESTRICTED STOCK PLAN

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