ART LAW

Chapter 6

The District of Columbia

PRACTICE MANUAL

Copyright © 2013 Janet Fries & Ann M. Garfinkle

All Rights Reserved
 ART LAW

I. INTRODUCTION

This chapter was introduced in 2005 as the first installment of what is anticipated to

become a thorough and complete overview of legal issues regulated by the District of Columbia

that impact artists, art collectors, galleries, and museums. Each year we have updated and added

new sections. Section II addresses issues relating to the sale of work(s) of art by commercial

galleries, cooperative galleries, or other arts organizations, by auction, by street vendors, and at

art fairs. Section III addresses legal protections of ownership rights in work(s) of art. Section IV

addresses sales tax. Section V addresses issues relating to loans of work(s) of art by artists to

museums or other entities. (Issues other than those discussed below would be raised if work(s) of

art were consigned, sold, or loaned by the estate of an artist or by an art collector.) Section VI

addresses issues relating to the gift of work(s) of art to museums or other entities involved with

the arts. Finally, Section VII provides sample forms and provisions. It is anticipated that many

other issues will be considered in future editions of this manual.

II. SALE OF WORKS OF ART

A. Consignment to a Commercial Gallery

Most of the work(s) of art exhibited in the District of Columbia are owned either by the

artists who created them or by collectors, not by the galleries in which they are exhibited.

Typically, an artist or collector retains title to a work of art until such time a purchaser makes

complete payment. With payment in full, title to the physical work of art passes from the artist or

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collector directly to the purchaser, with no ownership rights held at any time by the gallery or

other dealer. The transfer of title is accomplished when the dealer presents a written bill of sale to

the purchaser. The copyright in the work of art remains with the artist and is not transferred to

the purchaser unless it is expressly conveyed in the bill of sale or other written agreement. In

certain instances, the copyright in a work of art may be held by a party other than the seller and

therefore not available for transfer to the purchaser of the work of art.

Even museums that have large permanent collections routinely exhibit works of art to

which they do not hold title. Works of art on display in a museum may be on loan from another

museum, from a private collector, or from the artist who created them. Museums, which often

sell derivative works of art such as catalogs, posters, notecards, and postcards by custom and

professional constraints, do not directly offer original works of art for sale to the public.

Museums enter into loan agreements with the owners of works of art to formalize and document

the terms and conditions governing the exhibition of the works and often granting rights to

reproduce and distribute derivative works of art. See section V.A., infra.

Commercial art galleries, which not only sell derivative works of art but also offer

original works of art for sale to the general public, usually cannot afford to purchase all of the

works that they display, nor would such purchases be customary. Some well-established dealers

may have an inventory of works of art that are owned by the dealer, but typically dealers accept

works on consignment from artists or collectors, and most works of art on display in the District

and elsewhere are offered for sale to the public by dealers acting on behalf of artists, collectors,

or estates of artists or collectors (collectively herein referred to as “Artist”). A dealer that takes

possession of works of art on consignment from an Artist acts as the agent of the Artist. The

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relationship between the Artist and the dealer is a kind of bailment, with the dealer acting in a

role similar to that of a trustee who holds property on behalf of the beneficiary of a trust. When a

work of art is sold by a dealer to a purchaser, the dealer collects the total amount of the price

from the purchaser (sometimes in installments) and then remits payment to the Artist, less the

agreed-upon amount of the dealer’s commission and less other agreed-upon out-of-pocket costs.

The collection and reporting of sales tax is handled by the gallery or dealer.

When the work of art consigned for sale has a value of $500 or more, there should be a

written agreement. D.C. Code § 28:2-201(1). Sample provisions from a consignment agreement

between an Artist and a dealer are appended to this chapter in section VII. See Appendix A. Any

agreement between an Artist and a dealer would need numerous other provisions, including

warranties by both the Artist and the dealer and sections providing for indemnification,

insurance, and delivery of the works of art, as well as describing what copyright licenses, if any,

are being granted to the dealer for purposes of promotion and what rights are reserved by the

Artist.

Since the sale of works of art by auction involves a consignment, the seller would be

prudent to file a UCC-1 financing statement. See section III. B., infra.

B. Sale of Art Through a Cooperative Gallery

Many artists choose to associate themselves with cooperative galleries, either in addition

to an affiliation with a commercial gallery, or as a stepping stone to establishing a commercial

identity.

Artists who participate with cooperative galleries should enter into a written agreement

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documenting the terms and conditions of their arrangements, including the admission of new

members; the procedure for terminating membership; the liability for expenses including rent,

insurance, and utilities; their obligations to staff the gallery; and their opportunities for

exhibition. With regard to liability, typically, member artists are joint and severally liable to

third parties.

See Appendix B for a template cooperative gallery agreement.

C. Sale of Works of Art by Auction

1. Choosing to Sell by Auction

Certain situations may indicate that the sale of work(s) of art by an auction house would

be more advantageous than a sale resulting from consignment to a gallery or other art dealer. For

example, if an individual finds him- or herself confronted by one of the “3 Ds” (i.e., death,

divorce, or debt), it may be that an auction is the best choice for selling works of art. The reasons

for this are practical, not legal. First, there is the matter of timing. Galleries typically schedule

exhibits a year or more (sometimes several years) in advance. An auction house is generally

more flexible as to scheduling a sale or incorporating works of art into an already scheduled sale.

An auction house needs time to assess, organize, and photograph works of art for promotion and

advertising, but generally speaking, an auction can be scheduled with less lead time than an

exhibit in a commercial gallery. Galleries and especially dealers can sell works of art without

having an exhibit, but having an event---an auction or an exhibition---focuses attention on the

works and often encourages sales.

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 Auction houses also offer flexibility as to the number of works being offered for sale: a

single work may be grouped with others offered for sale by other sellers, or a special sale may be

organized for a large collection.

Auctions are a particularly useful method for selling works of art for which the owner is

not certain of the value. The auction process itself determines what a willing buyer pays to the

willing seller.

2. Types of Auctions

The most common type of auction for the sale of works of art in the United States is the

English auction, in which bidding starts at the lowest price---the “Reserve” price---acceptable to

the seller. Interested parties then make consecutively higher, competitive bids until no one is

interested in bidding higher. The acceptance of the highest bid is dramatically announced by the

falling of the hammer. D.C. Code § 28:2-328(2). Courts have found that auction houses have a

fiduciary duty to the consigning seller, and that the auctioneer has an obligation to obtain the best

possible price.

There are other types of auctions, including the Dutch auction (referred to as such because

it is used in tulip auctions), wherein the auctioneer starts with a high price and then lowers the

price until a bidder is willing to accept the price; the Chinese auction (similar to a raffle); the

sealed bid auction; and the silent auction. This last type is similar to the English auction in that

the price starts low and then is competitively bid up, but the bidding process is done on paper and

over time, rather than orally in a focused, dramatic event.

Certain details of transactions at auctions may be kept private, with bidders remaining

anonymous and sometimes with the seller’s and/or buyer’s identities being kept secret.

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However, the selling price (i.e., the hammer price plus the buyer’s premium) will generally be

made public. However, many auctions are public, with the identities of bidders and sellers

disclosed. But bidders may participate anonymously in public auctions by using an agent or by

bidding by telephone or online.

There are many reputable auction houses in New York and elsewhere, including

Christie’s, Sotheby’s, Phillips, Swann, Bonhams & Butterfields, and Guernsey’s. In Washington,

D.C., Adam A. Weschler & Son, Inc. (“Weschler’s”) has been selling works of art since 1890.

Prudent sellers will research the auction house before signing an agreement and will file a UCC-1

form to protect their ownership rights. See section III.B., infra.

3. Agreement Between Seller and Auction House

The owner of works of art who decides to sell by auction should enter into a written

agreement with the auction house to confirm the commission to be paid as well as any premiums

and/or fees. D.C. Code § 28:2-201(1). As with sales of works of art by galleries, the

owner/seller of the works consigns to the auction house and retains title; the ownership of the

works of art passes directly from the seller to the purchaser. See Appendix C.

The auction house generally charges the seller a commission, which is a percentage of the

hammer price; the higher the price, typically the lower the percentage paid in commission.

Additionally, the auction house generally charges a buyer’s premium, also a percentage of the

hammer price.

The seller is usually charged for insurance; photography; advertising and promotion,

including the cost of any catalogue; and sometimes for storage, conservation, and/or repairs. If

the work of art being offered for sale is seen as very desirable by the auction house, these costs as

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well as the seller’s commission can be negotiated.

The seller and the auction house should agree on the presale estimate or Reserve price, if

any. D.C. Code § 28:2-328(3). This is usually based on a recent appraisal and/or sales history,

including prior sales by auction of the works being currently offered for sale, or the sales history

of similar works by the same Artist.

If the works of art are grouped into one or more “lots,” the sale of each lot is deemed a

separate sale. Id. § 28:2-328(1).

The auction house will require the seller to make certain representations and warranties,

including as to clear title. Id. §§ 28:2-312, 2-313. And even if warranties are not spelled out in

the written agreement, the seller will be providing implied warranties of merchantability and

fitness for purpose. Id. §§ 28:2-314, 2-315. These implied warranties have been interpreted as

guarantees that the work of art, if properly handled, will not disintegrate and is authentic.

Agreements with auction houses typically include a provision prohibiting “cold feet;” that

is, once the works of art are consigned, the seller promises not to withdraw the works. There are

situations when this provision may be negotiated.

In the event that a work of art is not sold, the seller and the auction house may agree to a

private treaty sale, whereby the auction house acts as an exclusive agent for a limited period time,

during which the auction house will attempt to sell the work of art privately.

4. Bidder’s Registration

Parties who wish to purchase works of art at auction must register as bidders. See

Appendix D.

Bidders generally must agree to accept the works of art “as is,” to pay a buyer’s premium

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(usually 10 to 20 percent of the hammer price), and to pay sales tax based on the hammer price.

Notwithstanding the purchase “as is,” purchasers are generally given a short time in

which to inspect the work of art, and if they discover that the work of art is not what it purports

to be (i.e., it is a fake or counterfeit), the sale may be rescinded.

5. UCC Financing Statements

Since the sale of works of art by auction involves a consignment, the seller would be

prudent to file a UCC financing statement. See section III.B., infra.

D. Sales of Works of Art by Street Vendors

1. Selling Works of Art on the Street

Artists or others may wish to sell work(s) of art directly to the public from a public place,

rather through a gallery or by auction. The D.C. Code defines a “street vendor” as a “person

licensed to vend from a sidewalk, roadway, or other public space.” D.C. Code § 47-2002.01.

Before setting up a stall or table on public property anywhere in the District of Columbia, it is

necessary to obtain a business license.

2. Obtaining a Vendor License

A vendor license, a type of business license, is required to sell works of art from any

public space in the District of Columbia. Licenses are issued by the Business License Center at

the Department of Consumer and Regulatory Affairs, located at 1101 4th Street, S.W.,

Washington, DC 20024. Once issued, a license is valid for two years and may be renewed.

Information about obtaining and renewing business licenses is available online at

http://dcra.dc.gov/DC/DCRA/For+Business/Apply+for+a+Business+License, and there is a

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telephone Help Line at 202-442-4311. A copy of the application form, which can be printed

from the Web site, is included as Appendix E. The completed application may be mailed or

hand-delivered.

Vendor licenses are issued for specific public spaces, i.e., “vending site permits” are

issued for specific “vending locations.” D.C. Code § 37-131.01. The determination of who is

allowed to sell from what particular space has, in the past, been determined by lottery as allowed

by section 47-2834 of the D.C. Code. As this edition of the Practice Manual is going to press,

there is a moratorium on the issuance of vendor licenses, while the Mayor, the Council, and the

Director of the Department of Consumer and Regulatory Affairs consider regulations that will

govern how licenses will be granted in the future.

3. Quarterly Payments in Lieu of Sales Tax

As described in section IV, retailer vendors who sell works of art must collect sales tax

and remit them to the D.C. Treasurer with periodic reports. For street vendors, the procedure has

been changed recently. Effective for the quarter beginning October 1, 2012, street vendors who

have collected less than $375 in sales tax for the quarter must file a return pursuant to section 47-

2002 and remit a minimum payment of $375 for the quarter being reported. Any street vendor

who has collected sales tax in excess of $375 for the quarter must remit the full amount of the

sales tax collected for the quarter being reported.

4. Eastern Market

Eastern Market, located at 7th Street and North Carolina Avenue, S.E., on Capitol Hill,

(Lot 800, Square 872) is a popular venue for artists to sell their works. The regulation and

management of Eastern Market specifically is addressed in D.C. Code § 37-101 et seq. Eastern

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Market is administered by a “market manager” under the authority of the Department of

Recreation and Parks and the Eastern Market Community Advisory Committee (“EMCAC”).

The EMCAC is comprised of 11 members who are elected to two-year terms. D.C. Code § 37-

111. The members serve without compensation, meet quarterly, and are responsible for

regulating Eastern Market and preserving its historic character.

For purposes of Eastern Market, “Artist” is defined as “an individual who created the

works of art offered for sale and includes two or more individuals who work together in creating

individual works of art offered for sale.” D.C. Code § 37-101(3). “Works of art” means

“drawings, paintings, sculptures, photographs, ornamental textiles, ornamental glass, ornamental

pottery, and any other items created primarily for aesthetic appreciation.” D.C. Code § 37-

101(31).

Artists who wish to sell their works of art may wish to rent a stall in Eastern Market. The

market manager can be reached by telephone at 202-698-5253 or by e-mail at

market.manager@dc.gov.

Vendors at Eastern Market are not required to have a vendor’s license, but they are

required to collect sales tax as described below.

E. Sales of Works of Art at Art Fairs

Another option for the exhibition and sale of works of art is art fairs. A few highly

selective art fairs have been around a long time; this includes the Art Show organized by the Art

Dealers Association of America (ADAA) and the AIPAD Photography Show organized by the

Association of International Photography Art Dealers, both held annually at the Park Avenue

Armory in New York City, and also the Art Basel Miami Project held annually in Florida. These

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art fairs, and most others, allow participation only by art dealers or galleries who rent exhibition

space to display art. A few art fairs allow participation by individual artists who rent space to

display their works of art.

The exhibition spaces at art fairs, typically called “booths,” may be tables or temporary

cubicles in a hotel ballroom or auditorium or even a hotel room.

Art fairs ask the gallery, dealer, or individual artist to fill out an application to participate.

If accepted, the participant will sign an agreement with terms and conditions that will govern

the arrangements, including rental fees, scheduling set-up and dismantling of exhibits, insurance,

and liability.

Art fair agreements typically allow little or no opportunity to negotiate any of the terms,

including the booth rental fee. With the increase in art fairs, there are many more opportunities

open to the public to buy art in a much wider range of taste and cost. As a result, some galleries

have cut back on the number of shows they produce at their own brick-and-mortar venues to have

the time, money, and energy to participate in art fairs.

See Appendix F for sample art fair agreements.

III. PROTECTION OF OWNERSHIP RIGHTS IN WORKS OF ART

A. Statutory Protection

The Artist Protection Bill, which addresses the consignment of art by an artist to a

gallery, was signed into law as L18-310 with an effective date of March 12, 2011. This new

statute confirms the fiduciary nature of the consignment arrangement, establishes that works of

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art delivered to a dealer constitute trust property, and that proceeds generated from any sale of

works of art are trust funds held for the benefit of the Artist.

It is important to note that this statute applies only to works of art created by living artists

and consigned to a gallery by the artist; the law does not address and cannot be asserted on behalf

of a collector or the estate of an artist or collector. Therefore, when works of art are consigned to

a gallery by anyone other than the Artist, the proceeds from sales of works of art by a dealer, and

the works themselves, may be subject to the claims of creditors of the dealer. This means that if a

collector or an estate consigns works of art to a dealer, it is possible that a creditor of the dealer

could seize the works of art and obtain the proceeds from their sale. Only if the consignor

“perfects” ownership interests in the consigned works of art within 20 days of delivery to the

dealer will the consignor’s interests take priority over the interests of the dealer’s creditors. Id.

D.C. Code § 28-5101, et seq.

To perfect ownership in consigned works of art, thereby protecting the works and any

proceeds generated from sales of the works from the claims of a dealer’s creditors, an Artist must

file a UCC Financing Statement with the D.C. Recorder of Deeds.

B. UCC Financing Statements

Filing UCC Financing Statements used to mean waiting in long lines at the D.C. Recorder

of Deed’s Office. This was a deterrent to all but the most determined. Currently, however, forms

can be completed and filed online. Attorneys can easily file UCC Financing Statements on behalf

of their clients (or instruct their clients how to do it themselves) online at

https://gov.propertyinfo.com/DC-Washington/UCC/default.asp. After completion of a simple

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registration, forms can be filed within a few minutes. Receipts and copies of the UCC documents

filed are sent by e-mail to the filer.

IV. SALES TAX

A. Retailers and Vendors of Works of Art

The District of Columbia imposes a tax on “all vendors for the privilege of selling at

retail certain tangible personal property.” D.C. Code § 47-2002. Art dealers and auction houses

that sell work(s) or art, as discussed in sections II and III above, are included in the expansive

definitions of “retailer” and “vendor” set forth in the D.C. Code, as are Artists who sell their own

works. D.C. Code §§ 47-2001(l), 47-2001(w). Moreover, a “retail sale” or a “sale at retail” is

defined as “the sale in any quantity or quantities of any tangible personal property.” D.C. Code §

47-2001(n). The term “tangible personal property” is defined as “corporeal personal property of

any nature” and so would include works of art. D.C. Code § 47-2001(s).

Although the statute exempts the sale of certain kinds of goods, including wheelchairs,

certain food and drinks and certain tickets, there is no exemption for the sale of works of art.

D.C. Code § 47-2005. Sales of works of art to certain purchasers, however, would be exempt,

including sales to the United States or the District, and sales to a state or any of its subdivisions.

D.C. Code § 47-2005. But generally, sales of works of art are retail sales subject to tax, with a

presumption of taxability on all sales. D.C. Code § 47-2010.

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B. Certificate of Registration

The first step for Artists, dealers, and other retailers who wish to sell works of art to the

public from venues other than public spaces in the District of Columbia, as discussed in section

IV, is to apply for a certificate of registration. D.C. Code § 47-2026.

C. Calculation of Tax

Sales tax is calculated on the “sales price,” which is defined as “the total amount paid by

a purchaser to a vendor as consideration for a retail sale, valued in money, whether paid in money

or otherwise.” D.C. Code § 47-2001(p)(1). The current tax rate for retail sales is 5.75 percent.

D.C. Code § 47-2002.

D. Collection of Tax

Retailers are required to inform purchasers of the sales tax and itemize it on their bills of

sale or invoices. D.C. Code § 47-2009. The sales tax is collected at the time of purchase and

held by retailers until reports are filed as described below.

E. Filing Tax Returns

Generally, vendors must file a monthly report on or before the 20th day of each calendar

month, reporting all taxable sales during the preceding month. D.C. Code § 47-2015(a). Less

frequent filings are allowed under certain conditions, D.C. Code § 47-2015(b), and special

arrangements are made for “street vendors” to make payments in lieu of collecting and remitting

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tax as other retailers are required, D.C. Code § 47-2002.01. Payment of taxes collected is made

at the time of filing. D.C. Code § 47-2016.

Additionally, annual returns must be filed within 30 days after the end of each tax year.

D.C. Code § 47-2017.

F. Penalty for Noncompliance

In the event that an Artist, dealer, or other retailer is discovered to be making sales

subject to tax without having obtained a certificate, collected tax, and/or filed the requisite return,

the D.C. Code provides for the imposition of a fine up to $50 per day “for each and every

separate day on which said retail sales are made without possession of such registration

certificate.”

V. LOANS OF WORKS OF ART

A. Loan Agreements

Museums and other entities often borrow work(s) of art from Artists and collectors as

well as from galleries and other museums. As stated above, even museums that have large

permanent collections routinely exhibit works of art to which they do not hold title. It is

important that the loan of any work of art be documented in a written loan agreement that

includes terms and conditions governing the insurance, shipping, and delivery of the works as

well as the exhibition itself, and clarifying whether the borrower may reproduce and distribute

copies of derivative works such as press prints, brochures, catalogs, posters, postcards, and

notecards.

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 Sample provisions from a loan agreement between an Artist and a museum or other

borrower are appended to this chapter. See Appendix G. Any agreement between an Artist and a

museum or other borrower would need provisions in addition to those already provided,

including appropriate warranties by both the Artist and the borrower, indemnification in the

event that a warranty is breached, the precise timing and schedule of the loan period, and any

special precautions and/or arrangements that may be required for particular works of art.

B. Condition Reports

Works of art that are being loaned should be carefully inspected before and after the loan

period. These inspections should be done by the borrower and/or its qualified representative in

the presence of the Artist or the Artist’s qualified representative. When valuable works of art are

loaned, it is common to engage a conservator to provide a condition report (prepared

immediately before the work of art leaves the possession and control of the owner), a copy of

which travels with the works of art. In the condition report, the works are carefully counted,

measured, and examined prior to the loan. Titles and written descriptions are included for each

work so that the Artist, the borrower, and the insurer are all in complete accord as to what is

being loaned. These written descriptions will include detailed mention of any preexisting

imperfections and/or defects, as well as any particular weaknesses and/or vulnerabilities of the

works of art. Both the Artist and the borrower should review the condition report to ensure its

accuracy, and a copy of the condition report should be attached to the loan agreement and travel

with the works of art.

When the works of art are returned to the Artist, they should be carefully inspected again.

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This inspection should occur immediately upon delivery back to the Artist. Written notice of any

missing and/or damaged works of art should be sent to the borrower immediately.

C. Insurance

The loaning Artist and the borrowing entity must agree on the specific value of the works

of art loaned. This evaluation may require an appraisal by a qualified and disinterested third

party. Once a value has been determined, insurance coverage can be obtained. Typically, the

borrower is responsible for obtaining and maintaining insurance coverage for the works of art on

loan. Such coverage is usually arranged on a “wall-to-wall” basis (i.e., from the time the works of

art leave the Artist’s wall until safely returned to the Artist’s wall). A copy of the borrower’s

insurance policy or a certificate of insurance must be attached to the loan agreement.

VI. GIFTS OF WORKS OF ART

A. Gifts of Works of Art

Artist and collectors may wish to donate work(s) of art to a museum or other arts

organization, particularly to organizations that have exhibitions open to the public. (As discussed

below, such donations may or may not result in any tax benefit.) Many works of art are conveyed

at the time of death of an Artist or collector by means of a will or testamentary trust. But gifts

may also be made for various reasons during the lifetime of an Artist or collector. An Artist may

wish to donate one or more works of art for greater visibility and/or for the prestige that may

come from being included in the permanent collection of a museum. There is currently little or

no tax incentive for an Artist to make a gift to a museum. In calculating income tax, an Artist

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may only claim a deduction for the cost of the materials used to create the work of art (i.e., the

cost of the paint and canvas), but may not claim a deduction for the market value of the work of

art. Typically, the cost of materials has already been listed as an ordinary business expense,

leaving nothing further for the Artist to deduct at the time of the gift. When a collector makes a

donation of a work of art to a museum or other 501(c)(3) arts organization, the full market value

of the work is deductible for purposes of income tax. (The recipient organization must be arts

related in order for the value of the work of art to be deductible as a charitable donation. Gifts of

works of art to organizations whose purposes are unrelated to art, even if they are 501(c)(3)

entities, are unlikely to qualify as charitable donations. A gift of a work of art to a hospital or

research center, for example, may not qualify as a charitable donation.) Federal legislation to

remedy the Artist’s tax situation has been proposed each year for many years. It would be prudent

to check the status of such legislation, if any, before any inter vivos gift is made.

B. Partial Gifts

Sometimes museums may wish to purchase a work of art but may not have sufficient

budget to do so. In such a situation, if an Artist or collector is interested in a work being included

in the museum’s collection, he or she may wish to make a particular kind of partial gift. The

museum would pay something less than the full market value for the work of art. The difference

between the amount paid and the market value of the work would be deemed a gift from the

Artist or collector to the museum. Such a gift would likely be deductible as a charitable donation

for a collector, but not deductible for an Artist except for the cost of materials.

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C. Fractional Gifts

The Pension Protection Act of 2006, Pub. L. No. 109-280, 120 Stat. 780 (the “Pension

Protection Act”), has all but closed the door on fractional gifting of art. Under the old law, a

collector could donate a percentage of a work of art to a museum that qualified as a charitable

institution under the federal tax law. A donor could give a valuable work of art over time rather

than as a single gift in one tax year. For example, 10 percent of a work of art valued at $1 million

could be given, and a charitable deduction of $100,000 could be claimed using an IRS Form

8283. At the time of the 10 percent gift, the donor would sign an agreement with the museum

that he or she would give the remaining 90 percent to the museum before or, at the latest, upon

his or her death. The estate would be entitled to deduct 90 percent of the fair market value at the

date of death. Between the time of the fractional gift of 10 percent and the donor’s death, the

museum would be entitled to have the work of art in its possession for 365 days of the year.

However, under the Pension Protection Act, in order to qualify for a charitable deduction, the

donor must donate the balance of the work of art within 10 years or before his or her death,

whichever comes first, and can only deduct 90 percent of the fair market value of the work of art

at the time the fractional gift was made, rather than based on the value when the gift is

completed. If the donor dies without completing the gift, the Internal Revenue Service (IRS) will

recapture from the donor’s estate an amount equal to the original deduction. Since no one knows

when he or she will die, this provision adds an unknowable element to tax planning, which will

have drastic tax consequences of recapture even if the donor is satisfied to receive a deduction

equal to the fair market value at the time the initial fractional gift was made.

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D. Deeds of Gift

Any gift of a work of art should be documented in writing with an Instrument of Gift or

Deed of Gift. Such documents should include a description of the work or works of art and may

describe certain conditions such as that the work will be attributed in a certain way. See

Appendix E. But too many terms and conditions can invalidate a gift. Terms and conditions may

be documented in a separate contractual agreement between the donor and recipient. This

contract may also be subject to IRS scrutiny. See Appendix H.

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VII. APPENDICES

A. Consignment Provisions for Use in a Contract or Letter of Agreement Between an Artist

and a Dealer

Consignment. This agreement constitutes a consignment of works of art; the Artist hereby

consigns to the Dealer and the Dealer hereby accepts consignment of the works of art listed and

described on Schedule A (the “Works”).

Title to Works. Title to the physical Works is and shall remain with the Artist until such

time as the Dealer is paid in full by a purchaser and such payment is remitted to the Artist, less

commissions as described herein.

Copyrights in the Works. All copyrights in and to the Works are reserved by and shall

remain with the Artist; copyrights shall not be transferred to any purchaser. The Dealer may

reproduce and distribute copies of the Works only as described in section ___ herein.

Works to Remain on Dealer Premises. The Dealer represents and warrants that no Work

shall leave the Dealer’s premises until such time as the Dealer has been paid in full by a

purchaser, without the prior written approval of the Artist.

Commissions for Services. The Dealer will be paid a commission of __________ percent

(___%) of the retail price received for each Work sold. The Dealer may not accept terms other

than full payment of the retail price for any Work without the prior written approval of the Artist.

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B. Cooperative Gallery Agreement---Template

COOPERATIVE GALLERY ARTIST CONTRACT

The Coop Gallery (the “Gallery”) is an artist’s cooperative gallery. There is no paid staff in the
Gallery. This means the artist members of the Gallery share the responsibility for keeping the
Gallery functioning and successful.

If you are accepted as an artist member, you will need to contribute to the Gallery by:
• Working in the Gallery at least ______ shifts each month.
• Serving on at least one of our committees.
• One-time buy in of $____.
• Paying monthly membership dues to the Gallery of $_____.
• Paying a commission of __% on all of your artwork sold by the Gallery.

Artist and Gallery agree to the following terms and conditions:

1. Term & Termination: This agreement (the “Contract”) shall commence upon signing
and after six months may be terminated by either party after giving 30 days written notice to the
other party. A member may be terminated by a majority vote of the Board of Directors for non-
compliance with this Contract and/or the Gallery by-laws. A member may be terminated by a
majority vote of the Board of Directors as a “vote of no confidence” as being a divisive or
destructive presence. No member is exempt from any of the stated duties in this Contract (except
for special cases as deemed by the Board of Directors) without forfeiting his/her privileges to
exhibit and remain a member in good standing of the Gallery. Consistent with the terms of this
Contract, the Board of Directors has the full authority to dismiss a member from the Gallery.

2. Expenses: The Gallery agrees to pay out of the dues and Gallery commissions, operating
expenses for the Gallery including utilities, liability insurance, and Gallery advertising, and other
related expenses for the day-to-day operations of the Gallery.

3. Insurance: The Gallery agrees to provide general liability insurance as determined by

the Board of Directors upon consultation with a professional insurance broker. Artists are
encouraged to provide their own theft/damage insurance through their own brokers. The Gallery
will not be responsible for theft or damage, with the exception of problems with display units.
Artists should be notified of any breakage or damaged items ASAP.

4. Commissions: The Gallery shall receive a commission of __% (subject to modification

by the Board). The Artist shall establish retail value of his/her works.

5. Sales Tax: The Gallery will collect and pay the applicable sales tax on works sold. The
applicable tax, as determined by the State, will be added to the retail price established by the
Artist.

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6. Payments to Artist: The Gallery shall pay proceeds of sales due to the Artist within
_______ days of a sale.

7. Dues & Fees: Artist agrees to pay a one-time, non-refundable fee of $____ and regular
membership dues each month as determined and subject to modification of the Board, based on
Gallery expenses ($____). Dues must be received by the ___ day of each month, to be applied to
the following month.
Current Monthly Dues: $______
Artists will be assessed a $____ late fee if dues are not paid on time.
Sales revenues will be applied toward last month’s dues when an artist decides to
terminate his/her membership and the last month’s dues have not been paid. Any artist who does
not pay dues within 30 days shall have his/her membership terminated.

8. Display, Conditions: All active artist members shall have their work displayed in the
Gallery, but not necessarily all works submitted. All work that requires special handling or
packaging shall be submitted by the artist to the Display Committee. The Chair of the Display
Committee will provide these requirements to the membership. Original work will be submitted
to the Display Committee for exhibit selection. Works selected for exhibit will remain on display
at the discretion of the Display Committee. The number of works selected will depend upon the
size of work and available space. All paintings to be displayed on the walls must be properly
framed in accordance with Display Committee requirements. All work must be clearly labeled
by the artist in a manner determined by the Gallery.

9. Gallery Staffing: Artist agrees to work ____ shifts per month. If unable to fulfill
scheduled time, arrangements must be made for a replacement by the member. The Gallery
Manager must be notified of such replacements. All members must serve on at least one
committee.

10. Meeting Attendance: Artists are strongly encouraged to attend full membership
meetings and any emergency meetings called by the Board of Directors.

11. Unclaimed Work: Work submitted by the Artist but not exhibited shall be picked up in
a timely manner.

12. Time Purchases (Lay Away): Lay away is to be handled on a case-by-case basis as
agreed upon between the purchaser and the Artist.

13. Security Interest: All works deposited by the Artist remain the property of the Artist
until sold; ownership of sold works shall pass directly to the buyer. The works shall not be
subject to claims by the Gallery’s creditors, provided the Artist files a UCC-1 form.

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14. Copyright: The Gallery staff shall take all reasonable steps necessary to ensure that
exhibited works in the Gallery will not be reproduced by any fashion. (No photographs.) Artist
shall retain the copyrights in all artworks.

15. Modifications: The Board of the Gallery reserves the right to change the terms of this
Contract upon 30 days written notice.

16. Termination of Membership by Artist: Artist may terminate this agreement with 30-
day written notice to the Board. If an artist gives 30-day notice of resignation, said artist must
work their shifts for the 30 days after submission of resignation or provide coverage by other
artists or volunteers. The artist must notify the Gallery Manager of such changes.

17. Grievances: Any artist who has a grievance against the Gallery shall first try to resolve
the grievance. If he/she is still unable to solve the grievance, than he/she may submit the
grievance in writing to the Board to discuss at its next meeting. The artist can request that the
Board meet sooner if the matter is urgent.
18. Hold Harmless: Neither the Board nor any member of the Gallery shall be liable for any
loss or damage to art works brought to the Gallery for display or sale. Membership fees grant
exhibition space only.

ARTIST GALLERY

By: ______________________________ By:__________________________

Signature Signature

Printed Name: ______________ Printed Name: ______________________

Date: _____________________ Date: ____________________________

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C. Weschler’s Seller’s Agreement

WESCHLER’S
ADAM A. WESCHLER & SON, INC.
905-9 E STREET, N.W., WASHINGTON, D.C. 20004
(202) 628-1281 Fax: (202) 628-2366

Consignor: Account Number:

Phone Number:

Date:

TERMS ON WHICH GOODS ARE RECEIVED

Thank you for consigning your property to Weschler’s. This agreement pertains to all property offered by
Weschler’s as the Consignor’s agent at public auction subject to the following terms, and the Conditions of Sale and Terms of
Guarantee printed in the front of the sale catalogue. These terms cannot be altered, amended, interpreted or construed in any
manner biding upon Adam A. Weschler & Son, Inc., hereinafter “Auctioneer”, except in writing
signed by an officer of that corporation.

1. Name and Address - The name, address and telephone number of the ‘Consignor’ must be given at the
time the Property is delivered to the ‘Auctioneer’ and the person delivering the property is understood to be
the ‘Consignor’ or his/her authorized agent. All authorized agents acknowledge that they have the authority
to deliver such Property on behalf of the ‘Consignor’.

2. Title - The ‘Consignor’ certifies to the ‘Auctioneer’ that he/she has clear title to the Property consigned
and that he/she has the right to sell the Property and receive the net proceeds there from. The ‘Consignor’ or his/her agent
agrees to indemnify and hold harmless the ‘Auctioneer’ from and against all claims, losses, liabilities and expenses (including
but opt limited to reasonable attorney’s fees) pertaining or relating to
such title, right to sell and right to the proceeds of sale.

3.Place and Time of Sale - The ‘Auctioneer’ has the sole right and discretion to determine when and where
the Property will be sold. If, for whatever reason, the ‘Auctioneer’ decides not to auction any or all of
the Property, it may, without liability of any kind, require the ‘Consignor’ to pick the Property up within a reasonable time at
the ‘Consignor’s’ expense.

4. Commissions - The ‘Auctioneer’ will receive and retain from the proceeds of the sale of the Property a
commission from the Seller based upon the final bid price of each lot as follows:

Final Bid Price Commission Rate Per Lot

Under $500 25% Commission
$500 - $1,499 20% Commission
$1,500 - $2,999 15% Commission
$3,000 and above 10% Commission

There will be a minimum commission charge of $50 on each lot sold. In addition, the ‘Consignor’s’
account may be charged 25% on any object which is auctioned in a weekly auction, regardless of its selling

25
price. In addition the ‘Auctioneer’ is authorized to collect from the purchaser, on each lot sold, and retain as
an additional commission on buyer’s premium of 17 - 1/2% up to $50,000 and 10% thereafter of the
successful bid amount.

5. Other Expenses - The ‘Consignor’ agrees to be charged the expense of $25 per lot for : (a) insurance which will insure
for loss or damage of the property (as further provided in Paragraph 6); (b) illustrations in the catalogue (as further provided in
Paragraph 7); and (c) promotions of property in advertising and online internet production. Other expenses may also include
(d) packing, shipping and/or customs duties to the ‘Auctioneer’s’ premises, (e) any additional advertising, (f) foreign
translations up to $50, otherwise approved by the ‘Consignor’, and (g) other services, such as framing, restoration, gemological
tests and authentications made by independent experts, approved by the ‘Consignor’.

6. Fine Arts Insurance - All consignments once received and stored at the ‘Auctioneer’s’ premises are
insured against all risk of loss or damage up to the full amount of their value, (i) that value to be determined before sale
by the mean of the ‘Auctioneer’s’ pre-sale estimate, or (ii) post-sale by the amount at which the item was sold, or (iii) the
amount of the reserve if unsold. The ‘Auctioneer’ will not be liable for damage to frames or glass covering prints, paintings or
other works.

7. Photographs - In its sole discretion the ‘Auctioneer’ will decide to reproduce photographically in its catalogue pictures
of any of the items consigned.

8. Auctioneer’s Right to Reproduce Photographically, to Advertise and to Use ‘Consignor’s’ Name - The
‘Auctioneer’ has the right to reproduce photographically and to advertise and publicize the Property prior to, during and after
the auction. The ‘Auctioneer’ retains title to all rights in blocks, prints, plates and the right to reproduction therefrom for such
use as the ‘Auctioneer’ determines, including, among other things, publicity and advertising. The ‘Auctioneer’ may use the
consignor’s name as owner of the Property or otherwise designate the Property when offered for sale or otherwise promote the
sale both before or after the auction, unless the ‘Consignor’ initials the line below:

Auctioneer may not use my name ________________________________

Auctioneer may designate the Property as follows ____________________:

9. Reserves/Estimates - Unless a reserve figure is mutually agreed upon by the ‘Consignor’ and ‘Auctioneer’ at least five
(5) days prior to the auction, it will be at the ‘Auctioneer’s’ discretion to sell any property without reserve or at an amount
equal to fifty percent (50%) of the low pre-sale estimate. In no case should this reserve exceed the low pre-sale estimate. If the
‘Consignor’ wishes no reserves on the Property, please initial below:

No Reserves ______________________________________

The ‘Auctioneer’ may sell any lot of the Property below the reserve provided the ‘Consignor’ receives the net amount which
the ‘Consignor’ would have been entitled to receive had the property been sold at the reserve. Any Property which fails to
reach its reserve and which is `bought-in’ for the ‘Consignor’s’ account will be subject to a commission equal to 5% of the
reserve, subject to a minimum handling charge of $50 for each ‘bought-in’ lot. However, if the ‘Consignor’ agrees to a reserve
less than 70%, of the low pre-sale estimate, the commission on the `bought-in’ lot will be $25 for each such lot with a low pre-
sale estimate of less than $1,000 and $50 for each such lot with a low pre-sale estimate of $1,000 or more.

The ‘Consignor’ agrees not to bid on his/her own Property. If however, the ‘Consignor’ bids on the Property and is the
successful bidder, the ‘Consignor’ will pay the commissions set forth in paragraph four (4), including buyer’s premium of 17-
1/2%, on the hammer price.

As a guideline for the prospective bidder, the ‘Auctioneer’ may publish pre-sale estimates of the value of the Property. These
figures are the ‘Auctioneer’s’ best opinion as to the anticipated selling price but in no way represent a prediction or guarantee
of the actual selling price.

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10. Repairs - The Consignor authorizes the ‘Auctioneer’ to arrange for any repairs or other services necessary to exhibit the
property, where the cost is $100 or less. The ‘Auctioneer’ will obtain verbal authorization of the Consignor for costs greater
than $100.

11. Proceeds - The goods and the net proceeds there from shall be retained until all such amounts owed by ‘Consignor’ to
‘Auctioneer’ have been paid in full no matter from what cause such amounts owed to ‘Auctioneer’ have arisen. If such
amounts remain owed to the ‘Auctioneer’ ninety (90) days after they become due, the ‘Auctioneer’ reserves the right, if it so
chooses, to sell the goods and/or retain the proceeds and ‘set-off’ such amounts against any money owed the ‘Auctioneer’.
Should ‘Auctioneer’ use ‘set-off’ as a remedy this does not constitute a waiver of the full amount owed to the ‘Auctioneer’.

12. Non-Payment by Purchaser - ‘Auctioneer’ assumes no responsibility for, and is under no obligation to use or
otherwise enforce, payment by any purchaser, for property sold. In the event of non-payment by the purchaser, ‘Auctioneer’, in
its sole discretion, and with ‘Consignor’s’ approval hereby given may either (1) enforce in ‘Consignor’s’ or ‘Auctioneer’s’
name any or all of ‘Consignor’s’ or ‘Auctioneer’s’ rights against the purchaser, or (2) cancel the sale and re-sell the property
for ‘Consignor’s’ account at auction or privately, or (3) cancel the sale and return the property to ‘Consignor’.

13. Settlement of Account - Thirty-five (35) calendar days after the auction where the goods are sold ‘Auctioneer’ shall
settle and mail to the ‘Consignor’ an account of the sale of the property, together with the net proceeds received and collected
from such sale, after deducting ‘Auctioneer’s’ commissions and other charges due hereunder, settlement and payment thus
provided not to constitute a waiver of ‘Consignor’s’ obligation hereunder. If an alleged true owner shall raise a claim, after the
settlement of account is oracle to the ‘Consignor’, ‘Consignor’ agrees to indemnify ‘Auctioneer’ and to hold ‘Auctioneer’
harmless from and against all claims, losses, liability and expenses (including but not limited to reasonable attorney’s fees)
relating to a claim of an alleged true owner to the proceeds of such sale.

14. Certain Warranties - The ‘Consignor’ represents and warrants to the world that he/she has the right to consign the
Property for sale, that the Property is free and clear and will be kept free and clear of encumbrances, liens and claims of third
parties. If the ‘Consignor’ acts as an agent for an undisclosed principal, he/she and his/her principal, jointly and severally,
assume all of the obligations hereunder to the same extent as. if each were acting as principal. The ‘Consignor’ further agrees
to indemnify the ‘Auctioneer’ and to hold the ‘Auctioneer’ harmless from and against all claims, losses, liabilities and expenses
(including but not limited to reasonable attorney’s fees) relating to a claim of a purchaser or a person claiming through a
purchaser, or an alleged owner and arising out of or resulting from the ‘Auctioneer’s’ offering from sale or selling any Property
consigned by the ‘Consignor’, including but not limited to claims for personal injury, Property damage and breach of warranty,
whether express or implied.

If the Property is a painting, sculpture, drawing or work of graphic art, the ‘Consignor’ further represents and warrants
that it was not sold or otherwise transferred on or after September 1, 1966, within or subject to the laws of the State of New
York or the District of Columbia, by or on behalf of the artist who created it, his heirs or personal representatives: if it was sold
or transferred, in the alternative, the ‘Consignor’ represents and warrants that the buyer thereof at this ‘Auctioneer’s’ sale will
acquire full and unconditional right of reproduction without liability to the artist, his heirs or representatives.

15. Right to Rescind Sale - The ‘Auctioneer’ is authorized to accept the return and rescind the sale of any Property at
any time and not withstanding any limitation as to time set forth in the Conditions of Sale, if the ‘Auctioneer’ in its sole
discretion determines that any Property is counterfeit or that the offering or sale of any Property has or might subject the
‘Auctioneer’ and/or ‘Consignor’ to liability. In any such event, the ‘Auctioneer’ is further authorized to refund or credit the
purchaser with the purchase price of such returned Property and the ‘Consignor’ agrees to pay the ‘Auctioneer’ on request an
amount equal to the refund or credit to the purchaser if the ‘Auctioneer’ has already remitted to the ‘Consignor’ the net
proceeds of the rescinded sale, whereupon the ‘Auctioneer’ shall return the Properly to the ‘Consignor’ provided the
‘Consignor’s’ indebtedness to the ‘Auctioneer’, if any, is paid in full. The ‘Consignor’ further agrees to indemnify the
‘Auctioneer’ and to hold the ‘Auctioneer’ harmless from and against all claims, losses, liabilities and expenses (including but
not limited to reasonable attorney’s fees) relating to a claim of a purchaser or a person claiming through a purchaser, or any
alleged owner and arising out of or resulting from the ‘Auctioneer’s’ offering for sale or selling any Property consigned by the
‘Consignor’, whether or not it has been returned to the ‘Auctioneer’.

16. Right to Withdraw Consignment from Sale - The Auctioneer reserves the right in its sole discretion and
without limitation whatever to withdraw from the auction arty consigned item at any time before actual sale, the ‘Auctioneer’s’

27
sole responsibility to the ‘Consignor’ then to be to notify the ‘Consignor’ to pick up the consigned item within a reasonable
period not to exceed one week from the date of such notice.

17. No Withdrawal - The ‘Consignor’ agrees not to withdraw any Property consigned for the sale after the date on
which the ‘Auctioneer’ issues a receipt or the ‘Consignor’ signs this agreement, whichever is earlier. If the ‘Auctioneer’
consents to the ‘Consignor’s’ withdrawal of any consigned item, the ‘Consignor’ agrees to pay the ‘Auctioneer’ 15% of the
`Auctioneer’s’ high pre-sale estimate and any other charges already incurred pertaining to the Property.

18. Private Sales - If any lot fails to sell and is ‘bought-in’ for the ‘Consignor’s’ account, the Consignor authorizes the
‘Auctioneer’, as the ‘Consignor’s’ exclusive agent for a period of 60 days following the auction, to sell the lot privately for a
price that will result in payment to the ‘Consignor’ of not less than the net amount to which the ‘Consignor’ would have been
entitled had the lot been sold at auction at a price equal to the agreed reserve. In such an event, all provisions of this Agreement
shall remain in full force and effect.

19. Treatment of Unsold Property - Any unsold Property which is not sold privately pursuant to paragraph 17 or
reconsigned for sale on mutually agreed-upon terms, must be picked up as the ‘Consignor’s expense within thirty (30) days
following the auction date. After forty-five (45) days post-auction the Consignor will incur a storage charge of $10 per day per
lot. Property remaining on the ‘Auctioneer’s’ premises more than ninety (90) days following the auction date may be sold at
public suction at the `Auctioneer’s’ sole discretion without reserve. The proceeds of such sale shall first be applied to any
amount owed to the ‘Auctioneer’, including but not limited to commissions and expenses, and any excess will be remitted to
the ‘Consignor’.

Accepted

____________________________
Consignor Adam A. Wechsler & Son, Inc.

Date Date

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D. Weschler’s Buyer’s Registration

WESCHLER’S
TERMS & CONDITIONS

1. REGISTRATION
Prior to sale, all bidders must register with a Weschler’s representative and receive a bidding number. A bidding
number will be required of the successful bidder at the fall of the Auctioneer’s hammer for each lot.

2. “AS IS” CONDITION

The Auctioneer and the Consignor assume no risk, liability or responsibility for the authenticity or the authorship of
any property identified in the catalogue (that is, the identity of the creator or the period, culture, source or origin as
the case may be, with which the creation of any property is identified herein). All property is sold “As Is” and neither
the Auctioneer nor the Consignor makes any warranties or representations of any kind or nature with respect to the
property, and in no event shall be responsible for the correctness or any implied warranty or merchantability or any
implied warranty of fitness for a particular purpose as it relates to description, genuineness, attribution, provenance,
safety, reliability or condition of the property. If any implied warranties of merchantability or fitness for a particular
purpose can be construed from the catalogue, auction, or bill of sale, such warranties are disclaimed by the
Auctioneer and the Consignor. No statement in the catalogue or made at the sale or in the Bill of Sale or invoice or
elsewhere shall be deemed such a warranty or representation or an admission of liability.

3. GUARANTEE
Notwithstanding the preceding condition, if within 14 days of the date of the sale, on any lot, the purchaser must give
notice in writing to the Auctioneer that the lot sold is a counterfeit and, if within 7 days after such notice the
purchaser returns to the Auctioneer in the same condition as when sold, and gives written proof from a recognized
impartial expert which establishes beyond reasonable doubt that the returned lot is in fact a counterfeit and that this
was not indicated by a fair reading of the catalogue or the Auctioneer’s comments at the time of sale, the Auctioneer
as agent for the Consignor will rescind the sale and refund the purchase price paid defined as the amount of the
successful bid price, plus buyer’s premium. The guarantee is made only to the original purchaser of record (i.e., the
registered bidder) and not any subsequent owners. The original buyer must have remained the owner of the lot
without disposing of any interest in it to any third party.
The term counterfeit is defined as a modern fake or forgery, and made with the intent to deceive.

4. WITHDRAWAL
The Auctioneer reserves the right to withdrawal any property at any time before actual sale.

5. BIDDING
Unless otherwise announced by the Auctioneer at the time of sale, all bids are per lot as numbered in the catalogue.
The Auctioneer reserves the right to reject a bid from any bidder. The highest bid acknowledged by the Auctioneer
shall be the purchaser. In the event of any dispute between bidders, the Auctioneer shall have the sole and final
discretion either to determine the successful bidder, or to re-offer and re-sell the article in dispute. If the Auctioneer
determines that any opening bid is not commensurate with the value of the article offered, he may reject the bid; and
if, having acknowledged an opening bid he decides that any advance is not sufficient, he may reject the advance.

6. PURCHASER’S RESPONSIBILITY
On the fall of the Auctioneer’s hammer, title to the offered lot passes to the highest bidder who, thereupon will pay
the full purchase price therefore or such part as the Auctioneer may require. All deposits may be applied to any or all
purchases made by the purchaser at this or any previous sale. All property shall be removed by the purchaser at his
expense on the day of sale and, if not so removed, may be sent by the Auctioneer to a public warehouse for the

29
account, risk and expense of the purchaser. Any damage to or loss of any item purchased which is left with the
Auctioneer after the day of purchase is the purchaser’s sole responsibility. If the foregoing conditions or any other
applicable conditions herein are not complied with, in addition to other remedies available to the Auctioneer and the
Consignor by law, including without limitation the right to hold the purchaser liable for the bid price, the Auctioneer
at its option, may either (a) cancel the sale, retaining as liquidated damages all payments made by the purchaser, or
(b) re-sell the property on 3 days notice to the purchaser and for the account and risk of the purchaser, either publicly
or privately, and in such event the purchaser shall be liable for the payment of any deficiency plus all costs, including
warehousing, the expenses of both sales, and the Auctioneer’s commission at its regular rates and all other charges
due hereunder, and incidental charges. No claims shall be allowed after removal of goods and no article shall be re-
sold for purchaser at the sale where purchased.

A premium equal to 17-1/2 percent of the successful bid price up to and including $50,000, and 10 percent of the
successful bid price over $50,000 will be added thereto and is payable by the purchaser as part of the total purchase
price.

The District of Columbia Sales Tax is computed on this total purchase price. The purchaser will be required to pay
the Sales Tax unless exempted through possession of a valid District of Columbia Sales Tax number.

Please Note:
The District of Columbia has no arrangement of reciprocity with any other jurisdiction and the Auctioneer cannot
honor a Sales Tax number from any other jurisdiction.

Buyers not known to the Auctioneer and planning to pay with a personal or business check are required to supply the
Auctioneer with a bank letter of credit prior to the auction. If such arrangements are not made prior to the auction,
purchases will be held by the Auctioneer until the check has cleared the bank.

7. RESERVES
Unless the sale is advertised and announced as an unrestricted sale or sale without reserve, Consignors reserve the
right to bid through the Auctioneer as agent on their own consignments.

8. ADDITIONAL CONDITIONS
The Auctioneer reserves the right to cancel the sale or any portion thereof without prior or further notice, and to
announce at any time additional conditions of sale.

30
E. Basic Business License Application Form

31
32
33
F. Sample Art Fair Agreements

FINE ART FAIR CONTRACT

THIS FINE ART FAIR CONTRACT (the “Contract”) by and between FINE ART FAIR
ORGANIZER (“FAFO”) and ___________ (“Exhibitor”) shall govern the exhibit space at the
Fine Art Fair (the “Fair”) to be held ____________[date]. The signing of this Contract indicates
agreement by the Exhibitor to comply with all of the terms and conditions herein.

1. Fair Site and Time:

The Fair will be held on Friday _____________ through Sunday __________________. A
Friday invitational preview will be held from 6:30 p.m. to 8:30 p.m. The Fair will be open to the
public Saturday, ________________ from noon to 7:00 p.m.; Sunday, __________ from 11:00
a.m. to 5:00 p.m. The Fair site is located at _____________________, Washington, DC.

2. Exhibit Space & Rental Fee:

It is understood the Exhibitors will be installing their displays.
• Approximately 12 feet of wall space and one six-foot conference table, two chairs:
$_____
• Minimal wall space and one six-foot conference table, two chairs: $______

3. Payment of Rental Fee:

A deposit of $___________ to confirm exhibit space shall be paid by ____________. An
invoice for the total exhibit rental fee will be sent. FINAL PAYMENT OF TOTAL FEE IS
REQUIRED BY________________. Move-in at the Fair will not be permitted until all
outstanding invoices are paid in full.

4. Exhibit Space Allocation:

FAFO will assign exhibit spaces in its sole discretion.

5. Installation & Dismantle:

Installation of exhibits will begin on Thursday, ______________ from 10:00 a.m. to 5:00 p.m.
and continue, as needed, on Friday, _____________ from 10:00 a.m. to 5:00 p.m. Installations
must be completed by 5:00 p.m. Friday, ______________. Dismantle of exhibits will begin on
Sunday, ______________ at 5:30 p.m. PLEASE NOTE: Exhibits must be completely
dismantled and removed from the venue by 8:00 p.m. Sunday, .
No Exhibitor will be permitted to dismantle their exhibit displays prior to the close of the Fair at
5:00 p.m., Sunday, ______________. Security and badge control will be in place for the
duration of the Fair through 6:00 p.m. on Sunday, _________________. All property shipped or
delivered to the Fair by the Exhibitor or their agent is at the sole risk of the Exhibitor.

34
6. Contract for Space:
This Contract shall be considered a binding Contract between Exhibitor and FAFO, subject to the
terms and conditions set forth herein. By signing this Contract, the Exhibitor releases FAFO
from any and all liabilities to the Exhibitor, its agents, licensees, and employees that may arise or
be asserted as a result of participation in this Fair.

7. Liability:
The Exhibitor hereby agrees to indemnify, protect, save, and hold harmless FAFO for any and all
bodily and personal injury to any party, including death, and for any and all damages to property,
or charges for violation of any law or ordinance whether occasioned by negligence of the
Exhibitor or any other reason. In the event that, because of war, fire, strike, government
regulation, public catastrophe, act of God or any other cause whatsoever, the Fair or any part of it
is prevented from being held, is canceled, and/or exhibit space becomes unavailable, FAFO shall
determine, in its sole discretion, the refund, if any, to be made to the Exhibitor, after deducting
expenses incurred by FAFO. In no case shall the amount of the refund exceed the amount of the
exhibit rental fee paid by Exhibitor to FAFO.

8. Security:
FAFO will make every reasonable effort to provide appropriate security protection in the form of
uniformed guards during Fair hours and overnight when the Fair is closed. However, in no case
whatsoever shall FAFO be responsible for any loss to property or persons that may occur in
connection with the Fair. Exhibitors are urged and advised to secure their own all-risk insurance,
both property and personal, to cover all on-site and in-transit risks. All Exhibitors and all visitors
at the Fair are subject to having their bags and parcels inspected by security.

Upon signing this Contract for exhibit space, the Exhibitor acknowledges that Exhibitor has read,
understands, and will abide by the terms and conditions as outlined in this Contract.

EXHIBITOR: FAFO

By: ________________________________ By: ________________________________

Signature Signature

Printed Name: __________________________ Printed Name: _______________________

Title: ________________________________ Title: ______________________________

Date: _______________________________ Date: ______________________________

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 ART FAIR CONTRACT

1. GENERAL: Art Fair is a project of ABC, LLC (“ABC”). These Terms & Conditions of
Participation (the “Contract”) set forth the terms and conditions of the Exhibitor’s participation in
ABC Art Fair (the “Fair”). ABC reserves the right to, at any time, issue other rules and regulations
of participation.

2. FAIR DATES: ____________

3. FAIR LOCATION: _________________ _________________Washington, DC

4. ART ON EXHIBIT: Painting, Sculpture, Works on Paper, Photography, Video, Sculpture,

Installation, and Performance.

5. ADMISSION TO EXHIBITION: ABC shall be the sole and final judge of all applications
and may accept or reject applications in its sole discretion. Final admission is contingent upon
review and approval of an Exhibition Proposal. The Exhibitor (“Exhibitor”) guarantees that all
information in Exhibitor’s application is accurate and that all work submitted for exhibition is
authentic. Admission will be confirmed in writing via e-mail after ________ with room allocation
approximately three weeks thereafter, but not before the initial 50% deposit is received. ABC
reserves the right to cancel any application that is accepted on the basis of false information or if the
Exhibitor fails to comply with this Contract. Exhibitors are obliged to use the exhibition space for
the duration of the show and keep the space sufficiently staffed at all times during exhibition hours.
Set-up and dismantling of exhibition must take place during the allocated hours; Exhibitors should
arrange for shipment of works and arrival of their staff to ensure for adequate installation time. ABC
has the right to require complete details of a proposed exhibit and reserves the right to prohibit the
exhibition of any work of art that does not meet the requirements of the exhibition. If necessary, the
removal of such objects will be at the sole risk and expense of the Exhibitor.

6. ALLOCATION OF SPACE: Allocation of exhibition space at the Fair will be allocated and
determined by ABC in ABC’s sole discretion. ABC makes no guarantee as to placement, square
footage, or configuration and may, in its sole discretion, change the location of allocated space if
circumstances demand. ABC reserves the right to rearrange the layout and to alter exhibition space
if necessary. Allotment of square footage is not to be considered final until the release of a final
floor plan, and Exhibitor understands that final floor plan square footage may differ and is to be
considered approximate until the release of the final floor plan. No adjustment in fees reflective of
reasonable square footage differences is permitted.

7. COEXHIBITORS: No Exhibitor may sublet space either entirely or partially without the
express written consent of ABC Fair Management. Any work other than what is specified in the
Exhibitor’s application may not be shown. In the event that ABC agrees to a co-exhibition
arrangement, this subdivision will be subject to a $______ administrative and marketing fee.

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8. CONDITIONS OF PAYMENT: Payments are non-refundable unless ABC otherwise agrees
in its sole discretion. Any Exhibitor whose booth space rental has not been paid in full by
___________, will not be permitted to exhibit unless pre-negotiated and confirmed in writing; and in
such event ABC may cancel the Exhibitor’s Contract, reallocate the space, and retain any payments
made without any further liability or obligation to the Exhibitor. ABC requires that Exhibitor
provide a credit card authorization to guarantee payments in connection with the Fair. Without
further authorization, ABC may charge the credit card for failure to make subsequent payments by
deadlines as well as for other services including labor, material handling, or any additional and
unpaid charges incurred at the show. All payments are non-refundable and non-transferable. ABC
reserves the right to pursue any and all other remedies it may have in law or equity with respect to
Exhibitor’s default. Upon acceptance, Exhibitor will be invoiced for 50% of the exhibition fee;
invoices are due within 15 days of invoice unless otherwise negotiated in writing. The final balance
is due in full by _____________.

9. WITHDRAWAL FROM THE CONTRACT: In the event of withdrawal from the Contract
after acceptance, a termination fee will be charged. Upon the signing of this Contract, Exhibitor
agrees to pay the termination fee as follows: Cancellation between _____________ and _________,
25% of the space rental fee. Cancellation between ____________ and ________________, 50% of
the space rental fee. Cancellation after _________________, 100% of the space rental fee.

10. DEFAULT AND/OR BREACH: In the event that Exhibitor fails to make rental payments as
agreed herein or breaches any term or condition contained in this Contract (or any other
supplemental documents incorporated, such as the Exhibitor Kit), Exhibitor shall be in default under
the terms of this Contract, and 120% of all fees shall be payable to ABC as liquidated damages.
Exhibitor acknowledges that the additional 20% assessed is reasonably related to ABC’s anticipated
loss of revenues on the sale of labor and services. ABC shall thus have the right to retain Exhibitor’s
deposit and all other monies paid under the terms of this Contract. ABC reserves any other remedies
with respect to any default by Exhibitor. In the event of default by Exhibitor, ABC shall have the
right, but not the obligation, to lease the subject room space to another Exhibitor prior to the
Exhibition. In the event ABC is unable to lease all of the defaulting Exhibitor’s space, Exhibitor
shall remain liable for the full balance due under the terms of this agreement, along with any and all
costs of collection, including but not limited to, all reasonable attorneys’ fees, court costs, and
interest. In addition to any other defaults enumerated herein, ABC retains the right of acceleration in
the event of a default in addition to and not exclusive of any and all available remedies.

11. INSURANCE AND EXEMPTION FROM LIABILITY: Each Exhibitor should obtain
insurance coverage for damage or loss to articles exhibited or to be exhibited, due to fire, theft,
burglary, breakage, leakage, accident, or water damage, and the risks of transport to and from the
Exhibitor’s exhibition space and from any other cause whatsoever. The Exhibitor assumes all risk of
loss related thereto. ABC will not be liable to any Exhibitor for any direct, incidental, or
consequential damages or loss to Exhibitor or his/her property arising from or connected with
Exhibitor’s participation. Each Exhibitor is responsible for obtaining Commercial General Liability
with limits of not less than $1,000,000 each occurrence and $2,000,000 aggregate, Workers

37
Compensation and Employers Liability, and Automobile including Non-Owned & Hired auto
Liability with limits of at least $1,000,000. Prior to admission to the show, each Exhibitor will be
asked to show proof of insurance and will be required to sign a form releasing ABC and its agents
from liability. Each Exhibitor must provide ABC with a certificate of insurance as proof of such
coverage, and which names ABC as an additional insured under the General Liability and
Automobile policies. ABC will not be liable to any Exhibitor for any direct, incidental, or
consequential damages or loss to Exhibitor, to his/her property, or Articles arising in any way from
or connected with Exhibitor’s participation, except for damage or loss caused by ABC’s gross
negligence. Prior to admission to the show, each Exhibitor will be required to sign a form releasing
ABC from liability. Neither ABC, nor the lessor of the Exhibition facility (Capitol Skyline Hotel),
will accept any responsibility for the well-being of any art and materials consigned to or in the
possession of any Exhibitor during the Exhibition. The Exhibitor waives any and all claims against
ABC, its contractors, agents, employees, invitees, and licensees and the lessor of the Exhibition
facility for loss, theft, damage, or destruction by fire, water, or otherwise, of any art work, crates,
packing materials, or any other items of Exhibitor, on the Exhibition premises at any time as well as
for injury to itself, its agents, or employees while on the Exhibition premises, and for any damage of
any nature including damage to its business by reason of the failure to provide room space for its
exhibit or for any failure to hold the Exhibition as scheduled. All of Exhibitor’s personal property of
every kind of description which may at any time be in the room space or on the Exhibition premises
shall be at Exhibitor’s sole risk, or at the risk of those claiming under Exhibitor, and ABC shall not
be liable for any damage to said property or loss suffered by the business or occupation of Exhibitor
caused in any manner whatsoever, including theft. ABC shall not be liable for any such injury or
damage caused by other Exhibitors or any other person(s) either on the Exhibition premises or
elsewhere. ABC shall not be liable for any latent defect in construction. ABC shall not be
responsible for damage or loss of property of Exhibitor kept or stored on the Exhibition premises no
matter how caused.

12. MARKETING: Exhibitor hereby grants to ABC an irrevocable, non-exclusive license to use
Exhibitor’s trade name, together with a description of the nature of Exhibitor’s business, in any
television, radio, print, electronic, or other media advertising or marketing programs of ABC, and
Exhibitor shall cooperate with Fair Management in carrying out such advertising and marketing.
Exhibitor agrees to supply two digital image files of at least 300 dpi accompanied by general contact
and caption information to Fair Management within two weeks of acceptance for PR and Marketing
purposes.

13. SECURITY: There is security; however, Exhibitors are required to take all necessary
precautions to ensure the safety of their artwork and belongings; booths should be staffed at all
times. Neither ABC nor the [venue] shall be liable for any loss or damage due to theft. To maintain
security, once set-up begins, nothing can be removed from the show premises unless accompanied by
a merchandise and/or security pass, through the dismantling period. Only Exhibitors may bring
articles onto the premises throughout the duration of the Fair.

38
14. ELECTRICAL SERVICES: ABC will seek but is not obligated to provide common area
lighting, but shall not be liable for any loss or damage due to failure or interruption of any service.
No Exhibitor is allowed to install Exhibitor’s own power connections. Fire, safety, and security
regulations must be adhered to.

15. MAINTENANCE: ABC will be responsible for keeping the common areas of the show site
clean. Each Exhibitor is responsible for the maintenance of Exhibitor’s booth and will leave the
space in the same condition in which it was found, reasonable wear and tear excepted. A $300
maintenance fee will be assessed for all Exhibitors in the Exhibitor Kit for the purpose of restoration
and maintenance of space. No nails or screws may be used on the walls, floors, or ceilings;
removable adhesive hooks only are permitted. All hanging devices must be removed from the wall
when dismantling the room. There will be a fee charged by the [venue] directly to the Exhibitor for
any damages that occur.

16. EXPENSES AND TAXES: The Exhibitor assumes full responsibility for the payment of the
total expenses incurred by each Exhibitor, or by third parties in connection with the operation of its
booth. It is not the responsibility of ABC to advise Exhibitors of any city, state, or local taxes with
respect to payment. All city, state, and local taxes, and licenses, if any, are the responsibility of
participating Exhibitors. The prices quoted by Fair Management are exclusive of applicable sales,
use, license, hotel occupancy, or other taxes or charges levied by the authority of the state, city, or
other governmental unit having jurisdiction at the site of the Fair, and Exhibitor shall be responsible
for the payment of all such amounts.

17. ELECTRONIC SIGNATURES: Signatures of Exhibitor on copies of the Contract transmitted

by electronic or telephonic means shall be deemed originals for all purposes hereunder, shall have
the same legal effect as an originally drawn signature, and shall be.

18. CONTRACT TERMS TO BE EXCLUSIVE: This Contract contains the sole and entire
agreement between the parties, and supersedes any and all other agreements between them. The
parties acknowledge and agree that neither of them has made any representation with respect to the
subject matter of this Contract or any representations inducing the execution and delivery of this
Contract except such representations as are specifically set forth in this Contract, and each party
acknowledges that he/she/it has relied on his/her/its own judgment in entering into this Contract.
The parties further acknowledge that any statements or representations that may have been made
prior to this Contract by either of them to the other are void and of no effect and that neither of them
has relied on the same in connection with her or its dealings with the other. Any and all changes or
modification to this Contract must be executed in advance, in writing.

19. GENERAL REMARKS: ABC is entitled in the case of compelling reasons or Acts of God to
postpone, reschedule, shorten, or extend the Fair without liability or obligation to the Exhibitor.
ABC reserves the right to expel from the show any Exhibitor who violates the rules stated herein.
The Exhibitor will remain liable for the full amount of booth space rental and any additional charges
incurred. The liability of ABC for failure to perform its obligations under this agreement is limited

39
to a refund of the Exhibitor’s deposits and room fees paid. In the event ABC shall be in default
under the terms of this Contract in any respect, such default shall not give rise to any rights or
remedies to Exhibitor unless and until such default shall continue for more than 30 days after ABC’s
actual receipt of written notice thereof from Exhibitor (or, as to defaults not susceptible of being
cured within such 30-day period, ABC fails to commence the cure thereof within such period and
thereafter diligently prosecute the same to completion). Further, if ABC is delayed or prevented
from performing any of its obligations under this agreement by any cause whatsoever beyond ABC’s
control, the period of such delay or such prevention shall be deemed added to the time herein
provided for the performance of any such obligation by ABC, or ABC, in its sole discretion, may
cancel this agreement and the parties hereto shall be released of all further obligations and liabilities
each may have to the other.

ABC reserves the right to expel from the Fair any Exhibitor for any reason including but not limited
to violation of the rules stated herein. The Exhibitor will remain liable for the liquidation amount of
room rental and any additional charges incurred. Notwithstanding any conflict of law provisions, the
laws of the District of Columbia and the United States of America shall be applicable to this
Contract Conditions and all matters arising from Exhibitor’s participation in ABC Art Fair, 2012.
Exhibitor agrees to the exclusive jurisdiction and venue for any legal proceedings relating to this
Contract solely in the federal and local courts located in Washington, D.C. This Contract is the final
and exclusive agreement between ABC and the Exhibitor.

40
G. Loan Provisions for Use in a Contract Between an Artist and a Museum or Other Entity

Borrowing Work(s) of Art

Ownership Rights. The Borrower acknowledges that the Works of Art are and shall

remain the property of the Artist, and that no right, title, or ownership interest is conveyed,

transferred, or assigned to the Borrower.

All copyrights in and to the Works of Art are reserved by and shall remain with the Artist;

the Borrower may reproduce and distribute copies of the Works only as described in section ___

herein.

Publicity and Photography. The Works of Art may be photographed provided that all

photography is supervised by the Borrower. Photographs of the Works of Art may be reproduced

for the purpose of press announcements related to the exhibition and may be included in an

exhibition catalog and/or brochure, on condition that each such photograph includes the credit

line provided herein. Photographs of the Works of Art may also be used to prepare derivative

works such as posters, postcards, and notecards, subject to the prior written approval of the

Artist. In the event that any derivative works are distributed and/or sold by the Borrower, the

parties shall negotiate in good faith the royalty to be paid to the Artist.

Care and Preservation. The Artist certifies that the Works of Art loaned are in good

condition as described more fully in the Condition Report attached hereto and made a part hereof

41
as Schedule A. The Borrower warrants that it will treat the Works of Art left in its custody with

the same care as the Borrower provides for its own collections; such care shall include all

commercially reasonable precautions, including without limitation, control of lighting,

temperature, and humidity as well as adequate security measures. Evidence of any damage to a

Work of Art at the time of receipt or while in the Borrower’s custody will be reported in writing

immediately to the Artist. No conservation, restoration, or repair to the Works of Art will be

undertaken without the prior written authorization of the Artist.

Transportation and Packing. All costs of transportation and packing will be paid by the

Borrower. The method of shipment and the shipper will be approved in writing by the Artist prior

to its occurrence, and the Works of Art shall be prepared for delivery to the Borrower and for

return to the Artist by a fine arts packer and/or qualified employee on the staff of the Borrower.

Insurance. The Borrower warrants that it shall insure the Works of Art on a “wall-to-

wall” basis with coverage under the Borrower’s fine arts policy (a copy of which is attached

hereto and made a part hereof as Schedule B) for the amount specified by the Artist, i.e.,

$_____________ for each of the [number] Works of Art, for a total of $_______________,

against so-called “all risk perils.” The Borrower agrees that in the event of any loss or damage to

any of the Works of Art, full recovery is hereby guaranteed by the Borrower. In the event that the

insurer determines that an exception or exclusion applies, or if for any other reason the insurer

refuses to pay for any loss or damage to any of the Works of Art, the Borrower warrants that it

will be solely liable, and the Borrower hereby releases the Artist from any liability for any and all

42
claims arising out of or relating to such losses or damage. Insurance coverage will be in effect

from the time the Works of Art are shipped by the Artist until they are returned to the Artist.

H. Provisions for Use in a Deed of Gift Pertaining to Work(s) of Art

Gift of Work(s) of Art. The undersigned Donor does hereby give, grant, and convey all of

his or her rights, title, and interests in and to said Work of Art, including any and all copyright

interests, to the Museum for inclusion in its collection, subject to the conditions set forth herein.

Delivery of the Work of Art. The Donor will deliver the Work(s) of Art to the Museum on or

by [date].

Preservation and Care. The Museum shall provide the same care to the Work of Art as it

provides for its own collections.

OR:

The Museum shall exercise its best efforts to safeguard and protect the Work(s) of Art,

including such conservation as is appropriate and necessary.

Disclaimer. The Museum accepts the Work(s) of Art “AS IS”. The Museum in its sole

discretion shall determine the adequacy of the releases and other consent forms and will not hold the

43
Artist liable for any deficiency in these forms. The Museum shall obtain any additional permissions,

assignments, authorizations, licenses, waivers and/or releases as it deems necessary.

I. Provisions for Use in a Contract Between an Artist and a Museum or Other Recipient of

a Work(s) of Art

Access and Use. The Work(s) of Art shall be made available to researchers according to

the policies of the Museum. Use of the Work(s) of Art shall include private study on any of the

premises administered by the Museum and in accordance with the Museum’s customary archival

and administrative purposes, including preservation and security. The Museum may also exhibit

the Work(s) of Art at its discretion and may display copies of the Work(s) of Art on its Web site-

--subject to agreed-upon technical restrictions---or in any other electronic form or successor

technology. Additionally, the Museum shall have unlimited discretion to loan the Work(s) of Art

to other museums, universities, colleges, and other organizations, as the Museum may deem

appropriate for the purposes of exhibition and education so long as adequate precautions are

taken.

Attribution. The Work(s) of Art and any reproductions and/or derivative works based on

the Work(s) of Art shall be marked consistent with standard Museum practices and policies.

Such markings shall take the following form:

44
 [Title of Work]

[Year Created]

A gift of [Artist’s Name]

The Museum shall make this attribution, including on the Museum’s Web site.

Copyright Notice. All reproductions and/or derivative works based on the Work of Art shall

include complete copyright notice in the following form:

Copyright © 2013 [Name of Artist]

All Rights Reserved.

Such notice shall also be posted in close proximity to the Work of Art whenever it is displayed.

Additions. Any such related materials as the Donor may from time to time donate to the

Museum shall be governed by the terms of this agreement or such written amendments as may

hereafter be agreed upon by the Donor and the Museum.

Communications. The Donor will provide the Museum with a current address and other

contact information in order that the Museum can meet its responsibilities as herein described.

The Museum will send notices and requests to addresses of record as provided and updated by

the Donor.

45
 Preservation of the Work of Art. The Museum shall exercise its best efforts to safeguard

and protect the Work(s) of Art; such care shall include all commercially reasonable precautions,

including without limitation, control of lighting, temperature, and humidity as well as adequate

security measures and such conservation as is appropriate and necessary.

Public Announcement. The Museum shall formally announce this gift to the public in a

manner that is acceptable to the Donor. [Note: Gifts may be anonymous.]

Disclaimer. The Museum acknowledges receipt of certain executed consent forms; Donor

makes no warranty as to the effectiveness of these forms. The Museum accepts the consent

forms, “AS IS”. The Museum in its sole discretion shall determine the adequacy of the consent

forms and will not hold the Artist liable for any deficiency in these forms. The Museum shall

obtain any additional permissions, assignments, authorizations, licenses, waivers, and/or releases

as it deems necessary.

Display of the Work(s) of Art on the Internet. The Donor may continue to display certain

material from the collection on his own Internet Web site. The Museum may link to materials

displayed on the Donor’s Internet Web site.

Commercial Use. In the event that the Museum prepares derivative works based on the

Work(s) of Art (subject to the prior written approval of the Donor), and sells such derivative

works in one or more of the Museum’s gift shops or are otherwise exploited for commercial gain,

46
or in the event that the Museum otherwise exploits the Work(s) of Art for commercial gain in any

way, then the Museum shall provide prior written notice of any such exploitation to the Donor;

such notice shall include the title of any derivative works, the format, the number of copies, and

the retail price for which copies will be offered for sale. The Museum shall provide periodic

written statements to the Donor disclosing the revenues generated from any commercial

exploitation of the Work(s) of Art. In the event that the revenues generated exceed the

reasonable, direct costs of production, then the net profits shall be shared, to the extent permitted

by law, by the Museum with the Donor as follows: _____% to the Museum and ____% to the

Donor. [Note: Profits generated from commercial exploitation of the work(s) of art may raise

serious tax issues that will need to be addressed by the museum.]

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