Art Purchase Agreement: Definition, Terms, Example

 

Exhibit 6.3

 

 

 

ART PURCHASE AGREEMENT

 

THIS ART PURCHASE AGREEMENT (“Agreement”) is made and entered into this ___ day of December, 2020 (the “Effective Date”), by and between Lévy Gorvy, LLC, a Limited Liability Company with an address at 909 Madison Avenue. New York, NY 10021 (“Seller”), and Masterworks Gallery, LLC, a Delaware limited liability company with an address at 497 Broome Street, New York, New York 10013 (“Agent”). Seller is selling the Work on behalf of the sole legal and beneficial owner (“Owner”) of the work of art described in Exhibit A attached hereto and incorporated herein by this reference (the “Work”), and has the authority to sell the Work. Agent is acting as agent on behalf of Masterworks Cayman SPC, on behalf of its 031 Segregated Portfolio (“Buyer”), and has the authority to buy the Work on behalf of Buyer. Seller, on behalf of the Owner, has agreed to sell the Work to Buyer, and Agent, on behalf of Buyer, has agreed to buy the Work from Seller, on the terms and conditions set forth in this Agreement. In consideration of the mutual promises contained in this Agreement, the parties agree as follows:

 

1. SALE. Seller agrees to sell the Work to Buyer, and Agent on behalf of Buyer agrees to buy the Work from Seller, subject to the terms and conditions set forth in this Agreement.

 

2. PURCHASE PRICE AND MANNER OF PAYMENT. The purchase price for the Work is One Million Dollars ($1,000,000) (the “Purchase Price”). The full Purchase Price shall be paid on or before December 31, 2020. For the avoidance of doubt, the obligation to pay the Purchase Price is expressly conditioned on Buyer’s ability to inspect the Work at the Storage Location (as defined in Section 4.1) to confirm the Work is in good condition prior to the Closing Date. Agent shall pay the Purchase Price to Seller by wire transfer in accordance with the wire instructions listed in the invoice, a copy of which is attached hereto as Exhibit A, which shall be verbally confirmed by either Mariya Golovina or Nigel Glenday on behalf of Buyer and Leon Yugrakh on behalf of Seller prior to payment to Seller.

 

3. REPRESENTATIONS AND WARRANTIES.

 

3.1. To induce Agent to enter into this Agreement, and acknowledging that Agent and Buyer are relying on each and all of the following representations and warranties, Seller represents and warrants to Agent and Buyer on the Effective Date and on the Closing Date (as defined in Section 6 below) that:

 

3.1.1. Seller, without any further action, consent or authority of any other party, and without violation of any party’s rights or claims, has full right, legal authority and capacity to enter into this Agreement, to make the covenants, representations, warranties, and indemnifications contained in this Agreement, to execute and deliver the bill of sale (the “Bill of Sale”) in the form annexed as Exhibit B to this Agreement, to sell and transfer good and marketable title to the Work to Buyer on the Closing Date and to complete the transaction contemplated by this Agreement.

 

3.1.2. The Work is authentic, meaning the Work was created by the artist indicated on the attached Exhibit A.

 

3.1.3. Owner is the sole legal and beneficial owner of the Work and has good and marketable title to the Work.

 

3.1.4. The Work is not subject to or the subject of any rights or interests of others, claims, liens, security interests, restrictions, conditions, options or other encumbrances of any kind held or claimed by any person, entity, government or government agency (actual, threatened or pending) (collectively, “Claims”). Neither Seller nor Owner has knowledge of any facts or circumstances likely to give rise to any Claims.

 

3.1.5. Neither Seller nor Owner is aware of any challenges or disputes (current, past, pending or threatened) relating to the attribution, authenticity, description or provenance of the Work as set forth in Exhibit A attached hereto. Seller has provided Agent with all information in Seller’s and Owner’s knowledge concerning the attribution, authenticity, description, and condition of the Work, and shall provide to Agent a certificate of authenticity from the artist for the Work, if applicable. .

 

 

Art Purchase Agreement

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3.1.6. The condition of the Work is, and shall be upon inspection of the Work by Buyer and delivery and inspection of the Work at the Delivery Location (as defined in Section 7.1 below) and at the Closing Date, substantially in the same condition reflected in the Condition Report (as defined in Section 9 below). Upon delivery at the Delivery Location, Delaware Freeport shall prepare a new condition report for the Work at the sole cost and expense of Buyer, which shall confirm that the condition of the Work is the same as set forth in the Condition Report. If the Work is not in the same condition as reflected in the Condition Report at the time of its delivery at the Delivery Location or as of the Closing Date, Buyer shall have the right to terminate the Agreement and be entitled to a full refund of the Purchase Price.

 

3.1.7. The Work has been lawfully exported and imported as required by the laws of any country in which it was located or to which it was transported, and any duties and taxes on the export and import of the Work have been paid and any required declarations upon the export and import have been made.

 

3.1.8. The Work has not been used and the Purchase Price funds will not be used to violate the banking, anti-money laundering or currency transfer laws or regulations of the United States or any other country.

 

3.2. Seller does hereby agree to indemnify, defend and hold Agent and Buyer free and harmless from any and all demands, claims, suits, judgments, obligations, damages, losses, or other liability asserted or alleged against Agent or Buyer as well as all reasonable attorney or other professional fees and other reasonable costs, fees and expenses, suffered or incurred by, or asserted or alleged against Agent or Buyer arising by reason of, or in connection with, the breach or alleged breach by Seller of any provision of this Agreement, or the actual or alleged falsity or inaccuracy of any representation or warranty by Seller contained in this Agreement.

 

3.3. The benefits of the representations, warranties, covenants and indemnities contained in this Agreement shall survive completion of the transaction contemplated by this Agreement, including without limitation transfer of the Work to Buyer. It shall be a condition precedent to Agent and Buyer’s obligations that Seller’s representations and warranties contained in this Agreement are true and correct on and as of the Closing Date and delivery of the Work to Buyer. Notwithstanding anything to the contrary herein, Seller’s representation, warranty and indemnification relating to the authenticity of the Work shall survive for a period of five (5) years from the Closing Date.

 

4. STORAGE AND CARE OF THE WORK.

 

4.1. BETWEEN THE EFFECTIVE DATE AND THE DATE ON WHICH SELLER PACKS AND SHIPS THE WORK FOR DELIVERY TO THE DELIVERY LOCATION, SELLER SHALL STORE THE WORK AT PREMISES LOCATED AT 3930 NE 2ND AVENUE, MIAMI, FL (THE “STORAGE LOCATION”). Seller shall not relocate the Work without Agent’s prior written approval.

 

4.2. Seller agrees to ensure an appropriate storage environment consistent with professional fine art museum and conservation standards is provided to safeguard the quality and condition of the Work and to protect the Work from water, fire, loss, damage, deterioration, theft, mishandling, dirt, vermin, insects, and from extremes of light, temperature, and humidity from the Effective Date and until the Work is delivered to the Delivery Location. Any damage to the Work must be reported immediately to Agent. Seller will not perform any conservation or restoration on the Work without the specific prior written consent of Agent.

 

5. INSURANCE. Seller shall arrange and pay for the Work to be insured under Seller’s fine arts policy for an amount equal to the Purchase Price commencing on the Effective Date and continuing until risk of loss transfers to Buyer. Risk of loss to the Work shall transfer from Seller to Buyer following both (i) Buyer’s acceptance of the Work at the Delivery Location and (ii) payment by Buyer of the full Purchase Price.

 

6. TITLE. The “Closing Date” shall mean the date upon which Agent has paid the full Purchase Price to Seller. On the Closing Date, subject only to Agent’s payment of the full Purchase Price in accordance with this Agreement, Seller, on behalf of Owner, hereby transfers to Buyer good and marketable title and exclusive and unrestricted right to possession of the Work free and clear of any and all Claims. On the Closing Date, Seller shall deliver to Agent a signed copy of the Bill of Sale, and if they have not done so already, a certificate of authenticity from the artist of the Work, if applicable. Seller shall be responsible for remitting any and all applicable sales proceeds due to Owner in connection with the sale of the Work hereunder.

 

 

 

Art Purchase Agreement

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7. DELIVERY AND EXPENSES.

 

7.1. Within five (5) business days of the Closing Date, if Seller has not already done so, Seller shall arrange for the Work to be packed and shipped by fine art shippers approved by Agent in writing to Agent’s account at Delaware Freeport, located at 111 Alan Drive, Newark, Delaware 19711 (the “Delivery Location”).

 

7.2. Seller shall be responsible for arranging packing and shipping the Work from its current location to the Delivery Location and insuring the Work until the Closing Date. Agent agrees to reimburse Seller for all third-party costs and expenses relating to packing and shipping the Work to the Delivery Location pursuant to this Agreement , provided that all shipping and packing arrangements and costs shall be approved in advance in writing by Agent.

 

8. THIRD-PARTY COMMISSIONS. Neither Agent nor Buyer shall be responsible for and neither shall pay any commissions or fees due any person acting on behalf of Seller or Owner as a result of the transaction contemplated by this Agreement. Seller shall not be responsible for and shall not pay any commissions or fees due any person acting on behalf of Agent or Buyer as a result of the transaction contemplated by this Agreement. Seller shall be responsible to pay any fees or costs to any agent or advisor engaged by Seller in connection with the transactions contemplated hereby and Buyer shall be indemnified and held harmless from any claim by any such agent or advisor relating to this Agreement and the transactions contemplated hereby. The parties acknowledge and agree that no such agent or advisor to Seller is an employee or affiliate of Buyer or Agent.

 

9. INSPECTION. During the week of December 14, 2020 or, if such inspection is impracticable, on another date mutually agreed upon, agent for the Buyer shall be entitled to inspect the Work (the “Inspection”) at Storage Location, and shall prepare a condition report (the “Condition Report”). When the Work is delivered to the Delivery Location, Delaware Freeport shall be entitled to inspect the Work and prepare a condition report at the Agent’s expense to confirm the condition of the Work matches the condition reflected in the Condition Report.

 

10. SECURITY INTEREST. Seller grants Buyer a security interest in all right, title and interest in and to the Work, all documents related thereto, and any amount that compensates or indemnifies for the loss, theft or damage to the Work from the Effective Date and until the Work is delivered to and accepted by Buyer at the Delivery Location. In the event of any default under this Agreement by Seller, Buyer, to the extent of Buyer’s security interest in and to the Work at such time of default, shall have the rights of a secured party under Article 9 of the New York Uniform Commercial Code. Upon execution of this Agreement, Seller authorizes Buyer to file a UCC-1 Financing Statement covering the Work.

 

11. MISCELLANEOUS. This Agreement, including the exhibits attached hereto, represents the entire understanding of the parties hereto with respect to the subject matter hereof, supersedes any and all other and prior agreements between the parties with respect to the sale of the Work and declares all such prior agreements between the parties null and void. In the event of a conflict between this Agreement and any invoice issued by Seller, the terms of this Agreement shall control. Seller agrees that Buyer is a third-party beneficiary of this Agreement. The terms of this Agreement may not be modified or amended, except in a writing signed by the parties hereto. Seller may not assign this Agreement without the prior written consent of Agent or Buyer. This Agreement shall inure to the benefit of, and shall be binding upon, the successors, permitted assigns, heirs, executors, administrators and legal representatives of the parties hereto. This Agreement, and all matters arising out of or relating to this Agreement, shall be governed and construed in accordance with the laws of the State of New York, without regard to its conflict of laws provisions. Any dispute arising under or related to this Agreement shall be resolved in the New York State Supreme Court, New York County or in the United States District Court for the Southern District of New York. This Agreement may be executed in counterparts, including by PDF or facsimile, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.

 

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Art Purchase Agreement

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IN WITNESS WHEREOF, the parties hereto have hereunto signed their hands and seals as of the Effective Date.

 

	SELLER:
	LÉVY GORVY, LLC
	BY:
	ITS:
	AGENT:
	MASTERWORKS GALLERY, LLC
	BY:
	ITS:

 

[Signature Page to Art Purchase Agreement]

 

 

Art Purchase Agreement

Page 5

 

EXHIBIT A

 

Invoice

 

 

Art Purchase Agreement

Page 6

 

EXHIBIT B

 

BILL OF SALE

 

Dated: _______________, 2020

 

Sold by:	LÉVY GORVY, LLC	(“Seller”)
Sold to:	Masterworks Cayman SPC On behalf of its 031Segregated Portfolio 497 Broome Street New York, New York 10013	(“Buyer”)
Artist:	Günther Uecker	(the “Work”)
Title:	Weisses Feld
Year:	1987
Medium:	White paint and nails on canvas on board
Dimensions:	35 7/16 x 35 7/16 x 6 1/8 inches (90 x 90 x 15.5 cm)
Retail Price:	$1,000,000
NY Sales Tax:	None Withheld; Delaware Delivery
Purchase Price:	$1,000,000

 

For value received, Seller acknowledges that the Work, good and marketable title to the Work, and all right to possession thereto and all legal ownership thereof, have been irrevocably, and without condition or reservation of any kind, sold, transferred, and conveyed to Buyer.

 

The Work is sold subject to each and all of the provisions, terms, conditions, covenants, representations, warranties and indemnities contained in the Art Purchase Agreement by and between Seller and Masterworks Gallery, LLC dated December 9, 2020, and all such provisions, terms, conditions, covenants, representations, warranties and indemnities of the parties thereunder are incorporated herein by this reference as if fully set forth herein in their entirety.

 

	SELLER:
	LÉVY GORVY, LLC
	BY:
	ITS:

 

 

 

Reference:
Security Exchange Commission - Edgar Database, EX1A-6 MAT CTRCT 5 ex6-3.htm, Viewed August 11, 2022, View Source on SEC.