VIRTU FINANCIAL,INC.Files An 8-K Entry into a Material Definitive Agreement

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VIRTU FINANCIAL,INC.Files An 8-K Entry into a Material Definitive Agreement

Item 1.01. Entry Into a Material Definitive Agreement.

On June16, 2017 (the Closing Date), Orchestra Borrower LLC (the
Escrow Issuer) and Orchestra Co-Issuer,Inc. (the Co-Issuer),
wholly owned subsidiaries of Virtu Financial,Inc. (Virtu),
completed their offering (the Offering), to an exemption from
registration under the Securities Act of 1933 (as amended, the
Securities Act), of $500 million aggregate principal amount of
6.750% Senior Secured Second Lien Notes due 2022 (the Notes). The
Notes have been issued by the Escrow Issuer and Co-Issuer under
an Indenture, dated as of June16, 2017 (the Indenture), among the
Escrow Issuer, the Co-Issuer and U.S. Bank National Association,
as trustee (in such capacity, the Trustee) and collateral agent.
The Notes mature on June15, 2022. Interest on the Notes accrues
at 6.750% per annum, paid every six months through maturity on
each June15 and December15, beginning on December15, 2017.

For purposes of this Current Report on Form8-K, the term Issuers
means (a)prior to the Effective Date, collectively, the Escrow
Issuer and the Co-Issuer and (b)from and after Effective Date,
collectively, VFH Parent LLC (VFH) and the Co-Issuer. The
Effective Date means the closing date of Virtus previously
announced pending acquisition (the Acquisition) of KCG
Holdings,Inc. (KCG Holdings), and its subsidiaries (collectively,
KCG), to the Agreement and Plan of Merger, dated as of April20,
2017 (the Merger Agreement).

Use of Proceeds

The gross proceeds from the Offering have been escrowed as
described below and upon release from escrow will be used to
finance, in part, the Acquisition and to repay certain
indebtedness of Virtu and KCG. The proceeds of the Notes will be
held in escrow until immediately prior to the consummation of the
Acquisition.

Notes Guarantees

The Notes are currently the obligations of only the Escrow Issuer
and Co-Issuer and are not currently guaranteed by Virtu Financial
LLC, a subsidiary of Virtu (Holdings), or any of Holdings
subsidiaries. After the Effective Date and the release of the
escrowed funds, the Escrow Issuers obligations under the Notes
will be assumed by VFH, a wholly-owned subsidiary of Holdings,
and fully and unconditionally guaranteed on a senior basis,
jointly and severally, by Holdings and each of Holdings existing
and future wholly owned domestic restricted subsidiaries that
guarantee or are borrowers under VFHs previously announced new
senior secured first lien credit facilities (the New Credit
Facilities), including KCG Holdings and certain of its
subsidiaries (subject to certain exceptions) (collectively, the
Guarantors). Virtu will not guarantee the notes.

Collateral

Currently, the Notes are secured by a first-priority perfected
lien on the escrow account and the gross proceeds of the offering
and other escrow property held therein. From and after the
Effective Date, the Notes and the related guarantees will be
secured by second-priority perfected liens on substantially all
of the Issuers and Guarantors existing and future assets, subject
to certain exceptions, including all material personal property,
a pledge of the capital stock of the Issuers, the Guarantors
(other than Holdings) and the direct subsidiaries of the Issuers
and the Guarantors and up to 65.0% of the voting capital stock of
any now-owned or later-acquired foreign subsidiaries that are
directly owned by the Issuers or any of the Guarantors, which
assets will also secure the New Credit Facilities on a
first-priority basis.


Indenture

Optional Redemption

Prior to June15, 2019, the Issuers may redeem some or all of
the Notes at a redemption price equal to 50% of the principal
amount plus accrued and unpaid interest, if any, to (but not
including) the date of redemption, plus an applicable make
whole premium (calculated based upon the yield of certain U.S.
treasury securities plus 0.50%).

Prior to June15, 2019, the Issuers may redeem up to 35% of the
aggregate principal amount of the Notes at a redemption price
equal to 106.750% of the principal amount thereof, plus accrued
and unpaid interest, if any, to (but not including) the date of
redemption with the net cash proceeds from certain equity
offerings.

On or after June15, 2019, the Issuers may redeem some or all of
the Notes, at the following redemption prices (expressed as
percentages of principal amount), plus accrued and unpaid
interest to (but not including) the date of redemption, if
redeemed during the 12-month period beginning on June15 of the
years indicated below:

Period

Percentage

103.375

%

101.688

%

2021 and thereafter

100.000

%

Special Mandatory Redemption

If (i)the Escrow Release Conditions (as defined below) are not
satisfied on or prior to the Escrow End Date (as defined below)
or such earlier date as the Escrow Issuer determines in its
sole discretion that the Escrow Release Conditions cannot be
satisfied, (ii)the Escrow Issuer fails to satisfy its Top Up
Obligations (as defined below) or (iii)the Merger Agreement is
terminated in accordance with its terms, the Escrow Issuer will
redeem the Notes at a redemption price equal to 50% of the
issue price of the Notes, plus accrued and unpaid interest to,
but excluding, the redemption date.

Change of Control

Upon the occurrence of specified change of control events, the
Issuers are required to make an offer to purchase all of the
Notes at a purchase price of 101% of the aggregate principal
amount of the Notes repurchased, plus accrued and unpaid
interest to (but not including) the date of purchase.

Certain Covenants

The Indenture imposes certain limitations on the Issuers and
the Guarantors ability, and the ability of certain other
subsidiaries, to:

incur or guarantee additional indebtedness or issue preferred
stock;

pay dividends, make certain investments and make repayments on
indebtedness that is subordinated in right of payment to the
Notes and make other restricted payments;

create liens on their assets to secure debt;

enter into transactions with affiliates;

merge, consolidate or amalgamate with another company;

transfer and sell assets; and

permit restrictions on the payment of dividends by Holdings
subsidiaries.


These covenants are subject to important qualifications and
exceptions. The Indenture also contains customary events of
default, including, among others, payment defaults related to
the failure to pay principal or interest on the Notes, covenant
defaults, final maturity default or cross-acceleration with
respect to material indebtedness and certain bankruptcy events.

A copy of the Indenture will be filed as an exhibit to our next
Quarterly Report on Form10-Q. The above description of the
material terms of the Indenture is qualified in its entirety by
reference to the full text of the Indenture.

Escrow Arrangement

The Escrow Issuer and the Co-Issuer have deposited the gross
proceeds of the Offering into a segregated escrow account,
together with additional amounts necessary to redeem the Notes
at a price equal to 50% of the gross proceeds of the Offering,
plus accrued and unpaid interest to, but not including, the
fourth business day following the three-month anniversary of
the Closing Date. On or prior to each three-month anniversary
of the Closing Date, the Escrow Issuer will deposit an
additional amount of cash into the escrow account that,
together with all amounts then existing in the escrow account,
would be sufficient to redeem the Notes in full at 50% of the
issue price of the Notes plus an amount equal to the interest
that would accrue on the Notes to, but excluding, the date that
is three months and four business days (or, if shorter, the
date that is four business days following January31, 2018 (the
Escrow End Date)) following such deposit date (the Top Up
Obligations).

The escrow agent will release the escrowed funds (the Release)
on or prior to the Escrow End Date upon certification by the
Escrow Issuer that the following conditions have been met (the
Escrow Release Conditions): (i)the merger of Orchestra Merger
Sub,Inc., a Delaware corporation and an indirect wholly-owned
subsidiary of Virtu, with and into KCG Holdings, with KCG
Holdings surviving such merger, followed by a series of
contributions of the Escrow Issuer and its subsidiaries
(including KCG Holdings) to Holdings, and then to VFH,
resulting in KCG Holdings becoming an indirect wholly owned
subsidiary of VFH (the Merger and Contribution) shall be
consummated in accordance with the terms of the Merger
Agreement without giving effect to any amendment, change or
supplement or waiver of any provision thereof (including any
change in the purchase price) in any manner that is materially
adverse to the interests of the holders of Notes, it being
understood that any reduction of the purchase price in respect
of the Merger (as defined in the Indenture) will be materially
adverse to the holders of Notes unless such reduction is in the
aggregate less than 10% of the purchase price payable on the
date of the Merger Agreement; and (ii)Holdings will, to a
supplemental indenture to the Indenture to be entered
immediately following the Merger and Contribution, assume all
obligations of the Escrow Issuer in respect of the Notes and
Holdings and the guarantors will, at Holdings option, by either
the same or a separate supplemental indenture to be entered
immediately following the Merger and Contribution, become
guarantors of the Notes on the date of the closing of the
Merger (it being understood that such supplemental
indenture(s)may be entered into on such date after the Release
and the consummation of the Merger and Contribution so long as
such certificate specifies that such supplemental indenture
shall be so executed on such date).

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

Please see the discussion set forth under Item 1.01, Entry into
a Material Definitive Agreement, of this Form8-K, which
discussion is incorporated herein by reference in its entirety.


Forward-Looking Statements

This report contains forward-looking statements. These
forward-looking statements are subject to numerous
uncertainties and factors relating to Virtus operations and
business environment, as well as uncertainties relating to the
Acquisition. Any forward-looking statements in this report are
based upon information available to Virtu on the date of this
report. Virtu does not undertake to publicly update or revise
its forward-looking statements even if experience or future
changes make it clear that any statements expressed or implied
therein will not be realized. Additional information on risk
factors that could potentially affect Virtus financial results
may be found in Virtus filings with the Securities and Exchange
Commission.


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