VIRTU FINANCIAL,INC. (NASDAQ:VIRT) Files An 8-K Entry into a Material Definitive Agreement

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VIRTU FINANCIAL,INC. (NASDAQ:VIRT) Files An 8-K Entry into a Material Definitive Agreement

Item 1.01. Entry into a Material Definitive Agreement.

Agreement and Plan of Merger

On April20, 2017, Virtu Financial,Inc., a Delaware corporation
(the Company) entered into an Agreement and Plan of Merger (the
Merger Agreement) with Orchestra Merger Sub,Inc., a Delaware
corporation and an indirect wholly-owned subsidiary of the
Company (Merger Sub and, together with the Company, the Acquirer
Parties), and KCG Holdings,Inc., a Delaware corporation (the
Target). to the Merger Agreement, subject to the satisfaction or
waiver of specified conditions, Merger Sub will merge with and
into the Target (the Merger), with the Target surviving the
Merger as a wholly-owned subsidiary of the Company (the
Acquisition).

to the Merger Agreement, at the effective time of the Merger (the
Effective Time), each of the Targets issued and outstanding
shares of ClassA common stock, par value $0.01 per share (Target
ClassA Common Stock) will be cancelled and extinguished and
converted into the right to receive $20.00 in cash, without
interest (the Merger Consideration), less any applicable
withholding taxes. to the Merger Agreement, the Company will
finance the Merger Consideration with the equity issuances
described below under the heading Equity Financing and the new
debt financing described below under the heading Debt Financing.

Following execution of the Merger Agreement, TJMT Holdings LLC
(the Founder Member), the holder of a majority of the voting
power of the outstanding capital stock of the Company, executed a
written consent approving the equity financing to partially
finance the Merger Consideration. The written consent will not be
effective until the passing of 20 calendar days from the date on
which the Company mails to the Companys stockholders an
information statement on Schedule 14C under the Securities
Exchange Act of 1934, as amended (the Information Statement).

As of the Effective Time, (i)each stock option of the Target that
is outstanding and unexercised immediately before the Effective
Time will be cancelled in consideration for the right to receive
a cash payment equal to the excess, if any, of the Merger
Consideration over the exercise price of such stock option;
(ii)each stock appreciation right of the Target that is
outstanding and unexercised immediately before the Effective Time
will be cancelled in consideration for the right to receive a
cash payment equal to the excess, if any, of the Merger
Consideration over the exercise price of such stock appreciation
right; (iii)each restricted share unit of the Target will become
fully vested (contingent upon the closing of the Merger) and
cancelled and converted into the right to receive the Merger
Consideration and (iv)the right of each holder of warrants of the
Target that are outstanding immediately before the Effective Time
to receive shares of Target Class A Common Stock upon exercise of
such warrants will be converted into the right to receive, upon
exercise of such warrants, a cash payment equal to the excess, if
any, of the Merger Consideration over the exercise price of such
warrant.

The parties have each made customary representations and
warranties. The Company has agreed, subject to the terms of the
Merger Agreement, to various covenants and agreements, including,
among others, to use its reasonable best efforts to obtain the
equity financing and the debt financing described below or such
alternative financing as contemplated by the Merger Agreement.
The Target has agreed, subject to the terms of the Merger
Agreement, to various covenants and agreements, including, among
others: (i)to conduct its business in the ordinary course and in
a manner consistent with past practice; (ii)to promptly call a
meeting of the Targets stockholders to vote on the Merger
Agreement; (iii)to, through the Targets board of directors,
recommend to its stockholders that they vote to approve the
Merger Agreement and the Merger, subject to certain exceptions to
permit the Targets board of directors to comply with its
fiduciary duties; (iv)not to solicit proposals relating to
alternative transactions to the Merger with a third party or
engage in discussions or negotiations with respect thereto,
subject to certain exceptions to permit the Targets board of
directors to comply with its fiduciary duties; and (v)to use
reasonable best efforts to cooperate with the Companys efforts to
obtain financing. The parties have also agreed to use their
respective reasonable best efforts to obtain any approvals from
governmental authorities for the Merger, including all antitrust
approvals.

Each partys obligation to consummate the Merger is subject to
certain conditions, including, among others: (i) approval of the
Merger Agreement by the holders of a majority of the Target
ClassA Common Stock, voting together as a single class;
(ii)expiration or termination of applicable waiting periods under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended; (iii)the receipt of other required governmental or
regulatory approvals; (iv)the absence of any order or legal
requirement issued or enacted by any court or other governmental
authority, which is in effect and prevents the consummation of
the Merger; and (v)the passing of 20 calendar days from the date
on which the Company mails to the Companys stockholders the 14C
Information Statement in definitive form. The Companys obligation
to consummate the Merger is also conditioned on, among other
things, the absence of any Company Material Adverse Effect (as
defined in the Merger Agreement) on the Target.

to the Merger Agreement, the Company is required to use its
reasonable best efforts to consummate the equity financing and
the debt financing. The Merger is not subject to a financing
condition.

The Merger Agreement also contains certain specified
termination provisions, including, among others, a mutual
termination right if the Merger has not been consummated on or
before January31, 2018. In certain circumstances in connection
with the termination of the Merger Agreement, the Target must
pay to the Company a termination fee equal to $45,000,000 (the
Target Termination Fee). The Target must pay to the Company the
Target Termination Fee in the event that the Company terminates
the Merger Agreement (i)following a Company Adverse
Recommendation Change (as defined in the Merger Agreement) by
the Targets board of directors; (ii)due to the failure of the
Targets board of directors to recommend the approval of the
Merger Agreement to its stockholders; (iii)due to the Targets
material breach, in a manner adverse to the Company, of its
agreement not to solicit proposals relating to alternative
transactions to the Merger or engage in discussions or
negotiations with respect thereto; and (iv)due to the Targets
failure to convene a meeting of its stockholders to vote on the
Merger Agreement. The Target also must pay to the Company the
Target Termination Fee if the Merger Agreement is terminated
under certain specified circumstances and, within 12 months of
such termination, the Target enters into a definitive agreement
with respect to, or consummates, a competing proposal.

The foregoing description of the Merger Agreement is qualified
in its entirety by reference to the Merger Agreement, a copy of
which is filed herewith as Exhibit2.1 and is incorporated
herein by reference.

The Merger Agreement has been attached to provide investors and
security holders with information regarding its terms and is
not intended to provide any factual information about the
Target, the Company or Merger Sub. The representations,
warranties and covenants in the Merger Agreement were made only
for the purpose of the Merger Agreement and solely for the
benefit of the parties to the Merger Agreement as of specific
dates. Such representations, warranties and covenants may have
been made for the purposes of allocating contractual risk
between the parties to the Merger Agreement instead of
establishing these matters as facts, may or may not have been
accurate as of any specific date, and may be subject to
important limitations and qualifications (including exceptions
thereto set forth in disclosure schedules agreed to by the
contracting parties) and may therefore not be complete. The
representations, warranties and covenants in the Merger
Agreement may also be subject to standards of materiality
applicable to the contracting parties that may differ from
those applicable to investors. Investors should not rely on the
representations, warranties and covenants or any descriptions
thereof as characterizations of the actual state of facts or
condition of the Target, the Company, Merger Sub or any of
their respective subsidiaries or affiliates. Moreover,
information concerning the subject matter of the
representations, warranties and covenants may change after the
date of the Merger Agreement, which subsequent information may
or may not be fully reflected in the Companys or the Targets
public disclosures.

Voting Agreement

In connection with entering into the Merger Agreement, on
April20, 2017, the Company, Merger Sub and Jefferies LLC,
representing 24.5% of outstanding shares of the Target ClassA
Common Stock, entered into a Voting Agreement to which, among
other things, such stockholder has agreed to (i)vote its shares
of Target ClassA Common Stock for the approval of the Merger
Agreement and the approval of the transactions contemplated
thereby, including the Merger and (ii) take other actions in
furtherance of the transactions contemplated by the Voting
Agreement (the Voting Agreement).

The foregoing description of the Voting Agreement is qualified
in its entirety by reference to the Voting Agreement, a copy of
which is filed herewith as Exhibit10.1 and is incorporated
herein by reference.

Equity Financing

Temasek Investment Agreement

In connection with financing the Merger Consideration, on
April20, 2017, the Company entered into an investment agreement
(the Temasek Investment Agreement) with Aranda Investments Pte.
Ltd. (Temasek) to which the Company will issue to Temasek
8,012,821 shares of the Companys ClassA common stock, par value
$0.00001 per share (the Company ClassA Common Stock) at a
purchase price of $15.60 per share (the Temasek Investment).

The Temasek Investment Agreement provides that for so long as
Temasek and its affiliates beneficially own at least 25% of its
shares of Company ClassA Common Stock held as of the closing of
the Temasek Investment, Temasek is entitled to nominate one
representative to serve as an observer on the Companys board of
directors.

The Temasek Investment Agreement contains customary
representations and warranties by the Company and Temasek, and
the Company and Temasek have agreed to indemnify their
counterparty for losses resulting from a breach of any
representations, warranties or covenants by the other party.
The Company has also agreed to indemnify Temasek and

certain of its affiliates for losses to the extent (i)such
parties are party to a claim as a result of their direct or
indirect ownership of the shares of Company ClassA Common Stock
acquired in connection with the Temasek Investment and (ii)such
claim is based on the Companys or its subsidiaries (i)failure
or alleged failure to comply with any Law (as defined in the
Temasek Investment Agreement) or (ii)ownership or the operation
of its assets and properties or the operation or conduct of its
business.

The Temasek Investment is contingent upon the closing of the
Acquisition and is subject to other customary closing
conditions, including receipt of required regulatory approvals,
and the execution and delivery of certain other documents.

The Company ClassA Common Stock was offered and will be sold in
a private placement exempt from the registration requirements
of the Securities Act of 1933, as amended (the Securities Act)
to Section4(a)(2)of the Securities Act, and may not be offered
or sold absent registration or an applicable exemption from
registration. The information contained in this Current Report
on Form8-K shall not constitute an offer to sell or a
solicitation of an offer to buy, nor shall there be any sale of
the Company securities in any state where such offer,
solicitation or sale would be unlawful prior to the
registration or qualification under the securities laws of such
state.

The foregoing description of Temasek Investment Agreement is
qualified in its entirety by reference to the Temasek
Investment Agreement, a copy of which will be filed as an
exhibit to the Companys next Quarterly Report on Form10-Q for
the quarter ended March31, 2017.

NIH Investment Agreement

In connection with financing the Merger Consideration, on
April20, 2017, the Company entered into an investment agreement
(the NIH Investment Agreement) with North Island Holdings I, LP
(NIH) to which the Company will issue to NIH 40,064,103 shares
of the Company ClassA Common Stock at a purchase price of
$15.60 per share (the NIH Investment).

The NIH Investment Agreement provides NIH with certain board
nomination rights determined based on the percentage of Company
ClassA Common Stock beneficially owned by NIH as of the closing
of the NIH Investment. For so long as NIH beneficially owns at
least 50% of its shares of Company ClassA Common Stock held as
of the closing of the NIH Investment, NIH is entitled to
nominate two directors to serve on the Companys board of
directors. When NIH beneficially owns less than 50% but at
least 25% of its shares of Company ClassA Common Stock held as
of the closing of the NIH Investment, NIH is entitled to
nominate one director.

In addition, for so long as NIH is entitled to nominate one
director, NIH is entitled to certain pre-emptive rights with
respect to issuances of the Companys equity securities, subject
to customary exceptions, based on the percentage of Company
ClassA Common Stock owned by NIH at the time of such issuance.

The NIH Investment Agreement also provides NIH with certain
information rights determined based on the percentage of
Company ClassA Common Stock beneficially owned by NIH as of the
closing of the NIH Investment. For so long as NIH beneficially
owns at least 10% of its shares of Company ClassA Common Stock
held as of the closing of the NIH Investment, NIH is entitled
to receive certain financial information, including unaudited
monthly financial statements and audited annual financial
statements, and access to the Companys books of accounts and
other records, and for so long as NIH beneficially owns at
least 25% of its shares of Company ClassA Common Stock held as
of the closing of the NIH Investment, NIH is entitled to all
written information that is provided to the Companys board of
directors.

to the NIH Investment agreement, subject to certain exceptions,
NIH will be restricted from transferring its Company ClassA
Common Stock until after the first anniversary of the closing
of the NIH Investment.

The NIH Investment Agreement contains customary representations
and warranties by the Company and NIH, and the Company and NIH
have agreed to indemnify their counterparty for losses
resulting from a breach of any representations, warranties or
covenants by the other party. The Company has also agreed to
indemnify NIH and certain of its affiliates for losses to the
extent (i)such parties are party to a claim as a result of
their direct or indirect ownership of the shares of Company
ClassA Common Stock acquired in connection with the NIH
Investment and (ii)such claim is based on the Companys or its
subsidiaries (i)failure or alleged failure to comply with any
Law (as defined in the NIH Investment Agreement) or
(ii)ownership or the operation of its assets and properties or
the operation or conduct of its business.

The NIH Investment is contingent upon the closing of the
Acquisition and is subject to other customary closing
conditions, including the receipt of required regulatory
approvals, and the execution and delivery of certain other
documents,

including (i)an amendment to the Companys Existing Registration
Rights Agreement (as defined below) to be added as a party to
such agreement and (ii)an amendment to the Companys lock-up
waiver agreement to be added as a party to such agreement.,
which governs the release of underwriter lock-ups to which the
Founder Member and Temasek are subject.

The Company ClassA Common Stock was offered and will be sold in
a private placement exempt from the registration requirements
of the Securities Act to Section4(a)(2), and may not be offered
or sold absent registration or an applicable exemption from
registration. The information contained in this Current Report
on Form8-K shall not constitute an offer to sell or a
solicitation of an offer to buy, nor shall there be any sale of
the Company securities in any state where such offer,
solicitation or sale would be unlawful prior to the
registration or qualification under the securities laws of such
state.

The foregoing description of the NIH Investment Agreement is
qualified in its entirety by reference to the NIH Investment
Agreement, a copy of which will be filed as an exhibit to the
Companys next Quarterly Report on Form10-Q for the quarter
ended March31, 2017.

Stockholders Agreement

In connection with entering into the Temasek Investment
Agreement and NIH Investment Agreement, on April20, 2017, the
Company entered into a Stockholders Agreement (the Stockholders
Agreement) with the Founder Member, Temasek, Havelock Fund
Investments Pte Ltd. (an affiliate of Temasek) (Havelock and,
together with Temasek, the Temasek Entities) and NIH. The
Stockholders Agreement will not take effect until the closing
of the Acquisition.

Under the Stockholders Agreement, the Founder Member has agreed
to take all necessary action, including voting all of its
shares of capital stock of the Company or providing written
consent to cause the election of the directors nominated by NIH
to the NIH Investment Agreement and in accordance with the
terms of the Stockholders Agreement. To the extent the Founder
Member transfers any of its shares to an affiliated transferee,
that transferee would also be bound by the terms of the
Stockholders Agreement. The Founder Members obligations to NIHs
director nomination right will automatically terminate upon the
termination of NIHs right to appoint directors to the NIH
Investment Agreement.

The Stockholders Agreement also grants the Temasek Entities and
NIH with tag-along rights, subject to customary exceptions, in
connection with a transfer of shares by the Founder Member that
are subject to cutback provisions on a pro rata basis
(in each case calculated based on a fully exchanged and
converted to Company ClassA Common Stock basis).

The foregoing description of the Stockholders Agreement is
qualified in its entirety by reference to the Stockholders
Agreement, a copy of which will be filed as an exhibit to the
Companys next Quarterly Report on Form10-Q for the quarter
ended March31, 2017.

Amended and Restated Registration Rights
Agreement

On April15, 2015, prior to the consummation of the Companys
initial public offering, the Company entered into a
Registration Rights Agreement (the Existing Registration Rights
Agreement) with the Founder Member, Havelock and certain direct
or indirect or equityholders of the Company that granted the
parties certain demand and registration rights. In connection
with Temasek Investment and the NIH Investment, on April20,
2017, the Company and the parties thereto executed the Amended
and Restated Registration Rights Agreement (the Amended and
Restated Registration Rights Agreement) to add NIH and Temasek
as parties and provide them with similar registration rights as
Havelock. The Amended and Restated Registration Rights
Agreement will not take effect until the closing of the
Acquisition. If the closing of the Acquisition does not occur,
the Existing Registration Rights Agreement will remain in full
force and effect.

Subject to several exceptions, including certain specified
underwriter cutbacks and the Companys right to defer a demand
registration under certain circumstances, the Founder Member,
the Temasek Entities and NIH may require that the Company
register for public resale under the Securities Act all common
stock of the Company constituting registrable securities that
they request be registered at any time so long as the
securities requested to be registered in each registration
statement have an aggregate estimated market value of least
$50million. Under the Amended and Restated Registration Rights
Agreement, the Company is not obligated to effectuate more than
seven demand registrations for the Founder Member, more than
four demand registrations for NIH or more than three demand
registrations for the Temasek Entities. The Founder Member, the
Temasek Entities and NIH also have the right to require the
Company to register the sale of the registrable securities held
by them on FormS-3, subject to offering size and other
restrictions. In addition, the Company is required to file a
shelf registration statement for the registrable securities,
and cause such shelf registration statement to

become effective within one year after the earlier of the
closing of the Temasek Investment and the NIH Investment.

If the Founder Member, the Temasek Entities or NIH make a
request for registration, the non-requesting parties to the
Amended and Restated Registration Rights Agreement are entitled
to piggyback registration rights in connection with the
request. If such request is for an underwritten offering, the
piggyback registration rights are subject to underwriter
cutback provisions. In addition, the parties to the Amended and
Restated Registration Rights Agreement are entitled to
piggyback registration rights with respect to any registration
initiated by the Company or another stockholder, and if any
such registration is in the form of an underwritten offering,
such piggyback registration rights are subject to underwriter
cutback provisions.

to the Amended and Restated Registration Rights Agreement, NIH
will have no registration rights until after the first
anniversary of the closing of the NIH Investment and during
such period NIH shall be deemed to be an Excluded Party (as
defined in the Amended and Restated Registration Rights
Agreement) in connection with certain cutback provisions
(unless the Founder Member exercises its registration rights
under the Amended and Restated Registration Rights Agreement,
in which case NIH will have the right to exercise its
registration rights).

In connection with the registrations described above, the
Company will indemnify any selling stockholders and the Company
will bear all fees, costs and expenses (except underwriting
commissions and discounts and fees and expenses of the selling
stockholders and their internal and similar costs (other than
the fees and expense of a single law firm representing the
selling stockholders)).

The foregoing description of the Amended and Restated
Registration Rights Agreement is qualified in its entirety by
reference to the Amended and Restated Registration Rights
Agreement, a copy of which will be filed as an exhibit to the
Companys next Quarterly Report on Form10-Q for the quarter
ended March31, 2017.

Debt Financing

In connection with financing the Merger Consideration, on
April20, 2017, the Company entered into a debt financing
commitment letter (the Debt Commitment Letter) with JPMorgan
Chase Bank, N.A. (the Lender). to the Debt Commitment Letter,
the Lender has committed to arrange and provide the Company
with: (i)up to $825.0 million aggregate principal amount of
senior secured term B loans (the Term Loan Facilities) and
(ii)if $825.0 million aggregate principal amount of senior
secured second lien notes (the Notes) (as described below) are
not issued and sold on or prior to the date of consummation of
the Acquisition in such amount, $825.0 million aggregate
principal amount (minus the gross proceeds of Notes issued
prior to the date of consummation of the Acquisition) in senior
secured second lien bridge loans (the Bridge Loans and together
with the Term Loan Facilities and any Rollover Loans and
Exchange Notes, each, as defined in the Debt Commitment Letter,
the Facilities).

The proceeds of the applicable Facilities and the Notes (to the
extent borrowed or issued on or prior to the closing of the
Acquisition) may be used (i)to finance the Acquisition, (ii)to
pay the fees, costs and expenses incurred in connection with,
among other things, the Acquisition and the Facilities and
(iii)to fund the refinancing of the Targets and certain of the
Companys existing debt. The availability of the borrowings
under the Facilities is subject to the satisfaction of certain
customary conditions, including the consummation of the
Acquisition.

Item 3.02 Unregistered Sales of Equity
Securities.

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

Item 9.01. Financial Statements and Exhibits.

(d)Exhibits

ExhibitNo.

Description

2.1*

Agreement and Plan of Merger, dated April20, 2017, by and
among Virtu Financial,Inc., Orchestra Merger Sub,Inc. and
KCG Holdings,Inc.

10.1

Voting Agreement, dated April20, 2017, by and among Virtu
Financial,Inc. and Jefferies LLC.

* Certain schedules and exhibits to this agreement have been
omitted in accordance with Item 601(b)(2)of Regulation S-K. A
copy of any omitted schedule and/or exhibit will be furnished
supplementally to the SEC upon request.

Forward-Looking Statements

Statements made in this Current Report on Form8-K, which are
not historical facts, including statements about the Companys
plans, projected financial results and liquidity, strategies,
focus, beliefs and expectations, are forward-looking and
subject to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements speak
only as of the date they are made and, except for the Companys
ongoing obligations under the U.S. federal securities laws, the
Company undertakes no obligation to publicly update any
forward-looking statement, whether to reflect actual results of
operations; changes in financial condition; changes in
expectation of results of operations and liquidity; changes in
general U.S. or international economic or industry conditions;
changes in estimates, expectations or assumptions; or other
circumstances, conditions, developments or events arising after
the filing of this Current Report on Form8-K. Such
forward-looking statements include, without limitation, the
Companys beliefs, expectations, guidance, focus and/or plans
regarding future events, including the Companys plans to
consummate the Merger and the related financing transactions,
as well as the terms and conditions of such transactions and
the timing thereof. Actual results may differ materially from
such forward-looking statements for a number of reasons,
including as a result of the risks described and other items in
the Companys filings with the SEC, including the Companys
Annual Report on Form10-K, Quarterly Reports on Form10-Q and
Current Reports on Form8-K filed with the SEC during 2017.
Additional important factors that could cause actual results to
differ materially from those indicated by forward-looking
statements include risks and uncertainties relating to: the
Merger not being timely completed, if completed at all; risks
associated with the financing of the transaction; prior to the
completion of the Merger, the Companys or Targets respective
businesses experiencing disruptions due to transaction-related
uncertainty or other factors making it more difficult to
maintain relationships with employees, business partners or
governmental entities; and the parties being unable to
successfully implement integration strategies or realize the
anticipated benefits of the acquisition, including the
possibility that the expected synergies and cost reductions
from the proposed acquisition will not be realized or will not
be realized within the expected time period. Factors other than
those referred to above could also cause the Companys results
to differ materially from expected results. Additionally, the
business and financial materials and any other statement or
disclosure on, or made available through, the Companys websites
or other websites referenced herein shall not be incorporated
by reference into this Current Report on Form8-K.

Additional Information and Where to Find it

This communication is being made in respect of the proposed
Merger involving the Company, Target and Merger Sub. The
Company will prepare an Information Statement on Schedule 14C
for its stockholders with respect to the approval of the equity
financing described herein. When completed, the Information
Statement will be mailed to the Companys stockholders. The
Company may be filing other documents with the SEC as well. You
may obtain copies of all documents filed with the SEC regarding
this transaction, free of charge, at the SECs website,
http://www.sec.gov or from the Company by directing a request
by mail or telephone to 900 Third Avenue New York, NY
10022-1010, Attention: Investor Relations, Andrew Smith, (212)
418-0195, [email protected]


About VIRTU FINANCIAL, INC. (NASDAQ:VIRT)

Virtu Financial, Inc. is a holding company. The Company is a technology-enabled market maker and liquidity provider to the financial markets across the world. It is engaged in buying or selling a range of securities and other financial instruments and earning small bid/ask spreads across various transactions. It has a single, multi-asset, multi-currency technology platform, through which it provides quotations to buyers and sellers in equities, commodities, currencies, options, fixed income and other securities on exchanges, markets and liquidity pools in various countries around the world. It makes markets in a range of different assets classes, such as Americas Equities; Europe, the Middle East and Africa (EMEA) Equities; Asia Pacific (APAC) Equities; Global Commodities; Global Currencies, and Options, Fixed Income and Other Securities. It makes markets for global banks, brokers and other intermediaries, and indirectly provides services to retail and institutional investors.

VIRTU FINANCIAL, INC. (NASDAQ:VIRT) Recent Trading Information

VIRTU FINANCIAL, INC. (NASDAQ:VIRT) closed its last trading session up +1.50 at 16.45 with 2,996,757 shares trading hands.

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