AMENDMENT NO. 1 TO THE CREDIT AGREEMENT
AMENDMENT NO. 1 (this "AMENDMENT"), dated as of April 20, 1999, to the
Credit Agreement, dated as of March 16, 1999, by and among Investment Technology
Group, Inc. (the "BORROWER") and The Bank of New York (the "LENDER") (as
amended, the "CREDIT AGREEMENT").
RECITALS
A. Except as otherwise provided herein, capitalized terms used herein
that are not defined herein shall have the meanings ascribed thereto in the
Credit Agreement.
B. The parties to the Credit Agreement desire to amend the Credit
Agreement to the extent set forth herein upon the terms and conditions herein
contained.
Accordingly, in consideration of the Recitals and the terms and conditions
herein contained, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, it is agreed that the Credit
Agreement be and the same hereby is amended as set forth below.
1. References to "Section 5.03" in Sections 2.03 and 5.01(e) of the
Credit Agreement are hereby amended to read "Section 5.04".
2. Section 2.04 of the Credit Agreement is hereby amended by adding a new
subsection (d) to read as follows:
(d) In the event that Net Capital of ITG on the date on which
the first Loans are made is less than $20,000,000, the Commitment
shall automatically be reduced by an amount equal to the difference
(if positive) between $20,000,000 and the amount of Net Capital of ITG
as set forth in the certificate delivered pursuant to Section 5.02(e)
(the "5.02(e) CERTIFICATE"). If on or before May 30, 1999, the
Borrower delivers a certificate (the "FOCUS REPORT CERTIFICATE") of a
Financial Officer attaching a copy of the FOCUS Report of ITG filed by
ITG for the month ending April 30, 1999 demonstrating that Net Capital
of ITG is greater than the amount set forth in the Section 5.02(e)
Certificate and certifying that as of the date of such FOCUS Report
Certificate, Net Capital of ITG is not less than the amount set forth
on such Focus Report, from and after the date of the delivery of the
FOCUS Report Certificate, the Commitment shall, subject to Section
2.04(b), be equal to the amount of Net Capital of ITG as set forth in
such FOCUS Report but in no event greater than $20,000,000. If the
Borrower fails to deliver the FOCUS Report Certificate on or before
May 30, 1999, the reduction in the Commitment referred to in the first
sentence of this subsection (d) shall automatically become permanent.
3. Section 5.02 of the Credit Agreement is hereby amended in its entirety
to read as follows:
Section 5.02 CONDITIONS TO FIRST LOANS
The obligations of the Lender to make the initial Loans shall be
subject to the prior or contemporaneous satisfaction of the conditions set
forth in Section 5.01 and the satisfaction (or waiver in accordance with
Section 9.02) of the following additional conditions:
(a) Intentionally Omitted.
(b) Intentionally Omitted.
(c) Intentionally Omitted.
(d) The Lender shall have received counterparts of the Security
Agreement signed on behalf of the Borrower, together with the
following:
(i) all stock certificates representing shares of capital
stock of all Domestic Subsidiaries owned by or on behalf of the
Borrower;
(ii) undated stock powers and instruments of transfer,
endorsed in blank, with respect to such stock certificates, promissory
notes and other instruments;
(iii) all instruments and other documents, including
Uniform Commercial Code financing statements, required by law or
reasonably requested by the Lender to be filed, registered or recorded
to create or perfect the Liens intended to be created under the
Security Agreement; and
(iv) a completed Perfection Certificate, dated as of the
date of the Security Agreement and signed by the President, a Vice
President or a Financial Officer and the chief legal officer of the
Borrower, together with all attachments contemplated thereby,
including the results of a search of the Uniform Commercial Code (or
equivalent) filings made with respect to the Borrower in the
jurisdictions contemplated by the Perfection Certificate and copies of
the financing statements (or similar documents) disclosed by such
search and evidence reasonably satisfactory to the Lender that the
Liens indicated by such financing statements (or similar documents)
are permitted by Section 7.02 or have been released.
(e) Prior to giving effect to the first Loans, the Net Capital
of ITG shall be greater than or equal to $10,000,000, Consolidated
Shareholders' Equity shall be greater than or equal to $70,000,000,
each on a pro forma basis after giving effect to the Initial
Restricted Payment, and the Lender shall have received a certificate
of a Financial Officer, in form and substance reasonably satisfactory
to the Lender, to the foregoing
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effects and setting forth such pro forma amounts of such Net Capital
and Consolidated Shareholders' Equity at such time.
(f) Intentionally Omitted.
(g) The Lender shall have received a certificate, signed by a
Financial Officer, setting forth reasonably detailed calculations
demonstrating compliance with Sections 7.12, 7.13, 7.14 and 7.15, on a
pro forma basis immediately after giving effect to the making of the
first Loans and the Initial Restricted Payment.
(h) The Lender shall have received a favorable written opinion
(addressed to the Lender and dated the date of the Security Agreement)
from Cahill Gordon & Reindel, counsel to the Borrower, in form and
substance satisfactory to the Lender. The Borrower hereby requests
such counsel to deliver such opinion.
(i) Intentionally Omitted.
(j) Intentionally Omitted.
(k) Intentionally Omitted.
4. Section 5.03 of the Credit Agreement is hereby renumbered as "SECTION
5.04" and a new Section 5.03 is hereby added to read as follows:
Section 5.03 CONDITIONS TO INITIAL TRANSACTIONS
The consummation of the Initial Transactions shall be
subject to the prior or contemporaneous satisfaction of the conditions
set forth in Section 5.01 and Section 5.02 and the satisfaction (or
waiver in accordance with Section 9.02) of the following additional
conditions:
(a) The Lender shall have received counterparts of the
Assumption Agreement signed on behalf of Jefferies Group.
(b) The Lender shall have received such documents and
certificates as the Lender or its counsel may reasonably request
relating to the organization, existence and good standing of Jefferies
Group, the authorization by Jefferies Group of the Transactions and
any other legal matters relating to Jefferies Group, the Loan
Documents or the Transactions, all in form and substance reasonably
satisfactory to the Lender and its counsel.
(c) The Lender shall have received such documents and
certificates as the Lender or its counsel may reasonably request
relating to the absence of changes to the documentation delivered by
the Borrower
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pursuant to Section 5.01(d) and the continued effectiveness thereof,
and attaching resolutions of its board of directors authorizing the
Initial Transactions and the Initial Transaction Documents, all in
form and substance reasonably satisfactory to the Lender and its
counsel.
(d) The Lender shall have received a certificate, dated the
Initial Transaction Date and signed by the President, a Vice President
or a Financial Officer, (i) confirming that each Initial Transaction
has been consummated in accordance with the terms and conditions of
the applicable Initial Transaction Documents (with no waiver or
amendment of any provision thereof without the prior written consent
of the Lender), (ii) confirming that there has been no change to the
Initial Transaction Documents as delivered to the Lender pursuant to
Section 5.01 and (iii) attaching a copy of a certificate of merger
issued by the Secretary of State of the State of Delaware with respect
to the merger of the Borrower with and into Jefferies Group.
(e) The Lender shall have received all reasonable fees and
other amounts due it from the Borrower and payable on or prior to the
Initial Transaction Date, including, to the extent invoiced and not
theretofore paid, reimbursement or payment of all reasonable fees and
disbursements of Lender's counsel and other out-of-pocket expenses
required to be reimbursed or paid by the Borrower hereunder.
(f) In the event that the Borrower shall have delivered any
of the certificates required by Section 5.03(b) prior to the Initial
Transaction Date, the Lender shall have received a certificate, dated
the date of the consummation of the Initial Transactions and signed by
the President, a Vice President or a Financial Officer, certifying
that the information contained in any such certificate is true and
correct as of the Initial Transaction Date.
(g) After giving effect to the Transactions to be
consummated on the Initial Transaction Date, none of the Borrower or
any of the Subsidiaries shall have outstanding any shares of preferred
equity securities or any Indebtedness, other than (i) Indebtedness
incurred under the Loan Documents and (ii) Indebtedness permitted
under Section 7.01.
(h) The Lender shall have received a completed Perfection
Certificate, dated the Initial Transaction Date and signed by the
President, a Vice President or a Financial Officer and the chief legal
officer of Jefferies Group, together with all attachments contemplated
thereby, including the results of a search of the Uniform Commercial
Code (or equivalent) filings made with respect to Jefferies Group in
the jurisdictions contemplated by the Perfection Certificate and
copies of the
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financing statements (or similar documents) disclosed by such search
and evidence reasonably satisfactory to the Lender that the Liens
indicated by such financing statements (or similar documents) are
permitted by Section 7.02 or have been released, and setting forth
with respect to the Borrower any changes in the information provided
to the Lender in the Perfection Certificate delivered pursuant to
Section 5.02(d)(iv).
(i) The Lender shall have received UCC-1 financing
statements and UCC-3 amendments reflecting the Initial Transactions
and signed on behalf of the Borrower (as it exists after the
consummation of the Initial Transactions) in form and substance
satisfactory to the Lender.
(j) The Lender shall have received a favorable written opinion
(addressed to the Lender and dated the Initial Transaction Date) from
Cahill Gordon & Reindel, counsel to the Borrower, in form and
substance satisfactory to the Lender. The Borrower hereby requests
such counsel to deliver such opinion.
5. Paragraphs 1 - 4 of this Amendment shall become effective at such time
as the Lender shall have received counterparts of this Amendment duly executed
by the Borrower.
6. In all other respects the Credit Agreement and other Loan Documents
shall remain in full force and effect.
7. In order to induce the Lender to execute and deliver this Amendment,
the Borrower (a) certifies that, immediately before and after giving effect to
this Amendment, all representations and warranties contained in the Loan
Documents shall be true and correct in all respects with the same effect as
though such representations and warranties had been made on the date hereof,
except as the context otherwise requires or as otherwise permitted by the Credit
Agreement or this Amendment, (b) certifies that, immediately before and after
giving effect to this Amendment, no Default or Event of Default shall exist
under the Loan Documents, as amended, and (c) agrees to pay all of the
reasonable fees and disbursements of counsel to the Lender incurred in
connection with the preparation, negotiation and closing of this Amendment.
8. The Borrower (a) reaffirms and admits the validity, enforceability and
continuing effect of all Loan Documents, and its obligations thereunder, and (b)
agrees and admits that as of the date hereof it has no valid defenses to or
offsets against any of its obligations to the Lender under the Loan Documents.
9. This Amendment may be executed in any number of separate counterparts
and all of said counterparts taken together shall be deemed to constitute one
and the same document. It shall not be necessary in making proof of this
Amendment to produce or account for more than one counterpart signed by the
party to be charged.
10. This Amendment shall be governed by, and construed and interpreted in
accordance with, the laws of the State of New York.
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11. The parties have caused this Amendment to be duly executed as of the
date first written above.
[signature pages follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
INVESTMENT TECHNOLOGY GROUP, INC.
By: /s/ John R. MacDonald
Name: John R. MacDonald
Title: Chief Financial Officer
THE BANK OF NEW YORK
By: /s/ Mark T. Rogers
Name: Mark T. Rogers
Title: Vice President