VIPER ENERGY PARTNERS LP (NASDAQ:VNOM) Files An 8-K Entry into a Material Definitive Agreement
Item 9.01. Entry into a Material Definitive Agreement.

Exchange Agreement

Simultaneously with the closing of the Recapitalization Transaction, Viper, Diamondback, the General Partner and the Operating Company entered into the Exchange Agreement. Simultaneously with the effectiveness of the Tax Election, Viper, Diamondback, the General Partner and the Operating Company entered into the First Amendment to the Exchange Agreement (as so amended, the “Amended Exchange Agreement”). to the Amended Exchange Agreement but subject to certain conditions described in the Second Amended and Restated Limited Liability Company Agreement (as defined below), Diamondback may, at any time and from time to time at its discretion, tender Class B Units, which must be accompanied by an equal number of OpCo Units (one Class B Unit and one OpCo Unit is hereinafter referred to as a “Tendered Unit”), to Viper for redemption (each a “Redemption”). In a Redemption, Diamondback, subject to adjustment in the event of splits or combinations of units, distributions of warrants or other unit purchase rights, specified extraordinary distributions and similar events, will receive from Viper one Common Unit for each Tendered Unit and a cash amount representing a proportionate return of the Additional Diamondback Consideration in exchange for the Tendered Units. In addition, Viper may offer to purchase some or all of the Tendered Units from Diamondback for cash, subject to the approval of the conflicts committee of the General Partner.

The preceding summary of the Amended Exchange Agreement is qualified in its entirety by reference to the full text of the Exchange Agreement and the First Amendment to the Exchange Agreement, copies of which are attached as Exhibit 10.1 and Exhibit 10.2, respectively, to this Current Report on Form 8-K and incorporated herein by reference.

Amended and Restated Registration Rights Agreement

Simultaneously with the closing of the Recapitalization Transaction, Viper and Diamondback entered into the Amended and Restated Registration Rights Agreement, dated as of May 9, 2018 (the “Amended and Restated Registration Rights Agreement”). The Amended and Restated Registration Rights Agreement amends the definition of “Registrable Securities” to include Common Units acquired or that may be acquired by Diamondback in accordance with the Exchange Agreement. In addition, whenever a holder has requested that any Registrable Securities be registered under the Amended and Restated Registration Rights Agreement or has initiated an underwritten offering, the Amended and Restated Registration Rights Agreement requires such holder, if applicable, to cause such Registrable Securities to be exchanged into Common Units in accordance with the terms of the Exchange Agreement before or substantially concurrently with the sale of such Registrable Securities.

The preceding summary of the Amended and Restated Registration Rights Agreement is qualified in its entirety by reference to the full text of such agreement, a copy of which is attached as Exhibit 4.1 to this Current Report on Form 8-K and incorporated herein by reference.

Amendment to Credit Agreement

On May 9, 2018, Viper, as borrower, and the Operating Company, as guarantor, entered into the Sixth Amendment, which amended the Credit Agreement, dated as of July 8, 2014, with Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto (as amended, supplemented or otherwise modified to the date thereof, and as further amended by the Sixth Amendment, the “Credit Agreement”). The Sixth Amendment, among other things, amends the Credit Agreement to allow the Operating Company to (i) pay dividends and distributions to its equity holders other than Viper, subject to certain conditions, and (ii) issue nonvoting Units (as defined in the Second Amended and Restated Limited Liability Company Agreement).

The preceding summary of the Sixth Amendment is qualified in its entirety by reference to the full text of such amendment, a copy of which is attached as Exhibit 10.3 to this Current Report on Form 8-K and incorporated herein by reference.

Amendment to Recapitalization Agreement

On May 9, 2018, Diamondback, Viper, the General Partner and the Operating Company entered into the First Amendment to Recapitalization Agreement (the “First Amendment to the Recapitalization Agreement”). The First Amendment to the Recapitalization Agreement provides for certain amendments to the post-closing obligations of the parties thereto and obligated (i) Diamondback to pay the Additional Diamondback Consideration and (ii) the General Partner to contribute the Additional GP Capital Contribution, each to occur following consummation of the Recapitalization Transaction and immediately after effectiveness of the Tax Election.

The preceding summary of the First Amendment to the Recapitalization Agreement is qualified in its entirety by reference to the full text of such agreement, a copy of which is attached as Exhibit 10.4 to this Current Report on Form 8-K and incorporated herein by reference.

Item 9.01. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth in Item 9.01 above under the caption “Amendment to Credit Agreement” is incorporated herein by reference.

Item 9.01. Unregistered Sales of Equity Securities

As previously reported, in connection with the Recapitalization Transaction (i) Viper agreed to issue 73,150,000 Class B Units and (ii) the Operating Company agreed to issue 73,150,000 OpCo Units, in each case, to Diamondback to the terms of the Recapitalization Agreement in exchange for the tender by Diamondback of the 73,150,000 Common Units owned by Diamondback to Viper. This exchange, the terms of which are described in more detail in the Introductory Note to this Current Report on Form 8-K and incorporated herein by reference, occurred on May 9, 2018. In addition, on May 10, 2018, Viper issued 731,500 Common Units to Diamondback in exchange for 731,500 Class B Units and 731,500 OpCo Units, the terms of which transaction are also described in the Introductory Note above and incorporated herein by reference. The issuance of the foregoing

units was exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder.

Item 9.01. Material Modification to Rights of Security Holders

The information set forth in Item 9.01 is incorporated herein by reference.

Item 9.01. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

Second Amended and Restated Partnership Agreement of Viper

Simultaneously with the closing of the Recapitalization Transaction, the General Partner executed the Second Amended and Restated Agreement of Limited Partnership of Viper (the “Second Amended and Restated Partnership Agreement”).

The primary purpose of the amendments in the Second Amended and Restated Partnership Agreement was to delete or amend provisions of the First Amended and Restated Partnership Agreement to reflect Viper’s U.S. federal income tax classification as an entity taxable as a corporation upon the effective date of the Tax Election (the “Tax Amendments”). In addition to the Tax Amendments, certain additional amendments to the First Amended and Restated Partnership Agreement (the “Additional Amendments”) were made, which are principally focused on (i) deleting references to and amending provisions concerning certain agreements that existed and facts and definitions that were current at the time the First Amended and Restated Partnership Agreement was adopted, which agreements are no longer in existence and which facts and definitions are no longer current and (ii) the creation and rights of the Class B Units and their issuance. None of the Tax Amendments and Additional Amendments altered the distribution and voting rights of Viper’s public unitholders under the First Amended and Restated Partnership Agreement.

Simultaneously with the effectiveness of the Tax Election, on May 10, 2018, the General Partner executed the First Amendment to the Second Amended and Restated Partnership Agreement (the “First Amendment”). The First Amendment provides for the payment of the Additional Diamondback Consideration and the Additional GP Capital Contribution. In addition, the First Amendment provides that (i) holders of Class B Units are entitled to receive cash preferred distributions equal to 8% per annum payable quarterly on the Additional Diamondback Consideration and (ii) the General Partner is entitled to receive cash preferred distributions equal to 8% per annum payable quarterly on the Additional GP Capital Contribution.

The preceding summary of the Second Amended and Restated Partnership Agreement and the First Amendment is qualified in its entirety by reference to the full text of such agreements, copies of which are attached as Exhibit 3.1 and Exhibit 3.2, respectively, to this Current Report on Form 8-K and incorporated herein by reference.

Second Amended and Restated Limited Liability Company Agreement of the Operating Company

Simultaneously with the closing of the Recapitalization Transaction, Viper and Diamondback executed the Second Amended and Restated Limited Liability Company Agreement of the Operating Company (the “Second Amended and Restated Limited Liability Company Agreement”).

The primary purpose of amending and restating the First Amended and Restated Limited Liability Company Agreement of the Operating Company was to reflect the consummation of the Recapitalization Transaction and to implement provisions providing for a multi-member limited liability company. As a result of the Recapitalization Transaction and having two members, the Operating Company is being treated as a continuation of an existing partnership for U.S. federal income tax purposes. to the Second Amended and Restated Limited Liability Company Agreement, Viper is the managing member and Diamondback is the non-managing member. The non-managing member has no voting rights, but it is entitled to distributions.

The Second Amended and Restated Limited Liability Company Agreement also reflects additional tax provisions to provide that the Operating Company (i) maintains a capital account for each member, (ii) except for the special allocation described below, generally allocates income and losses of the Operating Company based on the members’ respective percentage interest in the Operating Company, (iii) provides the tax characterization of the Operating Company as a continuation of an existing partnership, (iv) requires that the Operating Company file tax returns and provide certain information to its members and (v) upon liquidation, distributes cash or property to the members in accordance with their respective capital account balances. The Second Amended and Restated Limited Liability Company Agreement also reflects an agreement between Diamondback and Viper to specially allocate to Diamondback priority allocations of $300 million of the Operating Company’s income and gains over losses and deductions (but before depletion) over the next four taxable years.

At any time, the non-managing member may exchange its OpCo Units (together with its Class B Units) for Common Units to and in accordance with the Exchange Agreement and the Second Amended and Restated Partnership Agreement upon a good faith written determination by Viper, based on the most current practically available geological data, that there is sufficient net built-in gains or net built-in losses (or items thereof) attributable to Viper’s assets to make an allocation to the Second Amended and Restated Limited Liability Company Agreement to equalize the members’ capital account equal to its percentage interests. The Second Amended and Restated Limited Liability Company Agreement also provides for additional transfer restrictions of OpCo Units.

The preceding summary of the Second Amended and Restated Limited Liability Company Agreement is qualified in its entirety by reference to the text of such agreement, a copy of which is attached as Exhibit 3.3 to this Current Report on Form 8-K and incorporated herein by reference.

Item 9.01.Financial Statements and Exhibits.

Exhibits

Viper Energy Partners LP Exhibit
EX-3.1 2 viperex31-5x15x18.htm EXHIBIT 3.1 Exhibit Exhibit 3.1SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIPOFVIPER ENERGY PARTNERS LP TABLE OF CONTENTS     Page   ARTICLE IDEFINITIONS   Section 1.1Definitions1Section 1.2Construction10   ARTICLE IIORGANIZATION   Section 2.1Formation10Section 2.2Name10Section 2.3Registered Office; Registered Agent; Principal Office; Other Offices11Section 2.4Purpose and Business11Section 2.5Powers11Section 2.6Term11Section 2.7Title to Partnership Assets11   ARTICLE IIIRIGHTS OF LIMITED PARTNERS   Section 3.1Limitation of Liability12Section 3.2Management of Business12Section 3.3Outside Activities of the Limited Partners12Section 3.4Rights of Limited Partners12      ARTICLE IVCERTIFICATES; RECORD HOLDERS; TRANSFER OF PARTNERSHIP INTERESTS; REDEMPTION OF PARTNERSHIP INTERESTS   Section 4.1Certificates13Section 4.2Mutilated,…
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About VIPER ENERGY PARTNERS LP (NASDAQ:VNOM)

Viper Energy Partners LP is a limited partnership that owns, acquires and exploits oil and natural gas properties in North America. The Company’s business objective is to provide an attractive return to its unitholders by focusing on business results, maximizing distributions through organic growth and pursuing accretive growth opportunities through acquisitions of mineral, royalty, overriding royalty, net profits and similar interests from Diamondback Energy, Inc. and from third parties. Its segment is engaged in the acquisition of oil and natural gas properties. Its assets consist of mineral interests in oil and natural gas properties in the Permian Basin in West Texas, all of which are leased to working interest owners. The Permian Basin, which consists of approximately 85,000 square miles centered on Midland, Texas, has been the source of oil production. Its assets consisted of mineral interests underlying approximately 46,560 gross (17,060 net) acres in the Permian Basin.