REDUCTIONS
THEREOF) PROPERLY MADE TO THE NET PROFITS ACCOUNT DURING SUCH PAYMENT PERIOD
PURSUANT TO SECTION 3.1(B) FROM (II) THE TOTAL CREDITS PROPERLY MADE TO SUCH NET
PROFITS ACCOUNT DURING SUCH PAYMENT PERIOD PURSUANT TO SECTION 3.1(A).
(B)
IF THE COMPUTATION MADE IN ACCORDANCE WITH SECTION 3.1(A) RESULTS
IN A POSITIVE AMOUNT WITH RESPECT TO A PAYMENT PERIOD (THE "NET PROFITS"), THEN
(I) THAT POSITIVE AMOUNT SHALL BE SUBTRACTED FROM THE BALANCE OF THE NET PROFITS
ACCOUNT TO CAUSE THE NET PROFITS ACCOUNT TO HAVE A ZERO BALANCE IMMEDIATELY
FOLLOWING THE END OF SUCH PAYMENT PERIOD, (II) THAT POSITIVE AMOUNT SHALL BE
MULTIPLIED BY THE PROCEEDS PERCENTAGE TO DETERMINE THE NET PROFITS INTEREST AND
(III) THE RESULTING PRODUCT FROM THE CALCULATIONS IN (II) ABOVE SHALL BE PAYABLE
TO GRANTEE AS SPECIFIED IN SECTION 3.3.
(C)
IF THE COMPUTATION MADE IN ACCORDANCE WITH SECTION 3.2(A) RESULTS
IN A NEGATIVE AMOUNT WITH RESPECT TO A PAYMENT PERIOD, THE NEGATIVE SUM SHALL BE
DEEMED THE "DEBIT BALANCE."
ANY DEBIT BALANCE SHALL BE CARRIED FORWARD AS A
DEBIT TO THE NET PROFITS ACCOUNT FOR THE FOLLOWING PAYMENT PERIOD.
IF THERE IS
A DEBIT BALANCE AT THE END OF ANY PAYMENT PERIOD, NO PAYMENTS SHALL BE MADE TO
GRANTEE IN RESPECT OF THE NET PROFITS INTEREST NOR SHALL GRANTEE EVER BE LIABLE
TO MAKE ANY PAYMENT TO GRANTOR IN RESPECT OF THE DEBIT BALANCE.
IN THE EVENT
THAT ANY DEBIT BALANCE EXISTS, THEN AN AMOUNT SHALL BE COMPUTED EQUAL TO
INTEREST ON SUCH DEBIT BALANCE AT THE PRIME INTEREST RATE FOR THE PERIOD BETWEEN
THE LAST DAY OF THE PAYMENT PERIOD THAT RESULTED IN SUCH DEBIT BALANCE AND THE
LAST DAY OF THE NEXT PAYMENT PERIOD, WHICH AMOUNT SHALL, ON THE LAST DAY OF SUCH
NEXT PAYMENT PERIOD, BE DEBITED TO THE NET PROFITS ACCOUNT IN THE SAME MANNER AS
OTHER DEBITS TO THE NET PROFITS ACCOUNT FOR SUCH PAYMENT PERIOD.
(D)
ALL AMOUNTS RECEIVED BY GRANTOR FROM THE SALE OF THE SUBJECT
MINERALS FOR ANY PAYMENT PERIOD SHALL BE HELD BY GRANTOR IN ONE OF ITS GENERAL
BANK ACCOUNTS AND GRANTOR SHALL NOT BE REQUIRED TO MAINTAIN A SEGREGATED ACCOUNT
FOR SUCH FUNDS.
3.3
PAYMENT OF PROCEEDS PERCENTAGE OF NET PROFITS.
ON OR BEFORE THE
FIFTH BUSINESS DAY FOLLOWING THE QUARTERLY RECORD DATE FOR EACH PAYMENT PERIOD,
GRANTOR SHALL TRANSFER OR CAUSE TO BE TRANSFERRED TO GRANTEE AN AMOUNT IN
RESPECT OF THE SUBJECT INTERESTS EQUAL TO THE PRODUCT OF THE PROCEEDS PERCENTAGE
TIMES THE NET PROFITS WITH RESPECT TO THE IMMEDIATELY
16
PRECEDING PAYMENT PERIOD IN ACCORDANCE WITH SECTION 3.2(B).
ALL FUNDS DELIVERED
TO GRANTEE ON ACCOUNT OF THE NET PROFITS INTEREST SHALL BE CALCULATED AND PAID
ENTIRELY AND EXCLUSIVELY OUT OF THE GROSS PROCEEDS ATTRIBUTABLE TO THE SUBJECT
MINERALS ATTRIBUTABLE TO THE SUBJECT INTERESTS.
3.4
OVERPAYMENT; PAST DUE PAYMENTS.
IF GRANTOR EVER PAYS GRANTEE MORE
THAN THE AMOUNT OF MONEY THEN DUE AND PAYABLE TO GRANTEE UNDER THIS CONVEYANCE,
GRANTEE SHALL NOT BE OBLIGATED TO RETURN THE OVERPAYMENT, BUT GRANTOR MAY