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<br />(e) In the case of a default under Section 3.1 (a), GCWA and Galveston may, for a
<br />30-day period after such default, offer LPAWA's Interest to the other Participants and then to
<br />other co-owner participants in the Southeast Plant. If another party assumes the rights and
<br />obligations of LPAWA hereunder, LPAWA shall be relieved of its obligations hereunder to the
<br />extent GCWA and Galveston receive payment from the assuming party.
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<br />Section 3.3 No Additional Waiver Implied. No waiver or waivers of any breach or
<br />default (or any breaches or defaults) by either party hereto of any term, covenant, condition, or
<br />liability hereunder, or of performance by the other party of any duty or obligation hereunder,
<br />shall be deemed or construed to be a waiver of subsequent breaches or defaults of any kind,
<br />under any circumstance.
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<br />Section 3.4: Force Majeure. If Force Majeure (as hereinafter defined) prevents either
<br />party hereto from performing any of its obligations under this Sale Agreement, in whole or in
<br />part, then the obligations of such party, to the extent affected by such Force Majeure, shall be
<br />suspended during the continuance of any inability so caused, so long as such party is exercising
<br />due diligence to resume performance at the earliest practicable time. As soon as reasonably
<br />possible after the occurrence of the Force Majeure relied upon, the party whose contractual
<br />obligations are affected thereby shall give written notice and full particulars of such Force
<br />Majeure to the other party. The term "Force Majeure," as used herein, shall include, without
<br />limitation of the generality thereof, acts of God, strikes, lockouts, or other industrial
<br />disturbances, acts of the public enemy, orders of any kind of the Government of the United
<br />States, or the State of Texas, or of any civil of military authority, epidemics, landslides, drought,
<br />lightning, earthquakes, fires, hurricanes, storms, floods, surface or ground water of unusable
<br />quality, washouts, droughts, arrests, restraint of government and people, civil disturbances,
<br />explosions, breakage or accidents to machinery, pipelines or canals, or failure of supply of raw
<br />water to GCWA from third parties and any other inabilities of either party, whether similar to
<br />those enumerated or otherwise, which are not within the control of the party claiming such
<br />inability, and which such party could not have avoided by the exercise of due diligence and
<br />care. It is understood and agreed that the settlement of strikes and lockouts shall be entirely
<br />within the discretion of the party having the difficulty and that the above requirement that any
<br />Force Majeure shall be remedied with all reasonable dispatch shall not require the settlement of
<br />strikes and lockouts by acceding to the demands of the opposing party and parties when such
<br />settlement is unfavorable to it in the judgment of the party having the difficulty.
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<br />ARTICLE IV
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<br />TERMINATION
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<br />GCWA or Galveston may terminate this Sale Agreement by notice in writing if any of the
<br />Participants shall fail to execute and deliver their respective Water Capacity Purchase and Sale
<br />Agreements on or before May 1, 1998. GCWA's and Galveston's option to terminate this Sale
<br />Agreement under this Article IV shall be exercised not later than May 6, 1998. If GCWA
<br />terminates this Sale Agreement pursuant this Article IV, or if the events described in Section
<br />2(a) of the Escrow Agreement occur, GCWA shall immediately refund the Down Payment paid
<br />by the LPAWA plus accrued interest thereon at 5% per annum calculated on a year of 360 days
<br />from date of Down Payment to date of refund.
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