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Default events are defined in the agreement to (1) include non-payment (if the payment date has been missed) within two business days of notification of payment; (2) failure to provide clear and good title or to have made accurate representations and warranties; (3) the opening of bankruptcy or insolvency proceedings; (4) Failure to give sufficient assurances of solvency within three working days of the request for such insurance. In the event of default, the non-defaulting party may terminate all WSPP transactions between the parties as long as it exercises this right of termination within 30 days (or longer if the parties agree to an extension). After termination, transactions in Service Schedules B and C will be liquidated. Essentially, the value of terminated transactions is estimated up to the date of termination in order to determine the liquidated amounts plus the costs associated with that termination. Revenues based on expected market prices, which are valued at present value, are used in the calculation of liquidation payments. Seller`s obligation is to sell and deliver to the delivery point(s) in accordance with the WSPP Agreement and the applicable Confirmation Agreement. The Buyer`s obligation is to receive and purchase at the place of delivery in accordance with the WSPP Agreement and the applicable Confirmation Agreement. Ownership and risk of loss passes to the buyer at the place of delivery. Seller warrants good title, free from privilege or seizure, but disclaims all other warranties, including any warranties of merchantability or fitness for a particular purpose. Each quarter, each FERC-regulated vendor (electricity distributors and investor-owned utilities) must submit price reports to FERC (submitted by the WSPP) showing prices and margins for each transaction.

Price data are public. Margin data is confidential for a period of one year. Stand-by arrangements of one year or less do not need to be submitted to FERC. FERC-regulated sellers who enter into stand-by arrangements of more than one year must submit these agreements to FERC. In general, the parties guarantee that they have the necessary authority to carry out the transactions and execute the terms of the agreements. Each party also declares that it is solvent and that this representation will be maintained until otherwise is communicated. If a party has a reasonable basis for challenging the solvency or capacity of the other party, that party may require the other party to provide a letter of credit, advance cash payment, guarantee or guarantee, guarantee agreement or any other mutually appropriate method of ensuring performance. The second party has three working days to give such assurances; Failure to make such statements will be considered a default resulting in the termination and liquidation of all WSPP transactions between the parties. The obligations of the second party to provide a letter of credit, deposits, etc. are limited to the amount of damages that the party would be liable for non-performance; that is, the coverage. The Agreement also lists certain events that would provide reasonable security, including (1) knowing that a party is not providing under other contracts; (2) a party that exceeds a credit or trading limit; (3) downgrading debt securities to investment grade; and (4) significant changes in market prices that have a significant impact on the performance of a party […].