POLICY DESCRIPTION ON STANDING CHAPTER 12 AND 13 TRUSTEES'
PURCHASE OF ERRORS AND OMISSIONS INSURANCE & PAYMENT OF
PREMIUMS AS AN ACTUAL AND NECESSARY EXPENSE FROM THE EXPENSE
ACCOUNT/MISDISBURSED FUNDS

Trustees may purchase an errors and omissions (E&O) insurance policy and the premiums
for such insurance will be considered an actual and necessary expense of the operations of the
Standing Trustee. Any deductibles for claims under such policy may be paid from the trustee's
expense account funds along with said premiums. Trustees must notify the United States Trustee
of all claims made against the E&O policy. The United States Trustee will monitor the number
and types of claims.

In order for the insurance policy to be approved for purchase, it must contain the
following guidelines, at a minimum:

1.      INSURANCE CARRIER:

     The insurance company or reinsurer must be listed on the Treasury Department Circular
570 or possess an A.M. Best Financial Rating of "A or Greater" and, in any event, be domiciled
in the United States. The insurance company or the reinsurer must be licensed to do business in
the state in which the standing trustee is appointed. Any reinsurer must provide documentation to
show agreement to reinsure at least 75% of the covered E&O activity.

2.      LIMITS OF LIABILITY:

     Up to $1,000,000 each occurrence

     Up to $1,000,000 annual aggregate

3.      DEDUCTIBLE:

     $1,000 each claim

4.      COVERAGE:      

   BANKRUPTCY TRUSTEE PROFESSIONAL LIABILITY

   • Applies to actual or alleged acts, errors, or omissions arising out of professional
     services rendered for others by insured or any person or organization for whom the
     insured is legally liable.
   • Covering damages and claims expense.
   • Carrier has the duty to defend.
   • Contract to contain severability provision.
   • Definition of "Insured" is to include employees and third parties to whom the
     standing trustee operation would be legally obligated.
   • The policy must include coverage for an event or circumstance which occurred
     prior to the effective date of the policy, if it involves a bankruptcy case which was
     open as of the effective date, unless the insured had knowledge of the event or
     circumstance prior to the effective date.
   • Coverage for failure to discharge fiduciary obligations.
   • Coverage for incorrect, ambiguous or late disbursement of funds.
   • Coverage for failure to investigate acts, operations and conduct of a debtor.
   • Coverage for failure to complete services on time.
   • Coverage for failure to estimate costs correctly.
   • Coverage for failure to maintain insurance where the insured does not have
     custody or control or assets, other than money.
   • Coverage for damages resulting in bodily injury or property damage claims as a
     result of failure to maintain insurance in cases where the insured does not have
     physical control of assets, other than money.
   • Coverage for unintentional violations of statutes, ordinances, or codes.
   • Coverage for failure to pay creditors on a timely basis.
   • Coverage for failure to establish and maintain administrative controls.
   • Coverage for damages resulting from improper computation of fees.
   • Coverage for wrongful termination (other than resulting from discrimination).
   • The insurance company or the reinsurer must provide a written statement to the
     trustee that the insurer or reinsurer meets all of the minimum requirements as set
     forth by the United States Trustee Program.

5.      EXTENDED REPORTING PERIOD (ERP):

   • If other than on an occurrence form, i.e.: "Claims Made" Contract.
   • Contains no "Right of Refusal" wording; allowing the insured the right to purchase
     the ERP.
   • ERP of a minimum of one year.

6.      PREMIUM:

To be commensurate with acceptable pricing levels developed in conjunction with the NACTT, ACT², or standing trustees, and reviewed and approved by the United States Trustee. The Trustee must take all steps required by the insurance company to reduce risk so as to reduce premiums.