On September 26, 2011, the California Insurance Commissioner's Verified Ex Parte Application for Order Appointing Conservator was heard as an ex parte matter by the Honorable STEVEN L. PERK in Department C32 of the Orange County Superior Court. Present on behalf of the applicant, THE INSURANCE COMMISSIONER OF THE STATE OF CALIFORNIA, was Elisa B. Wolfe-Donato, Deputy Attorneys General. Appearing on behalf of respondent AMERICAN STERLING INSURANCE COMPANY, was NO APPEARANCE.

FROM THE CALIFORNIA INSURANCE COMMISSIONER'S VERIFIED APPLICATION, II' APPEARS TO THIS COURT THAT:

1.       The California Insurance Commissioner has found American Sterling Insurance Company to be in such a condition, that its further transaction of business will be hazardous to its creditors, to its policyholders, and to the public;
2.       The California Insurance Commissioner has found that American Sterling Insurance Company does not comply with the requirements for the issuance to it of a certificate of authority;
3.       There exist factual and legal grounds for placing American Sterling Insurance Company into a conservation under the supervision of the California Insurance Commissioner;
4.       The California Insurance Commissioner is prepared to commence conservation of American Sterling Insurance Company, with (i) David E. Wilson serving as the Special Deputy Insurance Commissioner and Chief Executive Officer of the Conservation and Liquidation Office ("CLO") of the California Department of Insurance, and specifically as the Conservator of American Sterling Insurance Company, and (ii) Scott Pearce of the CLO, serving as the Conservation Manager for American Sterling Insurance Company.

THEREFORE, THIS COURT MAKES THE FOLLOWING ORDERS:

1.       The California Insurance Commissioner is hereby appointed as the Conservator of American Sterling Insurance Company ("AMERICAN STERLING"), and is directed to conduct the business of American Sterling or so much thereof as he may deem appropriate. The Conservator is authorized, in his discretion, to pay or defer payment of some or all proper claims, expenses, liabilities, and obligations of American Sterling, in whole or in part, accruing prior or subsequent to his appointment as Conservator.
2.       The Conservator is authorized to assume, reject, or modify any executory contracts including, without limitation, any lease, rental or utilization contract or agreement (including any schedule to any such contract or agreement), and any license or other arrangement for the use of computer software of business information systems, to which American Sterling is a party or as to which American Sterling agrees to accept an assignment of such contract. The Conservator is directed to effect any such assumption, rejection, or modification of any executory contract not later than 120 days of the date of this Order Appointing Conservator, unless such date is extended by application to and further order of this Court. All executory contracts not expressly assumed by the Conservator shall be deemed rejected.
3.       The Conservator is authorized to take possession of all assets of American Sterling, including books, records, property (both real and personal), accounts, safe deposit boxes, rights of action, and all such assets as may be in the name of American Sterling, wheresoever situated.
4.       Title to all property and assets of American Sterling and of its five subsidiaries (American Sterling Productions, Ltd.; Gold Fish LLC; American Sterling Communications, LLC; American Sterling Capital Corp.; American Sterling Productions One, LLC), including deposits, securities, contracts, rights of actions, books, records, and other assets of every type and nature, and including both those presently in American Sterling's possession and those which may be discovered hereafter, wheresoever situated, is vested in the Conservator or his successor in office, in his official capacity as Conservator. The Conservator is authorized to deal with these assets in his own name as Conservator or in the name of American Sterling. All persons are enjoined from interfering with Conservator's possession and title to these assets.
5.       The Conservator shall have all the powers of the directors, officers, and managers of American Sterling, whose authorities are suspended except as such powers may be redelegated to them by the Conservator.
6.       The Conservator is authorized to terminate compensation arrangements with employees, and to enter into new compensation arrangements with employees, including arrangements containing retention incentives. The Conservator is authorized to hire employees on such terms and conditions as he deems reasonable.
7.       Except upon the express authorization of the Conservator, American Sterling, its officers, directors, agents and employees are enjoined from transacting any of the business of American Sterling or its five Subsidiaries, whether in the State of California or elsewhere, or from disposing of using, transferring, selling, assigning, canceling, alienating, hypothecating, or concealing in any manner or any way, or assisting any person in any of the foregoing, the property or assets of American Sterling, or property or assets in the possession of American Sterling, of any nature or kind, including claims or causes of action, until further order of this Court. Further, such persons are enjoined from obstructing or interfering with the Conservator's conduct of his or her duties as Conservator.
8.       All persons are enjoined from instituting, prosecuting, or maintaining any action at law or suit in equity, including but not limited to actions or proceedings to compel discovery or production of documents or testimony, and matters in arbitration, against American Sterling, or against the Conservator, and from attaching, executing upon, redeeming of or taking any other legal proceedings against any of the property of American Sterling, and from doing any act interfering with the conduct of said business by the Conservator, except after an order from this Court obtained after reasonable notice to the Conservator.
9.       American Sterling and all officers, directors, agents, and employees of American Sterling shall deliver to and immediately make available to the Conservator all assets, books, records, accounts, records, information, computers, tapes, discs, writings, other recordings of information, equipment, and other property of American Sterling and its Subsidiaries, wheresoever situated, in said persons' custody or control, and further, the aforesaid persons shall disclose verbally, or in writing if requested by the Conservator, the exact whereabouts of the foregoing items if such items are not in the possession custody, or control of said persons.
10.       All officers, directors, trustees, employees, or agents of American Sterling, or any other person, firm, association, partnership, corporate parent, holding company, affiliate, or other entity in charge of any aspect of American Sterling's affairs, either in whole or in part, and including but not limited to banks, savings and loan associations, financial or lending institutions, brokers, stock or mutual associations, or any parent, holding company, subsidiary or affiliated corporation, or any other representative acting in concert with American Sterling, shall cooperate with the Conservator in the performance of his or her duties.
11.       The Conservator is authorized to pay all reasonable costs of taking possession of and conserving American Sterling (including but not limited to the Conservator's pre-conservation costs in examining American Sterling's financial condition, and preparing to take possession and conserve American Sterling) out of the funds and assets of the American Sterling.
12.       The Conservator is authorized to pay all reasonable costs of operating American Sterling as Conservator (including direct and allocated direct costs, direct and allocated general and administrative costs and overhead, and all other allocated costs) out of any and all funds and assets of American Sterling, and if there are insufficient hinds, to pay for the costs out of the Insurance Fund pursuant to Insurance Code section 1035.
13.       All funds and assets, including certificates of deposit, bank accounts, and mutual fund shares of American Sterling, in various financial depositary institutions, including banks, savings and loan associations, industrial loan companies, mutual funds, or stock brokerages, wheresoever situated, shall be vested in the Conservator and subject to withdrawal only upon his order.
14.       All persons who maintain records for American Sterling, pursuant to written contract or any other agreement, shall maintain such records and deliver to the Conservator such records upon his request.
15.       All agents of American Sterling or its Subsidiaries, and all brokers who have done business with American Sterling or its Subsidiaries, shall make all remittances of all funds collected by them or in their hands directly to the Conservator.
16.       All persons having possession of any lists of policyholders or escrow holders of American Sterling shall deliver such lists to the Conservator. All persons are enjoined from using any such lists or any information contained therein without the consent of the Conservator.
17.       The Conservator is authorized to initiate such equitable or legal actions or proceedings in this or other states as may appear to him necessary to carry out his functions as Conservator.
18.       The Conservator is authorized to appoint and employ special deputies, estate officers and managers, other professionals, clerks, and assistants, and to give each of them such power and authority as may be deemed necessary by him. The Conservator is authorized to compensate these persons from the assets of American Sterling as he shall deem appropriate.
19.       The Conservator is authorized to divert, take possession of, and secure all mail of American Sterling and its Subsidiaries, in order to screen such mail, and to effect a change in the rights to use any and all post office boxes and other mail collection facilities used by American Sterling and its Subsidiaries.
20.       American Sterling and its officers, directors, agents, servants, employees, successors, assigns, affiliates, and other persons or entities under their control and all persons or entities in concert or participation with American Sterling, and each of them, shall turn over to the Conservator all records, documentation, charts and/or descriptive materials of all funds, assets, property (owned beneficially or otherwise), and all other assets of American Sterling wherever situated, and all books and records of accounts, title documents and other documents in their possession or under their control, which relate, directly or indirectly to assets or property owned or held by American Sterling or to the business or operations of American Sterling.
21.       Except with leave of court issued after a hearing in which the Conservator has received reasonable notice, all persons are enjoined from obtaining preferences, judgments, attachments, or other liens, or making any levy against American Sterling or its assets or property, and from executing or issuing or causing the execution or issuance of any court attachment, subpoena, replevin, execution, or other process, for the purpose of impounding or taking possession of or interfering with or creating or enforcing a lien upon any property or assets owned or in the possession of American Sterling or the Conservator, wheresoever situated, and from doing any act interfering with the conduct of said business by Conservator.
22.       Except with leave of court issued after a hearing in which Conservator has received reasonable notice, all persons are enjoined from accelerating the due date of any obligation or claimed obligation; exercising any right of set-off; taking, retaining, retaking, or attempting to retake possession of any real or personal property; withholding or diverting any rent or other obligation; doing any act or other thing whatsoever to interfere with the possession of or management by the Conservator of the property and assets, owned or controlled by American Sterling or in the possession of American Sterling, or in any way interfering with the Conservator or interfering in any manner during dependency of this proceeding with the exclusive jurisdiction of this Court over American Sterling.
23.       Any and all provisions of any agreement entered into by and between any third party and American Sterling [including by way of illustration, but not limited to, the following types of agreements (as well as any amendments, assignments, or modifications thereto): financial guarantee bonds, promissory notes, loan agreements. security agreements, deeds of trust, mortgages, indemnification agreements, subrogation agreements, subordination agreements, pledge agreements, assignments of rents or other collateral, financial statements, letters of credit, leases, insurance policies, guaranties, escrow agreements, management agreements, real estate brokerage and rental agreements, servicing agreements, attorney agreements, consulting agreements, easement agreements, license agreements, franchise agreements, or employment contracts] that provide in any manner that selection, appointment, or retention of a conservator, receiver, or trustee by any court, or entry of any order such as hereby made, shall he deemed to be or otherwise operate as a breach, violation, event of default, termination, event of dissolution, event of acceleration, insolvency, bankruptcy, or liquidation, shall be stayed, and the assertion of any and all rights and remedies relating thereto shall also be stayed and barred, except as otherwise ordered by this Court. This Court shall retain jurisdiction over any cause of action that has arisen or may otherwise arise under any such provision.
24.       The Conservator is authorized to invest American Sterling's assets and funds in such a manner as to him may seem suitable for the best interest of American Sterling's creditors, which funds are not immediately distributable. However, no investment or reinvestment shall be made exceeding the sum of $100,000 without first obtaining permission of this Court; except, the Conservator may make investments or reinvestments in excess of $l00,000 without prior approval if such investments or reinvestments are made pursuant to the investment guidelines of the Conservator's Conservation & Liquidation Office, a true and correct copy of which is attached hereto as Exhibit A and incorporated herein by this reference. The Conservator shall file quarterly reports of such investments in excess of $100,000 with the Court, with notice to all persons on the service list. Such reports shall be filed within 60 days of the end of each quarter.
25.       The Conservator is authorized to conduct an analysis of the business and financial condition of American Sterling to determine, in the best judgment of the Conservator, whether it will be possible to correct the problem that led to the order of conservation and restore the insurer to private management and normal operations, or whether American Sterling should he placed into rehabilitation or liquidation.
26.       The Conservator is authorized to pay for his costs and fees in bringing and maintaining this action, and such other actions as are necessary to carry out his functions as Conservator, out of the funds and assets of American Sterling.
27.       All Persons are enjoined from the waste of the assets of American Sterling.

IT IS SO ORDERED.

EXHIBIT "A"

The Investment Guidelines
of the Conservation & Liquidation Office
of the California Department of Insurance