8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report: September 17, 2008

BROOKE CAPITAL CORPORATION

(Exact name of registrant as specified in its charter)

KS	001-33677	48-1187574
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification Number)

8500 College Boulevard Overland Park, KS	66210
(Address of principal executive offices)	(Zip Code)

(913) 383-9700

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01—Entry Into a Material Definitive Agreement.

On September 11, 2008, The Bank of New York (the “Trustee”), solely in its capacity as trustee under the Master Trust Indenture dated December 10, 2007, Series 2007-A Supplement dated December 10, 2007 and Master Trust Indenture dated July 1, 2007 (collectively, the “Indentures”), filed suit against Brooke Capital Corporation (the “Company”), Aleritas Capital Corporation, formerly known as Brooke Credit Corporation (“Aleritas”), which is a majority-owned subsidiary of Brooke Corporation (“Brooke”), Brooke, Brooke Capital Advisers, Inc. (“BCA”), Brooke Agency Services Company LLC and Robert D. Orr (collectively, the “Brooke Parties”) alleging misappropriation of funds pledged to the Trustee on behalf of noteholders (the “securitization investors”) under securitization documents (the “Securitization Documents”) relating to the Indentures. The action requested that the Trustee be entitled to all remedies available to it under the Indentures, including liquidation of any collateral, that the court appoint a receiver to take control of the Brooke Parties, plaintiff’s costs and other relief the court deems equitable and just.

The management of the Company believes that the suit was initiated due to attempts by the Brooke Parties to collect past due servicing fees and expenses from the securitization investors. The Securitization Documents require servicing fees and expenses to be paid prior to any distributions to securitization investors; however, the payment of such fees to us has been delayed. The Company estimates that the Brooke Parties are owed approximately $4 million for 2008 servicing fees and expenses, and the Brooke Parties intend to pursue collection of such fees for prior years which could be approximately $15 million for 2007 and $10 million for 2006.

On September 17, 2008, the Brooke Parties and the Trustee consented to an order (the “Order”) appointing Albert A. Riederer, as special master (the “Special Master”) with respect to the Company, Brooke and BCA (collectively, the “Special Master Entities”). The Order is filed as Exhibit 10.1 hereto and is incorporated herein by reference into this Item 1.01.

Pursuant to the Order, the Special Master is to administer the Special Master Estate which is defined therein to include (a) all monies, and all accounts into which monies have been or may hereafter be deposited or invested, of any of the Special Master Entities or their subsidiaries; (b) all contract rights of the Special Master Entities and their subsidiaries related in any way to (i) loans and related assets sold in any of the securitizations (the “Securitized Loans”), (ii) loans and related assets of Aleritas or any of the Special Master Entities or their subsidiaries made to the borrowers on the Securitized Loans, whether owned by Aleritas or a Special Master Entity, participated to other lenders, subject to any lien or security interest of any third party, or otherwise (the “Related Loans”), (iii) all franchise and other agreements with any of the borrowers (the “Borrower-Franchisees”) on any of the Securitized Loans or Related Loans, and (iv) all contracts with insurance companies under which any of the Borrower-Franchisees may have or may hereafter write policies of insurance for customers; (c) all written or electronic records maintained by or for the Special Master Entities or their subsidiaries relating to the foregoing (together with related software, licenses and systems); and (d) to the extent required to carry out the purposes of the Order, all other real and personal property of the Special Master Entities and their subsidiaries.

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In addition, pursuant to the Order the Special Master shall have and possess the following powers and rights to administer and manage the Special Master Estate in a commercially reasonable manner, including but not limited to the power and authority:

(a) to take custody, control and possession of all records, assets, funds, bank accounts, brokerage accounts, premises and other materials of any kind in the possession of or under the direct or indirect control of the Special Master Entities related to the Special Master Estate, and to direct the application thereof as set forth in the agreements of the Special Master Entities and their subsidiaries governing the same (including, without limitation, the agreements governing the Securitizations);

(b) to manage, control, operate and maintain the Special Master Estate;

(c) to have the governance of the Special Master Entities and conduct the business operations of the Special Master Entities to implement the purpose of this Order, and to maintain the ordinary course of business of the Special Master Entities including the continuation and termination of any contract, employment arrangement and all other aspects of any active business operation:

(d) to contact and negotiate in the ordinary course of business with any creditors or contract counterparties of the Special Master Entities or their subsidiaries for the purpose of compromising or settling any claim included in the Special Master Estate, but excluding any claims or counterclaims among the parties to this case or otherwise involving the Securitizations;

(e) to open or close bank accounts or other depository accounts, in the name of the Special Master Entities or their subsidiaries (subject to the terms of the Securitizations) on behalf of the Special Master Estate;

(f) to exercise, in a manner consistent with the documentation for the Securitization in question (including, without limitation, the limitations on the activities of each bankruptcy remote entity involved therein set forth in the limited liability company agreement of such bankruptcy remote entity), any rights the Special Master Entities may have as the holder of any membership interest in the bankruptcy remote entities created in respect of such securitization, including the right to appoint officers and directors of such bankruptcy remote entity, and for avoidance of doubt, the Special Master shall assure that there is at all times one Independent Director (as such term is used in the limited liability company agreement of such bankruptcy remote entity) of such bankruptcy remote entity as required by the limited liability company agreement of such bankruptcy remote entity;

(g) to enter into an agreement with TBS and TBSIA, as consultants to the Special Master, to allow the operations conducted by the Master Agent Servicer to be transferred to TBSIA or other consultants approved by the Special Master in an orderly manner and implement a restructuring of the premium and commission collection and payment process;

(h) to make payment from funds of the Special Master Entities of all premiums due insurance companies, and of all net commissions due franchise agents;

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(i) to take control of all franchisee receipts of premiums and commissions and make timely payment of all premiums to insurance companies and of all net commissions to franchise agents after setting aside loan payments due under the Securitized Loans and Related Loans and transferring those funds in accordance with the governing agreements;

(j) to exclusively authorize on behalf of the Special Master Entities or their subsidiaries the distribution of funds from collection accounts as provided under the waterfall provisions of the Securitization Documents; and

(k) to take such other action as may be approved by the Court.

The Order also requires that the Company to use its best efforts at all times to maintain a board of directors (the “Board”), a majority of which are independent directors (as defined by the AMEX Company Guide). In the event of a failure for 45 days of the Board to name a new or replacement independent director to maintain a majority of independent directors, the Special Master shall be entitled to make such appointment. Furthermore, the Order requires the Company to amend its organizational documents to require the appointment of a special director whose approval is required prior to the Company filing any voluntary petition under Title 11 of the Federal Bankruptcy Code or seeking relief under similar state laws. Lastly, the Order requires that an executive committee of the Board consisting of its independent members search for a permanent chief executive officer of the Company to be selected and appointed on or prior to November 1, 2008.

Item 5.02—Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

On September 17, 2008, Robert D. Orr, Chairman of the Board of the Company, resigned from his position effective immediately. In addition, Leland G. Orr, Chief Financial Officer of the Company, resigned from his position effective immediately. Effective immediately, the Company appointed Michael Hess, previously serving as a Director, Vice President and Vice Chairman of the Board of Directors of the Company, as President, and appointed Travis W. Vrbas as Chief Financial Officer of the Company.

Michael Hess, age 52, has served as a Director and Vice President of the Company since January 31, 2007. On June 7, 2007, he was appointed Vice Chairman of the Board of Directors. Mr. Hess has also served as President of BCA since January 31, 2007. Mr. Hess was an original investor in Brooke Corporation and served on its Board of Directors from 1990 until January 2005, as its President from 1996 until 2003, and as its Vice President from 1988 until 1996. From its acquisition by Brooke Corporation in 2002 until January 2007, Mr. Hess was president and a director of CJD & Associates, L.L.C., a wholesale insurance broker that later also began providing loan brokerage and consulting services to managing general agencies and funeral homes. He was a director and President of Brooke Brokerage Corporation, a wholly owned subsidiary of Brooke Corporation and the parent corporation of CJD from December 2004 until December 2005 and has been its Vice President since December 2005. Mr. Hess has been a director of Brooke Savings Bank, a federal savings bank, since January 8, 2007. Prior to joining the Brooke organization, Mr. Hess was employed by Western Resources, Inc. (now Westar Energy, Inc.), a utility company in Topeka, Kansas. Mr. Hess also previously served as director of Patrons Insurance Company and Great Plains Mutual Insurance Companies.

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Travis W. Vrbas has served as Chief Financial Officer, Treasurer and Assistant Secretary of Brooke since March 2008. Mr. Vrbas was Brooke’s director of internal audit from January 2004 to March 2008 and has been with Brooke since March 2003. Since joining Brooke, Mr. Vrbas was responsible for the Sarbanes-Oxley compliance of Brooke and its subsidiaries. Mr. Vrbas has worked closely with Brooke’s external auditors during quarterly reviews, SOX testing and year-end audits. As director of internal audit, Mr. Vrbas also served as a liaison to the Chief Financial Officer with respect to Brooke’s SEC filings and other accounting matters. Mr. Vrbas received a Bachelor of Science Degree in Accounting from Kansas State University and is a Phi Kappa Phi.

Item 8.01—Other Events.

On September 15, 2008, the Company issued a press release regarding the litigation filed by the Trustee and the Company’s response to the allegations contained in the complaint. A copy of the press release is furnished as Exhibit 99.1 to this current report on Form 8-K.

On September 17, 2008, the Company issued a press release announcing changes to its executive management team. A copy of the press release is furnished as Exhibit 99.2 to this current report on Form 8-K.

On September 19, 2008, the Company issued a press release announcing the appointment of Albert A. Riederer, as special master with respect to the Company, Brooke and BCA. A copy of the press release is furnished as Exhibit 99.3 to this current report on Form 8-K.

Item 9.01—Financial Statements and Exhibits.

(d) Exhibits

10.1	Consent Order Appointing a Special Master dated September 17, 2008
99.1	Press Release dated September 15, 2008 regarding the securitization litigation
99.2	Press Release dated September 17, 2008 announcing changes in management
99.3	Press Release dated September 18, 2008 announcing appointment of special master

This Current Report on Form 8-K contains forward-looking statements that are not limited to historical facts, but reflect the Company’s current beliefs, expectations or intentions regarding future events. All forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. The following factors, among others, could cause actual results to differ from those indicated in the forward-looking statements: the uncertainty that the Company will accomplish its objectives in the litigation with Bank of New York Mellon, the availability of funding sources, liquidity, the exposure to market risks, changes in the law and in economic, political and regulatory environments, changes in management, the effectiveness of internal controls, and risks and factors described from time to time in reports and registration statements filed by the Company with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this Current Report on Form 8-K, except as required by applicable law.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, hereunto duly authorized.

BROOKE CAPITAL CORPORATION
By:	/s/ Carl Baranowski
	Carl Baranowski
	Acting General Counsel
	Date: September 22, 2008

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EXHIBIT INDEX

10.1	Consent Order Appointing a Special Master dated September 17, 2008
99.1	Press Release dated September 15, 2008 regarding the securitization litigation
99.2	Press Release dated September 17, 2008 announcing changes to management
99.3	Press Release dated September 18, 2008 announcing appointment of special master

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EX-10.1

Exhibit 10.1

UNITED STATES DISTRICT COURT

DISTRICT OF KANSAS

THE BANK OF NEW YORK	)
MELLON, as Trustee,	)
	)
Plaintiff,	)
v.	)
	)	Case No. 08CV02424 JWL DJW
ALERITAS CAPITAL CORPORATION,	)
a Delaware corporation,	)
BROOKE CAPITAL CORPORATION,	)
a Kansas corporation,	)
BROOKE CORPORATION,	)
a Kansas corporation,	)
BROOKE CAPITAL ADVISORS, INC.,	)
a Kansas corporation,	)
BROOKE AGENCY SERVICES COMPANY LLC,	)
a Delaware limited liability company, and	)
ROBERT D. ORR	)
Defendants.	)

CONSENT ORDER APPOINTING A SPECIAL MASTER

WHEREAS, on, September 11, 2008 Plaintiff The Bank of New York Mellon, as Trustee (“BNY”), filed its Emergency Motion for the Appointment of a Receiver pursuant to 28 U.S.C. §§ 754 and 959 and Federal Rule of Civil Procedure 66; and

WHEREAS, on September 15, 2008, Defendants Aleritas Capital Corp. (“Aleritas”), Brooke Capital Corporation (“Brooke Capital”), Brooke Corporation (“Brooke Corp.”), Brooke Capital Advisors, Inc., Brookes Agency Services Company LLC (“BASC”) and Robert Orr (the “Defendants”) filed their Motion for Appointment of a Special Master and Opposition to Plaintiff’s Motion for Appointment of a Receiver pursuant to Federal Rule of Civil Procedure 53; and

WHEREAS, the parties had notice and an opportunity to be heard at the hearing held on September 16, 2008 at 11:00 a.m. in Room 427 of this courthouse; and

WHEREAS, the parties have consented to the terms of the following Consent Order;

The Court hereby ORDERS as follows:

1. Pursuant to Federal Rule of Civil Procedure 53 (a)(1)(A) and this Court’s inherent authority, the Court hereby appoints Albert A. Riederer as Special Master (the “Special Master”) to proceed with all reasonable diligence to carry out the duties specified herein. The Court finds that appointing the Special Master according to the agreed-upon terms specified herein protects against the potential for unreasonable expense and delay in connection with this action and is a fair and efficient course of action.

2. Over the past several years, the Defendants sponsored a number of securitizations (each a “Securitization”) pursuant to which it caused to be created special purpose, bankruptcy remote limited liability companies (each a “Securitization Company”) to which it sold various Loans described below in exchange for cash. The term “Securitization Documents” includes all documents, including, without limitation, all Credit Agreements, Indentures, Security Agreements, Pledge Agreements, Servicing Agreements, and all amendments thereto and restatements thereof, setting forth the terms of the Securitizations.

3. Brooke Capital, Brooke Corp. and Brooke Capital Advisors, Inc. are defined herein as the “Special Master Entities.” The “Special Master Estate”, for purposes of this Order, is defined to include (a) all monies, and all accounts into which monies have been or may hereafter be deposited or invested, of any of the Special Master Entities or their subsidiaries; (b) all contract rights of the Special Master Entities and their subsidiaries related in any way to (i) loans and related assets sold in any of the Securitizations (the “Securitized Loans”); (ii) loans and related assets of Aleritas or any of the Special Master Entities or their subsidiaries made to the

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borrowers on the Securitized Loans, whether owned by Aleritas or a Special Master Entity, participated to other lenders, subject to any lien or security interest of any third party, or otherwise (the “Related Loans”); (iii) all franchise and other agreements with any of the borrowers (the “Borrower-Franchisees”) on any of the Securitized Loans or Related Loans; and (iv) all contracts with insurance companies under which any of the Borrower-Franchisees may have or may hereafter write policies of insurance for customers; (c) all written or electronic records maintained by or for the Special Master Entities or their subsidiaries relating to the foregoing (together with related software, licenses and systems); and (d) to the extent required to carry out the purposes of this Order, all other real and personal property of the Special Master Entities and their subsidiaries.

4. It is understood and agreed notwithstanding anything to the contrary herein, that in the case of each of the bankruptcy remote companies created in connection with the Securitizations, including, without limitation, each Securitization Company and BASC, the Special Master must recognize the terms of the documentation for the Securitizations, which, among other things, provide that the assets of such companies are not to be available to the other creditors of the Special Master Entities. The exercise of duties, rights and remedies by the Noteholders and the Bank of New York Mellon as Indenture Trustee in respect of the Indenture for each Securitization Company and as Master Agent Trustee in respect of the various trust accounts established in connection with the Securitizations may not be interfered with by the Special Master Entities or the Special Master for the Special Master Entities.

5. No person holding or claiming any position of any sort with the Special Master Entities or their subsidiaries shall possess any authority to act by or on behalf of the Special Master Estate, except as authorized by the Special Master. All persons, including but

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not limited to the Special Master Entities, Aleritas, BASC and Robert Orr, and their officers, agents, servants, employees, attorneys, subsidiaries, affiliates, and all persons in active concert or participation with them, who receive notice of this Order by personal service or otherwise, are enjoined from in any way interfering with the operation of the Special Master or in any way disturbing or disposing of the assets of Special Master Estate. This Consent Order shall not modify, impair, or eliminate any rights granted to any party, or any agent or trustee for any such party, under the Securitization Documents, including, without limitation, any grant of a security interest. The Special Master will act on behalf of the Special Master Entities and their subsidiaries to implement the terms of the Securitization Documents.

6. The Special Master shall have and possess the following powers and rights to administer and manage the Special Master Estate in a commercially reasonable manner, including, but not limited to the power and authority:

A. to take custody, control and possession of all records, assets, funds, bank accounts, brokerage accounts, premises and other materials of any kind in the possession of or under the direct or indirect control of the Special Master Entities related to the Special Master Estate, and to direct the application thereof as set forth in the agreements of the Special Master Entities and their subsidiaries governing the same (including, without limitation, the agreements governing the Securitizations);

B. to manage, control, operate and maintain the Special Master Estate;

C. to have the governance of the Special Master Entities and conduct the business operations of the Special Master Entities to implement the purpose of this Order, and to maintain the ordinary course of business of the Special Master Entities including the continuation and termination of any contract, employment arrangement and all other aspects of any active business operation:

D. to contact and negotiate in the ordinary course of business with any creditors or contract counterparties of the Special Master Entities or their subsidiaries for the purpose of compromising or settling any claim included in the Special Master Estate, but excluding any claims or counterclaims among the parties to this case or otherwise involving the Securitizations;

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E. to open or close bank accounts or other depository accounts, in the name of the Special Master Entities or their subsidiaries (subject to the terms of the Securitizations) on behalf of the Special Master Estate;

F. to exercise, in a manner consistent with the documentation for the Securitization in question (including, without limitation, the limitations on the activities of each bankruptcy remote entity involved therein set forth in the limited liability company agreement of such bankruptcy remote entity), any rights the Special Master Entities may have as the holder of any membership interest in the bankruptcy remote entities created in respect of such securitization, including the right to appoint officers and directors of such bankruptcy remote entity, and for avoidance of doubt, the Special Master shall assure that there is at all times one Independent Director (as such term is used in the limited liability company agreement of such bankruptcy remote entity) of such bankruptcy remote entity as required by the limited liability company agreement of such bankruptcy remote entity;

G. to enter into an agreement with TBS and TBSIA, as consultants to the Special Master, to allow the operations conducted by the Master Agent Servicer to be transferred to TBSIA or other consultants approved by the Special Master in an orderly manner and implement a restructuring of the premium and commission collection and payment process;

H. to make payment from funds of the Special Master Entities of all premiums due insurance companies, and of all net commissions due franchise agents;

I. to take control of all franchisee receipts of premiums and commissions and make timely payment of all premiums to insurance companies and of all net commissions to franchise agents after setting aside loan payments due under the Securitized Loans and Related Loans and transferring those funds in accordance with the governing agreements;

J. to exclusively authorize on behalf of the Special Master Entities or their subsidiaries the distribution of funds from collection accounts as provided under the waterfall provisions of the Securitization Documents; and

K. to take such other action as may be approved by this Court.

7. None of the Special Master Entities or their subsidiaries shall file a voluntary petition under Title 11 of the United States Code (the “Bankruptcy Code”) or seek relief under similar state law without the approval of the Special Master. The Special Master shall not file a voluntary petition under Title 11 of the Bankruptcy Code or seek relief under similar state law with respect to any

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Special Master Entity or subsidiary without the approval of its Board of Directors. To implement this paragraph 7, the Special Master shall be appointed as a special director of each of the Special Master Entities and their subsidiaries (other than the Companies and BASC), and the organizational documents thereof shall be amended to require the approval of the special director prior to the filing of any voluntary petition under the Bankruptcy Code or seeking relief under similar estate law. The special director shall otherwise have no vote on matters before the board.

8.(a) Aleritas will exercise its best efforts to appoint two or more new independent directors on or about October 15, 2008, who must be approved by the Special Master. If Aleritas is unable to appoint two or more new independent directors on or before October 15, 2008, the Special Master may appoint two or more new independent directors.

(b) Brooke Corp. Brooke Capital and Aleritas will exercise their best efforts at all times to maintain on their respective boards a majority of independent directors, as independence is defined under rules of the exchanges on which each company’s securities are listed or under SEC rules, as applicable. In the event of a failure for forty-five (45) days of the Board to name a new or replacement independent director necessary to maintain a majority of independent directors, the Special Master shall make such appointment. During such time, no action of the Board of Directors shall be approved without the affirmative action of a majority of the full number of members of the Board of Directors.

(c) An executive committee of the board of directors of Brooke Capital consisting of its independent members will, beginning on the date hereof, launch a search for a permanent CEO, who will be selected and appointed by the board of directors on or prior to November 15, 2008.

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9. All persons, including but not limited to the Defendants and their officers, agents, servants, employees, attorneys, and all other persons in active concert or participation with them, who receive notice of this Order, shall cooperate with the Special Master and the other professionals working with him in the administration of the Special Master Estate.

10. The Special Master is authorized to communicate with all such persons as he deems appropriate to inform them of the status of this matter and the financial condition of the Special Master Estate. The Special Master is also hereby authorized to employ such employees, accountants, consultants, attorneys and other professionals, including employees of his own professional firm, as are necessary and proper for the administration of the Special Master Estate and the performance of his duties as set forth herein.

11. The Special Master, including any of his agents, may not communicate ex parte with the Judge of the Court. Ex parte communications with the parties by the Special Master or his agents will be permitted in connection with the operation and management of the Special Master Entities and the Special Master Estate. The Special Master shall retain copies of any written communications with the parties or the Court, as well as final copies of any reports to the Court pursuant to this Order. Such documents shall represent the record of the Special Master’s activities, which shall be submitted to the Court and filed within thirty days after completion of his duties and his release as Special Master.

12. The Special Master shall at periods no less frequently than monthly, report to the Court concerning the operation and management of the Special Master Entities. The Special Master shall investigate the claims and other matters raised by the parties to this action and shall make a report to this Court of his findings and conclusions reached in connection with this appointment. The

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Special Master shall (a) work with the Special Master Entities to detail the collateral protection fees and related costs and expenses that the Special Master Entities claim; (b) facilitate resolution of such claims with the Plaintiff and other parties against which such claims are made in accordance with the governing agreements; and (c) report to the Court on any such claims not resolved between the parties. The Special Master shall facilitate the exchange of information between the parties and attempt to facilitate a resolution among the parties to this case.

13. The Special Master shall seek and obtain the approval of this Court prior to disbursement of professional fees and expenses to himself, his firm or his counsel, by presentation of a written application therefor. Upon notice to all parties in this case, the Special Master may submit a proposed order regarding an administrative process for the approval and payment of professional fees and expenses, consistent with Federal Rules of Civil Procedure 53(g) and this paragraph.

14. Upon the request of the Special Master, the United States Marshals Office, in any judicial district, is hereby ordered to assist the Special Master in carrying out his duties to take possession, custody or control of, or identify the location of, any assets, records, or other materials belonging to the Special Master Estate.

15. The Special Master is authorized to remove any person from any premises or real estate that is owned or controlled by one of the Special Master Entities or that is otherwise part of the Special Master Estate.

16. The Special Master shall promptly notify the Court of any failure or apparent failure of any party to comply in any way with the terms of this Order.

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17. Except for an act of gross negligence or intentional misconduct, the Special Master and all persons engaged or employed by him shall not be liable for any loss or damage incurred by any person or entity by reason of any act performed or omitted to be performed by the Special Master or those engaged or employed by him in connection with the discharge of their duties and responsibilities in connection with the business and operations of the Special Master Entities.

18. The reasonable fees, costs and expenses of the Special Master (including, without limitation, costs and expenses for counsel and financial consultants) in carrying out the terms of this Order shall be paid on an interim basis as follows:

(a) 50% by the Special Master Entities; and

(b) 50% by the Securitization Companies and other lenders as the lenders may agree.

“Fifth Third” and “HVB” (as defined in the Complaint) have agreed to vote their interests to provide that the Securitization Companies’ share of the Special Master’s fees, costs and expenses will be paid under the agreement governing the Securitizations as provided in this Order. Such fees, costs and expenses may be assessed as costs at the conclusion of this case.

19. The parties each agree that the Special Master is a “disinterested person” as that term is defined under Title 11 of the United States Code.

20. The Special Master will work with the chief executive officer and the chief financial officer of each Special Master Entities in the preparation of financial information required by applicable securities law. Responsibility for such reports shall remain with the management of the Special Master Entities.

21. The Special Master shall, during the pendency of this action, have the right to apply to this Court for further instructions or directions.

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22. Kutak Rock LLP (“Kutak”), counsel for Defendants in this instant litigation, shall issue its invoices for fees and expenses incurred on behalf of any Defendants to the Special Master by electronic transmission or hard copy delivery on a daily basis. Within five business days of receipt of each such daily invoice, the Special Master shall review the invoice and, if the invoice is in conformance with the current standard hourly rate agreement in effect between Kutak and Defendants, direct prompt payment thereof.

23. Except as expressly stated herein, nothing in this Order shall be construed to impair, limit, or constrain the Special Master’s powers under any Federal Rule of Civil Procedure, any statute of the United States or any decisional authority construing the powers of or procedural mechanisms available to Special Masters.

24. This Order will remain in effect until modified by further order of this Court. Dated this 17 ^th day of September, 2008

/s/ John W. Sungstrum

UNITED STATES DISTRICT JUDGE

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Proposed Order submitted by
SPENCER FANE BRITT & BROWN, LLP
By:	/s/ J. Nick Badgerow
	J. Nick Badgerow, Esq.
	Kansas #9138
	Scott J. Goldstein, Esq.
	Kansas Federal District Court #70505 Eric L. Johnson, Esq. Kansas #20542
	1000 Walnut Street, Suite 1400
	Kansas City, MO 64106
	Telephone:	(816) 474-8100
	Facsimile:	(816) 474-3216
	and
BRYAN CAVE LLP
By:	/s/ Mark G. Stingley
	Mark G. Stingley, Esq.
	Kansas Federal District Court #70083
	Laurence M. Frazen, Esq.
	Kansas Federal District Court # 70114
	One Kansas City Place
	1200 Main Street, Suite 3500
	Kansas City, Missouri 64105
	Telephone:	(816) 391-7649
	ATTORNEYS FOR PLAINTIFF
KUTAK ROCK LLP
By:	/s/ John M. McFarland
	John M. McFarland, Esq.
	Kansas Federal District Court #13701
	Scott E. Harvison, Esq.
	Kansas Federal District Court # 21381
	Erin R. McClernon, Esq.
	Kansas Federal District Court # 21966
	1010 Grand Blvd, Suite 500
	Kansas City, Missouri 64106-2220
	Telephone:	(816) 960-0090
	Facsimile:	(816) 960-0041
	ATTORNEYS FOR DEFENDANTS

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EX-99.1

Exhibit 99.1

News Release

Brooke Capital Comments on Lawsuit

Phillipsburg, Kan. September 15, 2008 — Brooke Capital management was dismayed by a lawsuit filed last week by the Bank of New York Mellon, as trustee for securitization investors, against Brooke Capital Corporation for allegedly misappropriating funds due to securitization investors. Management believes that the suit was triggered by Brooke Capital’s attempts to collect past due servicing fees from those securitization investors.

Brooke Capital management expressed surprise that the court documents filed by Bank of New York did not reference Brooke Capital’s allegation that securitization investors continue to intentionally delay the payment of servicing fees to Brooke Capital for services provided by Brooke Capital to troubled borrowers on behalf of the securitization investors. The servicing fee dispute between Brooke Capital and securitization investors forced Brooke Capital to take protective actions to protect the collateral securing the loan pools.

Despite the fact that securitization documents require servicing fees to be paid prior to any distributions to securitization investors, the payment of servicing fees to Brooke Capital has consistently been delayed, resulting in artificially inflated returns for securitization investors, which they now seek to maintain wrongfully at the expense of Brooke Capital and its agents and shareholders.

On Aug. 19, securitization investors were presented by Brooke Capital with a plan for establishment of a framework for payment of the past due servicing fees. On Aug. 25, 2008, Brooke Capital announced to the public that collection of past due servicing fees from securitization investors was a “number one priority” and Brooke Capital then provided written notice that services to troubled borrowers might be discontinued if securitization investors did not pay servicing fees in full by Sept. 4.

The response of one securitization investor was to force Brooke Capital to sign a “forbearance agreement” on Aug. 27, 2008, in order for Brooke Capital to collect a portion of the servicing fees scheduled to be paid in August. The response of another securitization investor was to refuse payment of any servicing fees to Brooke Capital in August. Brooke Capital believes these actions to be attempts by securitization investors to force Brooke to abandon its contractual rights and forsake its agents.

On Sept. 4, Brooke Capital attended a contentious meeting with major securitization investors, during which Brooke Capital again demanded payment of servicing fees. Nevertheless, investors continued to delay. At this meeting, Brooke Capital advised securitization investors that their actions were compelling Brooke to take actions to protect itself, the loan collateral pools and the entire securitization structure. Brooke Capital took those actions despite fears of retribution by the securitization investors, which fears the lawsuit demonstrates were well founded.

Brooke Capital intends to ask the court for appointment of a special master to assert control over the securitization structure, to include disbursement of funds held by the Bank of New York Mellon to ensure that Brooke Capital is immediately paid servicing fees, prior to any future distributions to investors, in accordance with the securitization documents.

Securitization investors continue to owe approximately $4 million for 2008 servicing fees. After receipt of 2008 servicing fees, Brooke Capital will then pursue collection of servicing fees for prior years which, as noted in Brooke Capital’s most recent Form 10-K filing, could be up to $15 million for 2007 and $10 million for 2006.

About Brooke Capital Corporation…. Brooke Capital Corporation (AMEX:BCP) is a Phillipsburg, Kansas-based insurance agency franchisor and consultant.

Contact Lisa Mussman, 785-543-3199 ext. 561 or lisa.mussman@brookeagent.com

This press release contains forward-looking statements. All forward-looking statements involve risks and uncertainties, and several factors could cause actual results to differ materially from those in the forward-looking statements. The following factors, among others, could cause actual results to differ from those indicated in the forward-looking statements: the uncertainty that the Company will accomplish its objectives in the litigation with Bank of New York Mellon, the availability of funding sources, the exposure to market risks, changes in the law and in economic, political and regulatory environments, changes in management, the effectiveness of internal controls, and risks and factors described from time to time in reports and registration statements filed by the Company with the Securities and Exchange Commission. A more complete description of the Company’s business is provided in the Company’s reports and registration statements, which are available from the Company without charge at www.brookeagent.com or at www.sec.gov.

EX-99.2

Exhibit 99.2

News Release

Brooke Capital Officer Resigns

Phillipsburg, Kan. September 17, 2008 — Robert Orr has resigned as an officer of Brooke Capital Corporation to focus exclusively on litigation related to the collection of past due servicing fees from securitization investors. Mike Hess, president; Nick Rhodes, executive vice president; and Travis Vrbas, chief financial officer, will each assume some of Orr’s responsibilities.

“Personal animosity between securitization investors and me resulted from my efforts to collect past due servicing fees on behalf of Brooke Capital,” Orr stated. “To help prevent our squabbling from affecting Brooke Capital’s business, I have resigned as an officer although I remain a director and the largest shareholder.”

Orr also stated that he was pleased with the court appointment of Albert Riederer as special master so the parties “stand still” until Brooke Capital’s differences with securitization investors are resolved. Additionally, the special master has been directed to assist with resolution of the servicing fees issue.

“During the last year or so, the Orr family has loaned Brooke Capital and Brooke Corporation more than $15,000,000, much of which was ultimately used to provide services to troubled borrowers on behalf of securitization investors,” Orr continued. “The result is that I have personally been subsidizing securitization investors for quite some time because of their reluctance to pay servicing fees.”

Orr noted, “Last year I resigned from my executive positions with the company, but came back to work full time when the company ran into difficulties earlier in the year. In this respect, it will be good to have more discretionary time by no longer being an executive officer.”

About Brooke Capital Corporation…. Brooke Capital Corporation (AMEX:BCP) is a Phillipsburg, Kansas-based insurance agency franchisor and consultant.

Contact Lisa Mussman, 785-543-3199 ext. 561 or lisa.mussman@brookeagent.com

This press release contains forward-looking statements. All forward-looking statements involve risks and uncertainties, and several factors could cause actual results to differ materially from those in the forward-looking statements. The following factors, among others, could cause actual results to differ from those indicated in the forward-looking statements: the uncertainty that the Company will accomplish its objectives in the litigation with Bank of New York Mellon, the availability of funding sources, the exposure to market risks, changes in the law and in economic, political and regulatory environments, changes in management, the effectiveness of internal controls, and risks and factors described from time to time in reports and registration statements filed by the Company with the Securities and Exchange Commission. A more complete description of the Company’s business is provided in the Company’s reports and registration statements, which are available from the Company without charge at www.brookeagent.com or at www.sec.gov.

EX-99.3

Exhibit 99.3

News Release

Riederer Appointed Special Master To Help Resolve Dispute

Phillipsburg, Kan. September 18, 2008 — Mike Hess, president of Brooke Capital Corporation, announced that Albert Riederer had been appointed as special master of Brooke Capital until such time as securitization investors and Brooke Capital settle their dispute regarding securitization servicing fees and securitization cash flows.

Hess stated, “Mr. Riederer has been charged by the court with the responsibility of maintaining the ‘status quo’ in our company until the dispute between Brooke Capital and the securitization investors has been resolved. Mr. Riederer has a strong insurance background and a reputation for fair dealing.”

Mr. Riederer served as the Jackson County Prosecuting Attorney from 1980 to 1992. Upon leaving public office, he entered private practice. Mr. Riederer was named the first chairman of Missouri Employers Mutual Insurance Company and has served on the Missouri Court of Appeals.

About Brooke Capital Corporation…. Brooke Capital Corporation (AMEX:BCP) is a Phillipsburg, Kansas-based insurance agency franchisor and consultant.

Contact Lisa Mussman, 785-543-3199 ext. 561 or lisa.mussman@brookeagent.com

This press release contains forward-looking statements. All forward-looking statements involve risks and uncertainties, and several factors could cause actual results to differ materially from those in the forward-looking statements. The following factors, among others, could cause actual results to differ from those indicated in the forward-looking statements: the uncertainty that the Company will accomplish its objectives in the litigation with Bank of New York Mellon, the availability of funding sources, liquidity, the exposure to market risks, changes in the law and in economic, political and regulatory environments, changes in management, the effectiveness of internal controls, and risks and factors described from time to time in reports and registration statements filed by the Company with the Securities and Exchange Commission. A more complete description of the Company’s business is provided in the Company’s reports and registration statements, which are available from the Company without charge at www.brookeagent.com or at www.sec.gov.