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

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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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