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Exhibit 10.1
 
MEMORANDUM OF UNDERSTANDING IN THE
BROOKLYN FEDERAL BANCORP, INC. SHAREHOLDER LITIGATION

This memorandum of understanding (“MOU”) contains essential terms of a
settlement (“Settlement”) agreed to in principle between defendants Brooklyn
Federal Bancorp, Inc. (“Brooklyn Federal” or “Company”), Daniel O. Reich, Angelo
J. Di Lorenzo, Gregg J. Wagner, Arthur R. Williams, Rebecca Northey, Mark
Hughes, Richard A. Kielty, BFS Bancorp, MHC, Brooklyn Federal Savings Bank,
Investors Bancorp, Inc. (“Investors Bancorp”), Investors Bancorp, MHC, and
Investors Bank, formerly Investors Savings Bank (collectively, “Defendants”),
and plaintiffs in the actions, Joseph Underwood and Russ Bastin, (“Actions”) on
behalf of themselves as well as members of the putative classes alleged in the
Actions (collectively, “Plaintiffs”).
 
1.             As a result of the pendency and prosecution of the Actions, the
parties have agreed to the following:
 
a.  
Investors Bancorp will pay common shareholders of record of Brooklyn Federal,
other than BFS Bancorp, MHC, as of the effective date of the mergers
contemplated by the Merger Agreement, as defined below, an additional $0.07 per
share in consideration for settlement of all claims in the Actions and the
releases described herein, provided, however, that such shareholders do not opt
out of the Settlement;
 

b.  
in further consideration for settlement of all claims in the Actions and the
releases described herein, Defendants shall modify Section 10.02(b)(iii) of the
Agreement and Plan of Merger, dated August 16, 2011, by and between (i)
Investors Bank, formerly Investors Savings Bank, Investors Bancorp, and
Investors Bancorp, MHC, and (ii) Brooklyn Federal Savings Bank, Brooklyn Federal
and BFS Bancorp, MHC (the  “Merger Agreement”), to provide that the Investors
Bancorp Fee, as defined in the Merger Agreement, shall be reduced to $300,000,
subject to the condition that the Stipulation of Settlement, to be prepared by
the parties, is approved by the appropriate court.  If the Stipulation of
Settlement is not approved by the court, the Investors Bancorp Fee shall be
equal to $460,000, plus out-of-pocket expenses not to exceed the sum of $50,000
less any loan inventory expenses paid by Brooklyn Federal Savings Bank pursuant
to Section 5.03 of the Merger Agreement; and
 

c.  
Defendants shall provide Plaintiffs with a copy of the proxy statement before
issuance for Plaintiffs’ review, and consider in good faith any changes to the
proxy statement proposed by Plaintiffs up until a reasonable time before the
Definitive Proxy is filed.

 
 
 

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2.   The Defendants will provide to Plaintiffs additional reasonable discovery
as agreed by the parties to confirm the fairness and reasonableness of the
Settlement. The parties agree to conduct said confirmatory discovery as promptly
as possible, and will accomplish the discovery within 30 days of the signing of
this MOU.
 
3.   The parties agree that the consideration described in paragraph 1
represents valuable benefits to the putative classes, and that the pendency and
efforts of Plaintiffs’ counsel in prosecuting the Actions were the cause of
Defendants’ agreement to provide such consideration.
 
4.   In consideration of the benefits provided to the members of the putative
classes, Plaintiffs agree to the dismissal with prejudice of the Actions and of
all claims pending in the Actions against Defendants following final court
approval of the Settlement.
 
5.   It is contemplated that this MOU will be ultimately replaced by a
“Stipulation of Settlement” to be prepared by the parties and submitted to the
court for approval. The Stipulation of Settlement will include terms proposing
the certification of a non-opt out class with respect to all claims for
injunctive, declaratory and other equitable relief.  Non-New York resident
members of the class may opt out solely to preserve any right to pursue
potential claims for monetary damages but will otherwise be bound by the
Settlement’s terms.  Investors Bancorp may terminate the Settlement if class
members holding an agreed-to percentage or number of Brooklyn Federal shares opt
out of the Settlement.  The details of this provision shall be further defined
in a confidential side agreement.
 
 
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6.   The Stipulation of Settlement will be subject to, among other things, the
satisfactory completion of confirmatory discovery and Plaintiffs not having any
objection to the proxy statement on the grounds that the proxy contains any
material misstatement or omission.
 
7.   The Stipulation of Settlement will include a release to all of the
Defendants in the Actions, and others, of all claims, including, but not limited
to, all claims that were brought or could have been brought in the Actions.
 
8.   The Stipulation of Settlement will include a release by Defendants to the
named Plaintiffs and their counsel of all claims arising out of the institution,
prosecution, or resolution of the Actions.
 
9.   The release of claims contemplated in Paragraphs 7 and 8 will not include
claims by the parties to enforce the terms of the Settlement.
 
10.         The Defendants shall be responsible for providing notice of the
Settlement to all settlement class members who will be bound by the release
specified in Paragraph 7, and the Company shall pay all reasonable costs and
expenses incurred in providing that notice, with the understanding that such
notice shall be effected by mail and internet publication, or such other method
or methods as the court deems appropriate.
 
 
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11.         Following the execution of the MOU, the satisfactory completion of
confirmatory discovery, and the resolution of any objection by Plaintiffs that
the proxy statement contains any material misstatement or omission, the parties
will negotiate in good faith regarding an agreed-to fee in the Actions
(“Agreed-To Fee”). Notwithstanding the above, Plaintiffs and their counsel
intend to petition the court for an award of fees and expenses in connection
with the Actions. Any award to Plaintiffs’ counsel for fees and expenses shall
be determined by the court, or by a later agreement of the named Plaintiffs and
Defendants (subject to approval of the court or courts). Defendants shall not
object to or oppose any application for fees made by Plaintiffs’ counsel in the
Action, provided that such application is for an award no more than the amount
of the “Agreed-To Fee.” The parties acknowledge and agree that Brooklyn Federal
or its successor(s) in interest shall cause to be paid on behalf of the Brooklyn
Federal directors and the Company, any fees and expenses awarded by the court to
Plaintiffs’ counsel.  Subject to the terms and conditions of this MOU, and the
terms and conditions of the Settlement contemplated hereby, the Company shall,
within ten (10) business days after the date any order awarding attorneys’ fees
and/or expenses to Plaintiffs’ counsel becomes final and no longer subject to
further appeal or review, whether by affirmance on or exhaustion of any possible
appeal or review, writ of certiorari, lapse of time or otherwise (“Fee Payment
Date”), pay the amount of such award to Brower Piven, A Professional
Corporation, as agent for Plaintiffs’ counsel for distribution to and among
Plaintiffs’ counsel.
 
12.         This MOU and the Settlement are conditioned upon class certification
and final approval by the appropriate court.
 
13.         Neither this MOU nor any of the terms of the Settlement shall be
deemed to constitute an admission of the validity of any claim against any or
all of the defendants, or the liability of any or all of the Defendants, and
they may not be used in any proceeding for any purpose (other than to enforce
the terms of the Settlement).
 
14.         Each of the Defendants has denied and continues to deny that he or
it has committed any act or omission giving rise to any liability and/or
violation of law, rule or regulation.  The Defendants are entering into this
Settlement to eliminate the burden and expense of further litigation.
 
15.         Plaintiffs continue to believe that they have raised meritorious
claims, but also believe that the supplemental disclosures resulting from the
Settlement will permit the Company’s shareholders to make a fully informed
decision with respect to the acquisition proposal.
 
16.         This MOU may be executed in counterparts, including by signature
transmitted by facsimile.  Each counterpart when so executed shall be deemed to
be an original, and all such counterparts together shall constitute the same
instrument.
 
17.         The terms of this MOU and the Settlement shall be binding upon the
parties and inure to the benefit of the successors, assigns, executors,
administrators, heirs and legal representatives of the parties hereto, provided,
however, that no assignment by any party shall operate to relieve such party of
its obligations hereunder.
 
 
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UNDERSTOOD AND AGREED TO BY THE PARTIES:

 
 

        Plaintiff Joseph Underwood, Individually         And On Behalf of All
Others Similarly        
Situated
          Dated: October 28, 2011      By: /s/ Brian C. Kerr            
Brian C. Kerr, Esq.
       
Brower Piven
       
488 Madison Avenue
       
Eighth Floor
       
New York, NY 10022
       
Phone: (212) 501-9000
       
Fax: (212) 501-0300
                  Attorneys For And On Behalf of Plaintiff         Joseph
Underwood, Individually And On        
Behalf of All Others Similarly Situated
                                                Plaintiff Russ Bastin,
Individually And On        
Behalf of All Others Similarly Situated
          Dated: October 28, 2011      By: /s/ Evan J. Smith            
Evan J. Smith, Esq.
       
Brodsky & Smith, LLC
        240 Mineola Blvd.        
Mineola, NY 11501
        Phone: (516) 741-4977        
Fax: (516) 741-0626
                  Attorneys For And On Behalf of Plaintiff Russ         Bastin,
Individually And On Behalf of All          Others Similarly Situated

 
 
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        Defendants Daniel O. Reich, Angelo J.         DiLorenzo, Gregg J.
Wagner, Arthur R.         Williams, Rebecca Northey, Mark Hughes,        
Richard A. Kielty, Brooklyn Federal         Bancorp, Inc, BFS Bancorp, MHC, and
       
Brooklyn Federal Savings Bank
          Dated: October 28, 2011      By:  /s/ Douglas Koff            
Douglas Koff, Esq.
       
Anthony Antonelli, Esq.
        Paul Hastings, LLP         75 East 55th Street        
New York, NY 10022
        Phone: (212) 318-6000         Fax: (212) 319-4090                  
Attorneys For And On Behalf of Defendants         Daniel O. Reich, Angelo J.
DiLorenzo, Gregg         J. Wagner, Arthur R. Williams, Rebecca         Northey,
Mark Hughes, Richard A. Kielty,         Brooklyn Federal Bancorp, Inc, BFS
Bancorp,         MHC, and Brooklyn Federal Savings Bank                        
                        Defendants Investors Bancorp, Inc.,         Investors
Bancorp, MHC, and Investors        
Savings Bank
          Dated: October 28, 2011      By: /s/ Michael J. Geraghty            
Michael J. Geraghty, Esq.
        Saiber, LLC         18 Columbia Turnpike         Suite 200        
Florham Park, NJ 07932         Phone: (973) 622-3333         Fax: (973) 622-3349
                  Attorneys For And On Behalf of Defendants         Investors
Bancorp, Inc., Investors Bancorp,         MHC, and Investors Savings Bank