AGREEMENT AND PLAN OF MERGER

 

 

 

 

 

 

 

 

 

 

 

 

ARTICLE I CERTAIN DEFINITIONS			2
Section 1.01	Definitions		2
ARTICLE II THE MERGER AND RELATED MATTERS			11
Section 2.01	Effects of Merger; Surviving Entities		11
Section 2.02	Effect on Outstanding Shares of Investors Bancorp Common Stock		12
Section 2.04.	Conversion of Brooklyn Bancorp Common Stock; Mid-Tier Cash Merger Consideration		12
Section 2.05	Procedures for Exchange of Brooklyn Bancorp Common Stock.		13
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE BROOKLYN PARTIES			15
Section 3.01	Organization		15
Section 3.02	Capitalization		16
Section 3.03	Authority; No Violation		17
Section 3.04	Consents		18
Section 3.05	Financial Statements and Securities Documents		19
Section 3.07	No Material Adverse Effect		21
Section 3.08	Material Contracts; Leases; Defaults		21
Section 3.09	Ownership of Property; Insurance Coverage		22
Section 3.10	Legal Proceedings		23
Section 3.11	Compliance With Applicable Law		23
Section 3.12	Employee Benefit Plans		25
Section 3.13	Brokers, Finders and Financial Advisors		27
Section 3.14	Environmental Matters		27
Section 3.15	Loan Portfolio		28
Section 3.16	Securities Documents		31
Section 3.17	Related Party Transactions		31
Section 3.18	Deposits		32
Section 3.19	Required Votes		32
Section 3.20	Registration Obligations		32
Section 3.21	Risk Management Instruments		32
Section 3.22	Fairness Opinion		32
Section 3.23	Trust Accounts		32
Section 3.24	Intellectual Property		33
Section 3.25	Labor Matters		33
Section 3.26	Brooklyn Bancorp Information Supplied		33
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF INVESTORS			34
Section 4.01	Organization		34
Section 4.02	Capitalization		35
Section 4.03	Authority; No Violation		35
Section 4.04	Consents		36
Section 4.05	Financial Statements		36

Section 4.06	Legal Proceedings		38
Section 4.07	Compliance With Applicable Law		38
Section 4.08	Investors Bancorp Common Stock		39
Section 4.09.	Availability of Funds		39
Section 4.10	Investors Bancorp Information Supplied		39
Section 4.11	CRE Disposition		40
ARTICLE V COVENANTS OF THE BROOKLYN FEDERAL PARTIES			40
Section 5.01	Conduct of Business		40
Section 5.02	Current Information		44
Section 5.03	Access to Properties and Records		45
Section 5.04	Financial and Other Statements		46
Section 5.05	Maintenance of Insurance		47
Section 5.06	Disclosure Supplements		47
Section 5.07	Consents and Approvals of Third Parties		47
Section 5.08	Reasonable Best Efforts		47
Section 5.09	Failure to Fulfill Conditions		47
Section 5.10	No Solicitation		47
Section 5.11	Reserves and Merger-Related Costs		50
Section 5.12	Board of Directors and Committee Meetings		50
Section 5.13	Voting of MHC Shares; Brooklyn MHC Members Meeting		51
Section 5.14	REIT Matters		51
Each of the Brooklyn Parties will take all necessary actions to enable the REIT to merge or liquidate into Brooklyn Federal Savings at Closing			51
ARTICLE VI COVENANTS OF INVESTORS BANCORP			51
Section 6.01	Conduct of Business		51
Section 6.02	Current Information		51
Section 6.03	Financial and Other Statements		51
Section 6.04	Disclosure Supplements		52
Section 6.05	Consents and Approvals of Third Parties		52
Section 6.06	Regulatory Cooperation		52
Section 6.07	Failure to Fulfill Conditions		52
Section 6.08	Employee Benefits		53
Section 6.09	Directors and Officers Indemnification and Insurance		54
ARTICLE VII REGULATORY AND OTHER MATTERS			55
Section 7.01	Brooklyn Bancorp Shareholders Meeting		55
Section 7.02	Merger Proxy Statement		55
Section 7.03	Brooklyn MHC Membership Approval		56
Section 7.04	Regulatory Approvals		57
ARTICLE VIII CLOSING CONDITIONS			57
Section 8.01	Conditions to Each Party’s Obligations under this Agreement		57
Section 8.02	Conditions to the Obligations of Investors under this Agreement		58
Section 8.03	Conditions to the Obligations of the Brooklyn Federal Parties under this Agreement		59

ARTICLE IX THE CLOSING			59
Section 9.01	Time and Place		59
Section 9.02	Deliveries at the Pre-Closing and the Closing		59
ARTICLE X TERMINATION, AMENDMENT AND WAIVER			60
Section 10.01	Termination		60
Section 10.02	Effect of Termination		61
Section 10.03	Amendment, Extension and Waiver		62
ARTICLE XI MISCELLANEOUS			62
Section 11.01	Confidentiality		62
Section 11.02	Public Announcements		62
Section 11.03	Survival		62
Section 11.04	Notices		63
Section 11.05	Parties in Interest		64
Section 11.06	Complete Agreement		64
Section 11.07	Counterparts		64
Section 11.08	Severability		64
Section 11.09	Governing Law		64
Section 11.10	Interpretation		64
Section 11.11	Specific Performance; Jurisdiction		65

 

 

 

THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of August 16, 2011, is by and between (i) Investors Savings Bank, a New Jersey savings bank (“Investors Bank”), Investors Bancorp, Inc., a Delaware corporation (“Investors Bancorp”), Investors Bancorp, MHC, a New Jersey mutual holding company (“Investors MHC”), and (ii) Brooklyn Federal Savings Bank, a Federal savings bank (“Brooklyn Federal Savings”), Brooklyn Federal Bancorp, Inc., a Federal corporation (“Brooklyn Bancorp”), and BFS Bancorp, MHC, a Federal mutual holding company (“Brooklyn MHC”). Each of Investors Bank, Investors Bancorp, Investors MHC, Brooklyn Federal Savings, Brooklyn Bancorp and Brooklyn MHC is sometimes individually referred to herein as a “party,” and Investors Bank, Investors Bancorp, Investors MHC, Brooklyn Federal Savings, Brooklyn Bancorp and Brooklyn MHC are collectively sometimes referred to as the “parties.”

 

 

1.           Investors MHC owns a majority of the issued and outstanding capital stock of Investors Bancorp, which owns all of the issued and outstanding capital stock of Investors Bank. Each of Investors Bank, Investors Bancorp and Investors MHC has its principal offices located in Short Hills, New Jersey.

 

2.           Brooklyn MHC owns a majority of the issued and outstanding capital stock of Brooklyn Bancorp, which owns all of the issued and outstanding capital stock of Brooklyn Federal Savings. Each of Brooklyn Federal Savings, Brooklyn Bancorp and Brooklyn MHC has its principal offices located in Brooklyn, New York.

 

3.           The Board of Directors of each Party deems it advisable and in its best interests, including with respect to Investors, the members of Investors MHC and the stockholders of Investors Bancorp, and with respect to the Brooklyn Federal Parties, the stockholders of Brooklyn Bancorp and the Brooklyn MHC Members, for Brooklyn MHC to merge with and into Investors MHC with Investors MHC as the surviving entity, for Brooklyn Bancorp to merge with and into Investors Bancorp (or a wholly-owned subsidiary of Investors Bancorp), with Investors Bancorp as the surviving entity, and for Brooklyn Federal Savings to merge with and into Investors Bank with Investors Bank as the surviving entity, all pursuant to the terms, conditions and procedures set forth in this Agreement and the exhibits thereto.

 

4.           As a condition to the willingness of Investors to enter into this Agreement, each of the directors of Brooklyn Bancorp and Brooklyn MHC, and Brooklyn MHC itself, have entered into a Voting Agreement, substantially in the form of Exhibit C hereto, dated as of the date hereof, with Investors Bancorp (the “Voting Agreements”), pursuant to which each director  of Brooklyn Bancorp and Brooklyn MHC, as well as Brooklyn MHC itself, have agreed, among other things, to vote all shares of  Brooklyn Bancorp Common Stock owned by such person in favor of the approval of this Agreement and the transactions contemplated hereby, upon the terms and subject to the conditions set forth in the Voting Agreements.

 

5.           The parties intend the Mergers to qualify as reorganizations within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and that this Agreement be and is hereby adopted as a “plan of reorganization” within the meaning of Sections 354 and 361 of the Code.

 

6.           The parties desire to provide for certain undertakings, conditions, representations, warranties and covenants in connection with the transactions contemplated by this Agreement.

 

7.           In consideration of the premises and of the mutual representations, warranties and covenants herein contained and intending to be legally bound hereby, the parties hereby agree as follows:

 

 

 

 

Except as otherwise provided herein, as used in this Agreement, the following terms shall have the indicated meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

 

“Affiliate” means, with respect to any Person, any Person who directly, or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person and, without limiting the generality of the foregoing, includes any executive officer or director of such Person and any Affiliate of such executive officer or director.

 

“Agreement” means this agreement, and any amendment or supplement hereto, which constitutes a “plan of merger” between the Investors Parties and the Brooklyn Federal Savings Parties.

 

“Applications” means the applications to be filed with the appropriate Regulatory Authorities requesting approval or nonobjection of the transactions described in this Agreement.

 

“Assignment of Leases and Rents” means, with respect to any Mortgaged Property, any assignment of leases, rents and profits or similar document or instrument executed by the related Mortgagor in connection with the origination of the related Mortgage Loan, assigning to the Mortgagee all of the income, rents and profits derived from the ownership, operation, leasing or other disposition of all or a portion of such Mortgaged Property, in the form which such assignment or similar agreement was duly executed, acknowledged and delivered, as such document may be amended, modified, renewed or extended from time to time.

 

“Banking Act” means the New Jersey Banking Act of 1948, as amended.

 

“Bank Merger” means the merger of Brooklyn Federal Savings with and into Investors Bank with Investors Bank as the surviving entity.  The Bank Merger shall follow the MHC Merger and the Mid-Tier Merger.

 

“Bank Merger Act” means the Bank Merger Act, within the FDIA and applicable regulations thereunder.

 

“Bank Merger Effective Date” means the date that the certificate evidencing stockholder approval of the Bank Merger is filed with the Department or such other date as set forth in the certificate or as determined in accordance with applicable law.

 

“BHCA” means the Bank Holding Company Act of 1956, as amended.

 

“Brooklyn Bancorp” means Brooklyn Federal Bancorp, Inc., a Federal corporation having its principal place of business located at 81 Court Street, Brooklyn, New York 11201.

 

“Brooklyn Bancorp Common Stock” means the common stock of Brooklyn Bancorp described in Section 3.02(a).

 

 

“Brooklyn Bancorp Compensation and Benefit Plan” has the meaning given to that term in Section 3.12 of this Agreement.

 

“Brooklyn Bancorp Option” means an option to purchase shares of Brooklyn Bancorp Common Stock granted pursuant to the Brooklyn Bancorp 2006 Stock-Based Incentive Plan.

 

“Brooklyn Bancorp Regulatory Agreement” has the meaning given to that term in Section 3.11(c) of this Agreement.

 

“Brooklyn Bancorp Restricted Share” means a share of Brooklyn Bancorp Common Stock granted as a Restricted Stock Award pursuant to the Brooklyn Bancorp 2006 Stock-Based Incentive Plan.

 

“Brooklyn Bancorp Shareholders Meeting” has the meaning given to that term in Section 7.01 of this Agreement.

 

“Brooklyn Bancorp Stock Incentive Plan” means the Brooklyn Bancorp 2006 Stock-Based Incentive Plan.

 

“Brooklyn Bancorp Stockholders Meeting” has the meaning given to that term in Section 7.02 of this Agreement.

 

“Brooklyn Disclosure Schedules” means the Disclosure Schedules delivered by Brooklyn to Investors pursuant to Article III of this Agreement.

 

“Brooklyn Federal Savings” means Brooklyn Federal Savings Bank, a federally chartered savings bank having its principal place of business located at 81 Court Street, Brooklyn, New York 11201.

 

“Brooklyn Federal Parties” means Brooklyn Federal Savings, Brooklyn Bancorp and Brooklyn MHC.

 

“Brooklyn Financials” means (i) the audited consolidated financial statements of Brooklyn Bancorp as of September 30, 2010 and 2009 and for the two years ended September 30, 2010, including the notes thereto, and (ii) the unaudited interim consolidated financial statements of Brooklyn Bancorp as of each calendar quarter following September 30, 2010, in each case as filed by Brooklyn Bancorp in its Securities Documents.

 

“Brooklyn MHC” means BFS Bancorp, MHC, a Federal mutual holding company having its principal place of business located at 81 Court Street, Brooklyn, New York 11201.

 

“Brooklyn MHC Members” means those depositors of Brooklyn Federal Savings who are members of Brooklyn MHC in accordance with the charter and bylaws of Brooklyn MHC and applicable regulations.

 

“Brooklyn MHC Members Meeting” has the meaning given to such term in Section 7.03(a) of this Agreement.

 

“Brooklyn Regulatory Reports” means the Thrift Financial Reports of Brooklyn Federal Savings and accompanying schedules, as filed with the OTS, for each calendar quarter beginning with the quarter ended December 31, 2010, through the Closing Date, and all Annual, Quarterly and Current Reports filed with applicable Regulatory Authorities by Brooklyn Bancorp and Brooklyn MHC from December 31, 2010 through the Closing Date.

 

 

“Brooklyn Subsidiary” means any corporation, 50% or more of the capital stock of which is owned by Brooklyn Bancorp, either directly or indirectly through Brooklyn Federal Savings, and includes Brooklyn Federal Savings, except that it does not include any corporation the stock of which is held in the ordinary course of the lending activities of Brooklyn Federal Savings.

 

“Cash Merger Consideration” has the meaning given to such term in Section 2.04(c) of this Agreement.

 

“Certificate” shall mean certificates evidencing shares of Brooklyn Bancorp Common Stock held by Minority Shareholders.

 

“Closing Date” shall have the meaning given to such term in Section 2.03 of this Agreement.

 

“Commercial Loan Mortgage File” has the meaning given to that term in Section 3.15(e) of this Agreement.

 

“Commercial Real Estate Loan” means a mortgage loan or participation interest in such mortgage loan to the extent applicable, other than a one- to four-family mortgage loan or a home equity loan, in the loan portfolio of Brooklyn Federal Savings.

 

“Commercial Real Estate Loan Portfolio” means the Commercial Real Estate Loans listed on Brooklyn Disclosure Schedule 3.15(e).

 

“Commissioner” means the Commissioner of Banking and Insurance of the State of New Jersey, and includes the Department as appropriate.

 

“Confidentiality Agreement” has the meaning given to that term in Section 11.01 of this Agreement.

 

“CRE Personnel” has the meaning given to that term in Section 5.01(b)(xxvii).

 

“Department” means the New Jersey Department of Banking and Insurance.

 

“DGCL” means the Delaware General Corporation Law.

 

“Dissenters’ Shares” has the meaning given to that term in Section 2.04(d) of this Agreement.

 

“Dodd-Frank Act” means the Dodd-Frank Wall Street Reform and Consumer Protection Act.

 

“Effective Time” has the meaning given to such term in Section 2.03 of this Agreement.

 

“Encumbrance” means, with respect to a Mortgaged Property, an encumbrance having arisen from and after the issuance date of the respective title insurance policy as a result of which the lien of the respective mortgage can be divested, subordinated or extinguished or its validity or priority impaired.

 

 

“Environmental Laws” means any applicable Federal, state or local law, statute, ordinance, rule, regulation, code, license, permit, authorization, approval, consent, order, judgment, decree, injunction or agreement with any governmental entity relating to (1) the protection, preservation or restoration of the environment (including, without limitation, air, surface water, groundwater, drinking water supply, surface soil, subsurface soil, plant and animal life or any other natural resource), and/or (2) the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, release or disposal of Materials of Environmental Concern. The term Environmental Laws includes without limitation (a) the Comprehensive Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C. §9601, et seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C. §6901, et seq.; the Clean Air Act, as amended, 42 U.S.C. §7401, et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. §1251, et seq.; the Toxic Substances Control Act, as amended, 15 U.S.C. §2601, et seq.; the Emergency Planning and Community Right to Know Act, 42 U.S.C. §11001, et seq.; the Safe Drinking Water Act, 42 U.S.C. §300f, et seq.; and all comparable state and local laws, and (b) any common law (including without limitation common law that may impose strict liability) that may impose liability or obligations for injuries or damages due to the presence of or exposure to any Materials of Environmental Concern.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated from time to time thereunder.

 

“Exchange Agent” means the bank or trust company or other agent designated by Investors Bancorp, and reasonably acceptable to Brooklyn Bancorp, which shall act as agent for Investors Bancorp in connection with the exchange procedures for converting Certificates into the Cash Merger Consideration.

 

“Exchange Fund” has the meaning given to such term in Section 2.05 of this Agreement.

 

“FDIA” means the Federal Deposit Insurance Act, as amended.

 

“FDIC” means the Federal Deposit Insurance Corporation.

 

“FHLB” means the Federal Home Loan Bank of New York.

 

“FRB” means the Board of Governors of the Federal Reserve System, and, where appropriate, either the Federal Reserve Bank of New York or Federal Reserve Bank of Philadelphia, as applicable.

 

“GAAP” means accounting principles generally accepted in the United States of America as in effect at the relevant date and consistently applied.

 

“Governmental Entity” shall mean any Federal or state court, administrative agency or commission or other governmental authority or instrumentality.

 

“HOLA” the Home Owners’ Loan Act.

 

“Investors” means the Investors Parties and/or any direct or indirect Subsidiary of such entities.

 

“Investors Bancorp” means Investors Bancorp, Inc., a Delaware corporation having its principal place of business located at 101 JFK Parkway, Short Hills, New Jersey 07078.

 

“Investors Bancorp Disclosure Schedules” means the Disclosure Schedules delivered by Investors to Brooklyn Federal Savings pursuant to Article III of this Agreement.

 

“Investors Bancorp Option” means an option to purchase Investors Bancorp Common Stock granted pursuant to the Investors Bancorp Stock Benefit Plan.

 

 

“Investors Bancorp Regulatory Agreement” has the meaning given to such term in Section 4.07(c) of this Agreement.

 

“Investors Bancorp Stock Benefit Plan” means the Investors Bancorp, Inc. 2006 Equity Incentive Plan.

 

“Investors Bank” means Investors Savings Bank, a New Jersey chartered, stock savings bank, having its principal place of business located at 101 JFK Parkway, Short Hills, New Jersey 07078.

 

“Investors MHC” means Investors Bancorp, MHC, a New Jersey chartered mutual holding company having its principal place of business located at 101 JFK Parkway, Short Hills, New Jersey.

 

“Investors Financials” means (i) the audited consolidated balance sheets of Investors Bancorp and subsidiaries as of December 31, 2010 and 2009, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the year ended December 31, 2010, the six-month period ended December 31, 2009, and for each of the years in the two-year period ended June 30, 2009, including the notes thereto; and (ii) the unaudited interim consolidated financial statements of Investors Bancorp as of each calendar quarter following December 31, 2010 included in Securities Documents filed by Investors Bancorp.

 

“Investors Parties” means Investors Bank, Investors Bancorp and Investors MHC.

 

“Investors Subsidiary” means any corporation, 50% or more of the capital stock of which is owned, either directly or indirectly, by Investors Bancorp, and includes Investors Bank, except that it does not include any corporation the stock of which is held in the ordinary course of the lending activities of Investors Bank.

 

“IRC” means the Internal Revenue Code of 1986, as amended.

 

“IRS” means the Internal Revenue Service.

 

“Knowledge” as used with respect to a Party (including references to such Party being aware of a particular matter) means those facts that are known or should have been known by the executive officers and directors of such Party, and includes any facts, matters or circumstances set forth in any written notice from any Regulatory Authority or Governmental Entity or any other material written notice received by that Party.

 

 

“Major Decision” means with respect to any Commercial Real Estate Loan: (i)  any acceleration of such Commercial Real Estate Loan (other than acceleration that is automatic by the terms of the loan documents), any determination to commence a foreclosure or other legal or judicial proceeding to enforce the terms of such Commercial Real Estate Loan or realize on the collateral therefor or any actual foreclosure upon or comparable conversion (which may include acquisitions of real estate owned) of the ownership of properties securing such Commercial Real Estate Loan; (ii) any modification, consent to a modification, forbearance or waiver of any term of such Commercial Real Estate Loan (including any short payoff or short sale) or any extension of the maturity date thereof; (iii) any sale or other disposition of such Commercial Real Estate Loan, including real estate owned that originated as a Commercial Real Estate Loan (“REO”); (iv) any determination to bring an REO property into compliance with applicable environmental laws or to otherwise address hazardous material located at an REO property, except as required by law, court or administrative order; (v) any release of collateral or any acceptance of substitute or additional collateral for such Commercial Real Estate Loan or any consent to either of the foregoing, other than if required pursuant to the specific terms of such Commercial Real Estate Loan and for which there is no material lender discretion; (vi) any waiver of a “due-on-sale” or “due-on-encumbrance” clause or any consent to such a waiver or consent to a transfer of the related Mortgaged Property or interests in the borrower or consent to the incurrence of additional debt; (vii) any property management company changes or franchise changes, in each case, if the lender is required to consent or approve under the Commercial Real Estate Loan documents; (viii) any release of any escrow accounts, reserve accounts or letters of credit held as performance escrows or reserves, other than those required pursuant to the specific terms of such Commercial Real Estate Loan and for which there is no material lender discretion; (ix) any acceptance of an assumption agreement releasing a borrower from any liability under such Commercial Real Estate Loan other than pursuant to the specific terms thereof and for which there is no material lender discretion; (x) any release of the borrower, any guarantor or indemnitor from liability with respect to such Commercial Real Estate Loan or any modification to, waiver of any provision of, or release of, any guaranty or indemnity agreement; (xi)any transfer of the Mortgaged Property or any portion thereof, or any transfer of any direct or indirect ownership interest in the borrower, except in each case as expressly permitted by the loan documents and for which there is no material lender discretion; (xii) any incurrence of additional debt by the borrower or any Affiliate thereof, including the terms of any document evidencing or securing any such additional debt, preferred equity investment or mezzanine loan and of any intercreditor or subordination agreement executed in connection therewith and any waiver of or amendment or modification to the terms of any such document or agreement, except as expressly permitted by the loan documents and for which there is no material lender discretion; (xiii) the voting on any plan of reorganization, restructuring or similar plan in the bankruptcy of the borrower; (xiv) the settlement of any hazard insurance claim for a cash payment that will be applied to the principal amount of such Commercial Real Estate Loan if such repayment would not result in the payment in full of all amounts due and payable thereunder; (xv) the termination or modification of any ground lease or ground lessor estoppel agreement, except (other than in connection with REO) as expressly permitted by the loan documents and for which there is no material lender discretion; (xvi) any modification, waiver or amendment of, or consent under, any intercreditor, participation agreement or similar agreement relating to such Commercial Real Estate Loan; (xvii) any subordination of the related mortgage to any other interest in the Mortgaged Property; (xviii) any waiver of an obligation to contribute cash to a reserve or any waiver of a condition for disbursement of funds from a reserve; (xix) any determination to rebuild the Mortgaged Property after the occurrence of a casualty or condemnation (except as expressly permitted by the loan documents and for which there is no material lender discretion); (xx)any consent to a lease that covers more than 5% of the net rentable area  or amendment thereto or to any alteration to the extent lender consent is required under the terms of the loan documents; (xxi) commencing or settling any legal proceedings relating to such Commercial Real Estate Loan or the related borrower, or responding, without prior notice to Investors, to any such legal proceedings; and (xxii) force placing any insurance with respect to such Commercial Real Estate Loan.

 

“Material Adverse Effect” shall mean, with respect to an Investors Party or a Brooklyn Federal Party, respectively, any effect that (i) is material and adverse to the financial condition, results of operations or business of Investors MHC, Investors Bancorp and its Subsidiaries taken as a whole, or Brooklyn MHC, Brooklyn Bancorp and the Brooklyn Subsidiaries taken as a whole, respectively, or (ii) does or would materially impair the ability of any of the Brooklyn Federal Parties, on the one hand, or the Investors Parties, on the other hand, to perform its obligations under this Agreement or otherwise materially threaten or materially impede the consummation of the transactions contemplated by this Agreement; provided that “Material Adverse Effect” shall not be deemed to include the impact of (a) changes in laws and regulations affecting banks or thrift institutions or their holding companies generally, or interpretations thereof by courts or governmental agencies, (b) changes in GAAP or regulatory accounting principles generally applicable to financial institutions and their holding companies, (c) actions and omissions of a party hereto (or any of its Subsidiaries) taken with the prior written consent of the other party, (d) the announcement of this Agreement and the transactions contemplated hereby, and compliance with this Agreement on the business, financial condition or results of operations of the parties and their respective subsidiaries, including the expenses incurred by the parties hereto in consummating the transactions contemplated by this Agreement, and (e) changes in national or international political or social conditions, including the engagement by the United States in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon or within the United States, or any of its territories, possessions or diplomatic or consular offices or upon any military installation, equipment or personnel of the United States, unless it uniquely affects either or both of the parties or any of their Subsidiaries.

 

 

“Materials of Environmental Concern” means pollutants, contaminants, wastes, toxic substances, petroleum and petroleum products, and any other hazardous or toxic materials regulated under Environmental Laws.

 

“Members Proxy Statement” means the proxy statement, if any, together with any supplements thereto, transmitted by Brooklyn Federal Savings and/or Brooklyn MHC to the Brooklyn MHC Members in connection with any applicable membership vote that may be required by the OTS with respect to the transactions contemplated by this Agreement.

 

“Mergers” shall mean collectively the Bank Merger, the MHC Merger and the Mid-Tier Merger, and any other mergers by interim corporate entities necessary to effectuate the transactions contemplated by this Agreement.

 

“MHC Merger” means the merger of Brooklyn MHC with and into Investors MHC, with Investors MHC as the surviving entity.

 

“MHC Shares” has the meaning given to such term in Section 3.02(a) of this Agreement.

 

“Mid-Tier Effective Time” has the meaning given to such term in the Form of Merger Agreement for the MHC Merger.

 

“Mid-Tier Merger” means the merger of Brooklyn Bancorp with and into Investors Bancorp (or a wholly-owned subsidiary of Investors Bancorp) with Investors Bancorp as the surviving entity, which shall follow the MHC Merger.

 

“Minority Shareholders” shall mean those holders of Brooklyn Bancorp Common Stock other than Brooklyn MHC.

 

“Minority Shares” means those shares of Brooklyn Bancorp Common Stock other than those held by or on behalf of Brooklyn MHC.

 

“Mortgage” means, with respect to a Commercial Real Estate Loan, the mortgage, deed of trust or other instrument creating a first or second lien on the Mortgaged Property securing the Mortgage Note.

 

“Mortgage Loan” means, for purposes of Section 3.15(e) of this Agreement, a Commercial Real Estate Loan.

 

“Mortgage Loan Schedule” has the meaning given to such term in Section 3.15(e) of this Agreement.

 

“Mortgage Note” means, with respect a Commercial Real Estate Loan, the original executed note or other evidence of the Commercial Mortgage Loan indebtedness of a Mortgagor.

 

 

“Mortgaged Property” means, with respect to a Commercial Real Estate Loan, the real property securing repayment of the Mortgage Note, consisting of a fee simple estate or a leasehold estate in such real property.

 

“Mortgagee” means, with respect to a Commercial Real Estate Loan, the mortgagee or beneficiary named in the Mortgage and the successors and assigns of such mortgagee or beneficiary.

 

“Mortgagor” means, with respect to a Commercial Real Estate Loan, the obligor on a Mortgage Note, the owner of the Mortgaged Property and the grantor or mortgagor named in the related Mortgage and such grantor’s or mortgagor’s successors in title to the Mortgaged Property.”

 

“OCC” means the Office of the Comptroller of the Currency.

 

 “Order to Cease and Desist” means the Order to Cease and Desist issued by the OTS to, the issuance of which was consented by, each of the Brooklyn Federal Parties, which Order to Cease and Desist was effective as to each Brooklyn Federal Party as of March 31, 2011, as may be amended or superseded by a Consent Order with the OCC and any written agreement with the FRB.

 

 “OTS” means the Office of Thrift Supervision, and as to Brooklyn Federal Savings, shall include the OCC following the Transfer Date, as defined in the Dodd-Frank Act, and the transfer of authority from the OTS to the OCC pursuant to Section 312 of the Dodd-Frank Act, and as to Brooklyn Bancorp and Brooklyn MHC, shall include the FRB following the Transfer Date, as defined in the Dodd-Frank Act, and the transfer of authority from the OTS to the FRB as to savings and loan holding companies pursuant to Section 312 of the Dodd-Frank Act.

 

“Participation Facility” shall have the meaning given to such term in Section 3.14(a) of this Agreement.

 

“Participation Interest” shall have the meaning given to such term in Section 5.03(b) of this Agreement.

 

“Permitted Encumbrances” means, with respect to any Mortgage or Mortgaged Property related to a Mortgage Loan, (a) the lien for current real estate taxes, ground rents, water charges, sewer rents and assessments not yet due and payable, (b) covenants, conditions and restrictions, rights of way, easements and other matters that are of public record and are referred to in the related lender’s title insurance policy, none of which (individually or in the aggregate), materially interferes with the security intended to be provided by such Mortgage, (c) exceptions and exclusions specifically referred to in such lender’s title insurance policy, none of which (individually or in the aggregate) materially interferes with the security intended to be provided by such Mortgage, and (d) the rights of tenants (as tenants only) under leases (including subleases) pertaining to the related Mortgaged Property which the Seller did not require to be subordinated to the lien of such Mortgage and which do not  (individually or in the aggregate) materially interfere with the security intended to be provided by such Mortgage.

 

“Person” means any individual, corporation, partnership, joint venture, association, trust or “group” (as that term is defined under the Exchange Act).

“Regulations” means applicable regulations promulgated by the OTS, the FRB, the OCC or the Department with respect to the operations of the Brooklyn Parties or the Investors Parties.

 

 

“Regulatory Approvals” means the approval of any Regulatory Authority that is necessary in connection with the consummation of the Mergers and the related transactions contemplated by this Agreement.

 

“Regulatory Authority” or “Regulatory Authorities” means any agency or department of any Federal or state government having supervisory jurisdiction over the parties and the transactions contemplated by this Agreement, including without limitation the OTS, the OCC, the FDIC, the FRB and the Commissioner.

 

“REIT” means BFS REIT, Inc., an operating subsidiary of Brooklyn Federal Savings.

 

“Release” means any spilling, leaking, seepage, pumping, pouring, emitting, emptying, discharging, dumping, disposing or depositing.

 

“Right” means any warrant, option, right, convertible security or other capital stock equivalent that obligates an entity to issue its securities.

 

“SEC” means the Securities and Exchange Commission.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated from time to time thereunder.

 

“Securities Documents” shall mean all reports, offering circulars, proxy statements, registration statements and all similar documents filed, or required to be filed, pursuant to the Securities Laws.

 

“Securities Laws” means the Securities Act and the Exchange Act and the rules and regulations promulgated from time to time thereunder.

 

“Subsidiary” means any corporation, 50% or more of the capital stock of which is owned, either directly or indirectly, by another entity, except any corporation the stock of which is held as security by either Investors Bank or Brooklyn Federal Savings, as the case may be, in the ordinary course of their lending activities.

 

“Termination Date” means January 31, 2012.

 

“Treasury Stock” has the meaning given to that term in Section 2.04(b) of this Agreement.

 

“UCC Financing Statement” means a financing statement executed and filed pursuant to the Uniform Commercial Code, as in effect in the relevant jurisdiction.

 

“Voting Agreements” has the meaning given to that term in the Recitals.

 

 

 

 

The Mergers will be effected as follows:

 

(a)            The Bank Merger. Brooklyn Federal Savings shall merge with and into Investors Bank with Investors Bank as the surviving entity pursuant to the merger agreement substantially in the form of Exhibit A hereto. The separate existence of Brooklyn Federal Savings shall cease, and all of the property (real, personal and mixed), rights, powers and duties and obligations of Brooklyn Federal Savings shall be transferred to and assumed by Investors Bank as the surviving entity in the Bank Merger, without further act or deed, all in accordance with the HOLA and the Bank Merger Act, and applicable Regulations, and if applicable the Banking Act.  As a result of the Bank Merger, each holder of a deposit account in Brooklyn Federal Savings as of the Merger Effective Date shall have the same rights and privileges in Investors Bank as if the deposit account had been established at Investors Bank, and all deposit accounts established at Brooklyn Federal Savings prior to the Merger Effective Date shall confer on a depositor the same rights and privileges in Investors Bank as if such deposit account had been established at Investors Bank on the date established at Brooklyn Federal Savings, including without limitation for purposes of any subscription rights in any future conversion of Investors MHC to stock form. The officers of Investors Bank immediately prior to the Effective Time shall be the initial officers of surviving entity, in each case until their respective successors are duly elected or appointed and qualified.

 

(b)            The MHC Merger. Brooklyn MHC shall merge with and into Investors MHC with Investors MHC as the surviving entity pursuant to the merger agreement substantially in the form of Exhibit B hereto. The separate existence of Brooklyn MHC shall cease, and all of the property (real, personal and mixed), rights, powers and duties and obligations of Brooklyn MHC shall be transferred to and assumed by Investors MHC as the surviving entity in the MHC Merger, without further act or deed, all in accordance with the HOLA, and applicable Regulations.  As a result of the MHC Merger, each holder of a deposit account in Brooklyn Federal Savings as of the Merger Effective Date shall have the same rights and privileges in Investors MHC as if such deposit account had been established at Investors Bank, and all deposit accounts established at Brooklyn Federal Savings prior to the Merger Effective Date shall confer on a depositor the same rights and privileges in Investors MHC as if such deposit account had been established at Investors Bank on the date established at Brooklyn Federal Savings, including without limitation for purposes of any subscription rights in any future conversion of Investors MHC to stock form. The officers of Investors MHC immediately prior to the Effective Time shall be the initial officers of surviving entity, in each case until their respective successors are duly elected or appointed and qualified.

 

(c)            The Mid-Tier Merger. Brooklyn Bancorp shall merge with and into Investors Bancorp, or a to-be-formed, wholly owned subsidiary thereof, with Investors Bancorp (or its wholly-owned subsidiary) as the surviving entity pursuant to this Agreement.  The separate existence of Brooklyn Bancorp shall cease, and all of the property (real, personal and mixed), rights, powers and duties and obligations of Brooklyn Bancorp shall be transferred to and assumed by Investors Bancorp (or its wholly-owned subsidiary) as the surviving entity in the Mid-Tier Merger, without further act or deed, all in accordance with the DGCL and/or the HOLA, and applicable Regulations. The Certificate of Incorporation and Bylaws of Investors Bancorp as in effect immediately prior to the Effective Time shall be the Certificate of Incorporation and Bylaws of the surviving entity, until thereafter amended as provided therein and by applicable law. The directors of Investors Bancorp immediately prior to the Effective Time shall be the initial directors of the surviving entity, each to hold office in accordance with the Certificate of Incorporation and Bylaws of the surviving entity.  The officers of Investors Bancorp immediately prior to the Effective Time shall be the initial officers of surviving entity, in each case until their respective successors are duly elected or appointed and qualified.

 

(d)            Modification of Structure. Notwithstanding any provision of this Agreement to the contrary, Investors Bancorp may, subject to the filing of all necessary applications and the receipt of all required Regulatory Approvals, modify the structure of the transactions described in this Section 2.01, and the parties shall enter into such alternative transactions, so long as (i) there are no adverse tax consequences to any of the stockholders of Brooklyn Bancorp or member of Brooklyn MHC as a result of such modification, (ii) such modification will not materially delay or jeopardize receipt of any required Regulatory Approvals required under Section 7.03, and (iii) the consideration to be paid to the holders of Brooklyn Bancorp Common Stock under this Agreement is not thereby changed in kind or value or reduced in amount.

 

 

 

At and after the Mid-Tier Merger Effective Time, each share of Investors Bancorp Common Stock issued and outstanding immediately prior to the Effective Time shall remain an issued and outstanding share of common stock of Investors Bancorp and shall not be affected by the Merger, and each share of Investors Bank Common Stock issued and outstanding immediately prior to the Mid-Tier Effective Time shall remain an issued and outstanding share of Common Stock of Investors Bank and shall not be affected by the Merger.

 

 

The closing (“Closing”) shall occur on the date determined by Investors, in consultation with and upon no less than three (3) business days prior written notice to Brooklyn Bancorp, but in no event later than the close of business on the tenth business day following the satisfaction or (to the extent permitted by applicable law) waiver of the conditions set forth in Article VIII (other than those conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or (to the extent permitted by applicable law) waiver of those conditions), or such other date that may be agreed to in writing by the parties.  The Mid-Tier Merger shall be effected by the filing of a certificate of merger with the Delaware Office of the Secretary of State, and the filing of Articles of Combination with the Regulatory Authorities, on the day of the Closing (the “Closing Date”), in accordance with the DGCL and the HOLA.  The “Effective Time” means the date and time upon which the certificate of merger is filed with the Delaware Office of the Secretary of State, or as otherwise stated in the certificate of merger, in accordance with the DGCL.

 

 

At the Effective Time, by virtue of the Mid-Tier Merger and without any action on the part of Investors Bancorp, Brooklyn Bancorp or the holders of any of the shares of Brooklyn Bancorp Common Stock, the Mid-Tier Merger shall be effected in accordance with the following terms:

 

(a)           Each share of Investors Bancorp Common Stock that is issued and outstanding immediately prior to the Effective Time shall remain issued and outstanding following the Effective Time and shall be unchanged by the Mid-Tier Merger.

 

 

(b)           All shares of Brooklyn Bancorp Common Stock held in the treasury of Brooklyn Bancorp (“Treasury Stock”) and each share of Brooklyn Bancorp Common Stock owned by Investors Bancorp immediately prior to the Effective Time (other than shares held in a fiduciary capacity or in connection with debts previously contracted) shall, at the Effective Time, cease to exist, and the certificates for such shares shall be canceled as promptly as practicable thereafter, and no payment or distribution shall be made in consideration therefore.

 

 

(c)           Subject to the foregoing provisions of this Section 2.04, each share of Brooklyn Bancorp Common Stock issued and outstanding immediately prior to the Effective Time (other than Dissenters’ Shares) held by Minority Shareholders shall become and be converted into, as provided in and subject to the terms set forth in this Agreement, the right to receive a cash payment equal to eighty cents ($0.80) (the “Cash Merger Consideration”). Each share of Brooklyn Bancorp Common Stock issued and outstanding immediately prior to the Effective Time that is held by Brooklyn MHC shall be cancelled and converted into a number of shares of Investors Bancorp Common Stock as shall equal (x) $0.80 times the number of shares of Brooklyn Bancorp Common Stock held by Brooklyn MHC immediately prior to the Effective Time, divided by (y) the average of the closing sales price of a share of Investors Bancorp common stock, as reported on NASDAQ stock market, for the twenty (20) consecutive trading days preceding the Closing Date (rounded down to the nearest whole share), which shares shall be issued to Investors MHC as a result of the MHC Merger.

 

(d)           If shares of Brooklyn Bancorp Common Stock are not listed for trading on the NASDAQ Market as of the date of the Brooklyn Bancorp Shareholders Meeting, then holders of Brooklyn Bancorp Common Stock shall have dissenters’ rights of appraisal in accordance with applicable Regulations and this Section 2.04(d). In such event, shares of Brooklyn Bancorp Common Stock that are outstanding immediately prior to the Effective Time and which are held by stockholders who shall have not voted in favor of the Mid-Tier Merger nor consented thereto in writing and who shall have properly demanded appraisal for such shares in accordance with applicable Regulations (collectively, the “Dissenters’ Shares”), shall not be converted into or represent the right to receive the Cash Merger Consideration.  Such stockholders instead shall be entitled to such rights as are granted by the applicable Regulations, except that all Dissenters’ Shares held by Brooklyn Bancorp stockholders who shall have failed to perfect or who effectively shall have withdrawn or otherwise lost their appraisal rights shall thereupon be deemed to have been converted into and to have become exchangeable, as of the Effective Time, for the right to receive, without any interest thereon, the Cash Merger Consideration upon surrender, in the manner provided in this Article II, of the Certificate(s) that, immediately prior to the Effective Time, evidenced such shares.  Brooklyn Bancorp shall give Investors Bancorp (i) prompt notice of any written demands for appraisal rights, attempted withdrawals of demands for payment and any other instruments served pursuant to the applicable Regulations and received by Brooklyn Bancorp relating to Dissenters’ Shares, and (ii) the opportunity to participate in all negotiations and proceedings with respect to appraisal demands, consistent with the obligations of Brooklyn Bancorp thereunder.  Brooklyn Bancorp shall not, except with prior written consent of Investors Bancorp, (x) make any payment with respect to such demands, (y) offer to settle or settle any demand for payment or (z) waive any failure to timely deliver a written demand for appraisal rights or timely take any other action to perfect appraisal rights in accordance with Regulations.

 

(e)          After the Effective Time, shares of Brooklyn Bancorp Common Stock shall be no longer outstanding and shall automatically be canceled and shall cease to exist, and, except as to Dissenters’ Shares, shares held by Minority Shareholders shall thereafter by operation of this section represent the right to receive the Cash Merger Consideration.

 

Section 2.05  Procedures for Exchange of Brooklyn Bancorp Common Stock.

 

(a)          At or prior to the Effective Time, Investors Bancorp shall deposit, or shall cause to be deposited, with the Exchange Agent for the benefit of the Minority Shareholders, for exchange in accordance with this Article II, an aggregate amount of cash equal to the aggregate amount of the Cash Merger Consideration payable pursuant to Section 2.04 of this Article II (such cash being hereinafter referred to as the “Exchange Fund”).

 

 

(b)           Investors Bancorp shall cause the Exchange Agent, within five (5) business days after the Effective Time, to mail to each holder of a Certificate or Certificates, a form letter of transmittal for return to the Exchange Agent and instructions for use in effecting the surrender of the Certificates for the Cash Merger Consideration into which the Brooklyn Bancorp Common Stock represented by such Certificates shall have been converted as a result of the Mid-Tier Merger.  The letter of transmittal shall be subject to the approval of Brooklyn Bancorp (which shall not be unreasonably withheld, conditioned or delayed) and specify that delivery shall be affected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Exchange Agent. Upon proper surrender of a Certificate for exchange and cancellation to the Exchange Agent, together with a properly completed letter of transmittal, duly executed, the holder of such Certificate shall be entitled to receive in exchange therefor, as applicable, a check representing the aggregate amount of Cash Merger Consideration which such former holder has the right to receive in respect of the Certificate(s) surrendered pursuant to the provisions of this Section 2.05, and the Certificate(s) so surrendered shall forthwith be cancelled.  No interest will be paid or accrued on the Cash Merger Consideration.

 

(c)           The holder of a Certificate that prior to the Mid-Tier Merger represented issued and outstanding Brooklyn Bancorp Common Stock shall have no rights, after the Effective Time, with respect to such Brooklyn Bancorp Common Stock except to surrender the Certificate(s) in exchange for the Cash Merger Consideration as provided in this Agreement.  After the surrender of a Certificate in accordance with this Section 2.05, the record holder thereof shall be entitled to receive, without any interest thereon, the Cash Merger Consideration that has become payable with respect to shares of Brooklyn Bancorp Common Stock represented by such Certificate.

 

 

 

 

 

 

(h)           Investors Bancorp or the Exchange Agent will be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement or the transactions contemplated hereby to any holder of Brooklyn Bancorp Common Stock such amounts as Investors Bancorp (or any Affiliate thereof) or the Exchange Agent are required to deduct and withhold with respect to the making of such payment under the Code, or any applicable provision of U.S. federal, state, local or non-U.S. tax law.  To the extent that such amounts are properly withheld by Investors Bancorp or the Exchange Agent, such withheld amounts will be treated for all purposes of this Agreement as having been paid to the holder of the Brooklyn Bancorp Common Stock in respect of whom such deduction and withholding were made by Investors Bancorp or the Exchange Agent.

 

Section 2.06.  Treatment of Brooklyn Bancorp Options and Restricted Stock.

 

At the Effective Time, each Brooklyn Bancorp Option will vest in full and then cease to represent an option to purchase Brooklyn Bancorp Common Stock and will be converted automatically into the right to receive an amount of cash equal to:  (i) $.001 multiplied by (ii) the number of shares of Brooklyn Bancorp Common Stock subject to said Brooklyn Bancorp Option.   At the Effective Time, each Brooklyn Bancorp Restricted Share will become fully vested, and will be exchanged for the Cash Merger Consideration.  Brooklyn Disclosure Schedule 2.06 sets forth each Brooklyn Bancorp Option and each Brooklyn Bancorp Restricted Share outstanding as of the date of this Agreement, which schedule includes the name of the individual grantee, the date of grant, the vesting schedule, and as to Brooklyn Bancorp Options, the exercise price and the expiration date. Brooklyn Bancorp shall take such steps as necessary to terminate the Brooklyn Bancorp Incentive Plan as of the Effective Time.

 

 

Each of the Brooklyn Federal Parties represents and warrants to Investors that the statements contained in this Article III are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Article III), except as set forth in the Brooklyn Disclosure Schedules delivered to Investors on the date hereof, and except as to any representation or warranty which relates to a specific date. The Brooklyn Federal Parties have made a good faith effort to ensure that the disclosure on each schedule of the Brooklyn Disclosure Schedules corresponds to the section reference herein. However, for purposes of the Brooklyn Disclosure Schedules, any item disclosed on any schedule therein is deemed to be fully disclosed with respect to all schedules under which such item may be relevant and to the extent that it is reasonably clear on the face of such schedule that such item applies to such other schedule.  References to the Knowledge of Brooklyn Bancorp shall include the Knowledge of Brooklyn MHC and Brooklyn Federal Savings.

 

 

(a)           Brooklyn MHC is a Federal mutual holding company organized and validly existing under the laws of the United States, and is duly registered as a savings and loan holding company under the HOLA. Brooklyn MHC has full power and authority to carry on its business as now conducted and is duly licensed or qualified to do business in the states of the United States and foreign jurisdictions where its ownership or leasing of property or the conduct of its business requires such qualification, except where the failure to be so licensed or qualified would not have a Material Adverse Effect on Brooklyn MHC.  Brooklyn MHC has no assets, other than shares of Brooklyn Bancorp Common Stock, and has no liabilities.

 

 

(b)           Brooklyn Bancorp is a Federal corporation organized and validly existing under the laws of the United States, and is duly registered as a savings and loan holding company under the HOLA. Brooklyn Bancorp has the full corporate power and authority to own or lease all of its properties and assets and to carry on its business as it is now being conducted, and is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned or leased by it makes such licensing or qualification necessary, except where the failure to be so licensed, qualified or in good standing would not have a Material Adverse Effect on Brooklyn. Other than shares of capital stock of Brooklyn Federal Savings and the Subsidiaries of Brooklyn Federal Savings as identified on Brooklyn Disclosure Schedule 3.01(b) (collectively, the “Brooklyn Subsidiaries”), Brooklyn Bancorp does not own or control, directly or indirectly, or have the right to acquire directly or indirectly, an equity interest in any corporation, company, association, partnership, joint venture or other entity.

 

(c)           Brooklyn Federal Savings is a Federal savings bank organized and validly existing under the laws of the United States.  Except for its Subsidiaries that are identified as Brooklyn Subsidiaries, Brooklyn Federal Savings does not possess, directly or indirectly, any material equity interest in any corporate entity, except for equity interests held in its investment portfolio, and equity interests held by Brooklyn Federal Savings in a fiduciary capacity, and equity interests held in connection with its lending activities, including stock in the FHLB.  Brooklyn Federal Savings owns all of the outstanding shares of capital stock of each Subsidiary identified as a Brooklyn Subsidiary free and clear of all liens, security interests, pledges, charges, encumbrances, agreements and restrictions of any kind or nature, except that, in the case of the REIT, Brooklyn Federal Savings owns 100% of the common securities and less than 100% of the preferred securities.  The deposits of Brooklyn Federal Savings are insured by the FDIC to the fullest extent permitted by law, and all premiums and assessments required to be paid in connection therewith have been paid when due by Brooklyn Federal Savings.

 

(d)           Brooklyn Federal Savings is a member in good standing of the FHLB and owns the requisite amount of stock therein.

 

(e)           The respective minute books of Brooklyn MHC, Brooklyn Bancorp and Brooklyn Federal Savings accurately records, in all material respects, all material corporate actions of their respective stockholders and boards of directors (including committees) through the date of this Agreement.

 

(f)           Prior to the date of this Agreement, Brooklyn has made available to Investors true and correct copies of the charters and bylaws of Brooklyn Federal Savings, Brooklyn Bancorp and Brooklyn MHC.

 

 

(a)           The authorized capital stock of Brooklyn Bancorp consists of twenty million (20,000,000) shares of common stock, $0.01 par value (“Brooklyn Bancorp Common Stock”), and one million (1,000,000) shares of Preferred Stock, $0.01 par value (the “Brooklyn Preferred Stock”).  There are 12,882,607 shares of Brooklyn Bancorp Common Stock outstanding, validly issued, fully paid and nonassessable and free of preemptive rights, including 9,257,500 shares of Brooklyn Bancorp Common Stock held by Brooklyn MHC (the “MHC Shares”). There are no shares of Brooklyn Bancorp Preferred Stock issued and outstanding. There are 601,603 shares of Brooklyn Bancorp Common Stock held by Brooklyn Bancorp as treasury stock. Except for Brooklyn Bancorp Options, neither Brooklyn Bancorp nor any Brooklyn Subsidiary has or is bound by any Right of any character relating to the purchase, sale, issuance or voting of, or right to receive dividends or other distributions on, any shares of Brooklyn Bancorp Common Stock, or any other security of Brooklyn Bancorp or any Brooklyn Subsidiary, or any securities representing the right to vote, purchase or otherwise receive any shares of Brooklyn Bancorp Common Stock or any other security of Brooklyn Bancorp.

 

 

(b)           Brooklyn MHC owns the MHC Shares free and clear of any lien or encumbrance. Except for shares of Brooklyn Bancorp Common Stock (and any equity interests that may be attributed to Brooklyn MHC due to its ownership of Brooklyn Bancorp Common Stock), Brooklyn MHC does not possess, directly or indirectly, any equity interest in any corporation.

 

(c)           The authorized capital stock of Brooklyn Federal Savings consists of ten million (10,000,000) shares of common stock, $0.01 par value, and one million (1,000,000) shares of Preferred Stock, $0.01 par value.  There are 1,000 shares of Brooklyn Federal Savings common stock outstanding, all of which are validly issued, fully paid and nonassessable and free of preemptive rights, and all of which are owned by Brooklyn Bancorp free and clear of any liens, encumbrances, charges, restrictions or rights of third parties of any kind whatsoever.

 

 

(a)           The Brooklyn Federal Parties have full power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by the Brooklyn Federal Parties and the completion by the Brooklyn Federal Parties of the transactions contemplated hereby have been duly and validly approved by the requisite vote of each Board of Directors of the Brooklyn Federal Parties and by Brooklyn Bancorp as the sole stockholder of Brooklyn Federal Savings, and, except for approval from the stockholders of Brooklyn Bancorp and if required from the Brooklyn MHC Members, no other proceedings on the part of the Brooklyn Federal Parties are necessary to complete the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by each of the Brooklyn Federal Parties and, subject, if required, to the approval of the stockholders of Brooklyn Bancorp and if required the Brooklyn MHC Members and the receipt of the required approvals of the Regulatory Authorities, constitutes the valid and binding obligations of each of the Brooklyn Federal Parties, enforceable against each of the Brooklyn Federal Parties in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally, and as to Brooklyn Federal Savings, the conservatorship or receivership provisions of the FDIA, and subject, as to enforceability, to general principles of equity.

 

(b)           Subject to the receipt of approvals from the Regulatory Authorities and the compliance by the Brooklyn Federal Parties and Investors with any conditions contained therein,

 

  (A)           the execution and delivery of this Agreement by the Brooklyn Federal Parties,

 

  (B)           the consummation of the transactions contemplated hereby, and

 

 

will not: (i) conflict with or result in a material breach of any provision of the charters or bylaws of any of the Brooklyn Federal Parties or the certificate of incorporation of any Brooklyn Subsidiary; (ii) violate any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction applicable to the Brooklyn Federal Parties or any of the properties or assets of the Brooklyn Federal Parties; or (iii) violate, conflict with, result in a breach of any provisions of, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of, accelerate the performance required by, or result in a right of termination or acceleration or the creation of any lien, security interest, charge or other encumbrance upon any of the properties or assets of any of the Brooklyn Federal Parties under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other investment or obligation to which any Brooklyn Party is a party, or by which they or any of their respective properties or assets may be bound or affected, except in the case of clause (iii) above, for violations which, individually or in the aggregate, would not have a Material Adverse Effect on any or all of the Brooklyn Federal Parties.

 

 

(c)           The affirmative vote of the holders of a majority of the issued and outstanding shares of Brooklyn Bancorp Common Stock held by Minority Shareholders, as well as an affirmative vote of two-thirds of all of the issued and outstanding shares of Brooklyn Bancorp Common Stock, are the only votes of holders of any class of Brooklyn Bancorp’s capital stock necessary to adopt and approve this Agreement and the transactions contemplated hereby.

 

(d)           The board of directors of Brooklyn Bancorp, by resolution duly adopted by the requisite vote of the board of directors at a meeting duly called and held, has (x) determined that this Agreement, the Mid-Tier Merger and the other transactions contemplated hereby are fair to and in the best interests of Brooklyn Bancorp and its shareholders and declared the Mid-Tier Merger to be advisable, and (y) recommended that the shareholders of Brooklyn Bancorp approve this Agreement and directed that such matter be submitted for consideration by the Brooklyn Bancorp stockholders at the Brooklyn Bancorp Stockholders Meeting.

 

(e)           The board of directors of Brooklyn MHC, by resolution duly adopted by the requisite vote of the board of directors at a meeting duly called and held, has (x) determined that this Agreement, the MHC Merger and the other transactions contemplated hereby are fair to and in the best interests of Brooklyn MHC and its Members and declared the MHC Merger to be advisable, and (y) recommended that the Members of Brooklyn MHC approve the MHC Merger and directed that such matter be submitted for consideration by the Brooklyn MHC Members at the Brooklyn MHC Members Meeting, if required.

 

 

Except for (a) filings with Regulatory Authorities, the receipt of the Regulatory Approvals, and compliance with any conditions contained therein, (b) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, the Articles of Combination with the Regulatory Authorities, and such filings with the Department as required for the Bank Merger and the MHC Merger, (c) the filing with the SEC of (i) the Merger Proxy Statement and (ii) such reports under Sections 13(a), 13(d), 13(g) and 16(a) of the Exchange Act as may be required in connection with this Agreement and the transactions contemplated hereby and the obtaining from the SEC of such orders as may be required in connection therewith, (d) the filing with Regulatory Authorities of the Members Proxy Statement for any requisite vote of Brooklyn MHC members, and (e) the approval of this Agreement by the requisite vote of the shareholders of Brooklyn Bancorp, and if required by the Brooklyn MHC Members, no consents, waivers or approvals of, or filings or registrations with, any Governmental Entity are necessary, and, to the Knowledge of Brooklyn Bancorp, no consents, waivers or approvals of, or filings or registrations with, any other third parties are necessary, in connection with (x) the execution and delivery of this Agreement by the Brooklyn Federal Parties, and (y) the completion of the Mergers by the Brooklyn Federal Parties.  The Brooklyn Federal Parties have no reason to believe that any Regulatory Approvals or other required consents or approvals will not be received.

 

 

 

(a)           The Annual Reports on Form 10-K for the fiscal years ended September 30, 2010 and September 30, 2009 filed with the SEC by Brooklyn Bancorp on the dates set forth in Disclosure Schedule 3.05, and all other reports, registration statements, definitive proxy statements or information statements filed by Brooklyn Bancorp subsequent to September 30, 2009 under the Securities Act, or under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act or under the securities regulations of the SEC, in the form filed with the SEC as of the date filed or, if amended or supplemented as of the date amended or supplemented, (A) complied in all material respects as to form with the applicable requirements under the Securities Act or the Exchange Act, as the case may be, and (B) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.  The Brooklyn Bancorp Financial Statements included or incorporated by reference into any such filing (including the related notes and schedules thereto) have been prepared in accordance with GAAP, and fairly present in each case in all material respects (subject in the case of the unaudited interim statements to normal year-end adjustments) the consolidated financial position, results of operations and cash flows of Brooklyn Bancorp and the Brooklyn Subsidiaries on a consolidated basis as of and for the respective periods ending on the dates thereof, in accordance with GAAP during the periods involved, except as indicated in the notes thereto, or in the case of unaudited statements, as permitted by Form 10-Q.

 

(b)           Brooklyn Bancorp has made available to Investors true, correct and complete copies of all written correspondence between the SEC and it and any of its subsidiaries occurring since September 30, 2009 and prior to the date hereof.  There are no outstanding comments from or unresolved issues raised by the SEC with respect to any of Brooklyn Bancorp Securities Documents.  The books and records of Brooklyn Bancorp and its subsidiaries have been, and are being, maintained in all material respects in accordance with GAAP and any other applicable legal and accounting requirements and reflect only actual transactions.

 

(c)           Except as set forth in Brooklyn Disclosure Schedule 3.05(c), Brooklyn Bancorp and each of its subsidiaries have timely filed all reports, forms, schedules, registrations, statements and other documents, together with any amendments required to be made with respect thereto, that they were required to file since September 30, 2008 with any Governmental Entity (other than the SEC) and have paid all fees and assessments due and payable in connection therewith. 

 

(d)           Except as set forth in Brooklyn Disclosure Schedule 3.05(d), the records, systems, controls, data and information of Brooklyn Bancorp and its subsidiaries are recorded, stored, maintained and operated under means (including any electronic, mechanical or photographic process, whether computerized or not) that are under the exclusive ownership and direct control of it or its subsidiaries or accountants (including all means of access thereto and therefrom), except for any non-exclusive ownership and non-direct control that would not reasonably be expected to have a material adverse effect on the system of internal accounting controls described in the following sentence.  Brooklyn Bancorp and its subsidiaries have devised and maintain a system of internal accounting controls sufficient to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP.  Brooklyn Bancorp has designed and implemented disclosure controls and procedures (within the meaning of Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to ensure that material information relating to it and its subsidiaries is made known to its management by others within those entities as appropriate to allow timely decisions regarding required disclosure and to make the certifications required by the Exchange Act.

 

 

(e)           Brooklyn Bancorp has disclosed, based on its most recent evaluation prior to the date hereof, to its auditors and the audit committee of its board of directors and in the Brooklyn Bancorp Securities Documents and the Brooklyn Disclosure Schedules  (A) any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect in any material respect its ability to record, process, summarize and report financial information and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in its internal controls over financial reporting.

 

(f)            Since September 30, 2008, (A) neither Brooklyn Bancorp nor any of its subsidiaries nor, to its Knowledge, any director, officer, employee, auditor, accountant or representative of it or any of its subsidiaries has received or otherwise had or obtained knowledge of any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of it or any of its subsidiaries or their respective internal accounting controls, including any material complaint, allegation, assertion or claim that it or any of its subsidiaries has engaged in questionable accounting or auditing practices, and (B) no attorney representing it or any of its subsidiaries, whether or not employed by it or any of its subsidiaries, has reported evidence of a material violation of securities laws, breach of fiduciary duty or similar violation by it or any of its officers, directors, employees or agents to its board of directors or any committee thereof or to any of its directors or officers.

 

(g)           Since September 30, 2010, Brooklyn Bancorp and its subsidiaries have not incurred any liability other than in the ordinary course of business consistent with past practice. 

 

(h)           The allowance for loan losses reflected in Brooklyn Bancorp’s audited statement of condition at September 30, 2010 was, and the allowance for loan losses shown on the balance sheets in Brooklyn Bancorp’s Securities Documents for periods ending after September 30, 2010 will be, adequate, as of the dates thereof, under GAAP.

 

Brooklyn Bancorp and the Brooklyn Subsidiaries are members of the same affiliated group within the meaning of Code Section 1504(a). Each Brooklyn Federal Party and each Brooklyn Subsidiary has duly filed all federal, state and material local tax returns required to be filed by or with respect to it on or prior to the Closing Date, taking into account any extensions (all such returns, to the Knowledge of Brooklyn Bancorp, being accurate and correct in all material respects) and has duly paid or made provisions for the payment of all material federal, state and local taxes which have been incurred by or are due or claimed to be due from it by any taxing authority or pursuant to any written tax sharing agreement on or prior to the Closing Date other than taxes or other charges which (i) are not delinquent, (ii) are being contested in good faith, or (iii) have not yet been fully determined.   Except as set forth in Brooklyn Disclosure Schedule 3.06, as of the date of this Agreement, none of the Brooklyn Federal Parties has received written notice of, and to Knowledge of Brooklyn Bancorp there is no audit examination, deficiency assessment, tax investigation or refund litigation with respect to any taxes of any Brooklyn Federal Party or any Brooklyn Subsidiary, and no written claim has been made by any authority in a jurisdiction where any Brooklyn Party or any Brooklyn Subsidiary does not file tax returns that a Brooklyn Federal Party or any Brooklyn Subsidiary is subject to taxation in that jurisdiction.  No Brooklyn Federal Party and no Brooklyn Subsidiary has executed an extension or waiver of any statute of limitations on the assessment or collection of any material tax due that is currently in effect. Each Brooklyn Federal Party and each Brooklyn Subsidiary has withheld and paid all taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, shareholder or other third party, and each Brooklyn Federal Party and each Brooklyn Subsidiary, to the Knowledge of Brooklyn Bancorp, has timely complied with all applicable information reporting requirements under Part III, Subchapter A of Chapter 61 of the Code and similar applicable state and local information reporting requirements.

 

 

 

Other than as disclosed in the Securities Documents filed by Brooklyn Bancorp on or before the date of this Agreement, Brooklyn Bancorp has not suffered any Material Adverse Effect since September 30, 2010 and no event has occurred or circumstance arisen since that date which, in the aggregate, has had or is reasonably likely to have a Material Adverse Effect on Brooklyn Bancorp.

 

 

(a)           Except as set forth in Brooklyn Disclosure Schedule 3.08, neither Brooklyn MHC, Brooklyn Bancorp nor any Brooklyn Subsidiary is a party to or subject to: (i) any employment, consulting or severance contract or material arrangement with any past or present officer, director or employee, except for “at will” arrangements; (ii) any plan, material arrangement or contract providing for bonuses, pensions, options, deferred compensation, retirement payments, profit sharing or similar material arrangements for or with any past or present officers, directors or employees; (iii) any collective bargaining agreement with any labor union relating to employees; (iv) any agreement which by its terms limits the payment of dividends by Brooklyn Bancorp or any Brooklyn Subsidiary; (v) any instrument evidencing or related to material indebtedness for borrowed money whether directly or indirectly, by way of purchase money obligation, conditional sale, lease purchase, guaranty or otherwise, in respect of which Brooklyn Bancorp or any Brooklyn Subsidiary is an obligor to any person, which instrument evidences or relates to indebtedness other than deposits, repurchase agreements, FHLB advances, bankers’ acceptances, and “treasury tax and loan” accounts and transactions in “federal funds” in each case established in the ordinary course of business consistent with past practice, or which contains financial covenants or other restrictions (other than those relating to the payment of principal and interest when due) which would be applicable on or after the Closing Date to Investors Bancorp or any Investors Bancorp Subsidiary; (vi) any other agreement, written or oral, that obligates Brooklyn MHC, Brooklyn Bancorp or any Brooklyn Subsidiary for the payment of more than $25,000 annually or for the payment of more than $50,000 over its remaining term, which is not terminable without cause on 60 days’ or less notice without penalty or payment (other than agreements for commercially available “off-the- shelf” software), or (vii) any agreement (other than this Agreement), contract, arrangement, commitment or understanding (whether written or oral) that restricts or limits in any material way the conduct of business by Brooklyn Bancorp or any Brooklyn Subsidiary (it being understood that any non-compete or similar provision shall be deemed material, but any limitation on the scope of any license granted under any such agreement shall not be deemed material).

 

(b)          Each real estate lease that requires the consent of the lessor or its agent resulting from the Mergers by virtue of the terms of any such lease, is listed in Brooklyn Disclosure Schedule 3.08, identifying the section of the lease that contains such prohibition or restriction.  Subject to any consents that may be required as a result of the transactions contemplated by this Agreement, to its Knowledge, neither Brooklyn Bancorp nor any Brooklyn Subsidiary is in default in any material respect under any material contract, agreement, commitment, arrangement, lease, insurance policy or other instrument to which it is a party, by which its assets, business, or operations may be bound or affected, or under which it or its assets, business, or operations receive benefits, and there has not occurred any event that, with the lapse of time or the giving of notice or both, would constitute such a default.

 

(c)           True and correct copies of agreements, contracts, arrangements and instruments referred to in Section 3.08(a) and (b) (“Material Contracts”) have been made available to Investors Bancorp on or before the date hereof, and are in full force and effect on the date hereof and neither Brooklyn Bancorp nor any Brooklyn Subsidiary (nor, to the Knowledge of Brooklyn Bancorp, any other party to any such contract, arrangement or instrument) has materially breached any provision of, or is in default in any respect under any term of, any Material Contract.  Except as listed on Brooklyn Disclosure Schedule 3.08(c), no party to any Material Contract will have the right to terminate any or all of the provisions of any such Material Contract as a result of the execution of, and the consummation of the transactions contemplated by, this Agreement.

 

 

(d)           Since September 30, 2009, through and including the date of this Agreement, except as publicly disclosed in the Securities Documents filed or furnished by Brooklyn Bancorp prior to the date hereof, neither Brooklyn Bancorp nor any Brooklyn Subsidiary has (i) except for (A) normal increases for employees (other than officers subject to the reporting requirements of Section 16(a) of the Exchange Act) made in the ordinary course of business consistent with past practice, or (B) as required by applicable law, increased the wages, salaries, compensation, pension, or other fringe benefits or perquisites payable to any executive officer, employee, or director from the amount thereof in effect as of September 30, 2009 (which amounts have been previously made available to Investors Bancorp), granted any severance or termination pay, entered into any contract to make or grant any severance or termination pay (except as required under the terms of agreements or severance plans listed on Brooklyn Disclosure Schedule 3.08(d), as in effect as of the date hereof), or paid any bonus other than the customary year-end bonuses in amounts consistent with past practice, (ii) granted any options to purchase shares of Brooklyn Bancorp Common Stock, or any right to acquire any shares of its capital stock to any executive officer, director or employee other than grants to employees (other than officers subject to the reporting requirements of Section 16(a) of the Exchange Act) made in the ordinary course of business consistent with past practice under Brooklyn Bancorp Stock Incentive Plan, (iii) increased or established any bonus, insurance, severance, deferred compensation, pension, retirement, profit sharing, stock option (including, without limitation, the granting of stock options, stock appreciation rights, performance awards, or restricted stock awards), stock purchase or other employee benefit plan, (iv) made any material election for federal or state income tax purposes, (v) made any material change in the credit policies or procedures of Brooklyn Bancorp or any of the Brooklyn Subsidiaries, the effect of which was or is to make any such policy or procedure less restrictive in any material respect, (vi) made any material acquisition or disposition of any assets or properties, or any contract for any such acquisition or disposition entered into other than loans and loan commitments, (vii) entered into any lease of real or personal property requiring annual payments in excess of $25,000, other than in connection with foreclosed property or in the ordinary course of business consistent with past practice, (viii) changed any accounting methods, principles or practices of Brooklyn Bancorp or its Subsidiaries affecting its assets, liabilities or businesses, including any reserving, renewal or residual method, practice or policy or (ix) suffered any strike, work stoppage, slow-down, or other labor disturbance.

 

 

(a)           Brooklyn Bancorp and each Brooklyn Subsidiary has good and, as to real property, marketable title to all material assets and properties owned by Brooklyn Bancorp or each Brooklyn Subsidiary in the conduct of its businesses, whether such assets and properties are real or personal, tangible or intangible, including assets and property reflected in the balance sheets contained in the Brooklyn Regulatory Reports and in the Brooklyn Financials or acquired subsequent thereto (except to the extent that such assets and properties have been disposed of in the ordinary course of business, since the date of such balance sheets), subject to no material encumbrances, liens, mortgages, security interests or pledges, except (i) those items which secure liabilities for public or statutory obligations or any discount with, borrowing from or other obligations to FHLB, inter-bank credit facilities, or any transaction by an Brooklyn Subsidiary acting in a fiduciary capacity, (ii) statutory liens for amounts not yet delinquent or which are being contested in good faith, (iii) non-monetary liens affecting real property which do not adversely affect the value or use of such real property, and (iv) those described and reflected in the Brooklyn Financials. Brooklyn Bancorp and the Brooklyn Bancorp Subsidiaries, as lessee, have the right under valid and existing leases of real and personal properties used by Brooklyn Bancorp and its Subsidiaries in the conduct of their businesses to occupy or use all such properties as presently occupied and used by each of them.

 

 

(b)           With respect to all material agreements pursuant to which Brooklyn Bancorp or any Brooklyn Subsidiary has purchased securities subject to an agreement to resell, if any, Brooklyn Bancorp or such Brooklyn Subsidiary, as the case may be, has a lien or security interest (which to Brooklyn Bancorp’s Knowledge is a valid, perfected first lien) in the securities or other collateral securing the repurchase agreement, and the value of such collateral equals or exceeds the amount of the debt secured thereby.

 

(c)           Brooklyn Bancorp and each Brooklyn Subsidiary currently maintain insurance considered by each of them to be reasonable for their respective operations.  Neither Brooklyn Bancorp nor any Brooklyn Subsidiary, except as disclosed in Brooklyn Disclosure Schedule 3.09, has received notice from any insurance carrier during the past five years that (i) such insurance will be canceled or that coverage thereunder will be reduced or eliminated, or (ii) premium costs (other than with respect to health or disability insurance) with respect to such policies of insurance will be substantially increased. There are presently no material claims pending under such policies of insurance and no notices have been given by Brooklyn Bancorp or any Brooklyn Subsidiary under such policies (other than with respect to health or disability insurance). All such insurance is valid and enforceable and in full force and effect, and within the last three years Brooklyn Bancorp and each Brooklyn Subsidiary has received each type of insurance coverage for which it has applied and during such periods has not been denied indemnification for any material claims submitted under any of its insurance policies. Brooklyn Disclosure Schedule 3.09 identifies all material policies of insurance maintained by Brooklyn Bancorp and each Brooklyn Subsidiary as well as the other matters required to be disclosed under this Section.

 

 

Except as set forth in Brooklyn Disclosure Schedule 3.10, neither Brooklyn MHC, Brooklyn Bancorp nor any Brooklyn Subsidiary is a party to any, and there are no pending or, to the Knowledge of Brooklyn Bancorp, threatened legal, administrative, arbitration or other proceedings, claims (whether asserted or unasserted), actions or governmental investigations or inquiries of any nature (i) against Brooklyn MHC, Brooklyn Bancorp or any Brooklyn Subsidiary, (ii) to which Brooklyn MHC, Brooklyn Bancorp or any Brooklyn Subsidiary’s assets are or may be subject, (iii) challenging the validity or propriety of any of the transactions contemplated by this Agreement, or (iv) which could adversely affect the ability of any of the Brooklyn Federal Parties to perform under this Agreement, except as to (i) and (ii) above, for any proceeding, claim, action, investigation or inquiry which, if adversely determined, individually or in the aggregate, would not be reasonably expected to have a Material Adverse Effect on Brooklyn MHC or Brooklyn Bancorp.

 

 

(a)           Except as set forth in Brooklyn Disclosure Schedule 3.11(a), to Brooklyn Bancorp’s Knowledge, each of Brooklyn Bancorp and each Brooklyn Subsidiary is in compliance in all material respects with all applicable federal, state, local and foreign statutes, laws, regulations, ordinances, rules, judgments, orders or decrees applicable to it, its properties, assets and deposits, its business, and its conduct of business and its relationship with its employees, including, without limitation, the USA PATRIOT Act, the Equal Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment Act of 1977, the Home Mortgage Disclosure Act, the Bank Secrecy Act and all other applicable fair lending laws and other laws relating to discriminatory business practices and neither Brooklyn Bancorp nor any Brooklyn Subsidiary has received any written notice to the contrary.  The Board of Directors of Brooklyn Federal Savings has adopted and Brooklyn Federal Savings has implemented an anti-money laundering program that contains adequate and appropriate customer identification verification procedures that has not been deemed ineffective by any Governmental Entity and that meets the requirements of Sections 352 and 326 of the USA PATRIOT Act and the regulations thereunder.

 

 

(b)           Each of Brooklyn MHC, Brooklyn Bancorp and each Brooklyn Subsidiary has all material permits, licenses, authorizations, orders and approvals of, and has made all filings, applications and registrations with, all Governmental Entities and Regulatory Authorities that are required in order to permit it to own or lease its properties and to conduct its business as presently conducted except where the failure to hold such permits, licensees, authorizations, orders or approvals, or the failure to make such filings, applications or registrations would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Brooklyn MHC or Brooklyn Bancorp; all such permits, licenses, certificates of authority, orders and approvals are in full force and effect in all material respects and, to the Knowledge of Brooklyn Bancorp, no suspension or cancellation of any such permit, license, certificate, order or approval is threatened or will result from the consummation of the transactions contemplated by this Agreement, subject to obtaining Regulatory Approvals.

 

(c)           Other than those listed on Brooklyn Disclosure Schedule 3.11(c), for the period beginning October 1, 2008, neither Brooklyn MHC, Brooklyn Bancorp nor any Brooklyn Subsidiary has received any written notification or, to Brooklyn Bancorp’s Knowledge, any other communication from any Regulatory Authority (i) asserting that Brooklyn MHC, Brooklyn Bancorp or any Brooklyn Subsidiary is not in material compliance with any of the statutes, regulations or ordinances which such Regulatory Authority enforces; (ii) threatening to revoke any license, franchise, permit or governmental authorization which is material to Brooklyn MHC, Brooklyn Bancorp or any Brooklyn Subsidiary; (iii) requiring, or threatening to require, Brooklyn MHC, Brooklyn Bancorp or any Brooklyn Subsidiary, or indicating that Brooklyn MHC, Bancorp or any Brooklyn Subsidiary may be required, to enter into a cease and desist order, agreement or memorandum of understanding or any other agreement with any federal or state governmental agency or authority which is charged with the supervision or regulation of banks or engages in the insurance of bank deposits restricting or limiting, or purporting to restrict or limit, in any material respect the operations of Brooklyn Bancorp or any Brooklyn Subsidiary, including without limitation any restriction on the payment of dividends; or (iv) directing, restricting or limiting, or purporting to direct, restrict or limit, in any manner the operations of Brooklyn Bancorp or any Brooklyn Subsidiary, including without limitation any restriction on the payment of dividends (any such notice, communication, memorandum, agreement or order described in this sentence is hereinafter referred to as a “Brooklyn Bancorp Regulatory Agreement”). Except as set forth on Brooklyn Disclosure Schedule 3.11(c), neither Brooklyn MHC, Brooklyn Bancorp nor any Brooklyn Subsidiary has consented to or entered into any Brooklyn Bancorp Regulatory Agreement that is currently in effect or that was in effect since January 1, 2008.  The most recent regulatory rating given to Brooklyn Federal Savings as to compliance with the Community Reinvestment Act (“CRA”) is satisfactory or better.

 

(d)           Since October 1, 2008, and except as set forth on Brooklyn Disclosure Schedule 3.11(d), Brooklyn Bancorp has been and is in compliance in all material respects with (i) the applicable provisions of the Sarbanes-Oxley Act of 2002 and (ii) the applicable listing and corporate governance rules and regulations of the NASDAQ.  Brooklyn Disclosure Schedule 3.11(d) sets forth, as of June 30, 2011, a schedule of all executive officers and directors of Brooklyn Bancorp who have outstanding loans from Brooklyn Bancorp or Brooklyn Federal Savings, and there has been no default on, or forgiveness or waiver of, in whole or in part, any such loan during the two years immediately preceding the date hereof.

 

(e)            Each Brooklyn Federal Party is in compliance in all material respects with the Order to Cease and Desist, except as set forth in Brooklyn Disclosure Schedule 3.11(e).

 

 

 

(a)             Brooklyn Disclosure Schedule 3.12(a) includes a list of all existing bonus, incentive, deferred compensation, supplemental executive retirement plans, pension, retirement, profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock purchase, restricted stock, stock option, stock appreciation, phantom stock, severance, welfare benefit plans (including paid time off policies and other material benefit policies and procedures), fringe benefit plans, employment, consulting, settlement and change in control agreements and all other material benefit practices, policies and arrangements maintained by Brooklyn MHC, Brooklyn Bancorp or any Brooklyn Subsidiary in which any employee or former employee, consultant or former consultant or director or former director participates or to which any such employee, consultant or director is a party or is otherwise entitled to receive benefits (the “Brooklyn Bancorp Compensation and Benefit Plans”).  Neither Brooklyn MHC, Brooklyn Bancorp nor any Brooklyn Subsidiary has any commitment to create any additional Brooklyn Bancorp Compensation and Benefit Plan or to materially modify, change or renew any existing Brooklyn Bancorp Compensation and Benefit Plan (any modification or change that increases the cost of such plans would be deemed material), except as required to maintain the qualified status thereof, Brooklyn Bancorp has made available to Investors Bancorp true and correct copies of the Brooklyn Bancorp Compensation and Benefit Plans.

 

(b)            To the Knowledge of Brooklyn Bancorp, and except as disclosed in Brooklyn Disclosure Schedule 3.12(b), each Brooklyn Bancorp Compensation and Benefit Plan has been operated and administered in all material respects in accordance with its terms and with applicable law, including, but not limited to, ERISA, the Code, the Securities Act, the Exchange Act, the Age Discrimination in Employment Act, Part G of Subtitle I of ERISA and Section 4980B of the Code (collectively, “COBRA”),the Health Insurance Portability and Accountability Act (“HIPAA”) and any regulations or rules promulgated thereunder, and all material filings, disclosures and notices required by ERISA, the Code, the Securities Act, the Exchange Act, the Age Discrimination in Employment Act, COBRA and HIPAA and any other applicable law have been timely made or any interest, fines, penalties or other impositions for late filings have been paid in full.  Each Brooklyn Bancorp Compensation and Benefit Plan which is an “employee pension benefit plan” within the meaning of Section 3(2) of ERISA (a “Pension Plan”) and which is intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the IRS or is entitled to rely on a determination letter issued to the sponsor or a master or prototype plan, and Brooklyn Bancorp is not aware of any circumstances which are reasonably likely to result in revocation of any such favorable determination letter.  There is no material pending or, to the Knowledge of Brooklyn Bancorp, threatened action, suit or claim relating to any of the Brooklyn Bancorp Compensation and Benefit Plans (other than routine claims for benefits).  Neither Brooklyn Bancorp nor any Brooklyn Subsidiary has engaged in a transaction, or omitted to take any action, with respect to any Brooklyn Bancorp Compensation and Benefit Plan that would reasonably be expected to subject Brooklyn Bancorp or any Brooklyn Subsidiary to a material unpaid tax or penalty imposed by either Chapter 43 of the Code or Sections 409 or 502 of ERISA.

 

(c)            No liability under Title IV of ERISA has been incurred by Brooklyn Bancorp or any Brooklyn Subsidiary with respect to any Brooklyn Bancorp Compensation and Benefit Plan which is subject to Title IV of ERISA (“Brooklyn Bancorp Pension Plan”) currently or formerly maintained by Brooklyn Bancorp or any entity which is considered one employer with Brooklyn Bancorp under Section 4001(b)(1) of ERISA or Section 414 of the Code (an “Brooklyn Bancorp ERISA Affiliate”) since the effective date of ERISA that has not been satisfied in full, and no condition exists that presents a material risk to Brooklyn Bancorp or any Brooklyn Bancorp ERISA Affiliate of incurring a liability under such Title.  No Brooklyn Bancorp Pension Plan had an “accumulated funding deficiency” (as defined in Section 302 of ERISA), whether or not waived, as of the last day of the end of the most recent plan year ending prior to the date hereof; the fair market value of the assets of each Brooklyn Bancorp Pension Plan exceeds the present value of the “benefit liabilities” (as defined in Section 4001(a)(16) of ERISA) under such Brooklyn Bancorp Pension Plan as of the end of the most recent plan year with respect to the respective Brooklyn Bancorp Pension Plan ending prior to the date hereof, calculated on the basis of the actuarial assumptions used in the most recent actuarial valuation for such Brooklyn Bancorp Pension Plan as of the date hereof; there is not currently pending with the PBGC any filing with respect to any reportable event under Section 4043 of ERISA nor has any reportable event occurred as to which a filing is required and has not been made (other than as might be required with respect to this Agreement and the transactions contemplated thereby).  Neither Brooklyn Bancorp nor any Brooklyn Bancorp ERISA Affiliate has contributed to any “multiemployer plan,” as defined in Section 3(37) of ERISA.  Neither Brooklyn Bancorp, nor any Brooklyn Bancorp ERISA Affiliate, nor any Brooklyn Bancorp Compensation and Benefit Plan, including any Brooklyn Bancorp Pension Plan, nor any trust created thereunder, nor any trustee or administrator thereof has engaged in a transaction in connection with which Brooklyn Bancorp, any Brooklyn Bancorp ERISA Affiliate, and any Brooklyn Bancorp Compensation and Benefit Plan, including any Brooklyn Bancorp Pension Plan or any such trust or any trustee or administrator thereof, could reasonably be expected to be subject to either a civil liability or penalty pursuant to Section 409, 502(i) or 502(l) of ERISA or a tax imposed pursuant to Chapter 43 of the Code.

 

 

(d)           All material contributions required to be made under the terms of any Brooklyn Bancorp Compensation and Benefit Plan have been timely made, and all anticipated contributions and funding obligations are accrued on Brooklyn Bancorp’s consolidated financial statements to the extent required by GAAP.  Brooklyn Bancorp and each Brooklyn Subsidiary has expensed and accrued as a liability the present value of future benefits under each applicable Brooklyn Bancorp Compensation and Benefit Plan for financial reporting purposes as required by GAAP.

 

(e)           Neither Brooklyn Bancorp nor any Brooklyn Subsidiary has any obligations to provide retiree health, life insurance, or disability insurance, or any retiree death benefits under any Brooklyn Bancorp Compensation and Benefit Plan, other than benefits mandated by COBRA.  There has been no communication to employees by Brooklyn Bancorp or any Brooklyn Subsidiary that would reasonably be expected to promise or guarantee such employees retiree health, life insurance, or disability insurance, or any retiree death benefits, other than as set forth in Brooklyn Disclosure Schedule 3.12(e).

 

(f)           Brooklyn Bancorp and its Subsidiaries do not maintain any Brooklyn Bancorp Compensation and Benefit Plans covering employees who are not United States residents.

 

(g)           With respect to each Brooklyn Bancorp Compensation and Benefit Plan, if applicable, Brooklyn Bancorp has provided or made available to Investors Bancorp copies of the:  (A) plan documents, trust instruments and insurance contracts; (B) three most recent IRS Forms 5500; (C) three most recent actuarial reports and financial statements; (D) most recent summary plan description; (E) most recent determination letter issued by the IRS; (F) any Form 5310 or Form 5330 filed with the IRS within the last three years; (G) most recent nondiscrimination tests performed under ERISA and the Code (including 401(k) and 401(m) tests); and (H) PBGC Form 500 and 501 filings, along with the Notice of Intent to Terminate, ERISA Section 204(h) Notice, Notice of Plan Benefits, and all other documentation related to the termination of a Brooklyn Bancorp Pension Plan.

 

(h)           Except as provided in Brooklyn Disclosure Schedule 3.12(h) and in Section 2.06, the consummation of the Merger will not, directly or indirectly (including, without limitation, as a result of any termination of employment or service at any time prior to or following the Effective Time) (A) entitle any employee, consultant or director to any payment or benefit (including severance pay, change in control benefit, or similar compensation) or any increase in compensation, (B) entitle any employee or independent contractor to terminate any plan, agreement or arrangement without cause and continue to accrue future benefits thereunder, or result in the vesting or acceleration of any benefits under any Brooklyn Bancorp Compensation and Benefit Plan,  (C) result in any material increase in benefits payable under any Brooklyn Bancorp Compensation and Benefit Plan, or (D) entitle any current or former employee, director or independent contractor of Brooklyn Bancorp or any Brooklyn Subsidiary to any actual or deemed payment (or benefit) which could constitute a “parachute payment” (as such term is defined in Section 280G of the Code).

 

 

(i)           Except as disclosed in Brooklyn Disclosure Schedule 3.12(i), neither Brooklyn Bancorp nor any Brooklyn Subsidiary maintains any compensation plans, programs or arrangements under which any payment is reasonably likely to become non-deductible, in whole or in part, for tax reporting purposes as a result of the limitations under Section 162(m) of the Code and the regulations issued thereunder.

 

(j)           Except as disclosed in Brooklyn Disclosure Schedule 3.12(j), all “non-qualified” deferred compensation plans, programs or arrangements (within the meaning of Section 409A of the Code) have (i) between January 1, 2005 and December 31, 2008, been operated in all material respects in good faith compliance with Section 409A of the Code and IRS Notice 2005-01 and (ii) since January 1, 2009 (or such later date permitted under applicable guidance), been in documentary compliance with Section 409A of the Code and IRS regulations and guidance thereunder.  All stock options and stock appreciation rights granted by Brooklyn Bancorp to any current or former employee or director have been granted with a per share exercise price or reference price at least equal to the fair market value of the underlying stock on the date the option or stock appreciation right was granted, within the meaning of Section 409A of the Code and associated guidance.

 

(k)          Except as disclosed in Brooklyn Disclosure Schedule 3.12(k), there are no stock options, stock appreciation or similar rights, earned dividends or dividend equivalents, or shares of restricted stock, outstanding under any of the Brooklyn Bancorp Compensation and Benefit Plans or otherwise as of the date hereof and none will be granted, awarded, or credited after the date hereof.

 

(l)           Brooklyn Disclosure Schedule 3.12(l) sets forth, as of the payroll date immediately preceding the date of this Agreement, a list of the full names of all officers, and employees whose annual rate of salary is $50,000 or greater, of Brooklyn Federal Savings or Brooklyn Bancorp, their title and rate of salary, and their date of hire.

 

 

Neither Brooklyn MHC, Brooklyn Bancorp nor any Brooklyn Subsidiary, nor any of their respective officers, directors, employees or agents, has employed any broker, finder or financial advisor in connection with the transactions contemplated by this Agreement, or incurred any liability or commitment for any fees or commissions to any such person in connection with the transactions contemplated by this Agreement except for the retention of Sandler O’Neill + Partners, LP (“Sandler O’Neill”) by Brooklyn Bancorp and the fee payable pursuant thereto.  A true and correct copy of the engagement agreement with Sandler O’Neill, setting forth the fee payable to Sandler O’Neill for its services rendered to the Brooklyn Parties in connection with the Mergers and transactions contemplated by this Agreement, is attached to Brooklyn Disclosure Schedule 3.13.

 

 

(a)          Except as may be set forth in Brooklyn Disclosure Schedule 3.14 and any Phase I Environmental Report identified therein, with respect to Brooklyn Bancorp and each Brooklyn Subsidiary:

 

(i)           To the Knowledge of Brooklyn Bancorp, neither the conduct nor operation of its business nor any condition of any property currently or previously owned or operated by it, results or resulted in a violation of any Environmental Laws that is reasonably likely to impose a material liability (including a material remediation obligation) upon Brooklyn Bancorp or any Brooklyn Subsidiary.  To the Knowledge of Brooklyn Bancorp, no condition  exists or event has occurred with respect to any of Brooklyn Bancorp and each Brooklyn Subsidiary or any  owned or operated property that is reasonably likely to result in any material liability to Brooklyn Bancorp or any Brooklyn Subsidiary by reason of any Environmental Laws.  Neither Brooklyn Bancorp nor any Brooklyn Subsidiary during the past five years has received any written notice from any Person or Governmental Entity that Brooklyn Bancorp or any Brooklyn Subsidiary or the operation or condition of any property ever owned, operated by Brooklyn Bancorp or any Brooklyn Subsidiary (including Participation Facilities) are currently in violation of or otherwise are alleged to have liability under any Environmental Laws or relating to Materials of Environmental Concern (including, but not limited to, responsibility (or potential responsibility) for the cleanup or other remediation of any Materials of Environmental Concern at, on, beneath, or originating from any such property) for which a material liability is reasonably likely to be imposed upon Brooklyn Bancorp or any Brooklyn Subsidiary;

 

 

(ii)           There is no suit, claim, action, demand, executive or administrative order, directive, investigation or proceeding pending or, to the Brooklyn Bancorp’s Knowledge, threatened, before any court, governmental agency or other forum against Brooklyn Bancorp or any Brooklyn Subsidiary (x) for alleged noncompliance (including by any predecessor) with, or liability under, any Environmental Law or (y) relating to the presence of or Release  into the environment of any Materials of Environmental Concern whether or not occurring at or on a site owned, leased or operated by Brooklyn Bancorp or any Brooklyn Subsidiary;

 

(iii)           To Brooklyn Bancorp’s Knowledge, there are no underground storage tanks on, in or under any properties owned or operated by Brooklyn Bancorp or any of the Brooklyn Bancorp Subsidiaries, and to Brooklyn Bancorp’s Knowledge, no underground storage tanks have been closed or removed from any properties owned or operated by Brooklyn Bancorp or any of the Brooklyn Bancorp Subsidiaries or any Participation Facility except in compliance with Environmental Laws in all material respects; and

 

(iv) To the Knowledge of Brooklyn Bancorp, at the time of Closing, no condition exists on any property for which Brooklyn Bancorp holds a lien, that results or resulted in a material violation of Environmental Laws or creates a material liability under Environmental Law that is reasonably likely to impose a material liability (including a material remediation obligation) upon Brooklyn Bancorp or any Brooklyn Subsidiary; and

 

(b) “Participation Facility” means any facility in which Brooklyn Bancorp or its Subsidiaries participates in the management (as that term is defined under CERCLA), whether as a fiduciary, lender in control of the facility, owner or operator.

 

 

(a)           The allowance for loan losses reflected in Brooklyn Bancorp’s audited consolidated balance sheet at September 30, 2010 was, and the allowance for loan losses shown on the balance sheets in Brooklyn Bancorp’s Securities Documents for periods ending after September 30, 2010 was or will be, adequate, as of the date thereof, under GAAP.

 

 

(b)           Brooklyn Disclosure Schedule 3.15(b) sets forth a listing, as of June 30, 2011, by account, of: (A) all loans (including loan participations) of Brooklyn Federal Savings or any other Brooklyn Subsidiary that have been accelerated during the past twelve months; (B) all loan commitments or lines of credit of Brooklyn Federal Savings or any other Brooklyn Subsidiary which have been terminated by Brooklyn Federal Savings or any other Brooklyn Subsidiary during the past twelve months by reason of a default or adverse developments in the condition of the borrower or other events or circumstances affecting the credit of the borrower; (C) each borrower, customer or other party which has notified Brooklyn Federal Savings or any other Brooklyn Subsidiary during three years preceding the date of this Agreement, or has asserted against Brooklyn Federal Savings or any other Brooklyn Subsidiary, in each case in writing, any “lender liability” or similar claim, and, to the Knowledge of Brooklyn Bancorp, each borrower, customer or other party which has given Brooklyn Federal Savings or any other Brooklyn Subsidiary any oral notification of, or orally asserted to or against Brooklyn Federal Savings or any other Brooklyn Subsidiary, any such claim; (D) all loans, (1) that are contractually past due 90 days or more in the payment of principal and/or interest, (2) that are on non-accrual status, (3) that are as of the date of this Agreement classified as “substandard,” “doubtful,” “loss,” “classified,” “criticized,” “credit risk assets,” “concerned loans,” “watch list” or “special mention” (or words of similar import) by Brooklyn Bancorp and any Brooklyn Subsidiary, or any applicable Regulatory Authority, (4) as to which a reasonable doubt exists as to the timely future collectability of principal and/or interest, whether or not interest is still accruing or the loans are less than 90 days past due, (5) where, during the past three years, the interest rate terms have been reduced and/or the maturity dates have been extended subsequent to the agreement under which the loan was originally created due to concerns regarding the borrower’s ability to pay in accordance with such initial terms, (6) where a specific reserve allocation exists in connection therewith or (7) that are required to be accounted for as a troubled debt restructuring in accordance with Statement of Financial Accounting Standards No. 15; and  (E) all assets classified by Brooklyn Federal Savings or any Brooklyn Federal Subsidiary as real estate acquired through foreclosure or in lieu of foreclosure, including in-substance foreclosures, and all other assets currently held that were acquired through foreclosure or in lieu of foreclosure.  Brooklyn Disclosure Schedule 3.15(b) may exclude any individual loan with a principal outstanding balance of less than $25,000.

 

(c)           All loans receivable (including discounts) and accrued interest entered on the books of Brooklyn Bancorp and the Brooklyn Subsidiaries arose out of bona fide arm’s-length transactions, were made for good and valuable consideration in the ordinary course of Brooklyn Bancorp’s or the appropriate Brooklyn Subsidiary’s respective business, and the notes or other evidences of indebtedness with respect to such loans (including discounts) are true and genuine and are what they purport to be.  To the Knowledge of Brooklyn Bancorp, the loans, discounts and the accrued interest reflected on the books of Brooklyn Bancorp and the Brooklyn Subsidiaries are subject to no defenses, set-offs or counterclaims (including, without limitation, those afforded by usury or truth-in-lending laws), except as may be provided by bankruptcy, insolvency or similar laws affecting creditors’ rights generally or by general principles of equity.  All such loans are owned by Brooklyn Bancorp or the appropriate Brooklyn Subsidiary free and clear of any liens.

 

(d)           The notes and other evidences of indebtedness evidencing the loans described above, and all pledges, mortgages, deeds of trust and other collateral documents or security instruments relating thereto are, in all material respects, valid, true and genuine, and what they purport to be.

 

 

(e)           Attached to Brooklyn Disclosure Schedule 3.15(e) is a schedule of information with respect to each Commercial Real Estate Loan, which schedule of information is true, complete and correct in all material respects (the “Mortgage Loan Schedule”). As to each Commercial Real Estate Loan: (i) Brooklyn Federal Savings has good and marketable title to, and is the sole owner of, each such loan or Participation Interest to the extent applicable;  Brooklyn Federal Savings has full right, power and authority to transfer and assign each such loan or Participation Interest to or at the direction of Investors Bancorp free and clear of any and all pledges, liens, charges, security interests, participation interests and/or other interests and Encumbrances;  (ii)  the Mortgage related to and delivered in connection with each such loan constitutes a valid and enforceable first or second priority lien upon the related Mortgaged Property, and there are no liens and/or Encumbrances that are pari passu with the lien of such Mortgage except for Permitted Encumbrances; such Mortgage, together with any separate security agreements, chattel mortgages or equivalent instruments and UCC Financing Statements, establishes and creates a valid and enforceable security interest in favor of the holder thereof in all items of personal property owned by the related Mortgagor which are material to the conduct in the ordinary course of the Mortgagor’s business on the related Mortgaged Property, except to the extent that the enforcement of such security interest may be limited by (i) bankruptcy, insolvency, reorganization, fraudulent transfer or other similar laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law), but such limitations or unenforceability will not render such loan documents invalid or a whole or substantially interfere with the lender’s realization of the principal benefits and/or security provided thereby; (iii) as to each such loan for which, as indicated in the Mortgage Loan Schedule, there exists an Assignment of Leases and Rents, either as a separate instrument or as part of the Mortgage, related to and delivered in connection with each such loan, the Assignment of Leases and Rents establishes and creates a valid, subsisting and enforceable assignment of or first priority lien on and security interest in, subject to applicable law, the property, rights and interests of the related Mortgagor described therein; and each assignor thereunder has the full right to assign the same; if an Assignment of Leases and Rents exists with respect to any such loan (whether as part of the related Mortgage or separately), then the related Mortgage or related Assignment of Leases and Rents, subject to applicable law, provides for, upon an event of default under the loan, the appointment of a receiver for the collection of rents or for the related mortgagee to enter into possession to collect the rents or for rents to be paid directly to the mortgagee; (iv)  neither the Brooklyn Federal Parties, nor, to the Knowledge of Brooklyn Bancorp, any other holder of the loan, has done, by act or omission, anything that would materially impair the coverage under the title insurance policy related to such loan; (v) there is no valid offset, defense, counter claim or right of rescission available to the related Mortgagor with respect to any of the related Mortgage Notes, Mortgages or other loan documents, including, without limitation, any such valid offset, defense, counter claim or right based on fraud in connection with the origination or servicing of the loan, that would deny the mortgagee the principal benefits intended to be provided by the Mortgage Note, Mortgage or other loan documents; (vi) the Mortgaged Properties, including, all improvements upon each Mortgaged Property securing such loan are insured under a fire and extended perils insurance (or the equivalent) as required pursuant to the loan documents executed in connection with each such loan; the Mortgage Properties are insured for general liability; (vii) except for those loans identified on the Mortgage Loan Schedule as participation interests, no such loan contains any equity participation by the Mortgagee thereunder, is convertible by its terms into an equity ownership interest in the related Mortgaged Property or the related Mortgagor, provides for any contingent or additional interest in the form of participation in the cash flow of the related Mortgaged Property, or provides for the negative amortization of interest; (viii) except as identified on Brooklyn Disclosure Schedule 3.15(e), as of the date of origination and as of the Closing Date, to the Knowledge of Brooklyn Bancorp, there are no pending actions, suits, governmental investigations or proceedings by or before any court or governmental authority against or affecting the Mortgagor under any such loan or the related Mortgaged Property that, if determined adversely to such Mortgagor or Mortgaged Property, would materially and adversely affect the value of the Mortgaged Property, the principal benefit of the security intended to be provided by the loan documents, the current ability of the Mortgaged Property to generate net cash flow sufficient to service such loan, or the current principal use of the Mortgaged Property; (ix) all escrow deposits (including capital improvements, environmental remediation reserves and other reserve deposits, if any) relating to any such loan that were required to be delivered to the lender under the terms of the related loan documents, have been received and, to the extent of any remaining balances of such escrow deposits, are in the possession or under the control of Brooklyn Federal Savings or its agents (which shall include any applicable servicer);  all such escrow deposits which are required for the administration and servicing of such loan are being conveyed hereunder to Investors Bancorp; (x) there are no delinquent taxes or assessments, water or sewer fees or other outstanding charges (including interest), affecting any Mortgaged Property securing any such loan that are a lien of priority equal to or higher than the lien of the related Mortgage, or if there are such delinquent charges, fees, assessments or taxes, or if the appropriate amount of such taxes, assessments, fees or charges is being appealed or is otherwise in dispute, the unpaid taxes, assessments or charges are covered by an escrow of funds or other security sufficient to pay such tax, assessment or charge (for purposes of this representation and warranty, real property taxes and assessments shall not be considered delinquent until the date on which interest and/or penalties would be payable thereon); (xi) none of the Mortgaged Properties is subject to any (1) Encumbrances, other than a Permitted Encumbrance, or (2) monetary liens (including delinquent taxes, any judgments against the Mortgaged Property or the related Mortgagor or mechanic’s or similar liens to which the Mortgaged Property is subject) having priority over the lien of a respective Mortgage not insured against by each respective title insurance policy due to a monetary lien or an Encumbrance arising since the date the title insurance policy was issued up to and including the Closing Date or (3) undisclosed subordinate liens; and (xii) there are no material adverse environmental circumstances or conditions with respect to any Mortgaged Properties; there is no pending action or proceeding directly involving any Mortgaged Property in which compliance with any environmental law, rule or regulation is an issue; there is no violation of any environmental law, rule or regulation with respect to any Mortgage Property; and nothing further remains to be done to satisfy in full all requirements of each such law, rule or regulation constituting a prerequisite to use and enjoyment of said property;  (xiii) as of the Closing Date, the loan file with respect to each such loan shall include each document listed in Investors Bancorp Disclosure Schedule 3.15(e) (the “Commercial Loan Mortgage File”) and each such document shall be in the possession of Brooklyn Federal Savings; and (xiv) with respect to each Participation Interest, such Participation Interest and the servicing thereof are subject to the related participation agreement and participation certificate identified on Brooklyn Schedule 3.15(e) hereto, and are not subject to any other agreement or arrangement; Brooklyn Federal Savings has complied with all of its obligations under each participation agreement and participation certificate, has not received from any other participant in a Participation Interest a notice that Brooklyn Federal Savings has breached or is otherwise not complying with its obligations under a participation agreement and participation certificate and has not received notice, and is not otherwise aware, of any breach or noncompliance by another participant under a participation agreement.

 

 

 

Brooklyn Bancorp has made available to Investors Bancorp copies of its (i) annual reports on Form 10-K for the years ended September 30, 2010, 2009 and 2008, (ii) quarterly reports on Form 10-Q for the quarters ended December 31, 2010 and March 31, 2011, and (iii) proxy materials used in connection with its meetings of shareholders held in 2010, 2009 and 2008. Such reports and proxy materials complied, as to form, at the time filed with the SEC or if amended, as of the amendment date, in all material respects, with the Securities Laws.

 

Except as described in Brooklyn Bancorp’s Proxy Statement distributed in connection with the annual meeting of shareholders held in February 2010 (which has previously been provided to Investors Bancorp), or as set forth in Brooklyn Disclosure Schedule 3.17, neither Brooklyn Bancorp nor any Brooklyn Subsidiary is a party to any transaction (including any loan or other credit accommodation) with any Affiliate of Brooklyn Bancorp or any Brooklyn Subsidiary. All such transactions (a) were made in the ordinary course of business, (b) were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other Persons, and (c) did not involve substantially more than the normal risk of collectability or present other unfavorable features (as such terms are used under Item 404 of SEC Regulation S-K promulgated under the Securities Act and the Exchange Act). No loan or credit accommodation to any Affiliate of Brooklyn Bancorp or any Brooklyn Subsidiary is presently in default or, during the three year period prior to the date of this Agreement, has been in default or has been restructured, modified or extended.  To the Knowledge of Brooklyn Bancorp, neither Brooklyn Bancorp nor any Brooklyn Subsidiary has been notified that principal and interest with respect to any such loan or other credit accommodation will not be paid when due or that the loan grade classification accorded such loan or credit accommodation by Brooklyn Bancorp is inappropriate.