EX-10.7 18 gex10_7-31215.txt EX-10.7 ================================================================================ CLIFTON SAVINGS BANK, S.L.A. 401(K) SAVINGS PLAN IN RSI RETIREMENT TRUST (AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1999, INCLUDING PROVISIONS EFFECTIVE RETROACTIVE TO JANUARY 1, 1997, AND THROUGH JANUARY 1, 2001) ================================================================================
TABLE OF CONTENTS --------------------------------------------------------------------------------------------- TABLE OF CONTENTS TABLE OF CONTENTS .........................................................................I INTRODUCTION .........................................................................1 ARTICLE I -- DEFINITIONS....................................................................3 ARTICLE II -- ELIGIBILITY AND PARTICIPATION................................................13 2.1 Eligibility................................................................13 2.2 Ineligible Employees.......................................................13 2.3 Participation..............................................................13 2.4 Termination of Participation...............................................14 2.5 Eligibility upon Reemployment..............................................14 ARTICLE III -- CONTRIBUTIONS AND LIMITATIONS ON CONTRIBUTIONS..............................15 3.1 Before-Tax Contributions...................................................15 3.2 Limitation on Before-Tax Contributions.....................................15 3.3 Changes in Before-Tax Contributions........................................17 3.4 Matching Contributions.....................................................18 3.5 Special Contributions......................................................19 3.6 Limitation on Matching Contributions.......................................19 3.7 Aggregate Limit; Multiple Use of Alternative Limitation....................21 3.8 Discretionary Employer Contributions.......................................22 3.9 Interest on Excess Contributions...........................................22 3.10 Payment of Contributions to the Trust and the Separate Agency..............23 3.11 Rollover Contributions.....................................................24 3.12 Section 415 Limits on Contributions........................................24 ARTICLE IV -- VESTING AND FORFEITURES......................................................29 4.1 Vesting....................................................................29 4.2 Forfeitures................................................................29 4.3 Vesting upon Reemployment..................................................29 ARTICLE V -- TRUST FUND, INVESTMENT ACCOUNTS AND VOTING RIGHTS........................................................................30 5.1 Trust Fund and Separate Assets.............................................30 5.2 Interim Investments........................................................30 5.3 Account Values.............................................................31 5.4 Separate Assets............................................................31 ARTICLE VI -- INVESTMENT DIRECTIONS, CHANGES OF INVESTMENT DIRECTIONS AND TRANSFERS BETWEEN INVESTMENT ACCOUNTS........................................32 6.1 Investment Directions......................................................32 6.2 Change of Investment Directions............................................32 6.3 Transfers Between Investment Accounts......................................32 6.4 Employees Other than Participants..........................................32 --------------------------------------------------------------------------------------------- I CLIFTON SAVINGS BANK, S.L.A
TABLE OF CONTENTS --------------------------------------------------------------------------------------------- ARTICLE VII -- PAYMENT OF BENEFITS.........................................................34 7.1 General....................................................................34 7.2 Non-Hardship Withdrawals...................................................34 7.3 Hardship Distributions.....................................................35 7.4 Distribution of Benefits Following Retirement Or Termination of Service....38 7.5 Payments upon Retirement or Disability.....................................38 7.6 Payments upon Termination of Service for Reasons Other Than Retirement or Disability...................................................40 7.7 Payments Upon Death........................................................41 7.8 Direct Rollover of Eligible Rollover Distributions.........................43 7.9 Commencement of Benefits...................................................43 ARTICLE VIII -- ADMINISTRATION.............................................................46 8.1 General Administration of the Plan.........................................46 8.2 Designation of Named Fiduciaries...........................................46 8.3 Responsibilities of Fiduciaries............................................46 8.4 Plan Administrator.........................................................47 8.5 Committee..................................................................47 8.6 Powers and Duties of the Committee.........................................48 8.7 Certification of Information...............................................49 8.8 Authorization of Benefit Payments..........................................50 8.9 Payment of Benefits to Legal Custodian.....................................50 8.10 Service in More Than One Fiduciary Capacity................................50 8.11 Payment of Expenses........................................................50 8.12 Administration of Separate Assets..........................................50 ARTICLE IX -- BENEFIT CLAIMS PROCEDURE.....................................................52 9.1 Definition.................................................................52 9.2 Claims.....................................................................52 9.3 Disposition of Claim.......................................................52 9.4 Denial of Claim............................................................52 9.5 Inaction by Plan Administrator.............................................53 9.6 Right to Full and Fair Review..............................................53 9.7 Time of Review.............................................................53 9.8 Final Decision.............................................................53 ARTICLE X -- AMENDMENT, TERMINATION, AND WITHDRAWAL........................................54 10.1 Amendment and Termination..................................................54 10.2 Withdrawal from the Trust Fund.............................................54 ARTICLE XI -- TOP-HEAVY PLAN PROVISIONS....................................................55 11.1 Introduction...............................................................55 11.2 Definitions................................................................55 11.3 Minimum Contributions......................................................59 11.4 Impact on Section 415 Maximum Benefits.....................................61 11.5 Vesting....................................................................61 --------------------------------------------------------------------------------------------- II CLIFTON SAVINGS BANK, S.L.A
TABLE OF CONTENTS --------------------------------------------------------------------------------------------- ARTICLE XII -- MISCELLANEOUS PROVISIONS....................................................62 12.1 No Right to Continued Employment...........................................62 12.2 Merger, Consolidation, or Transfer.........................................62 12.3 Nonalienation of Benefits..................................................62 12.4 Missing Payee..............................................................62 12.5 Affiliated Employers.......................................................63 12.6 Successor Employer.........................................................63 12.7 Return of Employer Contributions...........................................63 12.8 Adoption of Plan by Affiliated Employer....................................63 12.9 Construction of Language...................................................64 12.10 Headings...................................................................64 12.11 Governing Law..............................................................64 --------------------------------------------------------------------------------------------- III CLIFTON SAVINGS BANK, S.L.A
INTRODUCTION -------------------------------------------------------------------------------- INTRODUCTION Effective as of January 1, 1985, Clifton Savings Bank, S.L.A., ("Employer") adopted the Clifton Savings Bank, S.L.A. Employees' Cash or Deferred Profit Sharing Plan ("Prior Plan"). Effective as of January 1, 1999, the Employer adopted resolutions wherein RSI Retirement Trust was named successor trustee and the RSI Retirement Trust Agreement and Declaration of Trust ("Agreement") was adopted. Effective as of January 1, 1999, the Prior Plan was amended and restated in its entirety. The amended and restated plan shall be known as Clifton Savings Bank, S.L.A. 401(k) Savings Plan in RSI Retirement Trust ("Plan"), shall contain the terms and conditions set forth herein, and shall in all respects be subject to the provisions of the Agreement which are incorporated herein and made a part hereof. The Plan as amended and restated hereunder incorporates a cash or deferred arrangement under Section 401(k) of the Internal Revenue Code of 1986, as amended ("Code"). The Plan shall constitute a profit-sharing plan within the meaning of Section 401(a) of the Code, without regard to current or accumulated profits of the Employer, as provided in Section 401(a)(27) of the Code. The Plan as amended and restated hereunder is generally effective January 1, 1999, the Restatement Date. However, certain provisions are effective on the earlier dates indicated within the Plan. These earlier, retroactive, provisions comply with all Internal Revenue Service legislation and regulations issued to date addressing tax-qualified plans, including the Uniformed Services Employment and Reemployment Rights Act of 1994, the Uruguay Round Agreements Act, the Small Business Job Protection Act of 1996, the Taxpayer Relief Act of 1997 and the Restructuring and Reform Act of 1998 (commonly referred to as GUST II). Subject to any amendments that may subsequently be adopted by the Employer prior to his Termination of Service, the provisions set forth in this Plan shall apply to an Employee who is in the employment of the Employer on or after January 1, 1999. Except to the extent specifically required to the contrary under the terms of this Plan, for terminations of employment prior to January 1, 1999, the rights and benefits of a former participant shall be determined in accordance with the provisions of the Plan or Prior Plan as in effect on the date of the former participant's termination of employment. The Employer has herein restated the Plan with the intention that (a) the Plan shall at all times be qualified under Section 401(a) of the Code, (b) the Agreement and the Separate Agreement shall be tax-exempt under Section 501(a) of the Code, (c) Employer contributions under the Plan shall be tax deductible under Section 404 of the Code and (d) the Plan shall be a Plan of Partial Participation as defined under the Agreement. The provisions of the Plan, the Agreement and the Separate Agreement shall be construed to effectuate such intentions. In conjunction with such resolutions, the Employer adopted a Separate Agreement to provide for the investment in the -------------------------------------------------------------------------------- 1 CLIFTON SAVINGS BANK, S.L.A. INTRODUCTION -------------------------------------------------------------------------------- Clifton Savings CD Fund and designated a Separate Agency to act as trustee of such Separate Assets. -------------------------------------------------------------------------------- 2 CLIFTON SAVINGS BANK, S.L.A. ARTICLE I -- DEFINITIONS -------------------------------------------------------------------------------- ARTICLE I -- DEFINITIONS The following words and phrases shall have the meanings hereinafter ascribed to them. Those words and phrases which have limited application are defined in the respective Articles in which such terms appear. 1.1 ACCOUNTS means the Before-Tax Contribution Account (including Special Contributions, if any), Matching Contribution Account, Discretionary Employer Contribution Account and Rollover Contribution Account established under the Plan on behalf of an Employee. 1.2 ACTUAL CONTRIBUTION PERCENTAGE means the ratio (expressed as a percentage) of the Matching Contributions under the Plan which are made on behalf of an Eligible Employee for the Plan Year to such Eligible Employee's compensation (as defined under Section 414(s) of the Code) for the Plan Year. An Eligible Employee's compensation hereunder shall include compensation receivable from the Employer for that portion of the Plan Year during which the Employee is an Eligible Employee, up to a maximum of one hundred sixty thousand dollars ($160,000) for the 1997, 1998 and 1999 Plan Years and one hundred seventy thousand dollars ($170,000) for the 2000 and 2001 Plan Years, adjusted in multiples of ten thousand dollars ($10,000) for increases in the cost-of-living, as prescribed by the Secretary of the Treasury under Section 401(a)(17)(B) of the Code. 1.3 ACTUAL DEFERRAL PERCENTAGE means the ratio (expressed as a percentage) of the sum of Before-Tax Contributions, and those Qualified Nonelective Contributions taken into account under the Plan for the purpose of determining the Actual Deferral Percentage, which are made on behalf of an Eligible Employee for the Plan Year to such Eligible Employee's compensation (as defined under Section 414(s) of the Code) for the Plan Year. An Eligible Employee's compensation hereunder shall include compensation receivable from the Employer for that portion of the Plan Year during which the Employee is an Eligible Employee, up to a maximum of one hundred sixty thousand dollars ($160,000) for the 1997, 1998 and 1999 Plan Years and one hundred seventy thousand dollars ($170,000) for the 2000 and 2001 Plan Years, adjusted in multiples of ten thousand dollars ($10,000) for increases in the cost-of-living, as prescribed by the Secretary of the Treasury under Section 401(a)(17)(B) of the Code. 1.4 AFFILIATED EMPLOYER means a member of an affiliated service group (as defined under Section 414(m) of the Code), a controlled group of corporations (as defined under Section 414(b) of the Code), a group of trades or businesses under common control (as defined under Section 414(c) of the Code) of which the Employer is a member, any leasing organization (as defined under Section 414(n) of the Code) providing the services of Leased Employees to the Employer, or any other group provided for under any and all Income Tax Regulations promulgated by the Secretary of the Treasury under Section 414(o) of the Code. -------------------------------------------------------------------------------- 3 CLIFTON SAVINGS BANK, S.L.A. ARTICLE I -- DEFINITIONS -------------------------------------------------------------------------------- 1.5 AFFILIATED SERVICE means employment with an employer during the period that such employer is an Affiliated Employer. 1.6 AGREEMENT means the RSI Retirement Trust Agreement and Declaration of Trust as amended and restated August 1, 1990, as amended from time to time. The Agreement shall be incorporated herein and constitute a part of the Plan. 1.7 AVERAGE ACTUAL CONTRIBUTION PERCENTAGE means the average of the Actual Contribution Percentages of (a) the group comprised of Eligible Employees who are Highly Compensated Employees or (b) the group comprised of Eligible Employees who are Non-Highly Compensated Employees, whichever is applicable. 1.8 AVERAGE ACTUAL DEFERRAL PERCENTAGE means the average of the Actual Deferral Percentages of (a) the group comprised of Eligible Employees who are Highly Compensated Employees or (b) the group comprised of Eligible Employees who are Non-Highly Compensated Employees, whichever is applicable. 1.9 BEFORE-TAX CONTRIBUTION ACCOUNT means the separate, individual account established on behalf of a Participant to which Before-Tax Contributions, Special Contributions if any, and "elective deferrals" under the Prior Plan, if any, made on his behalf are credited, together with all earnings and appreciation thereon, and against which are charged any withdrawals, and other distributions made from such account and any losses, depreciation or expenses allocable to amounts credited to such account. 1.10 BEFORE-TAX CONTRIBUTIONS means the contributions of the Employer made in accordance with the Compensation Reduction Agreements of Participants pursuant to Section 3.1. 1.11 BENEFICIARY means any person who is receiving or is eligible to receive a benefit under Section 7.7 of the Plan upon the death of an Employee or former Employee. 1.12 BOARD means the board of trustees, directors or other governing body of the Sponsoring Employer. 1.13 CLIFTON SAVINGS CD FUND means the Investment Account comprised of savings accounts, certificates of deposit and time or other interest bearing deposits which are obligations of Clifton Savings Bank, S.L.A. 1.14 CODE means the Internal Revenue Code of 1986, as amended from time to time. 1.15 COMMITTEE means the person or persons appointed by the Employer in accordance with Section 8.2(c). 1.16 COMPENSATION means an Employee's wages, salary, fees and other amounts defined as compensation in Section 415(c)(3) of the Code and Income Tax Regulations Sections 1.415-2(d)(2) and (3), received for personal services actually rendered in the course of employment with the Employer for the calendar year, prior to any reduction pursuant to a Compensation Reduction Agreement. Compensation shall include commissions, -------------------------------------------------------------------------------- 4 CLIFTON SAVINGS BANK, S.L.A. ARTICLE I -- DEFINITIONS -------------------------------------------------------------------------------- overtime, bonuses, wage continuation payments to an Employee absent due to illness or disability of a short-term nature, the amount of any Employer contributions under a flexible benefits program maintained by the Employer under Section 125 of the Code pursuant to a salary reduction agreement entered into by the Participant under Section 125 of the Code, amounts paid or reimbursed by the Employer for Employee moving expenses (to the extent not deductible by the Employee), and the value of any nonqualified stock option granted to an Employee by the Employer (to the extent includable in gross income for the year granted). Compensation does not include contributions made by the Employer to any other pension, deferred compensation, welfare or other employee benefit plan, amounts realized from the exercise of a nonqualified stock option or the sale of a qualified stock option, and other amounts which receive special tax benefits. Compensation shall not exceed one hundred sixty thousand dollars ($160,000) for the 1997, 1998 and 1999 Plan Years and one hundred seventy thousand dollars ($170,000) for the 2000 and 2001 Plan Years, adjusted in multiples of ten thousand dollars ($10,000) for increases in the cost-of-living, as prescribed by the Secretary of the Treasury under Section 401(a)(17)(B) of the Code. For purposes of this Section 1.16, if the Plan Year in which a Participant's Compensation is being made is less than twelve (12) calendar months, the amount of Compensation taken into account for such Plan Year shall be the adjusted amount, as prescribed by the Secretary of the Treasury under Section 401(a)(17) of the Code, for such Plan Year multiplied by a fraction, the numerator of which is the number of months taken into account for such Plan Year and the denominator of which is twelve (12). In determining the dollar limitation hereunder, compensation received from any Affiliated Employer shall be recognized as Compensation. 1.17 COMPENSATION REDUCTION AGREEMENT means an agreement between the Employer and an Eligible Employee whereby the Eligible Employee agrees to reduce his Compensation during the applicable payroll period by an amount equal to any whole percentage thereof, to the extent provided in Section 3.1, and the Employer agrees to contribute to the Trust, on behalf of such Eligible Employee, an amount equal to the specified reduction in Compensation. 1.18 DISABILITY means a physical or mental condition, determined after review of those medical reports deemed satisfactory for this purpose, which renders the Participant totally and permanently incapable of engaging in any substantial gainful employment based on his education, training and experience. 1.19 DISCRETIONARY EMPLOYER CONTRIBUTION ACCOUNT means the separate, individual account established on behalf of an Eligible Employee to which Discretionary Employer Contributions, if any, are credited, including "discretionary Employer contributions" made under the Prior Plan, together with all earnings and appreciation thereon, and against which are charged any withdrawals, and other distributions made from such account, as well as any losses, depreciation, or expenses allocable to amounts credited to such account. -------------------------------------------------------------------------------- 5 CLIFTON SAVINGS BANK, S.L.A. ARTICLE I -- DEFINITIONS -------------------------------------------------------------------------------- 1.20 DISCRETIONARY EMPLOYER CONTRIBUTIONS means the amounts, if any, contributed by the Employer on behalf of an Eligible Employee, pursuant to Section 3.8. 1.21 EFFECTIVE DATE means January 1, 1985. 1.22 ELIGIBILITY COMPUTATION PERIOD means a twelve (12) consecutive month period commencing on an Employee's Employment Commencement Date and each anniversary thereafter. 1.23 ELIGIBLE EMPLOYEE means an Employee who is eligible to participate in the Plan pursuant to the provisions of Article II. 1.24 EMPLOYEE means any person employed by the Employer. 1.25 EMPLOYER means Clifton Savings Bank, S.L.A. and any Participating Affiliate or any successor organization which shall continue to maintain the Plan set forth herein. 1.26 EMPLOYER RESOLUTIONS means resolutions adopted by the Board. 1.27 EMPLOYMENT COMMENCEMENT DATE means the date on which an Employee first performs an Hour of Service for the Employer upon initial employment or, if applicable, upon reemployment. 1.28 ERISA means the Employee Retirement Income Security Act of 1974, as amended from time to time. 1.29 FORFEITURES means any amounts forfeited pursuant to Section 4.2. 1.30 HARDSHIP means the condition described in Section 7.3. 1.31 HIGHLY COMPENSATED EMPLOYEE means, with respect to a Plan Year commencing January 1, 1997, an Employee or an employee of an Affiliated Employer who is such an Employee or employee during the Plan Year for which a determination is being made and who: (a) during the Plan Year immediately preceding the Plan Year for which a determination is being made received compensation as defined under Section 414(q)(4) of the Code ("Section 414(q) Compensation") from the Employer, in excess of eighty thousand dollars ($80,000) and effective for the 2000 Plan Year, eighty five thousand dollars ($85,000), adjusted as prescribed by the Secretary of the Treasury under Section 415(d) of the Code, or (b) at any time during the Plan Year for which a determination is being made or at any time during the Plan Year immediately preceding the Plan Year for which a determination is being made, was a five-percent owner as described under Section 414(q)(2) of the Code. -------------------------------------------------------------------------------- 6 CLIFTON SAVINGS BANK, S.L.A. ARTICLE I -- DEFINITIONS -------------------------------------------------------------------------------- For purposes of subsection (a)(i) above, Section 414(q) Compensation shall include (A) any elective deferral (as defined in Section 402(g)(3) of the Code, and (B) any amount which is contributed or deferred by the Employer at the election of the Employee and which is not includible in the gross income of the Employee by reason of Section 125 or 457 of the Code. Highly Compensated Employee also means a former Employee who (A) incurred a Termination of Service prior to the Plan Year of the determination, (B) is not credited with an Hour of Service during the Plan Year of the determination and (C) satisfied the requirements of subsection (a) or (b) during either the Plan Year of his Termination of Service or any Plan Year ending coincident with or subsequent to the Employee's attainment of age fifty-five (55). 1.32 HOUR OF SERVICE means the following: (a) each hour for which an Employee is directly or indirectly paid or entitled to payment, by the Employer for the performance of duties. These hours shall be credited to the Employee for the computation period or periods in which the duties are performed; and (b) each hour, for which an Employee is directly or indirectly paid or entitled to payment by the Employer for reasons (such as but not limited to vacation, sickness, jury duty, military duty or disability) other than for the performance of duties (irrespective of whether the employment relationship has terminated). These hours shall be credited to the Employee for the computation period or periods in which the nonperformance of duties occur; and (c) each hour for which back pay, irrespective of mitigation of damage, has been either awarded or agreed to by the Employer. These hours shall be credited to the Employee for the computation period or periods to which the award or agreement pertains rather than the computation period in which the award, agreement, or payment was made. These same Hours of Service shall not be credited under both subsection (a) or subsection (b), and under this of this Section (c). (d) Hours of Service shall be computed and credited in accordance with Section 2530.200b-2 of the Department of Labor Regulations which are incorporated herein by reference. (e) Hours of Service shall include Affiliated Service. Hours of Service for whom records are not maintained shall be determined on the assumption that each Employee has completed forty-five (45) Hours of Service per week for each week in which he would be required to be credited with at least one (1) Hour of Service. 1.33 INVESTMENT ACCOUNTS means any and all of the investment accounts established by Board resolution and presented to the Trustees, for the purpose of investing contributions made to the Plan Funds in accordance with the provisions of the Agreement or Separate -------------------------------------------------------------------------------- 7 CLIFTON SAVINGS BANK, S.L.A. ARTICLE I -- DEFINITIONS -------------------------------------------------------------------------------- Agreement, as applicable. The securities and other property in which contributions to the Investment Accounts of the Plan Funds may be invested shall be specified in the Agreement or the Separate Agreement, and the rights of the Trustees or Separate Agency shall be established in accordance with the provisions of such Agreement and Separate Agreement, respectively. 1.34 LEASED EMPLOYEE means with respect to a Plan Year commencing January 1, 1997, any individual (other than an Employee of the Employer or an employee of an Affiliated Employer) who, pursuant to an agreement between the Employer or any Affiliated Employer and any other person ("leasing organization"), has performed services for the Employer or any Affiliated Employer on a substantially full-time basis for a period of at least one (1) year, and such services are performed under the primary direction of and control by the Employer or any Affiliated Employer. A determination as to whether a Leased Employee shall be treated as an Employee of the Employer or an Affiliated Employer shall be made as follows: a Leased Employee shall not be considered an Employee of the Employer if: (a) such employee is a participant in a money purchase pension plan providing (i) a nonintegrated Employer contribution rate of at least ten percent (10%) of compensation, as defined in Section 415(c)(3) of the Code, however, including amounts contributed pursuant to a compensation reduction agreement which are excludable from the employee's gross income under Section 125, Section 402(e)(3), Section 402(h)(1)(B) or Section 403(b) of the Code; (ii) immediate plan participation; and (iii) full and immediate vesting; and (b) Leased Employees do not constitute more than twenty percent (20%) of the Employer's Non-Highly Compensated Employees. 1.35 MATCHING CONTRIBUTION ACCOUNT means the separate, individual account established on behalf of a Participant to which the Matching Contributions and the "matching contributions" under the Prior Plan, if any, made on such Participant's behalf are credited, together with all earnings and appreciation thereon, and against which are charged any withdrawals, and other distributions made from such account and any losses, depreciation or expenses allocable to amounts credited to such account. 1.36 MATCHING CONTRIBUTIONS means the contributions made by the Employer pursuant to Section 3.4. 1.37 NAMED FIDUCIARIES means the Trustees, the Committee, the Separate Agency and such other parties who are designated by the Sponsoring Employer to control and manage the operation and administration of the Plan. 1.38 NET VALUE means the value of an Employee's Accounts as determined as of the Valuation Date coincident with or next following the event requiring such determination. 1.39 NON-HIGHLY COMPENSATED EMPLOYEE means, with respect to a Plan Year, an Employee who is not a Highly Compensated Employee. 1.40 NORMAL RETIREMENT AGE means the date an Employee attains age sixty-five (65). -------------------------------------------------------------------------------- 8 CLIFTON SAVINGS BANK, S.L.A. ARTICLE I -- DEFINITIONS -------------------------------------------------------------------------------- 1.41 NORMAL RETIREMENT DATE means the first day of the month coincident with or next following the Participant's Normal Retirement Age. 1.42 ONE YEAR BREAK IN SERVICE means, for purposes of determining a Participant's service pursuant to Article II, an Eligibility Computation Period during which the Employee did not complete more than five hundred (500) Hours of Service. For purposes of determining if an Employee incurred a One Year Break in Service, if an Employee is absent from employment for maternity or paternity reasons, such Employee shall receive credit for the Hours of Service which would otherwise have been credited to such Employee but for such absence but in no event shall more than five hundred (500) Hours of Service be credited during a computation period. Such credit shall be applied to the computation period during which such absence from employment first occurs, if such credit will prevent a One Year Break in Service, otherwise, such credit shall be applied to the immediately following computation period. An absence from employment for maternity or paternity reasons means an absence (a) by reason of pregnancy of the Employee, or (b) by reason of a birth of a child of the Employee, or (c) by reason of the placement of a child with the Employee in connection with the adoption of such child by such Employee, or (d) for purposes of caring for such child for a period beginning immediately following such birth or placement. 1.43 PARTICIPANT means an Eligible Employee who participates in accordance with the provisions of Section 2.3, and whose participation in the Plan has not been terminated in accordance with the provisions of Section 2.4. 1.44 PARTICIPATING AFFILIATE means any corporation that is a member of a controlled group of corporations (within the meaning of Section 414(b) of the Code) of which the Sponsoring Employer is a member and any unincorporated trade or business that is a member of a group of trades or businesses under common control (within the meaning of Section 414(c) of the Code) of which the Sponsoring Employer is a member, which, with the prior approval of the Sponsoring Employer and subject to such terms and conditions as may be imposed by such Sponsoring Employer and the Trustees, shall adopt this Plan in accordance with the provisions of Section 12.8 and the Agreement. Such entity shall continue to be a Participating Affiliate until such entity terminates its participation in the Plan in accordance with Section 12.8. 1.45 PLAN means the Clifton Savings Bank, S.L.A. 401(k) Savings Plan in RSI Retirement Trust, as herein restated and as it may be amended from time to time. The Plan shall be a Plan of Partial Participation as defined under the Agreement. 1.46 PLAN ADMINISTRATOR means the person or persons who have been designated as such by the Employer in accordance with the provisions of Section 8.4. 1.47 PLAN FUNDS means the assets of the Plan held in the Trust Fund and Separate Assets held under any Separate Agreement. 1.48 PLAN YEAR means the calendar year. -------------------------------------------------------------------------------- 9 CLIFTON SAVINGS BANK, S.L.A. ARTICLE I -- DEFINITIONS -------------------------------------------------------------------------------- 1.49 POSTPONED RETIREMENT DATE means the first day of the month coincident with or next following a Participant's date of actual retirement which occurs after his Normal Retirement Date. 1.50 PRIOR PLAN means the Clifton Savings Bank, S.L.A. Employees Cash or Deferred Profit Sharing Plan as in effect on the date immediately preceding the Restatement Date. 1.51 QUALIFIED NONELECTIVE CONTRIBUTIONS means contributions, other than Matching Contributions and Discretionary Employer Contributions, made by the Employer, which (a) Participants may not elect to receive in cash in lieu of their being contributed to the Plan; (b) are one hundred percent (100%) nonforfeitable when made; and (c) are not distributable under the terms of the Plan to Participants or their Beneficiaries until the earliest of: (i) the Participant's death, Disability or separation from service for other reasons; (ii) the Participant's attainment of age fifty-nine and one-half (59-1/2); or (iii) termination of the Plan. Special Contributions defined under Section 1.59 are Qualified Nonelective Contributions. 1.52 RESTATEMENT DATE means January 1, 1999. 1.53 RETIREMENT DATE means the Participant's Normal Retirement Date or Postponed Retirement Date, whichever is applicable. 1.54 ROLLOVER CONTRIBUTION means (a) a contribution to the Plan of money received by an Employee from a qualified plan or (b) a contribution to the Plan of money transferred directly from another qualified plan on behalf of the Employee, which the Code permits to be rolled over into the Plan. 1.55 ROLLOVER CONTRIBUTION ACCOUNT means the separate, individual account established on behalf of an Employee to which his Rollover Contributions are credited together with all earnings and appreciation thereon, and against which are charged any withdrawals and other distributions made from such account and any losses, depreciation or expenses allocable to amounts credited to such account. 1.56 SEPARATE AGENCY means a trustee or trustees holding Plan Funds, that maintains a Separate Agreement. 1.57 SEPARATE AGREEMENT means the trust agreement between the Employer and a trustee or trustees governing the investment and administration of any Separate Assets. Such Separate Agreement shall be incorporated herein and constitute a part of the Plan. -------------------------------------------------------------------------------- 10 CLIFTON SAVINGS BANK, S.L.A. ARTICLE I -- DEFINITIONS -------------------------------------------------------------------------------- 1.58 SEPARATE ASSETS means assets of the Plan as described in Article V which are held other than under the Trust. 1.59 SPECIAL CONTRIBUTIONS means the contributions made by the Employer pursuant to Section 3.5. Special Contributions are Qualified Nonelective Contributions as defined under Section 1.51. 1.60 SPONSORING EMPLOYER means Clifton Savings Bank, S.L.A., or any successor organization which shall continue to maintain the Plan set forth herein. 1.61 SPOUSE means a person to whom the Employee was legally married and which marriage had not been dissolved by formal divorce proceedings that had been completed prior to the date on which payments to the Employee are scheduled to commence. 1.62 TERMINATION OF SERVICE means the earlier of the date on which an Employee's service is terminated by reason of his resignation, retirement, discharge, death or Disability. Service in the Armed Forces of the United States of America shall not constitute a Termination of Service but shall be considered to be a period of employment by the Employer provided that (i) such military service is caused by war or other emergency or the Employee is required to serve under the laws of conscription in time of peace, (ii) the Employee returns to employment with the Employer within six (6) months following discharge from such military service and (iii) such Employee is reemployed by the Employer at a time when the Employee had a right to reemployment at his former position or substantially similar position upon separation from such military duty in accordance with seniority rights as protected under the laws of the United States of America. Notwithstanding any provision of the Plan to the contrary, effective December 12, 1994, contributions, benefits and calculation of Years of Eligibility Service with respect to qualified military service will be provided in accordance with Section 414(u) of the Code. A leave of absence granted to an Employee by the Employer shall not constitute a Termination of Service provided that the Participant returns to the active service of the Employer at the expiration of any such period for which leave has been granted. 1.63 TRUST means the trust established or maintained under the Agreement with respect to the Plan. 1.64 TRUST FUND means the assets held in accordance with the Agreement. 1.65 TRUSTEES means the Trustees of the RSI Retirement Trust. 1.66 UNITS means the units of measure of an Employee's proportionate undivided beneficial interest in one or more of the Investment Accounts, valued as of the close of business. 1.67 VALUATION DATE means each business day. -------------------------------------------------------------------------------- 11 CLIFTON SAVINGS BANK, S.L.A. ARTICLE I -- DEFINITIONS -------------------------------------------------------------------------------- 1.68 YEAR OF ELIGIBILITY SERVICE shall mean an Eligibility Computation Period during which the Employee completes at least one thousand (1,000) Hours of Service. -------------------------------------------------------------------------------- 12 CLIFTON SAVINGS BANK, S.L.A. ARTICLE II -- ELIGIBILITY AND PARTICIPATION -------------------------------------------------------------------------------- ARTICLE II -- ELIGIBILITY AND PARTICIPATION 2.1 ELIGIBILITY (a) Every Employee who was a Participant in the Prior Plan immediately prior to the Restatement Date shall continue to be a Participant on the Restatement Date. (b) Every other Employee who is not excluded under the provisions of Section 2.2, shall become an Eligible Employee upon satisfying each of the following conditions: (i) completion of one (1) Year of Eligibility Service; and (ii) attainment of age eighteen (18). (c) For purposes of determining (i) if an Employee completed a Year of Eligibility Service and (ii) Years of Eligibility Service pursuant to Section 2.5, employment with an Affiliated Employer shall be deemed employment with the Employer. (d) An Employee who otherwise satisfies the requirements of this Section 2.1 and who is no longer excluded under the provisions of Section 2.2 shall immediately become an Eligible Employee. 2.2 INELIGIBLE EMPLOYEES The following classes of Employees are ineligible to participate in the Plan: (a) Leased Employees; (b) Employees in a unit of Employees covered by a collective bargaining agreement with the Employer pursuant to which employee benefits were the subject of good faith bargaining and which agreement does not expressly provide that Employees of such unit be covered under the Plan. 2.3 PARTICIPATION An Eligible Employee shall participate as of any January 1st or July 1st coinciding with or next following satisfaction of the eligibility requirements set forth in Section 2.1, and either: (a) an election for Before-Tax Contributions in accordance with Section 3.1 or (b) eligibility for Special Contributions in accordance with Section 3.5 or (c) eligibility for Discretionary Employer Contributions in accordance with Section 3.8. Commencing March 15, 2000, an Eligible Employee shall participate as of the first day of the month following satisfaction of the eligibility requirements set forth in Section 2.1, and either: -------------------------------------------------------------------------------- 13 CLIFTON SAVINGS BANK, S.L.A. ARTICLE II -- ELIGIBILITY AND PARTICIPATION -------------------------------------------------------------------------------- (i) an election for Before-Tax Contributions in accordance with Section 3.1 or (ii) eligibility for Special Contributions in accordance with Section 3.5 or (iii) eligibility for Discretionary Employer Contributions in accordance with Section 3.8. An election for Before-Tax Contributions shall be evidenced by completing and filing the form prescribed by the Committee not less than ten (10) days prior to the date participation is to commence. Such form shall include, but not be limited to, a Compensation Reduction Agreement, a designation of Beneficiary, and an investment direction as described in Section 6.1. By completing and filing such form, the Eligible Employee authorizes the Employer to make the applicable payroll deductions from Compensation, commencing on the first applicable payday coincident with or next following the effective date of the Eligible Employee's election to participate. In the case of Special Contributions or Discretionary Employer Contributions, a Participant shall complete a form prescribed by the Committee, designating a Beneficiary and an investment direction as described in Section 6.1. 2.4 TERMINATION OF PARTICIPATION Participation in the Plan shall terminate on the earlier of the date a Participant dies or the entire vested interest in the Net Value of such Participant's Accounts has been distributed. 2.5 ELIGIBILITY UPON REEMPLOYMENT If an Employee incurs a One Year Break in Service prior to satisfying the eligibility requirements of Section 2.1, service prior to such One Year Break in Service shall be disregarded and such Employee must satisfy the eligibility requirements of Section 2.1 as a new Employee. If an Employee incurs a One Year Break in Service after satisfying the eligibility requirements of Section 2.1 and again performs an Hour of Service, the Employee shall receive credit for Years of Eligibility Service prior to his One Year Break in Service and shall be eligible to participate in the Plan immediately upon reemployment, provided such Employee is not excluded from participating under the provisions of Section 2.2. -------------------------------------------------------------------------------- 14 CLIFTON SAVINGS BANK, S.L.A. ARTICLE III -- CONTRIBUTIONS AND LIMITATIONS ON CONTRIBUTIONS -------------------------------------------------------------------------------- ARTICLE III -- CONTRIBUTIONS AND LIMITATIONS ON CONTRIBUTIONS 3.1 BEFORE-TAX CONTRIBUTIONS The Employer shall make Before-Tax Contributions for each payroll period in an amount equal to the amount by which a Participant's Compensation has been reduced with respect to such period under his Compensation Reduction Agreement. Subject to the limitations set forth in Sections 3.2 and 3.12, the amount of reduction authorized by the Eligible Employee shall be limited to whole percentages of Compensation and shall not be less than one percent (1%) nor greater than ten percent (10%). The Before-Tax Contributions made on behalf of a Participant shall be credited to such Participant's Before-Tax Contribution Account and shall be invested in accordance with Article VI of the Plan. 3.2 LIMITATION ON BEFORE-TAX CONTRIBUTIONS (a) Commencing January 1, 1997, the percentage of Before-Tax Contributions made on behalf of a Participant who is a Highly Compensated Employee shall be limited so that the Average Actual Deferral Percentage for the group of such Highly Compensated Employees for the Plan Year does not exceed the greater of: (i) the Average Actual Deferral Percentage for the group of Eligible Employees who were Non-Highly Compensated Employees for the preceding Plan Year multiplied by 1.25; or (ii) the Average Actual Deferral Percentage for the group of Eligible Employees who were Non-Highly Compensated Employees for the preceding Plan Year, multiplied by two (2), provided, that the difference in the Average Actual Deferral Percentage for eligible Highly Compensated Employees and eligible Non-Highly Compensated Employees does not exceed two percent (2%). Use of this alternative limitation shall be subject to the provisions of Income Tax Regulations Section issued under Code Section 401(m)(9) regarding the multiple use of the alternative limitation set forth in Sections 401(k) and 401(m) of the Code. The preceding Plan Year testing method can only be modified if the Plan meets the requirements for changing to current Plan Year testing as set forth in Internal Revenue Service Notice 98-1, or any successor future guidance issued by the Internal Revenue Service. The above subsections (i) and (ii) shall be subject to the distribution provisions of the last paragraph of Section 3.12(f). If the Average Actual Deferral Percentage for the group of eligible Highly Compensated Employees exceeds the limitations set forth in the preceding paragraph, -------------------------------------------------------------------------------- 15 CLIFTON SAVINGS BANK, S.L.A. ARTICLE III -- CONTRIBUTIONS AND LIMITATIONS ON CONTRIBUTIONS -------------------------------------------------------------------------------- the amount of excess Before-Tax Contributions for a Highly Compensated Employee shall be determined by "leveling" (as hereafter defined), the highest Before-Tax Contributions made by Highly Compensated Employees until the Average Actual Deferral Percentage test for the group of eligible Highly Compensated Employees complies with such limitations. For purposes of this paragraph, "leveling" means reducing the Before-Tax Contribution of the Highly Compensated Employee with the highest Before-Tax Contribution amount to the extent required to: (A) enable the Average Actual Deferral Percentage limitations to be met, or (B) cause such Highly Compensated Employee's Before-Tax Contribution amount to equal the dollar amount of the Before-Tax Contribution of the Highly Compensated Employee with the next highest Before-Tax Contribution amount by distribution of such excess Before-Tax Contributions, as described below, to the Highly Compensated Employee whose Before-Tax Contributions equal the highest dollar amount, and repeating such process until the Average Actual Deferral Percentage for the group of eligible Highly Compensated Employees complies with the Average Actual Deferral Percentage limitations. If Before-Tax Contributions made on behalf of a Participant during any Plan Year exceed the maximum amount applicable to a Participant as set forth above, any such contributions, including any earnings thereon as determined under Section 3.9, shall be characterized as Compensation payable to the Participant and shall be paid to the Participant from his Before-Tax Contribution Account no later than two and one-half (2-1/2) months after the close of such Plan Year. If Before-Tax Contributions during any Plan Year exceed the maximum amount applicable to a Participant as set forth above, any Matching Contributions, including any earnings thereon as determined under Section 3.9, that are attributable to Before-Tax Contributions which are returned to the Participant as provided hereunder, shall be treated as Forfeitures under Section 4.2. In the event that the Plan satisfies the requirements of Section 401(k), 401(a)(4) or 410(b) of the Code only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of Section 401(k), 401(a)(4) or 410(b) of the Code only if aggregated with the Plan, then this Section 3.2 shall be applied by determining the Actual Deferral Percentages of Eligible Employees as if all such plans were a single plan. If any Highly Compensated Employee is a Participant in two (2) or more cash or deferred arrangements of the Employer, for purposes of determining the Actual Deferral Percentage with respect to such Highly Compensated Employee, all cash or deferred arrangements shall be treated as one (1) cash or deferred arrangement. -------------------------------------------------------------------------------- 16 CLIFTON SAVINGS BANK, S.L.A. ARTICLE III -- CONTRIBUTIONS AND LIMITATIONS ON CONTRIBUTIONS -------------------------------------------------------------------------------- (b) Before-Tax Contributions under this Plan, and elective deferrals (as defined under Section 402(g) of the Code) under all other plans, contracts or arrangements of the Employer made on behalf of any Participant during the 1997 Plan Year shall not exceed nine thousand five hundred dollars ($9,500). During the 1998 and 1999 Plan Years, such amount shall be increased to ten thousand dollars ($10,000). During the 2000 and 2001 Plan Years, such amount shall be increased to ten thousand five hundred dollars ($10,500). For Plan Years commencing after December 31, 2001, Before-Tax Contributions under this Plan and any elective deferrals (as defined under Section 402(g) of the Code) under all other plans, contracts or arrangements of the Employer may be further adjusted as prescribed by the Secretary of the Treasury under Section 415(d) of the Code. This Section 3.2(b) shall be subject to the distribution provisions of the last paragraph of Section 3.12(f). (c) If Before-Tax Contributions made on behalf of a Participant during any Plan Year exceed the dollar limitation set forth in subsection (b), such contributions, including any earnings thereon as determined under Section 3.9, shall be characterized as Compensation payable to the Participant and shall be paid to the Participant from his Before-Tax Contribution Account no later than April 15th of the calendar year following the close of such Plan Year. If Before-Tax Contributions during any Plan Year exceed the maximum dollar amount applicable to a Participant as set forth in subsection (b), any Matching Contributions, including any earnings thereon as determined under Section 3.9, that are attributable to Before-Tax Contributions which are returned to the Participant as provided hereunder, shall be treated as Forfeitures under Section 4.2. (d) Subject to the requirements of Sections 401(a) and 401(k) of the Code, the maximum amounts under subsections (a) and (b) may differ in amount or percentage as between individual Participants or classes of Participants, and any Compensation Reduction Agreement may be terminated, amended, or suspended without the consent of any such Participant or Participants in order to comply with the provisions of such subsections (a) and (b). 3.3 CHANGES IN BEFORE-TAX CONTRIBUTIONS Unless (a) an election is made to the contrary, or (b) a Participant receives a Hardship distribution pursuant to Section 7.3(c)(iii), the percentage of Before-Tax Contributions made under Section 3.1 shall continue in effect so long as the Participant has a Compensation Reduction Agreement in force. A Participant may, by completing the applicable form, prospectively increase or decrease the rate of Before-Tax Contributions made on his behalf to any of the percentages authorized under Section 3.1 or suspend Before-Tax Contributions without withdrawing from participation in the Plan. Such form must be filed at least ten (10) days prior to the first day of the payroll period with respect to which such change is to become effective. A Participant who has Before-Tax -------------------------------------------------------------------------------- 17 CLIFTON SAVINGS BANK, S.L.A. ARTICLE III -- CONTRIBUTIONS AND LIMITATIONS ON CONTRIBUTIONS -------------------------------------------------------------------------------- Contributions made on his behalf suspended may resume such contributions by completing and filing the applicable form. Not more often than once during any calendar quarter may an election be made which would prospectively increase, decrease, suspend or resume Before-Tax Contributions made on behalf of a Participant. A Participant may terminate his Before-Tax Contributions at any time. Notwithstanding the foregoing, a Participant who receives a Hardship distribution pursuant to Section 7.3(c)(iii) shall have his Compensation Reduction Agreement deemed null and void and all Before-Tax Contributions made on behalf of such Participant shall be suspended until the later to occur of: (i) twelve (12) months after receipt of the Hardship distribution and (ii) the first payroll period which occurs ten (10) days following the completion and filing of a Compensation Reduction Agreement authorizing the resumption of Before-Tax Contributions to be made on his behalf. Before-Tax Contributions following a Hardship distribution made pursuant to Section 7.3(c)(iii) shall be subject to the following limitations: (A) Before-Tax Contributions for the Participant's taxable year immediately following the taxable year of the Hardship distribution shall not exceed the applicable limit under Section 402(g) of the Code for such next taxable year less the amount of such Participant's Before-Tax Contributions for the taxable year of the Hardship distribution, and (B) the percentage of Before-Tax Contributions for the twelve (12) month period following the mandatory twelve (12) month suspension period shall not exceed the percentage of Before-Tax Contributions made on behalf of the Participant as set forth in the last Compensation Reduction Agreement in effect prior to the Hardship distribution. Before-Tax Contributions based on Compensation for the period during which such contributions had been suspended or decreased may not be made up at a later date. 3.4 MATCHING CONTRIBUTIONS (a) The Employer shall make contributions on behalf of each Participant in an amount equal to fifty percent (50%) of up to the first four and one-half percent (4.5%) of such Participant's Compensation. (b) Matching Contributions shall be credited to the Participant's Matching Contribution Account and shall be invested in accordance with Article VI of the Plan. (c) If a Participant terminates his Before-Tax Contributions, Matching Contributions attributable to such contributions will also cease. If Before-Tax Contributions are suspended, the Matching Contributions attributable to such contributions will be suspended for the same period. Subject to the limitations set forth in subsection (a), if Before-Tax Contributions are increased or decreased, Matching Contributions attributable to such contributions will be increased or decreased -------------------------------------------------------------------------------- 18 CLIFTON SAVINGS BANK, S.L.A. ARTICLE III -- CONTRIBUTIONS AND LIMITATIONS ON CONTRIBUTIONS -------------------------------------------------------------------------------- during the same period. Matching Contributions for the period during which Before-Tax Contributions had been suspended or decreased may not be made up at a later date. (d) Matching Contributions may be reviewed and modified by the Employer's Board, from time to time. 3.5 SPECIAL CONTRIBUTIONS In addition to any other contributions, the Employer may, in its discretion, make Special Contributions for a Plan Year to the Before-Tax Contribution Account of any Eligible Employees. Such Special Contributions may be limited to the amount necessary to insure that the Plan complies with the requirements of Section 401(k) of the Code. The Special Contributions made on behalf of a Participant shall be invested in accordance with Article VI of the Plan. The Employer may provide that Special Contributions be made only on behalf of each Eligible Employee who is a Non-Highly Compensated Employee on the last day of the Plan Year. Such Special Contributions shall be allocated in proportion to each such Eligible Employee's Compensation for the Plan Year. Any other provision of the Plan to the contrary notwithstanding, no Matching Contributions shall be made with respect to any Special Contributions. 3.6 LIMITATION ON MATCHING CONTRIBUTIONS Commencing January 1, 1997, the Actual Contribution Percentage made on behalf of a Participant who is a Highly Compensated Employee shall be limited so that the Average Actual Contribution Percentage for the group of such Highly Compensated Employees for the Plan Year shall not exceed the greater of: (a) the Average Actual Contribution Percentage for the group of Eligible Employees who were Non-Highly Compensated Employees for the preceding Plan Year multiplied by 1.25, or (b) the Average Actual Contribution Percentage for the group of Eligible Employees who were Non-Highly Compensated Employees for the preceding Plan Year Plan Year, multiplied by two (2), provided, that the difference in the Average Actual Contribution Percentage for Highly Compensated Employees and Non-Highly Compensated Employees does not exceed two percent (2%). Use of this alternative limitation shall be subject to the provisions of Income Tax Regulations issued under Code Section 401(m)(9) regarding the multiple use of the alternative limitation set forth in Sections 401(k) and 401(m) of the Code. The preceding Plan Year testing method can only be modified if the Plan meets the requirements for changing to current Plan Year testing as set forth in Internal Revenue -------------------------------------------------------------------------------- 19 CLIFTON SAVINGS BANK, S.L.A. ARTICLE III -- CONTRIBUTIONS AND LIMITATIONS ON CONTRIBUTIONS -------------------------------------------------------------------------------- Service Notice 98-1, or any successor future guidance issued by the Internal Revenue Service. The above subsections (a) and (b) shall be subject to the distribution provisions of the last paragraph of Section 3.12(f). If the Average Actual Contribution Percentage for the group of eligible Highly Compensated Employees exceeds the limitations set forth in the preceding paragraph, the amount of excess Matching Contributions for a Highly Compensated Employee shall be determined by "leveling" (as hereafter defined,) the highest Matching Contributions until the Average Actual Contribution Percentage test for the group of eligible Highly Compensated Employees complies with such limitations. For purposes of this paragraph, "leveling" means reducing the Matching Contributions made on behalf of the Highly Compensated Employee with the highest Matching Contribution amount to the extent required to: (i) enable the Average Actual Contribution Percentage limitations to be met, or (ii) cause such Highly Compensated Employee's Matching Contribution amount to equal the dollar amount of the Matching Contribution made on behalf of the Highly Compensated Employee with the next highest Matching Contribution amount and repeating such process until the Average Actual Contribution Percentage for the group of eligible Highly Compensated Employees complies with the Average Actual Contribution Percentage limitations. If Matching Contributions during any Plan Year exceed the maximum amount applicable to a Participant as set forth above, any such contributions, including any earnings thereon as determined under Section 3.9, shall, whether or not vested, be treated as Forfeitures under Section 4.2. In the event that the Plan satisfies the requirements of Section 401(m), 401(a)(4) or 410(b) of the Code only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of Section 401(m), 401(a)(4) or 410(b) of the Code only if aggregated with the Plan, then this Section 3.6 shall be applied by determining the Actual Contribution Percentages of Eligible Employees as if all such plans were a single plan. If any Highly Compensated Employee is a Participant in two (2) or more plans of the Employer, for purposes of determining the Actual Contribution Percentage with respect to such Highly Compensated Employee, all such plans shall be treated as one (1) plan. -------------------------------------------------------------------------------- 20 CLIFTON SAVINGS BANK, S.L.A. ARTICLE III -- CONTRIBUTIONS AND LIMITATIONS ON CONTRIBUTIONS -------------------------------------------------------------------------------- 3.7 AGGREGATE LIMIT; MULTIPLE USE OF ALTERNATIVE LIMITATION Commencing January 1, 1997, multiple use of the alternative limitation in determining the Average Actual Deferral Percentage and Average Actual Contribution Percentage shall not be permitted. Multiple use of the alternative limitation occurs if, for the group of Eligible Employees who are Highly Compensated Employees, the sum of the Average Actual Deferral Percentage and the Average Actual Contribution Percentage exceeds the Aggregate Limit. For purposes of this Section 3.7, Aggregate Limit shall mean the greater of (a) or (b), where (a) and (b) are as follows: (a) the sum of: (i) one hundred twenty-five percent (125%) of the greater of: (A) the Average Actual Deferral Percentage for the group of Eligible Employees who were Non-Highly Compensated Employees for the preceding Plan Year; or (B) the Average Actual Contribution Percentage for the group of Eligible Employees who were Non-Highly Compensated Employees for the preceding Plan Year; and (ii) two (2) plus the lesser of subsection (a)(i)(A) or (a)(i)(B). In no event shall this amount exceed two hundred percent (200%) of the lesser of subsection (a)(i)(A) or (a)(i)(B). (b) the sum of: (i) one hundred twenty-five percent (125%) of the lesser of: (A) the Average Actual Deferral Percentage for the group of Eligible Employees who were Non-Highly Compensated Employees for the preceding Plan Year; or (B) the Average Actual Contribution Percentage for the group of Eligible Employees who were Non-Highly Compensated Employees for the preceding Plan Year; and (ii) two (2) plus the greater of subsection (b)(i)(A) or (b)(i)(B). In no event shall this amount exceed two hundred percent (200%) of the greater of subsection (b)(i)(A) or (b)(i)(B). -------------------------------------------------------------------------------- 21 CLIFTON SAVINGS BANK, S.L.A. ARTICLE III -- CONTRIBUTIONS AND LIMITATIONS ON CONTRIBUTIONS -------------------------------------------------------------------------------- If multiple use of the alternative limitation occurs, the excess Before-Tax Contributions for Highly Compensated Employees under the Plan shall be reduced in accordance with Section 3.2(a). 3.8 DISCRETIONARY EMPLOYER CONTRIBUTIONS (a) Subject to the limitations of Section 3.12, the Employer may, in its sole and absolute discretion, make Discretionary Employer Contributions to the Plan for a Plan Year. Discretionary Employer Contributions shall be a specified dollar amount, determined by the Board, apportioned pro rata, based on each Participant's Compensation, among all Participants who are in the employ of the Employer on the last day of the Plan Year and who have completed at least one thousand (1,000) Hours of Service during such Plan Year. (b) The Discretionary Employer Contributions allocated to each Participant shall be credited to such Participant's Discretionary Employer Contribution Account and shall be invested in accordance with Article VI of the Plan. Any and all withdrawals, distributions or payments from a Participant's Discretionary Employer Contribution Account shall be made in accordance with Article VII of the Plan. 3.9 INTEREST ON EXCESS CONTRIBUTIONS In the event Before-Tax Contributions and/or Matching Contributions made on behalf of a Participant during a Plan Year exceed the maximum allowable amount as described in Section 3.2(a), 3.2(b) or 3.6 ("Excess Contributions") and such Excess Contributions and earnings thereon are payable to the Participant under the applicable provisions of the Plan, earnings on such Excess Contributions for the period commencing with the first day of the Plan Year in which the Excess Contributions were made and ending with the date of payment to the Participant ("Allocation Period") shall be determined in accordance with the provisions of this Section 3.9. The earnings allocable to excess Before-Tax Contributions for an Allocation Period shall be equal to the sum of (a) plus (b) where (a) and (b) are determined as follows: (a) The amount of earnings attributable to the Participant's Before-Tax Contribution Account for the Plan Year multiplied by a fraction, the numerator of which is the excess Before-Tax Contributions and Special Contributions for the Plan Year, and the denominator of which is the sum of (i) the Net Value of the Participant's Before-Tax Contribution Account as of the last day of the immediately preceding Plan Year and (ii) the contributions (including the Excess Contributions) made to the Before-Tax Contribution Account on the Participant's behalf during such Plan Year. (b) The amount of earnings attributable to the Participant's Before-Tax Contribution Account for the period commencing with the first day of the Plan Year in which -------------------------------------------------------------------------------- 22 CLIFTON SAVINGS BANK, S.L.A. ARTICLE III -- CONTRIBUTIONS AND LIMITATIONS ON CONTRIBUTIONS -------------------------------------------------------------------------------- payment is made to the Participant and ending with the date of payment to the Participant multiplied by a fraction, the numerator of which is the excess Before-Tax Contributions and Special Contributions made to the Before-Tax Contribution Account on the Participant's behalf during the Plan Year immediately preceding the Plan Year in which the payment is made to the Participant, and the denominator of which is the Net Value of the Participant's Before-Tax Contribution Account on the first day of the Plan Year in which the payment is made to the Participant. The earnings allocable to excess Matching Contributions for an Allocation Period shall be equal to the sum of (A) and (B) where (A) and (B) are determined as follows: (A) The amount of earnings attributable to the Participant's Matching Contribution Account for the Plan Year multiplied by a fraction, the numerator of which is the excess Matching Contributions for the Plan Year, and the denominator of which is the sum of (I) the Net Value of the Participant's Matching Contribution Account as of the last day of the immediately preceding Plan Year and (II) the contributions (including the Excess Contributions) made to the Matching Contribution Account on the Participant's behalf during such Plan Year. (B) The amount of earnings attributable to the Participant's Matching Contribution Account for the period commencing with the first day of the Plan Year in which payment is made to the Participant and ending with the date of payment to the Participant multiplied by a fraction, the numerator of which is the excess Matching Contributions made to the Matching Contribution Account on the Participant's behalf during the Plan Year immediately preceding the Plan Year in which the payment is made to the Participant, and the denominator of which is the Net Value of the Participant's Matching Contribution Account on the first day of the Plan Year in which the payment is made to the Participant. 3.10 PAYMENT OF CONTRIBUTIONS TO THE TRUST AND THE SEPARATE AGENCY As soon as possible after each payroll period, but not less often than once a month, the Employer shall deliver (a) to the Trustees: (i) the Before-Tax Contributions required to be made to the Trust during such payroll period under the applicable Compensation Reduction Agreements and (ii) the amount of all Matching Contributions required to be made to the Trust for such payroll period and (b) to the Separate Agency: (i) the Before-Tax Contributions required to be made to the Separate Agency during such payroll period under the applicable Compensation Reduction Agreements and (ii) the amount of all Matching Contributions required to be made to the Separate Agency for such payroll period Special Contributions and Discretionary Employer Contributions to the Trust and to the Separate Agency shall be forwarded by the Employer to the Trustees and to the Separate Agency no later than the time for filing the Employer's federal income tax return, plus any extensions thereon, for the Plan Year to which they are attributable. -------------------------------------------------------------------------------- 23 CLIFTON SAVINGS BANK, S.L.A. ARTICLE III -- CONTRIBUTIONS AND LIMITATIONS ON CONTRIBUTIONS -------------------------------------------------------------------------------- 3.11 ROLLOVER CONTRIBUTIONS Subject to such terms and conditions as may from time to time be established by the Committee, the Trustees and the Separate Agency, an Employee, whether or not a Participant, may contribute a Rollover Contribution to the Plan Fund; provided, however, that such Employee shall submit a written certification, in form and substance satisfactory to the Committee, that the contribution qualifies as a Rollover Contribution. The Committee shall be entitled to rely on such certification and shall accept the contribution on behalf of the Trustees and the Separate Agency, as applicable. Rollover Contributions shall be credited to an Employee's Rollover Contribution Account and shall be invested in accordance with Article VI of the Plan. 3.12 SECTION 415 LIMITS ON CONTRIBUTIONS (a) For purposes of this Section 3.12, the following terms and phrases shall have the meanings hereafter ascribed to them: (i) "Annual Additions" shall mean the sum of the following amounts credited to a Participant's Accounts for the Limitation Year: (A) Employer contributions, including Before-Tax Contributions, Matching Contributions and Discretionary Employer Contributions; (B) any other Employee contributions; (C) forfeitures; and (D)(1) amounts allocated to an individual medical account, as defined in Section 415(l)(2) of the Code, which is part of a pension or annuity plan maintained by the Employer and (2) amounts derived from contributions, paid or accrued, which are attributable to post-retirement medical benefits allocated to the separate account of a key employee, as defined in Section 419A(d)(3) of the Code, under a welfare benefit fund as defined in Section 419(e) of the Code, maintained by the Employer are treated as Annual Additions. Annual Additions include the following contributions credited to a Participant's Accounts for the Limitation Year, regardless of whether such contributions have been distributed to the Participant: (I) Before-Tax Contributions which exceed the limitations set forth in Section 3.2(a); (II) Before-Tax Contributions made on behalf of a Highly Compensated Employee which exceed the limitations set forth in Section 3.2(b); and (III) Matching Contributions made on behalf of a Highly Compensated Employee which exceed the limitations set forth in Section 3.6. (ii) "Current Accrued Benefit" shall mean a Participant's annual accrued benefit under a defined benefit plan, determined in accordance with the meaning of Section 415(b)(2) of the Code, as if the Participant had -------------------------------------------------------------------------------- 24 CLIFTON SAVINGS BANK, S.L.A. ARTICLE III -- CONTRIBUTIONS AND LIMITATIONS ON CONTRIBUTIONS -------------------------------------------------------------------------------- separated from service as of the close of the last Limitation Year beginning before January 1, 1987. In determining the amount of a Participant's Current Accrued Benefit, the following shall be disregarded: (A) any change in the terms and conditions of the defined benefit plan after May 5, 1986; and (B) any cost of living adjustment occurring after May 5, 1986. (iii) "Defined Benefit Plan" and "Defined Contribution Plan" shall have the meanings set forth in Section 415(k) of the Code. (iv) "Defined Benefit Plan Fraction" for a Limitation Year shall mean a fraction, (A) the numerator of which is the aggregate projected annual benefit (determined as of the last day of the Limitation Year) of the Participant under all defined benefit plans (whether or not terminated) maintained by the Employer, and (B) the denominator of which is the lesser of: (I) the product of 1.25 (or such adjustment as required under Section 11.4) and the dollar limitation in effect under Section 415(b)(1)(A) of the Code, adjusted as prescribed by the Secretary of the Treasury under Section 415(d) of the Code, or (II) the product of 1.4 and the amount which may be taken into account with respect to such Participant under Section 415(b)(1)(B) of the Code for such Limitation Year. Notwithstanding the above, if the Participant was a participant in one or more defined benefit plans of the Employer in existence on May 6, 1986, the dollar limitation of the denominator of this fraction will not be less than one hundred twenty-five percent (125%) of the Participant's Current Accrued Benefit. (v) "Defined Contribution Plan Fraction" for a Limitation Year shall mean a fraction, (A) the numerator of which is the sum of the Participant's Annual Additions under all defined contribution plans (whether or not terminated) maintained by the Employer for the current year and all prior Limitation Years (including annual additions attributable to the Participant's nondeductible employee contributions to all defined benefit plans (whether or not terminated) maintained by the Employer), and (B) the denominator of which is the sum of the maximum aggregate amounts for the current year and all prior Limitation Years with the Employer (regardless of whether a defined contribution plan was maintained by the Employer). "Maximum aggregate amounts" shall mean the lesser of (I) the product of 1.25 (or such adjustment as required under Section 11.4) and the dollar limitation in effect under Section 415(c)(1)(A) of the Code, adjusted as prescribed by the Secretary of the Treasury under Section 415(d) of the Code, or (II) the product of 1.4 and the amount that may be taken into account under Section 415(c)(1)(B) of the Code; provided, however, that the Committee may elect, on a uniform and nondiscriminatory basis, to apply the special -------------------------------------------------------------------------------- 25 CLIFTON SAVINGS BANK, S.L.A. ARTICLE III -- CONTRIBUTIONS AND LIMITATIONS ON CONTRIBUTIONS -------------------------------------------------------------------------------- transition rule of Section 415(e)(7) of the Code applicable to Limitation Years ending before January 1, 1983 in determining the denominator of the Defined Contribution Plan Fraction. If the Employee was a Participant as of the end of the first day of the first Limitation Year beginning after December 31, 1986, in one or more defined contribution plans maintained by the Employer which were in existence on May 6, 1986, the numerator of this fraction will be adjusted if the sum of this fraction and the defined benefit fraction would otherwise exceed 1.0 under the terms of this Plan. Under the adjustment, an amount equal to the product of (1) the excess of the sum of the fractions over 1.0 times (2) the denominator of this fraction, will be permanently subtracted from the numerator of this fraction. The adjustment is calculated using the fractions as they would be computed as of the end of the last Limitation Year beginning before January 1, 1987, and disregarding any changes in the terms and conditions of the Plan made after May 5, 1986, but using the Section 415 limitation applicable to the first Limitation Year beginning on or after January 1, 1987. The annual addition for any Limitation Year beginning before January 1, 1987, shall not be recomputed to treat all Employee contributions as Annual Additions. (vi) "Limitation Year" shall mean the calendar year. (vii) "Section 415 Compensation" shall be a Participant's remuneration as defined in Income Tax Regulations Sections 1.415-2(d)(2), (3) and (6). For purposes of this Section, effective for Plan Years commencing after December 31, 1997, Section 415 Compensation shall include (A) any elective deferral (as defined in Section 402(g)(3) of the Code, and (B) any amount which is contributed or deferred by the Employer at the election of the Employee and which is not includible in the gross income of the Employee by reason of Section 125 or 457 of the Code. (b) For purposes of applying the Section 415 limitations, the Employer and all members of a controlled group of corporations (as defined under Section 414(b) of the Code as modified by Section 415(h) of the Code), all commonly controlled trades or businesses (as defined under Section 414(c) of the Code as modified by Section 415(h) of the Code), all affiliated service groups (as defined under Section 414(m) of the Code) of which the Employer is a member, any leasing organization (as defined under Section 414(n) of the Code) that employs any person who is considered an Employee under Section 414(n) of the Code and any other group provided for under any and all Income Tax Regulations promulgated by the Secretary of the Treasury under Section 414(o) of the Code, shall be treated as a single employer. -------------------------------------------------------------------------------- 26 CLIFTON SAVINGS BANK, S.L.A. ARTICLE III -- CONTRIBUTIONS AND LIMITATIONS ON CONTRIBUTIONS -------------------------------------------------------------------------------- (c) If the Employer maintains more than one qualified Defined Contribution Plan on behalf of its Employees, such plans shall be treated as one Defined Contribution Plan for purposes of applying the Section 415 limitations of the Code. (d) Notwithstanding anything contained in the Plan to the contrary, in no event shall the Annual Additions to a Participant's Accounts for a Limitation Year exceed the lesser of: (i) thirty thousand dollars ($30,000) as adjusted in multiples of five thousand dollars ($5,000) for increases in the cost-of-living as prescribed by the Secretary of the Treasury under Section 415(d) of the Code; or (ii) twenty-five percent (25%) of the Participant's Section 415 Compensation for such Limitation Year. For purposes of this subsection (d)(ii), Section 415 Compensation shall not include (A) any contribution for medical benefits within the meaning of Section 419A(f)(2) of the Code after separation from service, which is otherwise treated as an Annual Addition, and (B) any amount otherwise treated as an Annual Addition under Section 415(1)(1) of the Code. (e) If, as a result of the allocation of forfeitures, a reasonable error in estimating a Participant's annual Compensation, a reasonable error in determining the amount of elective deferrals that may be made with respect to any Participant, or as otherwise permitted by the Internal Revenue Service, the Annual Additions to a Participant's Accounts for a Limitation Year exceed the limitation set forth in subsection (d) above during the Limitation Year, any or all of the following contributions on behalf of such Participant shall be immediately adjusted to that amount which will result in such Annual Additions not exceeding the limitation set forth in subsection (d): (i) Discretionary Employer Contributions; (ii) Before-Tax Contributions; (iii) Special Contributions; and (iv) Matching Contributions. (f) If the Annual Additions to a Participant's Accounts for a Limitation Year exceed the limitations set forth in subsection (d) above at the end of a Limitation Year, such excess amounts shall not be treated as Annual Additions in such Limitation Year but shall instead be treated in accordance with the following: (i) such excess amounts shall be used to reduce the Before-Tax Contributions, Discretionary Employer Contributions, Matching Contributions and/or Special Contributions to be made on behalf of such Participant in the succeeding Limitation Year, provided that such Participant is an Eligible -------------------------------------------------------------------------------- 27 CLIFTON SAVINGS BANK, S.L.A. ARTICLE III -- CONTRIBUTIONS AND LIMITATIONS ON CONTRIBUTIONS -------------------------------------------------------------------------------- Employee during such succeeding Limitation Year. If such Participant is not an Eligible Employee or ceases to be an Eligible Employee during such succeeding Limitation Year, any remaining excess amounts from the preceding Limitation Year shall be allocated during such succeeding Limitation Year to each Participant then actively participating in the Plan. Such allocation shall be in proportion to the Before-Tax Contributions made to date on his behalf for such Limitation Year, or the prior Limitation Year with respect to an allocation as of the beginning of a Limitation Year, before any other contributions are made in such succeeding Limitation Year; or (ii) such excess amounts may be reduced by the distribution of such Participant's Before-Tax Contributions to such Participant. The Employer will, at the end of the Limitation Year in which such excess amounts were made, choose the manner in which to treat such excess amounts on a uniform and nondiscriminatory basis on behalf of all affected Participants. If such excess amounts are reduced by the distribution described in subsection (ii), the amounts of such distribution shall not be taken into account for purposes of Sections 3.2(a)(i) and (ii), 3.8(a) and (b), or in determining the limitation in Section 3.2(b). In addition, any Matching Contributions attributable to such amounts shall constitute Forfeitures as described in Section 4.2. (g) If a Participant participates in both (i) the Plan and/or any other defined contribution plan maintained by the Employer and (ii) any defined benefit plan or plans maintained by the Employer, the sum of the Defined Contribution Plan Fraction and the Defined Benefit Plan Fraction shall not exceed the sum of 1.0. This subsection (g) shall not apply with respect to Plan Years beginning on or after January 1, 2000. (h) If, for any Plan Year commencing prior to January 1, 2000, the sum determined under subsection (g) for any Participant exceeds 1.0, the Defined Contribution Plan Fraction of such Participant as provided in the defined contribution plan or plans maintained by the Employer shall be reduced in order that such sum shall not exceed 1.0. -------------------------------------------------------------------------------- 28 CLIFTON SAVINGS BANK, S.L.A. ARTICLE IV -- VESTING AND FORFEITURES -------------------------------------------------------------------------------- ARTICLE IV -- VESTING AND FORFEITURES 4.1 VESTING An Employee shall always be fully vested in the Net Value of his Before-Tax Contribution Account, the Net Value of his Matching Contribution Account, the Net Value of his Discretionary Employer Contribution Account, and the Net Value of his Rollover Contribution Account. 4.2 FORFEITURES With respect to a Participant's Matching Contribution Account, anything in Section 4.1 to the contrary notwithstanding, any Matching Contribution forfeited in accordance with the fifth paragraph of Section 3.2(a), the second paragraph of Section 3.2(c), the fourth paragraph of Section 3.6 or the second paragraph of Section 3.12(f), shall be applied to reduce the amount of subsequent Matching Contributions otherwise required to be made. 4.3 VESTING UPON REEMPLOYMENT If a Participant incurs a One Year Break in Service and again performs an Hour of Service, such Participant shall receive credit for all his Years of Eligibility Service prior to his One Year Break in Service. -------------------------------------------------------------------------------- 29 CLIFTON SAVINGS BANK, S.L.A. ARTICLE V -- TRUST FUND, INVESTMENT ACCOUNTS AND VOTING RIGHTS -------------------------------------------------------------------------------- ARTICLE V -- TRUST FUND, INVESTMENT ACCOUNTS AND VOTING RIGHTS 5.1 TRUST FUND AND SEPARATE ASSETS The Employer has adopted the Agreement as the funding vehicle with respect to the Investment Accounts other than the Clifton Savings CD Fund, and has adopted the Separate Agreement as the funding vehicle with respect to the Clifton Savings CD Fund. All contributions forwarded by the Employer to the Trustees pursuant to the Agreement shall be held by them in trust and shall be used to purchase Units on behalf of the Plan in accordance with the terms and provisions of the Agreement. Contributions designated for investment in any Investment Account of the Trust Fund shall be allocated proportionately to and among the classes of Units so selected for such Investment Account. All contributions forwarded by the Employer to the Separate Agency pursuant to the Separate Agreement shall be held by them in trust in accordance with the terms and provisions of the Separate Agreement. All assets of the Plan shall be held for the exclusive benefit of Participants, Beneficiaries or other persons entitled to benefits. No part of the corpus or income of the Trust Fund shall be used for, or diverted to, purposes other than for the exclusive benefit of Participants, Beneficiaries or other persons entitled to benefits and for defraying reasonable administrative expenses of the Plan, Trust and Separate Agency. No person shall have any interest in or right to any part of the earnings of the Plan Funds, or any rights in, to or under the Plan Funds or any part of its assets, except to the extent expressly provided in the Plan. The Trustees and the Separate Agency shall invest and reinvest the Plan Funds, and the income therefrom, without distinction between principal and income, in accordance with the terms and provisions of the Agreement and Separate Agreement, respectively. The Trustees and the Separate Agency may maintain such part of the Trust Fund and the Separate Assets, respectively in cash uninvested as they shall deem necessary or desirable. The Trustees shall be the owner of and have title to all the assets of the Plan Funds other than the Separate Assets and shall have full power to manage the same, except as otherwise specifically provided in the Agreement. The Separate Agency shall be the owner of and shall have title to the Separate Assets, and shall have full power to manage the same, except as otherwise specifically provided in the Separate Agreement. 5.2 INTERIM INVESTMENTS The Trustees may temporarily invest any amounts designated for investment in any of the Investment Accounts of the Trust Fund identified herein in the Investment Account which provides for short-term investments and retain the value of such contributions therein -------------------------------------------------------------------------------- 30 CLIFTON SAVINGS BANK, S.L.A. ARTICLE V -- TRUST FUND, INVESTMENT ACCOUNTS AND VOTING RIGHTS -------------------------------------------------------------------------------- pending the allocation of such values to the Investment Accounts designated for investment. The Separate Agency may temporarily invest any amounts in short-term investment pending investment in the Clifton Savings CD Fund. 5.3 ACCOUNT VALUES The Net Value of the Accounts of an Employee means the sum of the total Net Value of each Account maintained on behalf of the Employee in the Trust and Separate Agency as determined as of the Valuation Date coincident with or next following the event requiring the determination of such Net Value. The assets of any Account shall consist of the Units credited to such Account. The applicable Units shall be valued from time to time by the Trustees and Separate Agency, respectively, in accordance with the Agreement and Separate Agreement, but not less often than monthly. On the basis of such valuations, each Employee's Accounts shall be adjusted to reflect the effect of income collected and accrued, realized and unrealized profits and losses, expenses and all other transactions during the period ending on the applicable Valuation Date. Upon receipt by the Trustees of Before-Tax Contributions, Matching Contributions, and, if applicable, Discretionary Employer Contributions, Rollover Contributions and Special Contributions, and, upon request by a Separate Agency of any Before-Tax Contributions, Matching Contributions, and, if applicable, Discretionary Employer Contributions, Rollover Contributions and Special Contributions, such contributions shall be applied to purchase for such Employee's Account, (a) Units other than Units of the Clifton Savings CD Fund, and (b) Units of Clifton Savings CD Fund, using the value of such Units as of the close of business on the date received. Whenever a distribution or withdrawal is made to a Participant, Beneficiary or other person entitled to benefits, the appropriate number of Units credited to such Employee shall be reduced accordingly and each such distribution or withdrawal shall be charged against the Units of the Investment Accounts of such Employee pro rata according to their respective values. For the purposes of this Section 5.3, fractions of Units as well as whole Units may be purchased or redeemed for the Account of an Employee. 5.4 SEPARATE ASSETS Subject to the terms and conditions of the Agreement and upon approval by the Trustees, a designated portion of the assets of the Plan may be held as Separate Assets under the Separate Agreement pursuant to investment elections made by Plan Participants from time to time. The Trustees shall have no responsibility or liability with respect to the management and control of any Separate Assets and shall have only those administrative duties with respect to such Separate Assets as are set forth in the Plan and the Agreement. -------------------------------------------------------------------------------- 31 CLIFTON SAVINGS BANK, S.L.A. ARTICLE VI -- INVESTMENT DIRECTIONS, CHANGES OF INVESTMENT DIRECTIONS AND TRANSFERS BETWEEN INVESTMENT ACCOUNTS -------------------------------------------------------------------------------- ARTICLE VI -- INVESTMENT DIRECTIONS, CHANGES OF INVESTMENT DIRECTIONS AND TRANSFERS BETWEEN INVESTMENT ACCOUNTS 6.1 INVESTMENT DIRECTIONS Upon electing to participate, each Participant shall direct that the contributions made to his Accounts shall be applied to purchase Units in any one or more of the Investment Accounts of the Trust Fund or to purchase Units in the Clifton Savings CD Fund. Such direction shall indicate the percentage, in multiples of one percent (1%), in which Before-Tax Contributions, Matching Contributions, Discretionary Employer Contributions, Special Contributions, and Rollover Contributions shall be made to the designated Investment Accounts. To the extent a Participant shall fail to make an investment direction, contributions made on his behalf shall be applied to purchase Units in the Investment Account which provides for short-term investments. 6.2 CHANGE OF INVESTMENT DIRECTIONS A Participant may change any investment direction at any time, in the form and manner prescribed by the Committee, either: (a) by completing and filing a notice at least ten (10) days prior to the effective date of such direction, or, (b) by telephone or other electronic medium. Any such change shall be subject to the same conditions as if it were an initial direction and shall be applied only to any contributions to be invested on or after the effective date of such direction. 6.3 TRANSFERS BETWEEN INVESTMENT ACCOUNTS A Participant or Beneficiary may, at any time, redirect the investment of his Investment Accounts such that a percentage of any one or more Investment Accounts may be transferred to any one or more other Investment Accounts in the form and manner prescribed by the Committee, either: (a) by filing a notice at least ten (10) days prior to the effective date of such change, or, (b) by telephone or other electronic medium. The requisite transfers shall be valued as of the Valuation Date on which the direction is received by the Trustees and shall be affected within seven (7) days of the Trustees' receipt of such direction. 6.4 EMPLOYEES OTHER THAN PARTICIPANTS (a) INVESTMENT DIRECTION An Employee who is not a Participant but who has made a Rollover Contribution in accordance with the provisions of Section 3.11, shall direct, in the form and -------------------------------------------------------------------------------- 32 CLIFTON SAVINGS BANK, S.L.A. ARTICLE VI -- INVESTMENT DIRECTIONS, CHANGES OF INVESTMENT DIRECTIONS AND TRANSFERS BETWEEN INVESTMENT ACCOUNTS -------------------------------------------------------------------------------- manner prescribed by the Committee, that such contribution be applied to the purchase of Units in any one or more of the Investment Accounts in the Trust, and to purchase Units in the Clifton Savings CD Fund. Such direction shall indicate the percentage, in multiples of one percent (1%), in which contributions shall be made to the designated Investment Accounts, and/or the Investment Account for Clifton Savings CD Fund. To the extent any Employee shall fail to make an investment direction, the Rollover Contributions shall be applied to the purchase of Units in the Investment Account which provides for short-term investments. (b) TRANSFERS BETWEEN INVESTMENT ACCOUNTS An Employee who is not a Participant may, subject to the provisions of Section 6.3, at any time, redirect the investment of his Investment Accounts such that a percentage of any one or more Investment Accounts may be transferred to any one or more other Investment Accounts. The requisite transfers shall be valued as of the Valuation Date on which the direction is received by the Trustees and shall be affected within seven (7) days of the Trustees' receipt of such direction. -------------------------------------------------------------------------------- 33 CLIFTON SAVINGS BANK, S.L.A. ARTICLE VII -- PAYMENT OF BENEFITS -------------------------------------------------------------------------------- ARTICLE VII -- PAYMENT OF BENEFITS 7.1 GENERAL (a) The vested interest in the Net Value of any one or more of the Accounts of a Participant, Beneficiary or any other person entitled to benefits under the Plan shall be paid only at the times, to the extent, in the manner, and to the persons provided in this Article VII. (b) Notwithstanding any provisions of the Plan to the contrary, any and all withdrawals, distributions or payments made under the provisions of this Article VII shall be made in accordance with Section 401(a)(9) of the Code and any and all Income Tax Regulations promulgated thereunder. With respect to distributions under the Plan made in calendar years beginning on or after January 1, 2001, the Plan will apply the minimum distribution requirements of Section 401(a)(9) of the Code in accordance with the regulations under Section 401(a)(9) that were proposed in January 2001, notwithstanding any provision of the Plan to the contrary. This amendment shall continue in effect until the end of the last calendar year beginning before the effective date of final regulations under Section 401(a)(9) or such other date specified in guidance published by the Internal Revenue Service. 7.2 NON-HARDSHIP WITHDRAWALS (a) Subject to the terms and conditions contained in this Section 7.2, upon ten (10) days prior written notice to the Committee each Participant who has attained age sixty (60) shall be entitled to withdraw not more often than once during any Plan Year, all or any portion of his vested interest in the Net Value of his Accounts in the following order of priority: (i) the Net Value of the Employee's Rollover Contribution Account provided that such Employee shall have satisfied such additional terms and conditions, if any, as the Committee may deem necessary; and (ii) the Net Value of his Before-Tax Contribution Account; (iii) the Net Value of his Matching Contribution Account; and (iv) the Net Value of his Discretionary Employer Contribution Account. (b) Withdrawals under this Section 7.2 shall be made in the following order of priority: -------------------------------------------------------------------------------- 34 CLIFTON SAVINGS BANK, S.L.A. ARTICLE VII -- PAYMENT OF BENEFITS -------------------------------------------------------------------------------- (i) by the redemption of Units from each of the Participant's Accounts in the Trust Fund in the order set forth in Section 7.2(a), on a pro rata basis from the Investment Accounts thereunder, as were selected by the Participant pursuant to Article VI; and (ii) by the redemption of Units invested in the Clifton Savings CD Fund from each of the Participant's Accounts invested under the Separate Agreement, in the order set forth in Section 7.2(a), if selected by the Participant pursuant to Article VI. 7.3 HARDSHIP DISTRIBUTIONS (a) For purposes of this Section 7.3, a "Hardship" distribution shall mean a distribution that is (i) made on account of a condition which has given rise to immediate and heavy financial need of a Participant and (ii) necessary to satisfy such financial need. A determination of the existence of an immediate and heavy financial need and the amount necessary to meet the need shall be made by the Committee in accordance with uniform nondiscriminatory standards with respect to similarly situated persons. (b) Immediate and Heavy Financial Need: A Hardship distribution shall be deemed to be made on account of an immediate and heavy financial need if the distribution is on account of: (i) expenses for medical care described under Section 213(d) of the Code which were previously incurred by the Participant, the Participant's Spouse or any of the Participant's dependents as defined under Section 152 of the Code or expenses which are necessary to obtain medical care described under Section 213(d) of the Code for the Participant, the Participant's Spouse or any of the Participant's dependents as defined under Section 152 of the Code; or (ii) purchase (excluding mortgage payments) of a principal residence of the Participant; or (iii) payment of tuition and related educational fees for the next twelve (12) months of post-secondary education for the Participant, the Participant's Spouse, children or any of the Participant's dependents as defined under Section 152 of the Code; or (iv) the need to prevent the eviction of the Participant from his principal residence or foreclosure on the mortgage of the Participant's principal residence; or -------------------------------------------------------------------------------- 35 CLIFTON SAVINGS BANK, S.L.A. ARTICLE VII -- PAYMENT OF BENEFITS -------------------------------------------------------------------------------- (v) any other condition which the Commissioner of Internal Revenue, through the publication of revenue rulings, notices and other documents of general applicability, deems to be an immediate and heavy financial need. (c) Necessary to Satisfy Such Financial Need: (i) A distribution will be treated as necessary to satisfy an immediate and heavy financial need of a Participant if: (A) the amount of the distribution is not in excess of (1) the amount required to relieve the financial need of the Participant and (2) if elected by the Participant, an amount necessary to pay any federal, state or local income taxes and penalties reasonably anticipated to result from such distribution, and (B) such need may not be satisfied from other resources that are reasonably available to the Participant. (ii) A distribution will be treated as necessary to satisfy a financial need if the Committee reasonably relies upon the Participant's representation that the need cannot be relieved: (A) through reimbursement or compensation by insurance or otherwise, (B) by reasonable liquidation of the Participant's assets, to the extent such liquidation would not itself cause an immediate and heavy financial need, (C) by cessation of Before-Tax Contributions or Employee contributions, if any, under the Plan, or (D) by other distributions or nontaxable loans from plans maintained by the Employer or by any other employer, or by borrowing from commercial sources on reasonable commercial terms. For purposes of this subsection (c)(ii), the Participant's resources shall be deemed to include those assets of his Spouse and minor children that are reasonably available to the Participant. (iii) Alternatively, a Hardship distribution will be deemed to be necessary to satisfy an immediate and heavy financial need of a Participant if (A) or (B) are met: (A) all of the following requirements are satisfied: (I) the distribution is not in excess of (1) the amount of the immediate and heavy financial need of the Participant and (2) if elected by the Participant, an amount necessary to pay any federal, state or local income taxes or penalties reasonably anticipated to result from such distribution; -------------------------------------------------------------------------------- 36 CLIFTON SAVINGS BANK, S.L.A. ARTICLE VII -- PAYMENT OF BENEFITS -------------------------------------------------------------------------------- (II) the Participant has obtained all distributions, other than Hardship distributions, and all nontaxable loans currently available under all plans maintained by the Employer; (III) the Plan, and all other plans maintained by the Employer, provide that the Participant's elective contributions and Employee contributions, if any, will be suspended for at least twelve (12) months after receipt of the Hardship distribution; and (IV) the Plan, and all other plans maintained by the Employer, provide that the Participant may not make elective contributions for the Participant's taxable year immediately following the taxable year of the Hardship distribution in excess of the applicable limit under Section 402(g) of the Code for such next taxable year less the amount of such Participant's elective contributions for the taxable year of the Hardship distribution; or (B) the requirements set forth in additional methods, if any, prescribed by the Commissioner of Internal Revenue (through the publication of revenue rulings, notices and other documents of general applicability) are satisfied. (d) A Participant who has withdrawn the maximum amounts available to such Participant under Section 7.2 or a Participant who is not eligible for a withdrawal thereunder, may, in case of Hardship (as defined under this Section 7.3), apply not more often than once in any Plan Year to the Committee for a Hardship distribution. Any application for a Hardship distribution shall be made in writing to the Committee at least ten (10) days prior to the requested date of payment. Hardship distributions may be made by a distribution of all or a portion of a Participant's Before-Tax Contribution Account, exclusive of investment earnings. (e) Distributions under this Section 7.3 shall be made in the following order of priority: (i) by the redemption of Units from the Participant's Before-Tax Contribution Account on a pro rata basis, from among the Investment Accounts, thereunder, other than the Clifton Savings CD Fund, selected by the Participant pursuant to Article VI; and (ii) by the redemption of Units invested in the Clifton Savings CD Fund from the Participant's Before-Tax Contribution Account invested under the Separate Agreement, as selected by the Participant pursuant to Article VI. -------------------------------------------------------------------------------- 37 CLIFTON SAVINGS BANK, S.L.A. ARTICLE VII -- PAYMENT OF BENEFITS -------------------------------------------------------------------------------- (f) A Participant who receives a Hardship distribution under this Section 7.3 may have his Before-Tax Contributions suspended in accordance with Section 3.3. 7.4 DISTRIBUTION OF BENEFITS FOLLOWING RETIREMENT OR TERMINATION OF SERVICE (a) If an Employee incurs a Termination of Service for any reason other than death, a distribution of the vested interest in the Net Value of his Accounts shall be made to the Employee in accordance with the provisions of Section 7.5 or 7.6 or 7.8. The amount of such distribution shall be the vested interest in the Net Value of his Accounts as of the Valuation Date coincident with the date of receipt by the Trustees of the proper documentation acceptable to the Trustees for such purpose. (b) An election by an Employee to receive the vested interest in the Net Value of his Accounts in a form other than in the normal form of benefit payment set forth in Sections 7.5(a) and (b) and Sections 7.6(a) and (b) may not be revoked or amended by him after he terminates his employment. Notwithstanding the foregoing, an Employee who elected to receive payment of benefits as of a deferred Valuation Date may, by completing and filing the form prescribed by the Committee, change to another form of benefit payment. (c) An Employee who incurs a Termination of Service and is reemployed by the Employer prior to the distribution of all or part of the Net Value of his Accounts in accordance with the provisions of Section 7.5 or 7.6, shall not be eligible to receive or to continue to receive such distribution during his period of reemployment with the Employer. Upon such Employee's subsequent Termination of Service, his prior election to receive a distribution in a form other than the normal form of benefit payment shall be null and void and the Net Value of his Accounts shall be distributed to him in accordance with the provisions of Section 7.5 or 7.6 or 7.8. (d) An Employee's Net Value of his Accounts in the Clifton Savings CD Fund shall be distributed to the Participant by the Separate Agency as soon as administratively possible following the date the Employer is informed by the Trustees of the Participant's interest in such Accounts invested in the Clifton Savings CD Fund. The distribution shall be made in accordance with the terms and provisions of the Separate Agreement. 7.5 PAYMENTS UPON RETIREMENT OR DISABILITY (a) If an Employee incurs a Termination of Service as of his Normal Retirement Date or his Postponed Retirement Date or if an Employee incurs a Termination of Service due to Disability and the Net Value of his Accounts is less than or equal to three thousand five hundred dollars ($3,500) (and effective January 1, 1998, five thousand dollars ($5,000), a lump sum distribution of the Net Value of his Accounts shall be made to the Employee within seven (7) days of the Valuation Date coincident with the date of receipt by the Trustees of the proper -------------------------------------------------------------------------------- 38 CLIFTON SAVINGS BANK, S.L.A. ARTICLE VII -- PAYMENT OF BENEFITS -------------------------------------------------------------------------------- documentation indicating that the Employee incurred a Termination of Service as of such Retirement Date or date of Disability. (b) If an Employee incurs a Termination of Service as of his Normal Retirement Date, Postponed Retirement Date or if an Employee incurs a Termination of Service due to Disability and the Net Value of his Accounts exceeds three thousand five hundred dollars ($3,500) (and effective January 1, 1998, five thousand dollars ($5,000), a lump sum distribution of the vested interest in the Net Value of his Accounts shall be made to the Employee within seven (7) days of the Valuation Date coincident with the later of (i) the date the Employee attained Normal Retirement Date or Postponed Retirement Date or would have attained his Normal Retirement Date if he were still employed by the Employer, or (ii) the date of receipt by the Trustees of the proper documentation indicating such Retirement Date. (c) In lieu of the normal form of benefit payment set forth in subsection (b), an Employee who incurs a Termination of Service due to Disability and the Net Value of his Accounts exceeds three thousand five hundred dollars ($3,500) (and effective January 1, 1998, five thousand ($5,000), may file an election form to receive the vested interest in the Net Value of his Accounts as a lump sum distribution as of some other Valuation Date following his Termination of Service and prior to his Normal Retirement Date. The vested interest in the Net Value of his Accounts shall be distributed to such Employee as a lump sum distribution within seven (7) days of the Valuation Date coincident with the date of receipt by the Trustees of the proper documentation indicating the Employee's distribution date. (d) In lieu of the normal form of benefit payment set forth in subsection (b), an Employee who incurs a Termination of Service as of his Retirement Date or incurs a Termination of Service due to Disability may elect to defer receipt of the vested interest in the Net Value of his Accounts beyond his Normal Retirement Date or Postponed Retirement Date. The applicable form must be filed at least ten (10) days prior to the Employee's Retirement Date. If such an election is made, the vested interest in the Net Value of his Accounts shall continue to be held in the Trust Fund. Subject to the required minimum distribution provisions of Sections 7.9(b) and 7.9(c), the vested interest in the Net Value of his Accounts shall be distributed to such Employee as a lump sum distribution within seven (7) days of the Valuation Date coincident with the date of receipt by the Trustees of the proper documentation indicating the Employee's deferred distribution date. (e) In lieu of the normal form of benefit payment set forth in subsections (a) and (b), an Employee who incurs a Termination of Service as of his Retirement Date or incurs a Termination of Service due to Disability may, at least ten (10) days prior to the date on which his benefit is scheduled to be paid, file an election form that a lump sum distribution equal to the vested interest in the Net Value of his Accounts be paid in a Direct Rollover pursuant to Section 7.8. The amount of -------------------------------------------------------------------------------- 39 CLIFTON SAVINGS BANK, S.L.A. ARTICLE VII -- PAYMENT OF BENEFITS -------------------------------------------------------------------------------- such lump sum distribution shall be determined as of the Valuation Date coincident with the date of receipt by the Trustees of the proper documentation. 7.6 PAYMENTS UPON TERMINATION OF SERVICE FOR REASONS OTHER THAN RETIREMENT OR DISABILITY (a) If an Employee incurs a Termination of Service as of a date other than a Retirement Date or for reasons other than Disability, has not elected to receive his benefit pursuant to an optional form of benefit payment in accordance with the provisions of subsection (c) or (d) and the vested interest in the Net Value of the Employee's Accounts is equal to or less than three thousand five hundred dollars ($3,500) (and effective January 1, 1998, five thousand dollars ($5,000), a lump sum distribution of the vested interest in the Net Value of his Accounts shall be made to the Employee within seven (7) days of the Valuation Date coincident with the date of receipt by the Trustees of the proper documentation indicating that he incurred a Termination of Service. (b) If an Employee incurs a Termination of Service as of a date other than a Retirement Date or for reasons other than Disability, has not elected to receive his benefit pursuant to an optional form of benefit payment in accordance with the provisions of subsection (c) or (d) and the vested interest in the Net Value of the Employee's Accounts exceeds three thousand five hundred dollars ($3,500) (and effective January 1, 1998, five thousand dollars ($5,000), a lump sum distribution of the vested interest in the Net Value of his Accounts shall be made to the Employee within seven (7) days of the Valuation Date coincident with the later of (i) the date the Employee would have attained his Normal Retirement Date if he were still employed by the Employer or (ii) the date of receipt by the Trustees of the proper documentation indicating the Employee's attainment of Normal Retirement Date. (c) In lieu of the normal form of benefit payment set forth in subsection (b), an Employee who incurs a Termination of Service as of a date other than a Retirement Date or for reasons other than Disability, may file an election form to receive the vested interest in the Net Value of his Accounts as a lump sum distribution as of some other Valuation Date following his Termination of Service and prior to the date he would have attained his Normal Retirement Date. The vested interest in the Net Value of his Accounts shall be distributed to such Employee as a lump sum distribution as of some other Valuation Date following the date of receipt by the Trustees of the proper documentation indicating the Employee's distribution date. (d) In lieu of the normal form of benefit payment set forth in subsections (a) and (b), an Employee who incurs a Termination of Service as of a date other than his Retirement Date or for reasons other than Disability may, at least ten (10) days prior to the date on which his benefit is scheduled to be paid, file an election form that a lump sum distribution equal to the vested interest in the Net Value of his -------------------------------------------------------------------------------- 40 CLIFTON SAVINGS BANK, S.L.A. ARTICLE VII -- PAYMENT OF BENEFITS -------------------------------------------------------------------------------- Accounts be paid in a Direct Rollover pursuant to Section 7.8. The amount of such lump sum distribution shall be determined as of the Valuation Date coincident with the date of receipt by the Trustees of the proper documentation. (e) If an Employee incurs a Termination of Service as of a date other than a Retirement Date or for reasons other than Disability and has not elected to receive the vested interest in the Net Value of his Accounts pursuant to an optional form of benefit payment in accordance with subsection (c) or (d), the Employer shall notify the Trustees of such termination. 7.7 PAYMENTS UPON DEATH (a) In the case of a married Participant, the Spouse shall be the designated Beneficiary. Notwithstanding the foregoing, such Participant may effectively elect to designate a person or persons other than the Spouse as Beneficiary. Such an election shall not be effective unless (i) such Participant's Spouse irrevocably consents to such election in writing, (ii) such election designates a Beneficiary which may not be changed without spousal consent or the consent of the Spouse expressly permits designation by the Participant without any requirement of further consent by the Spouse, (iii) the Spouse's consent acknowledges understanding of the effect of such election and (iv) the consent is witnessed by a Plan representative or acknowledged before a notary public. Notwithstanding this consent requirement, if the Participant establishes to the satisfaction of the Plan representative that such written consent cannot be obtained because there is no Spouse or the Spouse cannot be located, the consent hereunder shall not be required. Any consent necessary under this provision shall be valid only with respect to the Spouse who signs the consent. (b) In the case of a single Participant, Beneficiary means a person or persons who have been designated under the Plan by such Participant or who are otherwise entitled to a benefit under the Plan. (c) The designation of a Beneficiary who is other than a Participant's Spouse and the designation of any contingent Beneficiary shall be made in writing by the Participant in the form and manner prescribed by the Committee and shall not be effective unless filed prior to the death of such person. If more than one person is designated as a Beneficiary or a contingent Beneficiary, each designated Beneficiary in such Beneficiary classification shall have an equal share unless the Participant directs otherwise. For purposes of this Section 7.7, "person" includes an individual, a trust, an estate, or any other person or entity designated as a Beneficiary. (d) A married Participant who has designated a person or persons other than the Spouse as Beneficiary may, without the consent of such Spouse, revoke such prior election by submitting written notification of such revocation. Such revocation shall result in the reinstatement of the Spouse as the designated Beneficiary unless -------------------------------------------------------------------------------- 41 CLIFTON SAVINGS BANK, S.L.A. ARTICLE VII -- PAYMENT OF BENEFITS -------------------------------------------------------------------------------- the Participant effectively designates another person as Beneficiary in accordance with the provisions of subsection (a). The number of election forms and revocations shall not be limited. (e) Upon the death of a Participant the remaining vested interest in the Net Value of his Accounts shall become payable, in accordance with the provisions of subsection (g), to his Beneficiary or contingent Beneficiary. If there is no such Beneficiary, the remaining vested interest in the Net Value of his Accounts shall be payable to the executor or administrator of his estate, or, if no such executor or administrator is appointed and qualifies within a time which the Committee shall, in its sole and absolute discretion, deem to be reasonable, then to such one or more of the descendants and blood relatives of such deceased Participant as the Committee, in its sole and absolute discretion, may select. (f) If a designated Beneficiary entitled to payments hereunder shall die after the death of the Participant but before the entire vested interest in the Net Value of Accounts of such Participant has been distributed, then the remaining vested interest in the Net Value of Accounts of such Participant shall be paid, in accordance with the provisions of subsection (g), to the surviving Beneficiary who is not a contingent Beneficiary, or, if there are no such surviving Beneficiaries then living, to the designated contingent Beneficiaries as shall be living at the time such payment is to be made. If there is no designated contingent Beneficiary then living, the remaining interest in the Net Value of his Accounts shall be paid to the executor or administrator of the estate of the last to die of the Beneficiaries who are not contingent Beneficiaries. (g) If a Participant dies before his entire vested interest in the Net Value of his Accounts has been distributed to him, the remainder of such vested interest shall be paid to his Beneficiary or, if applicable, his contingent Beneficiary, in a lump sum distribution as soon as practicable following the date of the Participant's death. Notwithstanding the foregoing, if, prior to the Participant's death the Participant had elected to receive a deferred lump sum distribution and had not yet received such distribution, such Beneficiary shall receive a lump sum distribution as of the earlier of: (A) the Valuation Date set forth in the Participant's election or (B) the last Valuation Date which occurs within one (1) year of the Participant's death. If the Beneficiary is the Participant's Spouse and if benefits are payable to such Beneficiary as an immediate or deferred lump sum distribution, such Spouse may defer the distribution up to the date on which the Participant would have attained age seventy and one-half (70-1/2). If such Spouse dies prior to such distribution, the prior sentence shall be applied as if the Spouse were the Participant. (h) Notwithstanding anything in the Plan to the contrary, the provisions of subsections (a) through (g) shall also apply to a person who is not a Participant but -------------------------------------------------------------------------------- 42 CLIFTON SAVINGS BANK, S.L.A. ARTICLE VII -- PAYMENT OF BENEFITS -------------------------------------------------------------------------------- who has made a contribution to and maintains a Rollover Contribution Account under the Plan. 7.8 DIRECT ROLLOVER OF ELIGIBLE ROLLOVER DISTRIBUTIONS For purposes of this Section 7.8, the following definitions shall apply: (a) "Direct Rollover" means a payment by the Plan to the Eligible Retirement Plan specified by the Distributee. (b) "Distributee" means an Employee or former Employee. In addition, the Employee's or former Employee's surviving spouse and the Employee's or former Employee's Spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Section 414(p) of the Code, are Distributees with regard to the interest of the Spouse or former spouse. (c) "Eligible Retirement Plan" means an individual retirement account described in Section 408(a) of the Code, an individual retirement annuity described in Section 408(b) of the Code, an annuity plan described in Section 403(a) of the Code, or a qualified trust described in Section 401(a) of the Code, that accepts the Distributee's Eligible Rollover Distribution. However, in the case of an Eligible Rollover Distribution to the surviving Spouse, an Eligible Retirement Plan is an individual retirement account or individual retirement annuity. (d) "Eligible Rollover Distribution" means any distribution of all or any portion of the balance to the credit of the Distributee, except that an Eligible Rollover Distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the Distributee or the joint lives (or joint life expectancies) of the Distributee and the Distributee's designated Beneficiary, or for a specified period of ten (10) years or more; any distribution to the extent such distribution is required under Section 401(a)(9) of the Code; the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities); and effective as of January 1, 2000, any hardship distribution described in Section 401(k)(2)(B)(i)(IV) of the Code. Notwithstanding any provision of the Plan to the contrary that would otherwise limit a Distributee's election under this Section 7.8, a Distributee may elect, at the time and in the manner prescribed by the Plan Administrator, to have any portion of an Eligible Rollover Distribution paid directly to an Eligible Retirement Plan specified by the Distributee in a Direct Rollover. 7.9 COMMENCEMENT OF BENEFITS (a) Unless the Employee elects otherwise in accordance with the Plan, in no event shall the payment of benefits commence later than the sixtieth (60th) day after the -------------------------------------------------------------------------------- 43 CLIFTON SAVINGS BANK, S.L.A. ARTICLE VII -- PAYMENT OF BENEFITS -------------------------------------------------------------------------------- close of the Plan Year in which the latest of the following events occur: (i) the attainment by the Employee of age sixty-five (65), (ii) the tenth (10th) anniversary of the year in which the Participant commenced participation in the Plan or Prior Plan, or (iii) the termination of the Employee's employment with the Employer; provided, however, that if the amount of the payment required to commence on the date determined under this sentence cannot be ascertained by such date, a payment retroactive to such date may be made no later than sixty (60) days after the earliest date on which the amount of such payment can be ascertained under the Plan. (b) Distributions to five-percent owners: The vested interest in the Net Value of the Accounts of a five-percent owner (as described in Section 416(i) of the Code and determined with respect to the Plan Year ending in the calendar year in which such individual attains age seventy and one-half (70-1/2)) must be distributed or commence to be distributed no later than the first day of April following the calendar year in which such individual attains age seventy and one-half (70-1/2). The vested interest in the Net Value of the Accounts of an Employee who is not a five-percent owner (as described in Section 416(i) of the Code) for the Plan Year ending in the calendar year in which such person attains age seventy and one-half (70-1/2) but who becomes a five-percent owner (as described in Section 416(i) of the Code) for a later Plan Year must be distributed or commence to be distributed no later than the first day of April following the last day of the calendar year that includes the last day of the first Plan Year for which such individual is a five-percent owner (as described in Section 416(i) of the Code). (c) Subject to Section 7.1(d), distributions to other than five-percent owners: The vested interest in the Net Value of the Accounts of an Employee who is not a five-percent owner and who attained age seventy and one-half (70-1/2) prior to January 1, 1988, must be distributed or commence to be distributed no later than the first day of April following the calendar year in which occurs the later of: (i) his termination of employment or (ii) his attainment of age seventy and one-half (70-1/2). Except as otherwise provided in the following paragraph, the vested interest in the Net Value of the Accounts of any Employee who attains age seventy and one-half (70-1/2) after December 31, 1987, must be distributed or commence to be distributed no later than the first day of April following the later of: (A) the 1989 calendar year or (B) the calendar year in which such individual attains age seventy and one-half (70-1/2). Effective January 1, 1997, an Employee otherwise required to receive a distribution under the preceding paragraph, may elect to defer distribution of the Net Value of his Accounts to the date of his termination of employment. -------------------------------------------------------------------------------- 44 CLIFTON SAVINGS BANK, S.L.A. ARTICLE VII -- PAYMENT OF BENEFITS -------------------------------------------------------------------------------- Notwithstanding the foregoing, the vested interest in the Net Value of the Accounts of (I) any Employee who becomes a Participant on or after January 1, 1997 or (II) any Employee who attains age seventy and one-half (70-1/2) on or after January 1, 1999, must be distributed or commence to be distributed no later than the first day of April following the calendar year in which occurs the later of: (1) his termination of employment or (2) his attainment of age seventy and one-half (70-1/2). -------------------------------------------------------------------------------- 45 CLIFTON SAVINGS BANK, S.L.A. ARTICLE VIII -- ADMINISTRATION -------------------------------------------------------------------------------- ARTICLE VIII -- ADMINISTRATION 8.1 GENERAL ADMINISTRATION OF THE PLAN The operation and administration of the Plan shall be subject to the management and control of the Named Fiduciaries and Plan Administrator designated by the Sponsoring Employer. The designation of such Named Fiduciaries and Plan Administrator, the terms of their appointment, and their duties and responsibilities allocated among them shall be as set forth in this Article VIII. Any actions taken hereunder shall be conclusive and binding on Participants, Retired Participants, Employees, Beneficiaries and other persons, and shall not be overturned unless found to be arbitrary and capricious by a court of competent jurisdiction. 8.2 DESIGNATION OF NAMED FIDUCIARIES The management and control of the operation and administration of the Plan shall be allocated in the following manner: (a) The Sponsoring Employer shall designate the Trustees as a Named Fiduciary to perform those functions set forth in the Agreement or the Plan that are assigned to the Trustees which are applicable to a Plan of Partial Participation. (b) The Sponsoring Employer shall designate the Separate Agency to perform those functions relating to the Separate Agency in the Plan or the Separate Agreement. (c) The Sponsoring Employer shall designate one or more individuals to serve as member(s) of an employee benefits Committee to perform those functions set forth in the Agreement, Separate Agreement or the Plan that are assigned to such Committee. (d) A Trust Participant (as defined under the Agreement) may delegate to a person or persons the duties and responsibilities for voting Units set forth under the Agreement and Separate Agreement. (e) The Sponsoring Employer shall designate the Separate Agency as a Named Fiduciary to perform those functions set forth in the Separate Agreement or the Plan that are assigned to the Separate Agency. 8.3 RESPONSIBILITIES OF FIDUCIARIES The Named Fiduciaries and Plan Administrator shall have only those powers, duties, responsibilities and obligations that are specifically allocated to them under the Plan, the Agreement or the Separate Agreement. -------------------------------------------------------------------------------- 46 CLIFTON SAVINGS BANK, S.L.A. ARTICLE VIII -- ADMINISTRATION -------------------------------------------------------------------------------- To the extent permitted by ERISA, each Named Fiduciary and Plan Administrator may rely upon any direction, information or action of another Named Fiduciary, Plan Administrator or the Sponsoring Employer as being proper under the Plan, the Agreement or the Separate Agreement and is not required to inquire into the propriety of any such direction, information or action and no Named Fiduciary or Plan Administrator shall be responsible for any act or failure to act of another Named Fiduciary, Plan Administrator or the Sponsoring Employer. No Named Fiduciary, Plan Administrator or the Employer guarantees the Trust Fund or Separate Assets in any manner against investment loss or depreciation in asset value. The allocation of responsibility between the Trustees and the Sponsoring Employer or between the Separate Agency and the Sponsoring Employer may be changed by written agreement. Such reallocation shall be evidenced by Employer Resolutions and shall not be deemed an amendment to the Plan. To the extent permitted by ERISA, the Trustees shall have no liability or responsibility with respect to the administration of any Separate Assets held outside the Trust except as specifically set forth in the Agreement. The authority and responsibility of the Trustees extend only to those Plan assets held in accordance with the Agreement. 8.4 PLAN ADMINISTRATOR The Sponsoring Employer shall designate the Trustees as the Trustee Administrator to perform those functions applicable to Plans of Partial Participation as set forth in the Agreement. The Sponsoring Employer shall also designate one or more persons to act as Plan Administrator and to perform those functions set forth in the Agreement, the Plan or the Separate Agreement that are assigned to the Plan Administrator. The duties and responsibilities of a plan administrator under ERISA shall be allocated between the Plan Administrator and the Trustee Administrator as set forth herein or in the Agreement. Such allocation may be changed only by written agreement between the parties and shall not be deemed an amendment to the Plan. The Plan Administrator shall be solely responsible for monitoring and notifying the Trustees of an Employee's age for all purposes under the Plan. The Plan Administrator is designated as the Plan's agent for the service of legal process. 8.5 COMMITTEE The members of the Committee designated by the Sponsoring Employer under Section 8.2(c) shall serve for such term(s) as the Sponsoring Employer shall determine and until their successors are designated and qualified. The term of any member of the Committee may be renewed from time to time without limitation as to the number of renewals. Any member of the Committee may (a) resign upon at least sixty (60) days written notice to the Sponsoring Employer or (b) be removed from office but only for his failure or -------------------------------------------------------------------------------- 47 CLIFTON SAVINGS BANK, S.L.A. ARTICLE VIII -- ADMINISTRATION -------------------------------------------------------------------------------- inability, in the opinion of the Sponsoring Employer, to carry out his responsibilities in an effective manner. Termination of employment with the Employer shall be deemed to give rise to such failure or inability. The powers and duties allocated to the Committee shall be vested jointly and severally in its members. Notwithstanding specific instructions to the contrary, any instrument or document signed on behalf of the Committee by any member of the Committee may be accepted and relied upon by the Trustees and the Separate Agency as the act of the Committee. The Trustees and the Separate Agency shall not be required to inquire into the propriety of any such action taken by the Committee nor shall they be held liable for any actions taken by them in reliance thereon. The Sponsoring Employer may, pursuant to Employer Resolutions and upon notice to the Trustees and the Separate Agency, change the number of individuals comprising the Committee, their terms of office or other conditions of their incumbency provided that there shall be at all times at least one individual member of the Committee. Any such change shall not be deemed an amendment to the Plan. 8.6 POWERS AND DUTIES OF THE COMMITTEE The Committee shall have authority to perform all acts it may deem necessary or appropriate in order to exercise the duties and powers imposed or granted by ERISA, the Plan, the Agreement, the Separate Agreement or any Employer Resolutions. Such duties and powers shall include, but not be limited to, the following: (a) POWER TO CONSTRUE - Except as otherwise provided in the Agreement, or the Separate Agreement the Committee shall have the power to construe the provisions of the Plan and to determine any questions of fact which may arise thereunder. (b) POWER TO MAKE RULES AND REGULATIONS - The Committee shall have the power to make such reasonable rules and regulations as it may deem necessary or appropriate to perform its duties and exercise its powers. Such rules and regulations shall include, but not be limited to, those governing (i) the manner in which the Committee shall act and manage its own affairs, (ii) the procedures to be followed in order for Employees or Beneficiaries to claim benefits, and (iii) the procedures to be followed by Participants, Beneficiaries or other persons entitled to benefits with respect to notifications, elections, designations or other actions required by the Plan or ERISA. All such rules and regulations shall be applied in a uniform and nondiscriminatory manner. (c) POWERS AND DUTIES WITH RESPECT TO INFORMATION - The Committee shall have the power and responsibility: (i) to obtain such information as shall be necessary for the proper discharge of its duties; -------------------------------------------------------------------------------- 48 CLIFTON SAVINGS BANK, S.L.A. ARTICLE VIII -- ADMINISTRATION -------------------------------------------------------------------------------- (ii) to furnish to the Employer, upon request, such reports as are reasonable and appropriate; (iii) to receive, review and retain periodic reports of the financial condition of the Plan Funds; and (iv) to receive, collect and transmit to the Trustees all information required by the Trustees in the administration of the Accounts of the Employee as contemplated in Section 8.7. (d) POWER OF DELEGATION - The Committee shall have the power to delegate fiduciary responsibilities (other than trustee responsibilities defined under Section 405(c)(3) of ERISA) to one or more persons who are not members of the Committee. Unless otherwise expressly indicated by the Sponsoring Employer, the Committee must reserve the right to terminate such delegation upon reasonable notice. (e) POWER OF ALLOCATION - Subject to the written approval of the Sponsoring Employer, the Committee shall have the power to allocate among its members specified fiduciary responsibilities (other than trustee responsibilities defined under Section 405(c)(3) of ERISA). Any such allocation shall be in writing and shall specify the persons to whom such allocation is made and the terms and conditions thereof. (f) DUTY TO REPORT - Any member of the Committee to whom specified fiduciary responsibilities have been allocated under subsection (e) shall report to the Committee at least annually. The Committee shall report to the Sponsoring Employer at least annually regarding the performance of its responsibilities as well as the performance of any persons to whom any powers and responsibilities have been further delegated. (g) POWER TO EMPLOY ADVISORS AND RETAIN SERVICES - The Committee may employ such legal counsel, enrolled actuaries, accountants, pension specialists, clerical help and other persons as it may deem necessary or desirable in order to fulfill its responsibilities under the Plan. 8.7 CERTIFICATION OF INFORMATION The Committee shall certify to the Trustees on such periodic or other basis as may be agreed upon, but in no event later than ten (10) days before any Valuation Date as of which the Trustees must effect any action with respect to any Accounts held under the provisions of the Plan, relevant facts regarding the establishment of the Accounts of an Employee, periodic contributions with respect to such Accounts, investment elections and modifications thereof and withdrawals and distributions therefrom. The Trustees shall be fully protected in maintaining individual Account records and in administering the Accounts of the Employee on the basis of such certifications and shall have no duty of -------------------------------------------------------------------------------- 49 CLIFTON SAVINGS BANK, S.L.A. ARTICLE VIII -- ADMINISTRATION -------------------------------------------------------------------------------- inquiry or otherwise with respect to any transactions or communications between the Committee and Employees relating to the information contained in such certifications. 8.8 AUTHORIZATION OF BENEFIT PAYMENTS The Committee shall forward to the Trustees and, if applicable, any Separate Agency, any application for payment of benefits within a reasonable time after it has approved such application. The Trustees and such Separate Agency may rely on any such information set forth in the approved application for the payment of benefits to the Participant, Beneficiary or any other person entitled to benefits. 8.9 PAYMENT OF BENEFITS TO LEGAL CUSTODIAN Whenever, in the Committee's opinion, a person entitled to receive any benefit payment is a minor or deemed to be physically, mentally or legally incompetent to receive such benefit, the Committee may direct the Trustees and Separate Agency to make payment for his benefit to such individual or institution having legal custody of such person or to his legal representative. Any benefit payment made in accordance with the provisions of this Section 8.9 shall operate as a valid and complete discharge of any liability for payment of such benefit under the provisions of the Plan. 8.10 SERVICE IN MORE THAN ONE FIDUCIARY CAPACITY Any person or group of persons may serve in more than one fiduciary capacity with respect to the Plan, regardless of whether any such person is an officer, employee, agent or other representative of a party in interest. 8.11 PAYMENT OF EXPENSES The Employer will pay the ordinary administrative expenses of the Plan and compensation of the Trustees to the extent required, except that any expenses directly related to the Trust Fund, such as transfer taxes, brokers' commissions, registration charges, or administrative expenses of the Trustees (including expenses of counsel retained by it in accordance with the Agreement), shall be paid from the Trust Fund or from such Investment Account to which such expenses directly relate. The Employer may, if determined by the Committee, charge Employees all or part of the reasonable expenses associated with withdrawals and other distributions. 8.12 ADMINISTRATION OF SEPARATE ASSETS The Committee and the Separate Agency shall be solely responsible for the administration of the Separate Assets. All contributions to and withdrawals or disbursements from the Separate Assets shall be made directly to or by the Separate Agency. -------------------------------------------------------------------------------- 50 CLIFTON SAVINGS BANK, S.L.A. ARTICLE VIII -- ADMINISTRATION -------------------------------------------------------------------------------- The Trustees may, as agreed upon with the Committee, provide such combined or coordinated Plan records and reports, which include the Separate Assets. The Trustees shall be fully protected in relying upon any information provided to them by the Committee or Separate Agency with respect to such Separate Assets. The inclusion of any information pertaining to Separate Assets in such combined or coordinated Plan records and reports shall not increase the responsibility or liability of the Trustees with respect to the Separate Assets. If Plan Funds may be transferred between the Separate Assets and the other Investment Accounts, the manner in which such transfers may be made must be agreed to in a written instrument entered into among the Committee, the Trustees and the Separate Agency. -------------------------------------------------------------------------------- 51 CLIFTON SAVINGS BANK, S.L.A. ARTICLE IX -- BENEFIT CLAIMS PROCEDURE -------------------------------------------------------------------------------- ARTICLE IX -- BENEFIT CLAIMS PROCEDURE 9.1 DEFINITION For purposes of this Article IX, "Claimant" shall mean any Participant, Beneficiary or any other person entitled to benefits under the Plan or his duly authorized representative. 9.2 CLAIMS A Claimant may file a written claim for a Plan benefit with the Plan Administrator on the appropriate form to be supplied by the Plan Administrator. The Plan Administrator shall, in its sole and absolute discretion, review the Claimant's application for benefits and determine the disposition of such claim. 9.3 DISPOSITION OF CLAIM The Plan Administrator shall notify the Claimant as to the disposition of the claim for benefits under this Plan within ninety (90) days after the appropriate form has been filed unless special circumstances require an extension of time for processing. If such an extension of time is required, the Plan Administrator shall furnish written notice of the extension to the Claimant prior to the termination of the initial ninety (90) day period. The extension notice shall indicate the special circumstances requiring the extension of time and the date the Plan Administrator expects to render a decision. In no event shall such extension exceed a period of one hundred-eighty (180) days from the receipt of the claim. 9.4 DENIAL OF CLAIM If a claim for benefits under this Plan is denied in whole or in part by the Plan Administrator, a notice written in a manner calculated to be understood by the Claimant shall be provided by the Plan Administrator to the Claimant and such notice shall include the following: (a) a statement that the claim for the benefits under this Plan has been denied; (b) the specific reasons for the denial of the claim for benefits, citing the specific provisions of the Plan which set forth the reason or reasons for the denial; (c) a description of any additional material or information necessary for the Claimant to perfect the claim for benefits under this Plan and an explanation of why such material or information is necessary; and (d) appropriate information as to the steps to be taken if the Claimant wishes to appeal such decision. -------------------------------------------------------------------------------- 52 CLIFTON SAVINGS BANK, S.L.A. ARTICLE IX -- BENEFIT CLAIMS PROCEDURE -------------------------------------------------------------------------------- 9.5 INACTION BY PLAN ADMINISTRATOR A claim for benefits shall be deemed to be denied if the Plan Administrator shall not take any action on such claim within ninety (90) days after receipt of the application for benefits by the Claimant or, if later, within the extended processing period established by the Plan Administrator by written notice to the Claimant, in accordance with Section 9.3. 9.6 RIGHT TO FULL AND FAIR REVIEW A Claimant who is denied, in whole or in part, a claim for benefits under the Plan may file an appeal of such denial. Such appeal must be made in writing by the Claimant or his duly authorized representative and must be filed with the Committee within sixty (60) days after receipt of the notification under Section 9.4 or the date his claim is deemed to be denied under Section 9.5. The Claimant or his representative may review pertinent documents and submit issues and comments in writing. 9.7 TIME OF REVIEW The Committee, independent of the Plan Administrator, shall conduct a full and fair review of the denial of claim for benefits under this Plan to a Claimant within sixty (60) days after receipt of the written request for review described in Section 9.6; provided, however, that an extension, not to exceed sixty (60) days, may apply in special circumstances. Written notice shall be furnished to the Claimant prior to the commencement of the extension period. 9.8 FINAL DECISION The Claimant shall be notified in writing of the final decision of such full and fair review by such Committee. Such decision shall be written in a manner calculated to be understood by the Claimant, shall state the specific reasons for the decision and shall include specific references to the pertinent Plan provisions upon which the decision is based. In no event shall the decision be furnished to the Claimant later than sixty (60) days after the receipt of a request for review, unless special circumstances require an extension of time for processing, in which case a decision shall be rendered within one hundred-twenty (120) days after receipt of such request for review. -------------------------------------------------------------------------------- 53 CLIFTON SAVINGS BANK, S.L.A. ARTICLE X -- AMENDMENT, TERMINATION, AND WITHDRAWAL -------------------------------------------------------------------------------- ARTICLE X -- AMENDMENT, TERMINATION, AND WITHDRAWAL 10.1 AMENDMENT AND TERMINATION The Employer expects to continue the Plan indefinitely, but specifically reserves the right, in its sole and absolute discretion, at any time, by appropriate action of the Board, to terminate its Plan or to amend (subject to the approval of the Trustees), in whole or in part, any or all of the provisions of the Plan. Subject to the provisions of Section 12.7, no such amendment or termination shall permit any part of the Plan Funds to be used for or diverted to purposes other than for exclusive benefit of Participants, Beneficiaries or other persons entitled to benefits, and no such amendment or termination shall reduce the interest of any Participant, Beneficiary or other person who may be entitled to benefits, without his consent. In the event of a termination or partial termination of the Plan, or upon complete discontinuance of contributions under the Plan, the Accounts of each affected Participant shall become fully vested and shall be distributable in accordance with the provisions of Article VII. In the event of a termination or partial termination of the Plan, or upon complete discontinuance of contributions under the Plan, the Accounts of each affected Participant shall become fully vested and shall be distributable in accordance with the provisions of Article VII. In the event of a complete termination of the Plan, the Accounts of each affected Participant shall become fully vested and may alternatively be distributable as a lump sum distribution within seven (7) days of the Valuation Date coincident with the date of receipt by the Trustees of the proper documentation indicating the Participant's distribution date. If any amendment changes the vesting schedule, any Participant who has three (3) or more Years of Eligibility Service may, by filing a written request with the Employer, elect to have his vested percentage computed under the vesting schedule in effect prior to the amendment. The period during which the Participant may elect to have his vested percentage computed under the prior vesting schedule shall commence with the date the amendment is adopted and shall end on the latest of: (a) sixty (60) days after the amendment is adopted; (b) sixty (60) days after the amendment becomes effective; or (c) sixty (60) days after the Participant is issued written notice of the amendment from the Employer. 10.2 WITHDRAWAL FROM THE TRUST FUND An Employer may withdraw its Plan from the Trust Fund in accordance with and subject to the provisions of the Trust Agreement. -------------------------------------------------------------------------------- 54 CLIFTON SAVINGS BANK, S.L.A. ARTICLE XI -- TOP-HEAVY PLAN PROVISIONS -------------------------------------------------------------------------------- ARTICLE XI -- TOP-HEAVY PLAN PROVISIONS 11.1 INTRODUCTION Any other provisions of the Plan to the contrary notwithstanding, the provisions contained in this Article XI shall be effective with respect to any Plan Year in which this Plan is a Top-Heavy Plan, as hereinafter defined. 11.2 DEFINITIONS For purposes of this Article XI, the following words and phrases shall have the meanings stated herein unless a different meaning is plainly required by the context. (a) "Account," for the purpose of determining the Top-Heavy Ratio, means the sum of (i) a Participant's Accounts as of the most recent Valuation Date and (ii) an adjustment for contributions due as of the Determination Date. (b) "Determination Date" means, with respect to any Plan Year, the last day of the preceding Plan Year. With respect to the first Plan Year, "Determination Date" means the last day of such Plan Year. (c) "Five-Percent Owner" means, if the Employer is a corporation, any Employee who owns (or is considered as owning within the meaning of Section 318 of the Code modified by Section 416(i)(1)(B)(iii) of the Code) more than five percent (5%) of the value of the outstanding stock of, or more than five percent (5%) of the total combined voting power of all the stock of, the Employer. If the Employer is not a corporation, a Five-Percent Owner means any Employee who owns more than five percent (5%) of the capital or profits interest in the Employer. (d) "Key Employee" means any Employee or former Employee (or, where applicable, such person's Beneficiary) in the Plan who, at any time during the Plan Year containing the Determination Date or any of the preceding four (4) Plan Years, is: (i) an Officer having Top-Heavy Earnings from the Employer of greater than fifty percent (50%) of the dollar limitation in effect under Section 415(b)(1)(A) of the Code; (ii) one of the ten (10) Employees having Top-Heavy Earnings from the Employer of more than the dollar limitation in effect under Section 415(c)(1)(A) of the Code and owning (or considered as owning within the meaning of Section 318 of the Code modified by Section 416(i)(1)(B)(iii) of the Code) both more than a one-half of one percent (1/2%) interest in value and the largest interests in the value of the Employer; (iii) a Five-Percent Owner of the Employer; or (iv) a One-Percent Owner of the Employer having Top-Heavy Earnings from the Employer greater than one hundred fifty thousand ($150,000). For purposes of computing the Top-Heavy Earnings in subsections (d)(i), (d)(ii) and (d)(iv), the aggregation rules of Sections 414(b), (c), (m) and (o) of the Code shall apply. -------------------------------------------------------------------------------- 55 CLIFTON SAVINGS BANK, S.L.A. ARTICLE XI -- TOP-HEAVY PLAN PROVISIONS -------------------------------------------------------------------------------- (e) "Non-Key Employee" means an Employee or former Employee (or, where applicable, such person's Beneficiary) who is not a Key Employee. (f) "Officer" means an Employee who is an administrative executive in the regular and continued service of his Employer; any Employee who has the title but not the authority of an officer shall not be considered an Officer for purposes of this Article XI. Similarly, an Employee who does not have the title of an officer but has the authority of an officer shall be considered an Officer. For purposes of this Article XI, the maximum number of Officers that must be taken into consideration shall be determined as follows: (i) three (3), if the number of Employees is less than thirty (30); (ii) ten percent (10%) of the number of Employees, if the number of Employees is between thirty (30) and five hundred (500); or (iii) fifty (50), if the number of Employees is greater than five hundred (500). In determining such limit, the term "Employer" shall be determined in accordance with Sections 414(b), (c), (m) and (o) of the Code and "Employee" shall include Leased Employees and exclude employees described in Section 414(q)(5) of the Code. (g) "One-Percent Owner" means, if the Employer is a corporation, any Employee who owns (or is considered as owning within the meaning of Section 318 of the Code modified by Section 416(i)(1)(B)(iii) of the Code) more than one percent (1%) of the value of the outstanding stock of, or more than one percent (1%) of the total combined voting power of all the stock of, the Employer. If the Employer is not a corporation, a One-Percent Owner means any Employee who owns more than one percent (1%) of the capital or profits interest in the Employer. (h) A "Permissive Aggregation Group" consists of one or more plans of the Employer that are part of a Required Aggregation Group, plus one or more plans that are not part of a Required Aggregation Group but that satisfy the requirements of Sections 401(a)(4) and 410 of the Code when considered together with the Required Aggregation Group. If two (2) or more defined benefit plans are included in the aggregation group, the same actuarial assumptions must be used with respect to all such plans in determining the Present Value of Accrued Benefits. (i) "Present Value of Accrued Benefits" shall be determined in accordance with the actuarial assumptions set forth in the defined benefit plan and the assumed benefit commencement date shall be determined taking into account any nonproportional subsidy. The accrued benefit of any Employee shall be determined under the method used for accrual purposes for all plans of the Employer, or if no such method is described, as if such benefit accrued not more rapidly than the slowest accrual rate permitted under Section 411(b)(1)(C) of the Code. (j) "Related Rollover Contributions" means rollover contributions received by the Plan that are not initiated by the Employee nor made from another plan maintained by the Employer. -------------------------------------------------------------------------------- 56 CLIFTON SAVINGS BANK, S.L.A. ARTICLE XI -- TOP-HEAVY PLAN PROVISIONS -------------------------------------------------------------------------------- (k) A "Required Aggregation Group" consists of each plan of the Employer (whether or not terminated) in which a Key Employee participates or participated at any time during the Plan Year containing the Determination Date or any of the four (4) preceding Plan Years and each other plan of the Employer (whether or not terminated) which enables any plan in which a Key Employee participates or participated to meet the requirements of Section 401(a)(4) or 410 of the Code. If two (2) or more defined benefit plans are included in the aggregation group, the same actuarial assumptions must be used with respect to all such plans in determining the Present Value of Accrued Benefits. (l) A "Super Top-Heavy Plan" means a Plan in which, for any Plan Year: (i) the Top-Heavy Ratio (as defined under subsection (o)) for the Plan exceeds ninety percent (90%) and the Plan is not part of any Required Aggregation Group (as defined under subsection (k)) or Permissive Aggregation Group (as defined under subsection (h)); or (ii) the Plan is a part of a Required Aggregation Group (but is not part of a Permissive Aggregation Group) and the Top-Heavy Ratio for the group of plans exceeds ninety percent (90%); or (iii) the Plan is a part of a Required Aggregation Group and part of a Permissive Aggregation Group and the Top-Heavy Ratio for the Permissive Aggregation Group exceeds ninety percent (90%). (m) "Top-Heavy Earnings" means, for any year, compensation as defined under Section 414(q)(4) of the Code, up to a maximum of one hundred sixty dollars ($160,000) for the 1997, 1998 and 1999 Plan Years and one hundred seventy thousand dollars ($170,000) for the 2000 and 2001 Plan Years, adjusted in multiples of ten thousand dollars ($10,000) for increases in the cost-of-living, as prescribed by the Secretary of the Treasury under Section 401(a)(17)(B) of the Code. (n) A "Top-Heavy Plan" means a Plan in which, for any Plan Year: (i) the Top-Heavy Ratio (as defined under subsection (o)) for the Plan exceeds sixty percent (60%) and the Plan is not part of any Required Aggregation Group (as defined under subsection (k)) or Permissive Aggregation Group (as defined under subsection (h)); or (ii) the Plan is a part of a Required Aggregation Group but is not part of a Permissive Aggregation Group and the Top-Heavy Ratio for the group of plans exceeds sixty percent (60%); or (iii) the Plan is a part of a Required Aggregation Group and part of a Permissive Aggregation Group and the Top-Heavy Ratio for the Permissive Aggregation Group exceeds sixty percent (60%). -------------------------------------------------------------------------------- 57 CLIFTON SAVINGS BANK, S.L.A. ARTICLE XI -- TOP-HEAVY PLAN PROVISIONS -------------------------------------------------------------------------------- (o) "Top-Heavy Ratio" means: (i) if the Employer maintains one or more qualified defined contribution plans and the Employer has not maintained any qualified defined benefit plans which during the five (5) year period ending on the Determination Date have or have had accrued benefits, the Top-Heavy Ratio for the Plan alone or for the Required Aggregation Group or Permissive Aggregation Group, as appropriate, is a fraction, the numerator of which is the sum of the Account balances under the aggregated defined contribution plan or plans for all Key Employees as of the Determination Date, including any part of any Account balance distributed in the five (5) year period ending on the Determination Date but excluding distributions attributable to Related Rollover Contributions, if any, and the denominator of which is the sum of all Account balances under the aggregated qualified defined contribution plan or plans for all Participants as of the Determination Date, including any part of any Account balance distributed in the five (5) year period ending on the Determination Date but excluding distributions attributable to Related Rollover Contributions, if any, determined in accordance with Section 416 of the Code and the regulations thereunder. (ii) if the Employer maintains one or more qualified defined contribution plans and the Employer maintains or has maintained one or more qualified defined benefit plans which during the five (5) year period ending on the Determination Date have or have had any accrued benefits, the Top-Heavy Ratio for any Required Aggregation Group or Permissive Aggregation Group, as appropriate, is a fraction, the numerator of which is the sum of the Account balances under the aggregated qualified defined contribution plan or plans for all Key Employees, determined in accordance with (i) above, and the sum of the Present Value of Accrued Benefits under the aggregated qualified defined benefit plan or plans for all Key Employees as of the Determination Date, and the denominator of which is the sum of the Account balances under the aggregated qualified defined contribution plan or plans determined in accordance with (i) above, for all Participants and the sum of the Present Value of Accrued Benefits under the aggregated qualified defined benefit plan or plans for all Participants as of the Determination Date, all determined in accordance with Section 416 of the Code and the regulations thereunder. The accrued benefits under a qualified defined benefit plan in both the numerator and denominator of the Top-Heavy Ratio are adjusted for any distribution of an accrued benefit made in the five (5) year period ending on the Determination Date. (iii) For purposes of (i) and (ii) above, the value of Account balances and the Present Value of Accrued Benefits will be determined as of the most recent Valuation Date that falls within the twelve (12) month period ending on the Determination Date, except as provided in Section 416 of the Code and the regulations thereunder for the first and second Plan Years -------------------------------------------------------------------------------- 58 CLIFTON SAVINGS BANK, S.L.A. ARTICLE XI -- TOP-HEAVY PLAN PROVISIONS -------------------------------------------------------------------------------- of a qualified defined benefit plan. The Account balances and Present Value of Accrued Benefits of a Participant (A) who is a Non-Key Employee but who was a Key Employee in a prior year, or (B) who has not been credited with at least an Hour of Service with any employer maintaining the Plan at any time during the five (5) year period ending on the Determination Date will be disregarded. The calculation of the Top-Heavy Ratio, and the extent to which distributions, rollovers, and transfers are taken into account will be made in accordance with Section 416 of the Code and the regulations thereunder. When aggregating plans, the value of Account balances and the Present Value of Accrued Benefits will be calculated with reference to the Determination Date that falls within the same calendar year. (p) "Valuation Date", for the purpose of computing the Top-Heavy Ratio (as defined under subsection (o)) under subsections (1) and (n) means the last date of the Plan Year. For purposes of subsections (h), (j) and (k), the rules of Sections 414(b), (c), (m) and (o) of the Code shall be applied in determining the meaning of the term "Employer". 11.3 MINIMUM CONTRIBUTIONS If the Plan becomes a Top-Heavy Plan, then any provision of Article III to the contrary notwithstanding, the following provisions shall apply: (a) Subject to subsection (b), the Employer shall contribute on behalf of each Participant who is employed by the Employer on the last day of the Plan Year and who is a Non-Key Employee an amount with respect to each Top-Heavy year which, when added to the amount of Special Contributions, Discretionary Employer Contributions and Forfeitures made on behalf of such Participant, shall not be less than the lesser of: (i) three percent (3%) of such Participant's Section 415 Compensation (as defined under Section 3.12 (a)(vii) of the Plan and modified by Section 401(a)(17) of the Code), or (ii) if the Employer has no defined benefit plan which is designated to satisfy Section 416 of the Code, the largest of the total of each Key Employee's Matching Contributions, Special Contributions, Discretionary Employer Contributions and Forfeitures, as a percentage of each such Key Employees' Top-Heavy Earnings; provided, however, that in no event shall any contributions be made under this Section 11.3 in an amount which will cause the percentage of contributions made by the Employer on behalf of any Participant who is a Non-Key Employee to exceed the percentage at which contributions are made by the Employer on behalf of the Key Employee for whom the percentage of the total of Matching Contributions, Before-Tax Contributions, Special Contributions, Discretionary Employer Contributions and Forfeitures, is highest in such Top-Heavy year. Any such contribution shall be allocated to the Matching Contribution Account of each such Participant and, for purposes of vesting and withdrawals only, shall be deemed to -------------------------------------------------------------------------------- 59 CLIFTON SAVINGS BANK, S.L.A. ARTICLE XI -- TOP-HEAVY PLAN PROVISIONS -------------------------------------------------------------------------------- be a Matching Contribution. Any such contribution shall not be deemed to be a Matching Contribution for any other purpose. (b) Notwithstanding the foregoing, this Section 11.3 shall not apply to any Participant to the extent that such Participant is covered under any other plan or plans of the Employer (determined in accordance with Sections 414(b), (c), (m) and (o) of the Code) and such other plan provides that the minimum allocation or benefit requirement will be met by such other plan should this Plan become Top-Heavy. If such other plan does not provide for a minimum allocation or benefit requirement, a minimum of five percent (5%) of a Participant's Section 415 Compensation, as defined in Section 11.3(a) above, shall be provided under this Plan. (c) For purposes of this Article XI, the following shall be considered as a contribution made by the Employer: (i) Qualified Nonelective Contributions; (ii) Matching Contributions made by the Employer on behalf of Key Employees; (iii) Before-Tax Contributions made by the Employer on behalf of Key Employees; and (iv) Discretionary Employer Contributions made by the Employer on behalf of Key Employees and Non-Key Employees. (d) Subject to the provisions of subsection (b), all Non-Key Employee Participants who are employed by the Employer on the last day of the Plan Year shall receive the defined contribution minimum provided under subsection (a). A Non-Key Employee may not fail to accrue a defined contribution minimum merely because such Employee was excluded from participation or failed to accrue a benefit because (i) his Compensation is less than a stated amount, or (ii) he failed to make Before-Tax Contributions or (iii) he completed less than one thousand (1,000) Hours of Service. 11.4 IMPACT ON SECTION 415 MAXIMUM BENEFITS For any Plan Year commencing prior to January 1, 2000, in which the Plan is a Super Top-Heavy Plan, Sections 3.12(a)(iv) and (v) shall be read by substituting the number 1.0 for the number 1.25 wherever it appears therein. For any Plan Year in which the Plan is a Top-Heavy Plan but not a Super Top-Heavy Plan, the Plan shall be treated as a Super Top-Heavy Plan under this Section 11.4, unless each Non-Key Employee who is entitled to a minimum contribution or benefit receives an additional minimum contribution or benefit. If the Non-Key Employee is entitled to a minimum contribution under Section 11.3(a), the Plan shall not be treated as a Super -------------------------------------------------------------------------------- 60 CLIFTON SAVINGS BANK, S.L.A. ARTICLE XI -- TOP-HEAVY PLAN PROVISIONS -------------------------------------------------------------------------------- Top-Heavy Plan under this Section 11.4 if the minimum contribution satisfies Section 11.3(a) when four percent (4%) is substituted for three percent (3%) in Section 11.3(a)(i). If the Non-Key Employee is entitled to a minimum contribution under Section 11.3(b), the Plan shall not be treated as a Super Top-Heavy Plan under this Section 11.4, if the minimum contribution satisfies Section 11.3(b) when seven and one-half percent (7-1/2%) is substituted for five percent (5%). 11.5 VESTING For those Plan Years in which the Plan is a Top-Heavy Plan, the vesting schedule shall be determined in accordance with the provisions of Section 4. -------------------------------------------------------------------------------- 61 CLIFTON SAVINGS BANK, S.L.A. ARTICLE XII -- MISCELLANEOUS PROVISIONS -------------------------------------------------------------------------------- ARTICLE XII -- MISCELLANEOUS PROVISIONS 12.1 NO RIGHT TO CONTINUED EMPLOYMENT Neither the establishment of the Plan, nor any provisions of the Plan or of the Agreement establishing the Trust or of any Separate Agreement nor any action of any Named Fiduciary, Plan Administrator or the Employer, shall be held or construed to confer upon any Employee any right to a continuation of his employment by the Employer. The Employer reserves the right to dismiss any Employee or otherwise deal with any Employee to the same extent and in the same manner that it would if the Plan had not been adopted. 12.2 MERGER, CONSOLIDATION, OR TRANSFER The Plan shall not be merged or consolidated with, nor transfer its assets or liabilities to, any other plan unless each Employee, Participant, Beneficiary and other person entitled to benefits under the Plan, would (if such other plan then terminated) receive a benefit immediately after the merger, consolidation or transfer which is equal to or greater than the benefit he would have been entitled to receive if the Plan had terminated immediately before the merger, consolidation or transfer. 12.3 NONALIENATION OF BENEFITS Except, effective August 5, 1997, to the extent of any offset of a Participant's benefits as a result of any judgment, order, decree or settlement agreement provided in Section 401(a)(13)(C) of the Code, benefits payable under the Plan shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution, or levy of any kind, either voluntary or involuntary and any attempt to so anticipate, alienate, sell, transfer, assign, pledge, encumber, charge, garnish, execute, levy or otherwise affect any right to benefits payable hereunder, shall be void. Notwithstanding the foregoing, the Plan shall permit the payment of benefits in accordance with a qualified domestic relations order as defined under Section 414(p) of the Code. 12.4 MISSING PAYEE Any other provision in the Plan or Agreement to the contrary notwithstanding, if the Trustees and, if appropriate, any Separate Agency are unable to make payment to any Employee, Participant, Beneficiary or other person to whom a payment is due ("Payee") under the Plan because the identity or whereabouts of such Payee cannot be ascertained after reasonable efforts have been made to identify or locate such person (including mailing a certified notice of the payment due to the last known address of such Payee as shown on the records of the Employer), such payment and all subsequent payments otherwise due to such Payee shall be forfeited twenty-four (24) months after the date such -------------------------------------------------------------------------------- 62 CLIFTON SAVINGS BANK, S.L.A. ARTICLE XII -- MISCELLANEOUS PROVISIONS -------------------------------------------------------------------------------- payment first became due. However, such payment and any subsequent payments shall be reinstated retroactively, without interest, no later than sixty (60) days after the date on which the Payee is identified and located. 12.5 AFFILIATED EMPLOYERS All employees of all Affiliated Employers shall, for purposes of the limitations in Article XI and for measuring Hours of Service, be treated as employed by a single employer. No employee of an Affiliated Employer shall become a Participant of this Plan unless employed by the Employer or an Affiliated Employer which has adopted the Plan. 12.6 SUCCESSOR EMPLOYER In the event of the dissolution, merger, consolidation or reorganization of the Employer, the successor organization may, upon satisfying the provisions of the Agreement and the Plan, adopt and continue this Plan. Upon adoption, the successor organization shall be deemed the Employer with all its powers, duties and responsibilities and shall assume all Plan liabilities. 12.7 RETURN OF EMPLOYER CONTRIBUTIONS Any other provision of the Plan, Separate Agreement or Agreement to the contrary notwithstanding, upon the Employer's request and with the consent of the Trustees and, if appropriate, any Separate Agency, a contribution to the Plan by the Employer which was (a) made by mistake of fact, or (b) conditioned upon initial qualification of the Plan with the Internal Revenue Service, or (c) conditioned upon the deductibility by the Employer of such contributions under Section 404 of the Code, shall be returned to the Employer within one (1) year after: (i) the payment of a contribution made by mistake of fact, or (ii) the denial of such qualification or (iii) the disallowance of the deduction (to the extent disallowed), as the case may be. Any such return shall not exceed the lesser of (A) the amount of such contributions (or, if applicable, the amount of such contribution with respect to which a deduction is denied or disallowed) or (B) the amount of such contributions net of a proportionate share of losses incurred by the Plan during the period commencing on the Valuation Date as of which such contributions are made and ending on the Valuation Date as of which such contributions are returned. All such refunds shall be limited in amount, circumstances and timing to the provisions of Section 403(c) of ERISA. 12.8 ADOPTION OF PLAN BY AFFILIATED EMPLOYER An Affiliated Employer of the Sponsoring Employer may adopt the Plan and Agreement upon satisfying the requirements set forth in the Agreement. Upon such adoption, such Affiliated Employer shall become a Participating Affiliate in the Plan, which Plan shall be deemed a "single plan" within the meaning of Income Tax Regulations Section 1.414(1)-1(b)(1). -------------------------------------------------------------------------------- 63 CLIFTON SAVINGS BANK, S.L.A. ARTICLE XII -- MISCELLANEOUS PROVISIONS -------------------------------------------------------------------------------- For purposes of Article VIII, Employer shall mean only the Sponsoring Employer and each Participating Affiliate shall be deemed to accept and designate the Named Fiduciaries, Committee, Plan Administrator, Trustee Administrator and voter of Units designated by the Sponsoring Employer to act on its behalf in accordance with the provisions of the Plan and Agreement. The Sponsoring Employer shall solely exercise for and on behalf of such Participating Affiliate the powers reserved to the Employer under Articles VIII and X. However, such Participating Affiliate may at anytime terminate its future participation in the Plan for the purposes and in the manner set forth in the Agreement. 12.9 CONSTRUCTION OF LANGUAGE Wherever appropriate in the Plan, words used in the singular may be read in the plural; words used in the plural may be read in the singular; and words importing the masculine gender shall be deemed equally to refer to the female gender. Any reference to a section number shall refer to a section of this Plan, unless otherwise indicated. 12.10 HEADINGS The headings of articles and sections are included solely for convenience of reference, and if there be any conflict between such headings and the text of the Plan, the text shall control. 12.11 GOVERNING LAW The Plan shall be governed by and construed and enforced in accordance with the laws of the State of New York, except to the extent that such laws are preempted by the Federal laws of the United States of America. IN WITNESS WHEREOF, pursuant to resolutions of the Board of Directors of Clifton Savings Bank, S.L.A duly adopted on March 24, 1999, and the authorization contained therein, the Plan, as herein revised to include changes required by the Internal Revenue Service and conforming technical and administrative revisions, is hereby executed. CLIFTON SAVINGS BANK, S.L.A. /Sgd/: By:Walter Celuch Title:President & CEO Date: January 9, 2002 -------------------------------------------------------------------------------- 64 CLIFTON SAVINGS BANK, S.L.A. [CLIFTON SAVINGS BANK, S.L.A. LETTERHEAD] AMENDMENT NUMBER ONE TO CLIFTON SAVINGS BANK, S.L.A. 401(k) SAVINS PLAN IN RSI RETIREMENT TRUST ----------------------- Pursuant to section 10.1 of Clifton Savings Bank, S.L.A. 401(k) Savings Plan in RSI Retirement Trust As Amended and Restated Effective January 1, 1999, Including Provisions Effective Retroactive to January 1, 1997, and through January 1, 2001 ("Plan"), the Plan is amended, effective as of January 1, 2002: 1. ARTICLE II - Section 2.1(b)(ii) shall be amended in its entirety to read as follows: (ii) Prior to January 1, 2002, attainment of age eighteen (18) and commencing on and after January 1, 2002, attainment of age twenty-one (21). 2. ARTICLE III - Section 3.1 shall be amended by adding the following as the third sentence thereof and the former third sentence shall follow accordingly: Commencing January 1, 2002, subject to the limitations set forth in Sections 3.2 and 3.12, the amount of reduction authorized by the Eligible Employee shall be limited to whole or fractional percentages of Compensation and shall not be less than one percent (1%) nor greater than twenty five percent (25%).