401(K) Savings Plan

ATLANTIC LIBERTY SAVINGS, F.A. ================================================================================
401(k) Savings Plan


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(As Amended and Restated Effective December 1, 1999,
Including Provisions Effective Retroactive to January 1,
1997, and through January 1, 2001) ================================================================================ ================================================================================


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Table Of Contents


Table Of Contents .................................................i


Introduction .................................................1


Article I-- Definitions .................................................3


Article II-- Eligibility and Participation................................14
2.1 Eligibility..............................................14
2.2 Ineligible Employees.....................................14
2.3 Participation............................................14
2.4 Termination of Participation.............................15
2.5 Eligibility upon Reemployment............................15


Article III-- Contributions and Limitations on Contributions..............17
3.1 Before-Tax Contributions.................................17
3.2 Limitation on Before-Tax Contributions...................17
3.3 Changes in Before-Tax Contributions......................20
3.4 Matching Contributions...................................21
3.5 Special Contributions....................................21
3.6 Limitation on Matching Contributions.....................22
3.7 Aggregate Limit; Multiple Use of Alternative
Limitation.............................................23
3.8 Discretionary Employer Contributions.....................25
3.9 Interest on Excess Contributions.........................25
3.10 Payment of Contributions.................................26
3.11 Rollover Contributions...................................27
3.12 Section 415 Limits on Contributions......................27


Article IV-- Vesting and Forfeitures......................................32
4.1 Vesting..................................................32
4.2 Forfeitures..............................................33
4.3 Vesting upon Reemployment................................34


Article V-- Trust Fund and Investment Accounts...........................35
5.1 Trust Fund...............................................35
5.2 Interim Investments......................................35
5.3 Account Values...........................................35


Article VI-- Investment Directions, Changes of Investment Directions
and Transfers Between Investment Accounts..................37
6.1 Investment Directions....................................37
6.2 Change of Investment Directions..........................37
6.3 Transfers Between Investment Accounts....................37
6.4 Employees Other than Participants........................37


Article VII-- Payment of Benefits.........................................39
7.1 General..................................................39
7.2 Non-Hardship Withdrawals.................................39


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7.3 Hardship Distributions...................................40
7.4 Distribution of Benefits Following Retirement Or
Termination of Service.................................43
7.5 Payments upon Retirement or Disability...................43
7.6 Payments upon Termination of Service for Reasons
Other Than
Retirement or Disability.................................45
7.7 Payments Upon Death......................................46
7.8 Direct Rollover of Eligible Rollover Distributions.......48
7.9 Commencement of Benefits.................................49


Article VIII-- Loans to Participants......................................52
8.1 Definitions and Conditions...............................52
8.2 Loan Amount..............................................52
8.3 Term of Loan.............................................52
8.4 Operational Provisions...................................53
8.5 Repayments...............................................54
8.6 Default..................................................55
8.7 Coordination of Outstanding Account and Payment
of Benefits............................................55


Article IX-- Administration...............................................57
9.1 General Administration of the Plan.......................57
9.2 Designation of Named Fiduciaries.........................57
9.3 Responsibilities of Fiduciaries..........................57
9.4 Plan Administrator.......................................58
9.5 Committee................................................58
9.6 Powers and Duties of the Committee.......................59
9.7 Certification of Information.............................60
9.8 Authorization of Benefit Payments........................60
9.9 Payment of Benefits to Legal Custodian...................60
9.10 Service in More Than One Fiduciary Capacity..............61
9.11 Payment of Expenses......................................61


Article X-- Benefit Claims Procedure......................................62
10.1 Definition...............................................62
10.2 Claims...................................................62
10.3 Disposition of Claim.....................................62
10.4 Denial of Claim..........................................62
10.5 Inaction by Plan Administrator...........................63
10.6 Right to Full and Fair Review............................63
10.7 Time of Review...........................................63
10.8 Final Decision...........................................63


Article XI-- Amendment, Termination, and Withdrawal.......................64
11.1 Amendment and Termination................................64
11.2 Withdrawal from the Trust Fund...........................64


Article XII-- Top-Heavy Plan Provisions...................................65
12.1 Introduction.............................................65


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12.2 Definitions..............................................65
12.3 Minimum Contributions....................................69
12.4 Impact on Section 415 Maximum Benefits...................71
12.5 Vesting..................................................71


Article XIII-- Miscellaneous Provisions...................................72
13.1 No Right to Continued Employment.........................72
13.2 Merger, Consolidation, or Transfer.......................72
13.3 Nonalienation of Benefits................................72
13.4 Missing Payee............................................72
13.5 Affiliated Employers.....................................73
13.6 Successor Employer.......................................73
13.7 Return of Employer Contributions.........................73
13.8 Adoption of Plan by Affiliated Employer..................73
13.9 Construction of Language.................................74
13.10 Headings.................................................74
13.11 Governing Law............................................74


Introduction


Effective as of January 1, 1986, Atlantic Liberty Savings F.A.("Employer") adopted the Atlantic Liberty Savings, F.A. Salary Reduction Plan ("Prior Plan").


Effective as of December 1, 1999, the Employer adopted resolutions wherein RSGroup Trust Company ("RTC") was named successor trustee and the Trust Agreement between the Employer and RTC ("Trust Agreement") was adopted.


Effective as of December 1, 1999, the Prior Plan is amended and restated in its entirety. The amended and restated plan shall be known as Atlantic Liberty Savings F.A. 401(k) Savings Plan ("Plan"), shall contain the terms and conditions set forth herein, and shall in all respects be subject to the provisions of the Trust 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 December 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 December 1, 1999. Except to the extent specifically required to the contrary under the terms of this Plan, for terminations of employment prior to December 1, 1999, the rights and benefits of a former participant shall be determined in accordance with the provisions of the 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 Trust Agreement shall be tax-exempt under Section 501(a) of the Code, and (c) Employer contributions under the Plan shall be tax deductible under Section 404 of the Code. The provisions of the Plan and the Trust Agreement shall be construed to effectuate such intentions.


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Effective January 1, 2001, the Plan is amended to meet the requirements for a designed-based "safe harbor" arrangement under Sections 401(k)(12) and 401(m)(11) of the Code.


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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, prior to January 1, 2001, 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 Plan Year,
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. With respect to Plan Years
commencing prior to January 1, 1997, in determining compensation, the
rules of Section 414(q)(6) of the Code applied except that the term
"family" included only the Spouse and those lineal descendants of the
Employee who had not attained age nineteen (19) before the close of the
Plan Year.


1.3 Actual Deferral Percentage means, prior to January 1, 2001, 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 Plan Year, 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. With respect to Plan Years
commencing prior to January 1, 1997, in determining compensation, the
rules of Section 414(q)(6) of the Code applied except that the term
"family" included only the Spouse and those lineal descendants of the
Employee who had not attained age nineteen (19) before the close of the
Plan Year.


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


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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.


1.5 Affiliated Service means employment with an employer during the period
that such employer is an Affiliated Employer.


1.6 Average Actual Contribution Percentage means, prior to January 1, 2001,
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.


1.7 Average Actual Deferral Percentage means, prior to January 1, 2001, 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.


1.8 Before-Tax Contribution Account means the separate, individual account
established on behalf of a Participant to which Before-Tax
Contributions and Special Contributions if any, made on his behalf are
credited, together with all earnings and appreciation thereon, and
against which are charged any withdrawals, loans and other
distributions made from such account and any losses, depreciation or
expenses allocable to amounts credited to such account.


1.9 Before-Tax Contributions means the contributions of the Employer made
in accordance with the Compensation Reduction Agreements of
Participants pursuant to Section 3.1.


1.10 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.


1.11 Board means the board of trustees, directors or other governing body of
the Sponsoring Employer.


1.12 Code means the Internal Revenue Code of 1986, as amended from time to
time.


1.13 Committee means the person or persons appointed by the Employer in
accordance with Section 9.2(b).


1.14 Compensation means, prior to January 1, 2001, the base compensation
receivable by an Employee from the Employer for the calendar year prior
to any reduction pursuant to a Compensation Reduction Agreement. Base
compensation shall include salary, Before-Tax Contributions, wages and
wage continuation payments to an Employee who is 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


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Employer under Section 125 of the Code pursuant to a salary reduction
agreement entered into by the Participant under Section 125 of the Code
or under a "qualified transportation fringe" benefit described in
Section 132(f) of the Code, and shall exclude overtime, commissions,
expense allowances, severance pay, fees, bonuses, contributions (other
than Before-Tax Contributions) made by the Employer to the Plan, and
contributions made by the Employer to any other pension, insurance,
welfare, or other employee benefit plan.


Commencing January 1, 2001, 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, compensation based on profits, 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, or under a "qualified transportation fringe" benefit
described in Section 132(f) 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.


Commencing January 1, 1997, 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 1.14, 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. With respect to Plan Years commencing prior to January
1, 1997, in determining the dollar limitation hereunder, compensation
received from any Affiliated Employer was recognized as Compensation
and the rules of Section 414(q)(6) of the Code applied except that the
term "family" included only the Spouse and those lineal descendants of
the Employee who had not attained age nineteen (19) before the close of
the Plan Year.


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1.15 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 Fund,
on behalf of such Eligible Employee, an amount equal to the specified
reduction in Compensation.


1.16 Disability means a physical or mental condition, determined after
review of those medical reports deemed satisfactory for this purpose,
which renders the Participant eligible for benefits under the
Employer's long term disability plan.


1.17 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,
together with all earnings and appreciation thereon, and against which
are charged any withdrawals, loans and other distributions made from
such account, as well as any losses, depreciation, or expenses
allocable to amounts credited to such account.


1.18 Discretionary Employer Contributions means the amounts, if any,
contributed by the Employer on behalf of an Eligible Employee, pursuant
to Section 3.8.


1.19 Early Retirement Date means the first day of any month coincident with
or following the Participant's attainment of age fifty-five and the
completion of five (5) Years of Service.


1.20 Effective Date means January 1, 1986.


1.21 Eligibility Computation Period means a twelve consecutive month period
commencing on an Employee's Employment Commencement Date and each Plan
Year thereafter. The succeeding twelve (12) consecutive month period
begins with the Plan Year which commences prior to the first
anniversary of the Employee's Employment Commencement Date regardless
of whether the Employee is entitled to be credited with one thousand
(1,000) Hours of Service during the initial Eligibility Computation
Period.


1.22 Eligible Employee means an Employee who is eligible to participate in
the Plan pursuant to the provisions of Article II.


1.23 Employee means any person employed by the Employer.


1.24 Employer means Atlantic Liberty Savings, F.A. and any Participating
Affiliate or any successor organization which shall continue to
maintain the Plan set forth herein.


1.25 Employer Resolutions means resolutions adopted by the Board.


1.26 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.


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1.27 ERISA means the Employee Retirement Income Security Act of 1974, as
amended from time to time.


1.28 Forfeitures means any amounts forfeited pursuant to Section 4.2.


1.29 Hardship means the condition described in Section 7.3.


1.30 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 ...