<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
FIRSTFED AMERICA BANCORP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
FIRSTFED AMERICA BANCORP, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
-----------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
FIRSTFED AMERICA BANCORP, INC.
One North Main Street
Fall River, Massachusetts 02720
(508) 679-8181
June 20, 1997
Fellow Shareholders:
You are cordially invited to attend the 1997 annual meeting of
shareholders (the "Annual Meeting") of FIRSTFED AMERICA BANCORP, INC. (the
"Company"), the holding company for First Federal Savings Bank of America (the
"Bank"), Fall River, Massachusetts, which will be held on August 5, 1997 at 2:00
p.m., Eastern Time, at The Westin Hotel, One West Exchange Street, Providence,
Rhode Island 02903.
The attached Notice of the Annual Meeting and the Proxy Statement
describe the business to be transacted at the Annual Meeting. Directors and
officers of the Company as well as a representative of KPMG Peat Marwick LLP,
the Company's independent auditors, will be present at the Annual Meeting to
respond to any questions that our shareholders may have regarding the business
to be transacted.
The Board of Directors of the Company has determined that matters to be
considered at the Annual Meeting are in the best interests of the Company and
its shareholders. FOR THE REASONS SET FORTH IN THE PROXY STATEMENT, THE BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" EACH OF THE NOMINEES AS
DIRECTORS SPECIFIED UNDER PROPOSAL 1, AND THAT YOU VOTE "FOR" APPROVAL OF THE
FIRSTFED AMERICA BANCORP, INC. 1997 STOCK-BASED INCENTIVE PLAN (THE "PLAN") AS
SPECIFIED UNDER PROPOSAL 2, AND THAT YOU VOTE "FOR" PROPOSAL 3, THE RATIFICATION
OF INDEPENDENT AUDITORS.
PLEASE SIGN AND RETURN THE ENCLOSED PROXY CARD PROMPTLY. YOUR
COOPERATION IS APPRECIATED SINCE A MAJORITY OF THE COMMON STOCK MUST BE
REPRESENTED, EITHER IN PERSON OR BY PROXY, TO CONSTITUTE A QUORUM FOR THE
CONDUCT OF BUSINESS AT THE ANNUAL MEETING.
On behalf of the Board of Directors and all of the employees of the
Company and the Bank, I thank you for your continued interest and support.
Sincerely yours,
/s/ Robert F. Stoico
Robert F. Stoico
Chairman of the Board, President
and Chief Executive Officer
<PAGE>
FIRSTFED AMERICA BANCORP, INC.
One North Main Street
Fall River, Massachusetts 02720
----------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on August 5, 1997
----------------------------------
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders (the
"Annual Meeting") of FIRSTFED AMERICA BANCORP, INC. (the "Company"), the holding
company for First Federal Savings Bank of America (the "Bank"), will be held on
August 5, 1997 at 2:00 p.m., Eastern Time, at The Westin Hotel, One West
Exchange Street, Providence, Rhode Island 02903.
The purpose of the Annual Meeting is to consider and vote upon the
following matters:
1. The election of two directors to a three-year term of office;
2. The approval of the FIRSTFED AMERICA BANCORP, INC. 1997 Stock-Based
Incentive Plan;
3. The ratification of the appointment of KPMG Peat Marwick LLP as
independent auditors of the Company for the fiscal year ending March
31, 1998; and
4. Such other matters as may properly come before the meeting and at
any adjournments thereof, including whether or not to adjourn the
meeting.
The Board of Directors has established June 11, 1997, as the record
date for the determination of shareholders entitled to receive notice of and to
vote at the Annual Meeting and at any adjournments thereof. Only record holders
of the common stock of the Company as of the close of business on such record
date will be entitled to vote at the Annual Meeting or any adjournments thereof.
In the event there are not sufficient votes for a quorum or to approve the
foregoing proposals at the time of the Annual Meeting, the Annual Meeting may be
adjourned in order to permit further solicitation of proxies by the Company. A
list of shareholders entitled to vote at the Annual Meeting will be available at
FIRSTFED AMERICA BANCORP, INC., One North Main Street, Fall River, Massachusetts
02720, for a period of ten days prior to the Annual Meeting and will also be
available at the Annual Meeting itself.
By Order of the Board of Directors
/s/ Cecilia R. Viveiros
Cecilia R. Viveiros
Corporate Secretary
Fall River, Massachusetts
June 20, 1997
<PAGE>
FIRSTFED AMERICA BANCORP, INC.
-----------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
August 5, 1997
-----------------------
Solicitation and Voting of Proxies
This Proxy Statement is being furnished to shareholders of FIRSTFED
AMERICA BANCORP, INC. (the "Company") in connection with the solicitation by the
Board of Directors ("Board of Directors" or "Board") of proxies to be used at
the annual meeting of shareholders (the "Annual Meeting"), to be held on August
5, 1997, at 2:00 p.m., Eastern Time, at The Westin Hotel, One West Exchange
Street, Providence, Rhode Island, 02903, and at any adjournments thereof. The
1997 Annual Report to Stockholders, including the consolidated financial
statements of the Company for the fiscal year ended March 31, 1997, accompanies
this Proxy Statement which is first being mailed to record holders on or about
June 20, 1997.
Regardless of the number of shares of common stock owned, it is
important that record holders of a majority of the shares be represented by
proxy or in person at the Annual Meeting. Shareholders are requested to vote by
completing the enclosed proxy card and returning it signed and dated in the
enclosed postage-paid envelope. Shareholders are urged to indicate their vote in
the spaces provided on the proxy card. PROXIES SOLICITED BY THE BOARD OF
DIRECTORS OF THE COMPANY WILL BE VOTED BY THE BOARD OF DIRECTORS IN ACCORDANCE
WITH THE DIRECTIONS GIVEN THEREIN. WHERE NO INSTRUCTIONS ARE INDICATED, SIGNED
PROXY CARDS WILL BE VOTED "FOR" THE ELECTION OF THE NOMINEES FOR DIRECTOR NAMED
IN THIS PROXY STATEMENT, "FOR" THE APPROVAL OF THE FIRSTFD AMERICA BANCORP, INC.
1997 STOCK-BASED INCENTIVE PLAN (THE "INCENTIVE PLAN") AND "FOR" THE
RATIFICATION OF KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS OF THE COMPANY FOR
THE FISCAL YEAR ENDING MARCH 31, 1998.
Other than the matters listed on the attached Notice of Annual Meeting
of Shareholders, the Board of Directors knows of no additional matters that will
be presented for consideration at the Annual Meeting. EXECUTION OF A PROXY,
HOWEVER, CONFERS ON THE DESIGNATED PROXY HOLDERS DISCRETIONARY AUTHORITY TO VOTE
THE SHARES IN ACCORDANCE WITH THEIR BEST JUDGMENT ON SUCH OTHER BUSINESS, IF
ANY, THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING AND AT ANY ADJOURNMENTS
THEREOF, INCLUDING WHETHER OR NOT TO ADJOURN THE ANNUAL MEETING.
A proxy may be revoked at any time prior to its exercise by filing a
written notice of revocation with the Corporate Secretary of the Company, by
delivering to the Company a duly executed proxy bearing a later date, or by
attending the Annual Meeting and voting in person. However, if you are a
shareholder whose shares are not registered in your own name, you will need
appropriate documentation from your record holder to attend the Annual Meeting
and vote personally at the Annual Meeting.
The cost of solicitation of proxies on behalf of management will be
borne by the Company. In addition to the solicitation of proxies by mail,
Kissel-Blake Inc., a proxy solicitation firm, will assist the Company in
soliciting proxies for the Annual Meeting and will be paid a fee of $4,000,
plus out-of-pocket expenses. Proxies may also be solicited personally or by
telephone by directors, officers and other employees of the Company and its
subsidiary, First Federal Savings Bank of America (the "Bank"), without
additional compensation therefor. The Company will also request persons, firms
and corporations holding shares in their names, or in the name of their
nominees, which are beneficially owned by others,
<PAGE>
to send proxy material to, and obtain proxies from, such beneficial owners, and
will reimburse such holders for their reasonable expenses in doing so.
Voting Securities
The securities which may be voted at the Annual Meeting consist of
shares of common stock of the Company ("Common Stock"), with each share
entitling its owner to one vote on all matters to be voted on at the Annual
Meeting, except as described below.
The close of business on June 11, 1997, has been fixed by the Board of
Directors as the record date (the "Record Date") for the determination of
shareholders of record entitled to notice of and to vote at the Annual Meeting
and at any adjournments thereof. The total number of shares of Common Stock
outstanding on the Record Date was 8,707,152 shares.
As provided in the Company's Certificate of Incorporation, for voting
purposes, holders of Common Stock who beneficially own in excess of 10% of the
outstanding shares of Common Stock (the "Limit") are not entitled to any vote in
respect of the shares held in excess of the Limit and are not treated as
outstanding for voting purposes. A person or entity is deemed to beneficially
own shares owned by an affiliate of, as well as, by persons acting in concert
with, such person or entity. The Company's Certificate of Incorporation
authorizes the Board of Directors (i) to make all determinations necessary to
implement and apply the Limit, including determining whether persons or entities
are acting in concert, and (ii) to demand that any person who is reasonably
believed to beneficially own stock in excess of the Limit to supply information
to the Company to enable the Board of Directors to implement and apply the
Limit.
The presence, in person or by proxy, of the holders of at least a
majority of the total number of shares of Common Stock entitled to vote (after
subtracting any shares in excess of the Limit pursuant to the Company's
Certificate of Incorporation) is necessary to constitute a quorum at the Annual
Meeting. In the event that there are not sufficient votes for a quorum or to
approve or ratify any proposal at the time of the Annual Meeting, the Annual
Meeting may be adjourned in order to permit the further solicitation of proxies.
As to the election of directors (Proposal 1), the proxy card being
provided by the Board of Directors enables a shareholder to vote "FOR" the
election of the nominees proposed by the Board, or to "WITHHOLD" authority to
vote for one or more of the nominees being proposed. Under Delaware law and the
Company's Bylaws, directors are elected by a plurality of votes cast, without
regard to either (i) broker non-votes or (ii) proxies as to which authority to
vote for one or more of the nominees being proposed is withheld.
As to the proposed approval of the Incentive Plan (Proposal 2)
submitted for shareholder action, the proxy card being provided by the Board of
Directors enables a shareholder to check the appropriate box on the proxy card
to (i) vote "FOR" the item, (ii) vote "AGAINST" the item, or (iii) "ABSTAIN"
from voting on such item.
As to the ratification of KPMG Peat Marwick LLP as independent auditors
of the Company (Proposal 3) and all other matters that may properly come before
the Annual Meeting, by checking the appropriate box, a shareholder may (i) vote
"FOR" the item, (ii) vote "AGAINST" the item, or (iii) "ABSTAIN" from voting on
such item.
2
<PAGE>
Under the Company's Bylaws and Delaware law, an affirmative vote of the
holders of a majority of the votes cast at the Annual Meeting on Proposal 2 and
Proposal 3 is required to constitute shareholder approval of each such Proposal.
Shares underlying broker non-votes or in excess of the Limit will not be counted
as present and entitled to vote or as votes cast and will have no effect on the
vote. For further information on the vote required to implement Proposal 2
during the first year following the conversion from mutual to stock form of the
Company's subsidiary, the Bank, which was completed on January 15, 1997 (the
"Conversion"), see the discussion under Proposal 2 herein. For purposes of the
rules and regulations of the Securities and Exchange Commission ("SEC"), shares
as to which the "ABSTAIN" box has been selected on the proxy card with respect
to Proposal 2 have the effect of a vote against Proposal 2 and shares underlying
broker non-votes or in excess of the Limit are not counted as entitled to vote
on Proposal 2 and have no effect on the vote on the Proposal.
Proxies solicited hereby are to be returned to the Company's transfer
agent, Registrar and Transfer Company ("RTC"). The Board of Directors has
designated RTC to act as the inspector of election and tabulate the votes at the
Annual Meeting. RTC is not otherwise employed by, or a director of, the Company
or any of its affiliates. After the final adjournment of the Annual Meeting, the
proxies will be returned to the Company.
Security Ownership of Certain Beneficial Owners
The following table sets forth information as to those persons believed
by management to be beneficial owners of more than 5% of the Company's
outstanding shares of Common Stock on the Record Date or as disclosed in certain
reports received to date regarding such ownership filed by such persons with the
Company and with the SEC, in accordance with Sections 13(d) and 13(g) of the
Securities Exchange Act of 1934, as amended ("Exchange Act"). Other than those
persons listed below, the Company is not aware of any person, as such term is
defined in the Exchange Act, that owns more than 5% of the Company's Common
Stock as of the Record Date.
3
<PAGE>
<TABLE>
<CAPTION>
Amount and
Nature of
Name and Address Beneficial Percent of
Title of Class of Beneficial Owner Ownership Class
- ------------------- ---------------------------------------------- ----------------- ---------------
<S> <C> <C> <C>
Common Stock Wellington Management Company, LLP 1,086,100(1) 12.5%
75 State Street
Boston, Massachusetts 02109
Common Stock First Federal Savings Bank of America Employee 697,010(2) 8.0%
Stock Ownership Plan ("ESOP")
One North Main Street
Fall River, Massachusetts 02720
Common Stock The FIRSTFED Charitable Foundation 645,380(3) 7.4%
One North Main Street
Fall River, Massachusetts 02720
</TABLE>
- -------------------------
(1) Based upon information filed in a Schedule 13G on May 5, 1997,
Wellington Management Company, LLP, in its capacity as an investment
advisor, may be deemed the beneficial owner of 1,086,100 shares.
(2) Shares of Common Stock were acquired by the ESOP in the Bank's
Conversion. The ESOP Committee administers the ESOP. First Bankers
Trust, N.A. has been appointed as the trustee for the ESOP ("ESOP
Trustee"). The ESOP Trustee must vote all allocated shares held in the
ESOP in accordance with the instructions of the participants. At June
11, 1997, 77,446 shares had been allocated under the ESOP and 619,564
shares remain unallocated. Under the ESOP, unallocated shares and
allocated shares as to which voting instructions are not given by
participants are to be voted by the ESOP Trustee in a manner calculated
to most accurately reflect the instructions received from participants
regarding the allocated stock so long as such vote is in accordance
with the fiduciary provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA").
(3) The FIRSTFED Charitable Foundation (the "Foundation") was established
and funded by the Company in connection with the Bank's Conversion with
an amount of the Company's Common Stock equal to 8.0% of the total
amount of Common Stock issued in the Conversion. The Foundation is a
Delaware non-stock corporation and is dedicated to the promotion of
charitable purposes within the communities in which the Bank operates.
The Foundation is governed by a board of directors with 7 members, all
of whom are directors of the Company and the Bank. Pursuant to the
terms of the contribution of Common Stock, as mandated by the Office of
Thrift Supervision ("OTS"), all shares of Common Stock held by the
Foundation must be voted in the same ratio as all other shares of the
Company's Common Stock on all proposals considered by shareholders of
the Company.
Interest of Certain Persons in Matters to be Acted Upon
Upon obtaining shareholder approval, the Company and the Bank intend to
grant to directors, officers and employees of the Bank and the Company, stock
options and awards in the form of shares of Common Stock under the Incentive
Plan being presented for approval in Proposal 2.
4
<PAGE>
PROPOSALS TO BE VOTED ON AT THE ANNUAL MEETING
PROPOSAL 1. ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of seven (7)
directors and is divided into three classes. Each of the seven members of the
Board of Directors also presently serves as a director of the Bank. Directors
are elected for staggered terms of three years each, with the term of office of
only one of the three classes of directors expiring each year. Directors serve
until their successors are elected and qualified.
The two nominees proposed for election at the Annual Meeting are Thomas
A. Rodgers, Jr. and Anthony L. Sylvia. No person being nominated as a director
is being proposed for election pursuant to any agreement or understanding
between any such person and the Company.
In the event that any such nominee is unable to serve or declines to
serve for any reason, it is intended that proxies will be voted for the election
of the balance of those nominees named and for such other persons as may be
designated by the present Board of Directors. The Board of Directors has no
reason to believe that any of the persons named will be unable or unwilling to
serve. UNLESS AUTHORITY TO VOTE FOR THE DIRECTORS IS WITHHELD, IT IS INTENDED
THAT THE SHARES REPRESENTED BY THE ENCLOSED PROXY CARD WILL BE VOTED "FOR" THE
ELECTION OF ALL NOMINEES PROPOSED BY THE BOARD OF DIRECTORS.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL
NOMINEES NAMED IN THIS PROXY STATEMENT.
Information with Respect to Nominees, Continuing Directors and Certain Executive
Officers
The following table sets forth, as of the Record Date, the names of
nominees and continuing directors and the Named Executive Officers (as defined
below), their ages, a brief description of their recent business experience,
including present occupations and employment, the year in which each became a
director of the Bank and the year in which their terms (or, in the case of
nominees, their proposed terms) as director of the Company expire. This table
also sets forth the amount of Common Stock and the percent thereof beneficially
owned by each director, each Named Executive Officer and all directors and
executive officers as a group as of the Record Date.
<TABLE>
<CAPTION>
Amount and
Expiration Nature of Ownership
Name and Principal Occupation at Director of Term as Beneficial as a Percent
Present and for Past Five Years Age Since(1) Director Ownership(2)(3) of Class(4)
- -------------------------------------------- ----- ------------ ------------ ----------------- -------------
<S> <C> <C> <C> <C> <C>
NOMINEES
Thomas A. Rodgers, Jr. 83 1963 2000 21,500 *
Chairman and Chief Executive Officer of
Globe Manufacturing Co., Inc.
Anthony L. Sylvia 65 1984 2000 9,000 *
President and Treasurer of The Baker
Manufacturing Co., Inc.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Amount and
Expiration Nature of Ownership
Name and Principal Occupation at Director of Term as Beneficial as a Percent
Present and for Past Five Years Age Since(1) Director Ownership(2)(3) of Class(4)
- -------------------------------------------- ----- ------------ ------------ ----------------- -------------
<S> <C> <C> <C> <C> <C>
CONTINUING DIRECTORS
Robert F. Stoico 56 1980 1998 42,644 *
Chairman of the Board of the Company
and President and Chief Executive
Officer of the Company and the Bank
Gilbert C. Oliveira 72 1960 1999 27,000 *
Chairman of the Board of the Bank and
President and Treasurer of Gilbert C.
Oliveira Insurance Agency, Inc.
Richard W. Cederberg 68 1982 1999 8,000 *
Retired, former Chairman of Larson Tool
and Stamping Company
John S. Holden, Jr. 67 1982 1998 5,200 *
President and Treasurer of Automatic
Machine Products Co.
Paul A. Raymond, DDS 53 1981 1999 5,370 *
Dentist in town of Swansea,
Massachusetts
NAMED EXECUTIVE OFFICERS
(who are not also directors)
Kevin J. McGillicuddy 57 -- -- 5,659 *
Senior Vice President of the Company
and the Bank
Frederick R. Sullivan 55 -- -- 9,318 *
Senior Vice President of the Company
and the Bank
Terrence M. Tyrrell 47 -- -- 14,695 *
Senior Vice President of the Company
and the Bank
All directors and executive officers as a
group (18 persons).......................... -- -- -- 171,650 2.0%
</TABLE>
- ------------------
* Does not exceed 1.0% of the Company's voting securities.
(1) Includes years of service as a director of the Bank.
(2) Each person effectively exercises sole (or shares with spouse or other
immediate family members) voting or dispositive power as to shares
reported.
(3) Does not include options and awards intended to be granted under the
Incentive Plan, which is subject to shareholder approval. For a discussion
of the options and awards that are intended to be granted under the
Incentive Plan, see Proposal 2.
(4) As of the Record Date, there were 8,707,152 shares of Common Stock
outstanding.
6
<PAGE>
Meetings of the Board of Directors and Committees of the Board of Directors
The Board of Directors of the Company and the Board of Directors of the
Bank conduct business through meetings of the Board of Directors and through
activities of their committees. The Board of Directors of the Company and Bank
generally meet on a monthly basis and may have additional meetings as needed.
During the fiscal year ended March 31, 1997, the Board of Directors of the
Company, which was formed on September 6, 1996, held eight meetings primarily
related to organizational and other matters in connection with the formation of
the Company and the acquisition of the Bank through the Conversion. The Board of
Directors of the Bank held 20 meetings during fiscal 1997. All of the directors
of the Company and Bank attended at least 75% of the total number of the
Company's Board meetings held and committee meetings on which such directors
served during the fiscal year ended March 31, 1997. The Board of Directors of
the Company and Bank maintain committees, the nature and composition of which
are described below:
Audit Committee. The Audit and Compliance Committee of the Company
consists of Messrs. Holden, Sylvia and Raymond. The Audit and Compliance
Committee of the Bank consists of Messrs. Holden, Sylvia and Gerhard S.
Lowenstein. These committees generally meet on a quarterly basis and are
responsible for the review of audit reports and management's actions regarding
the implementation of audit findings and to review compliance with all relevant
laws and regulations. The internal audit function, which is outsourced to The
Harcourt Group, Ltd., reports to the Audit and Compliance Committees of the Bank
and Company. Due to the timing of the Conversion, the Audit and Compliance
Committee of the Company did not meet in fiscal 1997. The Audit and Compliance
Committee of the Bank, on occasion, will conduct its meetings as part of a full
board meeting. Including these joint meetings, the Committee met twice in fiscal
1997.
Nominating Committee. The Company's Nominating Committee for the 1997
Annual Meeting consists of Messrs. Stoico, Oliveira and Raymond. The committee
considers and recommends the nominees for director to stand for election at the
Company's annual meeting of shareholders. The Company's Certificate of
Incorporation and Bylaws provide for shareholder nominations of directors. These
provisions require such nominations to be made pursuant to timely notice in
writing to the Secretary of the Company. The shareholder's notice of nomination
must contain all information relating to the nominee which is required to be
disclosed by the Company's Bylaws and by the Exchange Act. See "Additional
Information - Notice of Business to be Conducted at a Special or Annual
Meeting." The Nominating Committee met one time in 1997.
Compensation Committee. The Compensation Committee of the Company
consists of Messrs. Stoico, Oliveira and Rodgers. The Management and Personnel
Committee of the Bank consists of Messrs. Stoico, Oliveira, Rodgers and Willard
E. Olmsted. Such Committees are responsible for all matters regarding
compensation and fringe benefits for officers and employees of the Company and
the Bank and meet on an as needed basis. See "Executive Compensation -
Compensation Committee Report on Executive Compensation." The Compensation
Committee of the Company and the Management and Personnel Committee of the Bank
met once and twice in fiscal 1997, respectively.
7
<PAGE>
Directors' Compensation
Directors' Fees. Directors of the Company do not receive compensation
for serving as Directors of the Company or on a Committee. Directors of the Bank
are currently paid an annual retainer of $10,000, except that the Chairman of
the Board of the Bank receives an annual retainer of $25,000. Directors of the
Bank also receive a fee of $400 for each regular and special board meeting which
they attend. In addition, members of the Board's Executive Committee receive an
annual retainer of $5,000 and a fee of $350 for each Executive Committee meeting
which they attend.
Incentive Plan. The Company is presenting the Incentive Plan to
shareholders for approval, under which all directors of the Company and the Bank
are eligible to receive awards and have been allocated awards to be effective
the earlier of the date the Incentive Plan is approved by shareholders pursuant
to OTS regulations at the Annual Meeting or January 16, 1998. See Proposal 2 for
a summary of the material terms of the Incentive Plan and "New Plan Benefits"
for a discussion of the terms of the awards under the Incentive Plan to Company
and Bank directors.
Executive Compensation
The report of the Compensation Committee and the stock performance
graph shall not be deemed incorporated by reference by any general statement
incorporating by reference this proxy statement into any filing under the
Securities Act of 1933, as amended (the "Securities Act") or the Exchange Act,
except as to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
Compensation Committee Report on Executive Compensation. Under rules
established by the SEC, the Company is required to provide certain data and
information in regard to the compensation and benefits provided to the Company's
Chief Executive Officer and certain other executive officers of the Company and
the Bank for the fiscal year ended March 31, 1997. Because the Company had no
significant assets, liabilities or operations until January 15, 1997, the
following discussion addresses compensation information relating to the Chief
Executive Officer and the executive officers of the Bank for fiscal 1997 and
sets forth the joint report of the Compensation Committee of the Company and
Management and Personnel Committee of the Bank (collectively the "Compensation
Committee"). The disclosure requirements for the Chief Executive Officer and
other executive officers include the use of tables and a report explaining the
rationale and considerations that led to fundamental compensation decisions
affecting those individuals. In fulfillment of this requirement, the
Compensation Committee, at the direction of the Board of Directors, has prepared
the following report for inclusion in this proxy statement.
General Policy. The Company and the Bank intend to begin a process
during fiscal 1998 to revise the current Executive Compensation Policies of the
Company and Bank to reflect the status of the Bank as a stock institution and
the Company as a publicly held entity and to ensure competitive compensation
levels in comparison to similarly situated publicly held financial institutions.
It is anticipated that the new policies will incorporate the consolidated
financial results of the Company as well
8
<PAGE>
as other factors related to the performance of the Company's stock. However, for
fiscal 1997, the following policy was utilized to determine compensation levels.
The Compensation Committee's responsibility is to recommend the amount
and composition of executive compensation paid to the executive officers. The
Board of Directors has the responsibility to review the report of the
Compensation Committee and approve such compensation. It is the policy of the
Compensation Committee to review executive compensation not less than annually
and more often if deemed necessary by the Compensation Committee. The process
which the Compensation Committee utilized for fiscal 1997, includes, but is not
limited to, reviews of the results of compensation surveys and the utilization
of compensation experts or consultants. It is the goal of the Compensation
Committee to utilize whatever means necessary to obtain adequate and up-to-date
information upon which to base their recommendations to the full Board.
In preparing its analysis, with respect to comparative compensation
data, the Compensation Committee generally considers the following factors in
selecting peer institutions: asset size, off-balance sheet assets, earnings,
type of business operations, corporate structure and geographic location. With
respect to analyzing comparative data for executive officers at peer
institutions, the Compensation Committee considers the scope and similarity of
officer positions, experience and the complexity of individual officer
responsibilities.
In making its compensation determinations, the Compensation Committee
also considers the evaluations of executive officers performed by the Chief
Executive Officer and recommendations made by the Chief Executive Officer,
except in the case of its compensation deliberations regarding the Chief
Executive Officer. The performance of the Chief Executive Officer and other
executive officers are evaluated by the Compensation Committee and a
recommendation is made to the Board. Upon review, the Board sets all executive
compensation. The Chief Executive Officer, a member of the Board of Directors,
abstains from voting on matters related to his compensation.
Compensation Committee Considerations for Fiscal 1997. While the
Company has in the past participated in a number of salary surveys, the Board,
in light of the pending conversion to a public company, decided to engage the
services of an outside consultant. Accordingly, KPMG Peat Marwick LLP ("KPMG")
was engaged to assist the Compensation Committee and the Board in its executive
compensation deliberations for fiscal 1997.
KPMG's report to the Compensation Committee and the full Board included
an analysis of the level of compensation of the Bank's executive officers in
comparison to peer institutions selected by KPMG. The report set forth the
methodology utilized for the selection of the peer group, a recommended
philosophy of compensation and recommended compensation ranges and adjustments.
After review of the report and review of the performance of the Company and the
Executive Officers, the compensation levels recommended by the report were
recommended by the Compensation Committee and approved by the Board of
Directors.
9
<PAGE>
Compensation of the Chief Executive Officer. The Chief Executive
Officer was evaluated on his performance in managing the Company during fiscal
1997, including the effort related to the Conversion and the franchise expansion
into the State of Rhode Island. Certain quantitative and qualitative factors
were reviewed to determine the Chief Executive Officer's compensation. No
specific formula was used in determining the Chief Executive Officer's base
salary for fiscal 1997. In reaching its determination regarding the Chief
Executive Officer's salary, the Compensation Committee utilized the report of
KPMG and recommended to the Board of Directors a base salary substantially
equivalent to the amount recommended by KPMG. Such report analyzed the Chief
Executive Officer's base salary and bonus in comparison to peer institutions
with specific consideration given to the level of the Bank's banking and
mortgage banking operations in comparison to peer institutions with an upward
adjustment to reflect such greater level of operations. The Committee's
determination of the Chief Executive Officer's bonus for fiscal 1997 also was
not determined by a formula or quantitative methodology but was discretionary.
In reaching its determination regarding the recommended level of the Chief
Executive Officer's cash bonus for fiscal 1997, the Committee considered KPMG's
report and recommended to the Board an amount of bonus substantially equivalent
to the amount recommended by KPMG in its report.
The Compensation Committee of the Board of Directors
of the Company
Robert F. Stoico Gilbert C. Oliveira
Thomas A. Rodgers, Jr.
The Management and Personnel Committee
of the Board of Directors of the Bank
Robert F. Stoico Gilbert C. Oliveira
Thomas A. Rodgers, Jr. Willard E. Olmsted
10
<PAGE>
Stock Performance Graph. The following graph shows a comparison of
total shareholder return on the Company's Common Stock, based on the market
price of the Common Stock with the cumulative total return of companies on the
American Stock Exchange and the MG Index for Savings and Loans for the period
beginning on January 15, 1997, the day the Company's Common Stock began trading,
through May 30, 1997. The graph was derived from a limited period of time and,
as a result, may not be indicative of possible future performance of the
Company's Common Stock. The data was supplied by Media General Financial
Services.
Comparative Total Returns
FIRSTFED AMERICA BANCORP, INC., The American Stock
Exchange and The MG Index For Savings and Loans
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Summary
1/15/97 1/31/97 2/28/97 3/31/97 4/30/97 5/30/97
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
FIRSTFED AMERICA BANCORP, INC. 100.00 146.30 146.30 136.30 140.00 148.10
American Stock Exchange 100.00 100.00 100.88 97.14 94.53 112.15
MG Index For Savings and Loans 100.00 100.00 108.88 107.75 104.23 103.54
</TABLE>
Notes:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to 100,000 on 1/15/97, the first
day of trading for FIRSTFED AMERICA BANCORP, INC. Common Stock. For
FIRSTFED AMERICA BANCORP, INC. the index commenced with the initial public
offering price of $10.00 per share.
- --------------------------------------------------------------------------------
11
<PAGE>
Summary Compensation Table. The following table shows, for the years
ended March 31, 1997 and 1996, the cash compensation paid, as well as certain
other compensation paid or accrued for that year to the Chief Executive Officer
of the Company and the Bank and all other executive officers of the Company and
the Bank who earned and/or received salary and bonus in excess of $100,000 in
fiscal year 1997 ("Named Executive Officers").
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Long-Term Compensation
-------------------------------------
Annual Compensation(1) Awards Payouts
----------------------------------------------------------------------------
Other Restricted Securities
Annual Stock Underlying LTIP All Other
Name and Principal Fiscal Compensation Awards Options/SARs Payouts Compensation
Positions Year Salary($) Bonus($) ($)(2) ($)(3) (#)(4) ($)(5) ($)(6)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert F. Stoico 1997 $328,941 $100,000 - - - - $239,216
President and Chief 1996 282,045 75,000 - - - - 149,364
Executive Officer
Kevin J. McGillicuddy 1997 105,677 15,000 - - - - 44,310
Senior Vice President 1996 96,846 8,000 - - - - 771
Frederick R. Sullivan 1997 105,677 15,000 - - - - 43,518
Senior Vice President 1996 99,923 8,000 - - - - 16,167
Terrence M. Tyrrell 1997 98,446 15,000 - - - - 37,555
Senior Vice President 1996 91,846 8,000 - - - - 11,625
</TABLE>
- -----------------------------------------
(1) Under Annual Compensation, the column titled "Salary" includes directors'
fees for the named President and Chief Executive Officer.
(2) For fiscal years 1997 and 1996, there were no (a) perquisites over the
lesser of $50,000 or 10% of the individual's total salary and bonus for the
year; (b) payments of above-market preferential earnings on deferred
compensation; (c) payments of earnings with respect to long-term incentive
plans prior to settlement or maturation; (d) tax payment reimbursements; or
(e) preferential discounts on stock.
(3) No stock awards were granted or earned in fiscal years 1997 or 1996.
See Proposal 2.
(4) No stock options or SARs were granted or earned in fiscal years 1997 or
1996. See Proposal 2.
(5) For fiscal years 1997 and 1996, there were no payouts or awards under any
long-term incentive plan.
(6) Includes employer contributions of $8,709, $3,174, $3,174 and $2,955 and
$17,500, $14,900, $15,000 and $10,700 to the Bank's Thrift and Retirement
Plans for Messrs. Stoico, McGillicuddy, Sullivan and Tyrrell, respectively,
for fiscal year 1997. Also includes $69,562, $26,236, $25,344 and $23,900
representing the value of shares allocated under the ESOP for the benefit of
Messrs. Stoico, McGillicuddy, Sullivan and Tyrrell, respectively, as of
March 31, 1997. Also includes employer contributions of $143,445 contributed
to Mr. Stoico pursuant to the Bank's Supplemental Retirement Plan for fiscal
year 1997.
12
<PAGE>
Employment Agreements. The Bank and the Company have entered into
employment agreements (collectively, the "Employment Agreement(s)" or
"Agreement(s)") with Messrs. Stoico, McGillicuddy, Sullivan and Tyrrell
(individually, the "Executive"). The Employment Agreements are intended to
ensure that the Bank and the Company will be able to maintain a stable and
competent management base. The continued success of the Bank and the Company
depends to a significant degree on the skills and competence of Messrs. Stoico,
McGillicuddy, Sullivan and Tyrrell.
The Employment Agreements provide for a three-year term for Mr. Stoico
and a two-year term for Messrs. McGillicuddy, Sullivan and Tyrrell. The Bank
Employment Agreements provide that, commencing on the first anniversary date and
continuing each anniversary date thereafter, the Board of Directors may extend
the agreement for an additional year so that the remaining term shall be three
years, in the case of Mr. Stoico, and two years, in the cases of Messrs.
McGillicuddy, Sullivan and Tyrrell, unless written notice of non-renewal is
given by the Board of the Bank after conducting a performance evaluation of the
Executive. The terms of the Company Employment Agreements are extended on a
daily basis unless written notice of non-renewal is given by the Board of the
Company. In addition to the base salary, the Agreements provide for, among other
things, participation in stock benefits plans and other fringe benefits
applicable to similarly situated executive personnel.
The Employment Agreements provide for termination by the Bank or the
Company for cause as defined in the Agreements at any time. In the event the
Bank or the Company chooses to terminate the Executive's employment for reasons
other than for cause, or in the event of the Executive's resignation from the
Bank and the Company upon: (i) failure to re-elect the Executive to his current
offices; (ii) a material change in the Executive's functions, duties or
responsibilities; (iii) a relocation of the Executive's principal place of
employment by more than 25 miles; (iv) liquidation or dissolution of the Bank or
the Company; or (v) a breach of the Agreement by the Bank or the Company, the
Executive or, in the event of death, his beneficiary would be entitled to
receive an amount equal to the remaining base salary payments due to the
Executive and the contributions that would have been made on the Executive's
behalf to any employee benefit plans of the Bank or the Company during the
remaining term of the Agreement. The Bank and the Company would also continue
and pay for the Executive's life, health and disability coverage for the
remaining term of the Employment Agreement. Upon any termination of the
Executive, the Executive is subject to a covenant not to compete with the
Company or the Bank for one year.
Under the Agreements, if voluntary or involuntary termination follows a
change in control of the Bank or the Company (as defined in the Employment
Agreements), the Executive or, in the event of the Executive's death, his
beneficiary, would be entitled to a severance payment equal to the greater of:
(i) the payments due for the remaining terms of the Agreements; or (ii) three
times the average of the five preceding taxable years' annual compensation. The
Bank and the Company would also continue the Executive's life, health, and
disability coverage for thirty-six months in the case of Mr. Stoico and twenty-
four months in the cases of Messrs. McGillicuddy, Sullivan and Tyrrell.
Notwithstanding that both Agreements provide for a severance payment in the
event of a change in control, the Executive would only be entitled to receive a
severance payment under one Agreement. In the event of a change in control,
based upon the Executive's base salary and incentive bonus for fiscal year 1997
as reported in the Summary Compensation Table, Messrs. Stoico, McGillicuddy,
Sullivan and Tyrrell would receive approximately $1.3 million, $362,000,
$362,000 and $340,000, respectively, in severance payments, in addition to other
cash and noncash benefits.
13
<PAGE>
Payments to Executive under the Bank's Agreement will be guaranteed by
the Company in the event that payments or benefits are not paid by the Bank.
Payment under the Company Agreement would be made by the Company. All reasonable
costs and legal fees paid or incurred by the Executive pursuant to any dispute
or question of interpretation relating to the Agreements shall be paid by the
Bank or Company, respectively, if the Executive is successful on the merits
pursuant to a legal judgment, arbitration or settlement. The Employment
Agreements also provide that the Bank and Company shall indemnify the Executive
to the fullest extent allowable under federal and Delaware law, respectively.
Change in Control Agreements. The Bank entered into Change in Control
Agreements (the "CIC Agreements") with eight (8) executive officers of the Bank
and the Bank's corporate secretary (individually, the "Executive"). Each CIC
agreement provides for a two-year term. Commencing on the first anniversary date
and continuing on each anniversary thereafter, the CIC Agreements may be renewed
by the Board of the Bank for an additional year. The Bank's CIC Agreement
provides that in the event voluntary or involuntary termination following a
change in control of the Bank or the Company (as defined in the agreement), the
Executive would be entitled to receive a severance payment equal to two times
the Executive's average compensation for the twelve months preceding
termination. The Bank would also continue and pay for the Executive's life,
health and disability coverage for twenty-four (24) full calendar months
following termination. Payments to the Executive under the Bank's CIC Agreements
will be guaranteed by the Company in the event that payments or benefits are not
paid by the Bank. If a change in control occurs, based upon two times fiscal
1997 base salary and incentive bonus and pursuant to the CIC Agreements, the
Executives would receive, in the aggregate, $1.0 million, in addition to other
cash and noncash benefits.
Incentive Plan. The Company is presenting to shareholders for approval
the Incentive Plan under which all eligible employees of the Company and Bank
are eligible to receive awards. See Proposal 2 for a summary of the material
terms of the Incentive Plan.
Thrift Plan. The Bank maintains the Financial Institutions Thrift Plan
(the "Thrift Plan") to encourage eligible employees to save and invest on a
regular, long-term basis. The Thrift Plan permits eligible employees to make
monthly contributions of 2% - 15% of their base monthly salary on an after-tax
basis. Employees become eligible to participate in the Thrift Plan on the first
day of the first full month following commencement of employment with the Bank.
After the completion of a 12 consecutive month period of employment with the
Bank in which they complete 1,000 hours of employment, the Bank makes monthly
employer contributions to each participant's account in the Thrift Plan equal to
50% of the participant's contribution up to 6% of the participant's annual base
salary. Participants are 100% vested in the amounts credited to their Thrift
Plan accounts.
Retirement Plan. The Bank participates in the Financial Institutions
Retirement Fund (the "Retirement Plan") to provide retirement benefits for
eligible employees. Employees become eligible to participate in the Retirement
Plan after the completion of 12 consecutive months of employment with the Bank
and the attainment of age 21. The Retirement Plan excludes hourly paid employees
from participation. Benefits under the Retirement Plan are based on the
participant's years of service and salary. A participant may elect early
retirement as early as age 45. However, such participant's normal retirement
benefits will be reduced by an early retirement factor based on age at early
retirement.
Participants generally have no vested interest in Retirement Plan
benefits prior to the completion of five years of service with the Bank.
Following the completion of five years of vesting service, or in the event of a
participant's attainment of age 65, death or termination of employment due to
disability, a participant becomes 100% vested in his/her accrued benefit under
the Retirement Plan. The table below
14
<PAGE>
reflects the pension benefit payable, and any payment due under the Supplemental
Executive Retirement Plan, discussed below, to a participant assuming various
levels of earnings and years of service. The amounts of benefits paid under the
Retirement Plan are not reduced for any social security benefit payable to
participants. As of January 1, 1997, Messrs. Stoico, McGillicuddy, Sullivan and
Tyrrell had credited years of service of 24 years, 23 months, 8 years and 16
years, respectively.
<TABLE>
<CAPTION>
Years of Benefit Service
----------------------------------------------------------------------
Final Average
Earnings(1) 15 20 25 30 35
- ----------------- ----------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
$50,000 $15,000 $20,000 $25,000 $30,000 $35,000
$75,000 $22,500 $30,000 $37,500 $45,000 $52,500
$100,000 $30,000 $40,000 $50,000 $60,000 $70,000
$125,000 $37,500 $50,000 $62,500 $75,000 $87,500
$150,000 $45,000 $60,000 $75,000 $90,000 $105,000
$200,000(2) $60,000 $80,000 $100,000 $120,000 $140,000
$250,000(2) $75,000 $100,000 $125,000 $150,000 $175,000
$300,000(2) $90,000 $120,000 $150,000 $180,000 $210,000
$350,000(2) $105,000 $140,000 $175,000 $210,000 $245,000
$400,000(2) $120,000 $160,000 $200,000 $240,000 $280,000
</TABLE>
- -------------------------
(1) The compensation utilized for formula purposes includes the salary
reported in the "Summary Compensation Table."
(2) The maximum amount of annual compensation which can be considered in
computing benefits under Section 401(a)(17) of the Internal Revenue
Code of 1986, as amended (the "Code"), is $160,000 for plan years
beginning on or after January 1, 1997.
Supplemental Retirement Plan. The Bank currently maintains a
Supplemental Retirement Plan under which it annually credits a specified amount
of money to the account of plan participants. Benefits under the Plan become
payable following a participant's termination of employment. In addition,
participants may direct the Bank to defer a percentage of their annual pay into
a subaccount under the Supplemental Retirement Plan. The Bank intends the
benefits provided under the Supplemental Retirement Plan to make participants
whole for reductions in benefits payable under the terms of the Thrift Plan and
Retirement Plan maintained by the Bank, as a result of limitations imposed by
the Code, and provide additional retirement benefits for participants.
15
<PAGE>
Participants generally vest in the amounts credited to the Supplemental
Retirement Plan after completing five years of employment with the Bank.
However, participants vest immediately upon death or disability. In connection
with the Conversion, the Supplemental Retirement Plan was amended to permit
participants to direct that all or a portion of the amounts then existing
(and/or future amounts) credited to their accounts be converted into stock units
based on the value of the Common Stock. The Plan is also being amended to
provide for benefits equivalent to those a participant would have received under
the ESOP but for limitations imposed by the Code. The Bank currently maintains
an irrevocable grantor's trust (also known as a "rabbi trust") to hold assets of
the Bank for the exclusive purpose of paying benefits under the Supplemental
Retirement Plan. However, in the event of the insolvency of the Bank, the assets
of the trust are first subject to the claims of the Bank's creditors. The assets
of this trust may be used to acquire shares of Common Stock to satisfy the
obligations of the Bank for the payment of benefits under the Supplemental
Retirement Plan. As of March 31, 1997, only Mr. Stoico participated in the
Supplemental Retirement Plan.
Employee Stock Ownership Plan and Trust. The Bank established an ESOP
and related trust for eligible employees effective February 1, 1996. Employees
employed with the Bank as of February 1, 1996 and employees of the Company or
the Bank employed after such date, who have been credited with at least 1,000
hours during a twelve month period and who have attained the age of 21 are
eligible to become participants. The ESOP purchased 8% of the Common Stock
issued in the Conversion, including the issuance of shares to the Foundation. In
order to fund the ESOP's purchase of the Common Stock, the ESOP borrowed funds
from a third-party lender, FAB FUNDING CORPORATION, a wholly-owned subsidiary of
the Company equal to 100% of the aggregate purchase price of the Common Stock.
The trustee of the ESOP will repay the loan principally from the Company's or
the Bank's contribution's to the ESOP over a period of nine years. FAB FUNDING
CORPORATION holds the Common Stock purchased by the ESOP as collateral for the
loan. Participant's become 100% vested in their ESOP benefits after five (5)
years of service as well as upon attainment of their normal retirement age
(generally age 65), death, disability and a change in control.
Transactions With Certain Related Persons
The Bank makes all loans to its executive officers, directors and
employees on the same terms and conditions offered to the general public. The
Bank's policy provides that all loans made by the Bank to its executive officers
and directors be made in the ordinary course of business, on substantially the
same terms, including collateral, as those prevailing at the time for comparable
transactions with other persons and may not involve more than the normal risk of
collectibility or present other unfavorable features. All such loans were made
by the Bank in the ordinary course of business, with no favorable terms and such
loans do not involve more than the normal risk of collectibility or present
unfavorable terms.
16
<PAGE>
PROPOSAL 2. APPROVAL OF THE FIRSTFED AMERICA BANCORP, INC.
1997 STOCK-BASED INCENTIVE PLAN
The Board of Directors of the Company is presenting for shareholder
approval the FIRSTFED AMERICA BANCORP, INC. 1997 Stock-Based Incentive Plan, in
the form attached hereto as Appendix A. The purpose of the Incentive Plan is to
attract and retain qualified personnel in key positions, provide officers,
employees and non-employee directors ("Outside Directors") of the Company and
any of its affiliates, including the Bank, with a proprietary interest in the
Company as an incentive to contribute to the success of the Company, promote the
attention of management to other shareholder's concerns and reward employees for
outstanding performance. The following is a summary of the material terms of the
Incentive Plan which is qualified in its entirety by the complete provisions of
the Incentive Plan attached as Appendix A.
General
The Incentive Plan authorizes the granting of options to purchase
Common Stock of the Company ("Options"), Option-related awards and awards of
Common Stock (collectively, "Awards"). Subject to certain adjustments to prevent
dilution of Awards to participants, the maximum number of shares of Common Stock
reserved for Awards under the Incentive Plan is 1,219,001 shares. The maximum
number of shares reserved for purchase pursuant to the exercise of Options and
Option-related Awards which may be granted under the Incentive Plan is 870,715
shares. The maximum number of the shares reserved for the award of shares of
Common Stock ("Stock Awards") is 348,286 shares. All officers, other employees
and Outside Directors of the Company and its affiliates, including the Bank, are
eligible to receive Awards under the Incentive Plan. The Incentive Plan will be
administered by a committee (the "Committee") consisting of at least three
members of the Board of Directors who are not employees of the Company or its
affiliates. Authorized but unissued shares or shares previously issued and
reacquired by the Company may be used to satisfy Awards under the Incentive
Plan. If authorized but unissued shares are used to satisfy the grant of Stock
Awards and the exercise of Options granted under the Incentive Plan, it will
result in an increase in the number of shares outstanding and will have a
dilutive effect on the holdings of existing shareholders. It is currently
anticipated that a trust (the "Incentive Plan Trust") will be established which
will purchase previously issued shares to fund the Company's obligation for
Stock Awards which such stock will be purchased by the Incentive Plan trustee
with contributions from the Company or Bank.
Types of Awards
General. The Incentive Plan authorizes the grant of Awards in the form
of: (i) Options intended to qualify as incentive stock options under Section 422
of the Code (Options which afford tax benefits to the recipients upon compliance
with certain conditions and which do not result in tax deductions to the
Company), referred to as "Incentive Stock Options"; (ii) Options that do not so
qualify (Options which do not afford income tax benefits to recipients, but
which may provide tax deductions to the Company), referred to as "Non-statutory
Stock Options"; (iii) limited rights which are exercisable only upon a "change
in control" of the Company or Bank (as defined in the Incentive Plan) ("Limited
Rights"); (iv) Stock Awards; and (v) Stock Appreciation Rights. Each type of
Award may be subject to vesting requirements or other conditions imposed by the
Committee.
Options. The Incentive Plan provides for the granting of Options for up
to 870,715 shares of Common Stock. The Committee has the authority to determine
the date or dates on which each Option shall become exercisable and any other
conditions applicable to the exercisability of an Option; provided,
17
<PAGE>
however, any Option granted prior to January 15, 1998 may not become exercisable
in annual installments of greater than 20% of the number of shares underlying
the Option awarded, commencing at least one year from the date of grant, and the
exercisability of such Options may not be accelerated except in the case of
death or disability. The Board of Directors intends to amend the Incentive Plan
in the future to provide the Committee with the authority to provide for the
acceleration of the exercisability of Options in certain circumstances. See
"Amendments." The exercise price of all Options shall be determined by the
Committee but shall be at least 100% of the fair market value of the underlying
Common Stock at the time of grant. The exercise price of any Option may be paid
in cash or in Common Stock at the discretion of the Committee. See "Alternative
Option Payments." The term of Options shall be determined by the Committee, but
in no event shall an Option be exercisable more than ten years from the date of
grant (or five years from date of grant for a 10% owner). Awards of Options have
been made to Outside Directors and certain officers under the Incentive Plan
which shall become effective and be considered to be granted upon the effective
date of the Incentive Plan. See "New Plan Benefits" and "Shareholder Approval
and Effective Date of Plan" below for a description of such Awards and the
effective date of the Incentive Plan.
All Options granted under the Incentive Plan to officers and employees
will be qualified as Incentive Stock Options to the extent permitted under
Section 422 of the Code. Incentive Stock Options, at the discretion of the
Committee with the concurrence of the holder, may be converted into Non-
Statutory Stock Options. The exercise price of all Incentive Stock Options must
be at least 100% of the fair market value of the underlying Common Stock at the
time of grant, except as provided below. In order to qualify as Incentive Stock
Options under Section 422 of the Code, the Option must be granted to an
employee, the exercise price must not be less than 100% of the fair market value
on the date of grant, the term of the Option may not exceed ten years from the
date of grant, and no more than $100,000 of options may become exercisable in
any fiscal year. Incentive Stock Options granted to any person who is the
beneficial owner of more than 10% of the outstanding voting stock may be
exercised only for a period of five years from the date of grant and the
exercise price must be at least equal to 110% of the fair market value of the
underlying Common Stock on the date of grant.
Each Outside Director of the Company or its affiliates will be eligible
to receive Non-statutory Stock Options to purchase shares of Common Stock.
Additionally, officers and employees are eligible to receive Non-Statutory Stock
Options to the extent they are ineligible to receive Incentive Stock Options.
Unless otherwise determined by the Committee, upon termination of an
optionee's services for any reason other than death, disability, retirement or
termination for cause, all then exercisable Options shall remain exercisable for
a period of three months following termination and all unexerciseable Options
shall be cancelled. In the event of the death or disability of an optionee, all
unexercisable Options held by such optionee will become fully exercisable and
remain exercisable for up to one year thereafter. In the event of termination
for cause, all exercisable and unexercisable Options held by the optionee shall
be cancelled. In the event of the retirement of an optionee, the Committee shall
have the discretion to allow unexercisable Options to continue to vest or become
exercisable in accordance with their original terms, provided that the optionee
is engaged as a consultant, advisor or advisory director of the Company or any
of its affiliates.
Limited Rights. The Incentive Plan also provides the Committee with the
ability to grant a Limited Right concurrently with any Option. Limited Rights
are related to specific Options granted and become exercisable only upon a
change in control of the Bank or the Company. Upon exercise, the holder will be
entitled to receive in lieu of purchasing the stock underlying the Option, a
lump sum cash payment equal to the difference between the exercise price of the
related Option and the fair market value of the
18
<PAGE>
shares of Common Stock subject to the Option on the date of exercise of the
right less any applicable tax withholding.
Stock Awards. The Incentive Plan authorizes the granting of Stock
Awards to employees and Outside Directors, in an amount not to exceed 348,286
shares of Common Stock in the aggregate. The Committee has the authority to
determine the dates on which Stock Awards granted will vest or any other
conditions which must be satisfied prior to vesting; provided, however, that any
Stock Award granted prior to January 15, 1998 may not vest at a rate greater
than 20% per year, commencing at least one year from the date of grant and the
vesting of any Stock Award may not be accelerated except in the case of death or
disability. The Board of Directors intends to award the Incentive Plan in the
future to provide the Committee with the discretion to accelerate vesting of
Stock Awards in certain circumstances. See "Amendments." Awards of Stock Awards
have been made to Outside Directors and certain officers under the Incentive
Plan which shall become effective and considered to be granted upon the
effective date of the Incentive Plan. See "New Plan Benefits" and "Shareholder
Approval and Effective Date of Plan" below for a description of such Awards and
the effective date of the Incentive Plan.
When Stock Awards are distributed in accordance with the Incentive
Plan, the recipients will also receive amounts equal to accumulated cash and
stock dividends (if any) with respect thereto plus earnings thereon minus any
required tax withholding amounts. Prior to vesting, recipients of Stock Awards
may direct the voting of shares of Common Stock granted to them and held in the
Incentive Plan Trust. Shares of Common Stock held by the Incentive Plan trust
which have not been allocated or for which voting has not been directed are
voted by the trustee in the same proportion as the awarded shares are voted in
accordance with the directions given by all recipients of Awards.
Unless otherwise determined by the Committee, upon termination of the
services of a holder of a Stock Award for any reason other than death,
disability, retirement or termination for cause, all such holder's rights in
unvested Stock Awards shall be cancelled. In the event of the death or
disability of the holder of the Stock Award, all unvested Stock Awards held by
such individual will become fully vested. In the event of termination for cause
of a holder of a Stock Award, all unvested Stock Awards held by such individual
shall be cancelled. In the event of retirement of the holder of a Stock Award,
the Committee shall have the discretion to determine that all unvested Stock
Awards shall continue to vest in accordance with their original terms, provided
the holder is engaged as a consultant, advisor or advisory director of the
Company or any of its affiliates.
Stock Appreciation Rights. The Incentive Plan authorizes the Committee
to grant Stock Appreciation Rights ("SARs") which entitles the holder to receive
a payment, equal in value to the excess of the fair market value of a specified
number of shares of Common Stock on the date the SAR is exercised over the grant
price of such SAR, as determined by the Committee.
Tax Treatment
Options. An optionee will generally not be deemed to have recognized
taxable income upon grant or exercise of any Incentive Stock Option, provided
that shares transferred in connection with the exercise are not disposed of by
the optionee for at least one year after the date the shares are transferred in
connection with the exercise of the Option and two years after the date of grant
of the Option. If certain holding periods are satisfied, upon disposal of the
shares, the aggregate difference between the per share Option exercise price and
the fair market value of the Common Stock is recognized as income taxable at
long term capital gains rates. No compensation deduction may be taken by the
Company as a result of the grant or exercise of Incentive Stock Options,
assuming these holding periods are met.
19
<PAGE>
In the case of the exercise of a Non-statutory Stock Option, an
optionee will be deemed to have received ordinary income upon exercise of the
Option in an amount equal to the aggregate amount by which the per share
exercise price is exceeded by the fair market value of the Common Stock. In the
event shares received through the exercise of an Incentive Stock Option are
disposed of prior to the satisfaction of the holding periods (a "disqualifying
disposition"), the exercise of the Option will be treated as the exercise of a
Non-statutory Stock Option, except that the optionee will recognize the ordinary
income for the year in which the disqualifying disposition occurs. The amount of
any ordinary income deemed to have been received by an optionee upon the
exercise of a Non-statutory Stock Option or due to a disqualifying disposition
will be a deductible expense of the Company for federal income tax purposes,
subject to the limitations imposed by Code Section 162(m) (discussed below).
Limited Rights. In the case of Limited Rights, the holder would have to
include the amount paid to him upon the exercise of the Limited Right in his
gross income for federal income tax purposes in the year in which the payment is
made and the Company would be entitled to a deduction for federal income tax
purposes of the amount paid to the extent that the amount paid is not in excess
of the limitation imposed by Section 280G of the Code.
Stock Awards. When shares of Common Stock, as Stock Awards, are
distributed, the recipient is deemed to receive ordinary income equal to the
fair market value of such shares at the date of distribution plus any dividends
and earnings on such shares (provided such date is more than six months after
the date of grant) and the Company is permitted a commensurate compensation
expense deduction for income tax purposes.
Stock Appreciation Rights. In the case of SARs, the holder would have
to include the amount paid to him upon the exercise of the SARs in his gross
income for federal income tax purposes in the year in which the payment is made
and the Company would be entitled to a deduction for federal income tax purposes
of the amount paid.
Performance Awards.
General. The Incentive Plan provides the Committee with the ability to
condition or restrict the vesting or exercisability of any Award upon the
achievement of performance targets or goals as set forth under the Incentive
Plan. Any Award subject to such conditions or restrictions is considered to be a
"Performance Award." Subject to the express provisions of the Plan and as
discussed in this paragraph, the Committee has discretion to determine the terms
of any Performance Award, including the amount of the award, or a formula for
determining such, the performance criteria and level of achievement related to
these criteria which determine the amount of the award granted, issued,
retainable and/or vested, the period as to which performance shall be measured
for determining achievement of performance (a "performance period"), the timing
of delivery of any awards earned, forfeiture provisions, the effect of
termination of employment for various reasons, and such further terms and
conditions, in each case not inconsistent with the Plan, as may be determined
from time to time by the Committee. The performance criteria upon which
Performance Awards are granted, issued, retained and/or vested may be based on
financial performance and/or personal performance evaluations, except that for
any Performance Award that is intended by the Committee to satisfy the
requirements for "performance based compensation" under Code Section 162(m), the
performance criteria shall be a measure based on one or more Qualifying
Performance Criteria (as defined below). Notwithstanding satisfaction of any
performance goals, the number of Shares granted, issued, retainable and/or
vested under a Performance Award may be adjusted by the Committee on the basis
of such further considerations as the Committee in its sole discretion shall
determine. However, the Committee may not increase the amount earned upon
satisfaction of any
20
<PAGE>
performance goal by any Participant who is a "covered employee" within the
meaning of Section 162(m) of the Code.
Qualifying Performance Criteria and Section 162(m) Limits. Subject to
shareholder approval of the Plan, the Performance Criteria for any Performance
Award that is intended to satisfy the requirements for "performance based
compensation" under the Code Section 162(m) shall be based upon any one or more
of the following Performance Criteria, either individually, alternatively or in
any combination, applied to either the Company as a whole or to a business unit
or subsidiary, either individually, alternatively or in any combination, and
measured either on an absolute basis or relative to a pre-established target, to
previous years' results or to a designated comparison group, in each case as
preestablished by the Committee under the terms of the Award: net income, as
adjusted for non-recurring items; cash earnings; earnings per share; cash
earnings per share; return on equity; return on assets; assets; stock price;
total shareholder return; capital; net interest income; market share; cost
control or efficiency ratio; and asset growth.
Maximum Awards. The aggregate amount of Options granted under the Plan
during any 60 month period to any one Participant may not exceed 25% of the
total amount of options available to be granted under the Incentive Plan. The
aggregate amount of shares of Common Stock issuable under a Stock Award granted
under the Plan for any 60 month period to any one Participant may not exceed 25%
of the total amount of Stock Awards available to be granted under the Incentive
Plan.
Payout Alternatives
The Committee has the discretion to determine the form of payment it
shall use in distributing payments for all Awards. If the Committee requests any
or all participants to make an election as to form of payment, it shall not be
considered bound by the election. Any shares of Common Stock tendered in payment
of an obligation arising under the Incentive Plan or applied to tax withholding
amounts shall be valued at the fair market value of the Common Stock. The
Committee may use treasury stock, authorized but unissued stock or it may direct
the market purchase of shares of Common Stock to satisfy its obligations under
the Incentive Plan.
Alternate Option Payments
Subject to the terms of the Incentive Plan, the Committee also has
discretion to determine the form of payment for the exercise of an Option. The
Committee may indicate acceptable forms in the Award Agreement covering such
Options or may reserve its decision to the time of exercise. No Option is to be
considered exercised until payment in full is accepted by the Committee. The
Committee may permit the following forms of payment for Options: (a) in cash or
by certified or cashiers check; or (b) by tendering previously acquired shares
of Common Stock. Any shares of Common Stock tendered in payment of the exercise
price of an Option shall be valued at the fair market value of the Common Stock
on the date prior to the date of exercise.
Amendments
The Board of Directors or Committee may amend the Incentive Plan in any
respect, at any time, provided that no amendment may affect the rights of the
holder of an Award without his or her permission. Applicable OTS regulations
provide that any stock based benefit plan, such as the Incentive Plan, that is
adopted by a converted institution within the first year after conversion may
not implement such a plan unless it provides for the grant of options or stock
awards which shall vest or become
21
<PAGE>
exercisable in installments at a rate greater than 20% per year, except in the
case of death or disability. The Board of Directors intends to amend the
Incentive Plan after January 15, 1998 to provide the Committee with the
authority to accelerate vesting of exercisability of Awards upon the occurrence
of a change in control of the Company or the Bank (as defined in the Incentive
Plan) and other circumstances. It is intended that any such amendment shall be
submitted to shareholders for approval to the extent required by applicable OTS
regulations.
Adjustments
In the event of any change in the outstanding shares of Common Stock of
the Company by reason of any stock dividend or split, recapitalization, merger,
consolidation, spin-off, reorganization, combination or exchange of shares, or
other similar corporate change, or other increase or decrease in such shares
without receipt or payment of consideration by the Company, or in the event an
extraordinary capital distribution is made, including the payment of an
extraordinary dividend, the Committee may make such adjustments to previously
granted Awards, to prevent dilution, diminution or enlargement of the rights of
the holder; provided, however, that in the case of an extraordinary dividend,
the Committee may be required to obtain OTS approval prior to any such
adjustment. All Awards under this Incentive Plan shall be binding upon any
successors or assigns of the Company.
Nontransferability
Unless determined otherwise by the Committee, Awards under the
Incentive Plan shall not be transferable by the recipient other than by will or
the laws of intestate succession or pursuant to a domestic relations order. With
the consent of the Committee, an Award recipient may permit transferability or
assignment for valid estate planning purposes as permitted under the Code or
Rule 16b-3 under the Exchange Act and a participant may designate a person or
his or her estate as beneficiary of any Award to which the recipient would then
be entitled, in the event of the death of the participant.
Shareholder Approval and Effective Date of Plan
The Incentive Plan complies with the applicable regulations of the OTS.
However, the OTS has not in any way endorsed or approved the Incentive Plan.
Pursuant to OTS regulations, the Incentive Plan may not be implemented prior to
January 15, 1998 unless it is approved by a majority of the votes eligible to be
cast by the Company's shareholders at a duly called meeting of shareholders
which may be held no sooner than six months after the completion of the
Conversion.
The Incentive Plan provides that it shall become effective upon the
earlier of: (i) the date that it is approved by a majority of votes eligible to
be cast by the Company's shareholders at a duly called meeting of shareholders;
or (ii) January 16, 1998. Accordingly, if the Incentive Plan is not approved by
a majority of the votes eligible to be cast by shareholders at the Annual
Meeting, the Incentive Plan and any grants thereunder shall become effective on
January 16, 1998 without further shareholder approval unless it is terminated by
the Board of Directors. In the absence of the approval of the Incentive Plan by
a majority of shares cast at the Annual Meeting, the Options granted under the
Incentive Plan would not qualify as Incentive Stock Options under the Code and
the Common Stock of the Company may no longer be eligible for listing on the
American Stock Exchange.
UNLESS MARKED TO THE CONTRARY, THE SHARES REPRESENTED BY THE ENCLOSED
PROXY CARD, IF EXECUTED AND RETURNED, WILL BE VOTED "FOR" THE APPROVAL OF THE
FIRSTFED AMERICA BANCORP, INC. 1997 STOCK-BASED INCENTIVE PLAN.
22
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF
THE FIRSTFED AMERICA BANCORP, INC. 1997 STOCK-BASED INCENTIVE PLAN.
New Plan Benefits
The following table provides certain information with respect to all
Awards which are intended to be granted and become effective upon the effective
date of the Incentive Plan, specifying the amounts to be granted to the named
executive officers individually, all current executive officers as a group, all
current directors of the Company and the Bank who are not executive officers as
a group, and all employees, including all current officers who are not executive
officers, as a group.
All Awards granted to the officers and directors of the Company and the
Bank reflected in the table below become vested or exercisable in equal annual
installments of 20% each year commencing one year from the effective date of
grant. All such Awards will immediately vest and become exercisable upon
termination of employment due to death or disability. Additionally, on or after
January 16, 1998, the Board of Directors intends to amend the Incentive Plan to
provide the Committee with the authority to accelerate the vesting of Awards,
including previously granted Awards, upon a change in control of the Company or
the Bank (as defined in the Incentive Plan) and other circumstances. The
Incentive Plan generally defines that a change in control will be deemed to
occur when a person or group of persons acting in concert acquires beneficial
ownership of 20% or more of any class of equity security, such as the Common
Stock of the Company or the Bank, or in the event of a tender offer or exchange
offer, merger or other form of business combination, sale of assets or contested
election of directors which results in a change in the composition of a majority
of the incumbent Board of Directors of the Company or the Bank. To the extent
required by applicable OTS regulation, the Company will present any such
amendment to shareholders for approval. The Company is not otherwise required to
obtain shareholder approval of such an amendment to the Incentive Plan.
23
<PAGE>
<TABLE>
<CAPTION>
NEW PLAN BENEFITS
Stock Option Awards(1) Stock Awards
---------------------------- ----------------------------
Dollar Number Dollar Number
Name and Position Value (2) of Units (3) Value (4) of Units (3)
- -------------------------------------------------- ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C>
Robert F. Stoico
Chairman of the Board of the Company and
President and Chief Executive Officer of the
Company and the Bank - 217,680 $1,273,428 87,072
Kevin J. McGillicuddy
Senior Vice President of the Company and the
Bank - 43,536 254,680 17,414
Frederick R. Sullivan
Senior Vice President of the Company and the
Bank - 43,536 254,680 17,414
Terrence M. Tyrrell
Senior Vice President of the Company and the
Bank - 43,536 254,680 17,414
All current executive officers as a group
(12 persons) - 452,776 2,852,489 195,042
All current directors of the Company and Bank
(who are not executive officers) as a group (10
persons)(5) - 261,220 1,528,166 104,490
Other employees (27 persons) - 26,122 191,017 13,061
</TABLE>
- ---------------------
(1) All Options awarded include the grant of Limited Rights.
(2) The "dollar value" for Options to be granted pursuant to the Incentive
Plan on the date of grant will be zero, as the exercise price for such
Options will be the fair market value on the date of grant which is
intended to be the date shareholder approval is obtained.
(3) 130,605 Options and 35,696 Stock Awards remain unallocated under the
Incentive Plan.
(4) Based upon $14.625, the closing price of the Common Stock, as reported
on the American Stock Exchange on June 6, 1997.
(5) Each Director of the Company and each Director of the Bank shall be
granted Options to purchase 26,122 shares and Stock Awards which provide
for 10,449 shares of Common Stock.
24
<PAGE>
PROPOSAL 3. RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Company's independent auditors for the fiscal year ended March 31,
1997 were KPMG Peat Marwick LLP. The Company's Board of Directors has
reappointed KPMG Peat Marwick LLP to continue as independent auditors for the
Bank and the Company for the fiscal year ending March 31, 1998, subject to
ratification of such appointment by the shareholders.
Representatives of KPMG Peat Marwick LLP will be present at the Annual
Meeting. They will be given an opportunity to make a statement if they desire to
do so and will be available to respond to appropriate questions from
shareholders present at the Annual Meeting.
UNLESS MARKED TO THE CONTRARY, THE SHARES REPRESENTED BY THE ENCLOSED
PROXY CARD WILL BE VOTED FOR RATIFICATION OF THE APPOINTMENT OF KPMG PEAT
MARWICK LLP AS THE INDEPENDENT AUDITORS OF THE COMPANY.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" RATIFICATION OF
THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE INDEPENDENT AUDITORS OF THE
COMPANY.
ADDITIONAL INFORMATION
Shareholder Proposals
To be considered for inclusion in the Company's proxy statement and
form of proxy relating to the 1998 Annual Meeting of Shareholders, a shareholder
proposal must be received by the Secretary of the Company at the address set
forth on the Notice of Annual Meeting of Shareholders not later than April 7,
1998. Any such proposal will be subject to 17 C.F.R. Section 240.14a-8 of the
Rules and Regulations under the Exchange Act.
Notice of Business to be Conducted at a Special or Annual Meeting
The Bylaws of the Company set forth the procedures by which a
shareholder may properly bring business before a meeting of shareholders.
Pursuant to the Bylaws, only business brought by or at the direction of the
Board of Directors may be conducted at an annual meeting. The Bylaws of the
Company provide an advance notice procedure for a shareholder to properly bring
business before an annual meeting. The shareholder must give written advance
notice to the Secretary of the Company not less than ninety (90) days before the
date originally fixed for such meeting; provided, however, that in the event
that less than one hundred (100) days notice or prior public disclosure of the
date of the meeting is given or made to shareholders, notice by the shareholder
to be timely must be received not later than the close of business on the tenth
day following the date on which the Company's notice to shareholders of the
annual meeting date was mailed or such public disclosure was made. The advance
notice by shareholders must include the shareholder's name and address, as they
appear on the Company's record of shareholders, a brief description of the
proposed business, the reason for conducting such business at the annual
meeting, the class and number of shares of the Company's capital stock that are
beneficially owned by such shareholder and any material interest of such
shareholder in the proposed business. In the case of nominations to the Board of
Directors, certain information regarding the nominee must be provided.
25
<PAGE>
Nothing in this paragraph shall be deemed to require the Company to include in
its proxy statement or the proxy relating to any Annual Meeting any shareholder
proposal which does not meet all of the requirements for inclusion established
by the SEC in effect at the time such proposal is received.
Other Matters Which May Properly Come Before the Meeting
The Board of Directors knows of no business which will be presented for
consideration at the Annual Meeting other than as stated in the Notice of Annual
Meeting of Shareholders. If, however, other matters are properly brought before
the Annual Meeting, it is the intention of the persons named in the accompanying
proxy to vote the shares represented thereby on such matters in accordance with
their best judgment.
Whether or not you intend to be present at the Annual Meeting, you are
urged to return your proxy card promptly. If you are then present at the Annual
Meeting and wish to vote your shares in person, your original proxy may be
revoked by voting at the Annual Meeting. However, if you are a shareholder whose
shares are not registered in your own name, you will need appropriate
documentation from your recordholder to vote personally at the Annual Meeting.
A COPY OF THE FORM 10-K (WITHOUT EXHIBITS) FOR THE FISCAL YEAR ENDED
MARCH 31, 1997, AS FILED WITH THE SEC, WILL BE FURNISHED WITHOUT CHARGE TO
SHAREHOLDERS OF RECORD UPON WRITTEN REQUEST TO PHILIP G. CAMPBELL, FIRSTFED
AMERICA BANCORP, INC., ONE NORTH MAIN STREET, FALL RIVER, MASSACHUSETTS 02720.
By Order of the Board of Directors
/s/ Cecilia R. Viveiros
Cecilia R. Viveiros
Corporate Secretary
Fall River, Massachusetts
June 20, 1997
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN
PERSON. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING, YOU ARE REQUESTED TO SIGN, DATE AND PROMPTLY
RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
26
<PAGE>
APPENDIX A
FIRSTFED AMERICA BANCORP, INC.
1997 STOCK-BASED INCENTIVE PLAN
1. DEFINITIONS.
-----------
(a) "Affiliate" means any "subsidiary corporation" of the Holding Company,
as such term is defined in Section 424(f) of the Code.
(b) "Award" means, individually or collectively, a grant under the Plan of
Non-statutory Stock Options, Incentive Stock Options, Stock Appreciation Rights,
Limited Rights and Stock Awards.
(c) "Award Agreement" means an agreement evidencing and setting forth the
terms of an Award granted under the Plan, in such form as the Committee may,
from time to time, approve.
(d) "Bank" means First Federal Savings Bank of America, Fall River,
Massachusetts.
(e) "Board of Directors" means the board of directors of the Holding
Company.
(f) "Change in Control" means a change in control of the Bank or Holding
Company of a nature that (i) would be required to be reported in response to
Item 1 of the current report on Form 8-K, as in effect on the date hereof,
pursuant to Sections 13 or 15(d) of the Exchange Act; (ii) results in a "change
of control" or "acquisition of control" within the meaning of the regulations
promulgated by the Office of Thrift Supervision ("OTS") (or its predecessor
agency) found at 12 C.F.R. Part 574, as in effect on the date hereof; provided,
however, that in applying the definition of change in control as set forth under
such regulations the Board of Directors shall substitute its judgment for that
of the OTS; or (iii) without limitation Change in Control shall be deemed to
have occurred at such time as (A) any "person" (as the term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Bank or the Holding Company representing 20% or
more of the Bank's or the Holding Company's outstanding securities except for
any securities of the Bank purchased by the Holding Company and any securities
purchased by any tax-qualified employee benefit plan of the Bank; or
(B) individuals who constitute the Board of Directors on the date hereof (the
"Incumbent Board") cease for any reason to constitute at least a majority
thereof, provided that any person becoming a director subsequent to the date
hereof whose election was approved by a vote of at least three-quarters of the
directors comprising the Incumbent Board, or whose nomination for election by
the Holding Company's stockholders was approved by a nominating committee
serving under the Incumbent Board, shall be, for purposes of this clause (B),
considered as though he were a member of the Incumbent Board; or (C) a plan of
reorganization, merger, consolidation, sale of all or substantially all the
assets of the Bank or the Holding Company or similar transaction occurs in which
the Bank or Holding Company is not the resulting entity; or (D) a solicitation
of
<PAGE>
shareholders of the Holding Company, by someone other than the current
management of the Holding Company, seeking stockholder approval of a plan of
reorganization, merger or consolidation of the Holding Company or Bank or
similar transaction with one or more corporations, as a result of which the
outstanding shares of the class of securities then subject to the plan are
exchanged for or converted into cash or property or securities not issued by the
Bank or the Holding Company; or (E) a tender offer is made for 20% or more of
the voting securities of the Bank or the Holding Company.
(g) "Code" means the Internal Revenue Code of 1986, as amended.
(h) "Committee" means the committee designated by the Board of Directors
to administer the Plan pursuant to Section 2 of the Plan.
(i) "Common Stock" means the Common Stock of the Holding Company, par
value, $.01 per share.
(j) "Date of Grant" means the effective date of an Award.
(k) "Disability" means any mental or physical condition with respect to
which the Participant qualifies for and receives benefits for under a long-term
disability plan of the Holding Company or an Affiliate, or in the absence of
such a long-term disability plan or coverage under such a plan, "disability"
shall mean a physical or mental condition which, in the sole discretion of the
Committee, is reasonably expected to be of indefinite duration and to
substantially prevent the Participant from fulfilling his duties or
responsibilities to the Holding Company or an Affiliate.
(l) "Effective Date" means the date the Plan is approved by stockholders,
as defined by applicable OTS regulation, or January 16, 1998, whichever is
earlier.
(m) "Employee" means any person employed by the Holding Company or an
Affiliate. Directors who are employed by the Holding Company or an Affiliate
shall be considered Employees under the Plan.
(n) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(o) "Exercise Price" means the price at which a share of Common Stock may
be purchased by a Participant pursuant to an Option.
(p) "Extraordinary Dividend" means a distribution to stockholders by the
Holding Company of earnings or stockholders' equity which: (i) exceeds net
earnings for the period for which the distribution is paid or (ii) such
distribution or any portion thereof will be treated by the stockholders
receiving such distribution as a return of capital for federal income tax
purposes
A-2
<PAGE>
(q) "Fair Market Value" means the market price of Common Stock, determined
by the Committee as follows:
(i) If the Common Stock was traded on the date in question on The
Nasdaq Stock Market then the Fair Market Value shall be equal
to the last transaction price quoted for such date by The
Nasdaq Stock Market;
(ii) If the Common Stock was traded on a stock exchange on the date
in question, then the Fair Market Value shall be equal to the
closing price reported by the applicable composite
transactions report for such date; and
(iii) If neither of the foregoing provisions is applicable, then the
Fair Market Value shall be determined by the Committee in good
faith on such basis as it deems appropriate.
Whenever possible, the determination of Fair Market Value by the Committee
shall be based on the prices reported in The Wall Street Journal. Such
-----------------------
determination shall be conclusive and binding on all persons.
(r) "Holding Company" means FIRSTFED AMERICA BANCORP, INC.
(s) "Incentive Stock Option" means an Option granted to a Participant
pursuant to Section 7 of the Plan that is intended to meet the requirements of
Section 422 of the Code.
(t) "Limited Right" means an Award granted to a Participant pursuant to
Section 8 of the Plan.
(u) "Non-statutory Stock Option" means a stock option granted to a
Participant pursuant to the terms of the Plan but which is not intended to be
and is not identified as an Incentive Stock Option or a stock option granted
under the Plan which is intended to be and is identified as an Incentive Stock
Option but which does not meet the requirements of Section 422 of the Code.
(v) "Option" means an Incentive Stock Option or Non-statutory Stock
Option.
(w) "Outside Director" means a member of the Board of Directors of the
Holding Company or an Affiliate, who is not also an Employee of the Holding
Company or an Affiliate.
(x) "Participant" means any person who holds an outstanding Award pursuant
to the Plan.
A-3
<PAGE>
(y) "Performance Award" means an Award granted to a Participant pursuant
to Section 11 of the Plan.
(z) "Performance Goal" means an objective for the Holding Company or any
Affiliate or any unit thereof or any individual that may be established by the
Committee for a Performance Award to become vested, earned or exercisable.
Performance Goals applicable to Performance Awards are intended to constitute
"performance-based" compensation within the meaning of Section 162(m) of the
Code and shall be based on one or more of the following criteria:
(i) net income, as adjusted for non-recurring items
(ii) cash earnings
(iii) earnings per share
(iv) cash earnings per share
(v) return on equity
(vi) return on assets
(vii) assets
(viii) stock price
(ix) total shareholder return
(x) capital
(xi) net interest income
(xii) market share
(xiii) cost control or efficiency ratio
(xiv) asset growth
(aa) "Plan" means the FIRSTFED AMERICA BANCORP, INC. 1997 Stock-Based
Incentive Plan.
(bb) "Retirement" means a termination of employment (i) from the Holding
Company or an Affiliate at an age and with employment service that would entitle
the individual to a pension under the Financial Institutions Retirement Fund as
adopted by First Federal Savings Bank of America ("Pension Plan") if the
individual were a participant in such Pension Plan or (ii) under circumstances
designated as a Retirement by the Committee. "Retirement" with respect to an
Outside Director means the termination of service from the Board of Directors of
the Holding Company and any Affiliate following written notice to the Board of
Directors of such Outside Director's intention to retire.
(cc) "Stock Appreciation Right" means an Award granted to a Participant,
alone or in connection with a related Option, pursuant to Section 10 of the
Plan.
(dd) "Stock Award" means an Award granted to a Participant pursuant to
Section 9 of the Plan.
A-4
<PAGE>
(ee) "Termination for Cause" shall mean, in the case of an Outside
Director, removal from the Board of Directors or, in the case of an Employee,
termination of employment, because of a material loss to the Holding Company or
an Affiliate caused by the Participant's intentional failure to perform stated
duties, personal dishonesty, willful violation of any law, rule, regulation
(other than traffic violations or similar offenses) or final cease and desist
order, as determined by the Board of Directors. No act, or failure to act, on a
Participant's part shall be "willful" unless done, or omitted to be done, not in
good faith and without reasonable belief that the action or omission was in the
best interest of the Holding Company or an Affiliate.
(ff) "Trust" means a trust established by the Board of Directors in
connection with this Plan to hold Plan assets for the purposes set forth herein.
(gg) "Trustee" means any person or entity approved by the Board of
Directors to hold legal title to any of the Trust assets for the purposes set
forth under the Plan.
2. ADMINISTRATION.
--------------
(a) The Plan shall be administered by the Committee. The Committee shall
consist of two or more disinterested directors of the Holding Company, who shall
be appointed by the Board of Directors. A member of the Board of Directors
shall be deemed to be "disinterested" only if he satisfies (i) such requirements
as the Securities and Exchange Commission may establish for non-employee
directors administering plans intended to qualify for exemption under Rule 16b-3
(or its successor) under the Exchange Act and (ii) such requirements as the
Internal Revenue Service may establish for outside directors acting under plans
intended to qualify for exemption under Section 162(m)(4)(C) of the Code. The
Board of Directors may also appoint one or more separate committees of the Board
of Directors, each composed of one or more directors of the Holding Company or
an Affiliate who need not be disinterested and who may grant Awards and
administer the Plan with respect to Employees and Outside Directors who are not
considered officers or directors of the Holding Company under Section 16 of the
Exchange Act.
(b) The Committee shall (i) select the Employees and Outside Directors who
are to receive Awards under the Plan, (ii) determine the type, number, vesting
requirements and other features and conditions of such Awards, (iii) interpret
the Plan and (iv) make all other decisions relating to the operation of the
Plan. The Committee may adopt such rules or guidelines as it deems appropriate
to implement the Plan. The Committee's determinations under the Plan shall be
final and binding on all persons.
(c) Each Award shall be evidenced by a written agreement ("Award
Agreement") containing such provisions as may be approved by the Committee. Each
Award Agreement shall constitute a binding contract between the Holding Company
or an Affiliate and the Participant, and every Participant, upon acceptance of
the Award Agreement, shall be bound by the terms and restrictions of the Plan
and the Award Agreement. The terms of each
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Award Agreement shall be in accordance with the Plan, but each Award Agreement
may include such additional provisions and restrictions determined by the
Committee, in its discretion, provided that such additional provisions and
restrictions are not inconsistent with the terms of the Plan. In particular,
the Committee shall set forth in each Award Agreement (i) the type of Award
granted (ii) the Exercise Price of an Option or Stock Appreciation Right,
(iii) the number of shares subject to the Award; (iv) the expiration date of the
Award, (v) the manner, time, and rate (cumulative or otherwise) of exercise or
vesting of such Award, and (vi) the restrictions, if any, placed upon such
Award, or upon shares which may be issued upon exercise of such Award. The
Chairman of the Committee and such other directors and officers as shall be
designated by the Committee are hereby authorized to execute Award Agreements on
behalf of the Company or an Affiliate and to cause them to be delivered to the
recipients of Awards.
(d) The Committee may delegate all authority for: (i) the determination of
forms of payment to be made by or received by the Plan and (ii) the execution of
any Award Agreement. The Committee may rely on the descriptions,
representations, reports and estimates provided to it by the management of the
Holding Company or an Affiliate for determinations to be made pursuant to the
Plan, including the attainment of Performance Goals. However, only the
Committee or a portion of the Committee may certify the attainment of a
Performance Goal.
3. TYPES OF AWARDS AND RELATED RIGHTS.
-----------------------------------
The following Awards may be granted under the Plan:
(a) Non-statutory Stock Options
(b) Incentive Stock Options
(c) Limited Rights
(d) Stock Awards
(e) Stock Appreciation Rights
4. STOCK SUBJECT TO THE PLAN.
-------------------------
Subject to adjustment as provided in Section 17 hereof, the maximum number
of shares reserved for Awards under the Plan is 1,218,983, which number shall
not exceed 14% of the outstanding shares of the Common Stock determined
immediately as of the Effective Date. Subject to adjustment as provided in
Section 17 hereof, the maximum number of shares reserved hereby for purchase
pursuant to the exercise of Options and Option-related Awards granted under the
Plan is 870,715, which number shall not exceed 10% of the outstanding shares of
Common Stock as of the Effective Date. The maximum number of the shares
reserved for Stock Awards is 348,268, which number shall not exceed 4% of the
outstanding shares of Common Stock as of the Effective Date. The shares of
Common Stock issued under the Plan may be either authorized but unissued shares
or authorized shares previously
A-6
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issued and acquired or reacquired by the Trust or the Holding Company,
respectively. To the extent that Options and Stock Awards are granted under the
Plan, the shares underlying such Awards will be unavailable for any other use
including future grants under the Plan except that, to the extent that Stock
Awards or Options terminate, expire, or are forfeited without having vested or
without having been exercised (in the case of Limited Rights, exercised for
cash), new Awards may be made with respect to these shares.
5. ELIGIBILITY.
-----------
Subject to the terms of the Plan, all Employees and Outside Directors shall
be eligible to receive Awards under the Plan. In addition, the Committee may
grant eligibility to consultants and advisors of the Holding Company or an
Affiliate.
6. NON-STATUTORY STOCK OPTIONS.
---------------------------
The Committee may, subject to the limitations of this Plan and the
availability of shares of Common Stock reserved but unawarded under this Plan,
grant Non-statutory Stock Options upon such terms and conditions as it may
determine. Non-statutory Stock Options granted under this Plan are subject to
the following terms and conditions:
(a) Exercise Price. The Exercise Price of each Non-statutory Stock Option
--------------
shall be determined by the Committee on the Date of Grant. Such Exercise Price
shall not be less than 100% of the Fair Market Value of the Common Stock on the
Date of Grant. Shares of Common Stock underlying a Non-statutory Stock Option
may be purchased only upon full payment of the Exercise Price in a manner
provided for in Section 14 of the Plan.
(b) Terms of Non-statutory Stock Options. The term during which each Non-
------------------------------------
statutory Stock Option may be exercised shall be determined by the Committee,
but in no event shall a Non-statutory Stock Option be exercisable in whole or in
part more than ten (10) years from the Date of Grant. Subject to Section 23 of
the Plan, the Committee shall determine the date on which each Non-statutory
Stock Option shall become exercisable and any terms or conditions which must be
satisfied prior to each Non-statutory Stock Option becoming exercisable. Any
such terms or conditions shall be determined by the Committee as of the Date of
Grant. The shares of Common Stock underlying each Non-statutory Stock Option
installment may be purchased in whole or in part by the Participant at any time
during the term of such Non-statutory Stock Option after such installment
becomes exercisable.
(c) Non-Transferability. Unless otherwise determined by the Committee in
-------------------
accordance with this Section 6(c), Non-statutory Stock Options shall not be
transferred, assigned, hypothecated, or disposed of in any manner by a
Participant other than by will or the laws of intestate succession. The
Committee may, however, in its sole discretion, permit transferability or
assignment of a Non-statutory Stock Option if such transfer or assignment is, in
its sole determination, for valid estate planning purposes and such transfer or
assignment is permitted under the Code and Rule 16b-3 under the Exchange Act.
For purposes of this
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Section 6(c), a transfer for valid estate planning purposes includes, but is not
limited to: (a) a transfer to a revocable intervivos trust as to which the
Participant is both the settlor and trustee, (b) a transfer for no consideration
to: (i) any member of the Participant's Immediate Family, (ii) any trust solely
for the benefit of members of the Participant's Immediate Family, (iii) any
partnership whose only partners are members of the Participant's Immediate
Family, and (iv) any limited liability corporation or corporate entity whose
only members or equity owners are members of the Participant's Immediate Family,
or (c) The FIRSTFED Charitable Foundation. For purposes of this Section 6(c),
"Immediate Family" includes, but is not necessarily limited to, a Participant's
parents, spouse, children, grandchildren and great-grandchildren. Nothing
contained in this Section 6(c) shall be construed to require the Committee to
give its approval to any transfer or assignment of any Non-statutory Stock
Option or portion thereof, and approval to transfer or assign any Non-statutory
Stock Option or portion thereof does not mean that such approval will be given
with respect to any other Non-statutory Stock Option or portion thereof. The
transferee or assignee of any Non-statutory Stock Option shall be subject to all
of the terms and conditions applicable to such Non-statutory Stock Option
immediately prior to the transfer or assignment and shall be subject to any
conditions proscribed by the Committee with respect to such Non-statutory Stock
Option.
(d) Termination of Employment or Service. Unless otherwise determined by
------------------------------------
the Committee, upon the termination of a Participant's employment or service for
any reason other than Disability, death, Retirement or Termination for Cause,
the Participant's Non-statutory Stock Options shall be exercisable only as to
those shares that were immediately exercisable by the Participant at the date of
termination and only for a period of three (3) months following termination. In
the event of a Participant's Retirement, the Participant's Non-statutory Stock
Options shall be exercisable only as to those shares that were immediately
exercisable by the Participant at the date of Retirement and remain exercisable
for a period of three (3) years; provided however, that upon the Participant's
Retirement, the Committee, in its discretion, may determine that all
unexercisable Non-statutory Stock Options shall continue to become exercisable
in accordance with the Award Agreement if the Participant is immediately engaged
by the Holding Company or an Affiliate as a consultant or advisor or continues
to serve the Holding Company or an Affiliate as a director or advisory director.
Unless otherwise determined by the Committee, in the event of the termination of
a Participant's employment or service due to Disability or death, all Non-
statutory Stock Options held by such Participant shall immediately become
exercisable and remain exercisable for a period of three (3) years. Unless
otherwise determined by the Committee, in the event of a Participant's
Termination for Cause, all rights under the Participant's Non-statutory Stock
Options shall expire immediately upon the effective date of such Termination for
Cause.
(e) Maximum Individual Award. No individual Employee shall be granted an
------------------------
amount of Non-statutory Stock Options which exceeds 25% of all Options eligible
to be granted under the Plan within any 60 month period and no individual
Outside Director shall be granted an amount of Non-statutory Stock Options which
exceeds 5% of all Options eligible to be granted under the Plan within any 60
month period.
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7. INCENTIVE STOCK OPTIONS.
-----------------------
The Committee may, subject to the limitations of the Plan and the
availability of shares of Common Stock reserved but unawarded under this Plan,
grant Incentive Stock Options to an Employee. Incentive Stock Options granted
pursuant to the Plan shall be subject to the following terms and conditions:
(a) Exercise Price. The Exercise Price of each Incentive Stock Option
--------------
shall be not less than 100% of the Fair Market Value of the Common Stock on the
Date of Grant. However, if at the time an Incentive Stock Option is granted,
the Employee owns or is treated as owning, for purposes of Section 422 of the
Code, Common Stock representing more than 10% of the total combined voting
securities of the Holding Company ("10% owner"), the Exercise Price shall not be
less than 110% of the Fair Market Value of the Common Stock on the Date of
Grant. Shares of Common Stock may be purchased only upon payment of the full
Exercise Price in a manner provided for in Section 14 of the Plan.
(b) Amounts of Incentive Stock Options. To the extent the aggregate Fair
----------------------------------
Market Value of shares of Common Stock with respect to which Incentive Stock
Options that are exercisable for the first time by an Employee during any
calendar year under the Plan and any other stock option plan of the Holding
Company or an Affiliate exceeds $100,000, or such higher value as may be
permitted under Section 422 of the Code, such Options in excess of such limit
shall be treated as Non-statutory Stock Options. Fair Market Value shall be
determined as of the Date of Grant with respect to each such Incentive Stock
Option.
(c) Terms of Incentive Stock Options. The term during which each
--------------------------------
Incentive Stock Option may be exercised shall be determined by the Committee,
but in no event shall an Incentive Stock Option be exercisable in whole or in
part more than ten (10) years from the Date of Grant. If at the time an
Incentive Stock Option is granted to an Employee who is a 10% Owner, the
Incentive Stock Option granted to such Employee shall not be exercisable after
the expiration of five (5) years from the Date of Grant. Subject to Section 23
of the Plan, the Committee shall determine the date on which each Incentive
Stock Option shall become exercisable and any terms or conditions which must be
satisfied prior to the Incentive Stock Option becoming exercisable. Any such
terms or conditions shall be determined by the Committee as of the Date of
Grant. The shares of Common Stock underlying each Incentive Stock Option
installment may be purchased in whole or in part at any time during the term of
such Incentive Stock Option after such installment becomes exercisable.
(d) Transferability. No Incentive Stock Option shall be transferable
---------------
except by will or the laws of descent and distribution and is exercisable,
during his lifetime, only by the Employee to whom it is granted. The
designation of a beneficiary does not constitute a transfer.
(e) Termination of Employment. Unless otherwise determined by the
-------------------------
Committee, upon the termination of an Employee's employment for any reason other
than Disability,
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<PAGE>
death, Retirement or Termination for Cause, the Employee's Incentive Stock
Options shall be exercisable only as to those Incentive Stock Options that were
immediately exercisable by the Employee at the date of termination and only for
a period of three (3) months following such termination. In the event of an
Employee's Retirement, the Employee's Incentive Stock Options shall be
exercisable only as to those shares that were immediately exercisable by the
Employee at the date of Retirement and remain exercisable for a period of three
(3) years; provided however, that upon the Employee's Retirement, the Committee,
in its discretion, may determine that all unexercisable Incentive Stock Options
shall continue to become exercisable in accordance with the Award Agreement if
the Employee is immediately engaged by the Holding Company or an Affiliate as a
consultant or advisor or continues to serve the Holding Company or an Affiliate
as a director or advisory director. Unless otherwise determined by the
Committee, in the event of the termination of an Employee's service for
Disability or death, all unvested Incentive Stock Options held by such Employee
shall immediately become exercisable and shall remain exercisable for three (3)
years after such termination. Unless otherwise determined by the Committee, in
the event of an Employee's Termination for Cause, all rights under such
Employee's Incentive Stock Options shall expire immediately upon the effective
date of such Termination for Cause. Any Option which, by operation of this
provision, does not meet the requirements of Section 422 of the Code, shall be
considered a Non-statutory Stock Option.
(f) Maximum Individual Award. No individual Employee shall be granted an
------------------------
amount of Incentive Stock Options which exceeds 25% of all Options eligible to
be granted under the Plan within any 60 month period.
8. LIMITED RIGHTS.
--------------
Simultaneously with the grant of any Option, the Committee may grant a
Limited Right with respect to all or some of the shares of Common Stock covered
by such Option. Limited Rights granted under this Plan are subject to the
following terms and conditions:
(a) Terms of Rights. In no event shall a Limited Right be exercisable in
---------------
whole or in part before the expiration of six (6) months from the Date of Grant
of the Limited Right. A Limited Right may be exercised only in the event of a
Change in Control. The Limited Right may be exercised only when the underlying
Option is eligible to be exercised, and only when the Fair Market Value of the
underlying shares on the day of exercise is greater than the Exercise Price of
the underlying Option. Upon exercise of a Limited Right, the underlying Option
shall cease to be exercisable and shall be terminated. Upon exercise or
termination of an Option, any related Limited Rights shall terminate. The
Limited Right is transferable only when the underlying Option is transferable
and under the same conditions.
(b) Payment. Upon exercise of a Limited Right, the holder shall promptly
-------
receive from the Holding Company or an Affiliate an amount of cash equal to the
difference between the Exercise Price of the underlying Option and the Fair
Market Value of the Common Stock
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<PAGE>
subject to such Option on the date the Limited Right is exercised, multiplied by
the number of shares with respect to which such Limited Right is being
exercised.
9. STOCK AWARDS.
------------
The Committee may, subject to the limitations of the Plan, make Stock
Awards which shall consist of the grant of some number of shares of Common Stock
to a Participant. Stock Awards shall be made subject to the following terms and
conditions:
(a) Payment of the Stock Award. Stock Awards may only be made in whole
--------------------------
shares of Common Stock. Stock Awards may only be granted from shares reserved
under the Plan and available for award at the time the Stock Award is made to
the Participant.
(b) Terms of the Stock Awards. Subject to Section 23 of the Plan, the
-------------------------
Committee shall determine the dates on which Stock Awards granted to a
Participant shall vest and any terms or conditions which must be satisfied prior
to the vesting of any installment or portion of the Stock Award. Any such
terms, or conditions shall be determined by the Committee as of the Date of
Grant.
(c) Termination of Employment or Service. Unless otherwise determined by
------------------------------------
the Committee, upon the termination of a Participant's employment or service for
any reason other than Disability, death, Retirement or Termination for Cause,
the Participant's unvested Stock Awards as of the date of termination shall be
forfeited and any rights the Participant had to such unvested Stock Awards shall
become null and void. In the event of a Participant's Retirement, the
Participant's unvested Stock Awards as of the date of Retirement shall be
forfeited and any rights the Participant had to such unvested Stock Awards shall
become null and void; provided however, that upon the Participant's Retirement,
the Committee, in its discretion, may determine that all unvested Stock Awards
shall continue to vest in accordance with the Award Agreement if the Participant
is immediately engaged by the Holding Company or an Affiliate as a consultant or
advisor or continues to serve the Holding Company or an Affiliate as a director
or advisory director. Unless otherwise determined by the Committee, in the
event of a termination of the Participant's service due to Disability, death all
unvested Stock Awards held by such Participant shall immediately vest. Unless
otherwise determined by the Committee, or in the event of the Participant's
Termination for Cause, all unvested Stock Awards held by such Participant as of
the effective date of such Termination for Cause shall be forfeited and any
rights such Participant had to such unvested Stock Awards shall become null and
void.
(d) Non-Transferability. Except to the extent permitted by the Code, the
-------------------
rules promulgated under Section 16(b) of the Exchange Act or any successor
statutes or rules:
(i) The recipient of a Stock Award shall not sell, transfer, assign,
pledge, or otherwise encumber shares subject to the Stock Award
until full vesting of such shares has occurred. For purposes of
this section, the separation
A-11
<PAGE>
of beneficial ownership and legal title through the use of any
"swap" transaction is deemed to be a prohibited encumbrance.
(ii) Unless determined otherwise by the Committee and except in the
event of the Participant's death or pursuant to a domestic
relations order, a Stock Award is not transferable and may be
earned in his lifetime only by the Participant to whom it is
granted. Upon the death of a Participant, a Stock Award is
transferable by will or the laws of descent and distribution.
The designation of a beneficiary shall not constitute a transfer.
(iii) If a recipient of a Stock Award is subject to the provisions of
Section 16 of the Exchange Act, shares of Common Stock subject to
such Stock Award may not, without the written consent of the
Committee (which consent may be given in the Award Agreement), be
sold or otherwise disposed of within six (6) months following the
date of grant of the Stock Award.
(e) Accrual of Dividends. Whenever shares of Common Stock underlying a
--------------------
Stock Award are distributed to a Participant or beneficiary thereof under the
Plan, such Participant or beneficiary shall also be entitled to receive, with
respect to each such share distributed, a payment equal to any cash dividends
and the number of shares of Common Stock equal to any stock dividends, declared
and paid with respect to a share of the Common Stock if the record date for
determining shareholders entitled to receive such dividends falls between the
date the relevant Stock Award was granted and the date the relevant Stock Award
or installment thereof is issued. There shall also be distributed an
appropriate amount of net earnings, if any, of the Trust with respect to any
dividends paid out on the shares related to the Stock Award.
(f) Voting of Stock Awards. After a Stock Award has been granted but for
----------------------
which the shares covered by such Stock Award have not yet been vested, earned
and distributed to the Participant pursuant to the Plan, the Participant shall
be entitled to vote or to direct the Trustee to vote, as the case may be, such
shares of Common Stock which the Stock Award covers subject to the rules and
procedures adopted by the Committee for this purpose and in a manner consistent
with the Trust agreement.
(g) Maximum Individual Award. No individual Employee shall be granted an
------------------------
amount of Stock Awards which exceeds 25% of all Stock Awards eligible to be
granted under the Plan within any 60 month period and no individual Outside
Director shall be granted an amount of Stock Awards which exceeds 5% of all
Stock Awards eligible to be granted under the Plan within any 60 month period.
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<PAGE>
10. STOCK APPRECIATION RIGHTS
-------------------------
The Committee may, subject to the limitation of the Plan, grant a Stock
Appreciation Right ("SAR") to any Participant. A Stock Appreciation Right shall
entitle the Participant to the right to receive a payment, equal in value to
the excess of the Fair Market Value of a specified number of shares of Common
Stock on the date the SAR is exercised over the grant price of such SAR, which
shall not be less than 100% of the Fair Market Value on the date of grant of
such SAR, as determined by the Committee, provided that, in the case of a SAR
granted retroactively in tandem with or as substitution for another award
granted under any plan of the Company or an Affiliate, the grant price may be
the same as the exercise or designated price of such other award.
(a) Maximum Individual Award. No individual Employee or Outside Director
------------------------
shall be granted a number of Stock Appreciation Rights which exceeds the maximum
number of Options such individual may be granted under the Plan, pursuant to
Section 6(e) hereof, within any 60 month period.
11. PERFORMANCE AWARDS
------------------
(a) The Committee may determine to make any Award under the Plan contingent
upon the achievement of a Performance Goal or any combination of Performance
Goals. Each Performance Award shall be evidenced in the Award Agreement, which
shall set forth the Performance Goals applicable to the Award, the maximum
amounts payable and such other terms and conditions as are applicable to the
Performance Award. Each Performance Award shall be granted and administered to
comply with the requirements of Section 162(m) of the Code and in a manner
consistent with the provisions of Section 23 of the Plan.
(b) Any Performance Award shall be made not later than 90 days after the
start of the period for which the Performance Award relates and shall be made
prior to the completion of 25% of such period. All determinations regarding the
achievement of any Performance Goals will be made by the Committee. The
Committee may not increase during a year the amount of a Performance Award that
would otherwise be payable upon achievement of the Performance Goals but may
reduce or eliminate the payments as provided for in the Award Agreement.
(c) Nothing contained in the Plan will be deemed in any way to limit or
restrict the Committee from making any Award or payment to any person under any
other plan, arrangement or understanding, whether now existing or hereafter in
effect.
(d) A Participant who receives a Performance Award payable in Common Stock
shall have no rights as a shareholder until the Company Stock is issued pursuant
to the terms of the Award Agreement. The Common Stock may be issued without
cash consideration.
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<PAGE>
(e) A Participant's interest in a Performance Award may not be sold,
assigned, transferred, pledged, hypothecated, or otherwise encumbered.
(f) No Award or portion thereof that is subject to the attainment or
satisfaction of a condition or Performance Goal shall be distributed or
considered to be earned or vested until the Committee certifies in writing that
the conditions or Performance Goal to which the distribution, earning or vesting
of such Award is subject has been achieved.
12. DEFERRED PAYMENTS
-----------------
Notwithstanding any other provision of this Plan, any Participant may
elect, with the concurrence of the Committee and consistent with any rules and
regulations established by the Committee, to defer the delivery of the proceeds
of the exercise of any Non-statutory Stock Option not transferred under the
provisions of Section 6(c), Stock Appreciation Rights, and Stock Awards.
(a) Election Timing. The election to defer the delivery of the proceeds
---------------
from any eligible Non-statutory Stock Option or Stock Appreciation Right must be
made at least six (6) months prior to the date such Award is exercised or at
such other time as the Committee may specify. The election to defer the
delivery of any Stock Award must be made no later than the last day of the
calendar year preceding the calendar year in which the Participant would
otherwise have an unrestricted right to receive such Award. Deferrals of
eligible Awards shall only be allowed for exercises of Options and lapses of
restrictions on Stock Awards that occur while the Participant is in active
service with the Holding Company or an Affiliate. Any election to defer the
proceeds from an eligible Award shall be irrevocable as long as the Participant
remains an Employee or Outside Director of the Holding Company or an Affiliate.
(b) Stock Option Deferral. The deferral of the proceeds of Non-statutory
---------------------
Stock Options may be elected by a Participant subject to the rules and
regulations established by the Committee. The proceeds from such an exercise
shall be credited to a deferred stock option account established for the
Participant. The proceeds shall be credited to the deferred stock option
account as a number of deferred shares or share units equivalent in value to
those proceeds. Deferred share units shall be valued at the Fair Market Value
on the date of exercise. Subsequent to exercise, the deferred shares or share
units shall be valued at the Fair Market Value of Common Stock; provided,
however, that at the discretion of the Committee, the Participant may elect to
have the value of his deferred stock option account valued on some other basis
of measurement approved by the Committee. Unless the Participant's deferred
stock option account is valued using a basis of measurement other than Common
Stock, deferred share units shall accrue dividends at the rate paid upon the
Common Stock credited in the form of additional deferred share units. Deferred
shares or share units shall be distributed in shares of Common Stock or cash, at
the discretion of the Committee, upon the termination of service of the
Participant or at such other date, as may be approved by the Committee, over a
period of no more than ten (10) years.
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<PAGE>
(c) Stock Appreciation Right Deferral. The deferral of the proceeds of
---------------------------------
Stock Appreciation Rights may be made by a Participant subject to the rules and
regulations established by the Committee. Upon exercise, the Committee will
credit the Participant's deferred stock option account with a number of deferred
shares or share units equivalent in value to the difference between the Fair
Market Value of a share of Common Stock on the exercise date and the Exercise
Price of the Stock Appreciation Right multiplied by the number of shares
exercised. Deferred shares or share units shall be valued at the Fair Market
Value on the date of exercise. Subsequent to exercise, the deferred shares or
share units shall be valued at the Fair Market Value of Common Stock; provided,
however, that at the discretion of the Committee, the Participant may elect to
have the value of his deferred stock option account valued on some other basis
of measurement approved by the Committee. Unless the Participant's deferred
stock option account is valued using a basis of measurement other than Common
Stock, deferred shares or share units shall accrue dividends at the rate paid
upon the Common Stock credited in the form of additional deferred shares or
share units. Deferred shares or share units shall be distributed in shares of
Common Stock or cash, at the discretion of the Committee, upon the Participant's
termination of service or at such other date, as may be approved by the
Committee, over a period of no more than ten (10) years.
(d) Stock Award Deferrals. The deferral of Stock Awards may be elected by
---------------------
a Participant subject to the rules and regulations established by the Committee.
Upon the lapsing of restrictions on such an Award, the Committee shall credit to
a deferred stock award account established for the Participant a number of
deferred shares or share units equivalent in value to the number of deferred
Stock Awards multiplied by the Fair Market Value of Common Stock. Deferred
shares or share units shall be valued at the Fair Market Value on the date all
restriction on the Stock Award lapse or are waived. Subsequent to the lapsing
of all restrictions, the deferred shares or share units shall be valued at the
Fair Market Value of Common Stock; provided, however, that at the discretion of
the Committee, the Participant may elect to have the value of his deferred stock
award account valued on some other basis of measurement approved by the
Committee. Unless the Participant's deferred stock award account is valued
using a basis of measurement other than Common Stock, deferred shares or share
units shall accrue dividends at the rate paid upon the Common Stock credited in
the form of additional deferred share units. Deferred share units shall be
distributed in shares of Common Stock or cash, at the discretion of the
Committee, upon the termination of service of the Participant or at such other
date, as may be approved by the Committee, over a period of no more than ten
(10) years.
(e) Accelerated Distributions. The Committee may, at its sole discretion,
-------------------------
allow for the early payment of a Participant's deferred stock option account
and/or deferred stock award account in the event of an "unforeseeable emergency"
or in the event of the death or Disability of the Participant. An
"unforeseeable emergency" means an unanticipated emergency caused by an event
beyond the control of the Participant that would result in severe financial
hardship if the distribution were not permitted. Such distributions shall be
limited to the amount necessary to sufficiently address the financial hardship.
Any distributions under this provision, shall be consistent with the Code and
the regulations
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<PAGE>
promulgated thereunder. Additionally, the Committee may use its discretion to
cause stock option deferral accounts and/or deferred stock award accounts to be
distributed when continuing the program is no longer in the best interest of the
Holding Company or any Affiliate.
(f) Assignability. No rights to deferred stock option accounts or deferred
-------------
stock award accounts may be assigned or subject to any encumbrance, pledge or
charge of any nature except that a Participant may designate a beneficiary
pursuant to any rules established by the Committee.
(g) Unfunded Status. No Participant or other person shall have any
---------------
interest in any fund or in any specific asset of the Holding Company or an
Affiliate by reason of any amount credited hereunder. Any amounts payable
hereunder shall be paid from the general assets of the Holding Company or its
Affiliates and no Participant or other person shall have any rights to such
assets beyond the rights afforded general creditors of the Holding Company and
its Affiliates. However, the Holding Company or any Affiliate shall have the
right to establish a reserve, trust or make any investment for the purpose of
satisfying the obligations created under this Section 12 of the Plan; provided,
however, that no Participant or other person shall have any interest in such
reserve, trust or investment.
13. PAYOUT ALTERNATIVES
-------------------
(a) Payments due to a Participant upon the exercise or redemption of an
Option or Stock Award shall be made in the form of shares of Common Stock.
Payments due to a Participant upon the exercise or redemption of a Stock
Appreciation Right or Limited Right shall be made in the form of cash.
(b) Any shares of Common Stock tendered in satisfaction of an obligation
arising under this Plan shall be valued at the Fair Market Value of the Common
Stock on the day preceding the date of the issuance of such stock to the
Participant.
14. METHOD OF EXERCISE
------------------
Subject to any applicable Award Agreement, any Option may be exercised by
the Participant in whole or in part at such time or times, and the Participant
may make payment of the Exercise Price in such form or forms, including, without
limitation, payment by delivery of cash, Common Stock or other consideration
(including, where permitted by law and the Committee, Awards) having a Fair
Market Value on the exercise date equal to the total Exercise Price, or by any
combination of cash, shares of Common Stock and other consideration, including
exercise by means of a cashless exercise arrangement with a qualifying broker-
dealer, as the Committee may specify in the applicable Award Agreement.
A-16
<PAGE>
15. RIGHTS OF PARTICIPANTS.
----------------------
No Participant shall have any rights as a shareholder with respect to any
shares of Common Stock covered by an Option until the date of issuance of a
stock certificate for such Common Stock. Nothing contained herein or in any
Award Agreement confers on any person any right to continue in the employ or
service of the Holding Company or an Affiliate or interferes in any way with the
right of the Holding Company or an Affiliate to terminate a Participant's
services.
16. DESIGNATION OF BENEFICIARY.
--------------------------
A Participant may, with the consent of the Committee, designate a person or
persons to receive, in the event of death, any Award to which the Participant
would then be entitled. Such designation will be made upon forms supplied by
and delivered to the Holding Company and may be revoked in writing. If a
Participant fails effectively to designate a beneficiary, then the Participant's
estate will be deemed to be the beneficiary.
17. DILUTION AND OTHER ADJUSTMENTS.
------------------------------
In the event of any change in the outstanding shares of Common Stock by
reason of any stock dividend or split, recapitalization, merger, consolidation,
spin-off, reorganization, combination or exchange of shares, or other similar
corporate change, or other increase or decrease in such shares without receipt
or payment of consideration by the Holding Company, or in the event an
extraordinary capital distribution (including an Extraordinary Dividend) is made
and any necessary OTS approval is obtained, the Committee may make such
adjustments to previously granted Awards, to prevent dilution, diminution, or
enlargement of the rights of the Participant, including any or all of the
following:
(a) adjustments in the aggregate number or kind of shares of Common Stock
or other securities that may underlie future Awards under the Plan;
(b) adjustments in the aggregate number or kind of shares of Common Stock
or other securities underlying Awards already made under the Plan;
(c) adjustments in the Exercise Price of outstanding Incentive and/or
Non-statutory Stock Options, or any Limited Rights attached to such
Options.
No such adjustments may, however, materially change the value of benefits
available to a Participant under a previously granted Award. All Awards under
this Plan shall be binding upon any successors or assigns of the Holding
Company.
Notwithstanding the above, in the event of an extraordinary capital
distribution, any adjustment under this Section 17 shall be subject to required
OTS approval.
A-17
<PAGE>
18. TAX WITHHOLDING.
---------------
Notwithstanding any other provision of the Plan, Awards under this Plan
shall be subject to tax withholding to the extent required by any governmental
authority. Any withholding shall comply with Rule 16b-3 or any amendment or
successive rule. Shares of Common Stock withheld to pay for tax withholding
amounts shall be valued at their Fair Market Value on the date the Award is
deemed taxable to the Participant. Participants granted Non-statutory Stock
Options shall be responsible for any required withholding applicable to any Non-
statutory Stock Option which has been transferred pursuant to Section 6(c)
hereof, unless otherwise inconsistent with current tax law.
19. AMENDMENT OF THE PLAN AND AWARDS.
--------------------------------
(a) The Board of Directors may at any time, and from time to time, modify
or amend the Plan in any respect, prospectively or retroactively; provided
however, that provisions governing grants of Incentive Stock Options, unless
permitted by the rules and regulations or staff pronouncements promulgated under
the Code shall be submitted for shareholder approval to the extent required by
such law, regulation or interpretation.
Failure to ratify or approve amendments or modifications by shareholders
shall be effective only as to the specific amendment or modification requiring
such ratification. Other provisions of this Plan will remain in full force and
effect.
No such termination, modification or amendment may adversely affect the
rights of a Participant under an outstanding Award without the written
permission of such Participant.
(b) The Committee may amend any Award Agreement, prospectively or
retroactively; provided, however, that no such amendment shall adversely affect
the rights of any Participant under an outstanding Award without the written
consent of such Participant.
20. EFFECTIVE DATE OF PLAN.
----------------------
The Plan shall become effective upon approval by the Holding Company's
shareholders in accordance with OTS and Internal Revenue Service ("IRS")
regulations or January 16, 1998, whichever is earlier. The failure to obtain
shareholder approval for such purposes will not effect the validity of the Plan
and any Awards made under the Plan; provided, however, that if the Plan is not
approved by stockholders in accordance with IRS regulations, the Plan shall
remain in full force and effect, and any Incentive Stock Options granted under
the Plan shall be deemed to be Non-statutory Stock Options and any Award
intended to comply with Section 162(m) of the Code shall not comply with Section
162(m) of the Code.
A-18
<PAGE>
21. TERMINATION OF THE PLAN.
-----------------------
The right to grant Awards under the Plan will terminate upon the earlier
of: (i) ten (10) years after the Effective Date; (ii) the issuance of a number
of shares of Common Stock pursuant to the exercise of Options or the
distribution of Stock Awards which together with the exercise of Limited Rights
is equivalent to the maximum number of shares reserved under the Plan as set
forth in Section 4 hereof. The Board of Directors has the right to suspend or
terminate the Plan at any time, provided that no such action will, without the
consent of a Participant, adversely affect a Participant's vested rights under a
previously granted Award.
22. APPLICABLE LAW.
--------------
The Plan will be administered in accordance with the laws of the state of
Delaware and applicable federal law.
23. COMPLIANCE WITH OTS CONVERSION REGULATIONS
------------------------------------------
Notwithstanding any other provision contained in this Plan:
(a) no Award under the Plan shall be made which would be prohibited by 12
CFR Section 563b.3(g)(4);
(b) unless the Plan is approved by a majority vote of the outstanding
shares of the total votes eligible to be cast at a duty called meeting
of stockholders to consider the Plan, as required by 12 CFR Section
563b.3(g)(4)(vii), the Plan shall not become effective or implemented
prior to one (1) year from the date of the Bank's mutual to stock
conversion;
(c) no Award granted prior to one (1) year from the date of the Bank's
mutual to stock conversion shall become vested or exercisable at a rate
in excess of 20% per year of the total number of Stock Awards or
Options (whichever may be the case) granted to such Participant,
provided, that Awards shall become fully vested or immediately
exercisable in the event of a Participant's termination of service due
to death or Disability;
(d) no Award granted to any individual Employee prior to one (1) year from
the date of the Bank's mutual to stock conversion may exceed 25% of the
total amount of Awards which may be granted under the Plan;
(e) no Award granted to any individual Outside Director prior to one (1)
year from the date of the Bank's mutual to stock conversion may exceed
5% of the total amount of Awards which may be granted under the Plan;
and
A-19
<PAGE>
(f) the aggregate amount of Awards granted to all Outside Directors prior
to one (1) year from the date of the Bank's mutual to stock conversion
may not exceed 30% of the total amount of Awards which may be granted
under the Plan.
24. DELEGATION OF AUTHORITY
-----------------------
The Committee may delegate all authority for: (i) the determination of
forms of payment to be made by or received by the Plan and (ii) the execution of
any Award Agreement. The Committee may rely on the descriptions,
representations, reports and estimates provided to it by the management of the
Holding Company or an Affiliate for determinations to be made pursuant to the
Plan, including the attainment of Performance Goals. However, only the
Committee or a portion of the Committee may certify the attainment of a
Performance Goal.
A-20
<PAGE>
PLEASE MARK VOTES REVOCABLE PROXY
[X] AS IN THIS EXAMPLE FIRSTFED AMERICA BANCORP, INC.
ANNUAL MEETING OF SHAREHOLDERS
August 5, 1997
2:00 p.m. Eastern Time
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert F. Stoco, Gilbert C. Oliveira and Paul
A. Raymond or any one or more of them acting in the absence of others each with
full power of substitution, to act as proxy for the undersigned, and to vote all
shares of Common Stock of FIRSTFED AMERICA BANCORP, INC. (the "Company") which
the undersigned is entitled to vote only at the Annual Meeting of Shareholders,
to be held on August 5, 1997, at 2:00 p.m. Eastern Time, at The Westin Hotel,
One West Exchange Street, Providence, Rhode Island 02903, and at any and all
adjournments thereof, with all of the powers the undersigned would possess if
personally present at such meeting as follows:
Please be sure to sign and date ----------------
this Proxy in the box below. Date
- --------------------------------------------------------------------------------
- --------Shareholder sign above----------Co-holder (if any) sign above-----------
Vote For
With- All
For held Except
1. The election as directors of all nominees listed
(except as marked to the contrary below). [_] [_] [_]
Thomas A. Rodgers Jr. Anthony L. Sylvia
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, MARK "FOR All
EXCEPT" AND WRITE THAT NOMINEE'S NAME ON THE LINE PROVIDED BELOW.
- --------------------------------------------------------------------------------
For Against Abstain
2. The approval of the FIRSTFED AMERICA BANCORP,
INC. 1997 Stock-Based Incentive Plan. [_] [_] [_]
3. The ratification of the appointment of KPMG
Peat Marwick LLP as independent auditors of
FIRSTFED AMERICA BANCORP, INC. for the fiscal [_] [_] [_]
year ending March 31, 1998.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
EACH OF THE LISTED PROPOSALS.
THIS PROXY IS REVOCABLE AND WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS
ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH OF THE PROPOSALS LISTED. IF
ANY OTHER BUSINESS IS PRESENTED AT THE ANNUAL MEETING, INCLUDING WHETHER OR NOT
TO ADJOURN THE MEETING, THIS PROXY WILL BE VOTED BY THE PROXIES IN THEIR BEST
JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER
BUSINESS TO BE PRESENTED AT THE ANNUAL MEETING.
- --------------------------------------------------------------------------------
DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED.
FIRSTFED AMERICA BANCORP, INC.
- --------------------------------------------------------------------------------
The above signed acknowledges receipt from the Company prior to the execution
of this proxy of a Notice of Annual Meeting of Shareholders and of a Proxy
Statement dated June 20, 1997 and of the Annual Report to Shareholders.
Please sign exactly as your name appears on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder may sign but only one signature
is required.
PLEASE COMPLETE, DATE, SIGN AND PROMPTLY MAIL THIS PROXY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
- --------------------------------------------------------------------------------
