<PAGE> 1
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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
FIRSTFED AMERICA BANCORP, INC
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
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:
2) Aggregate number of securities to which transaction applies:
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):
4) Proposed maximum aggregate value of transaction:
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:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
FIRSTFED AMERICA BANCORP, INC.
ONE FIRSTFED PARK
SWANSEA, MASSACHUSETTS 02777
(508) 679-8181
June 15, 1998
Fellow Shareholders:
You are cordially invited to attend the 1998 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"), Swansea,
Massachusetts, which will be held on July 21, 1998 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" PROPOSALS 2, 3
AND 4.
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> 3
FIRSTFED AMERICA BANCORP, INC.
ONE FIRSTFED PARK
SWANSEA, MASSACHUSETTS 02777
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 21, 1998
------------------------
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 July 21,
1998 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 ratification of certain amendments to the FIRSTFED AMERICA
BANCORP, INC. 1997 Stock-Based Incentive Plan.
3. The ratification of the FIRSTFED AMERICA BANCORP, INC. 1998 Stock
Option Plan.
4. The ratification of the appointment of KPMG Peat Marwick LLP as
independent auditors of the Company for the fiscal year ending March 31,
1999; and
5. 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 5, 1998, 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 FIRSTFED PARK, Swansea, Massachusetts 02777,
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
Swansea, Massachusetts
June 15, 1998
<PAGE> 4
FIRSTFED AMERICA BANCORP, INC.
------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
JULY 21, 1998
------------------------
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 July 21,
1998, 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 1998 Annual
Report to Stockholders, including the consolidated financial statements of the
Company for the fiscal year ended March 31, 1998, accompanies this Proxy
Statement which is first being mailed to record holders on or about June 15,
1998.
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 RATIFICATION OF CERTAIN AMENDMENTS TO THE
FIRSTFED AMERICA BANCORP, INC. 1997 STOCK-BASED INCENTIVE PLAN, "FOR" THE
RATIFICATION OF THE FIRSTFED AMERICA BANCORP, INC. 1998 STOCK OPTION PLAN AND
"FOR" THE RATIFICATION OF KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS OF THE
COMPANY FOR THE FISCAL YEAR ENDING MARCH 31, 1999.
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 $3,000, 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, 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.
<PAGE> 5
The close of business on June 5, 1998, 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 8,271,794 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 ratification of certain amendments to the FIRSTFED AMERICA
BANCORP, INC. 1997 Stock-Based Incentive Plan (Proposal 2), by checking the
appropriate box, you may: (i) vote "FOR" the item; (ii) vote "AGAINST" the item;
or (iii) "ABSTAIN" with respect to the item.
As to the ratification of the FIRSTFED AMERICA BANCORP, INC. 1998 Stock
Option Plan (the "Stock Option Plan") (Proposal 3), by checking the appropriate
box, you may: (i) vote "FOR" the item; (ii) vote "AGAINST" the item; or (iii)
"ABSTAIN" with respect to the item.
As to the ratification of KPMG Peat Marwick LLP as independent auditors of
the Company (Proposal 4) 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.
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 Proposals 2, 3
and 4 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.
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
2
<PAGE> 6
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.
<TABLE>
<CAPTION>
AMOUNT
AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER OWNERSHIP OF CLASS
-------------- ------------------- ---------- --------
<S> <C> <C> <C>
Common Stock......................... Wellington Management Company, LLP 1,189,800(1) 14.38%
75 State Street
Boston, Massachusetts 02109
Common Stock......................... First Federal Savings Bank of America 696,083(2) 8.42%
Employee Stock
Ownership Plan ("ESOP")
ONE FIRSTFED PARK
Swansea, Massachusetts 02777
Common Stock......................... The FIRSTFED Charitable Foundation 645,380(3) 7.80%
ONE FIRSTFED PARK
Swansea, Massachusetts 02777
Common Stock......................... Brandes Investment Partners, LP 561,540(4) 6.79%
12750 High Bluff Drive
San Diego, California 92130
</TABLE>
- ---------------
(1) Based on information in an amended Schedule 13G filed on February 10, 1998,
Wellington Management Company, LLP, in its capacity as an investment
advisor, may be deemed the beneficial owner of 1,189,800 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 5, 1998, 154,892 shares had been
allocated under the ESOP and 542,118 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.
(4) Based on information in a Schedule 13G filed on February 12, 1998, Brandes
Investment Partners, LP may be deemed the beneficial owner of 561,540
shares.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
Certain officers, employees and non-employee directors of the Company and
Bank have been granted awards under the FIRSTFED AMERICA BANCORP, INC. 1997
Stock-Based Incentive Plan being presented for approval of amendments in
Proposal 2.
3
<PAGE> 7
Upon obtaining shareholder approval, the Company and the Bank intend to
grant to certain officers, employees and non-employee directors stock options
under the FIRSTFED AMERICA BANCORP, INC. 1998 Stock Option Plan being presented
for adoption in Proposal 3.
PROPOSALS TO BE VOTED ON AT THE ANNUAL MEETING
PROPOSAL 1. ELECTION OF DIRECTORS
The Board of Directors of the Company 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 Robert F.
Stoico and John S. Holden, Jr. 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 PRESENT DIRECTOR OF TERM AS BENEFICIAL AS A PERCENT
AND FOR PAST FIVE YEARS AGE SINCE(1) DIRECTOR OWNERSHIP(2) OF CLASS
---------------------------------------- --- -------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
NOMINEES
Robert F. Stoico............................. 57 1980 2001 185,136(4)(6) 2.24%
Chairman of the Board of the Company and
President and Chief Executive Officer of
the Company and the Bank
John S. Holden, Jr. ......................... 68 1982 2001 20,873(3)(5) *
President and Treasurer of Automatic
Machine Products Co.
CONTINUING DIRECTORS
Thomas A. Rodgers, Jr. ...................... 84 1963 2000 37,173(3)(5) *
Chairman and Chief Executive Officer of
Globe Manufacturing Co., Inc.
</TABLE>
4
<PAGE> 8
<TABLE>
<CAPTION>
AMOUNT AND
EXPIRATION NATURE OF OWNERSHIP
NAME AND PRINCIPAL OCCUPATION AT PRESENT DIRECTOR OF TERM AS BENEFICIAL AS A PERCENT
AND FOR PAST FIVE YEARS AGE SINCE(1) DIRECTOR OWNERSHIP(2) OF CLASS
---------------------------------------- --- -------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Anthony L. Sylvia............................ 66 1984 2000 24,673(3)(5) *
President and Treasurer of The Baker
Manufacturing Co., Inc.
Gilbert C. Oliveira.......................... 73 1960 1999 43,673(3)(5) *
Chairman of the Board of the Bank and
President and Treasurer of Gilbert C.
Oliveira Insurance Agency, Inc.
Richard W. Cederberg......................... 69 1982 1999 23,673(3)(5) *
Retired, former Chairman of Larson Tool and
Stamping Company
Paul A. Raymond, DDS......................... 54 1981 1999 21,043(3)(5) *
Dentist in town of Swansea, Massachusetts
NAMED EXECUTIVE OFFICERS (WHO ARE NOT ALSO
DIRECTORS)
Edward A. Hjerpe, III........................ 39 -- -- 28,709(4)(6) *
Senior Vice President, Treasurer and Chief
Financial Officer of the Company and the
Bank
Kevin J. McGillicuddy........................ 58 -- -- 34,711(4)(6) *
Senior Vice President of the Company and
the Bank
Frederick R. Sullivan........................ 56 -- -- 37,677(4)(6) *
Senior Vice President of the Company and
the Bank
Terrence M. Tyrrell.......................... 48 -- -- 42,187(4)(6) *
Senior Vice President of the Company and
the Bank
All directors and executive officers as a
group (19 persons)......................... -- -- -- 609,811(7) 7.37%
</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) Includes 10,449 shares awarded to each outside director under the FIRSTFED
AMERICA BANCORP, INC. 1997 Stock-Based Incentive Plan (the "Incentive
Plan"). Such awards commence vesting at a rate of 20% per year beginning
August 5, 1998 but will vest immediately upon death, disability, retirement
or a change in control.
(4) Includes 87,072, 17,414, 17,414, 17,414, and 17,414 shares awarded to
Messrs. Stoico, Hjerpe, McGillicuddy, Sullivan and Tyrrell, respectively,
under the Incentive Plan. Such awards commence vesting at a rate of 20% per
year beginning August 5, 1998 but will vest immediately upon death,
disability, retirement or a change in control. Each participant presently
has voting power as to the shares awarded.
(5) Includes 5,224 options granted to each outside director under the Incentive
Plan which are currently exercisable or will become exercisable within 60
days and excludes 20,898 shares subject to unexercisable options granted to
each outside director under the Incentive Plan. Shares subject to options
granted under
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<PAGE> 9
the Incentive Plan vest at a rate of 20% per year commencing on August 5,
1998 but will vest immediately upon death, disability, retirement or a
change in control.
(6) Includes 43,536, 8,707, 8,707, 8,707 and 8,707 options granted to Messrs.
Stoico, Hjerpe, McGillicuddy, Sullivan and Tyrrell, respectively, under the
Incentive Plan which are currently exercisable or will become exercisable
within 60 days and excludes 174,144 shares for Mr. Stoico and 34,829 shares
for Messrs. Hjerpe, McGillicuddy, Sullivan and Tyrrell subject to
unexercisable options granted to each of these named executive officers
under the Incentive Plan. Shares subject to options granted under the
Incentive Plan vest at a rate of 20% per year commencing on August 5, 1998
but will vest immediately upon death, disability, retirement or a change in
control.
(7) Includes a total of 348,289 shares awarded under the Incentive Plan as to
which voting may be directed. Excludes a total of 870,723 shares subject to
options granted under the Incentive Plan.
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 generally
meets quarterly while the Bank's Board of Directors generally meet on a monthly
basis and both may have additional meetings as needed. During the fiscal year
ended March 31, 1998, the Board of Directors of the Company held 14 meetings,
including eight telephonic meetings. The Board of Directors of the Bank held 14
meetings during fiscal 1998, including one telephonic meeting. 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, 1998. 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, Raymond and Sylvia, who are outside Directors. The
Audit and Compliance Committee of the Bank consists of Messrs. Holden, Raymond,
Sylvia and Gerhard S. Lowenstein, who are outside Directors. 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. 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 5
times in fiscal 1998.
NOMINATING COMMITTEE. The Company's Nominating Committee for the 1998
Annual Meeting consists of Messrs. Stoico, Rodgers and Sylvia. 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 on April 30, 1998.
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 jointly 2
times in fiscal 1998.
6
<PAGE> 10
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 $650 for each regular and special board meeting which they
attend. Directors of the Company and the Bank are not compensated for telephonic
meetings. In addition, members of the Board's Executive Committee receive an
annual retainer of $5,000 and a fee of $450 for each Executive Committee meeting
which they attend.
INCENTIVE PLAN. Under the Incentive Plan maintained by the Company, each
member of the Board of Directors of the Company who is not an officer or
employee of the Company or the Bank received non-statutory stock options to
purchase 26,122 shares of Common Stock at an exercise price of $18.50, the fair
market value of the Common Stock on August 5, 1997, the date the option was
granted (as discussed below), and stock awards for 10,449 shares of common Stock
(collectively "Directors' Awards"). The Directors' Awards initially granted
under the Incentive Plan will vest over a five-year period, at a rate of 20%
each year commencing on August 5, 1998, the first anniversary of the date of the
grant.
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, 1998. The following discussion
addresses compensation information relating to the Chief Executive Officer and
the executive officers of the Bank for fiscal 1998 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 engaged the services of a
nationally known executive compensation consultant to design the Executive
Compensation Program 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.
This new Executive Compensation Program incorporates the consolidated financial
results of the Company as well as other factors related to the performance of
the Company's stock. For fiscal 1998, the Executive Compensation Program was
implemented and 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 1998 involved review of an extensive
analysis by the compensation consultant including compensation surveys and peer
group analysis. It was the goal of the Compensation Committee to utilize
industry specific and objective data upon which to base their recommendations to
the full Board.
7
<PAGE> 11
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 within the
parameters of compensation policy as defined within the Executive Compensation
Program. The Chief Executive Officer, a member of the Board of Directors,
abstains from voting on matters related to his compensation.
The Company has in the past used a number of salary surveys and on occasion
an outside consultant. The Board this year decided to use the same practice as
last year, which included using an outside consultant, but felt that it would be
helpful to use a different outside consultant in order to receive another point
of view. Accordingly, Watson Wyatt & Company was engaged to assist the
Compensation Committee and the Board in its executive compensation deliberations
for fiscal 1998.
Watson Wyatt'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 Watson Wyatt. 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 presented in the
report were recommended by the Compensation Committee and approved by the Board
of Directors.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER. The Chief Executive Officer
was evaluated on his performance in managing the Company during fiscal 1998,
including the effort related to operating the Company in its first year as a
public company, fiscal performance, and stock appreciation. Certain quantitative
and qualitative factors were reviewed to determine the Chief Executive Officer's
compensation. Following a review of the Chief Executive's performance, it was
determined that the total cash compensation for the Chief Executive Officer
would be established according to the compensation philosophy as recommended by
the executive compensation consultant. In reaching its determination regarding
the Chief Executive Officer's base salary, the Compensation Committee utilized
the report of Watson Wyatt and recommended to the Board of Directors a base
salary substantially equivalent to the amount recommended by Watson Wyatt. Such
report analyzed the Chief Executive Officer's base salary 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. The
Committee's determination of the Chief Executive Officer's bonus for fiscal 1998
also was determined by the Committee following a review of the Chief Executive
Officer's performance. In reaching its determination regarding the recommended
level of the Chief Executive Officer's cash bonus for fiscal 1998, the Committee
considered Watson Wyatt's report and recommended to the Board an amount of bonus
substantially equivalent to the amount recommended by Watson Wyatt in its
report.
8
<PAGE> 12
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
9
<PAGE> 13
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
March 31, 1998. 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 were supplied by Media General Financial Services.
FIRSTFED AMERICA BANCORP, INC.,
THE AMERICAN STOCK EXCHANGE AND THE MG INDEX FOR SAVINGS AND LOANS
<TABLE>
<CAPTION>
FIRSTFED
AMERICA MG INDEX AMERICAN
MEASUREMENT PERIOD BANCORP, FOR SAVINGS STOCK
(FISCAL YEAR COVERED) INC. AND LOANS EXCHANGE
<S> <C> <C> <C>
1/15/97 100.00 100.00 100.00
3/31/97 136.30 101.75 97.14
6/30/97 177.50 121.07 106.69
9/30/97 218.80 142.87 120.23
12/31/97 218.80 160.84 118.15
3/31/98 211.30 172.30 127.44
</TABLE>
Notes:
A. The lines represent quarterly 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 quarterly 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 at 100.00 on 1/15/97.
10
<PAGE> 14
SUMMARY COMPENSATION TABLE. The following table shows, for the years ended
March 31, 1998, 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 $100,000 in
fiscal year 1998 ("Named Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION(1) ----------------------- -------
-------------------------------------------- SECURITIES
OTHER RESTRICTED UNDERLYING
ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
FISCAL COMPENSATION AWARDS SARS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITIONS YEAR SALARY($) BONUS($) ($)(2) ($)(3) (#)(4) ($)(5) ($)(6)
- ---------------------------- ------ --------- -------- ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert F. Stoico........... 1998 $354,579 $171,300 -- $1,610,832 217,680 -- $292,281
President and Chief 1997 328,941 100,000 -- -- -- -- 239,216
Executive Officer 1996 282,045 75,000 -- -- -- -- 149,364
Edward A. Hjerpe, III...... 1998 126,035 $ 50,000 -- 322,159 43,536 -- 25,012
Senior Vice President,
Treasurer and Chief
Financial Officer(7)
Kevin J. McGillicuddy...... 1998 117,314 20,000 -- 322,159 43,536 -- 56,216
Senior Vice President 1997 105,677 15,000 -- -- -- -- 44,310
1996 96,846 8,000 -- -- -- -- 771
Frederick R. Sullivan...... 1998 117,316 25,000 -- 322,159 43,536 -- 58,229
Senior Vice President 1997 105,677 15,000 -- -- -- -- 43,518
1996 99,923 8,000 -- -- -- -- 16,167
Terrence M. Tyrrell........ 1998 101,201 20,000 -- 322,159 43,536 -- 47,006
Senior Vice President 1997 98,446 15,000 -- -- -- -- 37,555
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 year 1998, 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) Includes stock awards of 87,072, 17,414, 17,414, 17,414 and 17,414 shares
granted to Messrs. Stoico, Hjerpe, McGillicuddy, Sullivan and Tyrrell under
the Incentive Plan. The awards will vest in five equal annual installments
commencing on August 5, 1998, the first anniversary of the effective date of
the award. When shares become vested and are distributed, the recipients
will also receive an amount equal to accumulated cash and stock dividends
(if any) with respect thereto plus earnings thereon. All awards vest
immediately upon termination of employment due to death, disability,
retirement or following change in control. As of March 31, 1998, the market
value of the shares held by Messrs. Stoico, Hjerpe, McGillicuddy, Sullivan
and Tyrrell was $1,839,396, $367,871, $367,871, $367,871 and $367,871,
respectively. The dollar amounts set forth in the table represent the market
value of the shares awarded on the date of grant.
(4) Includes stock options granted to Messrs. Stoico, Hjerpe, McGillicuddy,
Sullivan and Tyrrell, respectively, pursuant to the Incentive Plan during
fiscal year 1998. See "Option Grants in Last Fiscal Year" table for
discussion of options granted under the Incentive Plan.
(5) For fiscal years 1998, 1997 and 1996, there were no payouts or awards under
any long-term incentive plan.
(6) Includes employer contributions of $9,645, $3,812, $3,450, $3,450 and $2,979
and $20,400, $7,200, $15,300, $16,800 and $11,100 to the Bank's Thrift and
Retirement Plans for Messrs. Stoico, Hjerpe, McGillicuddy, Sullivan and
Tyrrell, respectively, for fiscal year 1998. Also includes $94,945, $0,
$36,005, $36,154 and $31,334 representing the value of shares allocated
under the ESOP for the benefit of
11
<PAGE> 15
Messrs. Stoico, Hjerpe, McGillicuddy, Sullivan and Tyrrell, respectively, as
of March 31, 1998. Also includes employer contributions of $162,081
contributed to Mr. Stoico pursuant to the Bank's Supplemental Retirement
Plan for fiscal year 1998. Edward A. Hjerpe, III received $14,000 in
relocation assistance. Also includes payments of $5,210, $0, $1,461, $1,895,
$1,593 related to thrift and ESOP plans for Messrs. Stoico, Hjerpe,
McGillicuddy, Sullivan and Tyrrell, respectively.
(7) Mr. Hjerpe began employment with the Company on July 31, 1997 with an
initial annualized base salary of $192,500.
COMPENSATION ARRANGEMENTS
EMPLOYMENT AGREEMENTS. The Bank and the Company have entered into
employment agreements (collectively, the "Employment Agreement(s)" or
"Agreement(s)") with Messrs. Stoico, Hjerpe, 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,
Hjerpe, McGillicuddy, Sullivan and Tyrrell.
The Employment Agreements provide for a three-year term for Mr. Stoico and
a two-year term for Messrs. Hjerpe, 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. Hjerpe,
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. Hjerpe, 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 1998 as reported in the Summary Compensation Table, Messrs. Stoico, Hjerpe,
McGillicuddy, Sullivan and Tyrrell would receive approximately $1.6 million,
$528,000, $412,000, $427,000 and $364,000, respectively, in severance payments,
in addition to other cash and noncash benefits.
12
<PAGE> 16
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
1998 base salary and incentive bonus and pursuant to the CIC Agreements, the
Executives would receive, in the aggregate, $1.3 million, in addition to other
cash and noncash benefits.
INCENTIVE PLAN. The Company maintains the Incentive Plan, which provides
discretionary awards of options to purchase Common Stock, option-related awards
and awards of Common Stock (collectively, "Awards") to officers, directors and
key employees as determined by a committee of the Board of Directors. Awards of
Common Stock to officers, directors and key employees is provided under
"Restricted Stock Awards" in the "Summary Compensation Table." The following
table lists all grants of options under the Incentive Plan to the Named
Executive Officers for fiscal 1998 and contains certain information about
potential value of those options based upon certain assumptions as to the
appreciation of the Company's stock over the life of the option.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
----------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF
SECURITIES % OF TOTAL STOCK PRICE
UNDERLYING OPTIONS/SARS APPRECIATION FOR
OPTIONS/ GRANTED TO EXERCISE OR OPTIONS(1)
SARS GRANTED EMPLOYEES IN BASE PRICE EXPIRATION -----------------------
NAME (#)(2)(3)(4)(5) FISCAL YEAR(6) PER SHARE DATE(7) 5% 10%
---- --------------- -------------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Robert F. Stoico........ 217,680 27.85% $18.50 8/05/07 $2,532,609 $6,423,436
Edward A. Hjerpe, III... 43,536 5.57 18.50 8/05/07 506,541 1,283,615
Kevin J. McGillicuddy... 43,536 5.57 18.50 8/05/07 506,541 1,283,615
Frederick R. Sullivan... 43,536 5.57 18.50 8/05/07 506,541 1,283,615
Terrence M. Tyrrell..... 43,536 5.57 18.50 8/05/07 506,541 1,283,615
</TABLE>
- ---------------
(1) The amounts represent certain assumed rates of appreciation. Actual gains,
if any, on stock option exercises and Common Stock holdings are dependent on
the future performance of the Common Stock and overall stock market
conditions. There can be no assurance that the amounts reflected in this
table will be realized.
(2) Options granted pursuant to the Incentive Plan are exercisable in five equal
annual installments commencing on August 5, 1998, provided, however, options
will be immediately exercisable in the event the optionee terminates
employment due to death or disability.
(3) The purchase price may be made in whole or in part in cash or Common Stock.
13
<PAGE> 17
(4) Options include limited rights (SARs) pursuant to which the options may be
exercised in the event of a change in control of the Company. Upon the
exercise of a limited right, the optionee would receive a cash payment equal
to the difference between the exercise price of the related option on the
date of grant and the fair market value of the underlying shares of Common
Stock on the date the limited right is exercised.
(5) All options are intended to be Incentive Stock Options to the extent
permissible under Section 422 of the Code.
(6) Includes options granted to officers, directors and employees.
(7) The option term is ten years.
The following table provides certain information with respect to the number
of shares of Common Stock represented by outstanding options held by the Named
Executive Officers as of March 31, 1998. Also reported are the values for
"in-the-money" options which represent the positive spread between the exercise
price of any such existing stock options and the year end price of the Common
Stock.
FISCAL YEAR-END OPTION/SAR VALUE
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS
FISCAL YEAR-END(#)(1) AT FISCAL YEAR END($)(2)(3)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Robert F. Stoico................... 0 217,680 0 571,410
Edward A. Hjerpe, III.............. 0 43,536 0 114,282
Kevin J. McGillicuddy.............. 0 43,536 0 114,282
Frederick R. Sullivan.............. 0 43,536 0 114,282
Terrence M. Tyrrell................ 0 43,536 0 114,282
</TABLE>
- ---------------
(1) The options in this table have an exercise price of $18.50.
(2) The price of the Common Stock on March 31, 1998 was $21.125.
(3) Based on the market value of the underlying Common Stock at fiscal year end,
minus the exercise price.
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 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, 1998, Messrs.
Stoico, Hjerpe, McGillicuddy, Sullivan and Tyrrell had credited years of service
of 24 years 4 months, 10 years 6 months, 1 year 11 months, 8 years 9 months, and
16 years 7 months, respectively. The Retirement Plan provides the participant
portability with another participating member. Mr. Hjerpe's credited years of
service include credited years of service with his former employer, a
participant in the same multiple employer retirement plan.
14
<PAGE> 18
<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, 1998.
The following table sets forth the years of credited service (i.e., benefit
service) as of December 31, 1997 for each Named Executive Officer.
<TABLE>
<CAPTION>
CREDITED SERVICE (1)
---------------------
YEARS MONTHS
------- --------
<S> <C> <C>
Robert F. Stoico.......................................... 24 4
Edward A. Hjerpe, III..................................... 10 6
Kevin J. McGillicuddy..................................... 1 11
Frederick R. Sullivan..................................... 8 9
Terrence M. Tyrrell....................................... 16 7
</TABLE>
- ---------------
(1) The Retirement Plan provides the participant portability with another
participating member. Mr. Hjerpe's credited years of service include
credited years of service with his former employer, a participant in the
same multiple employer retirement plan.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. The Bank currently maintains a
Supplemental Executive 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. The
Bank intends the benefits provided under the Supplemental Executive Retirement
Plan to make participants whole for reductions in benefits payable under the
terms of the Thrift, ESOP and Retirement Plan maintained by the Bank, as a
result of limitations imposed by the Code, and provide additional retirement
benefits for participants.
Participants generally vest in the amounts credited to the Supplemental
Executive 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 Executive 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 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 Executive 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 Executive Retirement Plan. As of March 31, 1998, only Mr.
Stoico participated in the Supplemental Executive Retirement Plan.
15
<PAGE> 19
INCENTIVE AWARD AND SALARY DEFERRAL PLAN. Effective January 1, 1998 the
Bank established a compensation plan whereby eligible executives may defer a
percentage of their annual salary into a non-qualified plan. Executives receive
a 50% matching contribution on the first six percent of salary deferral which is
consistent with the Bank's 401(k) Plan. Investment options provided through the
Plan Trustee include Company stock and allow the executive to elect various
investment funds under the plan.
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.
PROPOSAL 2. APPROVAL OF THE AMENDMENT OF THE FIRSTFED AMERICA
BANCORP, INC. 1997 STOCK-BASED INCENTIVE PLAN
The Board of Directors of the Company is presenting for shareholder
ratification an amendment of the FIRSTFED AMERICA BANCORP, INC. 1997 Stock-Based
Incentive Plan, which was originally approved by shareholders on August 5, 1997.
The proposed amendment to the Incentive Plan is attached hereto as Appendix A.
The Board of Directors has determined that it is in the best interest of the
Company and the Bank to amend the Incentive Plan to generally provide for the
acceleration of the vesting of restricted stock awards, stock options and
related rights ("Awards") following retirement or upon an individual's
termination of employment or service in connection with a change in control of
the Company or Bank.
At March 31, 1998, options covering 781,720 of the Company's Common Stock
had been granted and 89,003 shares (other than shares that might in the future
be returned to the Incentive Plan as a result of cancellation or expiration of
options) remained available to satisfy options granted in the future under the
Incentive Plan. At March 31, 1998, Stock Awards of 329,041 shares of the
Company's Common Stock had been granted and 19,249 shares remained available for
future grants under the Incentive Plan.
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 shareholders' concerns and reward employees for outstanding
performance. The Incentive Plan authorizes the granting of options to purchase
Common Stock of the Company, option-related awards and stock awards
(collectively, "Awards"). 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 is administered by a
committee ("Committee") consisting of three members of the Board of Directors
who are not employees of the Company or its affiliates.
AMENDMENTS
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 exercisable in
installments at a rate of no less than 20% per year, except in the case of death
or disability. The one year prohibition on accelerated vesting as applied to the
Bank and the Company has expired, and the Company's Board of Directors has
determined to amend the Incentive Plan to generally provide accelerated vesting
of Awards upon an individual's retirement or in connection with a "change in
control" of the Company or the Bank (as defined in the Incentive Plan).
Specifically, the amendments provide that unless the Committee otherwise
determines, Awards which have not vested as of an individual's retirement shall
immediately become fully
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<PAGE> 20
vested as of such time and, in the case of the stock options, shall remain
exercisable for three (3) years. In addition, in the event of an individual's
termination of employment or service, within twenty-four months of a change in
control of the Company or the Bank, all unvested Awards held by such individual
will immediately vest and, in the case of stock options, shall remain
exercisable for three (3) years.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE AMENDMENT OF THE
FIRSTFED AMERICA BANCORP, INC. 1997 STOCK-BASED INCENTIVE PLAN.
PROPOSAL 3. APPROVAL OF THE FIRSTFED AMERICA BANCORP, INC. 1998
STOCK OPTION PLAN
The Board of Directors of the Company is presenting for shareholder
ratification the FIRSTFED AMERICA BANCORP, INC. 1998 Stock Option Plan (the
"Stock Option Plan"), in the form attached hereto as Appendix B. The purpose of
the Stock Option Plan is to advance the interests of the Company and its
shareholders by providing those key employees and non-employee directors of the
Company and its affiliates, including the Bank, upon whose judgment, initiative
and efforts the successful conduct of the business of the Company and its
affiliates largely depends, with additional incentive in the form of a
proprietary interest in the Company to perform in a superior manner. A further
purpose of the Stock Option Plan is to attract and retain people of experience
and ability to the service of the Company and its affiliates.
The following is a summary of the material terms of the Stock Option Plan
which is qualified in its entirety by the complete provisions of the Stock
Option Plan document attached as Appendix B.
GENERAL
The Stock Option Plan reserves 413,590 shares of Common Stock for purchase
pursuant to the exercise of stock options and stock option-related awards. All
officers and other employees of the Company and its affiliates, and directors
who are not also serving as employees of the Company or any of its affiliates
("Outside Directors"), are eligible to receive awards under the Stock Option
Plan. The Stock Option Plan will be administered by a committee of non-employee
directors (the "Committee"). Authorized but unissued shares or authorized shares
previously issued and reacquired by the Company may be used to satisfy an
exercise of an option under the Stock Option Plan. If authorized but unissued
shares are used to satisfy option exercises, the number of shares outstanding
would increase which would have a dilutive effect on the holdings of existing
shareholders.
AWARDS TO EMPLOYEES
Types of Awards. The Stock Option Plan authorizes the grant to employees
of (i) options to purchase the Company's Common Stock 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), which
generally 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 the same income tax benefits to recipients as Incentive Stock
Options), but which may provide tax deductions to the Company, referred to as
"Non-Statutory Stock Options"; and (iii) Limited Rights (discussed below) which
are exercisable only upon a "change in control" (as defined in the Stock Option
Plan) of the Company or Bank.
As of the date of this proxy statement, the Board of Directors, has not yet
granted any stock options under the Stock Option Plan and has made no
determination as to any future grants. Pursuant to the Stock Option Plan, the
Committee has the authority to grant options and option-related awards as
determined under its sole discretion. Unless other determined by the Committee,
all stock options shall become fully vested and exercisable upon death,
disability, retirement or termination of employment or service within
twenty-four (24) months of a change of control and remain exercisable for three
(3) years from such time. Unless otherwise determined by the Committee, upon the
termination of an employee's service for any reason, other than death,
disability, retirement, termination for cause or change in control, the
employee's options will be exercisable only as to those shares that were
immediately exercisable by the employee at the date of
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<PAGE> 21
termination and only for a period of three months. In the event of an employee's
termination for cause, all related rights to the individual's stock options
become null and void upon such termination. The exercise price of stock options
granted must be equal to at least 100% of the fair market value of the
underlying Common Stock at the time of grant, except as provided below. The
exercise price may be paid in cash, borrowed funds or in Common Stock. Options
granted under the Stock Option Plan to employees may be exercised at such times
as the Committee determines, but in no event shall an option be exercisable more
than 10 years from the date of grant.
Incentive Stock Options may only be granted to employees. In order to
qualify as Incentive Stock Options under Section 422 of the Code, in addition to
certain other restrictions, the exercise price must not be less than 100% of the
fair market value on the date of grant. 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.
Limited Rights. Upon exercise of Limited Rights in the event of a change
in control of the Company, the optionee will be entitled to receive a lump sum
cash payment equal to the difference between the exercise price of the related
option and the fair market value of the shares of Common Stock subject to the
option on the date of exercise of the Limited Right in lieu of purchasing the
stock underlying the option. Upon the exercise of a Limited Right the underlying
option is terminated.
Change in Control. In the event of a change in control, all options then
available for grant under the Stock Option Plan will automatically be granted,
on a pro rata basis, among current employees and Outside Directors who have
previously been granted options by the Company, whether exercisable or
unexercisable, as of the date of the change in control. All such options that
are automatically granted upon a change in control will be 100% vested and
exercisable upon the termination of the recipient's employment or service within
twenty-four (24) months of the change in control. Such options granted
subsequent to a change in control will have an exercise price equal to the
weighted-average exercise price of all previously granted options granted to
each respective individual, and will remain exercisable for 10 years following
the change in control.
AMENDMENT
The Board of Directors generally may, at any time, amend the Stock Option
Plan, subject to certain prohibitions established by law or by the terms of the
plan itself.
NON-TRANSFERABILITY
An award of options under the Stock Option Plan shall not be transferable
by the optionee other than by will or the laws of intestate succession or
pursuant to a domestic relations order. With consent of the Committee, an
optionee may permit transferability or assignment of a Non-Statutory Stock
Option for valid estate planning purposes as permitted under the Code or Rule
16b-3 under the Exchange Act and an optionee may designate a person or his or
her estate, beneficiary of any stock option and Limited Right to which the
optionee would then be entitled, in the event of the death of the employee.
TAX TREATMENT
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 the 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. 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 stock option in an amount equal to the aggregate amount by which
the per share exercise price exceeds the fair market value of the
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<PAGE> 22
Common Stock. In the event that a Non-statutory Stock Option is exercised during
a period that would subject the optionee to liability under Section 16(b) of the
Exchange Act (i.e., within six months of the date of grant), the optionee will
not be deemed to have recognized income until such period of liability has
expired, unless the optionee makes an election under Section 83(b) of the Code.
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") or more than 3 months of terminating employment (12
months in the cases of death and disability), the exercise of the option will
generally 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 tax purposes. In the case of Limited Rights, upon exercise, the
option holder would have to include the amount paid to him upon exercise 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. The employee will recognize taxable income for the
amount of cash received under the Dividend Equivalent Rights for the year such
amounts are paid. The employee will recognize taxable income for the amount of
cash received under the Dividend Equivalent Rights for the year such amounts are
paid. The Company may take an off-setting deduction for such amount.
AWARDS
No awards of options under the Stock Option Plan have been made to date.
Options for 413,590 shares of Common Stock are reserved under the Stock Option
Plan for future grants to employees and Outside Directors of the Company and its
affiliates, including the Bank.
STOCKHOLDER RATIFICATION AND EFFECTIVE DATE OF THE PLAN
The Board of Directors adopted the Stock Option Plan in June, 1998, and
determined to submit the Stock Option Plan for ratification by shareholders. The
Stock Option Plan shall become effective upon its ratification or approval by
shareholders. Implementation of the Stock Option Plan in the absence of
shareholder ratification or approval may result in the inability of the Company
to grant Incentive Stock Options but will not impair its ability to grant
Non-Statutory Stock Options. In the event the Stock Option Plan is not ratified
or approved by shareholders, the Plan provides that the Board of Directors may
terminate the Plan and any awards made pursuant to the Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE RATIFICATION OF
THE FIRSTFED AMERICA BANCORP, INC. 1998 STOCK OPTION PLAN.
PROPOSAL 4. RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Company's independent auditors for the fiscal year ended March 31,
1998, 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, 1999, 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.
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<PAGE> 23
ADDITIONAL INFORMATION
SHAREHOLDER PROPOSALS
To be considered for inclusion in the Company's proxy statement and form of
proxy relating to the 1999 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 February
16, 1999. Any such proposal will be subject to 17 C.F.R. sec. 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. 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, 1998, 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 FIRSTFED PARK, SWANSEA, MASSACHUSETTS 02777.
By Order of the Board of Directors
/s/ Cecilia R. Viveiros
Cecilia R. Viveiros
Corporate Secretary
Swansea , Massachusetts
June 15, 1998
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.
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<PAGE> 24
APPENDIX A
AMENDMENTS TO STOCK-BASED INCENTIVE PLAN
THE FIRSTFED AMERICA BANCORP, INC. 1997
SECTION 6(D) OF THE PLAN SHALL BE DELETED IN ITS ENTIRETY AND REPLACED WITH
THE FOLLOWING PARAGRAPH:
(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, Change in Control, 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. Unless otherwise determined by the Committee, in the
event of a Participant's termination of 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 Retirement, all Non-statutory Stock Options held by such
Participant shall immediately become exercisable and remain exercisable for a
period of three (3) years. In the event of a Participant's termination of
employment or service within twenty-four (24) months of a Change in Control, all
Non-statutory Stock Options held by such Participant shall immediately become
exercisable as of the date of such termination 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.
SECTION 7(E) OF THE PLAN SHALL BE DELETED IN ITS ENTIRETY AND REPLACED WITH
THE FOLLOWING PARAGRAPH:
(e) TERMINATION OF EMPLOYMENT. Unless otherwise determined by the
Committee, upon the termination of an Employee's employment for any reason other
than Disability, death, Retirement, Change in Control, 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. Unless otherwise determined by the Committee, in the event of the
termination of an Employee's service due to Disability or death, all unvested
Incentive Stock Options held by such Employee shall immediately become
exercisable and shall remain exercisable for three (3) years. Unless otherwise
determined by the Committee, in the event of an Employee's Retirement, all
Incentive Stock Options held by such Employee shall immediately become
exercisable and shall remain exercisable for three (3) years. In the event of a
Participant's termination of employment or service within twenty-four (24)
months of a Change in Control, all Incentive Stock Options held by such
Participant shall immediately become exercisable as of the date of such
termination and remain exercisable for a period of three (3) years. 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
originally designated as an Incentive Stock Option shall be treated as a
Non-Statutory Stock Options to the extent the Participant exercises such Option
more than one (1) year following termination of employment as a result of death
or Disability or more than three (3) months following the Participant's
termination of employment for any other reason. Any Option which otherwise, by
operation of this provision, does not meet the requirements of Section 422 of
the Code, shall be considered a Non-statutory Stock Option.
SECTION 9(C) OF THE PLAN SHALL BE DELETED IN ITS ENTIRETY AND REPLACED WITH
THE FOLLOWING PARAGRAPH:
(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, Change in Control, 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. Unless otherwise determined by
the Committee, in the event of a termination of the Participant's service due to
Disability or death, all unvested Stock Awards held by such Participant shall
immediately vest. Unless otherwise determined by the Committee, in the event of
a Participant's Retirement,
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all unvested Stock Awards held by such Participant at Retirement shall
immediately vest. In the event of a Participant's termination from employment or
service within twenty-four (24) months of a Change in Control, all unvested
Stock Awards held by such Participant shall immediately vest as of the date of
such termination. Unless otherwise determined by the Committee, 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.
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APPENDIX B
FIRSTFED AMERICA BANCORP, INC.
1998 STOCK OPTION 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, and Limited Rights.
(c) "Award Agreement" means an agreement evidencing and setting forth the
terms of an Award.
(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 Holding Company or
the Bank 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 Association or the Holding Company representing 20% or more of
the Association's or the Holding Company's outstanding securities except for any
securities of the Association purchased by the Holding Company and any
securities purchased by any tax-qualified employee benefit plan of the
Association; 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 Association or the Holding Company or similar transaction
occurs in which the Association or Holding Company is not the resulting entity;
or (D) a solicitation of 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
Association 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 Association or the Holding Company; or (E) a tender offer is made for 20% or
more of the voting securities of the Association 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,
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
B-1
<PAGE> 27
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 adopted by the Board of
Directors or ratified by shareholders, as provided for in Section 19 of the
Plan.
(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 Participant may purchase a
share of Common Stock pursuant to an Option.
(p) "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. The
Committee's determination of Fair Market Value shall be conclusive and binding
on all persons.
(q) "Holding Company" means FIRSTFED AMERICA BANCORP, INC.
(r) "Incentive Stock Option" means a stock 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.
(s) "Limited Right" means an Award granted to a Participant pursuant to
Section 8 of the Plan.
(t) "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.
(u) "Option" means an Incentive Stock Option or Non-Statutory Stock Option.
(v) "Outside Director" means a member of the Boards of Directors of the
Holding Company or an Affiliate who is not also an Employee of the Holding
Company or an Affiliate.
(w) "Participant" means any person who holds an outstanding Award.
(x) "Performance Award" means an Award granted to a Participant pursuant to
Section 9 of the Plan.
(y) "Plan" means this FIRSTFED AMERICA BANCORP, INC. 1998 Stock Option
Plan.
(z) "Retirement" means retirement from employment with the Holding Company
or an Affiliate in accordance with the retirement policies of the Holding
Company or Affiliate, as applicable, then in effect. "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.
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(aa) "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,
unless defined differently under any employment agreement with the Holding
Company or an Affiliate, termination of employment, because of a material loss
to the Holding Company or an Affiliate, as determined by and in the sole
discretion of the Board of Directors or its designee(s).
2. ADMINISTRATION.
--------------
(a) The Committee shall administer the Plan. 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 or for whom Awards are not intended to satisfy the provisions of Section
162(m) of the Code.
(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 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 and at a minimum, the Committee shall
set forth in each Award Agreement (i) the type of Award granted (ii) the
Exercise Price of any Option, (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 is 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 satisfaction of any conditions of a Performance Award.
However, only the Committee or a portion of the Committee may certify the
attainment of any conditions of a Performance Award intended to satisfy the
requirements of Section 162(m) of the Code.
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<PAGE> 29
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.
4. STOCK SUBJECT TO THE PLAN.
-------------------------
Subject to adjustment as provided in Section 14 of the Plan, the maximum
number of shares reserved hereby for purchase pursuant to the exercise of
Options and Option-related Awards granted under the Plan is 413,590, which
number shall not exceed five percent (5%) 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
issued and acquired or reacquired by the Trust or the Bank, respectively. To the
extent that Options are granted under the Plan, the shares underlying such
Options will be unavailable for any other use including future grants under the
Plan except that, to the extent that such Options terminate, expire, or are
forfeited 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 not previously awarded under
the Plan, grant Non-Statutory Stock Options to eligible individuals upon such
terms and conditions as it may determine to the extent such terms and conditions
are consistent with the following provisions:
(a) EXERCISE PRICE. The Committee shall determine the Exercise Price of
each Non-Statutory Stock Option. However, the Exercise Price shall not be less
than 100% of the Fair Market Value of the Common Stock on the Date of Grant.
(b) TERMS OF NON-STATUTORY STOCK OPTIONS. The Committee shall determine
the term during which a Participant may exercise a Non-Statutory Stock Option,
but in no event may a Participant exercise a Non-Statutory Stock Option, in
whole or in part, more than ten (10) years from the Date of Grant. The Committee
shall also determine the date on which each Non-Statutory Stock Option, or any
part thereof, first becomes exercisable and any terms or conditions a
Participant must satisfy in order to exercise each Non-Statutory Stock Option.
The shares of Common Stock underlying each Non-Statutory Stock Option may be
purchased in whole or in part by the Participant at any time during the term of
such Non-Statutory Stock Option, or any portion thereof, becomes exercisable.
(c) NON-TRANSFERABILITY. Unless otherwise determined by the Committee in
accordance with this Section 6(c), a Participant may not transfer, assign,
hypothecate, or dispose of in any manner, other than by will or the laws of
intestate succession, a Non-Statutory Stock Option. 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
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
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<PAGE> 30
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, grandparents, spouse, children, grandchildren, siblings
(including half bothers and sisters), and individuals who are family members by
adoption. 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 other conditions proscribed by the Committee with
respect to such Non-Statutory Stock Option.
(d) TERMINATION OF EMPLOYMENT OR SERVICE (GENERAL). Unless otherwise
determined by the Committee, upon the termination of a Participant's employment
or other service for any reason other than Retirement, Disability or death, a
Change in Control, or Termination for Cause, the Participant may exercise only
those Non-Statutory Stock Options that were immediately exercisable by the
Participant at the date of such termination and only for a period of three (3)
months following the date of such termination.
(e) TERMINATION OF EMPLOYMENT OR SERVICE (RETIREMENT). Unless otherwise
determined by the Committee, in the event of a Participant's Retirement, the
Participant's may exercise only those Non-Statutory Stock Options that were
immediately exercisable by the Participant at the date of Retirement and only
for a period of three (3) years following the date of Retirement.
(f) TERMINATION OF EMPLOYMENT OR SERVICE (DISABILITY OR DEATH). Unless
otherwise determined by the Committee, in the event of the termination of a
Participant's employment or other 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 three (3) years following the
date of such termination.
(g) TERMINATION OF EMPLOYMENT OR SERVICE (CHANGE IN CONTROL). Unless
otherwise determined by the Committee, in the event of the termination of a
Participant's employment or service within twenty-four (24) months of a Change
in Control, all Non-Statutory Stock Options held by such Participant shall
immediately become exercisable and remain exercisable for a period of three (3)
years following the date of such termination.
(h) TERMINATION OF EMPLOYMENT OR SERVICE (TERMINATION FOR CAUSE). Unless
otherwise determined by the Committee, in the event of a Participant's
Termination for Cause, all rights with respect to the Participant's
Non-Statutory Stock Options shall expire immediately upon the effective date of
such Termination for Cause.
(i) PAYMENT. Payment due to a Participant upon the exercise of a
Non-Statutory Stock Option shall be made in the form of shares of Common Stock.
(j) 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 12-month period.
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 upon such terms and conditions as
it may determine to the extent such terms and conditions are consistent with the
following provisions:
(a) EXERCISE PRICE. The Committee shall determine the Exercise Price of
each Incentive Stock Option. However, the Exercise Price shall not be less than
100% of the Fair Market Value of the Common Stock on the Date of Grant;
provided, however, that if at the time an Incentive Stock Option is granted, the
Employee
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<PAGE> 31
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.
(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 Committee shall determine the
term during which a Participant may exercise an Incentive Stock Option, but in
no event may a Participant exercise an Incentive Stock Option, in whole or in
part, more than ten (10)years from the Date of Grant; provided, however, that 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. The
Committee shall also determine the date on which each Incentive Stock Option, or
any part thereof, first becomes exercisable and any terms or conditions a
Participant must satisfy in order to exercise each Incentive Stock Option. The
shares of Common Stock underlying each Incentive Stock Option may be purchased
in whole or in part at any time during the term of such Incentive Stock Option
after such Option becomes exercisable.
(d) NON-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 the Committee grants the
Incentive Stock Option. The designation of a beneficiary does not constitute a
transfer of an Incentive Stock Option.
(e) TERMINATION OF EMPLOYMENT (GENERAL). Unless otherwise determined by
the Committee, upon the termination of a Participant's employment or other
service for any reason other than Retirement, Disability or death, a Change in
Control, or Termination for Cause, the Participant may exercise only those
Incentive Stock Options that were immediately exercisable by the Participant at
the date of such termination and only for a period of three (3) months following
the date of such termination.
(f) TERMINATION OF EMPLOYMENT (RETIREMENT). Unless otherwise determined by
the Committee, in the event of a Participant's Retirement, the Participant may
exercise only those Incentive Stock Options that were immediately exercisable by
the Participant at the date of Retirement and only for a period of three (3)
years following the date of Retirement. Any Option originally designated as an
Incentive Stock Option shall be treated as a Non-Statutory Stock Options to the
extent the Participant exercises such Option more than three (3) months
following the Date of the Participant's Retirement.
(g) TERMINATION OF EMPLOYMENT (DISABILITY OR DEATH). Unless otherwise
determined by the Committee, in the event of the termination of a Participant's
employment or other service due to Disability or death, all Incentive Stock
Options held by such Participant shall immediately become exercisable and remain
exercisable for a period Three (3) years following the date of such termination.
Any Option originally designated as an Incentive Stock Option shall be treated
as a Non-Statutory Stock Options to the extent the Participant exercises such
Option more than one (1) year following the Date of the Participant's
Retirement.
(h) TERMINATION OF EMPLOYMENT (CHANGE IN CONTROL). Unless otherwise
determined by the Committee, in the event of the termination of a Participant's
employment or service within twenty-four (24) months of a Change in Control, all
Incentive Stock Options held by such Participant shall become immediately
exercisable and remain exercisable for a period of three (3) years following the
date of such termination. Any Option originally designated as an Incentive Stock
Option shall be treated as a Non-Statutory Stock Options to the extent the
Participant exercises such Option more than one (1) year following the Date of
the Participant's Retirement.
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<PAGE> 32
(i) TERMINATION OF EMPLOYMENT (TERMINATION FOR CAUSE). 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.
(j) PAYMENT. Payment due to a Participant upon the exercise of an
Incentive Stock Option shall be made in the form of shares of Common Stock.
(k) 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 12-month period.
(l) DISQUALIFYING DISPOSITIONS. Each Award Agreement with respect to an
Incentive Stock Option shall require the Participant to notify the Committee of
any disposition of shares of Common Stock issued pursuant to the exercise of
such Option under the circumstances described in Section 421(b) of the Code
(relating to certain disqualifying dispositions), within 10 days of such
disposition.
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, 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 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. PERFORMANCE AWARDS.
------------------
(a) The Committee may determine to make any Award under the Plan contingent
upon the satisfaction of any conditions related to the performance of the
Holding Company, an Affiliate of the Participant. Each Performance Award shall
be evidenced in the Award Agreement, which shall set forth the applicable
conditions, the maximum amounts payable and such other terms and conditions as
are applicable to the Performance Award. Unless otherwise determined by the
Committee, each Performance Award shall be granted and administered to comply
with the requirements of Section 162(m) of the Code and subject to the following
provisions:
(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 applicable conditions 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 satisfaction of the conditions 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.
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<PAGE> 33
(d) No Award or portion thereof that is subject to the satisfaction of any
condition shall be considered to be earned or vested until the Committee
certifies in writing that the conditions to which the distribution, earning or
vesting of such Award is subject have been achieved.
10. GRANTS IN THE EVENT OF A CHANGE IN CONTROL.
------------------------------------------
(a) In the event of a Change in Control, Options then available for grant
under this Plan pursuant to Section 4 shall be automatically granted among those
current Employees and current Outside Directors who have previously been granted
Options under this Plan or the FIRSTFED AMERICA BANCORP, INC. 1997 Stock-Based
Incentive Plan (the "1997 Plan"), as of the date of the Change in Control. The
number of shares subject to Options to be granted to each such individual
pursuant to this Section 10 shall be determined by multiplying the number of
Options to purchase shares of Common Stock then available for grant to Employees
and Outside Directors, respectively, pursuant to Section 4 by a fraction, the
numerator of which is the number of Options to purchase shares of Common Stock
previously granted to that individual under this Plan and the 1997 Plan (whether
or not yet exercised), and the denominator of which is the total number of
Options to purchase shares of Common Stock previously granted to all Employees
(whether or not yet exercised), in the case of an Employee, and all current
Outside Directors, in the case of an Outside Director, under this Plan and the
1997 Plan.
(b) The Exercise Price for any Option granted pursuant to this Section 10
shall be the weighted average Exercise Price of all Options, as adjusted
pursuant to Section 15, granted under this Plan or the 1997 Plan, whether such
previously granted Option has been exercised or is exercisable or unexercisable,
to the respective Employee or Outside Director prior to the Change in Control.
(c) All Options granted pursuant to this Section 10 shall be 100% vested
and exercisable upon the Participant's termination of employment or service
following within twenty-four (24) months of a Change in Control and shall remain
exercisable for a period of ten (10) years from the date of grant.
11. DEFERRED PAYMENTS.
-----------------
The Committee, in its discretion, may permit a Participant to elect to
defer receipt of all or any part of any cash or stock payment under the Plan, or
the Committee may determine to defer receipt by some or all Participants, of all
or part of any such payment. The Committee shall determine the terms and
conditions of any such deferral, including the period of deferral, the manner of
deferral, and the method for measuring appreciation on deferred amounts until
their payout.
12. METHOD OF EXERCISE OF OPTIONS.
-----------------------------
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 or a constructive stock swap, as the Committee may specify in the
applicable Award Agreement.
13. 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.
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<PAGE> 34
14. 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.
15. 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 is made, 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 15 shall be subject to required
approval by the Office of Thrift Supervision.
16. TAX WITHHOLDING.
---------------
(a) Whenever under this Plan, cash or shares of Common Stock are to be
delivered upon exercise of an Award or any other event with respect to rights
and benefits hereunder, the Committee shall be entitled to require as a
condition of delivery (i) that the Participant remit an amount sufficient to
satisfy all federal, state, and local withholding tax requirements related
thereto, (ii) that the withholding of such sums come from compensation otherwise
due to the Participant or from any shares of Common Stock due to the Participant
under this Plan or (iii) any combination of the foregoing provided, however,
that no amount shall be withheld from any cash payment or shares of Common Stock
relating to an Award which was transferred by the Participant in accordance with
this Plan.
(b) If any disqualifying disposition described in Section 7(k) is made with
respect to shares of Common Stock acquired under an Incentive Stock Option
granted pursuant to this Plan, or any transfer described in Section 6(c) is
made, or any election described in Section 16 is made, then the person making
such disqualifying disposition, transfer, or election shall remit to the Holding
Company or its Affiliates an amount sufficient to satisfy all federal, state,
and local withholding taxes thereby incurred; provided that, in lieu of or in
addition to the foregoing, the Holding Company or its Affiliates shall have the
right to withhold such sums from compensation otherwise due to the Participant,
or, except in the case of any transfer pursuant to Section 6(c), from any shares
of Common Stock due to the Participant under this Plan.
17. NOTIFICATION UNDER SECTION 83(B).
--------------------------------
The Committee may, on the Date of Grant or any later date, prohibit a
Participant from making the election described below. If the Committee has not
prohibited such Participant from making such election, and the Participant
shall, in connection with the exercise of any Option, or the grant of any Stock
Award, make the election permitted under Section 83(b) of the Code (i.e., an
election to include in such Participant's gross income in the year of transfer
the amounts specified in Section 83(b) of the Code), such Participant
B-9
<PAGE> 35
shall notify the Committee of such election within 10 days of filing notice of
the election with the Internal Revenue Service, in addition to any filing and
notification required pursuant to regulations issued under the authority of
Section 83(b) of the Code.
18. AMENDMENT OF THE PLAN AND AWARDS.
--------------------------------
(a) Except as provided in paragraph (c) of this Section 18, 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 shall be submitted for shareholder
approval to the extent required by such law or regulation. 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) Except as provided in paragraph (c) of this Section 18, 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.
(c) In no event shall the Board of Directors amend the Plan or shall the
Committee amend an Award Agreement in any manner that has the effect of:
(i) Allowing any Option to be granted with an exercise below the Fair
Market Value of the Common Stock on the Date of Grant.
(ii) Allowing the exercise price of any Option previously granted
under the Plan to be reduced subsequent to the Date of Award.
(d) Notwithstanding anything in this Plan or any Award Agreement to the
contrary, if any Award or right under this Plan would cause a transaction to be
ineligible for pooling of interest accounting that would, but for such Award or
right, be eligible for such accounting treatment, the Committee may modify or
adjust the Award or right so that pooling of interest accounting is available.
19. EFFECTIVE DATE OF PLAN.
----------------------
The Plan shall become effective upon ratification by the Holding Company's
shareholders or, if not so ratified, as of the date adopted by the Board of
Directors. The failure to obtain shareholder ratification 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 ratified by stockholders in
accordance with IRS regulations, the Plan shall remain in full force and effect,
unless terminated by the Board of Directors, 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.
20. 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.
21. APPLICABLE LAW.
--------------
The Plan will be administered in accordance with the laws of the state of
Delaware and applicable federal law.
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<PAGE> 36
REVOCABLE PROXY
FIRSTFED AMERICA BANCORP, INC.
ANNUAL MEETING OF SHAREHOLDERS
JULY 21, 1998
2:00 P.M. EASTERN TIME
-------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert F. Stoico, Thomas A. Rodgers, Jr.
and Anthony L. Sylvia 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 July 21, 1998, 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:
1. The election as directors of all nominees listed (except as marked to
the contrary below).
Robert F. Stoico
John S. Holden, Jr.
FOR ALL
FOR VOTE WITHHELD EXCEPT
--- ------------- -------
/ / / / / /
INSTRUCTION: To withhold your vote for any individual nominee, mark "FOR
ALL EXCEPT" and write that nominee's name on the line provided below.
- --------------------------------------------------------------------------------
2. The approval of the amendment of the FIRSTFED AMERICA BANCORP, INC.
1997 Stock-Based Incentive Plan.
FOR AGAINST ABSTAIN
--- ------- -------
/ / / / / /
3. The approval of the FIRSTFED AMERICA BANCORP, INC. 1998 Stock-Option
Plan.
FOR AGAINST ABSTAIN
--- ------- -------
/ / / / / /
4. 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, 1999.
FOR AGAINST ABSTAIN
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/ / / / / /
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS.
<PAGE> 37
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.
Dated:
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SIGNATURE OF SHAREHOLDER
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SIGNATURE OF CO-HOLDER (IF ANY)
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 15, 1998 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.
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PLEASE COMPLETE, DATE, SIGN AND PROMPTLY MAIL THIS PROXY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
