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                         FIRSTFED AMERICA BANCORP, INC.
                         1997 STOCK-BASED INCENTIVE PLAN
                (AS AMENDED AND RESTATED AS OF OCTOBER 29, 1998)

1.   DEFINITIONS.

     (a)  "Affiliate" means any "subsidiary corporation" of the Holding Company,
as such term is defined in Section 424(f) of the Code.

     (b)  "Award" means, individually or collectively, a grant under the Plan of
Non-statutory Stock Options, Incentive Stock Options, Stock Appreciation Rights,
Limited Rights and Stock Awards.

     (c)  "Award Agreement" means an agreement evidencing and setting forth the
terms of an Award granted under the Plan, in such form as the Committee may,
from time to time, approve.

     (d)  "Bank" means First Federal Savings Bank of America, Fall River,
Massachusetts.

     (e)  "Board of Directors" means the board of directors of the Holding
Company.

     (f)  "Change in Control" means a change in control of the Bank or Holding
Company of a nature that (i) would be required to be reported in response to
Item 1 of the current report on Form 8-K, as in effect on the date hereof,
pursuant to Sections 13 or 15(d) of the Exchange Act; (ii) results in a "change
of control" or "acquisition of control" within the meaning of the regulations
promulgated by the Office of Thrift Supervision ("OTS") (or its predecessor
agency) found at 12 C.F.R. Part 574, as in effect on the date hereof; provided,
however, that in applying the definition of change in control as set forth under
such regulations the Board of Directors shall substitute its judgment for that
of the OTS; or (iii) without limitation Change in Control shall be deemed to
have occurred at such time as (A) any "person" (as the term is used in Sections
13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Bank or the Holding Company representing 20% or more of the
Bank's or the Holding Company's outstanding securities except for any securities
of the Bank purchased by the Holding Company and any securities purchased by any
tax-qualified employee benefit plan of the Bank; or (B) individuals who
constitute the Board of Directors on the date hereof (the "Incumbent Board")
cease for any reason to constitute at least a majority thereof, provided that
any person becoming a director subsequent to the date hereof whose election was
approved by a vote of at least three-quarters of the directors comprising the
Incumbent Board, or whose nomination for election by the Holding Company's
stockholders was approved by a nominating committee serving under the Incumbent
Board, shall be, for purposes of this clause (B), considered as though he were a
member of the Incumbent Board; or (C) a plan of reorganization, merger,
consolidation, sale of all or substantially all the assets of the Bank or the
Holding Company or similar transaction occurs in which the Bank or Holding
Company is not the resulting entity; or (D) a successful 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 Bank or
similar transaction with one or more corporations, as a result of which the
outstanding shares of the class of securities then subject to the plan are
exchanged for or converted into cash or property or securities not issued by the
Bank or the Holding Company; or (E) a tender offer is made for 20% or more of
the voting securities of the Bank or the Holding Company and such tender offer
is successful.


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     (g)  "Code" means the Internal Revenue Code of 1986, as amended.

     (h)  "Committee" means the committee designated by the Board of Directors
to administer the Plan pursuant to Section 2 of the Plan.

     (i)  "Common Stock" means the Common Stock of the Holding Company, par
value, $.01 per share.

     (j)  "Date of Grant" means the effective date of an Award.

     (k)  "Disability" means any mental or physical condition with respect to
which the Participant qualifies for and receives benefits for under a long-term
disability plan of the Holding Company or an Affiliate, or in the absence of
such a long-term disability plan or coverage under such a plan, "disability"
shall mean a physical or mental condition which, in the sole discretion of the
Committee, is reasonably expected to be of indefinite duration and to
substantially prevent the Participant from fulfilling his duties or
responsibilities to the Holding Company or an Affiliate.

     (l)  "Effective Date" means the date the Plan is approved by stockholders,
as defined by applicable OTS regulation, or January 16, 1998, whichever is
earlier.

     (m)  "Employee" means any person employed by the Holding Company or an
Affiliate. Directors who are employed by the Holding Company or an Affiliate
shall be considered Employees under the Plan.

     (n)  "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     (o)  "Exercise Price" means the price at which a share of Common Stock may
be purchased by a Participant pursuant to an Option.

     (p)  "Extraordinary Dividend" means a distribution to stockholders by the
Holding Company of earnings or stockholders' equity which: (i) exceeds net
earnings for the period for which the distribution is paid or (ii) such
distribution or any portion thereof will be treated by the stockholders
receiving such distribution as a return of capital for federal income tax
purposes.

     (q)  "Fair Market Value" means the market price of Common Stock, determined
by the Committee as follows:

          (i)   If the Common Stock was traded on the date in question on The
                Nasdaq Stock Market then the Fair Market Value shall be equal to
                the last transaction price quoted for such date by The Nasdaq
                Stock Market;

          (ii)  If the Common Stock was traded on a stock exchange on the date 
                in question, then the Fair Market Value shall be equal to the
                closing price reported by the applicable composite transactions
                report for such date; and

          (iii) If neither of the foregoing provisions is applicable, then the
                Fair Market Value shall be determined by the Committee in good
                faith on such basis as it deems appropriate.

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     Whenever possible, the determination of Fair Market Value by the Committee
shall be based on the prices reported in THE WALL STREET JOURNAL. Such
determination shall be conclusive and binding on all persons.

     (r)  "Holding Company" means FIRSTFED AMERICA BANCORP, INC.

     (s)  "Incentive Stock Option" means an Option granted to a Participant
pursuant to Section 7 of the Plan that is intended to meet the requirements of
Section 422 of the Code.

     (t)  "Limited Right" means an Award granted to a Participant pursuant to
Section 8 of the Plan.

     (u)  "Non-statutory Stock Option" means a stock option granted to a
Participant pursuant to the terms of the Plan but which is not intended to be
and is not identified as an Incentive Stock Option or a stock option granted
under the Plan which is intended to be and is identified as an Incentive Stock
Option but which does not meet the requirements of Section 422 of the Code.

     (v)  "Option" means an Incentive Stock Option or Non-statutory Stock
Option.

     (w)  "Outside Director" means a member of the Board of Directors of the
Holding Company or an Affiliate, who is not also an Employee of the Holding
Company or an Affiliate.

     (x)  "Participant" means any person who holds an outstanding Award pursuant
to the Plan.

     (y)  "Performance Award" means an Award granted to a Participant pursuant
to Section 11 of the Plan.

     (z)  "Performance Goal" means an objective for the Holding Company or any
Affiliate or any unit thereof or any individual that may be established by the
Committee for a Performance Award to become vested, earned or exercisable.
Performance Goals applicable to Performance Awards are intended to constitute
"performance-based" compensation within the meaning of Section 162(m) of the
Code and shall be based on one or more of the following criteria:

          (i)        net income, as adjusted for non-recurring items
          (ii)       cash earnings
          (iii)      earnings per share
          (iv)       cash earnings per share
          (v)        return on equity
          (vi)       return on assets
          (vii)      assets
          (viii)     stock price
          (ix)       total shareholder return
          (x)        capital
          (xi)       net interest income
          (xii)      market share
          (xiii)     cost control or efficiency ratio
          (xiv)      asset growth


     (aa) "Plan" means the FIRSTFED AMERICA BANCORP, INC. 1997 Stock-Based
Incentive Plan.

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     (bb) "Retirement" means a termination of employment (i) from the Holding
Company or an Affiliate at an age and with employment service that would entitle
the individual to a pension under the Financial Institutions Retirement Fund as
adopted by First Federal Savings Bank of America ("Pension Plan") if the
individual were a participant in such Pension Plan or (ii) under circumstances
designated as a Retirement by the Committee. "Retirement" with respect to an
Outside Director means the termination of service from the Board of Directors of
the Holding Company and any Affiliate following written notice to the Board of
Directors of such Outside Director's intention to retire.

     (cc) "Stock Appreciation Right" means an Award granted to a Participant,
alone or in connection with a related Option, pursuant to Section 10 of the
Plan.

     (dd) "Stock Award" means an Award granted to a Participant pursuant to
Section 9 of the Plan.

     (ee) "Termination for Cause" shall mean, in the case of an Outside
Director, removal from the Board of Directors or, in the case of an Employee,
termination of employment, because of a material loss to the Holding Company or
an Affiliate caused by the Participant's intentional failure to perform stated
duties, personal dishonesty, willful violation of any law, rule, regulation
(other than traffic violations or similar offenses) or final cease and desist
order, as determined by the Board of Directors. No act, or failure to act, on a
Participant's part shall be "willful" unless done, or omitted to be done, not in
good faith and without reasonable belief that the action or omission was in the
best interest of the Holding Company or an Affiliate.

     (ff) "Trust" means a trust established by the Board of Directors in
connection with this Plan to hold Plan assets for the purposes set forth herein.

     (gg) "Trustee" means any person or entity approved by the Board of
Directors to hold legal title to any of the Trust assets for the purposes set
forth under the Plan.

2.   ADMINISTRATION.

     (a)  The Plan shall be administered by the Committee. The Committee shall
consist of two or more disinterested directors of the Holding Company, who shall
be appointed by the Board of Directors. A member of the Board of Directors shall
be deemed to be "disinterested" only if he satisfies (i) such requirements as
the Securities and Exchange Commission may establish for non-employee directors
administering plans intended to qualify for exemption under Rule 16b-3 (or its
successor) under the Exchange Act and (ii) such requirements as the Internal
Revenue Service may establish for outside directors acting under plans intended
to qualify for exemption under Section 162(m)(4)(C) of the Code. The Board of
Directors may also appoint one or more separate committees of the Board of
Directors, each composed of one or more directors of the Holding Company or an
Affiliate who need not be disinterested and who may grant Awards and administer
the Plan with respect to Employees and Outside Directors who are not considered
officers or directors of the Holding Company under Section 16 of the Exchange
Act.

     (b)  The Committee shall (i) select the Employees and Outside Directors who
are to receive Awards under the Plan, (ii) determine the type, number, vesting
requirements and other features and conditions of such Awards, (iii) interpret
the Plan and (iv) make all other decisions relating to the operation of the
Plan. The Committee may adopt such rules or guidelines as it deems appropriate
to implement the Plan. The Committee's determinations under the Plan shall be
final and binding on all persons.


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     (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, the Committee shall set forth in each
Award Agreement (i) the type of Award granted (ii) the Exercise Price of an
Option or Stock Appreciation Right, (iii) the number of shares subject to the
Award; (iv) the expiration date of the Award, (v) the manner, time, and rate
(cumulative or otherwise) of exercise or vesting of such Award, and (vi) the
restrictions, if any, placed upon such Award, or upon shares which may be issued
upon exercise of such Award. The Chairman of the Committee and such other
directors and officers as shall be designated by the Committee are hereby
authorized to execute Award Agreements on behalf of the Company or an Affiliate
and to cause them to be delivered to the recipients of Awards.

     (d)  The Committee may delegate all authority for: (i) the determination of
forms of payment to be made by or received by the Plan and (ii) the execution of
any Award Agreement. The Committee may rely on the descriptions,
representations, reports and estimates provided to it by the management of the
Holding Company or an Affiliate for determinations to be made pursuant to the
Plan, including the attainment of Performance Goals. However, only the Committee
or a portion of the Committee may certify the attainment of a Performance Goal.

3.   TYPES OF AWARDS AND RELATED RIGHTS.

     The following Awards may be granted under the Plan:

     (a)    Non-statutory Stock Options
     (b)    Incentive Stock Options
     (c)    Limited Rights
     (d)    Stock Awards
     (e)    Stock Appreciation Rights


4.   STOCK SUBJECT TO THE PLAN.

     Subject to adjustment as provided in Section 17 hereof, the maximum number
of shares reserved for Awards under the Plan is 1,218,983, which number shall
not exceed 14% of the outstanding shares of the Common Stock determined
immediately as of the Effective Date. Subject to adjustment as provided in
Section 17 hereof, the maximum number of shares reserved hereby for purchase
pursuant to the exercise of Options and Option-related Awards granted under the
Plan is 870,715, which number shall not exceed 10% of the outstanding shares of
Common Stock as of the Effective Date. The maximum number of the shares reserved
for Stock Awards is 348,268, which number shall not exceed 4% of the outstanding
shares of Common Stock as of the Effective Date. The shares of Common Stock
issued under the Plan may be either authorized but unissued shares or authorized
shares previously issued and acquired or reacquired by the Trust or the Holding
Company, respectively. To the extent that Options and Stock Awards are granted
under the Plan, the shares underlying such Awards will be unavailable for any
other use including future grants under the Plan except that, to the extent that
Stock Awards or Options terminate, expire, or are forfeited without having
vested or without having been exercised (in the case of Limited Rights,
exercised for cash), new Awards may be made with respect to these shares.


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5    ELIGIBILITY.

     Subject to the terms of the Plan, all Employees and Outside Directors shall
be eligible to receive Awards under the Plan. In addition, the Committee may
grant eligibility to consultants and advisors of the Holding Company or an
Affiliate.

6    NON-STATUTORY STOCK OPTIONS.

     The Committee may, subject to the limitations of this Plan and the
availability of shares of Common Stock reserved but unawarded under this Plan,
grant Non-statutory Stock Options upon such terms and conditions as it may
determine. Non-statutory Stock Options granted under this Plan are subject to
the following terms and conditions:

     (a)  EXERCISE PRICE. The Exercise Price of each Non-statutory Stock Option
shall be determined by the Committee on the Date of Grant. Such Exercise Price
shall not be less than 100% of the Fair Market Value of the Common Stock on the
Date of Grant. Shares of Common Stock underlying a Non-statutory Stock Option
may be purchased only upon full payment of the Exercise Price in a manner
provided for in Section 14 of the Plan.

     (b)  TERMS OF NON-STATUTORY STOCK OPTIONS. The term during which each
Non-statutory Stock Option may be exercised shall be determined by the
Committee, but in no event shall a Non-statutory Stock Option be exercisable in
whole or in part more than ten (10) years from the Date of Grant. Subject to
Section 23 of the Plan, the Committee shall determine the date on which each
Non-statutory Stock Option shall become exercisable and any terms or conditions
which must be satisfied prior to each Non-statutory Stock Option becoming
exercisable. Any such terms or conditions shall be determined by the Committee
as of the Date of Grant. The shares of Common Stock underlying each
Non-statutory Stock Option installment may be purchased in whole or in part by
the Participant at any time during the term of such Non-statutory Stock Option
after such installment becomes exercisable.

     (c)  NON-TRANSFERABILITY. Unless otherwise determined by the Committee in
accordance with this Section 6(c), Non-statutory Stock Options shall not be
transferred, assigned, hypothecated, or disposed of in any manner by a
Participant other than by will or the laws of intestate succession. The
Committee may, however, in its sole discretion, permit transferability or
assignment of a Non-statutory Stock Option if such transfer or assignment is, in
its sole determination, for valid estate planning purposes and such transfer or
assignment is permitted under the Code and Rule 16b-3 under the Exchange Act.
For purposes of this Section 6(c), a transfer for valid estate planning purposes
includes, but is not limited to: (a) a transfer to a revocable intervivos trust
as to which the Participant is both the settlor and trustee, (b) a transfer for
no consideration to: (i) any member of the Participant's Immediate Family, (ii)
any trust solely for the benefit of members of the Participant's Immediate
Family, (iii) any partnership whose only partners are members of the
Participant's Immediate Family, and (iv) any limited liability corporation or
corporate entity whose only members or equity owners are members of the
Participant's Immediate Family, or (c) The FIRSTFED Charitable Foundation. For
purposes of this Section 6(c), "Immediate Family" includes, but is not
necessarily limited to, a Participant's parents, spouse, children, grandchildren
and great-grandchildren. Nothing contained in this Section 6(c) shall be
construed to require the Committee to give its approval to any transfer or
assignment of any Non-statutory Stock Option or portion thereof, and approval to
transfer or assign any Non-statutory Stock Option or portion thereof does not
mean that such approval will be given with respect to any other Non-statutory
Stock Option or portion thereof. The transferee or assignee of any Non-statutory
Stock Option shall be subject to all of the terms and conditions applicable to
such Non-statutory Stock Option immediately prior 


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to the transfer or assignment and shall be subject to any conditions proscribed
by the Committee with respect to such Non-statutory Stock Option.

     (d)  TERMINATION OF EMPLOYMENT OR SERVICE. Unless otherwise determined by
the Committee, upon the termination of a Participant's employment or service for
any reason other than Disability, death, Retirement, 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.

     (e)  MAXIMUM INDIVIDUAL AWARD. No individual Employee shall be granted an
amount of Non-statutory Stock Options which exceeds 25% of all Options eligible
to be granted under the Plan within any 60 month period and no individual
Outside Director shall be granted an amount of Non-statutory Stock Options which
exceeds 5% of all Options eligible to be granted under the Plan within any 60
month period.

7.   INCENTIVE STOCK OPTIONS.

     The Committee may, subject to the limitations of the Plan and the
availability of shares of Common Stock reserved but unawarded under this Plan,
grant Incentive Stock Options to an Employee. Incentive Stock Options granted
pursuant to the Plan shall be subject to the following terms and conditions:

     (a)  EXERCISE PRICE. The Exercise Price of each Incentive Stock Option
shall be not less than 100% of the Fair Market Value of the Common Stock on the
Date of Grant. However, if at the time an Incentive Stock Option is granted, the
Employee owns or is treated as owning, for purposes of Section 422 of the Code,
Common Stock representing more than 10% of the total combined voting securities
of the Holding Company ("10% owner"), the Exercise Price shall not be less than
110% of the Fair Market Value of the Common Stock on the Date of Grant. Shares
of Common Stock may be purchased only upon payment of the full Exercise Price in
a manner provided for in Section 14 of the Plan.

     (b)  AMOUNTS OF INCENTIVE STOCK OPTIONS. To the extent the aggregate Fair
Market Value of shares of Common Stock with respect to which Incentive Stock
Options that are exercisable for the first time by an Employee during any
calendar year under the Plan and any other stock option plan of the Holding
Company or an Affiliate exceeds $100,000, or such higher value as may be
permitted under Section 422 of the Code, such Options in excess of such limit
shall be treated as Non-statutory Stock Options. Fair Market Value shall be
determined as of the Date of Grant with respect to each such Incentive Stock
Option.

     (c)  TERMS OF INCENTIVE STOCK OPTIONS. The term during which each Incentive
Stock Option may be exercised shall be determined by the Committee, but in no
event shall an Incentive Stock Option be exercisable in whole or in part more
than ten (10) years from the Date of Grant. If at the time an Incentive Stock
Option is granted 


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to an Employee who is a 10% Owner, the Incentive Stock Option granted to such
Employee shall not be exercisable after the expiration of five (5) years from
the Date of Grant. Subject to Section 23 of the Plan, the Committee shall
determine the date on which each Incentive Stock Option shall become exercisable
and any terms or conditions which must be satisfied prior to the Incentive Stock
Option becoming exercisable. Any such terms or conditions shall be determined by
the Committee as of the Date of Grant. The shares of Common Stock underlying
each Incentive Stock Option installment may be purchased in whole or in part at
any time during the term of such Incentive Stock Option after such installment
becomes exercisable.

     (d)  TRANSFERABILITY. No Incentive Stock Option shall be transferable
except by will or the laws of descent and distribution and is exercisable,
during his lifetime, only by the Employee to whom it is granted. The designation
of a beneficiary does not constitute a transfer.

     (e)  TERMINATION OF EMPLOYMENT. Unless otherwise determined by the
Committee, upon the termination of an Employee's employment for any reason other
than Disability, 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.

     (f)  MAXIMUM INDIVIDUAL AWARD. No individual Employee shall be granted an
amount of Incentive Stock Options which exceeds 25% of all Options eligible to
be granted under the Plan within any 60 month period.

8.   LIMITED RIGHTS.

     Simultaneously with the grant of any Option, the Committee may grant a
Limited Right with respect to all or some of the shares of Common Stock covered
by such Option. Limited Rights granted under this Plan are subject to the
following terms and conditions:

     (a)  TERMS OF RIGHTS. In no event shall a Limited Right be exercisable in
whole or in part before the expiration of six (6) months from the Date of Grant
of the Limited Right. A Limited Right may be exercised only in the event of a
Change in Control. The Limited Right may be exercised only when the underlying
Option is eligible to be exercised, and only when the Fair Market Value of the
underlying shares on the day of exercise is greater than the Exercise Price of
the underlying Option. Upon exercise of a Limited Right, the underlying Option
shall cease to be exercisable and shall be terminated. Upon exercise or
termination of an Option, any related 


<PAGE>   9


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.   STOCK AWARDS.

     The Committee may, subject to the limitations of the Plan, make Stock
Awards which shall consist of the grant of some number of shares of Common Stock
to a Participant. Stock Awards shall be made subject to the following terms and
conditions:

     (a)  PAYMENT OF THE STOCK AWARD. Stock Awards may only be made in whole
shares of Common Stock. Stock Awards may only be granted from shares reserved
under the Plan and available for award at the time the Stock Award is made to
the Participant.

     (b)  TERMS OF THE STOCK AWARDS. Subject to Section 23 of the Plan, the
Committee shall determine the dates on which Stock Awards granted to a
Participant shall vest and any terms or conditions which must be satisfied prior
to the vesting of any installment or portion of the Stock Award. Any such terms,
or conditions shall be determined by the Committee as of the Date of Grant.

     (c)  TERMINATION OF EMPLOYMENT OR SERVICE. Unless otherwise determined by
the Committee, upon the termination of a Participant's employment or service for
any reason other than Disability, death, Retirement, 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, 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.

     (d)  NON-TRANSFERABILITY. Except to the extent permitted by the Code, the
rules promulgated under Section 16(b) of the Exchange Act or any successor
statutes or rules:

          (i)  The recipient of a Stock Award shall not sell, transfer, assign,
               pledge, or otherwise encumber shares subject to the Stock Award
               until full vesting of such shares has occurred. For purposes of
               this section, the separation of beneficial ownership and legal
               title through the use of any "swap" transaction is deemed to be a
               prohibited encumbrance.

<PAGE>   10


          (ii) Unless determined otherwise by the Committee and except in the
               event of the Participant's death or pursuant to a domestic
               relations order, a Stock Award is not transferable and may be
               earned in his lifetime only by the Participant to whom it is
               granted. Upon the death of a Participant, a Stock Award is
               transferable by will or the laws of descent and distribution. The
               designation of a beneficiary shall not constitute a transfer.

         (iii) If a recipient of a Stock Award is subject to the provisions of
               Section 16 of the Exchange Act, shares of Common Stock subject to
               such Stock Award may not, without the written consent of the
               Committee (which consent may be given in the Award Agreement), be
               sold or otherwise disposed of within six (6) months following the
               date of grant of the Stock Award.

     (e) ACCRUAL OF DIVIDENDS. Whenever shares of Common Stock underlying a
Stock Award are distributed to a Participant or beneficiary thereof under the
Plan, such Participant or beneficiary shall also be entitled to receive, with
respect to each such share distributed, a payment equal to any cash dividends
and the number of shares of Common Stock equal to any stock dividends, declared
and paid with respect to a share of the Common Stock if the record date for
determining shareholders entitled to receive such dividends falls between the
date the relevant Stock Award was granted and the date the relevant Stock Award
or installment thereof is issued. There shall also be distributed an appropriate
amount of net earnings, if any, of the Trust with respect to any dividends paid
out on the shares related to the Stock Award.

     (f) VOTING OF STOCK AWARDS. After a Stock Award has been granted but for
which the shares covered by such Stock Award have not yet been vested, earned
and distributed to the Participant pursuant to the Plan, the Participant shall
be entitled to vote or to direct the Trustee to vote, as the case may be, such
shares of Common Stock which the Stock Award covers subject to the rules and
procedures adopted by the Committee for this purpose and in a manner consistent
with the Trust agreement.

     (g) MAXIMUM INDIVIDUAL AWARD. No individual Employee shall be granted an
amount of Stock Awards which exceeds 25% of all Stock Awards eligible to be
granted under the Plan within any 60 month period and no individual Outside
Director shall be granted an amount of Stock Awards which exceeds 5% of all
Stock Awards eligible to be granted under the Plan within any 60 month period.

10.  STOCK APPRECIATION RIGHTS

     The Committee may, subject to the limitation of the Plan, grant a Stock
Appreciation Right ("SAR") to any Participant. A Stock Appreciation Right shall
entitle the Participant to the right to receive a payment, equal in value to the
excess of the Fair Market Value of a specified number of shares of Common Stock
on the date the SAR is exercised over the grant price of such SAR, which shall
not be less than 100% of the Fair Market Value on the date of grant of such SAR,
as determined by the Committee, provided that, in the case of a SAR granted
retroactively in tandem with or as substitution for another award granted under
any plan of the Company or an Affiliate, the grant price may be the same as the
exercise or designated price of such other award.

     (a) MAXIMUM INDIVIDUAL AWARD. No individual Employee or Outside Director
shall be granted a number of Stock Appreciation Rights which exceeds the maximum
number of Options such individual may be granted under the Plan, pursuant to
Section 6(e) hereof, within any 60 month period.

11.  PERFORMANCE AWARDS

<PAGE>   11


     (a)  The Committee may determine to make any Award under the Plan
contingent upon the achievement of a Performance Goal or any combination of
Performance Goals. Each Performance Award shall be evidenced in the Award
Agreement, which shall set forth the Performance Goals applicable to the Award,
the maximum amounts payable and such other terms and conditions as are
applicable to the Performance Award. Each Performance Award shall be granted and
administered to comply with the requirements of Section 162(m) of the Code and
in a manner consistent with the provisions of Section 23 of the Plan.

     (b)  Any Performance Award shall be made not later than 90 days after the
start of the period for which the Performance Award relates and shall be made
prior to the completion of 25% of such period. All determinations regarding the
achievement of any Performance Goals will be made by the Committee. The
Committee may not increase during a year the amount of a Performance Award that
would otherwise be payable upon achievement of the Performance Goals but may
reduce or eliminate the payments as provided for in the Award Agreement.

     (c)  Nothing contained in the Plan will be deemed in any way to limit or
restrict the Committee from making any Award or payment to any person under any
other plan, arrangement or understanding, whether now existing or hereafter in
effect.

     (d)  A Participant who receives a Performance Award payable in Common Stock
shall have no rights as a shareholder until the Company Stock is issued pursuant
to the terms of the Award Agreement. The Common Stock may be issued without cash
consideration.

     (e)  A Participant's interest in a Performance Award may not be sold,
assigned, transferred, pledged, hypothecated, or otherwise encumbered.

     (f)  No Award or portion thereof that is subject to the attainment or
satisfaction of a condition or Performance Goal shall be distributed or
considered to be earned or vested until the Committee certifies in writing that
the conditions or Performance Goal to which the distribution, earning or vesting
of such Award is subject has been achieved.

12.  DEFERRED PAYMENTS

     Notwithstanding any other provision of this Plan, any Participant may
elect, with the concurrence of the Committee and consistent with any rules and
regulations established by the Committee, to defer the delivery of the proceeds
of the exercise of any Non-statutory Stock Option not transferred under the
provisions of Section 6(c), Stock Appreciation Rights, and Stock Awards.

     (a)  ELECTION TIMING. The election to defer the delivery of the proceeds
from any eligible Non-statutory Stock Option or Stock Appreciation Right must be
made at least six (6) months prior to the date such Award is exercised or at
such other time as the Committee may specify. The election to defer the delivery
of any Stock Award must be made no later than the last day of the calendar year
preceding the calendar year in which the Participant would otherwise have an
unrestricted right to receive such Award. Deferrals of eligible Awards shall
only be allowed for exercises of Options and lapses of restrictions on Stock
Awards that occur while the Participant is in active service with the Holding
Company or an Affiliate. Any election to defer the proceeds from an eligible
Award shall be irrevocable as long as the Participant remains an Employee or
Outside Director of the Holding Company or an Affiliate.

<PAGE>   12


     (b)  STOCK OPTION DEFERRAL. The deferral of the proceeds of Non-statutory
Stock Options may be elected by a Participant subject to the rules and
regulations established by the Committee. The proceeds from such an exercise
shall be credited to a deferred stock option account established for the
Participant. The proceeds shall be credited to the deferred stock option account
as a number of deferred shares or share units equivalent in value to those
proceeds. Deferred share units shall be valued at the Fair Market Value on the
date of exercise. Subsequent to exercise, the deferred shares or share units
shall be valued at the Fair Market Value of Common Stock; provided, however,
that at the discretion of the Committee, the Participant may elect to have the
value of his deferred stock option account valued on some other basis of
measurement approved by the Committee. Unless the Participant's deferred stock
option account is valued using a basis of measurement other than Common Stock,
deferred share units shall accrue dividends at the rate paid upon the Common
Stock credited in the form of additional deferred share units. Deferred shares
or share units shall be distributed in shares of Common Stock or cash, at the
discretion of the Committee, upon the termination of service of the Participant
or at such other date, as may be approved by the Committee, over a period of no
more than ten (10) years.

     (c)  STOCK APPRECIATION RIGHT DEFERRAL. The deferral of the proceeds of
Stock Appreciation Rights may be made by a Participant subject to the rules and
regulations established by the Committee. Upon exercise, the Committee will
credit the Participant's deferred stock option account with a number of deferred
shares or share units equivalent in value to the difference between the Fair
Market Value of a share of Common Stock on the exercise date and the Exercise
Price of the Stock Appreciation Right multiplied by the number of shares
exercised. Deferred shares or share units shall be valued at the Fair Market
Value on the date of exercise. Subsequent to exercise, the deferred shares or
share units shall be valued at the Fair Market Value of Common Stock; provided,
however, that at the discretion of the Committee, the Participant may elect to
have the value of his deferred stock option account valued on some other basis
of measurement approved by the Committee. Unless the Participant's deferred
stock option account is valued using a basis of measurement other than Common
Stock, deferred shares or share units shall accrue dividends at the rate paid
upon the Common Stock credited in the form of additional deferred shares or
share units. Deferred shares or share units shall be distributed in shares of
Common Stock or cash, at the discretion of the Committee, upon the Participant's
termination of service or at such other date, as may be approved by the
Committee, over a period of no more than ten (10) years.

     (d)  STOCK AWARD DEFERRALS. The deferral of Stock Awards may be elected by
a Participant subject to the rules and regulations established by the Committee.
Upon the lapsing of restrictions on such an Award, the Committee shall credit to
a deferred stock award account established for the Participant a number of
deferred shares or share units equivalent in value to the number of deferred
Stock Awards multiplied by the Fair Market Value of Common Stock. Deferred
shares or share units shall be valued at the Fair Market Value on the date all
restriction on the Stock Award lapse or are waived. Subsequent to the lapsing of
all restrictions, the deferred shares or share units shall be valued at the Fair
Market Value of Common Stock; provided, however, that at the discretion of the
Committee, the Participant may elect to have the value of his deferred stock
award account valued on some other basis of measurement approved by the
Committee. Unless the Participant's deferred stock award account is valued using
a basis of measurement other than Common Stock, deferred shares or share units
shall accrue dividends at the rate paid upon the Common Stock credited in the
form of additional deferred share units. Deferred share units shall be
distributed in shares of Common Stock or cash, at the discretion of the
Committee, upon the termination of service of the Participant or at such other
date, as may be approved by the Committee, over a period of no more than ten
(10) years.

     (e)  ACCELERATED DISTRIBUTIONS. The Committee may, at its sole discretion,
allow for the early payment of a Participant's deferred stock option account
and/or deferred stock award account in the event of an "unforeseeable emergency"
or in the event of the death or Disability of the Participant. An "unforeseeable
emergency" means an 

<PAGE>   13


unanticipated emergency caused by an event beyond the control of the Participant
that would result in severe financial hardship if the distribution were not
permitted. Such distributions shall be limited to the amount necessary to
sufficiently address the financial hardship. Any distributions under this
provision, shall be consistent with the Code and the regulations promulgated
thereunder. Additionally, the Committee may use its discretion to cause stock
option deferral accounts and/or deferred stock award accounts to be distributed
when continuing the program is no longer in the best interest of the Holding
Company or any Affiliate.

     (f)  ASSIGNABILITY. No rights to deferred stock option accounts or deferred
stock award accounts may be assigned or subject to any encumbrance, pledge or
charge of any nature except that a Participant may designate a beneficiary
pursuant to any rules established by the Committee.

     (g)  UNFUNDED STATUS. No Participant or other person shall have any
interest in any fund or in any specific asset of the Holding Company or an
Affiliate by reason of any amount credited hereunder. Any amounts payable
hereunder shall be paid from the general assets of the Holding Company or its
Affiliates and no Participant or other person shall have any rights to such
assets beyond the rights afforded general creditors of the Holding Company and
its Affiliates. However, the Holding Company or any Affiliate shall have the
right to establish a reserve, trust or make any investment for the purpose of
satisfying the obligations created under this Section 12 of the Plan; provided,
however, that no Participant or other person shall have any interest in such
reserve, trust or investment.

13.  PAYOUT ALTERNATIVES

     (a)  Payments due to a Participant upon the exercise or redemption of an
Option or Stock Award shall be made in the form of shares of Common Stock.
Payments due to a Participant upon the exercise or redemption of a Stock
Appreciation Right or Limited Right shall be made in the form of cash.

     (b)  Any shares of Common Stock tendered in satisfaction of an obligation
arising under this Plan shall be valued at the Fair Market Value of the Common
Stock on the day preceding the date of the issuance of such stock to the
Participant.

14.  METHOD OF EXERCISE

     Subject to any applicable Award Agreement, any Option may be exercised
by the Participant in whole or in part at such time or times, and the
Participant may make payment of the Exercise Price in such form or forms,
including, without limitation, payment by delivery of cash, Common Stock or
other consideration (including, where permitted by law and the Committee,
Awards) having a Fair Market Value on the exercise date equal to the total
Exercise Price, or by any combination of cash, shares of Common Stock and other
consideration, including exercise by means of a cashless exercise arrangement
with a qualifying broker-dealer, as the Committee may specify in the applicable
Award Agreement.

15.  RIGHTS OF PARTICIPANTS.

     No Participant shall have any rights as a shareholder with respect to any
shares of Common Stock covered by an Option until the date of issuance of a
stock certificate for such Common Stock. Nothing contained herein or in any
Award Agreement confers on any person any right to continue in the employ or
service of the Holding Company or an Affiliate or interferes in any way with the
right of the Holding Company or an Affiliate to terminate a Participant's
services.

<PAGE>   14


16.  DESIGNATION OF BENEFICIARY.

     A Participant may, with the consent of the Committee, designate a person or
persons to receive, in the event of death, any Award to which the Participant
would then be entitled. Such designation will be made upon forms supplied by and
delivered to the Holding Company and may be revoked in writing. If a Participant
fails effectively to designate a beneficiary, then the Participant's estate will
be deemed to be the beneficiary.

17.  DILUTION AND OTHER ADJUSTMENTS.

     In the event of any change in the outstanding shares of Common Stock by
reason of any stock dividend or split, recapitalization, merger, consolidation,
spin-off, reorganization, combination or exchange of shares, or other similar
corporate change, or other increase or decrease in such shares without receipt
or payment of consideration by the Holding Company, or in the event an
extraordinary capital distribution (including an Extraordinary Dividend) is made
and any necessary OTS approval is obtained, the Committee may make such
adjustments to previously granted Awards, to prevent dilution, diminution, or
enlargement of the rights of the Participant, including any or all of the
following:

     (a)  adjustments in the aggregate number or kind of shares of Common Stock
          or other securities that may underlie future Awards under the Plan;

     (b)  adjustments in the aggregate number or kind of shares of Common Stock
          or other securities underlying Awards already made under the Plan;

     (c)  adjustments in the Exercise Price of outstanding Incentive and/or
          Non-statutory Stock Options, or any Limited Rights attached to such
          Options.

     No such adjustments may, however, materially change the value of benefits
available to a Participant under a previously granted Award. All Awards under
this Plan shall be binding upon any successors or assigns of the Holding
Company.

     Notwithstanding the above, in the event of an extraordinary capital
distribution, any adjustment under this Section 17 shall be subject to required
OTS approval.

18.  TAX WITHHOLDING.

     Notwithstanding any other provision of the Plan, Awards under this Plan
shall be subject to tax withholding to the extent required by any governmental
authority. Any withholding shall comply with Rule 16b-3 or any amendment or
successive rule. Shares of Common Stock withheld to pay for tax withholding
amounts shall be valued at their Fair Market Value on the date the Award is
deemed taxable to the Participant. Participants granted Non-statutory Stock
Options shall be responsible for any required withholding applicable to any
Non-statutory Stock Option which has been transferred pursuant to Section 6(c)
hereof, unless otherwise inconsistent with current tax law.

<PAGE>   15


19.  AMENDMENT OF THE PLAN AND AWARDS.

     (a)  The Board of Directors may at any time, and from time to time, modify
or amend the Plan in any respect, prospectively or retroactively; provided
however, that provisions governing grants of Incentive Stock Options, unless
permitted by the rules and regulations or staff pronouncements promulgated under
the Code shall be submitted for shareholder approval to the extent required by
such law, regulation or interpretation.

     Failure to ratify or approve amendments or modifications by shareholders
shall be effective only as to the specific amendment or modification requiring
such ratification. Other provisions of this Plan will remain in full force and
effect.

     No such termination, modification or amendment may adversely affect the
rights of a Participant under an outstanding Award without the written
permission of such Participant.

     (b)  The Committee may amend any Award Agreement, prospectively or
retroactively; provided, however, that no such amendment shall adversely affect
the rights of any Participant under an outstanding Award without the written
consent of such Participant.

20.  EFFECTIVE DATE OF PLAN.

     The Plan shall become effective upon approval by the Holding Company's
shareholders in accordance with OTS and Internal Revenue Service ("IRS")
regulations or January 16, 1998, whichever is earlier. The failure to obtain
shareholder approval for such purposes will not effect the validity of the Plan
and any Awards made under the Plan; provided, however, that if the Plan is not
approved by stockholders in accordance with IRS regulations, the Plan shall
remain in full force and effect, and any Incentive Stock Options granted under
the Plan shall be deemed to be Non-statutory Stock Options and any Award
intended to comply with Section 162(m) of the Code shall not comply with Section
162(m) of the Code.

21.  TERMINATION OF THE PLAN.

     The right to grant Awards under the Plan will terminate upon the earlier
of: (i) ten (10) years after the Effective Date; (ii) the issuance of a number
of shares of Common Stock pursuant to the exercise of Options or the
distribution of Stock Awards which together with the exercise of Limited Rights
is equivalent to the maximum number of shares reserved under the Plan as set
forth in Section 4 hereof. The Board of Directors has the right to suspend or
terminate the Plan at any time, provided that no such action will, without the
consent of a Participant, adversely affect a Participant's vested rights under a
previously granted Award.

22.  APPLICABLE LAW.

     The Plan will be administered in accordance with the laws of the state of
Delaware and applicable federal law.

23.  COMPLIANCE WITH OTS CONVERSION REGULATIONS

     Notwithstanding any other provision contained in this Plan:

     (a)  no Award under the Plan shall be made which would be prohibited by 12
          CFR '563b.3(g)(4);

<PAGE>   16
     (b)  unless the Plan is approved by a majority vote of the outstanding
          shares of the total votes eligible to be cast at a duty called meeting
          of stockholders to consider the Plan, as required by 12 CFR sec.
          563b.3(g)(4)(vii), the Plan shall not become effective or implemented
          prior to one (1) year from the date of the Bank's mutual to stock
          conversion;

     (c)  no Award granted prior to one (1) year from the date of the Bank's
          mutual to stock conversion shall become vested or exercisable at a
          rate in excess of 20% per year of the total number of Stock Awards or
          Options (whichever may be the case) granted to such Participant,
          provided, that Awards shall become fully vested or immediately
          exercisable in the event of a Participant's termination of service due
          to death or Disability;

     (d)  no Award granted to any individual Employee prior to one (1) year from
          the date of the Bank's mutual to stock conversion may exceed 25% of
          the total amount of Awards which may be granted under the Plan;

     (e)  no Award granted to any individual Outside Director prior to one (1)
          year from the date of the Bank's mutual to stock conversion may exceed
          5% of the total amount of Awards which may be granted under the Plan;
          and

     (f)  the aggregate amount of Awards granted to all Outside Directors prior
          to one (1) year from the date of the Bank's mutual to stock conversion
          may not exceed 30% of the total amount of Awards which may be granted
          under the Plan.



<PAGE>   17


24.  DELEGATION OF AUTHORITY

     The Committee may delegate all authority for: (i) the determination of
forms of payment to be made by or received by the Plan and (ii) the execution of
any Award Agreement. The Committee may rely on the descriptions,
representations, reports and estimates provided to it by the management of the
Holding Company or an Affiliate for determinations to be made pursuant to the
Plan, including the attainment of Performance Goals. However, only the Committee
or a portion of the Committee may certify the attainment of a Performance Goal.

     IN WITNESS WHEREOF, the Holding Company has established this Plan, as
adopted by the Board of Directors of FIRSTFED AMERICA BANCORP, INC. on May 29,
1997.


ADOPTED BY                                    FIRSTFED AMERICA BANCORP, INC
 THE BOARD OF DIRECTORS:


May 29, 1997                                  By: /s/ Robert F. Stoico     
--------------------------------                  ------------------------------
Date                                              Robert F. Stoico for the
                                                  Entire Board of Directors

APPROVED BY SHAREHOLDERS:


June 20, 1997                                 By: /s/ Cecilia Viverios    
--------------------------------                  ------------------------------
              Date                                Cecilia R. Viveiros
                                                  Corporate Secretary


Amendments approved by Shareholders:

June 15, 1998                                          
--------------------------------                  
              Date