STOCK OPTION AGREEMENT
                             ----------------------

                        FOR STOCK OPTIONS PURSUANT TO THE
                            TF FINANCIAL CORPORATION
                        1996 DIRECTORS STOCK OPTION PLAN



     STOCK OPTIONS for a total of shares  ___________ of Common Stock, par value
$.10 per share, of TF Financial Corporation (the "Company") is hereby granted to
___________  (the "Optionee") at the price determined as provided in, and in all
respects subject to the terms,  definitions and provisions of the 1996 Directors
Stock Option Plan (the "Plan")  adopted by the Company which is  incorporated by
reference herein, receipt of which is hereby acknowledged. Such Stock Options do
not comply with Options  granted under Section 422 of the Internal  Revenue Code
of 1986, as amended.

         1. Option Price. The Option price is $14.75 for each Share,  being 100%
of the fair market value, as determined by the Committee, of the Common Stock on
the date of grant of this Option.

         2. Exercise of Option.

                  (a) Date of  Exercisability.  This Option shall be exercisable
immediately  upon the date of grant in accordance  with  provisions of the Plan.
Notwithstanding  any provisions in this Section 2, in no event shall this Option
be exercisable  prior to six months  following the date of grant,  except in the
event of the death or disability of the Optionee.

                  (b)      Method of Exercise.  This Option shall be exercisable
by a written notice which shall:

                             (i) State the election to exercise the Option,  the
         number of  Shares  with  respect  to which it is being  exercised,  the
         person in whose name the stock  certificate  or  certificates  for such
         Shares of Common  Stock is to be  registered,  his  address  and Social
         Security  Number (or if more than one, the names,  addresses and Social
         Security Numbers of such persons);

                            (ii) Contain such  representations and agreements as
         to the holder's investment intent with respect to such shares of Common
         Stock as may be satisfactory to the Company's counsel;

                           (iii) Be signed by the person or persons  entitled to
         exercise the Option and, if the Option is being exercised by any person
         or  persons  other  than  the  Optionee,   be   accompanied  by  proof,
         satisfactory to counsel for the Company, of the right of such person or
         persons to exercise the Option; and



                            (iv) Be  in  writing  and  delivered in person or by
         certified mail to the Treasurer of the Company.

         Payment of the  purchase  price of any Shares with respect to which the
Option is being  exercised  shall be by certified or bank  cashier's or teller's
check.  The certificate or  certificates  for shares of Common Stock as to which
the Option shall be exercised  shall be  registered in the name of the person or
persons exercising the Option.

                  (c) Restrictions on Exercise. This Option may not be exercised
if the issuance of the Shares upon such exercise would constitute a violation of
any applicable federal or state securities or other law or valid regulation.  As
a condition to the Optionee's  exercise of this Option,  the Company may require
the person exercising this Option to make any representation and warranty to the
Company as may be required by any applicable law or regulation.

         3. Non-transferability of Option. This Option may not be transferred in
any manner otherwise than by will or the laws of descent or distribution and may
be exercised during the lifetime of the Optionee only by the Optionee. The terms
of this  Option  shall be binding  upon the  executors,  administrators,  heirs,
successors and assigns of the Optionee.

         4. Term of Option.  This Option may not be exercised more than ten (10)
years  from the date of grant of this  Option,  as set forth  below,  and may be
exercised  during  such term only in  accordance  with the Plan and the terms of
this Option.

         5. Dividend  Equivalent Rights.  The Stock Options  represented by this
Agreement shall include the right of the Optionee to receive payment of dividend
equivalent  rights.  Such rights  shall  provide that upon the payment of a cash
dividend on the Common Stock,  the holder of such Options shall receive  payment
of cash in an amount  equivalent to the cash dividend payable as if such Options
had been  exercised  and such Common Stock held as of the dividend  record date.
Such rights  shall  expire upon the  expiration  or exercise of such  underlying
Options.   Such  rights  are   non-transferable  and  shall  attach  to  Options
represented  by this  Agreement  whether  or not such  Options  are  immediately
exercisable.

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         6. Related  Matters.  Notwithstanding  anything herein to the contrary,
additional  conditions or restrictions  related to such Options may be contained
in the Plan or the resolutions of the Plan Committee  authorizing  such grant of
Options.

                                             TF Financial Corporation




Date of Grant:  May 21, 1996                 By:   /s/John R. Stranford
                                                   -----------------------------
                                                   John R. Stranford,
                                                   President


Attest:





[SEAL]

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