<PAGE>

                       FIRST SAVINGS AND LOAN ASSOCIATION
                                 OF PENNS GROVE

                       EMPLOYEE STOCK COMPENSATION PROGRAM

         1. Purpose of Program:

         The purpose of the First Savings and Loan Association
of Penns Grove Employee Stock Compensation Program (the "Program") contained
herein is to provide additional incentive to full-time officers and key
employees of First Savings and Loan Association of Penns Grove (the
"Association") and each present or future Association subsidiary corporation by
encouraging them to invest in shares of Association stock, and thereby to
acquire a proprietary interest in the business of the Association and each
present or future Association subsidiary corporation and an increased personal
interest in its continued success and progress, to the mutual benefit of
employees and shareholders.

         2. Aggregate Number of Shares:

         [           ] shares of Association Common Stock (par value $1.00 per
share) shall be the aggregate number of shares which may be issued under this
Program. Notwithstanding the foregoing, in the event of any change in the
outstanding shares of Association Common Stock by reason of a stock dividend,
stock split, combination of shares, recapitalization, merger, consolidation,
transfer of assets, reorganization, conversion, or what the Compensation
Committee, hereinafter referred to, deems in its sole discretion to be similar
circumstances, the aggregate number and kind of shares which may be issued under
this Program shall be appropriately adjusted in a manner determined in the sole
discretion of the Compensation Committee. Reacquired shares of Association
Common Stock as well as unissued shares may be used for the purpose of this
Program. Shares of Association Common Stock subject to options which have
terminated unexercised, either in whole or in part, shall be available for
future options granted under this Program.

         3. Class of Employees Eligible to Receive Options: 

         All full-time officers and key employees of the Association and of any
present or future Association subsidiary corporation who are employed on a
full-time basis are eligible to receive an option or options under this Program.
The officers and key employees who shall, in fact, receive an option or options
shall be selected by the Compensation Committee hereinafter referred to, in its
sole discretion, except as otherwise specified in Section 4 hereof.
<PAGE>

         4. Administration of Program:

            (a) This Program shall be administered by a Compensation Committee
(the "Committee" or "Compensation Committee") appointed by the Association Board
of Directors. The Committee shall consist of a minimum of three and a maximum of
seven members of the Association Board of Directors, each of whom shall be a
"disinterested person" as defined in Rule 16b-3(d)(3) under the Securities
Exchange Act of 1934, as amended, of the Securities and Exchange Commission
(hereinafter called "SEC") or any future corresponding rule. The Committee
shall, in addition to its other authority and subject to the provisions of this
Program, have authority in its sole discretion to determine who are the officers
and key employees of the Association and each present and future Association
subsidiary corporation eligible to receive options under this Program, which
officers and key employees shall in fact be granted an option or options,
whether the option shall be an incentive stock option or a non-qualified stock
option, the number of shares to be subject to each of the options, the time or
times at which the options shall be granted, the rate of option exercisability,
and, subject to Section 5 hereof, the price at which each of the options is
exercisable and the duration of the option.

            (b) The Committee shall adopt such rules for the conduct of its
business and administration of this Program as it considers desirable. A
majority of the members of the Committee shall constitute a quorum for all
purposes. The vote or written consent of a majority of the members of the
Committee on a particular matter shall constitute the act of the Committee on
such matter. The Committee shall have the exclusive right to construe the
Program and the options issued pursuant to it, correct defects, supply omissions
and reconcile inconsistencies to the extent necessary to effectuate the Program
and the options issued pursuant to it, and such action shall be final, binding
and conclusive upon all parties concerned. No member of the Committee or the
Board of Directors shall be liable for any act or omission (whether or not
negligent) taken or omitted in good faith, or for the exercise of an authority
or discretion granted in connection with this Program to the Committee or the
Board of Directors, or for the acts or omissions of any other members of the
Committee or the Board of Directors. Subject to the numerical limitations on
Committee membership set forth in Section 4(a) hereof, the Board of Directors
may at any time appoint additional members of the Committee and may at any time
remove any member of the Committee with or without cause. Vacancies in the
Committee, however caused, may be filled by the Board of Directors if it so
desires.

         5. Incentive Stock Options and Nonqualified Stock Options:

            (a) Options issued pursuant to this Program may be either incentive
stock options granted pursuant to Section 5(b) hereof or nonqualified stock

                                       -2-

<PAGE>

options granted pursuant to Section 5(c) hereof, as determined by the Committee.
An "incentive stock option" is an option which satisfies all of the requirements
of Section 422A of the Internal Revenue Code of 1986, as amended (the "Code"),
and the regulations thereunder, and a nonqualified stock option is an option
which does not satisfy all of those requirements. The Committee may grant both
an incentive stock option and a nonqualified stock option to the same person, or
more than one of each type of option to the same person. The option price for
both incentive stock options and nonqualified stock options issued under this
Program shall equal at least the fair market value of the Association Common
Stock as of the date of the grant of the option, such fair market value being
determined by the Committee in accordance with its interpretation of the
requirements of Section 422A of the Code and the regulations thereunder.

            (b) Incentive stock options issued pursuant to this Program shall be
issued substantially in the form set forth in Appendix I hereof, which form is
hereby incorporated by reference and made a part hereof, and shall contain
substantially the terms and conditions set forth therein. Incentive stock
options shall expire ten years after the date they are granted, unless
terminated earlier under the option terms. With respect to incentive stock
options granted hereunder prior to January 1, 1987, notwithstanding other
provisions hereof, the aggregate fair market value (determined as of the time an
incentive stock option is granted) of the stock for which any employee may be
granted incentive stock options in any calendar year (under all incentive stock
option plans of the Association and its parent and subsidiary corporations)
shall not exceed $100,000 plus any unused limit carryover to such year.
Notwithstanding the above, with respect to options granted after December 31,
1986, the aggregate fair market value (determined at the time the option is
granted) of the stock with respect to which incentive stock options are
exercisable for the first time by an optionee during any calendar year (under
all incentive stock option plans of the optionee's employer corporation and its
parent and subsidiary corporations) shall not exceed $100,000. The unused limit
carryover available in any calendar year to any employee shall be determined in
accordance with Section 422A(c)(4) of the Code and the regulation thereunder. At
the time of granting an incentive stock option hereunder, the Committee may, in
its discretion, modify or amend any of the option terms contained in Appendix I
for any particular optionee, provided that the option as modified or amended
continues to be an incentive stock option. Each of the options granted pursuant
to this Section 5(b) is intended, if possible, to be an "incentive stock option"
as that term is defined in Section 422A of the Code and the regulations
thereunder. In the event this Program or any option granted pursuant to this
Section 5(b) is any way inconsistent with the applicable legal requirements of
the Code or the regulations thereunder for an incentive stock option, this
Program and such option shall be deemed automatically amended as of the date
hereof to conform to such legal requirements, if such conformity may be achieved
by amendment.

                                       -3-

<PAGE>

            (c) Nonqualified stock options issued pursuant to this Program shall
be issued substantially in the form set forth in Appendix II hereof, which form
is hereby incorporated by reference and made a part hereof, and shall contain
substantially the terms and conditions set forth therein. Nonqualified stock
options shall expire ten years and ten days after the date they are granted,
unless terminated earlier under the option terms. At the time of granting a
nonqualified stock option hereunder, the Committee may, in its discretion,
modify or amend any of the option terms contained in Appendix II for any
particular optionee, provided that the option as modified or amended does not
expire more than ten years and ten days from the date of its grant and the
option price is not less than the fair market value of the Association Common
Stock as of the date of such grant.

         (d) Neither the Association nor any present or future Association
affiliated or subsidiary corporation, nor their officers, directors,
shareholders, stock option plan committees, employees or agents shall have any
liability to any optionee in the event an option granted pursuant to Section
5(b) hereof does not qualify as an "incentive stock option" as that term is used
in Section 422A of the Code and the regulations thereunder, or in the event any
optionee does not obtain the tax benefits of such an incentive stock option, or
in the event any option granted pursuant to Section 5(c) hereof is an "incentive
stock option".

         6. Modification, Amendment, Suspension and Termination:

            Options shall not be granted pursuant to this Program after the
expiration of ten years from and after the date of the adoption of the Program
by the Association Board of Directors. The Board of Directors reserves the right
at any time, and from time to time, to modify or amend this Program in any way,
or to suspend or terminate it, effective as of such date, which date may be
either before or after the taking of such action, as may be specified by the
Board of Directors; provided, however, that such action shall not affect options
granted under the Program prior to the actual date on which such action
occurred. If a modification or amendment of this Program is required by the Code
or the regulations thereunder to be approved by the shareholders of the
Association in order to permit the granting of "incentive stock options" (as
that term is defined in Section 422A of the Code and regulations thereunder)
pursuant to the modified or amended Program, such modification or amendment
shall also be approved by the shareholders of the Association in such manner as
is prescribed by the Code and the regulations thereunder. If the Board of
Directors voluntarily submits a proposed modification, amendment, suspension or
termination for shareholder approval, such submission shall not require any
future modifications, amendments (whether or not relating to the same provision
or subject matter), suspensions or terminations to be similarly submitted for
shareholder approval.

                                       -4-
<PAGE>


         7. Effectiveness of Program:

            This Program shall become effective on the date of its adoption by
the Association Board of Directors subject, however, to approval by the
shareholders of the Association in such manner as is prescribed by the Code and
the regulations thereunder. Options may be granted under this Program prior to
obtaining such approval, provided such options shall not be exercisable until
such approval is obtained.

         8. General Conditions:

            (a) Nothing contained in this Program or any option granted pursuant
to this Program shall confer upon any employee the right to continue in the
employ of the Association or any present or future Association affiliated and
subsidiary corporation or interfere in any way with the rights of the
Association and any Association affiliated or subsidiary corporation to
terminate his employment in any way.

            (b) Corporate action constituting an offer of stock for sale to any
employee under the terms of the options to be granted hereunder shall be deemed
completed as of the date when the Committee authorizes the grant of the option
to the employee, regardless of when the option is actually delivered to the
employee or acknowledged or agreed to by him.

            (c) The term "subsidiary corporation" as used throughout this
Program, and the options granted pursuant to this Program, shall (except as
otherwise provided in the option form) have the meaning that is ascribed to that
term when contained in Section 422A(b) of the Code, and the Association shall be
deemed to be the grantor corporation for purposes of applying such meaning.

            (d) References in this Program to the Code shall be deemed to also
refer to the corresponding provisions of any future United States revenue law.

            (e) The use of the masculine pronoun shall include the feminine
gender whenever appropriate.

                                      -5-
<PAGE>

                             INCENTIVE STOCK OPTION

TO:
   ----------------------------------------------------------------------------
                                      NAME

   ----------------------------------------------------------------------------
                                     ADDRESS

DATE:
     ----------------------------


        You are hereby granted an option, effective as of the date hereof, to
purchase       shares of Common Stock (par value $1.00 per share) of First
Savings and Loan Association of Penns Grove (the "Association") at a price of
$        per share pursuant to the Association's Employee Stock Compensation
Program (the "Program") adopted by the Association's Board of Directors
effective                 . Your option price is intended to equal at least the
fair market value of the Association's Common Stock as of the date hereof.

        Your option may first be exercised on and after one year from the date
of its grant, but not before that time. On and after one year and prior to two
years from the date of its grant, your option may be exercised for up to 25% of
the total number of shares then subject to the option. On and after two years
and prior to three years from the date of its grant, your option may be
exercised for up to 50% of the total number of shares then subject to the option
minus the number of shares previously purchased by exercise of the option (as
adjusted for stock dividends, stock splits, combinations of shares,
recapitalizations and what the Compensation Committee deems in its sole
discretion to be similar circumstances). On or after three years and prior to
four years from the date of its grant, your option may be exercised for up to
75% of the total number of shares then subject to the option minus the number of
shares previously purchased by exercise of the option (as adjusted for stock
dividends, stock splits, combinations of shares, recapitalizations and what the
Compensation Committee deems in its sole discretion to be similar
circumstances). On and after four years and prior to ten years from the date of
its grant, your option may be exercised for up to 100% of the total number of
shares then subject to the option minus the number of shares previously
purchased by exercise of the option (as adjusted for stock dividends, stock
splits, combinations of shares, recapitalizations and what the Compensation
Committee deems in its sole discretion to be similar circumstances). No
fractional shares shall be issued or delivered. This option shall terminate and
is not exercisable after the expiration of ten years from the date of its grant,
except in accordance with the provisions hereof.

                                   Appendix I
<PAGE>

        In the event of a "change of control" (as hereinafter defined) of the
Association, your option may, from and after the date of the change of control,
and notwithstanding the foregoing paragraph, be exercised for up to 100% of the
total number of shares then subject to the option minus the number of shares
previously purchased upon exercise of the option (as adjusted for stock
dividends, stock splits, combinations of shares, recapitalizations and what the
Compensation Committee deems in its sole discretion to be similar
circumstances). A "change of control" shall be deemed to have occurred upon the
happening of any of the following events:

        (1) A change within a twelve month period in a majority of the members
of the Board of Directors of the Association;

        (2) A change within a twelve month period in the holders of more than
50% of the outstanding voting stock of the Association; or

        (3) Any other event deemed to constitute a "change in control" by the
Compensation Committee.

        You may exercise your option by giving written notice to the Secretary
of the Association on forms supplied by the Association at the Association's
then principal executive office, accompanied by payment of the option price for
the total number of shares you specify that you wish to purchase. The payment
may be in any of the following forms: (i) cash, which may be evidenced by a
check; (ii) certificates representing shares of Common Stock of the Association
which will be valued by the Secretary of the Association at the mean average
between the closing "Bid" and "Asked" prices for the Association's Common Stock
quoted in the over-the-counter market on the last previous trading day,
accompanied by an assignment of the stock to the Association; or (iii) any
combination of cash and shares of the Association's Common Stock valued as
provided in clause (ii). Any assignment of stock shall be in a form and
substance satisfactory to the Secretary of the Association, including guarantees
of signature(s) where he deems such guarantees necessary or desirable.

        Your option will, to the extent not previously exercised by you,
terminate three months after the date on which your employment by the
Association or an Association subsidiary corporation is terminated other than by
reason of disability as defined in Section 105(d)(4) of the Internal Revenue
Code of 1986, as amended to the date hereof (the "Code"), or death (but in no
event later than ten years from the date this option is granted), whether such
termination be voluntary or not. After the date your employment is terminated,
as aforesaid, you may exercise this option only for the number of shares which
you had a right to purchase and did not purchase on the date your employment
terminated. If you are employed by an Association subsidiary corporation, your
employment shall be deemed to have terminated on the date your employer ceases

                                       -2-
<PAGE>

to be an Association subsidiary corporation, unless you are on that date
transferred to the Association or another Association subsidiary corporation.
Your employment shall not be deemed to have terminated if you are transferred
from the Association to an Association subsidiary corporation, or vice versa, or
from one Association subsidiary corporation to another Association subsidiary
corporation.

        If you die while employed by the Association or an Association
subsidiary corporation, your executor or administrator may, at any time within
one year after the date of your death (but in no event later than ten years from
the date this option is granted), exercise the option as to any shares which you
had a right to purchase and did not purchase during your lifetime. If your
employment by the Association or an Association subsidiary corporation is
terminated by reason of your becoming disabled (within the meaning of Section
105(d)(4) of the Code), you or your legal guardian or custodian may at anytime
within one year after the date of such termination (but in no event later than
ten years from the date this option is granted), exercise the option as to any
shares which you had a right to purchase and did not purchase prior to such
termination. Your executor, administrator, guardian or custodian must present
proof of his authority satisfactory to the Association prior to being allowed to
exercise this option.

        In the event of any change in the outstanding shares of the Association
Common Stock by reason of a stock dividend, stock split, combination of shares,
recapitalization, merger, consolidation, transfer of assets, reorganization,
conversion or what the Compensation Committee deems in its sole discretion to be
similar circumstances, the number and kind of shares subject to this option and
the option price for such shares shall be appropriately adjusted in a manner to
be determined in the sole discretion of the Compensation Committee.

        This option is not transferable, except in the event of disability or
death as provided above. During your lifetime, this option is exercisable only
by you. Until the option price has been paid in full pursuant to due exercise of
this option and the purchased shares are delivered to you, you do not have any
rights as a stockholder of the Association. The Association reserves the right
not to deliver to you the shares purchased by virtue of the exercise of this
option during any period of time in which the Association deems, in its sole
discretion, that such delivery may not be consummated without violating a
federal, state, local or securities exchange rule, regulation or law.

        Notwithstanding anything to the contrary contained herein, this option
is not exercisable until all the following events occur and during the following
periods of time:






                                       -3-
<PAGE>

        (1) Until the Program pursuant to which this option is granted is
approved by the shareholders of the Association in the manner prescribed by the
Code and the regulations thereunder;

        (2) Until this option and the optioned shares are approved and/or
registered with such federal, state and local regulatory bodies or agencies and
securities exchanges as the Association may deem necessary or desirable;

        (3) During any period of time in which the Association deems that the
exercisability of this option, the offer to sell the shares optioned hereunder,
or the sale thereof, may violate a federal, state, local or securities exchange
rule, regulation or law, or may cause the Association to be legally obligated to
issue or sell more shares than the Association is legally entitled to issue or
sell; or

        (4) During any period of time while there is outstanding (within the
meaning of Section 422A(c)(7) of the Code) any incentive stock option which was
granted to you, before the granting of this option, to purchase stock in your
employer corporation or in a corporation which (at the time of the granting of
this option) is a parent or subsidiary corporation of your employer corporation,
or a predecessor corporation of any of such corporations. Notwithstanding the
above, with respect to incentive stock options granted after December 31, 1986,
the preceding sentence shall not apply. The words and terms contained in this
subparagraph (4) are intended to have the same meaning as is ascribed by the
Code or the regulations thereunder to any identical or equivalent words or terms
contained in Section 422A(b) (7) of the Code.

        The following two paragraphs shall be applicable if, on the date of
exercise of this option, the Common Stock to be purchased pursuant to such
exercise has not been registered under the Securities Act of 1933, as amended,
and under applicable state securities laws, and shall continue to be applicable
for so long as such registration has not occurred:

        A. The optionee hereby agrees, warrants and represents that he will
acquire the Common Stock of the Association to be issued hereunder for his own
respective account for investment purposes only, and not with a view to, or in
connection with, any resale or other distribution of any of such shares, except
as hereafter permitted. The optionee further agrees that he will not at any time
make any offer, sale, transfer, pledge or other disposition of such Common
Stock to be issued hereunder without an effective registration statement under
the Securities Act of 1933, as amended, and under any applicable state
securities laws or an opinion of counsel for the Association to the effect that
the proposed transaction will be exempt from such registration. The optionee
agrees that, as a condition precedent to the Association's obligation to permit




                                       -4-

<PAGE>

the exercise of this option, the optionee shall execute such instruments,
representations, acknowledgments and agreements as the Association may, in its
sole discretion, deem advisable to avoid any violation of federal, state, local
or securities exchange rule, regulation or law.

        B. The certificates for Common Stock to be issued to the optionee
hereunder shall bear the following legend:

            "The shares represented by this certificate have not been
            registered under the Securities Act of 1933, as amended, or
            under applicable state securities laws. The shares have been
            acquired for investment and may not be offered, sold,
            transferred, pledged or otherwise disposed of without an
            effective registration statement under the Securities Act of
            1933, as amended, and under any applicable state securities
            laws or an opinion of counsel for the Association that the
            proposed transaction will be exempt from such registration."

The foregoing legend shall be removed upon registration of the legended shares
under the Securities Act of 1933, as amended, and under any applicable state
securities laws or upon receipt of an opinion of counsel for the Association
that said registration is no longer required.

        The sole purpose of the agreements, warranties, representations and
legend set forth in the two preceding paragraphs is to prevent violations of the
Securities Act of 1933, as amended, and any applicable state securities laws.

        It is the intention of the Association and you that this option shall
(if possible) be an "incentive stock option" as that term is used in Section
422A of the Code and the regulations thereunder. In the event this option is in
any way inconsistent with the legal requirements of the Code or the regulations
thereunder for an "incentive stock option", this option shall be deemed
automatically amended as of the date hereof to conform to such legal
requirements, if such conformity may be achieved by amendment.

         This option shall be subject to the terms of the Program in effect on
the date this option is granted, which terms are hereby incorporated herein by
reference and made a part hereof. In the event of any conflict between the terms
of this option and the terms of the Program in effect on the date of this
option, the terms of the Program shall govern. This option constitutes the
entire understanding between the Association and you with respect to the subject
matter hereof and no amendment, modification or be binding upon waiver



                                       -5-

<PAGE>

of this option, in whole or in part, shall the Association unless in writing and
signed by the President of the Association. This option and the performances of
the parties hereunder shall be construed in accordance with and governed by the
laws of the State of New Jersey.

        Please sign the copy of this option and return it to Association's
Secretary, thereby indicating your understanding of and agreement with its terms
and conditions.


                                 FIRST SAVINGS AND LOAN ASSOCIATION
                                 OF PENNS GROVE


                                 By:
                                    --------------------------------


        I hereby acknowledge receipt of a copy of the foregoing stock option
and, having read it hereby signify my understanding of, and my agreement with,
its terms and conditions.


                                     (SEAL)
-------------------------------------      ------------------------------------
              (SIGNATURE)                                (DATE)








                                       -6-
<PAGE>

                            NONQUALIFIED STOCK OPTION


TO:
   ----------------------------------------------------------------------------
                                      NAME


   ----------------------------------------------------------------------------
                                     ADDRESS


DATE:
     -----------------------------


        You are hereby granted an option, effective as of the date hereof, to
purchase      shares of Common Stock (par value $1.00 per share) of First 
Savings and Loan Association of Penns Grove (the "Association") at a price of 
$      per share pursuant to the Association's Employee Stock Compensation 
Program (the "Program") adopted by the Association's Board of Directors
effective                . Your option price is intended to equal at least the
fair market value of the Association's Common Stock as of the date hereof.

        Your option may first be exercised on and after one year from the date
of its grant, but not before that time. On and after one year and prior to two
years from the date of its grant, your option may be exercised for up to 25% of
the total number of shares then subject to the option. On and after two years
and prior to three years from the date of its grant, your option may be
exercised for up to 50% of the total number of shares then subject to the option
minus the number of shares previously purchased by exercise of the option (as
adjusted for stock dividends, stock splits, combinations of shares,
recapitalizations and what the Compensation Committee deems in its sole
discretion to be similar circumstances). On or after three years and prior to
four years from the date of its grant, your option may be exercised for up to
75% of the total number of shares then subject to the option minus the number of
shares previously purchased by exercise of the option (as adjusted for stock
dividends, stock splits, combinations of shares, recapitalizations and what the
Compensation Committee deems in its sole discretion to be similar
circumstances). On and after four years and prior to ten years and ten days from
the date of its grant, your option may be exercised for up to 100% of the total
number of shares then subject to the option minus the number of shares
previously purchased by exercise of the option (as adjusted for stock dividends,
stock splits, combinations of shares, recapitalizations and what the
Compensation Committee deems in its sole discretion to be similar

                                   Appendix II
<PAGE>

circumstances). No fractional shares shall be issued or delivered. This option
shall terminate and is not exercisable after the expiration of ten years and ten
days from the date of its grant, except in accordance with the provisions
hereof.

        In the event of a "change of control" (as hereinafter defined) of the
Association, your option may, from and after the date of the change of control,
and notwithstanding the foregoing paragraph, be exercised for up to 100% of the
total number of shares then subject to the option minus the number of shares
previously purchased upon exercise of the option (as adjusted for stock
dividends, stock splits, combinations of shares, recapitalizations and what the
Compensation Committee deems in its sole discretion to be similar
circumstances). A "change of control" shall be deemed to have occurred upon the
happening of any of the following events:

        (1) A change within a twelve month period in a majority of the members
of the Board of Directors of the Association;

        (2) A change within a twelve month period in the holders of more than
50% of the outstanding voting stock of the Association; or

        (3) Any other event deemed to constitute a "change in control" by the
Compensation Committee.

        You may exercise your option by giving written notice to the Secretary
of the Association on forms supplied by the Association at the Association's
then principal executive office, accompanied by payment of the option price for
the total number of shares you specify that you wish to purchase. The payment
may be in any of the following forms: (i) cash, which may be evidenced by a
check; (ii) certificates representing shares of Common Stock of the Association
which will be valued by the Secretary of the Association at the mean average
between the closing "Bid" and "Asked" prices for the Association's Common Stock
quoted in the over-the-counter market on the last previous trading day,
accompanied by an assignment of the stock to the Association; or (iii) any
combination of cash and shares of the Association's Common Stock valued as
provided in clause (ii). Any assignment of stock shall be in a form and
substance satisfactory to the Secretary of the Association, including guarantees
of signatures) where he deems such guarantees necessary or desirable.

        Your option will, to the extent not previously exercised by you,
terminate three months after the date on which your employment by the
Association or an Association subsidiary corporation is terminated other than by
reason of disability as defined in Section 105(d)(4) of the Internal Revenue
Code of 1986, as amended to the date hereof (the "Code"), or death (but in no



                                       -2-
<PAGE>

event later than ten years and ten days from the date this option is granted),
whether such termination be voluntary or not. After the date your employment is
terminated, as aforesaid, you may exercise this option only for the number of
shares which you had a right to purchase and did not purchase on the date your
employment terminated. If you are employed by an Association subsidiary
corporation, your employment shall be deemed to have terminated on the date your
employer ceases to be an Association subsidiary corporation, unless you are on
that date transferred to the Association or another Association subsidiary
corporation. Your employment shall not be deemed to have terminated if you are
transferred from the Association to an Association subsidiary corporation, or
vice versa, or from one Association subsidiary corporation to another
Association subsidiary corporation.

        If you die while employed by the Association or an Association
subsidiary corporation, your executor or administrator may, at any time within
one year after the date of your death (but in no event later than ten years and
ten days from the date this option is granted), exercise the option as to any
shares which you had a right to purchase and did not purchase during your
lifetime. If your employment by the Association or an Association subsidiary
corporation is terminated by reason of your becoming disabled (within the
meaning of Section 105(d)(4) of the Code), you or your legal guardian or
custodian may at anytime within one year after the date of such termination (but
in no event later than ten years and ten days from the date this option is
granted), exercise the option as to any shares which you had a right to purchase
and did not purchase prior to such termination. Your executor, administrator,
guardian or custodian must present proof of his authority satisfactory to the
Association prior to being allowed to exercise this option.

        In the event of any change in the outstanding shares of the Association
Common Stock by reason of a stock dividend, stock split, combination of shares,
recapitalization, merger, consolidation, transfer of assets, reorganization,
conversion or what the Compensation Committee deems in its sole discretion to be
similar circumstances, the number and kind of shares subject to this option and
the option price for such shares shall be appropriately adjusted in a manner to
be determined in the sole discretion of the Compensation Committee.

        This option is not transferable, except in the event of disability or
death as provided above, and except that this option may be transferred to your
spouse and lineal descendants. During your lifetime, this option is exercisable
only by you or your permitted transferees. Until the option price has been
paid in full pursuant to due exercise of this option and the purchased shares
are delivered to you, you do not have any rights as a stockholder of the
Association. The Association reserves the right not to deliver to you the shares
purchased by virtue of the exercise of this option during any period of time in



                                       -3-
<PAGE>

which the Association deems, in its sole discretion, that such delivery may not
be consummated without violating a federal, state, local or securities exchange
rule, regulation or law.

        Notwithstanding anything to the contrary contained herein, this option
is not exercisable until all the following events occur and during the following
periods of time:

        (1) Until the Program pursuant to which this option is granted is
approved by the shareholders of the Association;

        (2) Until this option and the optioned shares are approved and/or
registered with such federal, state and local regulatory bodies or agencies and
securities exchanges as the Association may deem necessary or desirable;

        (3) During any period of time in which the Association deems that the
exercisability of this option, the offer to sell the shares optioned hereunder,
or the sale thereof, may violate a federal, state, local or securities exchange
rule, regulation or law, or may cause the Association to be legally obligated to
issue or sell more shares than the Association is legally entitled to issue or
sell.

        The following two paragraphs shall be applicable if, on the date of
exercise of this option, the Common Stock to be purchased pursuant to such
exercise has not been registered under the Securities Act of 1933, as amended,
and under applicable state securities laws, and shall continue to be applicable
for so long as such registration has not occurred:

        A. The optionee hereby agrees, warrants and represents that he will
acquire the Common Stock of the Association to be issued hereunder for his own
respective account for investment purposes only, and not with a view to, or in
connection with, any, resale or other distribution of any of such shares, except
as hereafter permitted. The optionee further agrees that he will not at any time
make any offer, sale, transfer, pledge or other disposition of such Common Stock
to be issued hereunder without an effective registration statement under the
Securities Act of 1933, as amended, and under any applicable state securities
laws or an opinion of counsel for the Association to the effect that the
proposed transaction will be exempt from such registration. The optionee agrees
that, as a condition precedent to the Association's obligation to permit the
exercise of this option, the optionee shall execute such instruments,
representations, acknowledgments and agreements as the Association may, in its
sole discretion, deem advisable to avoid any violation of federal, state, local
or securities exchange rule, regulation or law.

        B. The certificates for Common Stock to be issued to to the optionee
hereunder shall bear the following legend:



                                       -4-
<PAGE>

       "The shares represented by this certificate have not been
       registered under the Securities Act of 1933, as amended, or
       under applicable state securities laws. The shares have been
       acquired for investment and may not be offered, sold,
       transferred, pledged or otherwise disposed of without an
       effective registration statement under the Securities Act of
       1933, as amended, and under any applicable state securities
       laws or an opinion of counsel for the Association that the
       proposed transaction will be exempt from such registration."

The foregoing legend shall be removed upon registration of the legended shares
under the Securities Act of 1933, as amended, and under any applicable state
securities laws or upon receipt of an opinion of counsel for the Association
that said registration is no longer required.

        The sole purpose of the agreements, warranties, representations and
legend set forth in the two preceding paragraphs is to prevent violations of the
Securities Act of 1933, as amended, and any applicable state securities laws.

        It is the intention of the Association and you that this option shall
not be an "incentive stock option" as that term is used in Section 422A of the
Code and the regulations thereunder.

        This option shall be subject to the terms of the Program in effect on
the date this option is granted, which terms are hereby incorporated herein by
reference and made a part hereof. In the event of any conflict between the terms
of this option and the terms of the Program in effect on the date of this
option, the terms of the Program shall govern. This option constitutes the
entire understanding between the Association and you with respect to the subject
matter hereof and no amendment, modification or waiver of this option, in whole
or in part, shall be binding upon the Association unless in writing and signed
by the President of the Association. This option and the performances of the
parties hereunder shall be construed in accordance with and governed by the laws
of the State of New Jersey.

        Please sign the copy of this option and return it to the Association's
Secretary, thereby indicating your understanding of and agreement with its terms
and conditions.


                                               FIRST SAVINGS AND LOAN
                                               ASSOCIATION OF PENNS GROVE


                                               By:
                                                  ----------------------------




                                       -5-
<PAGE>

        I hereby acknowledge receipt of a copy of the foregoing stock option
and, having read it hereby signify my understanding of, and my agreement with,
its terms and conditions.



                                     (SEAL)
-------------------------------------      -----------------------------------
             (SIGNATURE)                                 (DATE)








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