Exhibit 4.1


 





(FORM OF SUBORDINATED NOTE)


THE INDEBTEDNESS EVIDENCED BY THIS SUBORDINATED
NOTE IS SUBORDINATED AND JUNIOR IN RIGHT OF PAYMENT TO THE CLAIMS OF CREDITORS (OTHER THAN CREDITORS OF EXISTING SUBORDINATED DEBT)
AND DEPOSITORS OF STEWARDSHIP FINANCIAL CORPORATION (THE “COMPANY”), INCLUDING OBLIGATIONS OF THE COMPANY TO
ITS GENERAL AND SECURED CREDITORS AND IS UNSECURED. IT IS INELIGIBLE AS COLLATERAL FOR ANY EXTENSION OF CREDIT BY THE COMPANY OR
ANY OF ITS SUBSIDIARIES. IN THE EVENT OF LIQUIDATION ALL DEPOSITORS AND OTHER CREDITORS OF THE COMPANY SHALL BE ENTITLED TO BE
PAID IN FULL WITH SUCH INTEREST AS MAY BE PROVIDED BY LAW BEFORE ANY PAYMENT SHALL BE MADE ON ACCOUNT OF PRINCIPAL OF OR INTEREST
ON THIS SUBORDINATED NOTE. AFTER PAYMENT IN FULL OF ALL SUMS OWING TO SUCH DEPOSITORS AND CREDITORS, THE HOLDER OF THIS SUBORDINATED
NOTE SHALL BE ENTITLED TO BE PAID FROM THE REMAINING ASSETS OF THE COMPANY THE UNPAID PRINCIPAL AMOUNT OF THIS SUBORDINATED NOTE
PLUS ACCRUED AND UNPAID INTEREST THEREON BEFORE ANY PAYMENT OR OTHER DISTRIBUTION, WHETHER IN CASH, PROPERTY OR OTHERWISE, SHALL
BE MADE ON ACCOUNT OF ANY SHARES OF CAPITAL STOCK OF THE COMPANY.


THE INDEBTEDNESS EVIDENCED BY THIS SUBORDINATED
NOTE IS NOT A DEPOSIT AND IS NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (THE “FDIC”) OR ANY OTHER
GOVERNMENT AGENCY OR FUND.


THIS SUBORDINATED NOTE WILL BE ISSUED
AND MAY BE TRANSFERRED ONLY IN MINIMUM DENOMINATIONS OF $1,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER
OF THIS SUBORDINATED NOTE IN A DENOMINATION OF LESS THAN $1,000 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY
SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF THIS SUBORDINATED NOTE FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED
TO, THE RECEIPT OF PAYMENTS ON THIS SUBORDINATED NOTE, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER
IN THIS SUBORDINATED NOTE.


THIS SUBORDINATED NOTE MAY BE SOLD ONLY
IN COMPLIANCE WITH APPLICABLE FEDERAL AND STATE SECURITIES LAWS. THIS SUBORDINATED NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY OTHER STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES
LAWS. NEITHER THIS SUBORDINATED NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS SUBORDINATED NOTE IS ISSUED SUBJECT TO THE RESTRICTIONS ON TRANSFER
AND OTHER PROVISIONS OF A SUBORDINATED NOTE PURCHASE AGREEMENT DATED AUGUST 28, 2015 BETWEEN THE COMPANY AND THE PURCHASERS
REFERRED TO THEREIN (THE “PURCHASE AGREEMENT”), A COPY OF WHICH IS ON FILE WITH THE COMPANY. THE SUBORDINATED
NOTE REPRESENTED BY THIS INSTRUMENT MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE PURCHASE AGREEMENT. ANY SALE OR OTHER
TRANSFER NOT IN COMPLIANCE WITH THE PURCHASE AGREEMENT WILL BE VOID.



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CERTAIN ERISA CONSIDERATIONS:


THE HOLDER OF THIS SECURITY, OR ANY
INTEREST HEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT PLAN, INDIVIDUAL
RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
(“ERISA”), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”)
(EACH A “PLAN”), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY REASON OF ANY PLAN’S
INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING “PLAN ASSETS” OF ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR ANY
INTEREST HEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR
PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING
OF THIS SECURITY, OR ANY INTEREST HEREIN, ARE NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT TO
SUCH PURCHASE AND HOLDING. ANY PURCHASER OR HOLDER OF THIS SECURITY OR ANY INTEREST HEREIN WILL BE DEEMED TO HAVE REPRESENTED BY
ITS PURCHASE AND HOLDING THEREOF THAT EITHER: (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN OR OTHER PLAN TO WHICH TITLE I OF ERISA OR
SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF ANY SUCH EMPLOYEE BENEFIT PLAN OR PLAN, OR
ANY OTHER PERSON OR ENTITY USING THE “PLAN ASSETS” OF ANY SUCH EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE
OR (ii) SUCH PURCHASE OR HOLDING WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE
CODE FOR WHICH FULL EXEMPTIVE RELIEF IS NOT AVAILABLE UNDER APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.


ANY FIDUCIARY OF ANY PLAN WHO IS CONSIDERING
THE ACQUISITION OF ANY OF THE SECURITIES SHOULD CONSULT WITH HIS OR HER LEGAL COUNSEL PRIOR TO ACQUIRING SUCH SECURITIES.




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	No. 2025-[●]	CUSIP [●]


STEWARDSHIP FINANCIAL CORPORATION


6.75% FIXED RATE SUBORDINATED NOTE
DUE 2025


1.           Subordinated
Notes. This Subordinated Note is one of an issue of notes of Stewardship Financial Corporation, a New Jersey corporation (the
“Company”) designated as the “6.75% Fixed Rate Subordinated Notes due 2025” (the “Subordinated
Notes”).


2.           Payment.
The Company, for value received, promises to pay to                       ,
or its registered assigns, the principal sum of                   Dollars
(U.S.) ($                   ), plus accrued
but unpaid interest, on August 28, 2025 (the “Stated Maturity”) and to pay interest thereon at the rate of 6.75%
per annum from the original issue date of the Subordinated Note, or from the most recent Interest Payment Date to which interest
has been paid or duly provided for, semiannually in arrears on March 1 and September 1 of each year (each, an “Interest
Payment Date”), commencing March 1, 2016, until the principal hereof is paid or made available for payment, with such
interest calculated on the basis of a 360-day year consisting of twelve 30-day months and the number of days elapsed in any partial
month. If any payment of interest or principal is not paid in full when the same becomes due and payable, then interest will be
compounded quarterly.


Any payment of principal
of or interest on this Subordinated Note that would otherwise become due and payable on a day which is not a Business Day shall
become due and payable on the next succeeding Business Day, with the same force and effect as if made on the date for payment of
such principal or interest, and no interest will accrue in respect of such payment for the period after such day. The term “Business
Day” means any day that is not a Saturday or Sunday and that is not a day on which banks in the State of New Jersey are
generally authorized or required by law or executive order to be closed.


3.           Subordination.
The indebtedness of the Company evidenced by this Subordinated Note, including the principal and interest on this Subordinated
Note, shall be subordinate and junior in right of payment to the prior payment in full of all existing claims of creditors and
depositors of the Company, whether now outstanding or subsequently created, assumed, guaranteed or incurred (collectively, “Senior
Indebtedness”), which shall consist of principal of (and premium, if any) and interest, if any, on: (a) all indebtedness
and obligations of, or guaranteed or assumed by, the Company for money borrowed, whether or not evidenced by bonds, debentures,
securities, notes or other similar instruments, and including, but not limited to, deposits of the Company, and all obligations
to the Company’s general and secured creditors; (b) any deferred obligations of the Company for the payment of the purchase
price of property or assets acquired other than in the ordinary course of business; (c) all obligations, contingent or otherwise,
of the Company in respect of any letters of credit, bankers’ acceptances, security purchase facilities and similar direct
credit substitutes; (d) any capital lease obligations of the Company; (e) all obligations of the Company in respect of interest
rate swap, cap or other agreements, interest rate future or option contracts, currency swap agreements, currency future or option
contracts, commodity contracts and other similar arrangements or derivative products; (f) all obligations that are similar to those
in clauses (a) through (e) of other persons for the payment of which the Company is responsible or liable as obligor, guarantor
or otherwise arising from an off-balance sheet guarantee; and (g) all obligations of the types referred to in clauses (a) through
(f) of other persons secured by a lien on any property or asset of the Company, and (h) in the case of (a) through (g) above, all
amendments, renewals, extensions, modifications and refunding’s of such indebtedness and obligations; except “Senior
Indebtedness” does not include (i) the Subordinated Notes, (ii) any obligation that by its terms expressly is junior to,
or ranks equally in right of payment with, the Subordinated Notes, or (iii) any indebtedness between the Company and any of its
subsidiaries or Affiliates. This Subordinated Note is not secured by any assets of the Company.



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In
the event of liquidation of the Company, all creditors of the Company shall be entitled to be paid in full with such interest as
may be provided by law before any payment shall be made on account of principal of or interest on this Subordinated Note. Additionally,
in the event of any insolvency, dissolution, assignment for the benefit of creditors or any liquidation or winding up of or relating
to the Company, whether voluntary or involuntary, holders of Senior Indebtedness shall be entitled to be paid in full before any
payment shall be made on account of the principal of or interest on the Subordinated Notes, including this Subordinated Note. In
the event of any such proceeding, after payment in full of all sums owing with respect to the Senior Indebtedness, the registered
holders of the Subordinated Notes from time to time (each a “Noteholder” and, collectively, the “Noteholders”),
together with the holders of any obligations of the Company ranking on a parity with the Subordinated Notes, shall be entitled
to be paid from the remaining assets of the Company the unpaid principal thereof, and the unpaid interest thereon before any payment
or other distribution, whether in cash, property or otherwise, shall be made on account of any capital stock.


If
there shall have occurred and be continuing (a) a default in any payment with respect to any Senior Indebtedness or (b) an event
of default with respect to any Senior Indebtedness as a result of which the maturity thereof is accelerated, unless and until such
payment default or event of default shall have been cured or waived or shall have ceased to exist, no payments shall be made by
the Company with respect to the Subordinated Notes. The provisions of this paragraph shall not apply to any payment with respect
to which the immediately preceding paragraph of this Section 3 would be applicable.


Nothing
herein shall act to prohibit, limit or impede the Company from issuing additional debt of the Company having the same rank as the
Subordinated Notes or which may be junior or senior in rank to the Subordinated Notes.


4.           Redemption.


(a)           Redemption
Prior to Fifth Anniversary. This Subordinated Note shall not be redeemable by the Company in whole or in part prior to the
fifth anniversary of the date upon which this Subordinated Note was originally issued (the “Issue Date”), except
in the event: (i) this Subordinated Note no longer qualifies as “Tier 2” Capital (as defined by the Board
of Governors of the Federal Reserve System (the “Federal Reserve”)) as a result of a change in interpretation
or application of law or regulation by any judicial, legislative or regulatory authority that becomes effective after the date
of issuance of this Subordinated Note (“Tier 2 Capital Event”); (ii) of a Tax Event (as defined below);
or (iii) the Company becomes required to register as an investment company pursuant to the Investment Company Act of 1940, as amended
(and “Investment Company Event”). Upon the occurrence of a Tier 2 Capital Event, a Tax Event or an Investment
Company Event, the Company may redeem this Subordinated Note in whole at any time, or in part from time to time, upon giving not
less than 10 days’ notice to the holder of this Subordinated Note at an amount equal to 100% of the outstanding principal
amount being redeemed plus accrued but unpaid interest to, but excluding, the redemption date. “Tax Event” means
the receipt by the Company of an opinion of counsel to the Company that as a result of any amendment to, or change (including any
final and adopted (or enacted) prospective change) in, the laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, there exists a material risk that interest payable by the Company on the Subordinated
Notes is not, or within 120 days after the receipt of such opinion will not be, deductible by the Company, in whole or in part,
for United States federal income tax purposes.



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(b)           Redemption
on or after Fifth Anniversary. On or after the fifth anniversary of the Issue Date, this Subordinated Note shall be redeemable
at the option of and by the Company, in whole at any time, or in part upon any Interest Payment Date, at an amount equal to 100%
of the outstanding principal amount being redeemed plus accrued but unpaid interest to, but excluding, the redemption date, but
in all cases in a principal amount with integral multiples of $1,000. In addition, the Company may redeem all or a portion of the
Subordinated Notes, at any time upon the occurrence of a Tier 2 Capital Event, Tax Event or an Investment Company Event.


(c)           Partial
Redemption. If less than the then outstanding principal amount of this Subordinated Note is redeemed, (i) a new Subordinated
Note shall be issued representing the unredeemed portion without charge to the holder thereof and (ii) such redemption shall be
effected on a pro rata basis as to the Noteholders. For purposes of clarity, upon a partial redemption, a like percentage of the
principal amount of every Subordinated Note held by every Noteholder shall be redeemed.


(d)           No
Redemption at Option of Noteholder. This Subordinated Note is not subject to redemption at the option of the holder of this
Subordinated Note.


(e)           Effectiveness
of Redemption. If notice of redemption has been duly given and notwithstanding that this Subordinated Note has been called
for redemption but has not yet been surrendered for cancellation, on and after the date fixed for redemption interest shall cease
to accrue on this Subordinated Note, this Subordinated Note shall no longer be deemed outstanding and all rights with respect to
this Subordinated Note shall forthwith on such date fixed for redemption cease and terminate unless the Company shall default in
the payment of the redemption price, except only the right of the holder hereof to receive the amount payable on such redemption,
without interest.


(f)           Regulatory
Approvals. Any such redemption shall be subject to receipt of any and all required federal and state regulatory approvals,
including, but not limited to, the consent of the Federal Reserve. In the case of any redemption of this Subordinated Note pursuant
to paragraphs (b) and (c) of this Section 4, the Company will give the holder hereof notice of redemption, which notice
shall indicate the aggregate principal amount of Subordinated Notes to be redeemed, not less than 30 nor more than 45 calendar
days prior to the redemption date.



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(g)           Purchase
and Resale of the Subordinated Notes. Subject to any required federal and state regulatory approvals and the provisions of
this Subordinated Note, the Company shall have the right to purchase any of the Subordinated Notes at any time in the open market,
private transactions or otherwise. If the Company purchases any Subordinated Notes, it may, in its discretion, hold, resell or
cancel any of the purchased Subordinated Notes.


5.           Events
of Default; Acceleration; Compliance Certificate. Each of the following events shall constitute an “Event of Default”:


(a)           the
entry of a decree or order for relief in respect of the Company by a court having jurisdiction in the premises in an involuntary
case or proceeding under any applicable bankruptcy, insolvency, or reorganization law, now or hereafter in effect of the United
States or any political subdivision thereof, and such decree or order will have continued unstayed and in effect for a period of
60 consecutive days;


(b)           the
commencement by the Company of a voluntary case under any applicable bankruptcy, insolvency or reorganization law, now or hereafter
in effect of the United States or any political subdivision thereof, or the consent by the Company to the entry of a decree or
order for relief in an involuntary case or proceeding under any such law;


(c)           the
failure of the Company to pay any installment of interest on any of the Subordinated Notes as and when the same will become due
and payable, and the continuation of such failure for a period of 30 days;


(d)           the
failure of the Company to pay all or any part of the principal of any of the Subordinated Notes as and when the same will become
due and payable;


(e)           the
failure of the Company to perform any other covenant or agreement on the part of the Company contained in the Subordinated Notes,
and the continuation of such failure for a period of 60 days after the date on which notice specifying such failure, stating that
such notice is a “Notice of Default” hereunder and demanding that the Company remedy the same, will have been given,
in the manner set forth in Section 22, to the Company by the Noteholders of at least 25% in aggregate principal amount of
the Subordinated Notes at the time outstanding; or the default by the Company under any bond, debenture, note or other evidence
of indebtedness for money borrowed by the Company having an aggregate principal amount outstanding of at least $25,000,000, whether
such indebtedness now exists or is created or incurred in the future, which default (i) constitutes a failure to pay any portion
of the principal of such indebtedness when due and payable after the expiration of any applicable grace period or (ii) results
in such indebtedness becoming due or being declared due and payable prior to the date on which it otherwise would have become due
and payable without, in the case of clause (i), such indebtedness having been discharged or, in the case of clause (ii), without
such indebtedness having been discharged or such acceleration having been rescinded or annulled.



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Unless
the principal of this Subordinated Note already shall have become due and payable, if an Event of Default set forth in subsections
(c) or (d) above shall have occurred and be continuing, the holder of this Subordinated Note, by notice in writing to the Company,
may declare the principal amount of this Subordinated Note to be due and payable immediately and, upon any such declaration the
same shall become and shall be immediately due and payable. The Company waives demand, presentment for payment, notice of nonpayment,
notice of protest, and all other notices. The Company, within 45 calendar days after the receipt of written notice from any Noteholder
of the occurrence of an Event of Default with respect to this Subordinated Note, shall mail to all Noteholders, at their addresses
shown on the Security Register (as defined in Section 13 below), such written notice of Event of Default, unless such Event
of Default shall have been cured or waived before the giving of such notice as certified by the Company in writing.


6.           Failure
to Make Payments. In the event of failure by the Company to make any required payment of principal or interest on this Subordinated
Note (and, in the case of payment of interest, such failure to timely pay shall have continued for 15 calendar days), the Company
will, upon demand of the holder of this Subordinated Note, pay to the holder of this Subordinated Note the amount then due and
payable on this Subordinated Note for principal and interest (without acceleration of the Note in any manner), with interest on
the overdue principal and interest at the rate borne by this Subordinated Note, to the extent permitted by applicable law. If the
Company fails to pay such amount upon such demand, the holder of this Subordinated Note may, among other things, institute a judicial
proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may
enforce the same against the Company and collect the amounts adjudged or decreed to be payable in the manner provided by law out
of the property of the Company.


Upon
the occurrence of a failure by the Company to make any required payment of principal or interest on this Subordinated Note, or
an Event of Default until such Event of Default is cured by the Company, the Company shall not: (a) declare or pay any dividends
or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of the Company’s capital
stock; (b) make any payment of principal or interest or premium, if any, on or repay, repurchase or redeem any debt securities
of the Company that rank equal with or junior to the Subordinated Notes; or (c) make any payments under any guarantee that ranks
equal with or junior to the Subordinated Notes, other than (i) any dividends or distributions in shares of, or options, warrants
or rights to subscribe for or purchase shares of, any class of the Company’s common stock; (ii) any declaration of a non-cash
dividend in connection with the implementation of a shareholders’ rights plan, or the issuance of stock under any such plan
in the future, or the redemption or repurchase of any such rights pursuant thereto; (iii) as a result of a reclassification of
the Company’s capital stock or the exchange or conversion of one class or series of the Company’s capital stock for
another class or series of the Company’s capital stock; (iv) the purchase of fractional interests in shares of the Company’s
capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged;
or (v) purchases of any class of the Company’s common stock related to the issuance of common stock or rights under any benefit
plans for the Company’s directors, officers or employees or any of the Company’s dividend reinvestment plans; provided,
however, that any payment permitted by clauses (iii), (iv) or (v) above shall not exceed $300,000.


7.           Affirmative
Covenants of the Company.



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(a)           Payment
of Principal and Interest. The Company covenants and agrees for the benefit of the holder of this Subordinated Note that it
will duly and punctually pay the principal of, and interest on, this Subordinated Note, in accordance with the terms hereof. Principal
and interest will be considered paid on the date due if the Company or a subsidiary thereof holds as of 11:00 a.m., Midland Park,
New Jersey time, on any Interest Payment Date, an amount in immediately available funds provided
by the Company that is designated for and sufficient to pay all principal and interest then due. 


(b)           Maintenance
of Office. The Company will maintain an office or agency in the Borough of Midland Park, New Jersey where Subordinated Notes
may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect
of the Subordinated Notes may be served.


The Company
may also from time to time designate one or more other offices or agencies where the Subordinated Notes may be presented or surrendered
for any or all such purposes and may from time to time rescind such designations; provided that no such designation or rescission
will in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Midland Park, New Jersey.
The Company will give prompt written notice to the Noteholders of any such designation or rescission and of any change in the location
of any such other office or agency.


(c)           Corporate
Existence. The Company will do or cause to be done all things necessary to preserve and keep in full force and effect: (i)
the corporate existence of the Company; (ii) the existence (corporate or other) of each subsidiary; and (iii) the rights (charter
and statutory), licenses and franchises of the Company and each of its subsidiaries; provided, however, that the Company will not
be required to preserve the existence (corporate or other) of any of its subsidiaries or any such right, license or franchise of
the Company or any of its subsidiaries if the Board of Directors of the Company determines that the preservation thereof is no
longer desirable in the conduct of the business of the Company and its subsidiaries taken as a whole and that the loss thereof
will not be disadvantageous in any material respect to the Noteholders.


(d)           Maintenance
of Properties. The Company will, and will cause each subsidiary to, cause all its properties used or useful in the conduct
of its business to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment
of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted
at all times; provided, however, that nothing in this Section will prevent the Company or any subsidiary from discontinuing the
operation and maintenance of any of their respective properties if such discontinuance is, in the judgment of the Board of Directors
of the Company or of any subsidiary, as the case may be desirable in the conduct of its business.


(e)           Waiver
of Certain Covenants. The Company may omit in any particular instance to comply with any term, provision or condition set forth
in Section 7(a) or Section 7(b) above, with respect to this Subordinated Note if before the time for such compliance the Noteholders
of at least a majority in principal amount of the outstanding Subordinated Notes, by act of such Noteholders, either will waive
such compliance in such instance or generally will have waived compliance with such term, provision or condition, but no such waiver
will extend to or affect such term, provision or condition except to the extent so expressly waived, and, until such waiver will
become effective, the obligations of the Company in respect of any such term, provision or condition will remain in full force
and effect.



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(f)           Company
Statement as to Compliance. The Company will deliver to the Noteholders, within 120 days after the end of each fiscal year,
an Officer’s Certificate covering the preceding calendar year, stating whether or not, to the best of his or her knowledge,
the Company is in default in the performance and observance of any of the terms, provisions and conditions of this Subordinated
Note (without regard to notice requirements or periods of grace) and if the Company will be in default, specifying all such defaults
and the nature and status thereof of which he or she may have knowledge.


(g)           Tier
2 Capital. If all or any portion of the Subordinated Notes ceases to be deemed to be Tier 2 Capital, other than due to the
limitation imposed on the capital treatment of subordinated debt during the 5 years immediately preceding the Maturity Date of
the Subordinated Notes, Company will immediately notify the Noteholders, and thereafter the Company shall request, subject to the
terms hereof, that the Noteholders execute and deliver all agreements as reasonably necessary in order to restructure the applicable
portions of the obligations evidenced by the Subordinated Notes to qualify as Tier 2 Capital.


8.           Negative
Covenant of the Company. The Company shall not declare or pay any dividend or make any distribution on capital stock or other
equity securities of any kind of the Company if the Company is not adequately capitalized for regulatory purposes immediately prior
to the declaration of such dividend or distribution, except for dividends payable solely in shares of common stock of the Company.


9.           Denominations.
The Subordinated Notes are issuable only in registered form without interest coupons in minimum denominations of $1,000 and integral
multiples of $1,000 in excess thereof.


10.           Charges
and Transfer Taxes. No service charge will be made for any registration of transfer or exchange of this Subordinated Note,
or any redemption or repayment of this Subordinated Note, or any conversion or exchange of this Subordinated Note for other types
of securities or property, but the Company may require payment of a sum sufficient to pay all taxes, assessments or other governmental
charges that may be imposed in connection with the transfer or exchange of this Subordinated Note from the Noteholder requesting
such transfer or exchange.



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11.           Payment
Procedures. Payment of the principal and interest payable on the Maturity Date will be made by check, or by wire transfer in
immediately available funds to a bank account in the United States designated by the registered Noteholder of this Subordinated
Note if such Noteholder shall have previously provided wire instructions to the Company, upon presentation and surrender of this
Subordinated Note at the Payment Office (as defined in Section 22 below) or at such other place or places as the Company
shall designate by notice to the registered Noteholders as the Payment Office, provided that this Subordinated Note is presented
to the Company in time for the Company to make such payments in such funds in accordance with its normal procedures. Payments of
interest (other than interest payable on the Maturity Date) shall be made by wire transfer in immediately available funds or check
mailed to the registered Noteholder, as such person’s address appears on the Security Register. Interest payable on any Interest
Payment Date shall be payable to the Noteholder in whose name this Subordinated Note is registered at the close of business on
the fifteenth calendar day prior to the applicable Interest Payment Date, without regard to whether such date is a Business Day
(such date being referred to herein as the “Regular Record Date”), except that interest not paid on the Interest
Payment Date, if any, will be paid to the holder in whose name this Subordinated Note is registered at the close of business on
a special record date fixed by the Company (a “Special Record Date”), notice of which shall be given to the
holder of this Subordinated Note not less than 10 calendar days prior to such Special Record Date. (The Regular Record Date and
Special Record Date are referred to herein collectively as the “Record Dates”). To the extent permitted by applicable
law, interest shall accrue, at the rate at which interest accrues on the principal of this Subordinated Note, on any amount of
principal or interest on this Subordinated Note not paid when due. All payments on this Subordinated Note shall be applied first
against costs and expenses of the Noteholder hereunder; then against interest due hereunder; and then against principal due hereunder.
The holder of this Subordinated Note acknowledges and agrees that the payment of all or any portion of the outstanding principal
amount of this Subordinated Note and all interest hereon shall be pari passu in right of payment and in all other respects
to the other Subordinated Notes. In the event that the holder of this Subordinated Note receives payments in excess of its pro
rata share of the Company’s payments to the holders of all of the Subordinated Notes, then the holder of this Subordinated
Note shall hold in trust all such excess payments for the benefit of the holders of the other Subordinated Notes and shall pay
such amounts held in trust to such other holders upon demand by such holders.


12.           Form
of Payment. Payments of principal and interest on this Subordinated Note shall be made in such coin or currency of the United
States of America as at the time of payment shall be legal tender for the payment of public and private debts.


13.           Registration
of Transfer, Security Register. Except as otherwise provided herein, this Subordinated Note is transferable in whole or in
part, and may be exchanged for a like aggregate principal amount of Subordinated Notes of other authorized denominations, by the
Noteholder in person, or by his attorney duly authorized in writing, at the Payment Office. The Company shall maintain a register
providing for the registration of the Subordinated Notes and any exchange or transfer thereof (the “Security Register”).
Upon surrender or presentation of this Subordinated Note for exchange or registration of transfer, the Company shall execute and
deliver in exchange therefor a Subordinated Note or Subordinated Notes of like aggregate principal amount, each in a minimum denomination
of $1,000 or any amount in excess thereof which is an integral multiple of $1,000 (and, in the absence of an opinion of counsel
satisfactory to the Company to the contrary, bearing the restrictive legend(s) set forth hereinabove) and that is or are registered
in such name or names requested by the Noteholder. Any Subordinated Note presented or surrendered for registration of transfer
or for exchange shall be duly endorsed and accompanied by a written instrument of transfer in such form as is attached hereto and
incorporated herein, duly executed by the Noteholder or his attorney duly authorized in writing, with such tax identification number
or other information for each person in whose name a Subordinated Note is to be issued, and accompanied by evidence of compliance
with any restrictive legend(s) appearing on such Subordinated Note or Subordinated Notes as the Company may reasonably request
to comply with applicable law. No exchange or registration of transfer of this Subordinated Note shall be made on or after the
fifteenth day immediately preceding the Maturity Date.



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14.           Charges
and Transfer Taxes. No service charge (other than any cost of delivery) shall be imposed for any exchange or registration of
transfer of this Subordinated Note, but the Company may require the payment of a sum sufficient to cover any stamp or other tax
or governmental fee or charge that may be imposed in connection therewith (or presentation of evidence that such tax, charge or
fee has been paid).


15.           Priority.
The Subordinated Notes rank pari passu among themselves and pari passu, in the event of any insolvency proceeding,
dissolution, assignment for the benefit of creditors, reorganization, restructuring of debt, marshaling of assets and liabilities
or similar proceeding or any liquidation or winding up of the Company, with all other present or future unsecured subordinated
debt obligations of the Company, except any unsecured subordinated debt that, pursuant to its express terms, is senior or subordinate
in right of payment to the Subordinated Notes.


16.           Ownership.
Prior to due presentment of this Subordinated Note for registration of transfer, the Company may treat the Noteholder in whose
name this Subordinated Note is registered in the Security Register as the absolute owner of this Subordinated Note for receiving
payments of principal and interest on this Subordinated Note and for all other purposes whatsoever, whether or not this Subordinated
Note be overdue, and the Company shall not be affected by any notice to the contrary.


17.           Waiver
and Consent. Any consent or waiver given by the holder of this Subordinated Note shall be conclusive and binding upon such
holder and upon all future holders of this Subordinated Note and of any Subordinated Note issued upon the registration of transfer
hereof or in exchange therefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Subordinated
Note. This Subordinated Note may be also amended or waived pursuant to, and in accordance with, the provisions of Section 8.2 of
the Purchase Agreement. No delay or omission of the holder of this Subordinated Note to exercise any right or remedy accruing upon
any Event of Default shall impair such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein.
Any insured depository institution which shall be a holder of this Subordinated Note or which otherwise shall have any beneficial
ownership interest in this Subordinated Note shall, by its acceptance of such Subordinated Note (or beneficial interest therein),
be deemed to have waived any right of offset with respect to the indebtedness evidenced thereby.


18.           No
Impairment. No provisions of this Subordinated Note shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal and interest on this Subordinated Note at the times, places and rate, and in the coin or
currency, herein prescribed.


19.           No
Sinking Fund; Convertibility. This Subordinated Note is not entitled to the benefit of any sinking fund. This Subordinated
Note is not convertible into or exchangeable for any of the equity securities, other securities or assets of the Company or any
subsidiary.



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20.           No
Recourse Against Others. No recourse under or upon any obligation, covenant or agreement contained in this Subordinated Note,
or for any claim based thereon or otherwise in respect thereof, will be had against any past, present or future shareholder, employee,
officer, or director, as such, of the Company or of any predecessor or successor, either directly or through the Company or any
predecessor or successor, under any rate of law, statute or constitutional provision or by the enforcement of any assessment or
by any legal or equitable proceeding or otherwise, all such liability being expressly waived and released by the acceptance of
this Subordinated Note by the holder of this Subordinated Note and as part of the consideration for the issuance of this Subordinated
Note.


21.           Abbreviations.
Customary abbreviations may be used in the name of a Noteholder or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= custodian),
and U/G/M/A (= Uniform Gifts to Minors Act). Additional abbreviations may also be used though not in the above list.


22.           Notices.
All notices to the Company under this Subordinated Note shall be in writing and addressed to the Company at Stewardship Financial
Corporation, 630 Godwin Avenue, Midland Park, New Jersey, 07432, Attn: Claire Chadwick, or to such other address as the Company
may notify the holder of this Subordinated Note (the “Payment Office”). All notices to the Noteholders shall
be in writing and sent by first-class mail to each Noteholder at his or its address as set forth in the Security Register.


23.           Governing
Law. THIS SUBORDINATED NOTE WILL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW JERSEY AND WILL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW JERSEY WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES THEREOF.
THIS SUBORDINATED NOTE IS INTENDED TO MEET THE CRITERIA FOR QUALIFICATION OF THE OUTSTANDING PRINCIPAL AS TIER 2 CAPITAL UNDER
THE REGULATORY GUIDELINES OF THE FEDERAL RESERVE, AND THE TERMS HEREOF SHALL BE INTERPRETED IN A MANNER TO SATISFY SUCH INTENT.


[Signature Page Follows]


 




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IN WITNESS WHEREOF,
the undersigned has caused this Subordinated Note to be duly executed.


Dated:
August 28, 2015


 


	 	STEWARDSHIP FINANCIAL 
	 	CORPORATION
	 	 	 
	 	 	 
	 	 	 
	 	By:	 
	 	 	Paul Van Ostenbridge, President and Chief
	 	 	Executive Officer 


 




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ASSIGNMENT FORM


To assign this Subordinated Note, fill
in the form below: (I) or (we) assign and transfer this Subordinated Note to:


 


(Print or type
assignee’s name, address and zip code)


 


 


(Insert assignee’s
social security or tax I.D. No.)


 


and irrevocably appoint _______________________
agent to transfer this Subordinated Note on the books of the Company. The agent may substitute another to act for him.


 


	Date:	 	 	Your signature:	 
	 	 	 	(Sign exactly as your name appears on the face of this Subordinated Note)
	 	 	 	 	 
	 	 	 	Tax Identification No:


 


	Signature Guarantee:	 


(Signatures must be guaranteed by an eligible
guarantor institution (banks, stockbroker’s, savings and loan associations and credit unions with membership in an approved
signature guarantee medallion program), pursuant to Exchange Act Rule 17Ad-15).


 


The undersigned
certifies that it [is / is not] an Affiliate of the Company and that, to its knowledge, the proposed transferee [is / is not] an
Affiliate of the Company.


In connection with
any transfer or exchange of this Subordinated Note occurring prior to the date that is one year after the later of the date of
original issuance of this Subordinated Note and the last date, if any, on which this Subordinated Note was owned by the Company
or any Affiliate of the Company, the undersigned confirms that this Subordinated Note is being:


CHECK ONE BOX BELOW:


	o	(1)	acquired for the undersigned’s own account, without transfer;
	o	(2)	transferred to the Company;
	o	(3)	transferred in accordance and in compliance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”);
	o	(4)	transferred under an effective registration statement under the Securities Act;
	o	(5)	transferred in accordance with and in compliance with Regulation S under the Securities Act;


 



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	o	(6)	transferred to an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) or an “accredited investor” (as defined in Rule 501(a)(4) under the Securities Act), that has furnished a signed letter containing certain representation’s and agreements; or
	o	(7)	transferred in accordance with another available exemption from the registration requirements of the Securities Act of 1933, as amended.


Unless one of the boxes is checked,
the Company will refuse to register this Subordinated Note in the name of any person other than the registered holder thereof;
provided, however, that if box (5), (6) or (7) is checked, the Company may require, prior to registering any such transfer of this
Subordinated Note, in its sole discretion, such legal opinions, certifications and other information as the Company may reasonably
request to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act such as the exemption provided by Rule 144 under such Act.


	 	Signature:	 


 


	Signature Guarantee:	 


(Signatures must be guaranteed by an
eligible guarantor institution (banks, stockbroker’s, savings and loan associations and credit unions with membership in
an approved signature guarantee medallion program), pursuant to Exchange Act Rule 17Ad-l5).


TO BE COMPLETED BY PURCHASER IF BOX
(1) OR (3) ABOVE IS CHECKED.


The undersigned
represents and warrants that it is purchasing this Subordinated Note for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a “qualified institutional buyer” within the
meaning of Rule 144A under the Securities Act of 1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant
to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned’s
foregoing representations in order to claim the exemption from registration provided by Rule 144A.


	Date:	 	 	Signature:	 


 







 



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