Document:

Exhibit 4.2

 

DESCRIPTION OF THE REGISTRANT’S SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED 

 

As of December 31, 2020, Diamondhead Holdings Corp.
(“we,” “our,” “us” or the “Company”) had the following three classes of securities registered
under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”): (i) its Class A common stock, $0.0001
par value per share (“Class A common stock”), (ii) its warrants exercisable for one share of Class A common stock for $11.50
per share and (iii) its units, consisting of one share of Class A common stock and one-fourth of a warrant. Each whole warrant entitles
the holder thereof to purchase one share of Class A common stock at $11.50 per share. This Description of Securities also contains a description
of the Company’s Class B common stock, $0.0001 par value per share (the “Class B common stock” or “founder shares”),
which is not registered pursuant to Section 12 of the Exchange Act but is convertible into shares of Class A common stock. The description
of the Class B common stock is necessary to understand the material terms of the Class A common stock.

 

Pursuant to our certificate of incorporation, our
authorized capital stock consists of 300,000,000 shares of Class A common stock, $0.0001 par value, 10,000,000 shares of Class B common
stock, $0.0001 par value, and 10,000,000 shares of undesignated preferred stock, $0.0001 par value. The following description summarizes
the material terms of our capital stock.

 

Defined terms used herein and not defined herein
shall have the meaning assigned to such terms in the Company’s Annual Report on Form 10-K.

 

Units

 

Each unit consists of one whole share of Class A
common stock and one-fourth of one warrant. Each whole warrant entitles the holder thereof to purchase one share of our Class A common
stock at a price of $11.50 per share, subject to adjustment. Pursuant to the warrant agreement, a warrant holder may exercise its warrants
only for a whole number of shares of Class A common stock. This means that only a whole warrant may be exercised at any given time by
a warrant holder. No fractional warrants will be issued upon separation of the units and only whole warrants will trade.

 

Common Stock

 

Common stockholders of record are entitled to one
vote for each share held on all matters to be voted on by stockholders. Holders of the Class A common stock and holders of the Class B
common stock will vote together as a single class on all matters submitted to a vote of our stockholders, except as required by law. Unless
specified in our certificate of incorporation or bylaws, or as required by applicable provisions of the DGCL or applicable stock exchange
rules, the affirmative vote of a majority of our shares of common stock that are voted is required to approve any such matter voted on
by our stockholders. Our board of directors is divided into three classes, each of which will generally serve for a term of three years
with only one class of directors being elected in each year. There is no cumulative voting with respect to the election of directors,
with the result that the holders of more than 50% of the shares voted for the election of directors can elect all of the directors. Our
stockholders are entitled to receive ratable dividends when, as and if declared by the board of directors out of funds legally available
therefor.

 

    

     

    

 

We will provide our stockholders with the opportunity
to redeem all or a portion of their public shares upon the completion of our initial business combination at a per-share price, payable
in cash, equal to the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of our initial
business combination including interest earned on the funds held in the trust account and not previously released to us to pay our taxes,
divided by the number of then outstanding public shares, subject to the limitations described herein. The per-share amount we will distribute
to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions we will pay to the underwriter.
Our sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption
rights with respect to any founder shares and any public shares held by them in connection with the completion of our initial business
combination. Unlike many blank check companies that hold stockholder votes and conduct proxy solicitations in conjunction with their initial
business combinations and provide for related redemptions of public shares for cash upon completion of such initial business combinations
even when a vote is not required by law, if a stockholder vote is not required by law and we do not decide to hold a stockholder vote
for business or other legal reasons, we will, pursuant to our certificate of incorporation, conduct the redemptions pursuant to the tender
offer rules of the SEC, and file tender offer documents with the SEC prior to completing our initial business combination. Our certificate
of incorporation requires these tender offer documents to contain substantially the same financial and other information about the initial
business combination and the redemption rights as is required under the SEC’s proxy rules. If, however, stockholder approval of
the transaction is required by law, or we decide to obtain stockholder approval for business or other legal reasons, we will, like many
blank check companies, offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to
the tender offer rules. If we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding
shares of common stock voted are voted in favor of the business combination. A quorum for such meeting will consist of the holders present
in person or by proxy of shares of outstanding capital stock of the company representing a majority of the voting power of all outstanding
shares of capital stock of the company entitled to vote at such meeting. If we seek stockholder approval of our initial business combination
and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, our certificate of incorporation
provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is
acting in concert or as a “group”(as defined under Section 13 of the Exchange Act), will be
restricted from redeeming its shares with respect to more than an aggregate of 15% of the shares of Class A common stock sold in our initial
public offering, which we refer to as the Excess Shares. However, we would not be restricting our stockholders’ ability to vote
all of their shares (including Excess Shares) for or against our business combination. Our stockholders’ inability to redeem the
Excess Shares will reduce their influence over our ability to complete our business combination, and such stockholders could suffer a
material loss in their investment if they sell such Excess Shares on the open market. Additionally, such stockholders will not receive
redemption distributions with respect to the Excess Shares if we complete the business combination. And, as a result, such stockholders
will continue to hold that number of shares exceeding 15% and, in order to dispose such shares would be required to sell their stock in
open market transactions, potentially at a loss.

 

    

     

    

 

In the event of a liquidation, dissolution or winding
up of the company after a business combination, our stockholders are entitled to share ratably in all assets remaining available for distribution
to them after payment of liabilities and after provision is made for each class of stock, if any, having preference over the common stock.
Our stockholders have no preemptive or other subscription rights. There are no sinking fund provisions applicable to the common stock,
except that we will provide our stockholders with the opportunity to redeem their public shares for cash equal to their pro rata share
of the aggregate amount then on deposit in the trust account, upon the completion of our initial business combination, subject to the
limitations described herein.

 

Founder Shares

 

The founder shares are identical to the shares of
Class A common stock, and holders of founder shares have the same stockholder rights as public stockholders, except that (i) the founder
shares are subject to certain transfer restrictions, as described in more detail below, (ii) our sponsor, officers and directors have
entered into a letter agreement with us, pursuant to which they have agreed (A) to waive their redemption rights with respect to any founder
shares and any public shares held by them in connection with the completion of our business combination (B) and to waive their redemption
rights with respect to their founder shares and public shares in connection with a stockholder vote to approve an amendment to our certificate
of incorporation (i) to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our
initial business combination within the timeframe set forth in our certificate of incorporation, or (ii) with respect to any other provision
relating to stockholders’ rights or pre-initial business combination activity and (C) to waive their rights to liquidating distributions
from the trust account with respect to any founder shares held by them if we fail to complete our business combination within the timeframe
set forth in our certificate of incorporation, although they will be entitled to liquidating distributions from the trust account with
respect to any public shares they hold if we fail to complete our business combination within such time period, (iii) the founder shares
are shares of our Class B common stock that will automatically convert into shares of our Class A common stock at the time of our initial
business combination on a one-for-one basis, subject to adjustment pursuant to certain anti-dilution rights as described herein and (iv)
are subject to registration rights. If we submit our business combination to our public stockholders for a vote, our sponsor, officers
and directors have agreed to vote any founder shares held by them and any public shares purchased in favor of our initial business combination.
Permitted transferees of the founder shares held by our sponsor, anchor investors or our officers and directors would be subject to the
same restrictions applicable to our sponsor, anchor investors or officers and directors respectively.

 

The shares of Class B common stock will automatically
convert into shares of Class A common stock at the time of our initial business combination on a one-for-one basis (subject to adjustment
for stock splits, stock dividends, reorganizations, recapitalizations and the like), and subject to further adjustment as provided herein.
In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the
amounts offered in our initial public offering and related to the closing of the business combination, including pursuant to a specified
future issuance, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted
(unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respect to any
such issuance or deemed issuance, including a specified future issuance) so that the number of shares of Class A common stock issuable
upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total
number of all shares of common stock outstanding upon completion of our initial public offering plus all shares of Class A common stock
and equity-linked securities issued or deemed issued in connection with the business combination (excluding any shares or equity-linked
securities issued, or to be issued, to any seller in the business combination). Holders of founder shares may also elect to convert their
shares of Class B common stock into an equal number of shares of Class A common stock, subject to adjustment as provided above, at any
time.

 

    

     

    

 

With certain limited exceptions, the founder shares
are not transferable, assignable or salable (except to our officers and directors and other persons or entities affiliated with or related
to our sponsor or anchor investors) until the earlier of (A) one year after the completion of our initial business combination or (B)
subsequent to our initial business combination, (x) if the last reported sale price of our Class A common stock equals or exceeds $12.00
per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within
any 30-trading day period commencing at least 150 days after our initial business combination, or (y) the date on which we complete a
liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of our stockholders having
the right to exchange their shares of common stock for cash, securities or other property.

 

Redeemable Warrants

 

Each whole warrant entitles the registered holder
to purchase one whole share of our Class A common stock at a price of $11.50 per share, subject to adjustment as discussed below, at any
time commencing on the later of 12 months from the closing of our initial public offering or 30 days after the completion of our initial
business combination. Pursuant to the warrant agreement, a warrant holder may exercise its warrants only for a whole number of shares
of Class A common stock. This means that only a whole warrant may be exercised at any given time by a warrant holder. No fractional warrants
will be issued upon separation of the units and only whole warrants will trade. Accordingly, unless you purchase at least four units,
you will not be able to receive or trade a whole warrant. The warrants will expire five years after the completion of our initial business
combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.

 

We will not be obligated to deliver any shares of
Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration
statement under the Securities Act with respect to the shares of Class A common stock underlying the warrants is then effective and a
prospectus relating thereto is current, subject to our satisfying our obligations described below with respect to registration. No warrant
will be exercisable and we will not be obligated to issue shares of Class A common stock upon exercise of a warrant unless Class A common
stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state
of residence of the registered holder of the warrants. In the event that the conditions in the two immediately preceding sentences are
not satisfied with respect to a warrant, the holder of such warrant will not be entitled to exercise such warrant and such warrant may
have no value and expire worthless. In no event will we be required to net cash settle any warrant. In the event that a registration statement
is not effective for the exercised warrants, the purchaser of a unit containing such warrant will have paid the full purchase price for
the unit solely for the share of Class A common stock underlying such unit.

 

    

     

    

 

We have agreed that as soon as practicable, but
in no event later than 15 business days, after the closing of our initial business combination, we will use our reasonable best efforts
to file, and within 60 business days following our initial business combination to have declared effective, a registration statement for
the registration, under the Securities Act, of the shares of Class A common stock issuable upon exercise of the warrants. We will use
our reasonable best efforts to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until
the expiration of the warrants in accordance with the provisions of the warrant agreement. Notwithstanding the above, if our Class A common
stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of
a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our option, require holders of public warrants
who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in
the event we so elect, we will not be required to file or maintain in effect a registration statement, but we will be required to use
our best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.

 

Redemption of Warrants when the
price per share of Class A common stock equals or exceeds $18.00. Once the warrants become exercisable, we may call the warrants
for redemption (except as described herein with respect to the private placement warrants):

 

		·	in whole and not in part;

		·	at a price of $0.01 per warrant;

		·	upon a minimum of 30 days’ prior written notice of redemption, which we refer to as the 30-day redemption period; and

		·	if, and only if, the last reported sale price (the “closing price”) of our Class A common stock equals or exceeds $18.00
per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days
within a 30-trading day period ending on the third trading day prior to the date on which we send the notice of redemption to the warrant
holders.

 

We will not redeem the warrants as described
above unless a registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the
warrants is effective and a current prospectus relating to those shares of Class A common stock is available throughout the 30-day redemption
period. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify
the underlying securities for sale under all applicable state securities laws.

 

We have established the last redemption
criterion discussed above to prevent a redemption call unless there is at the time of the call a significant premium to the warrant exercise
price. If the foregoing conditions are satisfied and we issue a notice of redemption of the warrants, each warrant holder will be entitled
to exercise his, her or its warrant prior to the scheduled redemption date. However, the price of the Class A common stock may fall below
the $18.00 redemption trigger price (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like)
as well as the $11.50 (for whole shares) warrant exercise price after the redemption notice is issued.

 

Redemption of Warrants when the
price per share of Class A Common Stock equals or exceeds $10.00. Once the warrants become exercisable, we may redeem the outstanding
warrants:

 

		·	in whole and not in part;

 

    

     

    

 

		·	at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise
their warrants, but only on a cashless basis, prior to redemption and receive that number of shares to be determined by reference to the
table set forth under “Description of Securities - Redeemable Warrants” based on the redemption date and the
 “fair market value” of our Class A common stock (as defined below) except as otherwise described in “Description of
Securities - Redeemable Warrants”;

		·	if, and only if, the closing price of our Class A common stock equals or exceeds $10.00 per share (as adjusted for stock splits, stock
dividends, reorganizations, recapitalizations and the like) for any 20 trading days within the 30-trading day period ending three trading
days before we send the notice of redemption to the warrant holders; and

		·	if the closing price of our Class A common stock for any 20 trading days within a 30-trading day period ending on the third trading
day prior to the date on which we send the notice of redemption to the warrant holders is less than $18.00 per share (as adjusted for
stock splits, stock dividends, reorganizations, recapitalizations and the like), the private placement warrants must also be concurrently
called for redemption on the same terms as the outstanding public warrants as described above.

 

The “fair market value” of our
Class A common stock for the above purpose shall mean the volume weighted average price of our Class A common stock during the 10 trading
days immediately following the date on which the notice of redemption is sent to the holders of warrants. This redemption feature differs
from the typical warrant redemption features used in other blank check offerings. We will provide our warrant holders with the final fair
market value no later than one business day after the 10-trading day period described above ends. In no event will the warrants be exercisable
on a cashless basis in connection with this redemption feature for more than 0.361 shares of Class A common stock per warrant (subject
to adjustment).

 

The numbers in the table below represent
the “redemption prices”, or the number of shares of Class A common stock that a warrant holder will receive upon redemption
by us pursuant to this redemption feature.

 

The stock prices set forth in the column
headings of the table below will be adjusted as of any date on which the number of shares issuable upon exercise of a warrant is adjusted.
The adjusted stock prices in the column headings will equal the stock prices immediately prior to such adjustment, multiplied by
a fraction, the numerator of which is the number of shares deliverable upon exercise of a warrant immediately prior to such adjustment
and the denominator of which is the number of shares deliverable upon exercise of a warrant as so adjusted. The number of shares in the
table below shall be adjusted in the same manner and at the same time as the number of shares issuable upon exercise of a warrant.

 

    

     

    

  

	 	 	 	Fair Market Value of Class A Common Stock 	 
	Redemption Date (period 

to expiration of warrants) 	 	 	≤$10.00	 	 	 	 $11.00	 	 	$12.00	 	 	$13.00	 	 	 	$14.00	 	 	$15.00 	 	 	$16.00 	 	 	$17.00	 	 	≥$18.00 	 
	60 months 	​	​	0.261	​	​	 	0.281	​	​	0.297	​	​	0.311	​	​	​	0.324	​	​	0.337	​	​	0.348	​	​	0.358	​	​	0.361	 
	57 months 	​	​	0.257	​	​	 	0.277	​	​	0.294	​	​	0.310	​	​	​	0.324	​	​	0.337	​	​	0.348	​	​	0.358	​	​	0.361	 
	54 months 	​	​	0.252	​	​	 	0.272	​	​	0.291	​	​	0.307	​	​	​	0.322	​	​	0.335	​	​	0.347	​	​	0.357	​	​	0.361	 
	51 months 	​	​	0.246	​	​	 	0.268	​	​	0.287	​	​	0.304	​	​	​	0.320	​	​	0.333	​	​	0.346	​	​	0.357	​	​	0.361	 
	48 months 	​	​	0.241	​	​	 	0.263	​	​	0.283	​	​	0.301	​	​	​	0.317	​	​	0.332	​	​	0.344	​	​	0.356	​	​	0.361	 
	45 months 	​	​	0.235	​	​	 	0.258	​	​	0.279	​	​	0.298	​	​	​	0.315	​	​	0.330	​	​	0.343	​	​	0.356	​	​	0.361	 
	42 months 	​	​	0.228	​	​	 	0.252	​	​	0.274	​	​	0.294	​	​	​	0.312	​	​	0.328	​	​	0.342	​	​	0.355	​	​	0.361	 
	39 months 	​	​	0.221	​	​	 	0.246	​	​	0.269	​	​	0.290	​	​	​	0.309	​	​	0.325	​	​	0.340	​	​	0.354	​	​	0.361	 
	36 months 	​	​	0.213	​	​	 	0.239	​	​	0.263	​	​	0.285	​	​	​	0.305	​	​	0.323	​	​	0.339	​	​	0.353	​	​	0.361	 
	33 months 	​	​	0.205	​	​	 	0.232	​	​	0.257	​	​	0.280	​	​	​	0.301	​	​	0.320	​	​	0.337	​	​	0.352	​	​	0.361	 
	30 months 	​	​	0.196	​	​	 	0.224	​	​	0.250	​	​	0.274	​	​	​	0.297	​	​	0.316	​	​	0.335	​	​	0.351	​	​	0.361	 
	27 months 	​	​	0.185	​	​	 	0.214	​	​	0.242	​	​	0.268	​	​	​	0.291	​	​	0.313	​	​	0.332	​	​	0.350	​	​	0.361	 
	24 months 	​	​	0.173	​	​	 	0.204	​	​	0.233	​	​	0.260	​	​	​	0.285	​	​	0.308	​	​	0.329	​	​	0.348	​	​	0.361	 
	21 months 	​	​	0.161	​	​	 	0.193	​	​	0.223	​	​	0.252	​	​	​	0.279	​	​	0.304	​	​	0.326	​	​	0.347	​	​	0.361	 
	18 months 	​	​	0.146	​	​	 	0.179	​	​	0.211	​	​	0.242	​	​	​	0.271	​	​	0.298	​	​	0.322	​	​	0.345	​	​	0.361	 
	15 months 	​	​	0.130	​	​	 	0.164	​	​	0.197	​	​	0.230	​	​	​	0.262	​	​	0.291	​	​	0.317	​	​	0.342	​	​	0.361	 
	12 months 	​	​	0.111	​	​	 	0.146	​	​	0.181	​	​	0.216	​	​	​	0.250	​	​	0.282	​	​	0.312	​	​	0.339	​	​	0.361	 
	9 months 	​	​	0.090	​	​	 	0.125	​	​	0.162	​	​	0.199	​	​	​	0.237	​	​	0.272	​	​	0.305	​	​	0.336	​	​	0.361	 
	6 months 	​	​	0.065	​	​	 	0.099	​	​	0.137	​	​	0.178	​	​	​	0.219	​	​	0.259	​	​	0.296	​	​	0.331	​	​	0.361	 
	3 months 	​	​	0.034	​	​	 	0.065	​	​	0.104	​	​	0.150	​	​	​	0.197	​	​	0.243	​	​	0.286	​	​	0.326	​	​	0.361	 
	0 months 	​	​	-	​	​	 	-	​	​	0.042	​	​	0.115	​	​	​	0.179	​	​	0.233	​	​	0.281	​	​	0.323	​	​	0.361	 

 

The exact fair market value and redemption
date may not be set forth in the table above, in which case, if the fair market value is between two values in the table or the redemption
date is between two redemption dates in the table, the number of Class A common stock to be issued for each warrant exercised will be
determined by a straight-line interpolation between the number of shares set forth for the higher and lower fair market values and the
earlier and later redemption dates, as applicable, based on a 365- or 366-day year, as applicable. For example, if the volume weighted
average price of our Class A common stock during the 10 trading days immediately following the date on which the notice of redemption
is sent to the holders of the warrants is $11 per share, and at such time there are 57 months until the expiration of the warrants, holders
may choose to, in connection with this redemption feature, exercise their warrants for 0.277 Class A common stock for each whole warrant.
For an example where the exact fair market value and redemption date are not as set forth in the table above, if the volume weighted average
price of our Class A common stock during the 10 trading days immediately following the date on which the notice of redemption is sent
to the holders of the warrants is $13.50 per share, and at such time there are 38 months until the expiration of the warrants, holders
may choose to, in connection with this redemption feature, exercise their warrants for 0.298 Class A common stock for each whole warrant.
In no event will the warrants be exercisable on a cashless basis in connection with this redemption feature for more than 0.361 shares
of Class A common stock per warrant (subject to adjustment). Finally, as reflected in the table above, if the warrants are out of the
money and about to expire, they cannot be exercised on a cashless basis in connection with a redemption by us pursuant to this redemption
feature, since they will not be exercisable for any shares of Class A common stock.

 

    

     

    

 

This redemption feature differs from the
typical warrant redemption features used in many other blank check offerings, which typically only provide for a redemption of warrants
for cash (other than the private placement warrants) when the trading price for the Class A common stock exceeds $18.00 per share for
a specified period of time. This redemption feature is structured to allow for all of the outstanding warrants to be redeemed when the
Class A common stock are trading at or above $10.00 per share, which may be at a time when the trading price of our Class A common stock
is below the exercise price of the warrants. We have established this redemption feature to provide us with the flexibility to redeem
the warrants without the warrants having to reach the $18.00 per share threshold set forth above under “—Redemption of Warrants
When the Price Per Share of Class A Common Stock Equals or Exceeds $18.00”. Holders choosing to exercise their warrants in connection
with a redemption pursuant to this feature will, in effect, receive a number of shares for their warrants based on an option pricing model
with a fixed volatility input as of the date of our initial public offering. This redemption right provides us with an additional mechanism
by which to redeem all of the outstanding warrants, and therefore have certainty as to (i) our capital structure as the warrants would
no longer be outstanding and would have been exercised or redeemed and (ii) the amount of cash provided by the exercise of the warrants
and available to use, and also provides a ceiling to the theoretical value of the warrants as it locks in the amount of shares we would
pay to warrant holders that exercise if we choose to redeem the warrants in this manner. We will be required to pay the applicable redemption
price to warrant holders if we choose to exercise this redemption right and it will allow us to quickly proceed with a redemption of the
warrants if we determine it is in our best interest to do so. As such, we would redeem the warrants in this manner when we believe it
is in our best interest to update our capital structure to remove the warrants and pay the redemption price to the warrant holders.

 

As stated above, we can redeem the warrants
when the Class A common stock are trading at a price starting at $10.00, which is below the exercise price of $11.50, because it
will provide certainty with respect to our capital structure and cash position while providing warrant holders with the opportunity to
exercise their warrants on a cashless basis for the applicable number of shares. If we choose to redeem the warrants when the Class A
common stock are trading at a price below the exercise price of the warrants, this could result in the warrant holders receiving fewer
Class A common stock than they would have received if they had chosen to wait to exercise their warrants for Class A common stock if and
when such Class A common stock were trading at a price higher than the exercise price of $11.50.

 

No fractional Class A common stock will
be issued upon exercise. If, upon exercise, a holder would be entitled to receive a fractional interest in a share, we will round down
to the nearest whole number of Class A common stock to be issued to the holder. If, at the time of redemption, the warrants are exercisable
for a security other than the shares of Class A common stock pursuant to the warrant agreement (for instance, if we are not the surviving
company in our initial business combination), the warrants may be exercised for such security. At such time as the warrants become exercisable
for a security other than the Class A common stock, the surviving company will use its commercially reasonable efforts to register under
the Security Act the security issuable upon the exercise of the warrants within twenty business days of the closing of an initial business
combination.

 

    

     

    

 

Redemption Procedures and Cashless
Exercise. If we call the warrants for redemption for $0.01 as described above, our management will have the option to require
any holder that wishes to exercise its warrant to do so on a “cashless basis”. In determining whether to require all holders
to exercise their warrants on a “cashless basis”, our management will consider, among other factors, our cash position, the
number of warrants that are outstanding and the dilutive effect on our stockholders of issuing the maximum number of shares of Class A
common stock issuable upon the exercise of our warrants. If our management takes advantage of this option, all holders of warrants would
pay the exercise price by surrendering their warrants for that number of shares of Class A common stock equal to the quotient obtained
by dividing (x) the product of the number of shares of Class A common stock underlying the warrants, multiplied by the excess of the “fair
market value” (defined below) over the exercise price of the warrants by (y) the fair market value.
The “fair market value” shall mean the average last reported sale price of the Class A common stock for the 10 trading days
ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. If our management
takes advantage of this option, the notice of redemption will contain the information necessary to calculate the number of shares of Class
A common stock to be received upon exercise of the warrants, including the “fair market value” in such case. Requiring a cashless
exercise in this manner will reduce the number of shares to be issued and thereby lessen the dilutive effect of a warrant redemption.
We believe this feature is an attractive option to us if we do not need the cash from the exercise of the warrants after our initial business
combination. If we call our warrants for redemption and our management does not take advantage of this option, our sponsor, the anchor
investors and their permitted transferees would still be entitled to exercise their private placement warrants for cash or on a cashless
basis using the same formula described above that other warrant holders would have been required to use had all warrant holders been required
to exercise their warrants on a cashless basis, as described in more detail below.

 

A holder of a warrant may notify us in writing
in the event it elects to be subject to a requirement that such holder will not have the right to exercise such warrant, to the extent
that after giving effect to such exercise, such person (together with such person’s affiliates), to the warrant agent’s actual
knowledge, would beneficially own in excess of 4.8% or 9.8% (or such other amount as a holder may specify) of the shares of Class A common
stock outstanding immediately after giving effect to such exercise.

 

If the number of outstanding shares of Class
A common stock is increased by a stock dividend payable in shares of Class A common stock, or by a split-up of shares of Class A common
stock or other similar event, then, on the effective date of such stock dividend, split-up or similar event, the number of shares of Class
A common stock issuable on exercise of each warrant will be increased in proportion to such increase in the outstanding shares of Class
A common stock. A rights offering to holders of Class A common stock entitling holders to purchase shares of Class A common stock at a
price less than the fair market value will be deemed a stock dividend of a number of shares of Class A common stock equal to the product
of (i) the number of shares of Class A common stock actually sold in such rights offering (or issuable under any other equity securities
sold in such rights offering that are convertible into or exercisable for Class A common stock) multiplied by (ii) one (1) minus the quotient
of (x) the price per share of Class A common stock paid in such rights offering divided by (y) the fair market value. For these purposes
(i) if the rights offering is for securities convertible into or exercisable for Class A common stock, in determining the price payable
for Class A common stock, there will be taken into account any consideration received for such rights, as well as any additional amount
payable upon exercise or conversion and (ii) fair market value means the volume weighted average price of Class A common stock as reported
during the ten (10) trading day period ending on the trading day prior to the first date on which the shares of Class A common stock trade
on the applicable exchange or in the applicable market, regular way, without the right to receive such rights.

 

    

     

    

 

In addition, if we, at any time while the
warrants are outstanding and unexpired, pay a dividend or make a distribution in cash, securities or other assets to the holders of Class
A common stock on account of such shares of Class A common stock (or other shares of our capital stock into which the warrants are convertible),
other than (a) as described above, (b) certain ordinary cash dividends, (c) to satisfy the redemption rights of the holders of Class A
common stock in connection with a proposed initial business combination, (d) to satisfy the redemption rights of the holders of Class
A common stock in connection with a stockholder vote to amend our certificate of incorporation to modify the substance or timing of our
obligation to redeem 100% of our Class A common stock if we do not complete our initial business combination within the timeframe set
forth in our certificate of incorporation or with respect to any other provision relating to stockholders’ rights or pre-initial
business combination activity, or (e) in connection with the redemption of our public shares upon our failure to complete our initial
business combination, then the warrant exercise price will be decreased, effective immediately after the effective date of such event,
by the amount of cash and/or the fair market value of any securities or other assets paid on each share of Class A common stock in respect
of such event.

 

If the number of outstanding shares of our
Class A common stock is decreased by a consolidation, combination, reverse stock split or reclassification of shares of Class A common
stock or other similar event, then, on the effective date of such consolidation, combination, reverse stock split, reclassification or
similar event, the number of shares of Class A common stock issuable on exercise of each warrant will be decreased in proportion to such
decrease in outstanding shares of Class A common stock.

 

Whenever the number of shares of Class A
common stock purchasable upon the exercise of the warrants is adjusted, as described above, the warrant exercise price will be adjusted
by multiplying the warrant exercise price immediately prior to such adjustment by a fraction (x) the numerator of which will be the number
of shares of Class A common stock purchasable upon the exercise of the warrants immediately prior to such adjustment, and (y) the denominator
of which will be the number of shares of Class A common stock so purchasable immediately thereafter.

 

In addition, if  (x) we issue additional
shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of our initial
business combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue
price or effective issue price to be determined in good faith by our board of directors and, in the case of any such issuance to our initial
stockholders or their affiliates, without taking into account any founder shares held by our initial stockholders or such affiliates,
as applicable, prior to such issuance including any transfer or reissuance of such shares), (y) the aggregate gross proceeds from such
issuances represent more than 50% of the total equity proceeds, and interest thereon, available for the funding of our initial business
combination on the date of the consummation of our initial business combination (net of redemptions), and (z) the volume weighted average
trading price of our Class A common stock during the 10 trading day period starting on the trading day prior to the day on which we consummate
our initial business combination is below $9.20 per share, then the exercise price of the warrants will be adjusted (to the nearest cent)
to be equal to 115% of the higher of the Market Value and the Newly Issued Price, the $18.00 per share redemption trigger price will be
adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price (see “- Redemption
of Warrants When the Price Per Share of Class A Common Stock Equals or Exceeds $18.00” and “- Redemption of Warrants When
the Price Per Share of Class A Common Stock Equals or Exceeds $10.00”), and the $10.00 per share redemption trigger price will be
adjusted (to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price (see “- Redemption of Warrants
When the Price Per Share of Class A Common Stock Equals or Exceeds $10.00”).

 

    

     

    

 

In case of any reclassification or reorganization
of the outstanding shares of Class A common stock (other than those described above or that solely affects the par value of such shares
of Class A common stock), or in the case of any merger or consolidation of us with or into another corporation (other than a consolidation
or merger in which we are the continuing corporation and that does not result in any reclassification or reorganization of our outstanding
shares of Class A common stock), or in the case of any sale or conveyance to another corporation or entity of the assets or other property
of us as an entirety or substantially as an entirety in connection with which we are dissolved, the holders of the warrants will thereafter
have the right to purchase and receive, upon the basis and upon the terms and conditions specified in the warrants and in lieu of the
shares of our Class A common stock immediately theretofore purchasable and receivable upon the exercise of the rights represented thereby,
the kind and amount of shares of stock or other securities or property (including cash) receivable upon such reclassification, reorganization,
merger or consolidation, or upon a dissolution following any such sale or transfer, that the holder of the warrants would have received
if such holder had exercised their warrants immediately prior to such event. If less than 70% of the consideration receivable by the holders
of Class A common stock in such a transaction is payable in the form of common stock in the successor entity that is listed for trading
on a national securities exchange or is quoted in an established over-the-counter market, or is to be so listed for trading or quoted
immediately following such event, and if the registered holder of the warrant properly exercises the warrant within thirty days following
public disclosure of such transaction, the warrant exercise price will be reduced as specified in the warrant agreement based on the Black-Scholes
value (as defined in the warrant agreement) of the warrant. The warrants were issued in registered form under a warrant agreement between
American Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement provides that the terms of the warrants may
be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval by the
holders of at least 50% of the then outstanding public warrants to make any change that adversely affects the interests of the registered
holders of public warrants.

 

The warrants may be exercised upon surrender
of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the reverse
side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price (or on a cashless
basis, if applicable), by certified or official bank check payable to us, for the number of warrants being exercised. The warrant holders
do not have the rights or privileges of holders of Class A common stock or any voting rights until they exercise their warrants and receive
shares of Class A common stock. After the issuance of shares of Class A common stock upon exercise of the warrants, each holder will be
entitled to one (1) vote for each share held of record on all matters to be voted on by stockholders.

 

    

     

    

 

No fractional shares will be issued upon
exercise of the warrants. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, we
will, upon exercise, round down to the nearest whole number of shares of Class A common stock to be issued to the warrant holder.

 

Certain Anti-Takeover Provisions of Delaware Law and
our Certificate of Incorporation and Bylaws

 

We are subject to the provisions of Section
203 of the DGCL regulating corporate takeovers. This statute prevents certain Delaware corporations, under certain circumstances, from
engaging in a “business combination” with:

 

		·	a stockholder who owns 15% or more of our outstanding voting stock (otherwise known as an “interested stockholder”);

		·	an affiliate of an interested stockholder; or

		·	an associate of an interested stockholder, for three years following the date that the stockholder became an interested stockholder.

 

A “business combination”
includes a merger or sale of more than 10% of our assets. However, the above provisions of Section 203 do not apply if:

 

		·	our board of directors approves the transaction that made the stockholder an “interested stockholder”, prior to the date
of the transaction;

		·	after the completion of the transaction that resulted in the stockholder becoming an interested stockholder, that stockholder owned
at least 85% of our voting stock outstanding at the time the transaction commenced, other than statutorily excluded shares of common stock;
or

		·	on or subsequent to the date of the transaction, the business combination is approved by our board of directors and authorized at
a meeting of our stockholders, and not by written consent, by an affirmative vote of at least two-thirds of the outstanding voting stock
not owned by the interested stockholder.

 

Our certificate of incorporation provides
that our board of directors will be classified into three classes of directors. As a result, in most circumstances, a person can gain
control of our board only by successfully engaging in a proxy contest at two or more annual meetings.

 

Our authorized but unissued common stock
and preferred stock are available for future issuances without stockholder approval (including a specified future issuance) and could
be utilized for a variety of corporate purposes, including future offerings to raise additional capital, acquisitions and employee benefit
plans. The existence of authorized but unissued and unreserved common stock and preferred stock could render more difficult or discourage
an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.

 

Class B Common Stock Consent Right

 

For so long as any shares of Class B
common stock remain outstanding, we may not, without the prior vote or written consent of the holders of a majority of the shares of Class
B common stock then outstanding, voting separately as a single class, amend, alter or repeal any provision of our certificate of incorporation,
whether by merger, consolidation or otherwise, if such amendment, alteration or repeal would alter or change the powers, preferences or
relative, participating, optional or other or special rights of the Class B common stock. Any action required or permitted to be taken
at any meeting of the holders of Class B common stock may be taken without a meeting, without prior notice and without a vote, if a consent
or consents in writing, setting forth the action so taken, shall be signed by the holders of the outstanding Class B common stock having
not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of
Class B common stock were present and voted.Document

MANAGEMENT CHANGE IN CONTROL SEVERANCE AGREEMENT

THIS MANAGEMENT CHANGE IN CONTROL SEVERANCE AGREEMENT (this “Agreement”) is made on and as of this 15 day of December, 2020 (“Effective Date”), by and between Parke Bancorp, Inc. (“Company”), a corporation organized under the laws of the State of New Jersey which serves as a bank holding company, with its principal office at 601 Delsea Drive, Sewell, New Jersey 08080, Parke Bank (“Bank”), a banking corporation organized under the laws of the State of New Jersey, with its principal office at 601 Delsea Drive, Sewell, New Jersey 08080, and John Kaufman (the “Executive”).

WHEREAS, the Executive is, as of the effective date of this Agreement, employed by the Company and the Bank, a wholly owned subsidiary of the Company, as Senior Vice President and Treasurer (“Officer Position”); and

WHEREAS, the Board of Directors of the Bank believes that the Executive has worked, and will continue to work, diligently in his position in pursuing the business objectives of the Bank to the direct benefit of the Company and its shareholders;

WHEREAS, the Board believes that, if the Company receives any proposal from a third-party concerning a possible business combination with, or the acquisition of equity securities of, the Company, it is imperative that the Company and its Board be able to rely upon the Executive to continue in his or her position with the Company and the Bank, and that the Board be able to receive and rely upon his advice, if they request it, as to the best interests of the Company and its shareholders, without concern that the Executive might be distracted by the personal uncertainties and risks created by such a proposal; and

WHEREAS, to achieve that goal, and to retain the Executive’s services as an executive employee of the Company and the Bank prior to and through the occurrence of a potential future Change in Control, as defined in this Agreement, the Company, the Bank and the Executive have, with the full support and concurrence of the Board of Directors of each of the Company and the Bank, agreed to enter into this Agreement to provide to the Executive certain benefits in the event that his or her employment as an executive employee of the Company or the Bank is terminated in conjunction with or after a Change in Control of the Company or the Bank.

NOW THEREFORE, in order to assure the Company and the Bank that they will have the continued dedication of the Executive and the availability of his or her ongoing advice and contribution notwithstanding the possibility, threat or occurrence of a change in the control or ownership of the Company or the Bank, and to induce the Executive to remain in the employ of the Company and the Bank pending such potential Change in Control, the Company, the Bank and the Executive, each intending to be legally bound hereby, agree as follows: 

1.    Definitions.

a.    Cause.  For purposes of this Agreement, “Cause”, with respect to the termination by the Employer of the Executive’s employment shall mean (i) the willful and continued failure by the Executive to perform his or her duties for the Employer under this Agreement after at least one warning in writing from the President and Chief Executive Officer of the Employer identifying specifically any such failure and providing at least a ten day period for an opportunity to cure such failure detailed in such warning; (ii) if the Executive shall have engaged in conduct involving fraud, deceit, personal dishonesty, breach of fiduciary duty or illegal conduct in his or her business and/or personal matters; (iii) willful misconduct of any type by the Executive, including, but not limited to, the disclosure or improper use of confidential information under Section 11 of this Agreement, which causes material injury to the Company or any of its subsidiaries or affiliates, as specified in a written notice to the Executive from President and Chief Executive Officer of the Employer; (iv) the Executive’s conviction of a crime (other than a traffic violation); (v) if the Executive shall have become subject to continuing intemperance in the use of alcohol or drugs which has adversely affected, or may adversely affect, the business or reputation of the Company or the Bank as determined by the Board or the President and Chief Executive Officer of the Employer; (vi) if the Executive shall have violated any banking law or regulation, memorandum of understanding, cease and desist order, or other agreement with any banking agency having jurisdiction over the Company or the Bank which, in the judgment of the Board or the President and Chief Executive Officer of the Employer, has adversely affected, or may adversely affect, the business or reputation of the Company or the Bank; (vii) if the Executive shall have filed, or had filed against him or her, any petition under the federal bankruptcy laws or any state insolvency laws; or (viii) if any banking authority having supervisory jurisdiction over the Company or the Bank initiates any proceedings for removal of the Executive.  No act or failure to act on the part of the Executive shall be considered to have been willful for purposes of clause (i) or (iii) of this Section 1(a) unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the action or omission was in the best interest of the Company or any of its subsidiaries or affiliates.

b.    Change in Control.  “Change in Control” shall mean the occurrence of any of the following events:

(i) Merger: The Company or the Bank merges into or consolidates with another entity, or merges another bank or corporation into the Bank or the Company, and as a result, less than a majority of the combined voting power of the resulting corporation immediately after the merger or consolidation is held by persons who were stockholders of the Company or the Bank immediately before the merger or consolidation; 

(ii) Acquisition of Significant Share Ownership: There is filed, or is required to be filed, a report on Schedule 13D or another form or schedule (other than Schedule 13G) required under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended, if the schedule discloses that the filing person or persons acting in concert has or have become the beneficial owner of 25% or more of a class of the Company’s or the Bank’s voting securities; provided, however, this clause (ii) shall not apply to beneficial ownership of the Company’s or the Bank’s voting shares held in a fiduciary capacity by an entity of which the Company directly or indirectly beneficially owns 50% or more of its outstanding voting securities; 

(iii) Change in Board Composition: Individuals who constitute the Company’s or the Bank’s Board of Directors on the Effective Date hereof (the “Incumbent Board”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the Effective Date whose election was approved by a vote of at least three-quarters of the directors comprising the Incumbent Board shall be considered, for purposes of this clause (iii), as though he or she was a member of the Incumbent Board; or 

(iv) Sale of Assets: The Company or the Bank sells to a third party all or substantially all of its assets.

The definition of Change in Control shall be construed to be consistent with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and Treasury Regulations promulgated thereunder.

c.    Contract Period.  “Contract Period” shall mean the period commencing on the business day immediately preceding a Change in Control and ending on the earlier of (i) the second anniversary of the date of the Change in Control, or (ii) the death of the Executive.

d.    Employer.  “Employer” shall mean the Company and/or the Bank, whichever entity that shall employ the Executive from time to time, and any successor entity thereto. 

e.    Good Reason.  When used with reference to a voluntary termination by the Executive of his or her employment with the Employer, “Good Reason” shall mean any of the following, if taken without the Executive’s express written consent:

        (1)    a material diminution in the Executive’s base compensation during the Contract Period;

(2)    a material diminution in the Executive’s authority, duties, or responsibilities during the Contact Period;  

        (3)    a material diminution in the budget over which the Executive retains authority; 

        (4)    a more than 25 mile change in the geographic location of the Executive’s office location during the Contract Period, including assignment to a work location outside of New Jersey; or 

        (5)    any other action or inaction that constitutes a material breach by the Employer of the agreement under which the Executive provides services.

2.    Employment.  The Employer hereby agrees to employ the Executive, and the Executive hereby accepts such employment, during the Contract Period upon the terms and conditions set forth herein.  The Company and the Bank may, in the exercise of their sole discretion, transfer the Executive’s employment relationship from the Bank to the Company, or from the Company to the Bank, in which case the transferee employer shall be the Employer for all purposes of this Agreement.  The transfer of the Executive’s employment relationship between the Bank and the Company shall not be deemed to be either an actual or constructive termination of the Executive or “Good Reason” for any purpose of this Agreement, and the Executive’s employment shall be deemed to have continued without interruption for all purposes of this Agreement.

3.    Job Position.  During the Contract Period, the Executive shall be employed in the Officer Position with the Company and the Bank, or such other corporate or divisional profit center as shall then be the principal successor to the business, assets and properties of the Bank, with a comparable position title and comparable professional job duties, responsibilities and required experience and skill level as were in effect 

before the Change in Control.  The Executive shall devote his or her full time professional effort and attention to the business of the Employer, and shall not, during the Contract Period, be engaged in any other business activity without the written consent of the Employer.

4.    Cash Compensation.  The Employer shall pay to the Executive compensation for his or her services during the Contract Period as follows:

a.    Base Compensation.  The base compensation shall be equal to not less than such annual compensation, including both salary and bonus, as was paid to or accrued by, or for the benefit of, the Executive in the twelve (12) months immediately prior to the Change in Control.  The annual salary portion of base compensation shall be payable in installments in accordance with the Employer’s usual payroll method.  The bonus portion, if any, shall be payable at the time and in the manner as to which the Employer paid such bonuses prior to the Change in Control.  Any increase in the Executive’s annual compensation pursuant to paragraph 4(b) below, or otherwise, shall automatically and permanently increase the base compensation.

b.    Annual Increase.  During the Contract Period, the Board of Directors of the Employer shall review not less than annually, the Executive’s compensation and shall award him or her additional compensation to reflect the Executive’s performance and the performance of the Employer and the Company corporate group, and competitive compensation levels, all as determined in the discretion of the Board of Directors of the Employer.

Additional compensation may take any form including but not limited to increases in annual salary, incentive bonuses and/or bonuses not tied to performance. 

5.    Expenses and Fringe Benefits.  During the Contract Period, the Executive shall be entitled to reimbursement for all business expenses incurred by him or her with respect to the business of the Employer in the same manner and to the same extent as such expenses were previously reimbursed to him or her immediately prior to the Change in Control.  If prior to the Change in Control, the Executive was entitled to the use of an automobile, he or she shall continue to be entitled to the same use of an automobile at least comparable to the automobile provided to him or her prior to the Change in Control, and he or she shall be entitled to vacation leave and sick days, in accordance with the practices and procedures of the Employer, as such existed immediately prior to the Change in Control.  During the Contract Period, the Executive also shall be entitled to hospital, 

health, medical and life insurance, and any other material benefits enjoyed, from time to time, by executive officers of the Employer, all upon terms as favorable as those enjoyed by other executive officers of the Employer.  Notwithstanding anything in this section to the contrary, if the Employer adopts any change in the expenses allowed to, or fringe benefits provided for, executive officers of the Employer, and such policy is uniformly applied to all executive officers of the Employer, and any successor or acquirer of the Employer, if any, including the chief executive officer of such entities, then no such change in policy shall be deemed to be a violation of this provision.

6.    Termination for Cause.  At all times, including both before and during the Contract Period, the Employer shall have the right to terminate the Executive for Cause, upon written notice to him or her of the termination, which notice shall specify the reasons for the termination.  In the event of termination for Cause, the Executive shall not be entitled to any further benefits under this Agreement.

7.    Disability.  During the Contract Period, if the Executive becomes permanently and totally disabled within the meaning of the Social Security Act, the Employer may terminate the employment of the Executive.  In which event, the Executive shall not be entitled to any further benefits under this Agreement other than payments under any disability policy which the Employer may maintain for the benefit of its senior officers generally.

8.    Death Benefits.  Upon the Executive’s death during the Contract Period, the Executive shall be entitled to the benefits of any life insurance policy or supplemental executive retirement plan paid for, or maintained by, the Employer, but his estate shall not be entitled to any further benefits under this Agreement.

9.Termination without Cause or Resignation for Good Reason.  
a.    The Employer may terminate the Executive without Cause during the Contract Period by giving the Executive not less than four weeks’ prior written notice to the Executive.  During the Contract Period, the Executive may resign within 90 days following the initial occurrence of a condition constituting a Good Reason upon giving not less than four weeks’ prior written notice to the Employer specifying the condition constituting Good Reason.  The date of termination of employment for Good Reason shall be no later than twenty-four months following commencement of the Contract Period.  If the Employer terminates the Executive’s employment during the Contract Period without Cause or if the Executive resigns for Good Reason, the Employer shall, upon such termination of employment, pay the Executive a lump sum amount 

equal to 150% times the average of the annualized compensation, comprised of annualized salary and cash incentive or bonus compensation, paid or accrued to the Executive during the thirty-six month period (or such lesser number of months of actual employment) immediately prior to the Change in Control (the “Lump Sum Payment”).  Notwithstanding the foregoing, any notice of resignation for Good Reason during the Contract Period furnished by the Executive to the Employer shall not be effective prior to the date that is three months following the date of the Change in Control, and the Executive shall continue to work through such three month period, unless the Employer shall agree in writing to an earlier effective date of such resignation. 
b.    For a period of eighteen (18) months following the effective date of such termination of employment following a Change in Control, whether resulting from without Cause termination initiated by the Employer or for Good Reason initiated by the Executive, the Employer shall continue to provide the Executive with and pay the applicable premiums for medical and hospital insurance, disability insurance and life insurance benefits, as were provided and paid for at the time of the termination of his employment with the Employer; provided that, if at any time during such eighteen month period, the Executive becomes employed by another employer which provides one or more such benefits, the Employer shall, immediately and from the date when such benefits are made available to the Executive by the successor employer, be relieved of its obligation to provide such benefits to the extent such benefits are duplicative of what is provided to the Executive by the Executive’s new employer. If the Employer cannot provide the benefits set forth in this Section 9(b) because Executive is no longer an employee and applicable rules and regulations prohibit the continuation of such benefits in the manner contemplated, or it would subject the Employer to penalties, then the Employer shall pay Executive a cash lump sum payment reasonably estimated to be equal to the value of such benefits or the value of the remaining benefits at the time of such determination. The cash payment shall be made in a lump sum within thirty (30) days after the later of Executive’s date of termination or the effective date of the rules or regulations prohibiting the benefits or subjecting the Bank to penalties. 
c.    The Executive shall not have a duty to mitigate the damages suffered by him or her in connection with the termination by the Employer of his employment without Cause or a resignation for Good Reason during the Contract Period.  If the Employer fails to pay the Executive the Lump Sum Payment or to provide him or her with the benefits due under this Section 9, the Executive, after giving ten (10) days’ written notice to the Employer identifying the Employer’s failure, shall be entitled to recover from the Employer all of his reasonable legal fees 

and expenses incurred in connection with his or her enforcement against the Employer of the terms of this Agreement.  The Employer agrees to pay such legal fees and expenses to the Executive on demand.  The Executive shall be denied payment of his or her legal fees and expenses only if a court finds that the Executive sought payment of such fees without reasonable cause and in bad faith.

Notwithstanding the foregoing, in the event that the Executive delivers written notice to the Employer of his or her termination of employment for Good Reason, the Employer will have a period of 30 calendar days during which the Employer may remedy the condition constituting Good Reason and if such condition is remedied, shall not be required to pay the amount due to the Executive under this Section 9 and such termination of employment shall not be effective.

10.    Resignation without Good Reason.  The Executive shall be entitled to resign from the employment of the Employer at any time during the Contract Period without Good Reason, but upon such resignation, the Executive shall not be entitled to any additional compensation for the time after which he or she ceases to be employed by the Employer, and shall not be entitled to any of the other benefits provided for herein, except as may otherwise be provided by the terms of such other plans or arrangements of the Employer or in accordance with applicable law.  No such resignation shall be effective unless in writing with four weeks’ notice thereof.  

11.    Restrictions and Limitations on Executive Conduct.

a.    Non-Disclosure of Confidential Information.  Except in the course of his or her employment with the Employer and in pursuit of the business of the Company, the Bank or any of their subsidiaries or affiliates, the Executive shall not, at any time during or following the Contract Period, disclose or use for any purpose any confidential information or proprietary data of the Company, the Bank or any of their respective subsidiaries or affiliates.  The Executive agrees that, among other things, all information concerning the identity of, and the Company’s and the Bank’s relations with, their respective customers is confidential and proprietary information. 

b.    Covenant Not to Compete.  The Executive agrees that for a period of twelve months following termination of employment in conjunction with or after a Change in Control, the Executive shall not become employed or retained by, directly or indirectly, any FDIC 

insured depository institution whereby the Executive shall have a new work location that is within 15 miles of any branch or office of the Bank in existence as of the date of the Change in Control.  The Executive acknowledges that the terms and conditions of this restrictive covenant are reasonable and necessary to protect the Company, its subsidiaries, its affiliates, and any successors in interest, and that the Employer’s tender of compensation under this Agreement is fair, adequate and valid consideration in exchange for his or her promises and restrictions under this subparagraph of this Agreement.  The Executive further acknowledges that his knowledge, skills and abilities are sufficient to permit him or her to earn a satisfactory livelihood without violating the provisions of this subparagraph. 

c.    Non-Solicitation of Business.  The Executive agrees that for a period of one year following termination of employment in conjunction with or after a Change in Control, the Executive shall not contact (with a view toward selling any product or service competitive with any product or service sold or proposed to be sold by the Company, the Bank or any successors thereto (“Companies”)) any person, firm, association or corporation (a) to which the Companies sells any product or service, (b) which the Executive solicited, contacted or otherwise dealt with on behalf of the Companies, or (c) which the Executive is otherwise aware is a client of the Companies.  During such one-year period, the Executive will not directly or indirectly make any such contact, either for his own benefit or for the benefit of any other person, firm, association, or corporation.

d.    Non-Solicitation of Employees.   The Executive agrees that for a period of one year following termination of employment in conjunction with or after a Change in Control, the Executive shall not contact, on his or her own behalf or on behalf of others, employ, solicit, or induce, or attempt to employ, solicit or induce, any employee of the Companies for purposes of employment or other business relationship with any other business entity, nor will the Executive directly or indirectly, on his behalf or for others, seek to influence any Companies’ employee to leave the employ of the Companies.

e.    Specific Performance and Severability.  The Executive agrees that the Company and the Bank do not have an adequate remedy at law for the breach of this Section 11 and agrees that he or she shall be subject to injunctive relief and equitable remedies as a result of any breach of this section.  The provisions of this 

Agreement shall be deemed severable, and the invalidity or unenforceability of any provision of this Agreement shall not affect the force and effect of the remaining provisions. 

f.    Survival.  This Section 11 shall survive the termination or resignation of the Executive’s employment during the Contract Period for any reason and the expiration of this Agreement.

12.    Term and Effect Prior to Change in Control.

a.    Term.  Except as otherwise provided for herein, this Agreement shall commence on the Effective Date hereof and shall remain in effect for a period of two (2) years thereafter (the “Term”) or until the end of the Contract Period, whichever is later.  The Term shall be automatically extended for an additional one (1) year period on each annual anniversary date of the Effective Date, unless the Board of Directors of the Employer then in office votes not to so extend such Term prior to each such annual anniversary date.  The Executive shall be promptly notified of the passage of such a resolution on non-extension of such Term.  In the event that the Contract Period shall not commence prior to the expiration of the Term of this Agreement, then this Agreement shall terminate upon the expiration of the Term, unless such Term shall be extended prior to its expiration.

b.    No Effect Prior to Change in Control.  This Agreement shall not, in any respect, affect any rights of the Employer or the Executive prior to a Change in Control, nor shall this Agreement affect or limit any rights of the Executive granted in accordance with any other agreement, plan or arrangement.  The rights, duties and benefits provided hereunder shall only become effective upon the occurrence of a Change in Control, as defined in this Agreement.  If the employment of the Executive is terminated by the Employer for any reason in good faith prior to a Change in Control, this Agreement shall thereafter be of no further force and effect.

13.    Limitations under Section 280G.  Notwithstanding the forgoing, all sums payable hereunder shall be reduced in such manner and to such extent so that no such payments made hereunder when aggregated with all other payments to be made to the Executive by the Company and the Bank shall be deemed an "excess parachute payment" in accordance with Section 280G of the Code, and thereby subjecting the Executive to the excise tax provided at Section 4999(a) of the Code. 

14.    Release in Favor of the Company Corporate Group.  Notwithstanding anything herein to the contrary, such payment due in accordance with Section 9 herein shall be made to the Executive by the Employer on the date which is sixty (60) days following the date of Termination of Employment (the “Payment Date”); provided that the Executive shall have executed and delivered to the Employer within fifty (50) days following the date of Termination of Employment a release in favor of the Company, the Bank, their respective affiliates and subsidiaries, and their respective employees, officers, directors and agents, which release shall be substantially in form and content as the form of General Release set forth at Exhibit A hereto (with any changes as are reasonably requested by the Employer to reflect changes in law or practice) and all permissible revocation periods have lapsed with respect to such release without being exercised by the Executive prior to such Payment Date.  If the release requirements at this Section 14 have not been satisfied by the Executive prior to such Payment Date, including the lapse of all such revocation periods prior to such Payment Date, then the obligations of the Employer to make such payment to the Executive in accordance with Section 9 herein shall be nullified at such time.

15.    Severance Compensation and Benefits not in Derogation of Other Benefits.  Subject only to those particular terms of this Agreement to the contrary, the payment or obligation to pay any monies, or the granting of any benefits, rights or privileges to the Executive as provided in this Agreement shall not be in lieu or derogation of the rights and privileges that the Executive now has or will have under any plans or programs of the Employer.

16.    Miscellaneous.  This Agreement shall be the joint and several obligation of the Company, the Bank and any acquiring entity(ies) which assumes the obligations of the Company and the Bank under this Agreement.  The terms of this Agreement shall be governed by, and interpreted and construed in accordance with the provisions of, the laws of New Jersey and, to the extent applicable, Federal law.  Except as specifically set forth in this Agreement, this Agreement supersedes all prior agreements and understandings with respect to the matters covered hereby.  The amendment or termination of this Agreement may be made only in a writing executed by the Company, the Bank and the Executive, and no amendment or termination of this Agreement shall be effective unless and until made in such a writing.  This Agreement shall be binding to the extent of its applicability upon any successor (whether direct or indirect, by purchase, merge, consolidation, liquidation or otherwise) to all or substantially all of the assets of the Company or the Bank.  This Agreement is personal to the Executive, and the Executive may not assign any of his rights or duties hereunder, but this Agreement shall be 

enforceable by the Executive’s legal representatives, executors or administrators.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and it shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart.  The Company or the Bank, as the case may be, shall, as part of any Change in Control involving an acquiring entity or successor to the Company or the Bank, obtain an enforceable assumption in writing by (i) the entity which is the acquiring entity or successor to the Company or the Bank, as the case may be, in the Change in Control and, (ii) if the acquiring entity or successor to the Company or the Bank, as the case may be, is a bank, the holding company parent of the acquiring entity or successor, of this Agreement and the obligations of the Company or the Bank, as the case may be, under this Agreement, and shall provide a copy of such assumption to the Executive prior to any Change in Control. 

17.    Regulatory Matters.

Notwithstanding anything herein to the contrary, any payments made to the Executive pursuant to the Agreement, or otherwise, shall be subject to and conditioned upon compliance with 12 USC § 1828(k) and FDIC Regulation 12 CFR Part 359, Golden Parachute and Indemnification Payments promulgated thereunder.

18.    Section 409A Compliance.

a.    This Agreement shall be amended to the extent necessary to comply with Section 409A of the Code and regulations promulgated thereunder. Prior to such amendment, and notwithstanding anything contained herein to the contrary, this Agreement shall be construed in a manner consistent with Section 409A of the Code and the parties shall take such actions as are required to comply in good faith with the provisions of Section 409A of the Code such that payments shall not be made to the Executive at such time if such payments shall subject the Executive to the penalty tax under Section 409A of the Code, but rather such payments shall be made by the Bank to the Executive at the earliest time permissible thereafter without the Executive having liability for such penalty tax under Section 409A of the Code.

b.    If and to the extent termination payments under this Agreement constitute deferred compensation within the meaning of Section 409A of the Code and regulations promulgated thereunder, and if the payment under this Section 9 does not qualify as a short-term 

deferral under Section 409A of the Code and Treas. Reg. §1.409A-1(b)(4) (or any similar or successor provisions), and the Executive is a Specified Employee within the meaning of Section 409A of the Code and regulations promulgated thereunder, then the payment of such termination payments that constitute deferred compensation under Section 409A of the Code shall comply with Section 409A(a)(2)(B)(i) of the Code and the regulations thereunder, which generally provide that distributions of deferred compensation (within the meaning of Section 409A of the Code) to a Specified Employee that are payable on account of Termination of Employment may not commence prior to the six (6) month anniversary of the Executive’s Termination of Employment (or, if earlier, the date of the Executive’s death). Amounts that would otherwise be distributed to the Executive during such six (6) month period but for the preceding sentence shall be accumulated and paid to the Executive on the 185th day following the date of the Executive’s Termination of Employment.

"Specified Employee" means, for an applicable twelve (12) month period beginning on April 1, a key employee (as described in Section 416(i) of the Code, determined without regard to paragraph (5) thereof) during the calendar year ending on the December 31 immediately preceding such April 1.

"Termination of Employment" shall have the same meaning as "separation from service", as that phrase is defined in Section 409A of the Code (taking into account all rules and presumptions provided for in the Section 409A of the Code regulations).

c.    Notwithstanding the six-month delay rule set forth in Section 18b. above:

(i)    To the maximum extent permitted under Section 409A of the Code and Treas. Reg. §1.409A-1(b)(9)(iii) (or any similar or successor provisions), the Employer will pay the Executive an amount equal to the lesser of two times (1) the maximum amount that may be taken into account under a qualified plan pursuant to Section 401(a)(17) of the Code for the year in which the Executive’s Termination of Employment occurs, and (2) the sum of the Executive’s annualized compensation based upon the annual rate of pay for services provided to the Employer for the taxable year of the Executive preceding the taxable year of the Executive in which his or her Termination of Employment occurs (adjusted for any increase during that year that was expected to continue indefinitely if the Executive had not had a Termination of Employment); provided that amounts paid under this Section 18c. must be paid no later than the last day of the second taxable year of the Executive following the taxable year 

of the Executive in which occurs the Termination of Employment and such amounts paid will count toward, and will not be in addition to, the total payment amount required to be made to the Executive by the Employer under Section 9; and

(ii)    To the maximum extent permitted under Section 409A of the Code and Treas. Reg. §1.409A-1(b)(9)(v)(D) (or any similar or successor provisions), within ten (10) days of the Termination of Employment, the Employer will pay the Executive an amount equal to the applicable dollar amount under Section 402(g)(1)(B) of the Code for the year of the Executive’s Termination of Employment; provided that the amount paid under this Section 18c. will count toward, and will not be in addition to, the total payment amount required to be made to the Executive by the Employer under this Section 9.

d.    To the extent that any reimbursements or in-kind payments are subject to Section 409A of the Code, then such expenses (other than medical expenses) must be incurred before the last day of the second taxable year following the taxable year in which the termination occurred, provided that any reimbursement for such expenses shall be paid before the Executive’s third taxable year following the taxable year in which the termination occurred.  For medical expenses, to the extent the Agreement entitles the Executive to reimbursement by the Employer of payments of medical expenses incurred and paid by the Executive but not reimbursed by a person other than the Employer and allowable as a deduction under Section 213 of the Code (disregarding the requirement of Section 213(a) of the Code that the deduction is available only to the extent that such expenses exceed 7.5 percent of adjusted gross income), then the reimbursement applies during the period of time during which the Executive would be entitled (or would, but for the Agreement, be entitled) to continuation coverage under a group health plan of the Bank or the Company under Section 4980B of the Code (COBRA) if the Executive elected such coverage and paid the applicable premiums.

IN WITNESS WHEREOF, the Company and the Bank have caused this Agreement to be signed by their respective duly authorized representatives pursuant to the authority of their respective Boards of Directors, and the Executive has personally executed this Agreement, all as of the date and year first written above.

ATTEST:                        PARKE BANK

/s/ Linda A. Kaiser    
_____________________________            /s/ Vito S. Pantilione
Secretary                        By:  Vito S. Pantilione

ATTEST:                        PARKE BANCORP, INC.

/s/ Linda A. Kaiser
_____________________________            /s/ Vito S. Pantilione
Secretary                        By:  Vito S. Pantilione

WITNESS:                        EXECUTIVE:

/s/ Linda A. Kaiser
_____________________________            /s/ John Kaufman
                            John Kaufman

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