Exhibit
10.9


 


	
   

  	
  

  	
  COMMERCE STREET CAPITAL,
  LLC

  1700 PACIFIC AVENUE, SUITE 2020

  DALLAS, TEXAS 75201

  214 - 545 - 6800

  www.commercestreetcapital.com

  



 


June 25, 2008


 


Mr. Michael D.
Owens, CEO


Coastal Carolina
Bancshares, Inc. /


Coastal Carolina National
Bank


2305 North Oak Street


Myrtle Beach, SC 29577


 


Dear Mr. Owens,


 


In accordance with
our recent conversations, Commerce Street Capital, LLC (“CSC”), a Texas limited
liability company and registered as a broker or dealer under the Securities
Exchange Act of 1934, (the “Exchange Act”), is pleased to submit this
(Engagement Letter the “EL”) in connection with the proposed offering (the “Offering”)
of shares of common stock (“Common Shares”) of Coastal Carolina Bancshares, Inc.
(the “Company”), a South Carolina corporation, and a holding company for
Coastal Carolina National Bank (the “Bank”) to prospective investors.  This letter is intended to address certain
specifics of CSC’s role as consultant to the Company.  The Company acknowledges that, with respect
to the Offering, CSC will act on a “best efforts” basis only, and not pursuant
to any “firm commitment.”


 


In connection with the
Offering, CSC proposes to assist management and the Board of Directors of the
Company on (i) the establishment of a comprehensive plan for the
development and execution of the Offering as well as to assist the Company’s
and the Bank’s management in establishing a computer database that will enable
the Company’s and the Bank’s management and directors to gauge the progress of
the Offering on a daily basis, (ii) how best to coordinate all aspects of
the Company’s stock sales efforts, including assistance as to sales techniques
which have been successful in other stock offerings, and (iii) facilitating
all retirement account purchases of Common Shares through the various types of
retirement accounts that potential investors may have.  The Company assures CSC that its board of
directors will remain active in the Offering process and its management team will
be present each day during the Offering to lead the Offering process, including
the guidelines discussed in Attachment A.


 


The
following generally address certain matters related to the Offering.


 


1.     The
Offering will consist of a minimum of approximately 2,100,000 and a maximum of
approximately 3,000,000 Common Shares to be sold by the Company at a price of
$10.00 per share.


 


2.     The
Common Shares to be offered will be registered by the Company under the
Securities Act of 1933, as amended (the “Securities Act”) on the appropriate
registration statement (the “Registration Statement”).  The Company agrees that the Registration
Statement (a) shall comply with the applicable provisions of the


 


Member
FINRA/SIPC


 

















 


(i) Securities Act
and the rules and regulations promulgated thereunder, (ii) to the
extent applicable, the Exchange Act of 1934 and the rules and regulations
promulgated thereunder, (iii) laws promulgated by the Company’s and the
Bank’s regulators, and (b) shall not contain an untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading.


 


3.               The Company will
cause to be established appropriate procedures to ensure that, prior to the
issuance of the Common Shares, subscription funds are held in a separate escrow
account and not in the Company’s or the Bank’s general funds.


 


4.               As compensation for
CSC’s services, CSC will be paid the following fees and reimbursed for its
expenses as follows:


 


(a)     The Company or the Bank will
pay CSC a cash fee equal to $20,000 upon the later of (i) CSC’s receipt of
a “no objection” letter from FINRA or (ii) 45 days after the date of the
commencement of the Company’s offering (the later of (i) or (ii) above
being referred to as the “Commencement Date”), provided that if the Offering is
completed prior to the Commencement Date, then the Company or the Bank will pay
CSC for all of its expenses due pursuant to paragraph 4(c) and the
Sponsoring Dealer Fees, if any, due pursuant to paragraph 4(d).  On the first day of the first full month
after the Commencement Date and for each month thereafter until the Offering is
completed, or earlier if CSC’s engagement is terminated upon 30 days notice (as
set forth in the Agency Agreement), the Company will pay CSC the sum of $20,000
(due at the commencement of each month) for the term of CSC’s engagement
hereunder.


 


(b)     If the Offering is successful
(the Company raises at least the minimum, or subject to securities laws, and
with the consent of the bank regulatory authorities such lesser amount as
needed for the Bank to commence operations), the Company agrees to pay CSC at
each closing (“Closing”) at which subscriptions for Common Shares are accepted
by the Company and the subscription funds are released from escrow, a cash fee
equal to (i) 4.0% of the gross proceeds from the Offering from
subscriptions received from investors who are not introduced to the Company by
CSC, and (ii) 5.0% of the gross proceeds from subscriptions received from
investors introduced to the Company by CSC (which investors shall be documented
in writing prior to the Closing); provided, however, that the fee paid at the
Closing will be reduced by the aggregate of the fees paid to CSC pursuant to
paragraph 4(a) above. Subscriptions from Mr. Bill Crosby, either
individually or in the name of his company, Interstate Brokers, Inc., Mr. Stephen
Anderson, Mr. Larry Silver (a founder) and those individuals who are the
directors, officers, organizers or employees of the Company or the Bank as of
the date of this EL will not be subject 


 


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to the fee.  In addition, subscription agreements that are
received by the Company and for which funds are received and held in escrow on
the Commencement Date will not be subject to a fee.  No payments shall be due CSC under this
paragraph 4(b) until the Commencement Date.


 


(c)   The
Company agrees to reimburse the actual and accountable reasonable expenses of
CSC in connection with its activities related to the Offering in accordance
with this EL.  These expenses will be
presented to the Company at regular intervals. 
Attachment B, a part of this EL, defines the reimbursement policy to be
followed. Without prior written consent of the Company, total expenses per
month will not exceed $6,000 for the use of one on-site consultant and not more
than an additional $3,000, or $9,000, in aggregate, for two on-site
consultants. Notwithstanding any other provision of this EL, the Company will
pay all reasonable third party expenses of CSC, including marketing and
advertising, catering and facilities, printing and reproduction, and legal fees
(which legal fees will be capped at $20,000, excluding blue sky registrations
and FINRA Rule 2710 filings, if any).


 


(d)   If
the Company elects to engage CSC as a Sponsoring Dealer in any state, the
Company shall pay CSC an additional engagement fee of $10,000 for the first
state and a fee of $2,500 for each additional state requiring a Sponsoring
Dealer (the “Sponsoring Dealer Fee”).  Any Sponsoring Dealer Fee shall be set off
against the $20,000 cash fees, if any, payable to CSC pursuant to paragraph 4(a) above.


 


5.               Regardless of
whether the proposed Offering is consummated, the Company and the Bank agree to
indemnify and hold harmless CSC and its controlling persons, representatives
and agents in accordance with Attachment C, which is incorporated herein by
this reference and made a part hereof.


 


6.               It is understood
that the proceeds of the Offering will be used to pay for the pre-opening
expenses of the Company and the Bank, support the future growth of the Bank and
for general corporate purposes, all as disclosed by the Company in the
Registration Statement.


 


7.               The Company, and
its counsel, will attempt to qualify or register the Common Shares for sale
under the securities laws of such states and other jurisdictions as may be
reasonably necessary, in the mutually agreed opinion of the Company and CSC,
provided that, the parties currently agree that qualification and registration
will only be completed in North Carolina, South Carolina, Georgia and
Florida.  Prior to closing, the Company’s
counsel shall provide CSC with evidence of compliance with the foregoing in the
form of a blue sky memorandum.  To the
extent that CSC and its counsel assist in this process, the Company will pay
the reasonable fees and expenses of CSC’s counsel in connection with such
efforts, 


 


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which shall be in
addition to any cap set forth in paragraph 4(c) above.


 


8.               The Registration
Statement, the Subscription Agreement and every aspect of the Offering must be
satisfactory in form and substance to the Company, CSC and their respective
counsel.  The Company will include in the
Subscription Agreement such provisions as CSC may reasonably request in order
to elicit from each investor information necessary to determine the suitability
of an investment in the Company for such investor.


 


9.               If the Offering
proceeds, the Company and CSC will enter into an Agency Agreement immediately
prior to or following the initial distribution of the Registration Statement,
or if the Offering has previously commenced any supplement to the Registration
Statement disclosing the participation of CSC in the Offering.  The Agency Agreement will contain, among
other provisions customary in such agreements, provisions consistent with this
letter and satisfactory to the parties, including the following:


 


(a)   representations
and warranties, covenants and conditions, which are  customary and appropriate for a registered or
exempt, as applicable, offering of securities;


 


(b)   an agreement by
the Company and the Bank to pay all expenses incident to the performance of its
obligations under the agreement, including, among others, the SEC and FINRA
filing fees (including fees related to the Agency Agreement), if any, the
reasonable fees and expenses of the Company’s counsel, the reasonable fees and
expenses of the independent public accountants for the Company, the cost of
preparing, printing and filing the Registration Statement, the cost of
furnishing reasonable quantities thereof to CSC, and to pay the out-of-pocket
expenses of CSC as described in paragraph 4 above if the Offering is not
completed; and


 


(c)   the agreement of
the Company and the Bank to indemnify and hold harmless CSC and its controlling
persons, representatives and agents from all expenses, losses, claims, actions,
damages or liabilities incurred in connection with any claim made against the
Company, the Bank or CSC, as the case may be, concerning any matters
contemplated by this EL, including against liabilities based upon alleged
misstatements in and alleged omissions from the Registration Statement, and
appropriate provisions for contribution in the event this indemnity undertaking
is found to be unenforceable in form and substance satisfactory to our
attorneys; provided, however, that such indemnity will not exceed the scope of
the indemnity set forth in Attachment C.


 


10.         The Company acknowledges
and agrees that the Offering is a sophisticated enterprise and that CSC has
been engaged solely with respect to the matters set forth herein.  In such capacity, CSC shall act as an
independent contractor and 


 


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CSC’s duties hereunder
are contractual and shall be owed solely to the Company.  Each party disclaims any intention to impose
a fiduciary duty on the other.


 


11.   This
EL shall terminate automatically without any action of the parties hereto upon
the expiration date of the Offering, unless extended by the mutual consent of
the Company and CSC.  This  EL may be terminated by either the Company or
CSC upon 30 days written notice to the other party.  In the event this EL terminates as provided
in this paragraph 11, the Company shall promptly reimburse all outstanding
actual and accountable expenses of CSC as provided in paragraph 4(c).


 


12.   This
EL shall be governed by and construed in accordance with the laws of the State
of Texas, without regard to the conflicts of law provisions thereof.


 


13.   This
EL shall not be assigned by either party without the other party’s prior
consent, which consent shall not be unreasonably withheld.  Notwithstanding the foregoing, CSC may assign
this EL to a successor in interest, by way of merger or the sale of substantially
all of its assets, or to any entity which is under the common control of the
members of CSC.


 


The
purpose of this EL is to set forth the terms of the proposed engagement of CSC
as mutually understood and, except for the agreement as to the payment of fees
and expenses and indemnification contained in paragraphs 4 and 5 above,
respectively, is not to be construed as a binding contract or commitment on the
part of any party hereto.  It is
understood that the proposed Offering is subject to satisfactory investigation
on our part of the activities of the Company and the Bank and the absence of
any material adverse change in the condition (financial or other), earnings,
business, prospects, net worth or results of operations of the Company or the
Bank or in the overall capital markets. 
You will give CSC and its counsel full access to the records of the
Company and the Bank (to the extent permitted by law) for the purpose of
completing our investigation, and will keep us apprised of all material developments
affecting the Company or the Bank.


 


5

















 


If
this  EL sets forth correctly the
understanding of the Company, please sign and return to us one copy of this
letter.


 


We are looking forward to
working on the Offering with you.


 


Sincerely,


 


	
  Commerce
  Street Capital, LLC

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  s/Charles W. Ingram

  	
   

  
	
  Name: Charles W.
  Ingram

  	
   

  
	
  Title:   Senior
  Vice President

  	
   

  
			



 


Accepted and Agreed to:


 


Coastal
Carolina Bancshares, Inc. /Coastal Carolina National Bank


 


 


	
  By: 

  	
  s/

  	
  Holly L. Schreiber

  	
   

  
	
   

  	
  Holly
  L. Schreiber

  	
   

  
	
   

  	
  Chief
  Financial Officer

  	
   

  



 


 


Date:  June 25, 2008


 


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ATTACHMENT
A


 


Management/Director/Organizer
Responsibilities


 


Time
Period - 30 days prior to CSC’s Commencement Date:


 


Organizer/Director/Management
Responsibilities:


 


1.  Provide a list of names (minimum desired is
100 from each organizer/director/manager) of prospective investors.  All investors included on such list will be
persons for whom the organizer/director/manager reasonably believes an
investment in the Company is suitable based on such person’s financial and tax
status, investment objectives and investment experience.   The list shall include proper addresses,
phone numbers and, if available, email addresses.  Any useful background (retired, sold company,
etc.) regarding potential investors is very helpful.


 


2.  Prepare all collateral material, including,
folders, stationery, postage reply envelopes, advertisements and tombstones (if
appropriate) and a website (if appropriate).


 


Time
Period - Following the Commencement Date:


 


Organizer/Director
Responsibilities


 


1.  Participate in the process.


2.  Be proactive in arranging one-on-one and
group meetings.


3.  Encourage people to attend lunch and dinner
functions.


4.  Promptly return phone calls from the CSC
onsite consultant.


5.  Complete funding investment in transaction
promptly when asked.


6.  Collectively invest at least 10% of the
minimum amount.


 


Management
Responsibilities:


 


1.  Same tasks as organizers/directors under 1-5
above.


2.  Support CSC on a day-to-day basis.


3.  Be present at the Company office every
business day.


4.  Prepare and deliver presentations.


5.  Actively call and work prospects/contacts.


 


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ATTACHMENT B


 


MEALS


 


Up to $250 per week per  person with receipts attached to expense
reports.


 


MILEAGE/AIRFARE


 


$.505 per mile on direct
business related travel with personal cars. All mileage is to be logged on a
daily basis on expense reports. When traveling by air, the lower of coach or
economy fares, if available, will be used.


 


LODGING


 


The lowest cost
alternative to the Company will be used commensurate with safety and
cleanliness for personnel.


 


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ATTACHMENT
C


 


Coastal Carolina Bancshares, Inc.,
Coastal Carolina Dream Team, LLC and Coastal Carolina National Bank (collectively,
the “Company”) agree to indemnify and hold harmless CSC and each person, if any, who controls CSC within
the meaning of Section 15 of the Securities Act of 1933, as amended, or Section 20
of the Securities Exchange Act of 1934, as amended, and their respective
members, partners, directors, officers, employees, agents and controlling
persons (CSC and each such person being an “Indemnified Party”) from and
against any and all loss, claim, damage, judgment, assessment, cost and other
liability (each a “Claim”), joint or several, to which such Indemnified Party
may become subject under any applicable federal or state law, or otherwise, and
related to or arising out of any transaction contemplated by this EL or the
engagement of CSC pursuant to, and the performance by CSC of the services
contemplated by this EL and will reimburse any Indemnified Party for all
reasonable fees and expenses (including reasonable counsel fees and expenses)
as they are incurred in connection with the investigation of, preparation for,
or defense of any pending or threatened claim or any action or proceeding
arising therefrom, whether or not such Indemnified Party is a party and whether
or not such claim, action or proceeding is initiated or brought by or on behalf
of the Company. The Company will not be liable under the foregoing
indemnification and reimbursement provisions to the extent that any loss,
claim, damage, judgment, assessment, cost or any other liability, or related
expense, is found in a final judgment by a court of competent jurisdiction to
have resulted from an Indemnified Party’s willful misconduct, bad faith or
gross negligence or the breach of this EL. 
The Company also agrees that no Indemnified Party will have any
liability (whether direct or indirect, in contract or tort or otherwise) to the
Company or its security holders or creditors related to or arising out of the
engagement of CSC pursuant to, or the performance by CSC of the services
contemplated by, this Agreement except to the extent that any loss, claim,
damage, judgment, assessment, cost or any other liability, or related expenses,
is found in a final judgment by a court of competent jurisdiction to have
resulted from an Indemnified Party’s willful misconduct, bad faith or gross
negligence or the breach of this Agreement.


 


If the indemnification of an Indemnified Party provided for in this EL
is for any reason held unenforceable (other than for a reason provided in the
prior paragraph), the Company agrees to contribute to the losses, claims,
damages, judgments, assessments, costs and other liabilities, and related
expenses, for which such indemnification is held unenforceable (i) in such
proportion as is appropriate to reflect the relative benefits to the Company
and its security holders, on the one hand, and CSC, on the other hand, of the
transaction as contemplated (whether or not the transaction is consummated) or (ii) if
(but only if) the allocation provided for in clause (i) is for any
reason held unenforceable, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) but also the
relative fault of the Company, on the one hand, and CSC, on the other hand, as
well as any other relevant equitable considerations; provided, however, that,
to the extent permitted by applicable law, in no event will the Indemnified
Parties be required to contribute an aggregate amount in excess of the
aggregate fees actually paid to CSC under this Agreement.


 


The Company agrees that, without CSC’s prior written consent, which
consent will not be unreasonably withheld, it will not settle, compromise or
consent to the entry of any judgment in any pending or threatened claim,
action, or proceeding in respect of which indemnification could be sought under
the indemnification provisions of this EL, whether or not CSC or any other 


 


9

















 


Indemnified Party is an actual or threatened party to
such claim, action, or proceeding, unless such settlement, compromise or
consent includes an unconditional release of each Indemnified Party from all
liability arising out of such claim, action or proceeding.  The Company shall not be liable for any
settlement of any litigation or proceeding effected without its consent.


 


Upon receipt by an Indemnified Party of actual notice of a Claim as to
which indemnification may be sought hereunder, such Indemnified Party shall
promptly notify the Company of the nature and basis of the Claim.  In addition, an Indemnified Party shall
promptly notify the Company after any action is commenced against the
Indemnified Party (by way of service with a summons or other legal process) and
shall transmit a copy to the business address of the Company.  The Company may, and shall, if requested by
any Indemnified Party, assume the defense of any Claim against such Indemnified
Party in respect of which indemnity may be sought hereunder, including, without
limitation, the employment of counsel reasonably satisfactory to such
Indemnified Party and the payment of the fees and expenses of such counsel and
necessary experts, in which event the Company shall not be liable for the fees
and expenses of any other counsel retained by such Indemnified Party in
connection with such litigation or proceeding.


 


The reimbursement, indemnity and contribution obligations of the
Company under the preceding paragraphs shall be in addition to any liability
that the Company may otherwise have, and shall be binding upon and inure to the
benefit of the successors, assigns, heirs and personal representatives of any
Indemnified Party.


 


In the event that an Indemnified Party is requested or required to
appear as a witness in any action brought by or on behalf of or against the
Company or any affiliate of the Company in a transaction contemplated by this
EL in which such Indemnified Party is not named as a defendant, the Company
agrees to reimburse CSC for all reasonable expenses incurred by it in
connection with such Indemnified Party’s appearing and preparing to appear as
such a witness, including, without limitation, the reasonable fees and
disbursements of its legal counsel.


 


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