Exhibit 10.5


 


INTERSTATE BROKERS


1100 Johnson Ferry Road, NE


Atlanta GA 30342


 


Organizers &
Directors


Myrtle
Beach, SC Bank Group


 


Organizers:


 


We are pleased to offer the
following description of the terms of INTERSTATE BROKERS (“INTERSTATE BROKERS”)
services to you in connection with the organization of a de novo bank and bank
holding company in Myrtle Beach, South Carolina.  If the terms of our engagement meet with your
approval, please so indicate by signing the enclosed copy of this letter and
returning it to us for our files.  Our
engagement will cover the following:


 


Assistance with Regulatory Process


 


We understand that you wish
to file charter applications with either the Office of the Comptroller of the
Currency (“the OCC”), the State Department of Banking (“SDB”) or the Office of
Thrift Supervision (“the OTS”) to organize a new bank (“the Charter Application”)
and simultaneously file an application with the Federal Deposit Insurance
Corporation (“the FDIC”) for deposit insurance.


 


We will determine the
specific regulatory steps needed to be taken before submitting your
applications and advise you about such matters as the filing fees, publication
of notices, and brief you about the policies and procedures generally applied
by the OCC, SDB, OTS, and the FDIC.


 


We will assist the Organizers
and the CEO in the analysis and preparation of a market feasibility study for
your new bank that will demonstrate in the application for charter that the needs
and convenience of the community will be enhanced by a new bank.  The analysis will include demographic data
for your proposed primary service area, information on your competition and
other relevant information and data which are required to be set forth in the
applications.


 


We will assist the
organizers in the recruitment of additional organizers and senior management
for the bank.


 


We will also assist the CEO
and organizers in the preparation of a business plan for the new bank including
the specific types of proposed services to be offered by your new bank and the
pricing of same.  The business plan will
also contain the appropriate capital structure for the new bank and the
supporting rationale for the structure.


 


We will review proposed
policies and procedures to cover administrative functions of the new bank
including, but not limited to, lending, investment, security and audit with a
view toward assisting the new bank in passing the pre-opening examination.


 


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We will assist each
organizer in the preparation of confidential interagency biographical and
financial information to ensure that such information complies as to form and
completeness with customary OCC, SDB, OTS and the FDIC review standards.  This assistance includes organizers, proposed
directors and executive management.


 


We will help you respond to
any questions about the applications from the OCC, SDB, OTS, the FDIC, or the
FED and work expeditiously to provide additional information, clarifications,
and modifications, as necessary, to the applications so that the applications
are deemed “technically complete” and “accepted” for processing.


 


We will work with your legal
counsel in the preparation of organizational documents for the new bank and the
BHC including Articles of Association, By-Laws and other initial documents
required to be filed with the regulators. 
The legal fees will be your direct responsibility and are not part of
our compensation.


 


In summary, we will assist
you with the content, presentation, and format of the applications.  This assistance is offered in conjunction
with the expectation that the organizing group will provide the requisite
secretarial, clerical, and administrative assistance required to complete the
filing of all applications and their contents. You recognize and understand
that the OCC, SDB, OTS, the FDIC, and the FED expect you to be completely
familiar and in agreement with the content of the applications, and that
INTERSTATE BROKERS cannot and does not guarantee that the OCC, SDB or OTS will
approve the proposed bank’s charter, that the FDIC will award deposit
insurance, or that the Fed or OTS will approve the bank holding company.


 


Term of Engagement


 


We will continue to provide
the aforementioned services until such time as the proposed bank obtains
charter approval from the OCC, SDB or OTS and deposit insurance from the
FDIC.  Likewise, we will continue to
provide services with regard to the BHC application until you receive a
decision from the FED or OTS.  You
understand and agree, however, that if our services are required in conjunction
with any formal protests by competing financial institutions or as result of
changes in the composition of the organizing group or due to further
modifications in the bank’s operating plan after the charter application is accepted
by the OCC, SDB or OTS, then such services are not contemplated by this
engagement letter.  If such additional
services are needed, we will bill you on the basis of the number of hours
provided and at our normal and customary rate per hour ($175).


 


You may, however, elect to
terminate this engagement at any time so long as you are current in the payment
of all fees and expense reimbursements required in the section entitled “Compensation”
below and current in payment of all fees and expenses billed in the event that
additional services described in the preceding paragraph are provided.  Any such termination will become effective
immediately upon receipt by us of a written notice of termination.  If the applications have been filed, then
such termination will not alter the obligation of the organizers to pay all
professional fees contemplated in the following description of “Compensation.”
You understand and agree that all payments received prior to such termination
will not be subject to refund.  In the
event of a termination, we will cease providing you with all services.


 


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Compensation


 


For the services described
above, you agree to pay us professional fees totaling $75,000 as follows:  $7,500 upon execution of this Agreement, and
$7,500 on the first day of each month for nine (9) thereafter.    You
agree to pay our normal and customary rate per hour for special services, if
any, provided after preliminary approval of the charter.


 


Our fee includes the review
of and assistance in the preparation of Interagency Biographical and Financial
Reports for up to twenty-two Organizers. 
All IBFR reports over 22 shall increase the fee by $2,500 for each
additional organizer.


 


Once
the Bank receives final charter approval, you shall grant to Interstate Brokers
or its assigns, stock options (“Options”) to purchase 7,500(a)
shares of the shares of the common stock of the new Bank or Bank Holding
Company. The Options shall expire ten (10) years from the date of award,
or the opening of the Bank, whichever is later.  The price of each share
of stock purchased shall be Ten Dollars ($10.00), also known as the “exercise”
or “strike” price (b).  Notwithstanding anything to the contrary as
described above, the Options shall be awarded under substantially the same
terms as any stock warrants or stock options which may be awarded to the
Organizers, officers or Board of Directors. Further, the Options contemplated
herein shall be transferable without restriction; and, be subject to corporate
reorganizations, which may result in a proportionate increase or decrease in
the number of Options and/or the exercise price and/or, result in the Options
being exercisable in whole or in part.  No statements contained herein
shall be construed as contingent fee pricing.  If the bank regulators, the
Securities and Exchange Commission, or any other government agency in any way
prohibit the award of the Options described above, then the proposed bank or
its bank holding company shall immediately pay Interstate Brokers, or its
assigns, an amount equal to $3.33 (b) for each prohibited
option.  At our option, we may purchase
stock in your initial bank or bank holding company offering up to the amount of
our total fee including the total value of all options at $3.33 each.


 






(a)   Plus 250 additional options for each
organizer over twenty-two.


(b)   The number of
options and exercise price is based on an initial offering price per share of
$10.00.  Should the initial offering price be different than $10.00 per
share, then the exercise price and the number of options shall be increased or
decreased proportionately, as the case may be.


 


In addition to the
professional fees described above, expenses will be incurred for your
account.  Such invoices shall be payable
upon receipt.  We expect to incur such
expenses as travel, telephone, facsimile, demographic, and peer data, express
and local courier services, duplication costs and out of pocket expenses.  Accordingly, we request that upon execution
of this engagement letter, you agree that we shall be advanced $5,000 within
two weeks of your signature, as a deposit against our expenses to be incurred
on your behalf.  Expenses up to $5,000
shall be charges against the advance. In addition, we may incur certain expenses
on your behalf in connection with pre-organization activities. We expect such
expenses to be less than $5,000 and we will not bill you for more than said $5,000
without your prior approval. You will be invoiced separately for the
pre-organization expenses and such invoice will be due and payable upon
receipt.


 


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Miscellaneous


 


Because we recognize that
our engagement by you will necessarily involve exposure to confidential
information with respect to your proposed bank and the organizers and directors
thereof, we agree to hold such information in confidence and will not disclose
same to third parties without your prior written consent. Likewise, the terms
of our engagement by you, the proposed bank and bank holding company, are
confidential.  No disclosure may be made
to a third party without our prior written consent, except by reason of legal,
accounting, or regulatory requirements.


 


You understand and agree
that the terms of our engagement will be governed under Georgia law and that
this letter sets forth all of the terms and conditions with respect to such
engagement.  Any amendment or
modification of our engagement must be made in writing and signed by each of us.  Neither party to this engagement may bring an
action more than one year after the cause of action arises.  This engagement letter replaces all prior
written and oral communication and is the complete agreement between you and
INTERSTATE BROKERS.


 


We very much look forward to
working with you on this project and trust that this letter meets with your
approval.  Of course, please do not
hesitate to contact the undersigned should you have any questions regarding
this matter.


 


INTERSTATE BROKERS


 


	
   

  	
  By:

  	
    /s/
  John L. Johnson

  
	
   

  	
   

  	
                John
  L. Johnson

  
	
   

  	
   

  	
                      Principal

  
	
   

  	
   

  	
   

  
	
  Acknowledged,
  Agreed and

  	
   

  
	
  Accepted
  by the undersigned Organizer(s)

  	
   

  
	
  this
  15th day of June, 2007.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
    /s/ J. Egerton Burroughs

  	
   

  
				



 


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