Exhibit
10.9


 


	
   

  	
  

  	
  COMMERCE STREET CAPITAL,
  LLC

  1700 PACIFIC AVENUE, SUITE 2020

  DALLAS, TEXAS 75201

  214 - 545 - 6800

  www.commercestreetcapital.com

  



 


August 4,
2008


 


Mr. Michael D.
Owens, CEO


Coastal Carolina
Bancshares, Inc. /


Coastal Carolina National
Bank (In organization)


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 supersedes and replaces in its
entirety our Engagement Letter of June 25, 2008, and 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
  (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 payable upon the later of CSC’s
  receipt and delivery to the Company of a “no objection” notice from the Financial
  Industries Regulatory Authority (the “FINRA”) in connection with the Offering
  or the Commencement Date (which for purposes of this engagement letter shall
  be the date of the final prospectus made a part of the Registration Statement
  (such date referred to here as the “Commencement Date”)). On the first day of
  the first full month after the Commencement Date and for each month
  thereafter until the Offering is completed, the Company or the Bank will pay
  CSC the sum of $20,000 (due at the commencement of each month thereafter) 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) 2.0% of the gross proceeds from the
  Offering on the first $3,000,000 in subscriptions received from investors who
  are not introduced to the Company by CSC, (ii) 4% on all subsequent in
  subscriptions in excess of the initial $3,000,000 received from investors who
  are not introduced to the Company by CSC and (iii) 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. In
  addition, 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 to the fee.

  
					



 


 


 


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  (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, CSC will provide this service as part
  of the engagement at no additional charge.

  
	
   

  
	
   

  	
  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, 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.

  
					



 


 


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  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
  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).

  
							



 


 


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  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 (In Organization

  
	
   

  
	
  By:

  	
  /s/ Holly L. Schreiber

  	
   

  
	
   

  	
  Holly L. Schreiber

  
	
   

  	
  Chief Financial Officer

  
	
   

  
	
  Date:

  	
   August 8, 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


 


$.585 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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