Exhibit
10.1


 


Stark Consulting Group, Ltd.


 


PRIVATE


 


Mr. Charles Huffman


Chairman of the Board


Pelican National Bank


 


Dear Charles:


 


We appreciate the opportunity
to propose to identify best practices / profit improvement opportunities and
operating efficiencies for Pelican National Bank.  The purpose of this letter is to outline the
objective and scope, approach, benefits, staffing, and timing and fees
associated with our assistance.


 


OBJECTIVES AND SCOPE


 


The primary objectives of this
project are to:


 


•      Measure
and report earnings enhancement and expense reduction opportunities.


 


•      Review
and evaluate selected activities performed and recommend operational methods
and procedure improvements.


 


The scope of
our review will focus on the following areas:


 


	
  • Bookkeeping

  	
   

  	
  •  Proof

  
	
  • Lending

  	
   

  	
  •  Finance/Accounting

  
	
  • Cash
  and Float Management

  	
   

  	
  •  Teller
  Operations

  
	
  • Loan
  Support

  	
   

  	
  •  Item
  Processing

  
	
  • Customer
  Service

  	
   

  	
  •  Wire
  Transfer

  
	
  • Staffing
  Models

  	
   

  	
  •  Incentive
  Compensation Plans

  
	
  • Occupancy
  Costs

  	
   

  	
  •  Credit
  Administration Procedures

  
	
  • Investment
  Portfolio Analysis

  	
   

  	
  •  Fixed
  Asset Review

  



 


APPROACH


 


Our approach
to this project is outlined below:


 


•      Issue
an announcement memorandum to officers and staff pertaining to the project.


 


•      Formulate
the project work plan, including scheduling of time and dates and assignment of
duties related to the review.


 


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•      Compile
and review business activity reports.


 


•      Commence
the profit improvement review.


 


•     Cash Management as it
pertains to outgoing cash letters, cash on hand, reserve requirements, and “due-from-bank”
and “due-to-bank” accounts;


 


•      Item processing and float assignment;


 


•      Opportunities to reduce non-labor related
non-interest expenses;


 


•      Opportunities to increase non-interest
income;


 


•      Opportunities to increase interest income;


 


•      Opportunities to reduce interest expense;


 


•      Staff utilization analysis;


 


•     Structure and pricing of
products and services in comparison to competition;


 


•      Application and collection fees and
charges;


 


•      Operational and procedural issues; and,


 


•      Competitive, marketing, and cultural
issues.


 


At the conclusion of the review, we will document our findings,
recommendations, and benefits for each of the quantified improvement opportunities.  We will schedule weekly / monthly meetings
with Bank Management / Board of Directors to relay our findings.  A listing of the unquantified improvement
opportunities that are identified will also be provided.


 


All decisions regarding accepting or rejecting our recommendations will
be made solely by the Bank Management and/or Board of Directors of Pelican
National Bank.  We will not participate
in the consideration of such recommendations and will not be present at the
time of the vote regarding such recommendations.


 


BENEFITS


 


Our experience indicates that many positive benefits accrue to an
organization, including:


 


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•     Increased earning assets
through improved cash management.


 


•     Increased earning assets
through improved float management.


 


•     Increased interest income.


 


•     Reduced interest expense.


 


•     Reduced non-labor related
non-interest expenses.


 


•     Improved interest and fee
income as a result of updated pricing strategies.


 


•     Improved capture of fee
income through new fee waiver monitoring.


 


•     Improved workflow as the
result of operational improvements and procedural recommendations.


 


•     Improved information for
managing the organization’s performance.


 


•     Improved marketing and
customer service.


 


The annualized recurring benefits are frequently seven to ten times our
professional fee.


 


STAFFING


 


So long as he is employed by Stark Consulting Group, Ltd., Doug Bass
will be responsible for the day-to-day project management.  Experienced financial consultants from Stark
Consulting Group, Ltd., will be assigned to specific portions of the project as
appropriate.


 


TIMING AND FEES


 


Based on the work steps outlined, we estimate the duration of the
project to be approximately four months from the day of formal acceptance of
this engagement.  Our professional fees
for this project will be 25% of the first year’s savings achieved as the result
of an action plan agreed to by the Board based on recommendations made by Stark
Consulting Group, Ltd., payable within five months after the end of such first
year,, 20% of the first years savings, payable one year thereafter and 10% of
the first years savings, payable two years thereafter.   Expenses for project related travel, report
production, etc., are included in the professional fees.


 


If there is disagreement as to
the amount of the first years savings achieved as the result of recommendations
made by Stark Consulting Group, Ltd., then the amount of such savings shall be
submitted to McGladrey and Pullen or such other accounting firm mutually
selected by the parties (the “Arbitrators”) within 15 days after the first
payment


 


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of fees was to be made.  Each party shall execute, if requested by the
Arbitrators, a reasonable engagement letter. 
All fees and expenses relating to the work, if any, to be performed by
the Arbitrators shall be pro rata as between the parties in proportion to the
allocation of the dollar amount of the amounts remaining in dispute between
parties made by the Arbitrators such that the prevailing Party shall pay the
lesser proportion of such fees and expenses. 
The Arbitrators shall act as an arbitrator to determine, based solely on
the provisions of this letter and the presentations by the parties, and not by
independent review.  The Arbitrators’
determination must be made within 15 days of their selection, must be set forth
in a written statement delivered to the parties and shall be final, binding and
conclusive on the parties.


 


This agreement may be
terminated immediately by either party at any time or upon notice to the other
party in the event that any regulatory authority objects in writing to this
agreement or conditions the approval of the Agreement and Plan of
Reorganization dated as of November 30, 2005 (“Merger Agreement”) among Stark
Bank Group, Ltd., SBG II, Ltd. and Pelican Financial, Inc. on the termination
of this agreement


 


We are pleased with opportunity to be of service to Pelican National
Bank and look forward to working with you on this most important project.


 


Very truly yours,


 


	
  /s/ Doug
  Bass

  	
   

  	
   

  
	
   

  	
   

  
	
  Doug Bass

  	
   

  
	
  On behalf of
  Stark Consulting Group, Ltd.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Accepted

  	
   

  
	
  By 

  	
  /s/ Ken
  Aschom

  	
   

  	
  This 30th
  day of January 2006.

  
	
   Ken Aschom, Chief Executive Officer

  and Chief Credit Officer

  	
   

  
						



 


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Consent of Stark Bank Group, Ltd.


 


Stark Bank Group, Ltd. (“Stark”) hereby consent to the execution,
delivery and performance of this agreement for all purposes under the Merger
Agreement and agrees that the accrual and/or payment of fees as provided above
shall be excluded from the calculation of PFI’s Final Stockholder Costs (as
defined in the Merger Agreement) provided for in the Merger Agreement.


 


 


	
  Stark Bank
  Group, Ltd.

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  /s/ Doug
  Bass, President

  	
   

  	
   

  
	
  print name
  and title: Doug Bass

  	
   

  
				



 


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