exv10w32






Exhibit 10.32




Stock Purchase Agreement




between




Anchor Bancorp Wisconsin Inc.




and




Badger Anchor Holdings, llc




dated as of December 1, 2009




 









 








Table of Contents




	 	 	 	 	 
	 	 	Page	 
	ARTICLE I AGREEMENT TO SELL AND PURCHASE COMMON STOCK
	 	 	2	 
	Section 1.1 Sale and Purchase.
	 	 	2	 
	Section 1.2 Additional Due Diligence Investigation
	 	 	2	 
	 
	 	 	 	 
	ARTICLE II CLOSING, DELIVERY AND PAYMENT
	 	 	2	 
	Section 2.1 Closing
	 	 	2	 
	Section 2.2 Closing Deliveries
	 	 	3	 
	 
	 	 	 	 
	ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
	 	 	3	 
	Section 3.1 Organization, Good Standing and Qualification
	 	 	3	 
	Section 3.2 Capitalization.
	 	 	4	 
	Section 3.3 Company Subsidiaries
	 	 	5	 
	Section 3.4 Authority; No Conflict
	 	 	5	 
	Section 3.5 Consents
	 	 	6	 
	Section 3.6 SEC
Documents
	 	 	6	 
	Section 3.7 Financial Statements; Absence of Undisclosed Liabilities
	 	 	7	 
	Section 3.8 No Material Adverse Changes
	 	 	8	 
	Section 3.9 Title to Properties and
Assets
	 	 	8	 
	Section 3.10 Compliance with
Law
	 	 	8	 
	Section 3.11 Agreements with Regulatory
Agencies
	 	 	8	 
	Section 3.12 Pending
Litigation
	 	 	9	 
	Section 3.13 Certain Contracts
	 	 	9	 
	Section 3.14
Insurance
	 	 	10	 
	Section 3.15 Tax
Matters
	 	 	10	 
	Section 3.16 Hazardous Materials
	 	 	10	 
	Section 3.17 Intellectual
Property
	 	 	10	 
	Section 3.18 Employee
Matters
	 	 	11	 
	Section 3.19 Employee Benefit
Plans
	 	 	11	 
	Section 3.20 Board Approval; Requisite Shareholder
Approvals
	 	 	12	 
	Section 3.21 Opinion of Financial Advisor
	 	 	13	 
	Section 3.22 Broker’s
Fees
	 	 	13	 
	Section 3.23 Loan
Matters
	 	 	13	 
	Section 3.24 Transactions with
Affiliates
	 	 	14	 
	Section 3.25 Controls and
Procedures
	 	 	14	 
	Section 3.26 Valid
Offering
	 	 	14	 
	Section 3.27 Takeover Statutes; No Rights Plan
	 	 	14	 
	Section 3.28 Investment Company Act
	 	 	15	 
	Section 3.29 No Misstatement of Material Fact
	 	 	15	 
	 
	 	 	 	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER
	 	 	15	 
	Section 4.1 Organization; Authority; No
Conflict
	 	 	15	 
	Section 4.2 Investment Representations
	 	 	16	 
	Section 4.3
Consents
	 	 	16	 
	Section 4.4
Litigation
	 	 	16	 
	Section 4.5 No
Brokers
	 	 	16	 
	Section 4.6 No Other
Operations
	 	 	16	 
	 
	 	 	 	 
	ARTICLE V COVENANTS
	 	 	16	 
	Section 5.1 Conduct of Business Prior to the Closing
	 	 	16	 
	Section 5.2 Company
Forbearances
	 	 	17	 
	Section 5.3
Access
	 	 	20	 






i 









 






	 	 	 	 	 
	 	 	Page	 
	Section 5.4 Proxy
Statement
	 	 	20	 
	Section 5.5 Company Shareholders
Meeting
	 	 	21	 
	Section 5.6 No Solicitation of Competing Proposal.
	 	 	21	 
	Section 5.7 Efforts
	 	 	23	 
	Section 5.8 Notification of Certain
Matters
	 	 	24	 
	Section 5.9 Regulatory and Other Authorizations; Notices and
Consents
	 	 	24	 
	Section 5.10 Appointment of Directors
	 	 	24	 
	Section 5.11 Termination of Company Stock Options; Employee
Benefits
	 	 	25	 
	Section 5.12 Voting
Agreement
	 	 	25	 
	Section 5.13 Financing
	 	 	25	 
	Section 5.14 Takeover
Statutes
	 	 	25	 
	Section 5.15 Stock Exchange Listing
	 	 	26	 
	Section 5.16 Public Announcements
	 	 	26	 
	Section 5.17 Pre-Emptive Rights
Offering
	 	 	26	 
	Section 5.18 Agreement Regarding Series B Preferred
Stock
	 	 	26	 
	Section 5.19 Agreement Regarding Indebtedness Under Existing Loan Agreement
	 	 	26	 
	Section 5.20 Payment to Cover Purchaser’s
Expenses
	 	 	27	 
	Section 5.21 Agreement Regarding Purchaser’s Assumption of Certain Liabilities of the
Company
	 	 	27	 
	 
	 	 	 	 
	ARTICLE VI CONDITIONS TO CLOSING
	 	 	27	 
	Section 6.1 Conditions to the Obligations of Purchaser
	 	 	27	 
	Section 6.2 Conditions to Obligations of the
Company
	 	 	29	 
	 
	 	 	 	 
	ARTICLE VII TERMINATION AND AMENDMENT
	 	 	30	 
	Section 7.1
Termination
	 	 	30	 
	Section 7.2 Effect of
Termination
	 	 	32	 
	 
	 	 	 	 
	ARTICLE VIII MISCELLANEOUS
	 	 	33	 
	Section 8.1 Other Definitions; Terms Generally
	 	 	33	 
	Section 8.2 Representations and
Warranties
	 	 	35	 
	Section 8.3 Governing Law; Jurisdiction; Waiver of Jury
Trial
	 	 	35	 
	Section 8.4 Successors and Assigns; Assignment; No Third Party Beneficiaries
	 	 	36	 
	Section 8.5 Entire
Agreement
	 	 	36	 
	Section 8.6 Severability
	 	 	36	 
	Section 8.7 Amendment and Waiver
	 	 	37	 
	Section 8.8 Delays or
Omissions
	 	 	37	 
	Section 8.9
Notices
	 	 	37	 
	Section 8.10 Expenses
	 	 	38	 
	Section 8.11 Titles and
Subtitles
	 	 	38	 
	Section 8.12
Remedies
	 	 	39	 
	Section 8.13 Counterparts; Execution by Facsimile
Signature
	 	 	39	 






Exhibits




Exhibit A — Form of Fee Agreement Between Anchor BanCorp Wisconsin, Inc. and Badger Capital, LLC

Exhibit B — Form of Registration Rights Agreement

Exhibit C — Form of Voting Agreement

Exhibit D — Form of Amendment to Articles of Incorporation




ii 









 





Index of Principal Terms




	 	 	 	 	 
	2009 Form 10-K
	 	 	7	 
	Acquisition Transaction
	 	 	23	 
	Actions
	 	 	33	 
	Adjustment Factor
	 	 	2	 
	Affiliate
	 	 	33	 
	Agreement
	 	 	1	 
	Badger Capital
	 	 	1	 
	Badger Fee Agreement
	 	 	1	 
	Bank
	 	 	1	 
	Bankruptcy Law
	 	 	33	 
	Business Day
	 	 	33	 
	Change in Recommendation
	 	 	22	 
	Charter Amendment
	 	 	13	 
	Closing
	 	 	2	 
	Closing Date
	 	 	3	 
	Common Stock
	 	 	1	 
	Company
	 	 	1	 
	Company Contract
	 	 	9	 
	Company Disclosure Schedule
	 	 	3	 
	Company Employees
	 	 	11	 
	Company Intellectual Property
	 	 	33	 
	Company Preferred Stock
	 	 	33	 
	Company Recommendation
	 	 	20	 
	Company Regulatory Agreement
	 	 	9	 
	Company Representatives
	 	 	20	 
	Company Shareholders Meeting
	 	 	20	 
	Company Stock Options
	 	 	4	 
	control
	 	 	33	 
	controlled by
	 	 	33	 
	CRA
	 	 	8	 
	Custodian
	 	 	33	 
	Due Diligence Period
	 	 	2	 
	Encumbrance
	 	 	33	 
	Equity Commitments
	 	 	25	 
	ERISA
	 	 	11	 
	ERISA Affiliate
	 	 	12	 
	Exchange Act
	 	 	7	 
	Existing Loan Agreement
	 	 	34	 
	FDIC
	 	 	5	 
	Fee Agreement
	 	 	34	 
	FHLB
	 	 	5	 
	Financial Statements
	 	 	7	 
	GAAP
	 	 	34	 
	Governmental Entity
	 	 	6	 
	Hazardous Materials
	 	 	34	 
	HOLA
	 	 	4	 
	HSR Act
	 	 	6	 
	Intellectual Property
	 	 	34	 
	Law
	 	 	6	 
	Loans
	 	 	13	 
	Material Adverse Effect
	 	 	34	 
	Nasdaq
	 	 	6	 
	New Loan Agreement
	 	 	1	 
	Non-Performing Assets
	 	 	29	 






iii 









 






	 	 	 	 	 
	Notice of Superior Proposal
	 	 	22	 
	Offering Materials
	 	 	25	 
	Order
	 	 	6	 
	OTS
	 	 	6	 
	PBGC
	 	 	12	 
	Person
	 	 	34	 
	Plan
	 	 	11	 
	Pre-Closing Period
	 	 	16	 
	Pre-Emptive Rights Offering
	 	 	26	 
	Proxy Statement
	 	 	20	 
	Purchase Price
	 	 	2	 
	Purchased Stock
	 	 	2	 
	Purchaser
	 	 	1	 
	Purchaser Disclosure Schedule
	 	 	15	 
	Purchaser Expenses
	 	 	32	 
	Purchaser Organizational Documents
	 	 	28	 
	Purchaser Related Parties
	 	 	39	 
	Purchaser Representatives
	 	 	20	 
	Registration Rights Agreement
	 	 	5	 
	Regulation O
	 	 	13	 
	Requisite Regulatory Approvals
	 	 	28	 
	Requisite Shareholder Approvals
	 	 	13	 
	SEC
	 	 	6	 
	SEC Reports
	 	 	7	 
	Securities Act
	 	 	7	 
	Series B Preferred Stock
	 	 	4	 
	Significant Subsidiary
	 	 	35	 
	Specified Regulatory Agreement
	 	 	9	 
	Subsidiary
	 	 	35	 
	Superior Proposal
	 	 	23	 
	Takeover Statute
	 	 	14	 
	Tangible Common Shareholders’ Equity
	 	 	29	 
	Termination Fee
	 	 	32	 
	Third Quarter Form 10-Q
	 	 	2	 
	to the knowledge of the Company
	 	 	35	 
	Transaction Agreements
	 	 	5	 
	U.S. Treasury
	 	 	4	 
	under common control with
	 	 	33	 
	Unsolicited Company Proposal
	 	 	22	 
	Voting Agreement
	 	 	5	 
	Voting Debt
	 	 	4	 
	WBCL
	 	 	6	 







iv 











 





STOCK PURCHASE AGREEMENT




     This STOCK PURCHASE AGREEMENT (this “Agreement”) is dated as of December 1, 2009 and is
made by and between ANCHOR BANCORP WISCONSIN INC., a Wisconsin corporation (the “Company”),
and BADGER ANCHOR HOLDINGS, LLC, a Delaware limited liability company (“Purchaser”).



R
E C I T A L S:




     A. The Company is a savings and loan holding company that owns 100% of the issued and outstanding
capital stock of AnchorBank fsb, a federally chartered savings bank with its main office located in
Madison, Wisconsin (the “Bank”).



     B. Purchaser is a newly-formed investment entity established for the specific purpose of entering
into this Agreement and consummating the transactions contemplated hereby.



     C. Purchaser is a manager-managed limited liability company and, as of the date hereof, its sole
manager is Badger Capital, LLC, an Illinois manager-managed limited liability company (“Badger
Capital”).



     D. The Company and Purchaser have entered into that certain Loan Agreement, dated of even date
herewith (the “New Loan Agreement”), whereby Purchaser has agreed to provide the Company
with a term loan in the aggregate principal amount of $110 million, which loan will be evidenced by
one or more promissory notes that are convertible into shares of the Company’s common stock, par
value $0.10 par value per share (the “Common Stock”).



     E. The Company and Badger Capital are entering into a fee agreement simultaneous with the execution
of this Agreement, in the form attached hereto as Exhibit A (the “Badger Fee
Agreement”), pursuant to which the Company has agreed to pay Badger Capital for its services in
connection with arranging and structuring the investment contemplated by this Agreement and the
loan contemplated by the Loan Agreement a fee equal to the sum of: (a) 5.0% of the sum of (i) the
Purchase Price (as defined below), plus (ii) the principal amount of the term loan extended by
Purchaser to the Company pursuant to the New Loan Agreement; and (b) 5.0% of the amount by which
the outstanding indebtedness under the Existing Loan Agreement (as defined below) is reduced and/or
converted to equity pursuant to the agreement referred to in Section 5.19.



     F. Subject to the terms and conditions set forth in this Agreement, the Company has agreed to sell
to Purchaser and
Purchaser has agreed to purchase from the Company, at least 116,666,667 shares but no more than
483,333,333 shares (with the exact amount to be determined by Purchaser in its sole discretion) of
the Common Stock.



     G. The parties hereto are entering into this Agreement to provide for the purchase and sale of the
Purchased Stock.



     NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants, conditions and
agreements herein contained, the parties hereto hereby agree as follows:



 









 





A G R E E M E N T:




ARTICLE I

AGREEMENT TO SELL AND PURCHASE COMMON STOCK




     Section 1.1 Sale and Purchase.



          (a) Subject to the terms and conditions hereof, the Company hereby agrees to issue and sell to
Purchaser, and Purchaser agrees to purchase from the Company, at the Closing (as defined below), at
least 116,666,667 shares but no more than 483,333,333 shares of the Common Stock (with the exact
amount to be determined by Purchaser in its sole discretion), for a purchase price of $0.60 per
share, or between $70,000,000 and $290,000,000 in the aggregate. The actual number of shares of the
Common Stock that Purchaser elects to purchase at the Closing is referred to herein as the
“Purchased Stock.” The product of the number of shares of the Common Stock constituting the
Purchased Stock and $0.60 is referred to herein as the “Purchase Price.”



          (b) In the event that, subsequent to the date of this Agreement but prior to the Closing, the
outstanding shares of Common Stock shall have been increased, decreased, changed into or exchanged
for a different number or kind of shares or securities through any reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock split, or other like
changes in the Company’s capitalization, (i) the number of shares of Common Stock constituting the
Purchased Stock shall be multiplied by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately after, and the denominator of which shall be the
number of such shares outstanding immediately before, the occurrence of such event (the
“Adjustment Factor”), and the resulting number shall from and after the date of such event
be the number of shares of Common Stock constituting the Purchased Stock, subject to further
adjustment in accordance with this sentence, and
(ii) the purchase price per share of Purchased Stock shall be divided by the Adjustment Factor, and
the resulting number shall from and after the date of such event be the purchase price per share of
Purchased Stock, subject to further adjustment in accordance with this sentence.



     Section 1.2 Additional Due Diligence Investigation. During the period beginning on the date
of this Agreement through and including fifth Business Day following the date on which the Company
files its Quarterly Report on Form 10-Q for the quarter ended December 31, 2009 (the “Third
Quarter Form 10-Q”), with the SEC (the “Due Diligence Period”), the Company shall
permit Purchaser to conduct an additional pre-Closing comprehensive investigation, review and
analysis of the loan portfolio, books, records and facilities of the Company and its Subsidiaries.
Purchaser shall have the absolute right, in its sole discretion, to terminate this Agreement by
giving to the Company by 5:00 p.m., Central Standard Time, on the last day of the Due Diligence
Period, written notice of its election to terminate pursuant to this Section 1.2 if such
pre-Closing investigation, review and analysis discovers matters that are not completely
satisfactory to Purchaser in its sole discretion. Nothing in this Section 1.2 shall limit in any
respect any other right or basis that Purchaser may then or thereafter have to terminate this
Agreement by reason of any breach hereof by the Company or any breach or inaccuracy of any of the
representations and warranties of the Company, or because of the failure of any of the conditions
set forth in Section 6.1.



ARTICLE II

CLOSING, DELIVERY AND PAYMENT




     Section 2.1 Closing. The closing (the “Closing”) of the sale and purchase of the
Purchased Stock under this Agreement shall take place on the second Business Day after the
satisfaction or waiver of the conditions set forth in ARTICLE VI (other than those conditions which
by their terms are to be



2









 




satisfied at the Closing, but subject to the satisfaction or waiver of those conditions at the
Closing), at the offices of Barack Ferrazzano Kirschbaum & Nagelberg LLP, 200 W. Madison Street,
Suite 3900, Chicago, Illinois 60606, or at such other time or place as the Company and Purchaser
may mutually agree (such date, the “Closing Date”). All right, title and interest in or to
the Purchased Stock and the Purchase Price shall be transferred from the Company to Purchaser and
from Purchaser to the Company, respectively, at the place of the Closing.




     Section 2.2 Closing Deliveries. (a) At the Closing, subject to the terms and conditions
hereof, the Company will deliver to Purchaser:



               (i) stock certificates evidencing the Purchased Stock, or evidence of issuance of the
Purchased Stock in book entry form, in either case free and clear of any Encumbrances (as defined
below) (other than those created by Purchaser), registered in the name of Purchaser or one or more
of its nominees, in form reasonably satisfactory to Purchaser;



               (ii) a receipt for the Purchase Price; and



               (iii) the duly executed Transaction Agreements, certificates and other documents required to
be delivered pursuant to Section 6.1.



          (b) At the Closing, subject to the terms and conditions
hereof, Purchaser shall deliver



          to the Company:



               (i) the Purchase Price by wire transfer of
immediately available funds to an
account designated by the Company at least two Business Days prior to the Closing Date;



               (ii) a receipt for the Purchased Stock; and



               (iii) the duly executed Transaction Agreements, certificates and other documents required to
be delivered pursuant to Section 6.2.



ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY




     Except (i) as disclosed in the SEC Reports filed since December 31, 2008 and prior to the date of
this Agreement (other than any such disclosures (x) made solely in the exhibits and schedules
thereto, documents incorporated by reference therein, the “Risk Factors” sections thereof or in any
section relating to forward-looking statements or (y) included in such filings that are cautionary,
predictive or forward-looking in nature) or (ii) as disclosed in the corresponding section of the
disclosure schedule provided by the Company to Purchaser on the date hereof (the “Company
Disclosure Schedule”) (it being agreed that, except as otherwise expressly provided in the
Company Disclosure Schedule, disclosure of any item in any section of the Company Disclosure
Schedule shall be deemed disclosure with respect to any other section to which the relevance of
such item is reasonably apparent on its face), the Company represents and warrants to Purchaser as
follows:



     Section 3.1 Organization, Good Standing and Qualification. Each of the Company and its
Subsidiaries: (a) is duly
organized, validly existing and in good standing under the laws of the jurisdiction of its
incorporation or formation; (b) has all requisite power and authority, corporate or otherwise, to
own, operate and lease its properties and to carry on its business as now being conducted; and (c)
is duly qualified as a foreign bank or corporation and in good standing in all states in which it
is doing business, except where it is not required to qualify or where the failure to so qualify
would not have a Material



3









 




Adverse Effect on the financial condition, results of operations or business of the Company and its
Subsidiaries taken as a whole. The Company has made payment of all franchise and similar taxes in
the State of Wisconsin, and in all of the jurisdictions in which it is qualified to do business,
and so far as such taxes are due and payable at the date of this Agreement and not otherwise being
contested in good faith. The Company does not have any Subsidiaries other than those set forth in
Section 4.1 of the Company Disclosure Schedule. The Company has made available to Purchaser true,
complete and correct copies of its articles of incorporation and by-laws and the articles of
incorporation and by-laws (or other equivalent organizational documents) of each Subsidiary of the
Company, in each case as amended to, and as in effect as of, the date of this Agreement. The
Company is a savings and loan holding company duly registered under the Home Owners’ Loan Act, as
amended (“HOLA”).




     Section 3.2 Capitalization.



          (a) The authorized capital stock of the Company consists of: (a) 100,000,000 shares of Common
Stock, of which, as of the date of this Agreement, (i) 21,689,117 shares are issued and
outstanding, (ii) 510,670 shares are reserved for issuance upon exercise of options and other
awards granted under the Company’s stock option and incentive plans (the “Company Stock
Options”) and
(iii) 7,399,103 are reserved for issuance upon exercise of the warrant, dated January 30, 2009,
held by the United States Department of the Treasury (the “U.S. Treasury”); and (b)
5,000,000 shares of preferred stock, $0.10 par value per share, of which, as of the date of this
Agreement, (i) 100,000 have been designated as Series A Preferred Stock, liquidation preference
$100.00 per share, none of which are issued and outstanding, and (ii) 110,000 have been designated
as Fixed Rate Cumulative Perpetual Preferred Stock, Series B, liquidation preference $1,000.00 per
share (“Series B Preferred Stock”), all of which are issued and outstanding and held by the
U.S. Treasury. All of the outstanding shares of Common Stock and Series B Preferred Stock have been
duly authorized, are validly issued, fully paid and nonassessable and were offered, sold and issued
in compliance with all applicable federal and state securities laws and without violating any
contractual obligation or any other preemptive or similar rights. Section 3.2(a) of the Company
Disclosure Schedule contains a list setting forth as of the date of this Agreement all outstanding
Company Stock Options, the names of the optionees, the date each such option was granted, the
number of shares subject to each such option, the expiration date of each such option, any vesting
schedule with respect to an option which is not yet fully vested, and the price at which each such
option may be exercised.



          (b) There are no outstanding bonds, debentures, notes, debt securities or other indebtedness for
borrowed money of the Company or any of its Subsidiaries having the right to vote (or convertible
into or exercisable or exchangeable for securities having the right to vote) on any matters on
which the shareholders of the Company or any of its Subsidiaries may vote (“Voting Debt”).
Section 3.2(b) of the Company Disclosure Schedule sets forth a true and complete list of all
indebtedness for borrowed money (other than deposit liabilities, advances and loans from the FHLB
of Chicago and sales of securities subject to repurchase, in each case incurred in the ordinary
course of business consistent with past practice) of the Company and its Subsidiaries with an
unpaid principal amount in excess of $1 million on the date of this Agreement.



          (c) Except as set forth in paragraph (a) above, there are no issued, outstanding or authorized
securities (including securities convertible into or exercisable or exchangeable for shares of
capital stock or other equity or voting securities) of the Company and (except for (i) the issuance
and sale of the Purchased Stock contemplated by this Agreement, (ii) the agreement referred to in
Section 5.18 pursuant to which shares of Common Stock may be issued to the U.S. Treasury, (iii) the
agreement referred to in Section 5.19 pursuant to which shares of Common Stock may be issued to the
lenders that are a party to the Existing Loan Agreement and (iv) the New Loan Agreement pursuant to
which promissory notes that are
convertible into shares of Common Stock are to be issued) there are no options,



4









 




warrants, calls, rights (including “phantom” stock or stock appreciation rights), commitments,
agreements, arrangements or undertakings of any kind to which the Company or any of its
Subsidiaries is a party or by which any of them is bound obligating the Company or any of its
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares
of capital stock or other equity or voting securities of the Company or of any of its Subsidiaries
(or securities convertible into or exercisable or exchangeable for shares of capital stock or other
equity or voting securities) or obligating the Company or any of its Subsidiaries to issue, grant,
extend or enter into any such option, warrant, call, right, commitment, agreement, arrangement or
undertaking. Except as set forth in the terms of the Company Preferred Stock as in effect on the
date hereof, there are no outstanding contractual obligations, commitments, understandings or
arrangements of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire
or make any payment in respect of any shares of capital stock or other equity or voting securities
of the Company or any of its Subsidiaries or other agreements or arrangements with or among any
securityholders of the Company or any of its Subsidiaries with respect to securities of the Company
or any of its Subsidiaries. Except as set forth above, there are no agreements or arrangements
pursuant to which the Company is or could be required to register shares of Common Stock or other
securities of the Company or any of its Subsidiaries under the Securities Act.




     Section 3.3 Company Subsidiaries. The only direct or indirect Subsidiaries of the Company
are those listed in Section 3.3 of the Company Disclosure Schedule. All of the capital stock of
each of the Company’s Subsidiaries has been duly authorized and validly issued, and is fully paid
and nonassessable. The Company owns directly or indirectly all of the issued and outstanding
capital stock of each of its Subsidiaries free and clear of all Encumbrances, except for the
security interest in the capital stock of the Bank granted to U.S. Bank National Association and
other participating financial institutions pursuant to the Existing Loan Agreement. The deposits of
the Bank are insured by the Federal Deposit Insurance Corporation (the “FDIC”) to the
fullest extent permitted by law. The Bank is a member of the Federal Home Loan Bank
(“FHLB”) of Chicago.



     Section 3.4 Authority; No Conflict. (a) The Company has all requisite corporate power and
authority to execute and deliver this Agreement, the Registration Rights Agreement between the
Company and Purchaser, in substantially the form attached as Exhibit B hereto (the
“Registration Rights Agreement”), the Voting Agreement in the form attached as Exhibit
C hereto (the “Voting Agreement” and, together with this Agreement and the Registration
Rights Agreement, the “Transaction Agreements”), and, subject to the receipt of the
Requisite Shareholder Approvals in the case of the approval of the Charter Amendment and the
issuance of the Purchased Stock pursuant to this Agreement, to consummate the transactions
contemplated hereby and thereby and to perform its obligations hereunder and thereunder. The
execution and delivery of the Transaction Agreements and the consummation of the transactions
contemplated hereby and thereby have been duly and validly approved by all necessary corporate and
shareholder action of the Company, subject to the receipt of the Requisite Shareholder Approvals in
the case of the approval of the Charter Amendment and the issuance of the Purchased Stock pursuant
to this Agreement, upon conversion of the Series B Preferred Stock, upon conversion of all or a
portion of the amounts due and outstanding under the Existing Loan Agreement and upon conversion of
the convertible promissory notes to be issued pursuant to the New Loan Agreement, and no other
corporate or shareholder proceedings on the part of the Company are necessary to approve this
Agreement or the other Transaction Agreements or to consummate the transactions contemplated hereby
or thereby. This Agreement has been, and the other Transaction Agreements when executed will be,
duly and validly executed and delivered by the Company and (assuming due authorization, execution
and delivery by Purchaser) constitute (or will constitute when executed and delivered) valid and
binding obligations of the Company, enforceable against the Company in accordance with their terms,
except as enforcement may be limited by general principles of equity whether applied in a court of
law or a court of equity and by bankruptcy, insolvency, reorganization, moratorium, or other
similar laws relating to creditors’ rights and remedies generally.



5









 





          (b) The issuance and sale of the Purchased Stock pursuant to this Agreement is not and will not be
subject to any preemptive rights, rights of first refusal, subscription or similar rights. The
Purchased Stock, when issued in accordance with the terms of this Agreement, will be duly
authorized, validly issued, fully paid and nonassessable, and upon delivery
to Purchaser will be free and clear of all Encumbrances (other than those created by Purchaser).



          (c) Neither the execution and delivery of the Transaction Agreements by the Company nor the
consummation by the Company of the transactions contemplated thereby, nor compliance by the Company
with any of the terms or provisions thereof, will (i) subject to the receipt of the Requisite
Shareholder Approvals in the case of the approval of the Charter Amendment, violate any provision
of the articles of incorporation or by-laws of the Company or any of the similar governing
documents of any of its Subsidiaries or (ii) assuming that the consents and approvals referred to
in Section 3.5 are duly obtained, (x) violate any statute, law, code, ordinance, rule or regulation
of any Governmental Entity (“Law”), or any judgment, order, writ, decision, settlement,
stipulation, decree or injunction (an “Order”) applicable to the Company or any of its
Subsidiaries or any of their respective properties or assets, or (y) violate, conflict with, result
in a breach of any provision of or the loss of any benefit under, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) under, result in the
termination of or a right of termination or cancellation under, accelerate the performance required
by, or result in the creation of any Encumbrance upon any of the respective properties or assets of
the Company or any of its Subsidiaries under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust, license, lease or other agreement, instrument or
obligation to which the Company or any of its Subsidiaries is a party, or by which they or any of
their respective properties or assets may be bound or affected, except (in the case of clause (y)
above) for such violations, conflicts, breaches, defaults or other events which would not
reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.



     Section 3.5 Consents. Except for (i) the filing of applications and notices, as applicable,
with the Office of Thrift Supervision (the “OTS”) under HOLA and the approval of such
applications and notices, (ii) approval of the listing of the Purchased Stock on the Nasdaq Stock
Market (“Nasdaq”),
(iii) the filing with the Securities and Exchange Commission (the “SEC”) of a proxy
statement in definitive form relating to the meeting of the shareholders of the Company to be held
to vote on, among other things, the Charter Amendment and the issuance of the Purchased Stock, (iv)
the filing of the restated articles of incorporation of the Company, reflecting the Charter
Amendment, with the Wisconsin Department of Financial Institutions pursuant to the Wisconsin
Business Corporation Law (the “WBCL”),
(v) the approval of the Charter Amendment and the issuance of the Purchased Stock by the Requisite
Shareholder Approvals, (vi) any notices or filings under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the “HSR Act”) and the expiration or termination of
any applicable waiting periods thereunder, (vii) consent from the lenders under the Existing Loan
Agreement of the issuance and sale of the Purchased Stock and (viii) the consents and approvals of
third parties which are not Governmental Entities, the failure of which to be obtained would not be
reasonably expected to have, individually or in the aggregate, a Material Adverse Effect, no
consents or approvals of, or filings or registrations with, any court, administrative agency or
commission or other federal, state, local governmental authority or instrumentality or
self-regulatory organization (each, a “Governmental Entity”) or with any other third party
are necessary in connection with (A) the execution and delivery by the Company of the Transaction
Agreements and (B) the consummation by the Company of the transactions contemplated by the
Transaction Agreements and the performance by the Company of its obligations under the Transaction
Agreements. As of the date of this Agreement, the Company does not know of any reason why the
approvals and authorizations required by Section 6.1(d)(i) should not be obtained..



     Section 3.6 SEC Documents. (a) The Company has filed with the SEC and made available to
Purchaser (through the SEC’s Electronic Data Gathering Analysis and Retrieval System or otherwise)



6









 




all forms, reports, schedules, registration statements and other documents required to be filed by
the Company with the SEC since January 1, 2006 (collectively, and in each case including all
exhibits and schedules thereto and documents incorporated by reference therein, the “SEC
Reports”). As of their respective dates of filing with the SEC (or, if amended or superseded by
a subsequent filing prior to the date hereof, as of the date of such subsequent filing), the SEC
Reports complied in all material respects with the requirements of the Securities Act of 1933, as
amended (the “Securities Act”), or the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), as the case may be, and the rules and regulations of the SEC thereunder
applicable to such SEC Reports, and none of the SEC Reports when filed (or, if
amended or superseded by a subsequent filing prior to the date hereof, as of the date of such
subsequent filing) contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and there are no outstanding comments
from the SEC with respect to any of the SEC Reports. None of the Company’s Subsidiaries is required
to file periodic reports with the SEC pursuant to Section 13 or 15(d) of the Exchange Act.




          (b) Since January 1, 2006, (i) neither the Company nor any of its Subsidiaries nor, to the
knowledge of the Company, any director, officer, employee, auditor, accountant or representative of
the Company or any of its Subsidiaries has received or otherwise had or obtained knowledge of any
material complaint, allegation, assertion or claim, whether written or oral, regarding the
accounting or auditing practices, procedures, methodologies or methods of the Company or any of its
Subsidiaries or their respective internal accounting controls, including any material complaint,
allegation, assertion or claim that the Company or any of its Subsidiaries has engaged in
questionable accounting or auditing practices, other than routine recommendations made in letters
from the Company’s independent public accountants to the Company’s management, true and complete
copies of which letters have been made available to Purchaser and (ii) no attorney representing the
Company or any of its Subsidiaries, whether or not employed by the Company or any of its
Subsidiaries, has reported evidence of a material violation of securities laws, breach of fiduciary
duty or similar violation by the Company or any of its officers, directors, employees or agents to
the Board of Directors of the Company or any committee thereof or to any director or officer of the
Company.



     Section 3.7 Financial Statements; Absence of Undisclosed Liabilities. (a) The consolidated
financial statements of the Company (including any related notes thereto) included in the SEC
Reports (the “Financial Statements”) are true and correct in all material respects, are in
accordance with the books of account and records of the Company and have been prepared in
accordance with GAAP, or applicable banking rules and regulations, as the case may be, applied on a
basis consistent with prior periods, and fairly and accurately present the consolidated financial
condition of the Company and its Subsidiaries and its and their respective assets, liabilities,
shareholders’ equity and results of operations as of such date. The Financial Statements contain
and reflect provisions for taxes, reserves and other liabilities of the Company and each of its
Subsidiaries in accordance with GAAP or applicable banking rules and regulations, as the case may
be.



          (b) Except as disclosed in Section 3.8, and except for (i) those liabilities that are fully
reflected or reserved for in the Financial Statements of the Company included in its Annual Report
on Form 10-K for the year ended March 31, 2009, as filed with the SEC on June 29, 2009 (the
“2009 Form 10-K”), (ii) liabilities incurred since March 31, 2009 in the ordinary course of
business consistent with past practice and (iii) liabilities that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, neither the Company nor any of
its Subsidiaries has incurred any liability of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether due or to become due), other than pursuant to the Transaction
Agreements or the transactions contemplated thereby.



7









 





     Section 3.8 No Material Adverse Changes. Except as described on Section 3.8 of the Company
Disclosure Schedule, since March 31, 2009, (i) no event, change or circumstance has occurred which,
individually or in the aggregate, has had or would reasonably be expected to have a Material
Adverse Effect and (ii) neither the Company nor any of its Subsidiaries has taken any action or
entered into any transaction, and no event has occurred, that would have required Purchaser’s
consent pursuant to Section 5.2 if such action had been taken, transaction had been entered into or
event had occurred, in each case, after the date of this Agreement.



     Section 3.9 Title to Properties and Assets. (a) The Company and its Subsidiaries have good
and marketable fee title to all real property, and good and marketable title to all other property
and assets reflected in the latest balance sheet included as part of the Financial Statements or
purported to have been acquired by the Company or its Subsidiaries subsequent to such date, except
(i) real property and other assets acquired and/or being acquired from debtors in full or partial
satisfaction of obligations owed to the Company or its Subsidiaries, as the case may be, (ii)
property or other assets
leased by the Company or its Subsidiaries, and (iii) property and assets sold or otherwise disposed
of subsequent to the date of such balance sheet. Except for properties and other assets acquired
and/or being acquired from debtors in full or partial satisfaction of obligations owed to the
Company or any Subsidiary and properties or other assets leased by the Company or any Subsidiary,
and except as disclosed in the Financial Statements, all material property and assets of any kind
(real or personal, tangible or intangible) of the Company and each of its Subsidiaries are free
from any Encumbrances, except Encumbrances for current Taxes not yet due and payable and other
standard exceptions commonly found in title policies in the jurisdiction where such real property
is located, and such Encumbrances and imperfections of title, if any, as do not materially detract
from the value of the properties and do not materially interfere with the present or proposed use
of such properties.



          (b) Except as reflected in the Financial Statements, none of the assets or property the value of
which is reflected in the latest balance sheet that is included as part of the Financial Statements
is held by the Company or any of its Subsidiaries as lessee under any lease, or as conditional
vendee under any conditional sales contract or other title retention agreement. The Company and
each of its Subsidiaries enjoy peaceful and undisturbed possession under all of the material leases
under which they are operating, all of which permit the customary operations of the Company and
each of its Subsidiaries. None of the Company or any of its Subsidiaries in default and, to the
Company’s knowledge, no event has occurred which with the passage of time or the giving of notice,
or both, would reasonably be expected to constitute a default under any such lease, except for any
default or potential default which would not reasonably be expected to have a Material Adverse
Effect.



     Section 3.10 Compliance with Law. (a) Except as listed on Schedule 3.10 of the Company
Disclosure Schedule, each of the Company and its Subsidiaries is and will continue to be in
material compliance with all applicable statutes, regulations and orders of, and all applicable
material restrictions imposed by, all Governmental Entities in respect of the conduct of its
business and the ownership of its property (including applicable statutes, regulations, orders and
restrictions relating to environmental standards and controls), except such noncompliance as would
not, in the aggregate, reasonably be expected to have a Material Adverse Effect.



          (b) The Company and each of its Subsidiaries is in compliance in all material respects with the
applicable provisions of the Community Reinvestment Act of 1977 and the regulations promulgated
thereunder (collectively, “CRA”). The Bank has received CRA ratings of “satisfactory” in
its most recently completed exam.



     Section 3.11 Agreements with Regulatory Agencies. Other than the Order to Cease and Desist,
dated June 26, 2009, entered into by the Company and the Bank with the OTS (the “Specified 



8









 




Regulatory Agreement”), neither the Company nor any of its Subsidiaries is subject to any
cease-and-desist or other order or directive (other than those generally applicable to businesses
such as the business of the Company or any of its Subsidiaries) issued by, or is a party to any
written agreement, consent agreement or memorandum of understanding with, or is a party to any
commitment letter or similar undertaking to, or is a recipient of any extraordinary supervisory
letter from, or has adopted any board resolutions at the request of (each, whether or not described
above or set forth in the Company Disclosure Schedule, a “Company Regulatory Agreement”),
any Governmental Entity that currently restricts or by its terms will in the future restrict the
conduct of its business or relates to its capital adequacy, its credit or risk management policies,
its dividend policies, its management or its business, nor has the Company or any of its
Subsidiaries been advised by any Governmental Entity that it is considering issuing or requesting
the Company or any Subsidiary to enter into or become bound by any Company Regulatory Agreement.




     Section 3.12 Pending Litigation. Except as listed on Section 3.12 of the Company Disclosure
Schedule, there are no actions, suits, proceedings or written agreements pending, or, to the
knowledge of the Company, threatened, against the Company or any of its Subsidiaries at law or in
equity or before or by any federal, state, municipal, or other governmental
department, commission, board, or other administrative agency. To the best knowledge of the
Company, nothing disclosed on Section 3.12 of the Company Disclosure Schedule would, if adversely
determined, be reasonably expected to have a Material Adverse Effect on the Company and its
Subsidiaries taken as a whole; and none of the Company nor any of its Subsidiaries is in default
with respect to any material order, writ, injunction, or decree of, or any written agreement with,
any court, commission, board or agency.



     Section 3.13 Certain Contracts. (a) Neither the Company nor any of its Subsidiaries is a
party to or is bound by any contract, arrangement, commitment or understanding (whether written or
oral): (i) which is a material contract (as defined in Item 601(b)(10) of Regulation S-K of the
SEC) to be performed in whole or in part after the date of this Agreement; (ii) which limits the
freedom of the Company or any of its Subsidiaries to compete in any line of business, in any
geographic area or with any Person, or which requires referrals of business or requires the Company
or any of its Subsidiaries to make available investment or business opportunities to any Person on
a priority or exclusive basis; (iii) which relates to the incurrence of indebtedness with an unpaid
principal amount in excess of $1 million (other than deposit liabilities, advances and loans from
the FHLB of Chicago and sales of securities subject to repurchase, in each case incurred in the
ordinary course of business consistent with past practice) by the Company or any of its
Subsidiaries, including any sale and leaseback transactions, capitalized leases and other similar
financing transactions; (iv) which limits the payment of dividends by the Company or the Bank; or
(v) for a joint venture, partnership, or similar agreement for a business venture involving a
sharing of profits or expenses. Each contract, arrangement, commitment or understanding of the type
described in this Section 3.13(a), whether or not publicly disclosed in the SEC Reports described
in clause (i) of the introductory paragraph of this ARTICLE III or set forth in Section 3.13(a) of
the Company Disclosure Schedule, is referred to herein as a “Company Contract.” The Company
has made available all contracts which involved payments by the Company or any of its Subsidiaries
during the year ended March 31, 2009 of more than $1 million or which would reasonably be expected
to involve payments during the year ended March 31, 2010 of more than $1 million, other than any
such contract that is terminable at will on 60 days or less notice without payment of a penalty and
other than any contract entered into on or after the date hereof that is permitted under the
provisions of Section 5.2.



          (b) (i) Each Company Contract is valid and binding on the Company or its applicable Subsidiary and
is in full force and effect, and, to the knowledge of the Company, is valid and binding on the
other parties thereto, (ii) the Company and each of its Subsidiaries and, to the knowledge of the
Company, each of the other parties thereto, has in all material respects performed all obligations
required to be performed by it to date under each Company Contract, and (iii) no event or condition
exists which



9









 




constitutes or, after notice or lapse of time or both, would constitute a material breach or
default on the part of the Company or any of its Subsidiaries or, to the knowledge of the Company,
any other party thereto, under any such Company Contract, except, in each case, where such
invalidity, failure to be binding, failure to so perform or breach or default, individually or in
the aggregate, would not have or reasonably be expected to have a Material Adverse Effect.




     Section 3.14 Insurance. The Company and its Subsidiaries are insured with reputable and
financially sound insurers against such risks and in such amounts as is sufficient to comply with
applicable Law, is consistent with industry practice and which the management of the Company
reasonably has determined to be prudent. Section 3.14 of the Company Disclosure Schedule contains a
true and complete list and summary description (including name of insurer, agent, coverage and
expiration date) of all insurance policies in force on the date hereof that are material to the
business and assets of the Company and its Subsidiaries. The Company and its Subsidiaries are in
material compliance with such insurance policies and are not in default under any of the material
terms thereof. Neither the Company nor any Subsidiary thereof has taken any action or failed to
take any action which, with notice or the lapse of time, or both, would constitute such a default.
None of the execution and delivery of the Transaction Agreements, the performance by the Company of
its obligations thereunder or the consummation of the transactions contemplated thereby will
constitute a default (or an event which, with notice or lapse of time, or both, would constitute a
default) under, or result in the cancellation of or non-compliance with any provisions of, such
policies (including any change of control provisions thereof), except for such defaults or other
events which would not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Each such policy is outstanding and in full force and effect and except for
policies insuring against potential liabilities of officers, directors and employees of the Company
and its Subsidiaries, the Company or the relevant Subsidiary thereof is the sole beneficiary of
such policies. No written notice of cancellation or termination has been received with respect to
any such policy. All premiums and other payments due under any such policy have been paid, and all
claims thereunder have been filed in due and timely fashion.



     Section 3.15 Tax Matters. Each of the Company and its Subsidiaries has filed and will
continue to file all tax returns required to be filed by it and has paid and will pay all income
taxes payable by it which have become due pursuant to such tax returns and all other taxes and
assessments payable by it which have become due, other than those not yet delinquent and except for
those contested in good faith and for which adequate reserves have been established. Each of the
Company and its Subsidiaries has paid, or has provided adequate reserves (in the good faith
judgment of the management of Borrower) for the payment of, all federal and state income taxes
applicable for all prior fiscal years and for the current fiscal year to the date hereof. The
Company has no knowledge of any audit, assessment or other proposed action or inquiry of the
Internal Revenue Service or any other taxing authority with respect to any tax liability of the
Company or any of its Subsidiaries.



     Section 3.16 Hazardous Materials. Neither the Company nor any of its Subsidiaries is in
material violation of any applicable statute, regulation, ordinance or policy of any governmental
entity relating to the ecology, human health, safety or the environment and, to the Company’s
knowledge, no Hazardous Material is located on any real property owned or leased by the Company or
any of its Subsidiaries or has been discharged from or to, or penetrated into, any real property
(or surface or subsurface rivers or streams crossing or adjoining any real property) owned or
leased by the Company or any of its Subsidiaries or the aquifer underlying any real property owned
or leased by the Company or any of its Subsidiaries.



     Section 3.17 Intellectual Property. Except as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect: (a) the Company and/or each of its
Subsidiaries owns, or is licensed or otherwise possesses sufficient rights to use such rights as it
has in and



10









 




to all the Company Intellectual Property; (b) the use of the Company Intellectual Property by the
Company and its Subsidiaries does not constitute an infringement or misappropriation of any valid
third party Intellectual Property right in existence as of the date hereof; (iv) except for
allegations that have since been resolved, neither the Company nor any of its Subsidiaries has
received any written notice from any Person alleging that the use of any of the Company
Intellectual Property or the operation of the Company’s or its Subsidiaries’ businesses infringes,
dilutes (in the case of trademarks), or otherwise violates the Intellectual Property of such
Person.




     Section 3.18 Employee Matters. Except as set forth in Section 3.18 of the Company
Disclosure Schedule, there are no material controversies pending or, to the knowledge of the
Company, threatened between the Company or any of its Subsidiaries and any current or former
employees of the Company or any of its Subsidiaries. There has been no “mass layoff” or “plant
closing” as defined by the Worker Adjustment Retraining Notification Act or similar state or local
“plant closing” Law with respect to the Company or any of its Subsidiaries since January 1, 2006.
Since January 1, 2006, neither the Company nor any of its Subsidiaries has experienced any employee
strikes, work stoppages, slowdowns or lockouts. There is no material unfair labor practice
complaint against the Company or any of its Subsidiaries pending or, to the knowledge of the
Company, threatened before any Governmental Entity, and no pending or, to the knowledge of the
Company, threatened arbitration arising out of any collective bargaining agreement.



     Section 3.19 Employee Benefit Plans. (a) Section 3.19(a) of the Company Disclosure Schedule
contains a true and complete list of each material Plan. For purposes of this Agreement, the term
“Plan” shall mean any “employee benefit plan”(within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”), including
multiemployer plans within the meaning of ERISA Section 3(37)), stock purchase, stock option,
severance, employment, loan, change-in-control, fringe benefit, collective bargaining, bonus,
incentive, deferred compensation and all other employee benefit plans, agreements, programs,
policies or other arrangements, whether or not subject to ERISA (including any funding mechanism
therefore now in effect or required in the future as a result of the transactions contemplated by
this Agreement or otherwise), whether formal or informal, oral or written, legally binding or not,
under which any current or former employee, officer, director, consultant or independent contractor
of the Company or any of its Subsidiaries (“Company Employees”) has any present or future
right to benefits or under which the Company or any of its Subsidiaries has any present or future
material liability.



          (b) With respect to each Plan, the Company has made available to Purchaser a current, accurate and
complete copy (or, to the extent no such copy exists, an accurate description) thereof and, to the
extent applicable: (i) any related trust agreement or other funding instrument; (ii) the most
recent determination letter, if applicable; (iii) any summary plan
description and other written communications by the Company or any of its Subsidiaries to Company
Employees concerning the extent of the benefits provided under a Plan; and (iv) a summary of any
proposed amendments or changes anticipated to be made to the Plans at any time within the twelve
months immediately following the date hereof.



          (c) (i) Except as would not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect, each Plan has been established and administered in accordance with its
terms, and in compliance with the applicable provisions of ERISA, the Code and other applicable
laws, rules and regulations; (ii) each Plan which is intended to be qualified within the meaning of
Section 401(a) of the Code is so qualified and has received a favorable determination letter as to
its qualification, and to the knowledge of the Company, nothing has occurred, whether by action or
failure to act, that would reasonably be expected to cause the loss of such qualification; (iii) no
event has occurred and no condition exists that would subject the Company or any of its
Subsidiaries, either directly or by reason of



11









 




their affiliation with any “ERISA Affiliate” (defined as any organization which is a member
of a controlled group of organizations within the meaning of Sections 414(b), (c), (m) or (o) of
the Code), to any material tax, fine, lien, penalty or other liability imposed by ERISA, the Code
or other applicable laws, rules and regulations; (iv) for each Plan with respect to which a Form
5500 has been filed, no material change has occurred with respect to the matters covered by the
most recent Form since the date thereof, (v) no “reportable event”(as such term is defined in
Section 4043 of ERISA), “prohibited transaction”(as such term is defined in Section 406 of ERISA
and Section 4975 of the Code) or “accumulated funding deficiency”(as such term is defined in
Section 302 of ERISA and Section 412 of the Code (whether or not waived)) has occurred with respect
to any Plan; (vi) except as set forth in Section 3.19(c)(vi) of the Company Disclosure Schedule, no
Plan provides post-employment welfare (including health, medical or life insurance) benefits and
neither the Company nor any of its Subsidiaries have any obligation to provide any such
post-employment welfare benefits now or in the future, other than as required by Section 4980B of
the Code; (vii) there is no present intention that any Plan be materially amended, suspended or
terminated, or otherwise modified to adversely change benefits (or the levels thereof) under any
Plan at any time within the twelve months immediately following the date hereof; and (viii) neither
the Company nor any ERISA Affiliate has engaged in, or is a successor or parent corporation to an
entity that has engaged in, a transaction described in Sections 4069 or 4212(c) of ERISA.




          (d) None of the Plans is a “single employer plan” (within the meaning of Section 3(41) of ERISA)
nor a “multiemployer plan” (within the meaning of Section 4001(a)(3) of ERISA) and none of the
Company, its Subsidiaries or any ERISA Affiliate has at any time sponsored or contributed to, or
has or had any material liability with respect to a single employer plan or a multiemployer plan
that remains unsatisfied.



          (e) With respect to any Plan: (i) no Actions (other than routine claims for benefits in the
ordinary course of business consistent with past practice) are pending or, to the knowledge of the
Company, threatened; (ii) to the knowledge of the Company, no facts or circumstances exist that
would reasonably be expected to give rise to any such Actions; (iii) no written or oral
communication has been received from the Pension Benefit Guaranty Corporation (the “PBGC”)
in respect of any Plan subject to Title IV of ERISA concerning the funded status of any such plan
or any transfer of assets and liabilities from any such plan in connection with the transactions
contemplated herein; and (iv) no administrative investigation, audit or other administrative
proceeding by the Department of Labor, the PBGC, the Internal Revenue Service or other Governmental
Entities are pending or in progress or, to the knowledge of the Company, threatened (excluding any
routine requests for information from the PBGC).



          (f) No Plan exists that would result in the payment to any present or former Company Employee of
any money or other property or accelerate or provide any other rights or benefits to any present or
former Company Employee as a result of the transactions contemplated by this Agreement. There is no
Plan that, individually or collectively, could give, or has given, rise to the payment of any
amount that would reasonably be expected to be subject to excise tax under Section 4999 of the
Code.



     Section 3.20 Board Approval; Requisite Shareholder Approvals. (a) The Board of Directors of
the Company, by resolutions duly adopted by unanimous vote of the entire Board of Directors at a
meeting duly called and held, has (i) approved this Agreement, the other Transaction Agreements,
the Pre-Emptive Rights Offering, the issuance and sale of the Purchased Stock as provided herein,
the issuance of the Purchased Stock, the issuance of shares of Common Stock upon conversion of the
Series B Preferred Stock currently held by the U.S. Treasury, the issuance of shares of Common
Stock upon conversion of all or a portion of the amounts due and outstanding under the Existing
Loan Agreement, the issuance of shares of Common Stock upon conversion of the convertible
promissory notes



12









 




to be issued pursuant to the New Loan Agreement, the amendment to the articles of incorporation of
the Company in the form attached as Exhibit D hereto (the “Charter Amendment”) and
the other transactions contemplated hereby and by the other Transaction Agreements, and determined
that such agreements, such amendment and such transactions are fair to and in the best interests of
the Company and its shareholders and declared such agreements, such amendment and such transactions
to be advisable and
(ii) recommended that the shareholders of the Company approve the issuance of the Purchased Stock,
upon conversion of the Series B Preferred Stock, upon conversion of all or a portion of the amounts
due and outstanding under the Existing Loan Agreement and upon conversion of the convertible
promissory notes to be issued pursuant to the New Loan Agreement and adopt the Charter Amendment
and directed that such matters be submitted for consideration by the shareholders of the Company at
the Company Shareholders Meeting.




          (b) The affirmative vote of (i) the holders of a majority of the outstanding shares of Common Stock
to adopt the Charter Amendment and (ii) the holders of a majority of the shares of Common Stock
having voting power and present in person or represented by proxy and voting at a meeting at which
the holders of a majority of the outstanding Common Stock are present or represented by proxy to
approve (w) the issuance of the Purchased Stock pursuant to this Agreement, (x) the issuance of
shares of Common Stock upon conversion of the Series B Preferred Stock currently held by the U.S.
Treasury, (y) the issuance of shares of Common Stock upon conversion of all or a portion of the
amounts due and outstanding under the Existing Loan Agreement and (z) the issuance of shares of
Common Stock upon conversion of the convertible promissory notes to be issued pursuant to the New
Loan Agreement (together, the “Requisite Shareholder Approvals”) are the only votes of the
holders of any class or series of capital stock of the Company necessary to approve the
transactions contemplated by this Agreement and the other Transaction Agreements, or to approve the
related transactions that are conditions to Purchaser’s obligation to purchase the Purchased Stock
at the Closing, as set forth in Section 6.1(k) and Section 6.1(l).



     Section 3.21 Opinion of Financial Advisor. The Company has received the opinion of Stifel,
Nicolaus & Co., Inc., dated as of the date of this Agreement, to the effect that, as of such date,
the consideration to be paid to the Company in connection with the issuance and sale of the
Purchased Stock is fair, from a financial point of view, to the holders of Common Stock.



     Section 3.22 Broker’s Fees. Except for fees payable to Badger Capital pursuant to the
Badger Fee Agreement, neither the Company nor any Subsidiary thereof nor any of their respective
officers or directors has employed any broker or finder or incurred any liability for any broker’s
fees, commissions or finder’s fees in connection with any of the transactions contemplated by this
Agreement. True, correct and complete copies of all agreements with Badger Capital pertaining to
broker’s fees, commissions or finder’s fees in connection with any of the transactions contemplated
by this Agreement have previously been made available to Purchaser.



     Section 3.23 Loan Matters. (a) (i) Section 3.23 of the Company Disclosure Schedule sets
forth a list of all extensions of credit (including commitments to extend credit) (“Loans”)
by the Company and its Subsidiaries to any directors, executive officers and principal shareholders
(as such terms are defined in Regulation O (“Regulation O”) of the Federal Reserve Board
(12 C.F.R. Part 215)) of the Company or any of its Subsidiaries; (ii) there are no employee,
officer, director or other affiliate Loans
on which the borrower is paying a rate other than that reflected in the note or the relevant credit
agreement or on which the borrower is paying a rate which was below market at the time the Loan was
made; and
(iii) all such Loans are and were made in compliance in all material respects with all applicable
Law.



          (b) All reserves for loan losses shown on the financial statements of the Company included in the
2009 Form 10-K and in the Forms 10-Q for the periods ended June 30, 2009 and



13









 




September 30, 2009 have been calculated in accordance with prudent and customary banking practices
and are adequate in all material respects to reflect all known and reasonably anticipated risk of
losses inherent in the Loans of the Company and its Subsidiaries. To the knowledge of the Company,
no fact exists which would be reasonably likely to require a future material increase in the
provision for loan losses reflected in such financial statements in accordance with GAAP. The Bank
does not have any Loan exceeding its legal lending limit or any Loan with an unpaid principal
amount or unfunded commitment in excess of $500,000 which is, or in accordance with applicable
regulatory requirements should be, classified as sub-standard, doubtful or a loss, except as set
forth in Section 3.23(b) of the Company Disclosure Schedule.




          (c) None of the material agreements pursuant to which the Company or any of its Subsidiaries has
sold Loans or pools of Loans or participations in Loans or pools of Loans contains any continuing
obligation to repurchase such Loans or interests therein solely on account of a payment default by
the obligor on any such Loan, other than (i) customary repurchase obligations pursuant to standard
agreements with Fannie Mae or Freddie Mac and (ii) customary repurchase obligations on account of
an early payment default.



     Section 3.24 Transactions with Affiliates. Except (i) for Loans by the Company or any of
its Subsidiaries to any directors, executive officers and principal shareholders pursuant to
Regulation O and set forth in Section 3.24 of the Company Disclosure Schedule, and (ii) for any
arrangement, contract, agreement or transaction which involves aggregate per annum payments by the
Company and its Subsidiaries of less than $120,000, there are no contracts or other agreements
between the Company or any of its Subsidiaries, on the one hand, and any of its Affiliates (other
than the Company or any of its Subsidiaries) or any officer, director or employee of any such
Affiliate, on the other hand.



     Section 3.25 Controls and Procedures. The Company: (i) has implemented and maintains
disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) to ensure
that material information relating to the Company, including its Subsidiaries, is made known to the
chief executive officer and the chief financial officer of the Company by others within those
entities; and
(ii) has disclosed, based on its most recent evaluation prior to the date hereof, to the Company’s
independent registered accounting firm and the audit committee of the Board of Directors (A) any
significant deficiencies and material weaknesses in the design or operation of internal controls
over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that are reasonably
likely to adversely affect the Company’s ability to record, process, summarize and report financial
information and
(B) any fraud, whether or not material, that involves management or other employees who have a
significant role in the Company’s internal controls over financial reporting.



     Section 3.26 Valid Offering. Assuming the accuracy of the representations and warranties of
Purchaser contained in Section 4.2, the offer, sale and issuance by the Company of the Purchased
Stock to Purchaser will be exempt from the
registration requirements of the Securities Act and will have been registered or qualified (or are
exempt from registration and qualification) under the registration, permit or qualification
requirements of all applicable state or other local securities laws.



     Section 3.27 Takeover Statutes; No Rights Plan. The Board of Directors has taken or will
take all necessary action to ensure that the transactions contemplated by this Agreement will be
deemed approved by the Board of Directors for the purposes of Section 180.1143 of the Wisconsin
Business Corporation Law. No other takeover, anti-takeover, “fair price,” “moratorium,” “control
share acquisition” or other similar Law (including Section 180.1143 of the Wisconsin Business
Corporation Law, a “Takeover Statute”) or any anti-takeover provision in the Company’s
articles of incorporation or bylaws is applicable to the transactions contemplated by the
Transaction Agreements or the Voting



14









 




Agreement or the transactions contemplated thereby. The Company does not have any shareholder
rights plan in effect.




     Section 3.28 Investment Company Act. None of the Company or any of its Subsidiaries is an
“investment company” or a company “controlled” by an “investment company,” within the meaning of
the Investment Company Act of 1940, as amended.



     Section 3.29 No Misstatement of Material Fact. No information, exhibit, report or document
furnished by the Company to Purchaser in connection with the negotiation or execution of the
Transaction Documents contained any material misstatement of fact or omitted to state a material
fact or any fact necessary to make the statements contained therein not misleading when taken as a
whole, all as of the date when furnished to the Company.



ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PURCHASER




     Except as disclosed in the corresponding section of the disclosure schedule provided by Purchaser
to the Company on the date hereof (the “Purchaser Disclosure Schedule”) (it being agreed
that disclosure of any item in any section of Purchaser Disclosure Schedule shall be deemed
disclosure with respect to any other section to which the relevance of such item is reasonably
apparent on its face), Purchaser hereby represents and warrants to the Company as follows:



     Section 4.1 Organization; Authority; No Conflict. Purchaser is a limited liability company
validly existing and in good standing under the Laws of the State of Delaware. Purchaser has all
requisite power and authority to execute and deliver this Agreement and the Registration Rights
Agreement, to consummate the transactions contemplated hereby and thereby and to perform its
obligations hereunder and thereunder. The execution and delivery of this Agreement and the
Registration Rights Agreement by Purchaser and the consummation by Purchaser of the transactions
contemplated hereby and thereby have been duly authorized by all necessary action on the part of
Purchaser. This Agreement has been (and the Registration Rights Agreement, when executed, will be)
duly and validly executed and delivered by Purchaser and (assuming due authorization, execution and
delivery by the Company) constitute (or, in the case of the Registration Rights Agreement, will
constitute when executed and delivered) legal, valid and binding obligations of Purchaser,
enforceable against it in accordance with their terms, except as enforcement may be limited by
general principles of equity whether applied in a court of law or a court of equity and by
bankruptcy, insolvency, reorganization, moratorium, or other similar laws relating to creditors’
rights and remedies generally. Neither the execution and delivery of this Agreement or the
Registration Rights Agreement by Purchaser nor the consummation by Purchaser of the transactions
contemplated hereby or thereby, nor compliance by Purchaser with any of the terms or provisions
hereof or thereof, will: (i) violate any provision of the limited liability company agreement or
similar governing documents of Purchaser; or (ii) assuming that the consents and approvals referred
to in Section 4.3 are duly obtained, (x) violate any Law or Order applicable to Purchaser or any of
its properties or assets, or
(y) violate, conflict with, result in a breach of any provision of or the loss of any benefit
under, constitute a default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of termination or cancellation
under, accelerate the performance required by, or result in the creation of any Encumbrance upon
any of the respective properties or assets of Purchaser under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license, lease or other
agreement, instrument or obligation to which Purchaser is a party, or by which it or any of its
properties or assets may be bound or affected, except (in the case of clause (ii) above) for such
violations, conflicts, breaches, defaults or other events which would not reasonably be expected to
have, individually or in the aggregate, a material adverse effect on Purchaser’s ability to



15









 




consummate the transactions contemplated by this Agreement or the Registration Rights Agreement or
to perform its obligations hereunder or thereunder.




     Section 4.2 Investment Representations. Purchaser acknowledges (on its own behalf and on
behalf of its members), that the Purchased Stock has not been registered under the Securities Act
or under any state or local securities laws. Purchaser: (i) is an “accredited investor” within the
meaning of Regulation D, Rule 501(a), promulgated by the SEC; and (ii) acknowledges that the
Purchased Stock acquired by it must be held indefinitely unless the distribution thereof is
subsequently registered under the Securities Act or unless an exemption from the registration
requirements of the Securities Act is available.



     Section 4.3 Consents. Except as set forth in Section 3.5 of the Company Disclosure Schedule
and for (i) the filing of applications and notices, as applicable, with the OTS under HOLA and the
Wisconsin Department of Financial Institutions and the approval of such applications and notices,
(ii) any notices or filings under the HSR Act and the expiration or termination of any applicable
waiting periods thereunder, (iii) filings required as a result of facts or circumstances solely
attributable to the Company, its Subsidiaries, a direct or indirect change of control thereof or
the operation of their businesses, and (iv) the consents and approvals of third parties which are
not Governmental Entities, the failure of which to be obtained would not be reasonably expected to
have, individually or in the aggregate, a material adverse effect on Purchaser’s ability to
consummate the transactions contemplated by this Agreement or the Registration Rights Agreement or
to perform its obligations hereunder or thereunder, no consents or approvals of, or filings or
registrations by, Purchaser or Badger Capital with any Governmental Entity or with any other third
party are necessary in connection with (A) the execution and delivery by Purchaser of this
Agreement or the Registration Rights Agreement and (B) the consummation by Purchaser of the
transactions contemplated hereby and thereby.



     Section 4.4 Litigation. There is no Action pending or, to Purchaser’s knowledge, threatened
against Purchaser or Badger Capital which would reasonably be expected to have, individually or in
the aggregate, a material adverse effect on the ability of Purchaser to perform its obligations
under this Agreement and to consummate the transactions contemplated hereby and thereby.



     Section 4.5 No Brokers. As of the date of this Agreement, Purchaser has not employed any
broker or finder, or incurred any liability for any brokerage or finders’ fees or any similar fees
or commissions, in connection with the transactions contemplated by this Agreement and the other
Transaction Agreements in the event that the Closing does not occur.



     Section 4.6 No Other Operations. Purchaser has not conducted any business and has no
assets, liabilities or obligations of any nature other than those incident to its formation and
pursuant to this Agreement, the other Transaction Agreements and the Equity Commitments and the
transactions contemplated hereby and thereby.



ARTICLE V

COVENANTS




     Section 5.1 Conduct of Business Prior to the Closing. Except as otherwise expressly
contemplated or permitted by the terms of this Agreement, as set forth in Section 5.1 of the
Company Disclosure Schedule, as required by applicable Law or with the prior written consent of
Purchaser, during the period from the date of this Agreement to the Closing Date (the
“Pre-Closing Period”), the Company shall, and shall cause each of its Subsidiaries to, (a)
conduct its business in the ordinary course consistent with past practice, (b) use reasonable best
efforts to preserve intact its current business organizations and its rights and Permits issued by
Governmental Entities, keep available the services of its current officers and key employees and
preserve its relationships with customers, suppliers, Governmental Entities and



16









 




others having business dealings with it to the end that its goodwill and ongoing businesses shall
be unimpaired and (c) not take any action that would reasonably be expected to materially adversely
affect or materially delay the receipt of any approvals of any Governmental Entity required to
consummate the transactions contemplated hereby or by the other Transaction Agreements or
materially adversely affect or materially delay the consummation of the transactions contemplated
hereby or by the other Transaction Agreements.




     Section 5.2 Company Forbearances. Except as otherwise expressly contemplated or permitted
by the terms of this Agreement, as set forth in Section 5.2 of the Company Disclosure Schedule or
with the prior written consent of Purchaser,
during the Pre-Closing Period, the Company shall not, and shall not permit any of its Subsidiaries
to:



          (a) (i) adjust, split, combine or reclassify any of its capital stock; (ii) set any record or
payment dates for the payment of any dividends or distributions on its capital stock or make,
declare or pay any dividend or make any other distribution on, or directly or indirectly redeem,
purchase or otherwise acquire, any shares of its capital stock or any securities or obligations
convertible into or exercisable or exchangeable for any shares of its capital stock or stock
appreciation rights or grant any Person any right to acquire any shares of its capital stock, other
than (A) regular quarterly or monthly cash dividends on the Company Preferred Stock as required by
the terms thereof in effect as of the date hereof and with record and payment dates consistent with
past practice; (B) dividends paid by any of the Subsidiaries of the Company so long as such
dividends are only paid to the Company or any of its other wholly-owned Subsidiaries; and (C)
dividends by the Company at a rate not in excess of $0.01 per share per quarter; or (iii) issue or
commit to issue any additional shares of capital stock (except upon the exercise of Company Stock
Options and restricted stock unit grants outstanding as of the date hereof and disclosed in Section
3.2(a) of the Company Disclosure Schedule, pursuant to the Pre-Emptive Rights Offering (as defined
below), upon conversion of all or a portion of the indebtedness under the Existing Loan Agreement
into shares of Common Stock or upon conversion of the Series B Preferred Stock in accordance with
its terms), Voting Debt or any securities convertible into or exercisable or exchangeable for, or
any rights, warrants or options to acquire, any additional shares of capital stock or Voting Debt;



          (b) enter into any new line of business or change its lending, investment, risk and asset-liability
management and other material banking or operating policies in any material respect, except as
required by Law or by policies imposed by a Governmental Entity;



          (c) other than (i) in the ordinary course of business consistent with past practice, or
(ii) as expressly required by the terms of any contracts or agreements in force at the date of this
Agreement and set forth in Section 5.2(c) of the Company Disclosure Schedule or (iii) for the sales
of the branches of the Bank listed in Section 5.2(c) of the Company Disclosure Schedule, sell,
lease, transfer, mortgage, encumber or otherwise dispose of any of its assets or properties to any
Person (other than to a wholly-owned Subsidiary of the Company and other than disposals of obsolete
equipment), provided that any sales of Loans and/or other real estate owned permitted on the basis
that they are effected in the ordinary course of business consistent with past practice shall only
be permitted if (x) in the case of sales of Loans, such sales are made on a non-recourse basis and
at a sale price no less than 100% of the principal amount of such Loans (plus accrued but unpaid
interest thereon) and (y) in the case of sales of other real estate owned, such sales are made on a
non-recourse basis and at a sale price no less than 100% of the net book value of such other real
estate owned;



          (d) make any acquisition of or investment in any other Person, by purchase or other acquisition of
stock or other equity interests (other than in a fiduciary capacity in the ordinary course of
business consistent with past practice), by merger, consolidation, asset purchase or other business
combination, or by formation of any joint venture, partnership or other business organization or by



17









 




contributions to capital; or make any purchases or other acquisitions of any debt securities,
property or assets in or from any Person other than a wholly-owned Subsidiary of the Company,
except for:
(i) foreclosures and other similar acquisitions in connection with debts previously contracted in
the ordinary course of business consistent with past practice; (ii) purchases of U.S. government
and U.S. government agency securities which are investment grade rated and have a final maturity of
five years or less; and (iii) transactions that, together with all other such transactions, are not
material to the Company, in each case, in the ordinary course of business consistent with past
practice;




          (e) other than as set forth in Section 5.2(e) of the Company Disclosure Schedule, enter into,
renew, extend or terminate any lease, license, contract or other agreement or arrangement, other
than Loans made in accordance with paragraph (i) below or the incurrence of indebtedness for
borrowed money in accordance with paragraph (j) below, that calls for aggregate annual payments of
$100,000 or more, or make any material change in or waive any material provision of any of such
leases, licenses, contracts or other agreements or arrangements, other than renewals of such
leases, licenses, contracts or other agreements or arrangements for a term of one year or less
without material changes to the terms thereof; provided that the Company may engage an investment
banking firm to provide a fairness opinion to its Board of Directors relating to the Pre-Emptive
Rights Offering, the issuance and sale of the Purchased Stock and the other transactions
contemplated by this Agreement for an amount not to exceed $350,000.



          (f) (i) hire any new employee who is deemed to be an “executive officer” of the Company or the Bank
(as determined under Regulation O), or promote a current employee to an executive officer position
if such employee is not currently an executive officer of the Company or the Bank; (ii) increase
the compensation or benefits of any Company Employee (except for increases in salary or wages of
Company Employees in the ordinary course of business consistent with past practice, provided that
no such increase shall result in an annual adjustment of more than 3% of the aggregate base salary
and wages payable by the Company and its Subsidiaries during 2009); (iii) except as required by
Law, grant any severance or termination pay to any Company Employee except pursuant to the terms of
any Plan in effect on the date of this Agreement and which was made available to Purchaser prior to
the date of this Agreement and disclosed in Section 3.19(a) of the Company Disclosure Schedule;
(iv) loan or advance any money or other property to any Company Employee other than in the ordinary
course of business consistent with past practice; (v) establish, adopt, enter into, amend or
terminate, or grant (other than in the ordinary course of business consistent with past practice)
any waiver or consent under any Plan or any plan, agreement, program, policy, trust, fund or other
arrangement that would be a Plan if it were in existence as of the date of this Agreement; or (vi)
grant any equity or equity-based awards (including Company Stock Options and restricted stock
units);



          (g) make or authorize any capital expenditures in excess of (A) $250,000 per project or related
series of projects or (B) $500,000 in the aggregate;



          (h) except (i) as required by Law, (ii) for the sales of the branches of the Bank listed in Section
5.2(c) of the Company Disclosure Schedule and (iii) the conversion of the Bank’s Hudson loan
production office to a full-service branch, make application for the opening, relocation or closing
of any, or open, relocate or close any, branch office, loan production or servicing facility;



          (i) except for Loans or commitments for Loans that have previously been approved by the Company
prior to the date of this Agreement: (i) make or acquire any Loan or issue a commitment (or renew
or extend an existing commitment) for any Loan other than Loans and commitments made or Loans
acquired in each case in the ordinary course of business consistent with past practice which have a
principal balance not in excess of $500,000 without submitting to Purchaser, to be received by
Purchaser at least three Business Days prior to taking such action, a copy of the applicable Loan
write up packet



18









 




containing the same information submitted to the Company’s Board of Directors or the
applicable authorizing or reviewing body for such Loans in connection with obtaining approval for
such action and obtaining Purchaser’s written consent to make or acquire such Loan; (ii) renew any
Loan that has an internal loan classification rating of seven or better for a period longer than
364 days, provided that such renewal does not increase the principal balance of such Loan; (iii)
renew any Loan that has an internal loan classification rating worse than seven for a period
longer than 180 days, provided that such renewal does not increase the principal balance of such
Loan; (iv) take any action that would result in any discretionary releases of collateral or
guarantees; provided, however, that the Company may accept a deed lieu of foreclosure in with
respect to a Loan that has a principal balance not in excess of $500,000; or
(v) restructure any Loan or commitment for any Loan with a principal balance in excess of the
respective amounts set forth in clause (i) above; notwithstanding the foregoing clause (i) above,
if the Company sends a copy of the applicable Loan write up packet to Purchaser at least three
Business Days prior to making or acquiring any Loan or issuing a commitment and Purchaser does not
respond to the Company prior to the time that the Company intends to take such action, then
Purchaser shall be deemed to consent to the Company’s of such action;




          (j) (i) incur any indebtedness for borrowed money, other than deposit liabilities entered into
in the ordinary course of business consistent with past practice; (ii) guarantee, endorse or assume
responsibility for the obligations of any Person other than any wholly-owned Subsidiary of the
Company (other than the endorsement of checks and other negotiable instruments in the normal
process of collection); or (iii) redeem, repurchase, prepay, defease, or cancel, or modify in any
material respect the terms of, indebtedness for borrowed money, other than (x) deposit liabilities
in the ordinary course of business consistent with past practice, (y) in accordance with the terms
of the applicable instrument as in effect on the date hereof or (z) indebtedness outstanding under
the Existing Loan Agreement in accordance with Section 5.19;



          (k) other than as set forth in Section 5.2(k) of the Company Disclosure Schedule, settle any Action
involving monetary damages or other payments in excess of $100,000, agree or consent to the
issuance of any Order restricting or otherwise affecting its business or operations, or release or
dismiss any material claim against any other Person;



          (l) amend its articles of incorporation, bylaws or similar governing documents, or enter into a
plan of consolidation, merger, share exchange, reorganization or complete or partial liquidation
with any Person (other than consolidations, mergers or reorganizations solely among wholly-owned
Subsidiaries of the Company), or a letter of intent or agreement in principle with respect thereto;



          (m) except as required by Law, materially change its investment securities portfolio policy, or the
manner in which the portfolio is classified or reported;



          (n) except as required by Law, make any material changes in its policies and practices with respect
to: (i) underwriting, pricing, originating, acquiring, selling, servicing, or buying or selling
rights to service Loans; or (ii) its hedging practices and policies;



          (o) make any changes in its accounting methods or method of Tax accounting, practices or policies,
except as may be required under Law or GAAP, in each case following consultation with the Company’s
independent public accountants;



          (p) enter into any securitizations of any Loans or create any special purpose funding or variable
interest entity other than in the ordinary course of business consistent with past practice;



19









 





          (q) other than as set forth in Section 5.2(q) of the Company Disclosure Schedule, introduce any
material new products or services, any material marketing campaigns or any material new sales
compensation or incentive programs or arrangements;



          (r) except as required by Law, make or change any Tax election, file any amended Tax Returns,
settle or compromise any material Tax liability of the Company or any of its Subsidiaries, agree to
an extension or waiver of the statute of limitations with respect to the assessment or
determination of Taxes of the Company or any of its Subsidiaries, enter into any closing agreement
with respect to any Tax or surrender any right to claim a Tax refund; or



          (s) agree to, or make any commitment to, take any of the actions prohibited by this Section 5.2.



     Section 5.3 Access. (a) During the Pre-Closing Period, the Company shall, and shall cause
its Subsidiaries, and its and its Subsidiaries’ officers, directors, employees, accountants and
other agents and representatives (collectively, the “Company 
Representatives”) to: (i) afford the directors, officers, employees, partners, members,
advisors, agents, and representatives of Purchaser (collectively, the “Purchaser
Representatives”), reasonable access during normal business hours to its properties, offices,
branches and other facilities, to the Company Representatives and to all books and records of the
Company and its Subsidiaries; (ii) furnish Purchaser with a copy of each report, schedule,
registration statement and other document filed or received by it during such period pursuant to
the requirements of any federal, state or local securities, banking, mortgage lending, real estate
or consumer finance or protection Law (other than reports or documents which the Company is not
permitted to disclose under applicable Law) and all financial, operating and other data and
information as Purchaser may from time to time reasonably request; and (iii) afford Purchaser the
opportunity to discuss the Company’s affairs, finances and accounts with the Company’s officers on
a regular basis.



          (b) No investigation by either of the parties or their respective Representatives shall constitute
a waiver of or otherwise affect the representations, warranties, covenants or agreements of the
other party set forth herein.



     Section 5.4 Proxy Statement.



          (a) As promptly as reasonably practicable following the date of this Agreement, the Company
shall prepare and shall cause to be filed with the SEC a proxy statement (together with any
amendments thereof or supplements thereto, the “Proxy Statement”) relating to the meeting
of the Company’s shareholders to be held to consider, among other things, (i) the approval of the
Charter Amendment and (ii) the approval of this Agreement, the issuance of the Purchased Stock, the
issuance of shares of Common Stock upon conversion of the Series B Preferred Stock currently held
by the U.S. Treasury, the issuance of shares of Common Stock upon conversion of all or a portion of
the amounts due and outstanding under the Existing Loan Agreement and the issuance of shares of
Common Stock upon conversion of the convertible promissory notes issued pursuant to the New Loan
Agreement (the “Company Shareholders Meeting”). The Company shall include in the Proxy
Statement the recommendation of the Board of Directors of the Company in favor of approval of the
foregoing matters (the “Company Recommendation”), except that the Company shall not be
obligated to so include the Company Recommendation if the Company has effected a Change in
Recommendation in accordance with Section 5.6. None of the information with respect to the Company
or its subsidiaries to be included in the Proxy Statement will, at the time of the mailing of the
Proxy Statement or any amendments or supplements thereto, and at the time of the Company
Shareholders Meeting, contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading.




20












 




The Proxy Statement will comply as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations promulgated thereunder.




          (b) None of the information with respect to Purchaser or its Affiliates to be included in the Proxy
Statement will, at the time of the mailing of the Proxy Statement or any amendments or supplements
thereto, and at the time of the Company Shareholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which they were made, not
misleading.




          (c) The Company and Purchaser shall cooperate and consult with each other in the preparation of the
Proxy Statement. The Company shall cooperate and provide Purchaser with a reasonable opportunity to
review and comment on the draft of the Proxy Statement (including each amendment or supplement
thereto) prior to filing with the SEC. Without limiting the generality of the foregoing, Purchaser
will furnish to the Company the information relating to it required by the Exchange Act and the
rules and regulations promulgated thereunder to be set forth in the Proxy Statement. Each of the
Company and Purchaser shall promptly: (i) notify the other of the receipt of any comments from the
SEC with respect to the Proxy Statement and of any request by the SEC for amendments of, or
supplements to, the Proxy Statement; and (ii) provide the other with copies of all filings made
with the SEC and correspondence between it and the SEC with respect to the Proxy Statement. Each of
the Company and Purchaser shall use its reasonable best efforts to respond to and resolve all
comments from the SEC with respect to the Proxy Statement as promptly as practicable.




          (d) The Company shall mail, as promptly as practicable after filing, the definitive Proxy Statement
to the holders of Common Stock as of the record date established for the Company Shareholders
Meeting. If, at any time prior to the Closing, any event or circumstance relating to the Company or
Purchaser, or any of their respective Affiliates, officers or directors, should be discovered by
the Company or Purchaser, respectively, which, pursuant to the Exchange Act and the rules and
regulations promulgated thereunder should be set forth in an amendment or a supplement to the Proxy
Statement, such party shall promptly inform the other. Each of Purchaser and the Company agrees to
correct any information provided by it for use in the Proxy Statement which shall have become false
or misleading in any material respect.




     Section 5.5 Company Shareholders Meeting. The Company shall, as promptly as reasonably
practicable following the date of this Agreement, establish a record date for, duly call, give
notice of, convene and hold the Company Shareholders Meeting. At such Company Shareholders Meeting,
the Company shall make the Company Recommendation to its shareholders, and the Company shall use
all reasonable best efforts to solicit from its shareholders proxies in favor of the approval of
the proposals described in the Proxy Statement; provided, however, that the Company shall not be
obligated to recommend to its shareholders the approval of the proposals set forth in the Proxy
Statement or solicit proxies in favor of such approval to the extent that the Board of Directors of
the Company has duly made a Change in Recommendation in accordance with Section 5.6.



     Section 5.6 No Solicitation of Competing Proposal.



          (a) From and after the date of this Agreement until the earlier of the Closing and the date, if
any, on which this Agreement is terminated pursuant to Section 7.1, the Company agrees that neither
it nor any of its Subsidiaries shall, and that it shall direct and use its reasonable best efforts
to cause the Company Representatives not to, directly or indirectly, solicit, initiate or encourage
any inquiries or proposals from, discuss or negotiate with, provide any non-public information to,
or
consider the merits of any unsolicited inquiries or proposals from, any Person (other than
Purchaser or an Affiliate thereof) relating to any Acquisition Transaction or a potential
Acquisition Transaction involving the



21









 






Company or any Company Subsidiary. Notwithstanding the foregoing, the Company may provide
information at the request of, or enter into negotiations with, a third party with respect to an
Acquisition Transaction that was not directly or indirectly, after the date hereof, made,
encouraged, facilitated, solicited, initiated or assisted by the Company, any Company Subsidiary or
any of their respective directors, officers, employees, professional or financial advisors,
representatives, agents or Affiliates (an “Unsolicited Company Proposal”), but only to the
extent that the Board of Directors of the Company determines, in good faith, that the exercise of
its fiduciary duties to the Company’s shareholders under applicable law, as advised by its counsel,
requires it to take such action, and provided that the Company may not, in any event, provide to
such third party any information which it has not provided to Purchaser. The Company shall promptly
notify Purchaser orally, confirmed in writing, in the event it receives any such inquiry or
proposal and shall provide reasonable detail of all relevant facts relating to such inquiries.
Without limiting the foregoing, it is understood that any violation of the foregoing restrictions
by any Subsidiary of the Company or any Company Representative shall be deemed to be a breach of
this Section 5.6 by the Company.




          (b) Except as provided in Section 5.6 of the Company Disclosure Schedule, the Company shall, and
shall cause each of its Subsidiaries to, and shall direct and use its reasonable best efforts to
cause each of the Company Representatives to, immediately cease any existing solicitations,
discussions or negotiations with any Person with respect to a potential Acquisition Transaction.




          (c) Notwithstanding the limitations set forth in Section 5.6(a) and (b), if after the date of this
Agreement the Company receives an Unsolicited Company Proposal which did not result from or arise
in connection with a breach of Section 5.6(a) or (b) and which: (i) constitutes a Superior Proposal
(as defined below); or (ii) which the Board of Directors of the Company determines in good faith,
after consultation with the Company’s outside legal and financial advisors, could reasonably be
expected to result, after the taking of any of the actions referred to in either of clause (x) or
(y) below, in a Superior Proposal, the Company may take the following actions: (x) furnish
nonpublic information with respect to the Company and its Subsidiaries to the third party making
such Unsolicited Company Proposal, if, and only if, prior to so furnishing such information, the
Company and such third party enter into a confidentiality agreement and (y) engage in discussions
or negotiations with the third party with respect to the Unsolicited Company Proposal; provided,
however, that as promptly as reasonably practicable following the Company taking such actions as
described in clauses (x) or (y) above, the Company shall provide written notice to Purchaser of
such Superior Proposal or the determination of the Board of Directors of the Company as provided
for in clause (ii) above, as applicable.




          (d) Neither the Board of Directors of the Company nor any committee thereof shall withdraw, qualify
or modify the Company Recommendation in a manner adverse to Purchaser, or publicly propose to do
so, or take any other action or make any other public statement in connection with the Company
Shareholders Meeting or otherwise which is inconsistent with the Company Recommendation (any of the
foregoing, a “Change in Recommendation”) or approve or recommend or publicly propose to
approve or recommend, any other Acquisition Transaction. Notwithstanding the foregoing and the
limitations set forth in Section 5.6(a) and (b), if, prior to receipt of the Requisite Shareholder
Approvals, the Board of Directors of the Company determines in good faith, after consultation with
the Company’s outside legal and financial advisors, that failure to so withdraw, qualify or modify
the Company Recommendation would be reasonably likely to constitute a breach by the Board of
Directors of the Company of its fiduciary duties under applicable Law, the Board of Directors of
the Company may effect a Change in Recommendation; provided, however, that if such Change in
Recommendation is the result of a Superior Proposal, the Company shall have first: (i) provided
five Business Days’ prior written notice (such notice, a “Notice of Superior Proposal”) to
Purchaser that it is prepared to effect a Change in Recommendation in response to a Superior
Proposal and specifying the reasons therefor, including the terms and conditions of the Superior
Proposal that is the basis of the




22









 







proposed Change in Recommendation, and the identity of the Person making the proposal; (ii)
provided to Purchaser all non-public information delivered or made available to the Person making
any Superior Proposal in connection with such Superior Proposal that was not previously delivered
or made available to Purchaser; (iii) provided to Purchaser copies of documents relating the
Superior Proposal provided to the Company by the Person making the proposal, including the
letter or other document containing such person’s proposal and the terms and conditions thererof;
and (iv) during such five Business Day period, if requested by Purchaser, engaged in, and caused
its financial and legal advisors to engage in, good faith negotiations with Purchaser to amend this
Agreement.




          (e) Notwithstanding the limitations set forth in Section 5.6(a) and (b), if the Board of Directors
of the Company has effected a Change in Recommendation in compliance with the requirements of
Section 5.6(d), then the Board of Directors of the Company may, prior to the date on which the
condition set forth in Section 6.1(j) is satisfied and concurrently with such Change in
Recommendation, cause the Company to enter into a binding written agreement with respect to such
Superior Proposal and terminate this Agreement in accordance with Section 7.1(g); provided,
however, that the Company shall not terminate this Agreement pursuant to this Section 5.6(e), and
any purported termination pursuant to this Section 5.6(e) shall be void and of no force or effect,
unless prior to or concurrently with such termination the Company pays the Termination Fee payable
pursuant to Section 7.2(c).




          (f) As used in this Agreement, “Acquisition Transaction” shall mean: (i) a merger,
reorganization, share exchange, consolidation, business combination, recapitalization, dissolution,
liquidation, or similar transaction involving the Company or any of its Significant Subsidiaries;
(ii) the issuance by the Company or any of its Significant Subsidiaries of securities representing
20% or more of its outstanding voting securities (including upon the conversion, exercise or
exchange of securities convertible into or exercisable or exchangeable for such voting securities);
or (iii) the acquisition in any manner, directly or indirectly, of (x) 20% or more of the
outstanding voting securities of the Company or any of its Significant Subsidiaries (including
through the acquisition of securities convertible into or exercisable or exchangeable for such
voting securities), (y) 20% or more of the consolidated total assets of the Company and its
Subsidiaries, taken as a whole or (z) one or more businesses or divisions that constitute 20% or
more of the revenues or net income of the Company and its Subsidiaries, taken as a whole.




          (g) As used in this agreement, “Superior Proposal” shall mean a bona fide written
Unsolicited Company Proposal (not solicited or initiated in violation of Section 5.6(a) or (b))
that relates to a potential Acquisition Transaction that is determined in good faith by the Board
of Directors of the Company, after consultation with the Company’s legal and financial advisors, is
on terms that are more favorable to the shareholders of the Company than the transactions
contemplated by this Agreement and has a reasonable prospect of being consummated in accordance
with its terms




     Section 5.7 Efforts. (a) Subject to the terms and conditions of this Agreement, each of the
Company and Purchaser shall, and the Company shall cause its Subsidiaries to, use their reasonable
best efforts: (i) to take, or cause to be taken, all actions necessary, proper or advisable to
consummate the transactions contemplated by this Agreement and the other Transaction Agreements;
and (ii) to obtain (and to cooperate with the other party to obtain) any consent, authorization,
confirmation, determination, order or approval of, or any exemption by, any Governmental Entity and
any other third party which is required to be obtained by the Company, any of its Subsidiaries or
Purchaser, Badger Capital or any of the investors listed in Section 6.1(d)(ii) of Purchaser
Disclosure Schedule in connection with the transactions contemplated by this Agreement and the
other Transaction Agreements; provided, however, that Purchaser shall not be required to take any
action pursuant to the foregoing sentence if the taking of such action or the obtaining of such
consents, authorizations, orders, approvals or exemptions is



23









 




reasonably likely to result in a condition or restriction having an effect of the type referred to
in the last sentence of Section 6.1(d)(i).




          (b) Subject to the terms and conditions of this Agreement (including the proviso in Section
5.7(a)), each of the Company and Purchaser agrees to use reasonable best efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable
to consummate and make effective, as soon as practicable after the date of this Agreement, the
transactions contemplated hereby and by the other Transaction Agreements.




     Section 5.8 Notification of Certain Matters. (a) During the Pre-Closing Period, the Company
shall give prompt notice to Purchaser of the occurrence or non-occurrence of any event known to the
Company the occurrence or non-occurrence of which would reasonably be expected to cause the
condition in Section 6.1(a) not to be satisfied; provided, however, that the delivery of any notice
pursuant to this Section 5.8(a) shall not cure any breach of any representation or warranty
requiring disclosure of such matter prior to the date of this Agreement or otherwise limit or
affect the remedies available hereunder to Purchaser.



          (b) During the Pre-Closing Period, Purchaser shall give prompt notice to the Company of the
occurrence or non-occurrence of any event known to Purchaser the
occurrence or non-occurrence of
which would reasonably be expected to cause the condition in Section 6.2(a) not to be satisfied;
provided, however, that the delivery of any notice pursuant to this Section 5.8(b) shall not cure
any breach of any representation or warranty requiring disclosure of such matter prior to the date
of this Agreement or otherwise limit or affect the remedies available hereunder to the Company.




     Section 5.9 Regulatory and Other Authorizations; Notices and Consents. (a) Subject to the
other provisions of this Agreement (including the proviso in Section 5.7(a)), the parties hereto
shall cooperate with each other and use reasonable best efforts to promptly prepare and file all
necessary documentation, to effect all applications, notices, petitions and filings, to obtain as
promptly as practicable all permits, consents, approvals and authorizations of all third parties
and Governmental Entities which are necessary or advisable to consummate the transactions
contemplated by this Agreement and by the other Transaction Agreements and to comply with the terms
and conditions of all such permits, consents, approvals and authorizations of all such third
parties and Governmental Entities.



          (b) Each of the parties hereto shall, upon request, furnish each other with all information
concerning themselves, their Subsidiaries, directors, officers and shareholders or other equity
holders (to the extent applicable) and such other matters as may be reasonably necessary or
advisable in connection with any statement, filing, notice or application made by or on behalf of
the Company, any of its Subsidiaries or Purchaser to any Governmental Entity in connection with the
transactions contemplated by this Agreement.




          (c) The parties hereto shall promptly advise each other upon receiving any communication from any
Governmental Entity whose consent or approval is required for consummation of the transactions
contemplated by this Agreement which causes such party to believe that there is a reasonable
likelihood that any Requisite Regulatory Approval will not be obtained or that the receipt of any
such approval will be materially delayed or conditioned.




     Section 5.10 Appointment of Directors. Prior to the Closing and effective as of the
Closing, the Company shall: (i) take all necessary action to cause the Board of Directors of each
of the Company and the Bank to be comprised of seven directors (or, in the case of the Board of
Directors of the Bank, such other number specified by Purchaser) specified by Purchaser (subject to
applicable stock exchange requirements) and two of the current directors of the Company and the
Bank that are selected by



24









 




Purchaser in its sole discretion; (ii) take any necessary action to arrange for the resignation of
those current directors of the Company and the Bank that are not selected by Purchaser to serve on
the Boards of Directors following the Closing; and (iii) take any necessary action to amend its
bylaws to authorize the foregoing change in the size and composition of the Boards of Directors.




     Section 5.11 Termination of Company Stock Options; Employee Benefits. (a) Prior to the
Closing and effective as of the Closing, the Company shall take all necessary action to ensure that
all Company Stock Options shall terminate, without any liability to Purchaser, the Company or any
of its Subsidiaries on or after the Closing.



          (b) From and after the Closing, Purchaser will cause the Company and its Subsidiaries to
honor, in accordance with their terms, all existing employment, severance, retention and bonus
agreements between the Company or any of its Subsidiaries and any officer, director or employee of
the Company or any of its Subsidiaries that are employment agreements or agreements entered into
pursuant to the Plans described in Section 3.19(a) of the Company Disclosure Schedule.




     Section 5.12 Voting Agreement. Concurrently with the execution and delivery of this
Agreement, the Company shall deliver to Purchaser the Voting Agreement, signed by all directors of
the Company and the Bank who are holders of Common Stock. The Company agrees that as promptly as
practicable after the date hereof it shall give stop transfer instructions to the transfer agent
for the Common Stock with respect to shares of Common Stock held by the shareholders party to the
Voting Agreement.



     Section 5.13 Financing. Prior to the Closing, the Company shall, and shall cause its
Subsidiaries to, and shall use its reasonable best efforts to cause the Company Representatives to,
provide all cooperation reasonably requested by Purchaser in connection with obtaining equity
commitments from Persons that will either be investing in Purchaser or will be acquiring Purchased
Stock from the Company pursuant to this Agreement (the “Equity Commitments”), including (i)
participation in a reasonable number of meetings, presentations and due diligence sessions, (ii)
assisting with the preparation of materials for offering documents, private placement memoranda and
similar documents required in connection with obtaining the Additional Equity Commitments
(collectively, “Offering Materials”) and
(iii) providing any interim financial information provided to management of the Company and its
Subsidiaries in the ordinary course of business. Purchaser and Badger Capital shall use their
reasonable best efforts to cause the Persons who are or become party to Equity Commitments to
comply with the terms thereof in order to consummate the purchase of the Purchased Stock prior to
the date specified in Section 7.1(c) (including by taking reasonable enforcement action to cause
such Persons providing such Equity Commitments to fund the amounts contemplated thereby in
accordance with the terms thereof). Notwithstanding anything to the contrary in the foregoing, the
Company acknowledges and understands that the Equity Commitments will be made subject to the
satisfaction of all conditions precedent to Purchaser’s obligations under this Agreement set forth
in Section 6.1 and that Purchaser shall in no event be obligated to enforce the Equity Commitments
if such conditions precedent are not completely satisfied.



     Section 5.14 Takeover Statutes. The parties shall use their respective reasonable best
efforts:
(i) to take all action necessary so that no Takeover Statute is or becomes applicable to the
issuance and sale of the Purchased Stock to Purchaser or any of the other transactions contemplated
by this Agreement, the other Transaction Agreements or the Voting Agreement; and (ii) if any such
Takeover Statute is or becomes applicable to any of the foregoing, to take all action necessary so
that the issuance and sale of the Purchased Stock to Purchaser or any of the other transactions
contemplated by this Agreement, the other Transaction Agreements and the Voting Agreement may be
consummated as promptly as practicable on the terms contemplated by this Agreement, the other
Transaction Agreements and the Voting Agreement and otherwise to minimize the effect of such
Takeover Statute on the issuance and sale



25









 




of the Purchased Stock to Purchaser and the other transactions contemplated by this Agreement, the
other Transaction Agreements and the Voting Agreement.




     Section 5.15 Stock Exchange Listing. The Company shall use its reasonable best efforts to
cause the Purchased Stock and the shares of Common Stock to be acquired upon conversion of the
convertible promissory notes to be issued pursuant to the New Loan Agreement to be approved for
listing on Nasdaq, subject to official notice of issuance, prior to the Closing.



     Section 5.16 Public Announcements. Purchaser and the Company shall consult with each other
before issuing any press release or making any other public statement with respect to the
transactions contemplated by this Agreement and the other Transaction Agreements, and shall not
issue any such press release or make any such other public statement without the other party’s
prior consent, provided that the Company may, without the consent of Purchaser (but after prior
consultation, to the extent practicable in the circumstances) make such public disclosures as may
be required upon the advice of outside counsel by applicable Law or the rules and regulations of
Nasdaq. The parties agree that the initial press release or releases to be issued with respect to
the transactions contemplated by this Agreement shall be mutually agreed upon prior to the issuance
thereof. In addition, the Company and its Subsidiaries shall in accordance with Law (a) consult
with Purchaser regarding communications with customers, shareholders and employees related to the
transactions contemplated hereby, (b) provide Purchaser with shareholder lists of the Company and
(c) allow and facilitate contact by Purchaser with shareholders of the Company.



     Section 5.17 Pre-Emptive Rights Offering. Prior to the Closing, the Company shall be
permitted to conduct a pre-emptive rights offering (the “Pre-Emptive Rights Offering”) to
its shareholders existing as of the date of this Agreement of no more than 166,666,667 shares of
Common Stock at a price per share equal to no less than $0.60 per share. The Pre-Emptive Rights
Offering, if any, shall be consummated prior to or simultaneous with the Closing of the sale and
purchase of the Purchased Stock under this Agreement.



     Section 5.18 Agreement Regarding Series B Preferred Stock. The Company shall use its best
efforts to negotiate and enter into a definitive agreement with the U.S. Treasury providing for the
exchange or the redemption, on terms and conditions that are completely satisfactory to Purchaser,
in its sole discretion, of all 110,000 shares of Series B Preferred Stock and the warrant issued to
the U.S. Treasury. The Company shall consult with Purchaser prior to commencing negotiations with
the U.S. Treasury regarding the exchange or redemption of the Series B Preferred Stock. In
addition, the Company shall keep Purchaser apprised of the status of discussions with the U.S.
Treasury and consult with and regularly seek the input of Purchaser regarding the terms of any
definitive agreement with the
U.S. Treasury, and the Company shall not enter into a definitive agreement unless it first obtains
a written confirmation from Purchaser that the terms and conditions thereof are acceptable to
Purchaser.



     Section 5.19 Agreement Regarding Indebtedness Under Existing Loan Agreement. The Company
shall use its best efforts to negotiate and enter into a definitive agreement with U.S. Bank
National Association providing for the retirement by the Company of all of its currently
outstanding indebtedness under the Existing Loan Agreement at a settlement amount and on other
terms and conditions that are completely satisfactory to Purchaser, in its sole discretion. The
Company shall consult with Purchaser prior to commencing negotiations with U.S. Bank National
Association regarding the retirement by the Company of its outstanding indebtedness under the
Existing Loan Agreement. The Company shall keep Purchaser apprised of the status of discussions
with U.S. Bank National Association and regularly consult with and seek the input regarding the
terms of any definitive agreement with U.S. Bank National Association, and the Company shall not
enter into a definitive agreement unless it first obtains a written confirmation from Purchaser
that the terms and conditions thereof, including, without



26









 




limitation, the amount of the indebtedness that is to be forgiven and the amount that is to be
converted into shares of Common Stock, are acceptable to Purchaser.




     Section 5.20 Payment to Cover Purchaser’s Expenses. As an inducement to Purchaser to enter
into this Agreement, within 10 days of the date of this Agreement, the Company shall make a payment
of $325,000 to Purchaser to be used by Purchaser to reimburse Purchaser for costs and expenses
incurred in connection with the negotiation and preparation of this Agreement and the other
Transaction Documents and to cover additional costs and expenses to be incurred by Purchaser in
connection with the continuing due diligence investigation of the Company and the Bank. The funds
paid to Purchaser pursuant to this Section 5.20 shall be deemed earned by Purchaser upon payment
and shall in no event be required to be returned to the Company.



     Section 5.21 Agreement Regarding Purchaser’s Assumption of Certain Liabilities of the
Company. Prior to the Closing, Purchaser and the Company shall negotiate an assumption
agreement, which shall only become effective upon the Closing, pursuant to which Purchaser will
agree to assume the Company’s obligation to make severance payments under the employment agreements
listed on Section 5.21 of the Company Disclosure Schedule if the Company is prohibited from making
such payments by applicable banking rules and regulations at the time it becomes obligated to make
such payments; provided, that such assumption agreement shall provide that Purchaser shall not be
obligated to make such severance payments if prohibited from doing so by applicable banking rules
and regulations. For the avoidance of doubt, the assumption agreement shall not become effective
unless and until the Closing occurs, and in no event will Purchaser or any of its Affiliates have
any obligation of any kind under the assumption agreement if the Closing does not
occur.



ARTICLE VI

CONDITIONS TO CLOSING




     Section 6.1 Conditions to the Obligations of Purchaser. Purchaser’s obligation to purchase
the Purchased Stock at the Closing is subject to the satisfaction (or waiver by Purchaser), on or
prior to the Closing Date, of the following conditions:



          (a) Representations and Warranties; Performance of Obligations. (i) Except as set
forth in clause (ii) below, the representations and warranties of the Company contained in this
Agreement (without giving effect to any materiality or Material Adverse Effect qualifications set
forth therein) shall be true and correct as of the Closing Date as though made on and as of such
date and time (except to the extent that any such representation and warranty expressly speaks as
of an earlier date, in which case such representation and warranty shall be true and correct as of
such earlier date) except where any failures of any such representations and warranties to be so
true and correct, individually or in the aggregate, have not had and would not reasonably be
expected to have a Material Adverse Effect; and (ii) the representations and warranties set forth
in (x) Section 3.2 and Section 3.4(a) shall be true and correct in all but de minimis respects and
(y) Section 3.8(i) shall be true and correct in all respects. For the avoidance of doubt, if the
representation and warranty set forth in Section 3.8 (No Material Adverse Changes) is not true and
correct in all respects as of the Closing Date as though made on and as of such date and time, this
condition shall be deemed not satisfied. The Company also shall have performed in all material
respects all of its agreements, obligations, covenants and conditions herein required to be
performed or observed by it on or prior to the Closing Date.




          (b) Legal Investment. On the Closing Date, there shall not be in effect any Law or
Order directing that the purchase and sale of the Purchased Stock or any of the other transactions
contemplated by the Transaction Agreements not be consummated or which has the effect of rendering
it unlawful to consummate such transactions.




27









 








          (c) Proceedings and Litigation. No Action by any Governmental Entity shall be pending
against any party hereto seeking to restrain or prohibit the purchase and sale of the Purchased
Stock or the consummation of any of the other transactions contemplated by the Transaction
Agreements.




          (d) Regulatory Matters. (i) All approvals, consents, permits and waivers of the
Governmental Entities specified in Section 6.1(d)(i) of the Company Disclosure Schedule
(collectively, the “Requisite Regulatory Approvals”), shall have been obtained and shall be
in full force and effect, and all waiting periods required by Law in connection therewith
(including under the HSR Act) shall have expired or been terminated. No such approval, consent,
permit or waiver shall contain or impose any condition or restriction that Purchaser determines, in
its reasonable good faith judgment, is materially and unreasonably burdensome or would reduce the
benefits of its investment in the Company to such a degree that Purchaser would not have entered
into this Agreement had such condition or restriction been known to it at the date hereof.




               (ii) Each of the investors in Purchaser shall have received written confirmation, satisfactory to
it in its reasonable good faith judgment, from the OTS to the effect that neither it, nor any of
its Affiliates shall be deemed to “control” Badger Capital, Purchaser or any of its Subsidiaries
after the Closing (including the Company or the Bank) for purposes of HOLA by reason of the
purchase of the Purchased Stock by Purchaser and the consummation of the other transactions
contemplated by the Transaction Agreements or Purchaser Organizational Documents. For purposes of
this Agreement, “Purchaser Organizational Documents” means the limited liability company
agreement of Purchaser and the operating agreement of Badger Capital.



               (iii) The Company shall have received written confirmation from the OTS to the effect that,
upon the Closing, the Specified Regulatory Agreement shall be terminated and shall be replaced, if
at all, only with an order, directive, commitment letter or similar undertaking that is considered
to be an informal enforcement action by the OTS or other applicable regulatory body.



          (e) Board of Directors. The Company shall have taken all actions required by Section 5.10
hereof.




          (f) Requisite Shareholder Approvals. The Requisite Shareholder Approvals shall have
been obtained in accordance with the laws of State of Wisconsin and the rules and regulations of
Nasdaq.




          (g) Certificates. The Company shall have delivered to Purchaser a certificate,
executed on behalf of the Company by the Chief Executive Officer of the Company and the Chief
Financial Officer of the Company, dated the Closing Date, to the effect that the conditions
specified in paragraph (a) have been satisfied.




          (h) Listing Qualification of Common Stock. The Purchased Stock and the shares of
Common Stock to be issued upon conversion of the convertible promissory notes to be issued pursuant
to the New Loan Agreement shall have been approved for listing on the Nasdaq Stock Market, subject
to official notice of issuance.




          (i) Other Agreements. The Registration Rights Agreement and the Voting Agreement shall
have been duly authorized, executed and delivered by the Company.




          (j) Equity Commitments. Purchaser shall have received Equity Commitments in an amount
sufficient to consummate the transaction contemplated by this Agreement and the New Loan Agreement.




28









 








          (k) Conversion of Series B Preferred Stock. (i) The Company shall have entered into
the definitive agreement referred to in Section 5.18 with the U.S. Treasury providing for the
exchange or the redemption of all 110,000 shares of Series B Preferred Stock and the warrant issued
to the U.S. Treasury; and (ii) such exchange or redemption shall have been consummated in
accordance with the terms of such agreement.




          (l) Retirement Indebtedness Under Existing Loan Agreement. (i) The Company shall have
entered into a definitive agreement referred to in Section 5.19 with U.S. Bank National Association
providing for the retirement by the Company of all of its currently outstanding indebtedness under
the Existing Loan Agreement; and (ii) such retirement shall have been consummated in accordance
with the terms of such agreement.




          (m) Resignation of Company and Bank Directors. The Company or the Bank, as applicable,
shall have received written resignations from those current directors who are not selected by
Purchaser pursuant to Section 5.10 to continue serving on the Board of Directors of the Company or
the Bank, respectively, after the Closing.




          (n) Minimum Equity of the Company; Other Required Financial Measures. As of the last day of
the month preceding the month in which the Closing occurs, the Company shall: (i) have Tangible
Shareholders’ Equity of no less than $20 million; (ii) have Non-Performing Assets of no more than
$550 million and assets classified as substandard or worse of no more than $950 million; and (iii)
an allowance for loan and lease losses of no less than $150 million. “Tangible Shareholders’
Equity ” shall be an amount equal to total shareholders’ equity less total intangible assets,
and shall not include any increase in total shareholders’ equity resulting from any of the
transactions contemplated by this Agreement, including, without limitation, the issuance and sale
of the Purchased Stock, the issuance of shares of Common Stock upon conversion of the Series B
Preferred Stock, upon conversion of all or a portion of the amounts due and outstanding under the
Existing Loan Agreement or upon conversion of the convertible promissory notes to be issued
pursuant to the New Loan Agreement. “Non-Performing Assets” shall include loans classified
as non-accrual, loans classified as troubled debt
restructured—non-accrual, as defined by GAAP, and
other real estate owned.




     Section 6.2 Conditions to Obligations of the Company. The Company’s obligation to issue and
sell the Purchased Stock at the Closing is subject to the satisfaction (or waiver by the Company),
on or prior to the Closing Date, of the following conditions:



          (a) Representations and Warranties; Performance of Obligations. The representations
and warranties of Purchaser set forth in this Agreement shall be true and correct in all material
respects as of the Closing Date as though made on and as of such date and time (except to the
extent that any such representation and warranty expressly speaks as of an earlier date, in which
case such representation and warranty shall be true and correct in all material respects as of such
earlier date) except where any failures to be so true and correct would not prevent consummation of
the transactions contemplated by
this Agreement. Purchaser shall have performed in all material respects all of its agreements,
obligations, covenants and conditions herein required to be performed or observed by it on or prior
to the Closing Date.




          (b) Legal Investment. On the Closing Date, there shall not be in effect any Law or
Order directing that the purchase and sale of the Purchased Stock or any of the other transactions
contemplated by this Agreement or the other Transaction Agreements not be consummated or which has
the effect of rendering it unlawful to consummate such transactions.




29









 








          (c) Regulatory Matters. The Requisite Regulatory Approvals shall have been obtained and
shall be in full force and effect, and all waiting periods required by Law in connection therewith
(including under the HSR Act) shall have expired or been terminated.




          (d) Requisite Shareholder Approvals. The Requisite Shareholder Approvals shall have been
obtained in accordance with the laws of the State of Wisconsin and the rules and regulations of
Nasdaq.




          (e) Certificate. Purchaser shall have delivered to the Company a certificate, executed
on behalf of Purchaser by an authorized signatory thereof, dated the Closing Date, to the effect
that the conditions specified in paragraph (a) have been satisfied.




          (f) Assumption Agreement. Purchaser shall have delivered to the Company an executed
version of the assumption agreement referred to in Section 5.21.




ARTICLE VII

TERMINATION AND AMENDMENT




     Section 7.1 Termination. This Agreement may be terminated at any time prior to the Closing:



          (a) by mutual written consent of the Company and Purchaser;




          (b) by:




               (i) either the Company or Purchaser if: (x) any Governmental Entity which must grant a Requisite
Regulatory Approval has denied such approval and such denial has become final and nonappealable; or
(y) any Governmental Entity of competent jurisdiction shall have issued a final, nonappealable
Order enjoining or otherwise prohibiting the consummation of the transactions contemplated by this
Agreement or, in the case of termination by Purchaser, any of the other Transaction Agreements; or



               (ii) Purchaser if Badger Capital, Purchaser, any of the other investors referred to in Section
6.1(d)(ii), or any of their respective Affiliates receives final written notice from the OTS that
it will not grant any of the written confirmations or determinations described in Section
6.1(d)(ii);



          (c) by either the Company or Purchaser if the Closing shall not have occurred on or before March
31, 2010, unless the failure of the Closing to occur by such date shall be due to the failure of
the party seeking to terminate this Agreement to perform or observe the covenants and agreements of
such party set forth herein or unless the parties mutually agree in writing to extend the term of
this Agreement;




          (d) by either the Company or Purchaser (provided that the terminating party is not then in material
breach of any representation, warranty, covenant or other agreement contained herein), if the other
party shall have breached any of the covenants, agreements, representations or warranties made by
such other party herein, and such breach (x) is not cured within 30 days following written notice
to the party committing such breach, or which breach, by its nature, cannot be
cured prior to the Closing and
(y) could entitle the non-breaching party not to consummate the transactions contemplated hereby
under ARTICLE VI hereof;




30









 








          (e) by either the Company or Purchaser if the Requisite Shareholder Approvals shall not have been
obtained upon a vote taken thereon at the Company Shareholders Meeting or at any adjournment or
postponement thereof;




          (f) by Purchaser, if: (i) the Board of Directors of the Company shall have failed to recommend in
the Proxy Statement and at the Company Shareholders Meeting the approval of the issuance of the
Purchased Stock and the Charter Amendment by the shareholders of the Company or shall have effected
a Change in Recommendation (or shall have resolved to do so), whether or not permitted by this
Agreement; (ii) the Company shall have materially breached its obligations under Section 5.5 by
failing to call, give notice of, convene and hold the Company Shareholders Meeting in accordance
with Section 5.5; or (iii) the Company shall have breached its obligations under Section 5.6 in any
material
respect;




          (g) by the Company in accordance with, and subject to the terms and conditions of,
Section 5.6(e);




          (h) by Purchaser if it determines in its reasonable discretion that any of the
conditions precedent to its obligations under this Agreement set forth in Section 6.1 will not be
satisfied prior to the date set forth in Section 7.1(c), including, without limitation, if the U.S.
Treasury states that it will not enter into the agreement referred to in Section 5.18 or if U.S.
Bank National Association states that it will not enter into the agreement referred to in Section
5.19, in either case on terms acceptable to Purchaser; or




          (i) by Purchaser if:




               (i) the Company or a Significant Subsidiary of the Company, pursuant to or within the meaning of
any Bankruptcy Law: (A) commences a voluntary case, (B) consents to the entry of an order for
relief against it in an involuntary case, (C) consents to the appointment of a Custodian of it or
(D) makes a general assignment for the benefit of its creditors;



               (ii) a court of competent jurisdiction enters an Order under any Bankruptcy Law that (A) is for
relief against the Company or any Significant Subsidiary of the Company in an involuntary case; (B)
appoints a Custodian of the Company or any Significant Subsidiary of the Company or (C) orders the
winding up or liquidation of the Company or any Significant Subsidiary of the Company and the
order, decree or relief remains unstayed and in effect for 60 days; or



               (iii) (A) the OTS or the FDIC (or other competent Governmental Entity having regulatory
authority over the Bank) appoints, under any applicable federal, state or local banking Law or
Bankruptcy Law, a Custodian for the Bank or for all or substantially all of the assets of the Bank,
or (B) the Bank files with the OTS or the FDIC (or other competent Governmental Entity having
regulatory authority over the Bank) a notice of voluntary liquidation or other similar action under
any applicable federal, state or local banking Law, Bankruptcy Law or other similar Law.



          (j) by Purchaser as provided in Section 1.2.




          (k) by Purchaser if the Company files an amendment to its Third Quarter Form 10-Q to correct a
misstatement in the Company’s financial statements contained in the Third Quarter Form 10-Q.




31









 








     Section 7.2 Effect of Termination.



          (a) In the event of termination of this Agreement by either the Company or Purchaser as provided in
Section 7.1, this Agreement shall forthwith become void and have no effect, and none of the
Company, Purchaser, any of their respective officers, directors, or Affiliates (or, in the case of
Purchaser, any of Purchaser Related Parties) shall have any liability of any nature whatsoever
hereunder, or in connection with the transactions contemplated hereby, except that (i) this Section
7.2, Section 8.10 and Section 8.12 shall survive any termination of this Agreement and (ii)
notwithstanding anything to the contrary contained in this Agreement (other than Section 8.12
hereof), neither the Company nor Purchaser shall be relieved or released from any liabilities or
damages arising out of its willful breach of any provision of this Agreement.




          (b) If this Agreement is terminated (i) by either the Company or Purchaser pursuant to Section
7.1(e) or (ii) by Purchaser pursuant to Section 7.1(d), Section 7.1(f) or Section 7.1(i) (or, in
any such case, is terminated pursuant to another paragraph of Section 7.1 at a time when this
Agreement was terminable pursuant to one of the foregoing specified provisions and by the party
specified above), then the Company shall reimburse Purchaser for all expenses reasonably incurred
by or on its behalf in connection with the transactions contemplated by this Agreement, including
all reasonable expenses of counsel, accountants, investment bankers, experts and other consultants
retained by Purchaser, Badger Capital, their respective Affiliates, in connection with the
transactions contemplated hereby (and not theretofore paid or reimbursed by the Company, which
shall include the amounts paid by the Company to Purchaser pursuant to Section 5.20) (the
“Purchaser Expenses”) within three Business Days after the receipt by the Company of an
invoice therefor; provided that the payment by the Company of such expenses shall not relieve the
Company of any subsequent obligation to pay the Termination Fee pursuant to Section 7.2(d), except
to the extent expressly provided therein.




          (c) The Company shall pay to or as directed by Purchaser the sum of $10 million (the
“Termination Fee”) prior to or concurrently with, and as a condition to, the termination of
this Agreement: (i) by the Company pursuant to Section 7.1(g).or by the Company; or (ii) the
Purchaser pursuant to Section 7.1(e) or Section 7.1(f).




          (d) The Company shall pay to or as directed by Purchaser the Termination Fee, less any Purchaser
Expenses theretofore paid to Purchaser pursuant to Section 7.2(b), upon the execution and delivery
by the Company or any of its Subsidiaries of a definitive agreement with respect to, or
consummation of, an Acquisition Transaction with another Person if: (i) this Agreement is
terminated by
(A) Purchaser pursuant to Section 7.1(d) because of the Company’s willful breach of any
representation, warranty, covenant or agreement under this Agreement, or (B) by either the Company
or Purchaser pursuant to Section 7.1(c) without a vote of the shareholders of the Company
contemplated by this Agreement at the Company Shareholders Meeting having occurred (or, in any such
case, is terminated pursuant to another paragraph of Section 7.1 at a time when this Agreement was
terminable pursuant to one of the foregoing specified provisions and by the party specified above);
and (ii) the definitive agreement is entered into within 12 months following the date of any such
termination of this Agreement.




          (e) Any expenses that become payable pursuant to Section 7.2(b) and any Termination Fee or portion
thereof that
becomes payable pursuant to Section 7.2(c) or Section 7.2(d) shall be paid by wire transfer of
immediately available funds to an account designated by the Purchaser in writing to the Company.




          (f) The Company acknowledges that the agreements contained in paragraphs (b), (c) and (d) above are
an integral part of the transactions contemplated by this Agreement, that without such agreement by
the Company, Purchaser would not have entered into this Agreement, and that such




32









 







amounts do not constitute a penalty. If the Company fails to pay any amounts due under paragraph
(b),
(c) and (d) above within the time periods specified in such paragraphs, the Company shall pay the
reasonable costs and expenses (including reasonable legal fees and expenses) incurred by Purchaser
in connection with any action, including the filing of any lawsuit, taken to collect payment of
such amounts, together with interest on the amount of any such unpaid amounts at the prime rate of
U.S. Bank National Association from the date such amounts were required to be paid until the date
of actual payment.




ARTICLE VIII

MISCELLANEOUS




     Section 8.1 Other Definitions; Terms Generally. (a) The following terms as used in this
Agreement shall have the following meanings:



               (i) “Actions” means legal, administrative, regulatory or other suits, actions, claims,
audits, assessments, arbitrations or other proceedings or, to the knowledge of the Company,
investigations or inquiries.



               (ii) “Affiliate” means, with respect to any Person, any other Person that, directly or
indirectly through one or more intermediaries, controls, is controlled by or is under common
control with such specified Person, for so long as such Person remains so associated to the
specified Person.



               (iii) “Bankruptcy Law” means Title 11, United States Code, or any similar federal,
state or local law providing for the insolvency, reorganization, receivership, dissolution, winding
up or liquidation of a debtor.



               (iv) “Business Day” means any day other than a Saturday, Sunday or any other day on which
banks in Madison, Wisconsin are required or authorized to close.



               (v) “Company Intellectual Property” means the Intellectual Property currently used in
connection with the business of the Company or any of its Subsidiaries or owned or held for use by
the Company or any of its Subsidiaries.



               (vi) “Company Preferred Stock” means, collectively, the Series A Preferred Stock and the
Series B Preferred Stock.



               (vii) “control”(including the terms “controlled by” and “under common
control with”), with respect to the relationship between or among two or more Persons, means
the possession, directly or indirectly, of the power to direct or cause the direction of the
affairs or management and policies of a Person, whether through the ownership of voting securities,
as trustee or executor, by contract or otherwise.



               (viii) “Custodian” means any receiver, trustee, conservator, assignee, liquidator,
custodian or similar official under any Bankruptcy Law or banking Law.



               (ix) “Encumbrance” means any security interest, pledge, mortgage, lien (statutory or
other), charge, option to purchase, lease, claim, restriction, covenant, title defect,
hypothecation, assignment, deposit arrangement or other encumbrance of any kind or any preference,
priority or other security agreement or preferential arrangement of any kind or nature whatsoever
(including any conditional sale or other title retention agreement).



33









 





               (x) “Existing Loan Agreement” means that certain Amended and Restated Credit
Agreement, dated June 9, 2008 and as subsequently amended, by and among the Company, U.S. Bank
National Association and the other participating financial institutions listed on the signature
page of such agreement.



               (xi) “Fee Agreement” means that agreement (as it may be amended, modified or
supplemented) set forth in Section 8.1 of Purchaser Disclosure Schedule.



               (xii) “Hazardous Materials” means oil, flammable explosives, asbestos, urea
formaldehyde insulation, polychlorinated biphenyls, radioactive materials, hazardous wastes, toxic
or contaminated substances or similar materials, including, without limitation, any substances
which are “hazardous substances,” “hazardous wastes,” “hazardous materials” or “toxic substances”
under the Hazardous Materials Laws and/or other applicable environmental laws, ordinances or
regulations.



               (xiii) “Intellectual Property” means all patents, patent applications, statutory
invention registrations, inventions and other industrial property rights; trademarks, service
marks, trade names, trade dress, logos, and other source identified, including registrations and
applications for the registration thereof; copyrights (including without limitation, computer
software programs); Internet domain name registrations; Internet web sites, web content, and
registrations and applications for registrations thereof; confidential and proprietary information,
including know-how and trade secret rights, technologies, techniques and processes; computer
software, programs and databases in any form, all versions, updates, corrections, enhancements,
replacements, and modifications thereof, and all documentation related thereto; and rights of
privacy, publicity and endorsement, in each case under the laws of any jurisdiction in the world,
and including rights under and with respect to all applications, registrations, continuations,
divisions, renewals, extensions and reissues of the foregoing.



               (xiv) “Material Adverse Effect” shall mean a material adverse effect on (x) the
business, operations, properties, assets, liabilities, financial condition or results of operations
of the Company and its Subsidiaries, taken as a whole, or (y) the ability of the Company to perform
its obligations under this Agreement and the other Transaction Agreements and to consummate the
transactions contemplated hereby and thereby on a timely basis; provided, however, that in
determining whether a Material Adverse Effect has occurred pursuant to clause (x) above, there
shall be excluded any effect the cause of which is (i) any change after the date of this Agreement
in laws, rules or regulations of general applicability or published interpretations thereof by
Governmental Entities or in U.S. generally accepted accounting principles (“GAAP”) or
regulatory accounting requirements, in any such case applicable to banks, savings associations or
their holding companies generally, (ii) the pendency or the announcement of the transactions
contemplated by this Agreement (including, for the avoidance of doubt, any halt in trading of
shares of Common Stock on Nasdaq), (iii) the performance of obligations required by this Agreement
or consented to in writing by Purchaser, (iv) factors generally affecting the banking industry as a
whole, (v) any changes in general economic or political conditions or changes affecting the
securities, credit or financial markets in general (including any disruptions thereof and any
changes in interest rates in general) in the United States, and (vi) acts of war or terrorism
(other than any such acts that cause any damage or destruction to or render unusable any facility
or property of the Company or any of its Subsidiaries or that render any such facilities or
properties inaccessible), provided that the effect of such changes, effects, circumstances or
developments described in clauses (iv), (v) or (vi) shall not be excluded to the extent of the
disproportionate impact, if any, they have on
the Company and its Subsidiaries (relative to other banks, savings associations or their
holding companies in the United States).



               (xv) “Person” means any individual, corporation, limited liability company, limited or
general partnership, joint venture, association, joint-stock company, trust, unincorporated



34









 




organization, government or any agency or political subdivisions thereof or any group (within the
meaning of Section 13(d)(3) of the Exchange Act) comprised of two or more of the foregoing.




               (xvi) “Significant Subsidiary” shall have the meaning ascribed thereto in Rule
1.02 of Regulation S-X promulgated by the SEC.



               (xvii) “Subsidiary” means (i) any corporation of which a majority of the securities
entitled to vote generally in the election of directors thereof, at the time as of which any
determination is being made, are owned by another entity, either directly or indirectly, and (ii)
any joint venture, general or limited partnership, limited liability company or other legal entity
in which an entity is the record or beneficial owner, directly or indirectly, of a majority of the
voting interests or the general partner.



               (xviii) “to the knowledge of the Company” or similar expressions means the actual
knowledge of the senior executive officers of the Company and its Subsidiaries and, without
duplication, those executive officers or other employees in charge of environmental, tax, labor,
employee benefits or real estate matters, in each case after reasonable investigation and inquiry.



          (b) Terms Generally. The definitions in Section 8.1(a) shall apply equally to both the
singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall
include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and
“including” shall be deemed to be followed by the phrase “without limitation”, unless the context
expressly provides otherwise. All references herein to Sections, paragraphs, subparagraphs,
clauses, Exhibits or Schedules shall be deemed references to Sections, paragraphs, subparagraphs or
clauses of, or Exhibits or Schedules to this Agreement, unless the context requires otherwise.
Unless otherwise expressly defined, terms defined in this Agreement have the same meanings when
used in any Exhibit or Schedule hereto, including the Company Disclosure Schedule and Purchaser
Disclosure Schedule. Unless otherwise specified, the words “this Agreement”, “herein”, “hereof”,
“hereto” and “hereunder” and other words of similar import refer to this Agreement as a whole
(including the Schedules, Exhibits, the Company Disclosure Schedule and Purchaser Disclosure
Schedule) and not to any particular provision of this Agreement. The term “or” is not exclusive.
The word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other
thing extends, and such phrase shall not mean simply “if”. Any Law defined or referred to herein
means such Law as from time to time amended, modified or supplemented, including by succession of
comparable successor Laws and references to all attachments thereto and instruments incorporated
therein. References to a Person are also to its permitted successors and assigns.




     Section 8.2 Representations and Warranties. None of the representations, warranties,
covenants and agreements in this Agreement or in any instrument delivered pursuant to this
agreement shall survive the Closing, except for those covenants and agreements contained herein and
therein which by their terms apply in whole or in part after the Closing and then only to such
extent. Each of the Company and Purchaser acknowledges and agrees that, except for the
representations and warranties expressly set forth in this Agreement: (a) no party makes, and has
not made, any representations or warranties relating to itself or its businesses or otherwise in
connection with the transactions contemplated by this Agreement; and (b) no Person has been
authorized by any party to make any representation or warranty relating to itself or its businesses
or otherwise in connection with the transactions contemplated by this Agreement and, if made, such
representation or warranty must not be relied upon as having been authorized by such party.



     Section 8.3 Governing Law; Jurisdiction; Waiver of Jury Trial. (a) This Agreement shall be
governed in all respects by the laws of the State of Wisconsin.



35









 





          (b) Each of the Company and Purchaser hereby irrevocably and unconditionally consents to submit to
the exclusive jurisdiction and venue of the United States District Court for the Western District
of Wisconsin and in the courts hearing appeals therefrom unless no basis for federal jurisdiction
exists, in which event each party hereto irrevocably consents to the exclusive jurisdiction and
venue of the Dane County Circuit Court, Wisconsin, and the courts hearing appeals therefrom, for
any action, suit or proceeding arising out of or relating to this Agreement and the transactions
contemplated hereby. Each of the Company and Purchaser irrevocably and unconditionally waives, and
agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any such
action, suit or proceeding, any claim that is not personally subject to the jurisdiction of the
aforesaid courts for any reason, other than the failure to serve process in accordance with this
Section 8.3, that it or its property is exempt or immune from jurisdiction of any such court or
from any legal process commenced in such courts (whether through service of notice, attachment
prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise),
and to the fullest extent permitted by applicable law, that the action, suit or proceeding in any
such court is brought in an inconvenient forum, that the venue of such action, suit or proceeding
is improper, or that this Agreement, or the subject matter hereof, may not be enforced in or by
such courts and further irrevocably waives, to the fullest extent permitted by applicable law, the
benefit of any defense that would hinder, fetter or delay the levy, execution or collection of any
amount to which the party is entitled pursuant to the final judgment of any court having
jurisdiction.




          (c) Each of the parties hereto hereby irrevocably and unconditionally waives trial by jury in any
legal action or proceeding in relation to this Agreement or the other Transaction Agreements and
for any counterclaim therein.




     Section 8.4 Successors and Assigns; Assignment; No Third Party Beneficiaries. Except as
otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, permitted assigns, heirs, executors and administrators of the parties
hereto. This Agreement may not be assigned by a party without the prior written consent of the
other party (and any purported assignment without such consent shall be void and without effect),
except that so long as the Purchase Price is delivered at the Closing to the Company, Purchaser may
designate one or more additional persons to pay a portion of the Purchase Price and be issued a
corresponding number of shares of the Common Stock being issued and sold pursuant to this
Agreement, in amounts to be designated by Purchaser prior to the Closing; provided that the
addition of any such person will not delay the receipt of, extend the waiting period with respect
to, or invalidate a previously received Requisite Regulatory Approval. Except as otherwise
specifically provided in Section 8.12, this Agreement is not intended to and shall not confer upon
any Person other than the parties hereto any rights or remedies hereunder.



     Section 8.5 Entire Agreement. This Agreement (including the Exhibits and Schedules hereto,
which constitute part of this Agreement as if fully set forth herein), the other Transaction
Agreements and the Fee Agreement constitute the full and entire understanding and agreement between
the parties with regard to the subjects hereof and no party shall be liable or bound to any other
in any manner by any representations, warranties, covenants and agreements except as specifically
set forth herein and therein. The Fee Agreement shall remain in full force and effect in accordance
with its terms, but such letter agreement included in the Fee Agreement shall terminate upon the
termination of this Agreement, except with respect to fees and expenses accrued on or prior to the
date of such termination, with respect to which it shall survive until the payment or reimbursement
in full thereof. The Company agrees that any confidentiality agreements between Purchaser, Badger
Investment Partners, LLC, Badger Capital or any of their Affiliates shall be terminated effective
upon the Closing.



     Section 8.6 Severability. In case any provision of this Agreement shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby so long as the economic or legal substance of the
transactions contemplated



36









 




hereby is not affected in any manner materially adverse to any party. Upon such determination that
any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner so that the transactions contemplated hereby
are fulfilled to the extent possible.




     Section 8.7 Amendment and Waiver. This Agreement may be amended by the parties hereto (in
the case of the Company, by action taken by or on behalf of its Board of Directors) at any time
prior to the Closing, whether before or after receipt of the Requisite Shareholder Approvals;
provided, however, that, after receipt of the Requisite Shareholder Approvals, no amendment may be
made which under applicable Law requires the further approval of the shareholders of the Company
without such further approval. This Agreement may not be amended except by an instrument in writing
signed by the parties hereto. At any time prior to the Closing, any party hereto may: (i) extend
the time for the performance of any of the obligations or other acts of the other parties hereto;
(ii) waive any inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and
(iii) subject to the requirements of applicable Law, waive compliance with any of the agreements or
conditions contained for the benefit of such party contained herein. Any such extension or waiver
shall be valid if set forth in an instrument in writing signed by the party or parties to be bound
thereby.



     Section 8.8 Delays or Omissions. It is agreed that no delay or omission to exercise any
right, power or remedy accruing to any party, upon any breach, default or noncompliance by another
party under this Agreement or the other Transaction Agreements shall impair any such right, power
or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance,
or any acquiescence therein, or of or in any similar breach, default or noncompliance thereafter
occurring. All remedies, either under this Agreement or the other Transaction Agreements, by law,
or otherwise afforded to any party, shall be cumulative and not alternative.



     Section 8.9 Notices. All notices required or permitted hereunder shall be in writing and
shall be deemed effectively given: (i) upon personal delivery to the party to be notified; (ii)
when sent by confirmed facsimile if sent during normal business hours of the recipient, if not,
then on the next Business Day; (iii) when received, if sent by electronic mail with read receipt
requested; or (iv) one Business Day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of receipt. All communications shall be
sent to the addresses set forth below or such other address or facsimile number as a party may from
time to time specify by notice to the other parties hereto:


If to the Company:




	 	 	 
	Anchor Bancorp Wisconsin Inc.
	25 West Main Street
	Madison, Wisconsin 53703
	Telephone:

	 	(608) 252-8700
	Fax:

	 	(608) 252-8783
	Email:

	 	mtimmerman@anchorbank.com
	Attn:

	 	Mark Timmerman






37









 






with a copy (which shall not constitute notice) to:




	 	 	 
	Michael Best & Friedrich LLP
	100 East Wisconsin Avenue, Suite 3300
	Milwaukee, Wisconsin 53202
	Telephone:

	 	(414) 225-2752
	Fax:

	 	(414) 277-0656
	Email:

	 	grmorgan@michaelbest.com
	Attn:

	 	Geoffrey R. Morgan






If to Purchaser:




	 	 	 
	Badger Anchor Holdings, LLC
	c/o Badger Capital, LLC
	1629 Colonial Parkway
	Inverness, Illinois 60067
	Telephone:

	 	(847) 991-6622
	Fax:

	 	(847) 991-5928
	Email:

	 	shovde@hovde.com
	Attn:

	 	Steven D. Hovde






with a copy (which shall not constitute notice) to:




	 	 	 
	Inter Continental Real Estate & Development Corporation
	2221 Camden Court, Suite 200
	Oak Brook, Illinois 60523
	Telephone:

	 	(630) 560-8047
	Fax:

	 	(630) 560-8048
	Email:

	 	rcharal@icred.com
	Attn:

	 	Robert Charal






and




	 	 	 
	Barack Ferrazzano Kirschbaum & Nagelberg LLP
	200 W. Madison St., Suite 3900
	Chicago, Illinois 60606
	Telephone:

	 	(312) 984-3100
	Fax:

	 	(312) 984-3150
	Email:

	 	dennis.wendte@bfkn.com
	Attn:

	 	Dennis R. Wendte






     Section 8.10 Expenses. Except as provided in Section 7.2 or in the Fee Agreement, all costs
and expenses incurred in connection with this Agreement, the other Transaction Agreements and the
transactions contemplated hereby and thereby shall be paid by the party incurring such expense.



     Section 8.11 Titles and Subtitles. The titles of the sections and subsections of this
Agreement are for convenience of reference only and are not to be considered in construing this
Agreement.



38









 





     Section 8.12 Remedies.



          (a) Notwithstanding any other provision of this Agreement or any rights of the Company at law or in
equity, the Company agrees that to the extent it has incurred losses or damages in connection with
this Agreement or any of the transactions contemplated hereby, the maximum liability of Purchaser
for such losses and damages shall be limited to $500,000. In no event shall the Company seek to
recover any money damages in excess of $500,000 in the aggregate from Purchaser or any of its
Affiliates. In addition, the Company agrees that no recourse under this Agreement, any documents or
instruments delivered in connection with this Agreement, any other Transaction Agreement or any of
the transactions contemplated hereby or thereby shall be had against any (x) former, current or
future director, officer, employee, partner (limited or general), member, manager, shareholder,
Affiliate or controlling Person of Purchaser or (y) former, current or future director, officer,
employee, partner (limited or general), member, manager, shareholder, Affiliate or controlling
Person of any partner (limited or general), member, manager, shareholder, Affiliate or controlling
Person of Purchaser (the “Purchaser Related Parties”) whether by the enforcement of any
assessment or by any legal or equitable proceeding, or by virtue of any Law, it being expressly
agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or
otherwise be incurred by any of Purchaser Related Parties, as such, for any obligation of Purchaser
under this Agreement or any documents or instruments delivered in connection with this Agreement,
any other Transaction Agreement or any of the transactions contemplated hereby or thereby or for
any claim based on, in respect of or by reason of such obligations, documents, instruments or
transactions.




          (b) The parties hereto agree that irreparable damage would occur if any provision of this Agreement
were not performed by the Company in accordance with the terms hereof and that, prior to the
termination of this Agreement pursuant to Section 7.1, Purchaser shall be entitled to specific
performance of the terms hereof, in addition to any other remedy at law or equity. The parties
acknowledge that the Company shall not be entitled to an injunction or injunctions to prevent
breaches of this Agreement by Purchaser or to enforce specifically the terms and provisions of this
Agreement and that the Company’s sole and exclusive remedy with respect to any such breach shall be
the remedy set forth in Section 8.12(a).




          (c) Purchaser Related Parties shall be third party beneficiaries of this Section 8.12 and the
provisions of this Section 8.12 are intended to be for the benefit of and enforceable by each
Purchaser Related Party and his or her successors, heirs or representatives.




     Section 8.13 Counterparts; Execution by Facsimile Signature. This Agreement may be executed
in any number of counterparts, each of which shall be an original, but all of which together shall
constitute one instrument. This Agreement may be executed by facsimile signature(s) or by a
signature in PDF format that is transmitted via electronic mail.



[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]




[SIGNATURE PAGE FOLLOWS]




39









 





     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date set
forth in the first paragraph hereof.



	 	 	 	 	 	 	 	 	 	 	 	 	 
	Anchor Bancorp Wisconsin Inc.	 	 	 	Badger Anchor Holdings, LLC	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	 	 	 	 	By:	 	Badger Capital, LLC, its manager	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	Name:	 	 
	 

	 	 	 	 	 	 	 	 	 	Title:	 	 






[Signature Page to Stock Purchase Agreement]