exv10w33







EXHIBIT 10.33




Loan Agreement




between




Badger Anchor Holdings, LLC




and




Anchor Bancorp Wisconsin Inc.




dated as of December 1, 2009




 









 








TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	1. DEFINITIONS
	 	 	2	 
	1.1. Defined Terms
	 	 	2	 
	1.2. Certain UCC and Accounting Terms; Interpretations
	 	 	6	 
	1.3. Exhibits and Schedules Incorporated
	 	 	7	 
	 
	 	 	 	 
	2. CREDIT FACILITIES
	 	 	7	 
	2.1. The Loans
	 	 	7	 
	2.2. The Note
	 	 	7	 
	2.3. Maturity Date
	 	 	7	 
	2.4. Collateral
	 	 	7	 
	2.5. The Closing
	 	 	7	 
	2.6. Interest Rates
	 	 	7	 
	2.7. Payments
	 	 	8	 
	2.8. Conversion
	 	 	9	 
	2.9. Loan Origination Fee
	 	 	9	 
	 
	 	 	 	 
	3. DISBURSEMENT
	 	 	9	 
	3.1. Disbursement
	 	 	9	 
	3.2. Conditions Precedent to Disbursement; Related Delivery Obligations
	 	 	10	 
	 
	 	 	 	 
	4. GENERAL REPRESENTATIONS AND WARRANTIES
	 	 	12	 
	4.1. Organization
	 	 	12	 
	4.2. Capitalization
	 	 	12	 
	4.3. Stock of Subsidiaries
	 	 	12	 
	4.4. Use of Proceeds.
	 	 	12	 
	4.5. Financial Statements
	 	 	13	 
	4.6. Title to Properties
	 	 	13	 
	4.7. Legal and Authorized
	 	 	13	 
	4.8. No Defaults or Restrictions
	 	 	14	 
	4.9. Governmental Consent
	 	 	14	 
	4.10. Taxes
	 	 	14	 
	4.11. Compliance with Law
	 	 	14	 
	4.12. Employee Benefit Plans
	 	 	15	 
	4.13. No Material Adverse Change
	 	 	15	 
	4.14. Regulatory Actions
	 	 	15	 
	4.15. Hazardous Materials
	 	 	15	 
	4.16. Pending Litigation
	 	 	15	 
	4.17. Controls and Procedures
	 	 	15	 
	4.18. Anti-takeover Provisions Not Applicable
	 	 	16	 
	4.19. Investment Company Act
	 	 	16	 
	4.20. No Misstatement of Material Fact
	 	 	16	 
	4.21. Representations and Warranties Generally
	 	 	16	 
	 
	 	 	 	 
	5. GENERAL COVENANTS, CONDITIONS AND AGREEMENTS
	 	 	16	 
	5.1. Negative Covenants
	 	 	16	 
	5.2. Affirmative Covenants
	 	 	19	 






ii









 






	 	 	 	 	 
	 	 	Page	 
	6. ADDITIONAL COVENANTS
	 	 	22	 
	6.1. Compliance Certificate
	 	 	22	 
	6.2. Proceedings
	 	 	22	 
	6.3. Lender Expenses
	 	 	22	 
	6.4. Retain Certain Qualified Executive Officers
	 	 	22	 
	 
	 	 	 	 
	7. FINANCIAL COVENANTS
	 	 	23	 
	7.1. Capitalization
	 	 	23	 
	7.2. Nonperforming Asset Ratio
	 	 	23	 
	7.3. Loan Loss Reserve
	 	 	23	 
	7.4. Return on Assets
	 	 	23	 
	7.5. Additional Definitions
	 	 	23	 
	 
	 	 	 	 
	8. BORROWER’S DEFAULT.
	 	 	24	 
	8.1. Events of Default and Lender’s Remedies
	 	 	24	 
	8.2. Protective Advances
	 	 	27	 
	8.3. Other Remedies
	 	 	27	 
	8.4. No Lender Liability
	 	 	27	 
	8.5. Lender’s Fees and Expenses
	 	 	27	 
	 
	 	 	 	 
	9. MISCELLANEOUS.
	 	 	27	 
	9.1. Release; Indemnification
	 	 	27	 
	9.2. Assignment and Participation
	 	 	27	 
	9.3. Prohibition on Assignment
	 	 	28	 
	9.4. Time of the Essence
	 	 	28	 
	9.5. No Waiver
	 	 	28	 
	9.6. Severability
	 	 	29	 
	9.7. Usury; Revival of Liabilities
	 	 	29	 
	9.8. Notices
	 	 	29	 
	9.9. Successors and Assigns
	 	 	30	 
	9.10. No Joint Venture
	 	 	30	 
	9.11. Brokerage Commissions
	 	 	30	 
	9.12. Publicity
	 	 	30	 
	9.13. Documentation
	 	 	30	 
	9.14. Additional Assurances
	 	 	30	 
	9.15. Entire Agreement
	 	 	30	 
	9.16. Choice of Law
	 	 	31	 
	9.17. Forum; Venue
	 	 	31	 
	9.18. No Third Party Beneficiary
	 	 	31	 
	9.19. Legal Tender of United States
	 	 	31	 
	9.20. Captions; Counterparts
	 	 	31	 
	9.21. Knowledge; Discretion
	 	 	31	 
	9.22. Lender’s Representations and Warranties
	 	 	31	 






EXHIBITS:




A     Form of Note

B     Form of Pledge and Security Agreement

C     Form of Opinion of Borrower’s Counsel

D     Form of Quarterly  Compliance Certificate




DISCLOSURE SCHEDULES:



iii









 





LOAN AGREEMENT




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



R E C I T A L S:




     A. Borrower is a bank holding company that owns 100% of the issued and outstanding capital stock of
Anchor Bank, fsb, a federally chartered savings bank with its main office located in Madison,
Wisconsin (“Bank”), and 100% of the issued and outstanding capital stock of Investment Directions,
Inc., a Wisconsin corporation engaged in real estate development (“IDI”). The issued and
outstanding capital stock of Bank and IDI, collectively, may be referred to as the “Pledged
Subsidiary Shares”.



     B. Borrower has requested that Lender provide it with a term loan in the aggregate principal amount
of $110 million (the “Loan”).



     C. Borrower and Lender have entered in that certain Stock Purchase Agreement, dated of even date
herewith (the “Stock Purchase Agreement”), whereby Borrower has agreed to issue and sell to Lender,
and Lender has agreed to purchase from Borrower, up to $290 million of Common Stock, subject to
certain terms and conditions including, among other things, (i) the receipt of necessary approvals
from the appropriate Governmental Agencies (defined below), (ii) the receipt of necessary approvals
from Borrower’s shareholders to effect the transactions contemplated thereby, (iii) the execution
of agreements providing for the retirement by Borrower of all of its currently outstanding holding
company debt at a settlement amount and on other terms and conditions that are completely
satisfactory to Lender, in its sole discretion, (iv) the execution of agreements providing for the
exchange or the redemption, on terms and conditions that are completely satisfactory to Lender, in
its sole discretion, of the preferred stock and warrants issued to the U.S. Department of the
Treasury in connection with Borrower’s participation in the Capital Purchase Program; and (v) the
closing of the purchase and sale of the Common Stock pursuant to the Stock Purchase Agreement.



     D. Lender is willing to lend to Borrower an aggregate principal amount of $110 million under the
Loan in accordance with the terms, subject to the conditions and in reliance on the recitals,
representations, warranties, covenants and agreements set forth herein and in the other Loan
Documents (as defined below).



     E. The proceeds from the Loan shall be used by Borrower to contribute additional capital to the
Bank.



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



 









 





A G R E E M E N T:




1. DEFINITIONS.




     1.1. Defined Terms. The following capitalized terms generally used in this Agreement and in
the other Loan Documents shall have the meanings defined or referenced below. Certain other
capitalized terms used only in specific sections of this Agreement may be defined in such sections.



     “Affiliate(s)” means, with respect to any Person, such Person’s immediate family members, partners,
members or parent and subsidiary corporations, and any other Person directly or indirectly
controlling, controlled by, or under common control with, said Person, and their respective
Affiliates, members, shareholders, directors, officers, employees, agents and representatives.



     “Agreement” has the meaning ascribed to such term in the preamble hereto.



     “Assignee Lender” has the meaning ascribed to such term in Section 9.2.



     “Bank” has the meaning ascribed to such term in the recitals hereto.



     “Bankruptcy Code” means the Bankruptcy Reform Act of 1978, as amended or recodified.



     “Board of Directors” means the board of directors of Borrower.



     “Borrower” has the meaning ascribed to such term in the preamble hereto.



     “Borrower’s Accountant” means McGladrey & Pullen, LLP, or such other nationally recognized
firm of certified public accountants selected by Borrower as shall from time to time audit
Borrower’s consolidated financial statements.



     “Borrower’s Liabilities” means Borrower’s obligations under this Agreement, the Note and any other
Loan Documents.



     “Borrowing Date” means the date the principal amount is disbursed.



     “Business Day” means a day of the week other than a Saturday, Sunday or a legal holiday under the
laws of the State of Wisconsin or any other day on which banking institutions located in Wisconsin
are authorized or required by law or other governmental action to close. Unless specifically
referenced in this Agreement as a Business Day, all references to “days” shall be to calendar days.



     “Closing” has the meaning ascribed to such term in Section 2.5.



     “Code” shall mean the Internal Revenue Code of 1986, as amended or recodified.



     “Code Provisions” has the meaning ascribed to such term in Section 8.1.1.16.



     “Collateral” means all the property (including all tangible and intangible property) in which the
Collateral Documents grant (or purport to grant) Lender a security interest.




     “Collateral Documents” means the Pledge and Security Agreement and such other certificates, documents, and instruments
entered into or delivered in connection with or relating to the Collateral.




     “Common Stock” means
Borrower’s shares of common stock, $0.10 par value per share.




2









 








     “Conversion Price” means the lowest of: (i) $0.60 per share; and (ii) the per share tangible book
value of Borrower, determined in accordance with GAAP, as of the last day of the most recently
completed month preceding the month in which the Note is converted into shares of Common Stock
pursuant to Section 2.8.



     “Default Rate” has the meaning ascribed to such term in Section 2.6.3.



     “Depository Institution Subsidiary” means any Subsidiary of Borrower that is a depository
institution having as its primary federal regulator the OTS, FDIC or FRB.



     “Disbursement” has the meaning ascribed to such term in Section 3.1.



     “Disclosure Schedule” means, in aggregate, the disclosures contemplated herein as included in the
Disclosure Schedule, which has been delivered in connection with the execution of this Agreement.



     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended or recodified.



     “Event of Default” has the meaning ascribed to such term in Section 8.1.1.



     “Exchange Act” means the Securities Exchange Act of 1934, as amended or recodified.



     “Existing Loan Agreement” means that certain Amended and Restated Credit Agreement, dated June 9,
2008, and as subsequently amended, by and between Borrower and U.S. Bank National Association, as
administrative agent of the lenders.



     “FDI Act” means the Federal Deposit Insurance Act, as amended or recodified.



     “FDIC” means the Federal Deposit Insurance Corporation.



     “Financial Statements” has the meaning ascribed to such term in Section 4.5.



     “FRB” means the Board of Governors of the Federal Reserve System.



     “GAAP” means generally accepted accounting principles in effect from time to time in the United
States of America.



     “Governmental Agency(ies)” means, individually or collectively, any federal, state, county or local
governmental department, commission, board, regulatory authority or agency including, without
limitation, the OTS, the FDIC and the FRB.



     “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.



     “Hazardous Materials Laws” mean any laws, regulations, permits, licenses or requirements pertaining
to the protection, preservation, conservation or regulation of the environment which relates to
real property, including, without limitation: the Clean Air Act, as amended, 42 U.S.C. Section
7401 et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section 1251
et seq.; the Resource Conservation and Recovery Act of 1976, as amended, 42 U.S.C. Section
6901 et seq.; the Comprehensive



3









 




Environment Response, Compensation and Liability Act of 1980, as amended (including the Superfund
Amendments and Reauthorization Act of 1986), 42 U.S.C. Section 9601 et seq.; the Toxic
Substances Control Act, as amended, 15 U.S.C. Section 2601 et seq.; the Occupational Safety
and Health Act, as amended, 29 U.S.C. Section 651, the Emergency Planning and Community
Right-to-Know Act of 1986, 42 U.S.C. Section 11001 et seq.; the Mine Safety and Health Act
of 1977, as amended, 30 U.S.C. Section 801 et seq.; the Safe Drinking Water Act, 42 U.S.C.
Section 300f et seq.; and all comparable state and local laws, laws of other jurisdictions
or orders and regulations.




     “IDI” has the meaning ascribed to such term in the recitals hereto.



     “Indebtedness” means and includes: (a) all items arising from the borrowing of money that,
according to GAAP now in effect, would be included in determining total liabilities as shown on the
consolidated balance sheet of Borrower; (b) all obligations secured by any lien in property owned
by Borrower or any Subsidiary whether or not such obligations shall have been assumed, other than a
mortgage of or other lien in property to be used as a branch location of Bank or any other
Depository Institution Subsidiary of Borrower; (c) all guaranties and similar contingent
liabilities with respect to obligations of others; (d) obligations to purchase or repurchase assets
sold to or held by third parties; and
(e) all other obligations (including, without limitation, letters of credit) evidencing obligations
to others; provided, however, Indebtedness shall not include (i) Borrower’s Liabilities, (ii)
endorsement for collection or deposit of any commercial paper secured in the ordinary course of
business, (iii) obligations of Borrower or any of its Subsidiaries for taxes, assessments,
municipal or other governmental charges,
(iv) obligations of Borrower or any of its Subsidiaries for accounts payable incurred in the
ordinary course of business, (v) liabilities existing on the date hereof that are reflected in the
balance sheet included with the September 30, 2009 Financial Statements referred to in Section
4.5, and (vi) deposits or other indebtedness incurred in the ordinary course of business and in
accordance with safe and sound banking practices and applicable laws and regulations, including,
without limitation, brokered certificates of deposit, federal funds purchased, advances from any
Federal Home Loan Bank, secured deposits of municipalities and repurchase agreements (both with
customers of its Depository Institution Subsidiaries and with other parties).



     “Instructions” means disbursement instructions given by Borrower to Lender specifying the manner in
which proceeds of the Loan should be disbursed at Closing.



     “Interest Payment Date” has the meaning ascribed to such term in Section 2.6.2.



     “Lender” has the meaning ascribed to such term in the preamble hereto.



     “Lender’s Representatives” means those of Lender’s directors, officers, employees and professional
advisors engaged to advise Lender with respect to this Agreement and the transactions contemplated
hereunder who have a reasonable need to know the information in question and who agree to maintain
the confidentiality of the information in question except as required otherwise by law or
regulation.



     “LIBOR” means that rate of interest (rounded upward, if necessary, to the next 1/100 of 1%), quoted
by Bloomberg as the three-month London Inter-Bank Offered Rate for deposits in U.S. Dollars on the
applicable date.



     “Loan Documents” means those documents and instruments (including, without limitation, all
agreements, instruments and documents, including, without limitation, guaranties, mortgages, deeds
of trust, pledges, powers of attorney, consents, assignments, contracts, notices and all other
written matter heretofore, now and/or from time to time hereafter executed by and/or on behalf of
Borrower in



4









 







connection with this Agreement and the Loan) entered into or delivered in connection with or
relating to the Loan, including the Collateral Documents and any other documents listed on the
schedule of closing documents prepared in connection with the Closing.



     “Loan” has the meaning ascribed to such term in the recitals hereto.



     “Loan Review Firm” has the meaning ascribed to such term in Section 3.2.2.



     “Market Price of Common Stock” means the market price of Common Stock as reported by the
Nasdaq Stock Market and calculated on a 20-day trailing average as of the end of the day prior to
the relevant measurement date.



     “Maturity Date” means December 31, 2014.



     “NASDAQ Stock Market” means The NASDAQ Stock Market LLC.



     “Nonperforming Assets” has the meaning ascribed to such term in Section 7.5.2.



     “Note” means Note as amended, restated, supplemented or modified from time to time, and each note
delivered in substitution or exchange for any of such Notes and, where applicable, shall include
the singular as well as the plural.



     “OTS” means the Office of Thrift Supervision, a bureau of the United States Treasury Department.



     “PBGC” has the meaning ascribed to such term in Section 5.2.4.



     “Person” means an individual, a corporation (whether or not for profit), a partnership, a limited
liability company, a joint venture, an association, a trust, an unincorporated organization, a
government or any department or agency thereof (including a Governmental Agency) or any other
entity or organization.



     “PIK Interest Amount” has the meaning ascribed to such term in Section 2.6.2.



     “Plan” has the meaning ascribed to such term in Section 5.2.4.



     “Pledge Agreement” means a Pledge and Security Agreement dated as of the Borrowing Date between
Borrower and Lender in the form attached as Exhibit B hereto (as amended, restated,
supplemented or modified from time to time), pursuant to which the Pledged Subsidiary Shares,
together with any other collateral listed on an appendix thereto, are pledged to Lender.



     “Pledged Subsidiary Shares” has the meaning ascribed to such term in the recitals hereto.



     “Potential Event of Default” means an event or circumstance that with the passage of time,
the giving of notice or both could become an Event of Default.



     “Reserve for Loan and Lease Losses” has the meaning ascribed to such term in Section 7.5.4.



     “RICO Related Law” means the Racketeer Influenced and Corrupt Organizations Act of 1970 or
any other federal, state or local law for which forfeiture of assets is a potential penalty.




     “SEC” means the Securities and Exchange Commission of the United States of America.




5









 








     “Securities Act” means the Securities Act of 1933, as amended.



     “Subsidiary” means Bank, IDI and (i) any corporation, at least a majority of the outstanding voting
stock of which is owned, directly or indirectly, by Borrower or by one or more of its Subsidiaries,
(ii) any general partnership, joint venture or similar entity, at least a majority of the
outstanding partnership or similar interests of which shall at the time be owned by Borrower or by
one or more of its Subsidiaries, (iii) any limited partnership of which Borrower or any of its
Subsidiaries is a majority general partner and (iv) any limited liability company, at least a
majority of the outstanding voting membership interests of which are held by Borrower or one or
more of its Subsidiaries.



     “Term Loan” has the meaning ascribed to such term in the recitals hereto.



     “Term Loan Converted Shares” has the meaning ascribed to such term in Section 2.8.



     “Note” means a promissory note in the form attached as Exhibit A hereto in the principal
amount of $110 million, as amended, restated, supplemented or modified from time to time and each
note delivered in substitution or exchange for such note.



     “Total Loan Outstanding” has the meaning ascribed to such term in Section 7.5.5.



     “Treasury” means the United States Department of the Treasury.



     “UCC” shall mean the Uniform Commercial Code as enacted in the State of Wisconsin, as amended or
recodified.



     “U.S. Treasury” has the meaning ascribed to such term in Section 4.2.



          1.2. Certain UCC and Accounting Terms; Interpretations. Except as otherwise defined in this
Agreement or the other Loan Documents, all words, terms and/or phrases used herein and therein
shall be defined by the applicable definition therefor (if any) in the UCC. Notwithstanding the
foregoing, any accounting terms used in this Agreement which are not specifically defined herein
shall have the meaning customarily given to them in accordance with GAAP. Where the character or
amount of any asset or liability or item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made for the purposes of this
Agreement, it shall be done in accordance with GAAP except where such principles are inconsistent
with the specific provisions of this Agreement. The foregoing definitions are equally applicable to
both the singular and plural forms of the terms defined. The words “hereof”, “herein” and
“hereunder” and words of like import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement. The word “including” when used in this
Agreement without the phrase “without limitation,” shall mean “including, without limitation.” All
references to time of day herein are references to Chicago, Illinois time unless otherwise
specifically provided. Any reference contained herein to attorneys’ fees and expenses shall be
deemed to be reasonable fees and expenses of Lender’s outside counsel and of any other third-party
experts or consultants engaged by Lender’s outside counsel on Lender’s behalf. All references to
any Loan Document shall be deemed to be to such document as amended, modified or restated from time
to time. With respect to any reference in this Agreement to any defined term, (a) if such defined
term refers to a Person, then it shall also mean all heirs, legal representatives and permitted
successors and assigns of such Person, and (b) if such defined term refers to a document,
instrument or agreement, then it shall also include any
replacement, extension or other modification thereof.



6









 





     1.3. Exhibits and Schedules Incorporated. All exhibits and schedules attached hereto or
referenced herein, are hereby incorporated into this Agreement.



2. CREDIT FACILITIES.




     2.1. The Loans. Lender agrees to extend to Borrower a Term Loan in the aggregate principal
amount of $110 million in accordance with the terms of, and subject to the conditions set forth in,
this Agreement, the Note and the other Loan Documents. The entire principal amount of Term Loan
shall be borrowed on the Borrowing Date. The principal amount of the Term Loan shall bear interest
per annum at a rate equal to the greater of: (i) 6.50%; and (ii) LIBOR plus 500 basis points. The
unpaid principal balance plus all accrued but unpaid interest on Term Loan shall be due and payable
on (i) the Maturity Date, (ii) such earlier date on which such amount shall become due and payable
on account of acceleration by Lender in accordance with the terms of Note and this Agreement or
(iii) the date on which Lender converts Note into shares of Common Stock, as set forth in
Section 2.8.1.



     2.2. The Note. The Loan shall be evidenced by Note.



     2.3. Maturity Date. On the Maturity Date, all sums due and owing under this Agreement and
the other Loan Documents with respect to the Loan shall be repaid in full, provided, however, that
Lender may elect to convert the outstanding principal and interest owed under the Note into shares
of Common Stock as set forth in Section 2.8. Borrower acknowledges and agrees that Lender
has not made any commitments, either express or implied, to extend the terms of the Loan past its
Maturity Date, unless Borrower and Lender hereafter specifically otherwise agree in writing.



     2.4. Collateral. Borrower’s Liabilities shall be secured by the collateral pledged pursuant
to the Pledge Agreement.



     2.5. The Closing. The funding of the Loan (the “Closing”) will occur at the offices of
Barack Ferrazzano Kirschbaum & Nagelberg LLP, counsel to Lender, at 200 West Madison Street, Suite
3900, Chicago, Illinois at 9:30 a.m. on the date of Closing, or at such other place or time or on
such other date as the parties hereto may agree, by disbursing the proceeds of the Loan in
accordance with any Instructions received at least one Business Day prior to Closing.



     2.6. Interest Rates.



          2.6.1. Interest Rates. The amounts borrowed under the Note shall bear interest per annum as
set forth in Section 2.1. For purposes of determining the interest rate on the Note, LIBOR
shall be determined as of the first Business Day following an interest payment date and shall
continue until the next interest payment date; provided, however, that for the period between the
date on which the Disbursement is made and the first interest payment date, LIBOR shall be
determined as of the date on which the Disbursement is made.




          2.6.2. Interest Payments. Subject to Section 2.6.3 hereof, interest accrued on the
outstanding amount of each Loan shall be payable by Borrower in arrears on the last day of each
March, June, September and December (each, an “Interest Payment Date”), commencing on the first
such Interest Payment Date following the Closing and ended on the Maturity Date. Notwithstanding
the foregoing, Borrower may, at its option, pay a portion of the interest payable on an Interest
Payment Date by issuing to Lender shares of Common Stock in lieu of cash, provided, however, that
at each Interest Payment Date Borrower shall pay an amount of interest payable in cash equal to or
greater than (i) the outstanding principal amount of the Loan multiplied by (ii) 5.00% (the “Cash
Interest Amount”). The amount of interest payable on an Interest Payment Date that may
be paid in shares of Common Stock in




7









 




lieu of cash shall equal (i) the total interest payment due and payable minus (ii) the Cash
Interest Amount (the “PIK Interest Amount”). If Borrower elects to pay a portion of the interest
payable on an Interest Payment Date through the issuance to Lender of shares of Common Stock, the
number of shares of Common Stock to be issued shall equal (i) the PIK Interest Amount, divided by
(ii) the lowest of (A) $0.60 per share, (B) the per share tangible book value of Borrower,
determined in accordance with GAAP, as of the last day of the quarter ending on the relevant
Interest Payment Date and (C) the Market Price of Common Stock.




          2.6.3. Default Interest. Notwithstanding the rates of interest and the payment dates
specified in this Section 2.6, effective immediately upon the occurrence and during the
continuance of any Event of Default, the principal balance of the Loan then outstanding and, to the
extent permitted by applicable law, any interest payments not paid within 10 days after the same
becomes due shall bear interest payable upon demand at a rate which is 300 basis points per annum
in excess of the rate of interest otherwise payable pursuant to this Section 2.6 (the
“Default Rate”). In addition, all other amounts due Lender (whether directly or for reimbursement)
under this Agreement or any of the other Loan Documents, if not paid within five Business Days
after becoming due or, in the event no time period is expressed, if not paid within five Business
Days after written notice from Lender that the same has become due, shall thereafter bear interest
at the foregoing Default Rate. Finally, any amount due on a Maturity Date which is not then paid
shall also bear interest thereafter at the Default Rate.




          2.6.4. Computation of Interest. Interest shall be computed on the basis of the actual
number of days elapsed in the period during which interest accrues and a year of 360 days. In
computing interest, the date of funding shall be included and the date of payment shall be
excluded; provided, however, that if any funding is repaid on the same day on which it is made, one
day’s interest shall be paid thereon. The parties hereto intend to conform strictly to applicable
usury laws as in effect from time to time during the terms of the Loan. Accordingly, if the
transaction contemplated hereby would be usurious under applicable law (including the laws of the
United States of America, or of any other jurisdiction whose laws may be mandatorily applicable),
then, in that event, notwithstanding anything to the contrary in this Agreement or the Note,
Borrower and Lender agree that the aggregate of all consideration that constitutes interest under
applicable law that is contracted for, charged or received under or in connection with this
Agreement shall under no circumstances exceed the maximum amount of interest allowed by applicable
law, and any excess shall be credited to Borrower by Lender (or if such consideration shall have
been paid in full, such excess refunded to Borrower by Lender).




     2.7. Payments.



          2.7.1. Prepayment. Prior to January 1, 2013, Borrower may not prepay any principal
amount outstanding under the Note. On or after January 1, 2013, Borrower may, upon at least ten
Business Day’s notice to Lender, prepay, without penalty, the aggregate principal amount
outstanding under the Note, by paying the principal amount to be prepaid, together with unpaid
accrued interest thereon to but excluding the date of prepayment. This right to prepayment is
subject to Lender’s right to convert the principal amount outstanding under the Note into shares of
Common Stock as described in Section 2.8 hereof.




          2.7.2. Manner and Time of Payment. Except as set forth in Section 2.6.2, all payments
of principal, interest and fees hereunder payable to Lender shall be made, without condition or
reservation of right and free of set-off or counterclaim, in U.S. dollars and by wire transfer
(pursuant to Lender’s written wire transfer instructions) of immediately available funds delivered
to Lender not later than 11:00 a.m. (Chicago time) on the date due. Funds received by Lender after
that time and date shall be deemed to have been paid on the next succeeding Business Day.




8









 








          2.7.3. Payments on Non-Business Days. Whenever any payment to be made by Borrower hereunder
shall be stated to be due on a day which is not a Business Day, payments shall be made on the next
succeeding Business Day and such extension of time (but not such next succeeding Business Day)
shall be included in the computation of the payment of interest hereunder.




          2.7.4. Application of Payments. All payments received by Lender from or on behalf of
Borrower shall first be applied to amounts due to Lender to pay Lender’s fees and reimburse
Lender’s costs and expenses, including those pursuant to Section 6.3 or 8.5 of this
Agreement, second to accrued interest under the Note, provided, however, that after the date on
which the final payment of principal with respect to the Loan is due or following and during any
Event of Default, all payments received on account of Borrower’s Liabilities shall be applied, in
whatever order, combination and amounts as Lender, in its sole and absolute discretion, decides, to
all costs, expenses and other indebtedness owing to Lender. No amount paid on any of the Note may
be reborrowed.




     2.8. Conversion. At the sole election of Lender, Lender may at any time convert the
outstanding principal of the Note, together with any accrued but unpaid interest thereon, into
shares of Common Stock (“Term Loan Converted Shares”). The number of Term Loan Converted Shares
shall equal the quotient obtained by dividing (i) the outstanding principal of Term Loan, together
with any accrued but unpaid interest thereon, by (ii) the Conversion Price. For each fractional
share, cash will be paid in an amount equal to the product obtained by multiplying (A) the
fractional share by (B) the Conversion Price.



          2.8.1. Notice of Conversion. Lender shall provide Borrower written notice of its election
to convert a Note at least three (3) Business Days prior to the date of conversion.




          2.8.2. Treatment of Interest. At the time of any conversion, all interest accrued but
unpaid to Lender through the date of conversion shall be due and payable to Lender on the date of
conversion.




     2.9. Loan Origination Fee. At the Closing, Borrower shall pay to Lender a one-time fee
equal to one-half percent (0.5%) of the aggregate principal amount of the Loans.



3. DISBURSEMENT.




     3.1. Disbursement. At such time as all of the terms and conditions set forth in Section
3.2 have been satisfied by Borrower and Borrower has executed and delivered to Lender each of
the Loan Documents and any other related documents in form and substance satisfactory to Lender, in
its sole and absolute discretion, Lender shall disburse to Borrower an amount equal to $110 million
(the “Disbursement”).



          3.1.1. Borrower Termination Right. Prior to any Disbursement of funds by Lender to Borrower
pursuant to Section 3.1, Borrower may terminate this Agreement by delivering to Lender (a)
a written notice of such termination and (b) a termination fee of $7.5 million.




          3.1.2. Certain Costs and Expenses. In the event Borrower fails to satisfy the disbursement
conditions or Borrower terminates the Agreement pursuant to Section 3.2, Borrower
nevertheless shall pay all costs and expenses incurred by Lender in connection with the
transactions contemplated herein promptly upon receipt of an invoice from Lender, and this
Agreement shall terminate.




9









 








     3.2. Conditions Precedent to Disbursement; Related Delivery Obligations. In conjunction
with and as additional (but independent) supporting evidence for certain of the covenants,
representations and warranties made by Borrower herein, prior to and as a condition of the
Disbursement:



          3.2.1. Satisfaction of Closing Conditions to the Stock Purchase Agreement. All of the
closing conditions set forth in the Stock Purchase Agreement shall have been satisfied or otherwise
waived by the Lender and the transactions contemplated in the Stock Purchase Agreement shall have
been consummated.




          3.2.2. Satisfactory Completion of Loan Review. Borrower shall permit Lender and Crowe
Horwath LLP (the “Loan Review Firm”) to conduct a comprehensive review and analysis of Borrower’s
loan portfolio and other assets on Borrower’s balance sheet in connection with Lender’s pre-Closing
due diligence investigation conducted pursuant to Section 1.2 of the Stock Purchase Agreement.
Borrower hereby acknowledges and agrees that Lender shall be under no obligation to make all or any
portion of the Disbursement pursuant to this Agreement if Lender terminates the Stock Purchase
Agreement pursuant to Section 1.2 of the Stock Purchase Agreement.




          3.2.3. Deliveries. Borrower shall deliver or cause to be delivered to Lender each of
the following, each of which shall be in form and substance reasonably satisfactory to Lender:





               3.2.3.1. Searches. Such UCC, tax lien and judgment searches as Lender shall determine
regarding Borrower pertaining to the jurisdictions (a) in which Borrower is organized and
headquartered, and (b) in which the Collateral is located as determined pursuant to Article 9 of
the UCC.




               3.2.3.2. Opinions. An opinion of counsel of Borrower in substantially the form attached as
Exhibit C and otherwise satisfactory to Lender, dated on or about the date of the
Disbursement.




               3.2.3.3. Loan Documents. The Loan Documents, including, without limitation, the Note and the
Collateral Documents.




               3.2.3.4. Authority Documents. Copies certified by the appropriate secretary of state or
Governmental Agency of (a) the charter of Borrower, (b) the articles of association of Bank and (c)
the charter of IDI. A good standing certificate (or its equivalent) for Borrower issued by the
Secretary of State of Wisconsin, a certificate of corporate existence for Bank issued by the OTS
and a good standing certificate (or its equivalent) for IDI issued by the Secretary of State of
Wisconsin. Copies certified by the Secretary or an Assistant Secretary of Borrower of the Bylaws of
Borrower, Bank and IDI. Copies certified by the Secretary or an Assistant Secretary of Borrower of
resolutions of the board of directors of Borrower authorizing the execution, delivery and
performance (including the authority to pledge the Pledged Subsidiary Shares) of this Agreement,
the Note and the other Loan Documents. An incumbency certificate of the Secretary or an Assistant
Secretary of Borrower certifying the names of the officer or officers of Borrower authorized to
sign this Agreement, the Note and the other documents provided for in this Agreement, together with
a sample of the true signature of each such officer (Lender may conclusively rely on such
certificate until formally advised by a like certificate of any changes therein).




               3.2.3.5. Instructions. The Instructions.




10









 









               3.2.3.6. Certain Costs of Lender. Payment of the reasonable costs and expenses incurred by
Lender to date, such as Lender’s attorneys’ fees and expenses and other fees and expenses paid or
payable to any other parties, in connection with due diligence performed with respect to the
Borrower and preparation, documentation and negotiation of the transaction with Borrower, but
exclusive of expenses and fees related to any negotiation and/or documentation of rights or
interests of the members of Lender between one another, less the $200,000 previously paid by
Borrower to Lender pursuant to that certain letter agreement dated September 11, 2009, between
Borrower and Badger Investment Partners, LLC, an Affiliate of Lender.




               3.2.3.7. Loan Origination Fee. Payment of the loan origination fee referred to in Section
2.9.




               3.2.3.8. Other Requirements. Such other additional information regarding Borrower, any
Subsidiary and their respective assets, liabilities (including any liabilities arising from, or
relating to, legal proceedings) and contracts as Lender may reasonably require.




               3.2.3.9. Other Documents. Such other certificates, affidavits, schedules, resolutions,
opinions, instruments and/or other documents which are provided for hereunder or as Lender may
reasonably request.



          3.2.4. Default. There shall not exist an Event of Default or Potential Event of Default.




          3.2.5. Legislation or Proceedings. There shall not have been any legislation passed or
any suit or other proceeding instituted the effect of which is to prohibit, enjoin (or to declare
unlawful or improper) or otherwise materially adversely affect, in Lender’s reasonable judgment,
Borrower’s performance of its obligations hereunder, nor shall any litigation or governmental
proceeding have been instituted or threatened against Borrower or any Subsidiary or any of their
officers which, in the reasonable judgment of Lender, would be reasonably likely to materially
adversely affect the financial condition, results of operations or business of Borrower and its
Subsidiaries taken as a whole.




          3.2.6. Collateral. There shall be no reasonable basis for Lender to believe that any
Collateral might be subject to forfeiture under any RICO Related Law or any of the Collateral is
subject to any pledge, lien, security interest, charge or encumbrance other than in favor of
Lender.




          3.2.7. Material Adverse Change. There shall not have occurred, in Lender’s reasonable
judgment, a material adverse change in the financial condition, results of operations or business
of Borrower or Bank (including any material adverse change resulting from the Bank’s investment in
the common stock of the Federal Home Loan Bank of Chicago) since the date of the Financial
Statements; provided, however, that the impact of any of the following shall not be deemed a
material adverse change for these purposes: (a) changes in banking and similar laws of general
applicability to depository institutions generally or interpretations thereof by Governmental
Agencies, or other changes affecting depository institutions generally, including changes in
general economic conditions and changes in prevailing interest and deposit rates; (b) changes in
GAAP or regulatory accounting requirements applicable to depository institutions and their
affiliates; and (c) changes in economic conditions or financial market conditions affecting
similarly situated depository institutions or depository institution holding companies.




          3.2.8. Representations and Warranties. All representations and warranties of Borrower
contained herein or any information set forth in the recitals hereto, shall be true on and as of
the date of the Disbursement, with the same effect as though such representations and warranties
had been made, or such information had been presented, on and as of such date.





11









 








          3.2.9. Approvals. All necessary or appropriate actions and proceedings shall have been
taken in connection with, or relating to, the transactions contemplated hereby and all documents
incident thereto shall have been completed and tendered for delivery, in substance and form
reasonably satisfactory to Lender, including, without limitation, if appropriate in the reasonable
opinion of Lender, receipt of evidence of all necessary approvals from Governmental Agencies.



4. GENERAL REPRESENTATIONS AND WARRANTIES. Borrower hereby covenants,
represents and warrants to Lender as follows:




     4.1. Organization. Each of Borrower and its Subsidiaries: (a) is duly organized, validly
existing and (except for Bank and any other Depository Institution Subsidiary of Borrower that is a
federally chartered savings bank) 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 adverse effect on the financial condition, results of operations or
business of Borrower and its Subsidiaries taken as a whole. Borrower 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. Borrower does not have any Subsidiaries
other than those set forth in Schedule 4.1 of the Disclosure Schedule.



     4.2. Capitalization. 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 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.



     4.3. Stock of Subsidiaries. All of the capital stock of each of Borrower’s Subsidiaries has
been duly authorized and validly issued, and is fully paid and nonassessable. Borrower owns
directly or indirectly all of the issued and outstanding capital stock of each of its Subsidiaries
free and clear of any claim, lien or other encumbrance, except for the security interest in the
capital stock of Bank granted to
U.S. Bank National Association and other participating financial institutions pursuant to the
Existing Loan Agreement.



     4.4. Use of Proceeds.



          4.4.1. The proceeds of the Loans shall be contributed by Borrower to the capital of Bank.




          4.4.2. Borrower does not own any “margin security” as such term is defined in Regulation U of the
FRB. Borrower will not use any part of the proceeds of the Loans: (i) directly or




12









 




indirectly to purchase or carry any security or reduce or retire any indebtedness originally
incurred to purchase any such security within the meaning of Regulation U of the Board; or (ii) so
as to involve Borrower in a violation of Regulation T, U or X of the FRB.




     4.5. Financial Statements. Borrower has delivered to Lender copies of its consolidated
financial statements, consisting of a balance sheet, statement of income and retained earnings and
statement of cash flows, as of and for the year ending March 31, 2009, and as of and for the six
months ending September 30, 2009, audited in the case of Borrower’s year end financial statements
by Borrower’s certified public accountants (the “Financial Statements”). The Financial Statements
are true and correct in all material respects, are in accordance with the respective books of
account and records of Borrower 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 Borrower and its
Subsidiaries and its and their respective assets and liabilities and results of operations as of
such date. The Financial Statements contain and reflect provisions for taxes, reserves and other
liabilities of Borrower and each of its Subsidiaries in accordance with GAAP or applicable banking
rules and regulations, as the case may be.



     4.6. Title to Properties.



          4.6.1. Borrower 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 Borrower or its
Subsidiaries subsequent to such date, except (a) real property and other assets acquired and/or
being acquired from debtors in full or partial satisfaction of obligations owed to Borrower or its
Subsidiaries, as the case may be, (b) property or other assets leased by Borrower or its
Subsidiaries, and (c) 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 Borrower or any Subsidiary and
properties or other assets leased by Borrower 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 Borrower and each of its Subsidiaries are free from any material liens, encumbrances
or defects in title.




          4.6.2. 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 Borrower or any of its Subsidiaries as lessee under any lease, or as conditional vendee
under any conditional sales contract or other title retention agreement. Borrower 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 Borrower and each of its
Subsidiaries. None of Borrower or any of its Subsidiaries in default and, to Borrower’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 on the
financial condition, results of operations or business of Borrower and its Subsidiaries taken as a
whole.




     4.7. Legal and Authorized. The borrowing of the maximum principal amounts of the Loans, the
execution and performance of this Agreement, the Note, the Pledge Agreement and the other Loan
Documents and compliance by Borrower with all of the provisions of this Agreement and of the other
Loan Documents are within the corporate powers of Borrower. Each of this Agreement, the Note, the
Pledge Agreement and the other Loan Documents has been duly authorized, executed and delivered and
is the legal, valid and binding obligation of Borrower, and is enforceable in accordance with its



13









 




respective terms, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization or other laws and subject to general principles of equity.




     4.8. No Defaults or Restrictions. Neither the execution, delivery or performance by
Borrower of any of the Loan Documents, nor compliance by it with the terms and provisions hereof or
thereof: (a) will contravene any provision of any applicable law, statute, rule or regulation or
any order, writ, injunction or decree of any court or governmental instrumentality; (b) will
conflict with or result in any breach of any of the terms, covenants, conditions or provisions of,
or constitute a default under, or result in the creation or imposition of (or the obligation to
create or impose) any lien upon any of the property or assets of Borrower or any of its
Subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust, credit agreement,
loan agreement or any other agreement, contract or instrument to which Borrower or any of its
Subsidiaries is a party or by which it or any of its property or assets is bound or to which it may
be subject; or (c) will violate any provision of the charter or bylaws of Borrower or the
organizational documents, charter or bylaws of any of its Subsidiaries, except in the case of (a),
(b) or (c), any such contravention, conflict, breach, default, lien or violation which would not
reasonably be expected to have a material adverse effect on the financial condition, results of
operations or business of Borrower and its Subsidiaries, taken as a whole, or which would not
prevent Borrower from fulfilling its obligations under the Loan Documents in any material respect.
Neither Borrower nor any of its Subsidiaries is in material default in the performance, observance
or fulfillment of any of the terms, obligations, covenants, conditions or provisions contained in
any indenture or other agreement creating, evidencing or securing indebtedness of any kind or
pursuant to which any such indebtedness is issued, or other agreement or instrument to which
Borrower or any of its Subsidiaries is a party or by which it or its properties may be bound or
affected, which default would reasonably be expected to have a material adverse effect on the
financial condition, results of operations or business of Borrower and its Subsidiaries, taken as a
whole.



     4.9. Governmental Consent. No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with (except as have been obtained or made
prior to the date of this Agreement or pursuant to the Stock Purchase Agreement), or exemption by,
any governmental or public body or authority, or any subdivision thereof, is required to authorize,
or is required in connection with: (a) the execution, delivery and performance by Borrower of this
Agreement, the Note, the Pledge Agreement or any of the other Loan Documents; or (b) the legality,
validity, binding effect or enforceability of any of the Loan Documents.



     4.10. Taxes. Each of Borrower 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 Borrower 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. Borrower 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 Borrower or any of its Subsidiaries.



     4.11. Compliance with Law. Each of Borrower 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 bodies, domestic or foreign, 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,



14









 







in the aggregate, have a material adverse effect on the financial condition, results of operations
or business of Borrower and its Subsidiaries taken as a whole.



     4.12. Employee Benefit Plans. All employee benefit plans, as defined in Section 3(3) of
ERISA, established or maintained by Borrower or any of its Subsidiaries or to which any of them
contributes, are in compliance in all material respects with all applicable requirements of ERISA,
and are in compliance in all material respects with all applicable material requirements (including
qualification and non-discrimination requirements in effect) of the Code, for obtaining the tax
benefits the Code thereupon permits with respect to such employee benefit plans. For purposes of
this Section, non-compliance with the Code and ERISA is material if such non-compliance would
reasonably be expected to have a material adverse effect on the financial condition, results of
operations or business of Borrower and its Subsidiaries taken as a whole.



     4.13. No Material Adverse Change. Except as listed on Schedule 4.13, Since March 31, 2009,
none of the business, operations, properties or assets of Borrower and its Subsidiaries taken as a
whole has been materially and adversely affected in any way as the result of any act or event,
including fire, explosion, accident, act of God, strike, lockout, flood, drought, storm,
earthquake, combination of workers or other labor disturbance, riot, activity of armed forces or of
the public enemy, embargo, or nationalization, condemnation, requisition or taking of property, or
cancellation or modification of contracts, by any domestic or foreign government or any
instrumentality or agency.



     4.14. Regulatory Actions. Except as listed on Schedule 4.14, Neither Borrower nor any of
its Subsidiaries, nor any of the officers or directors or any of them, is now operating under any
restrictions, agreements, memoranda, or commitments (other than restrictions of general
application) imposed by any Governmental Agency, nor are any such restrictions to the knowledge of
Borrower threatened or agreements, memoranda or commitments being sought by any Governmental
Agency.



     4.15. Hazardous Materials. Neither Borrower 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 Borrower’s knowledge, no
Hazardous Material is located on any real property owned or leased by Borrower 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
Borrower or any of its Subsidiaries or the aquifer underlying any real property owned or leased by
Borrower or any of its Subsidiaries.



     4.16. Pending Litigation. Except as listed on Schedule 4.16, there are no actions, suits,
proceedings or written agreements pending, or, to the best knowledge of Borrower, threatened,
against Borrower 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,
domestic or foreign. To the best knowledge of Borrower, nothing disclosed on Schedule 4.16 would,
if adversely determined, be reasonably expected to have a material adverse effect on the financial
condition, results of operations or business of Borrower and its Subsidiaries taken as a whole; and
none of Borrower 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, domestic or foreign.



     4.17. Controls and Procedures. Borrower (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 Borrower, including its subsidiaries, is made known to the chief executive
officer and the chief financial officer of Borrower by others within those entities, and (ii) has
disclosed, based on its most recent evaluation prior to the date hereof, to Borrower’s Accountant
and the audit committee of the Board of Directors (A) any significant deficiencies and material
weaknesses in the design or



15









 







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 Borrower’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 Borrower’s internal controls
over financial reporting.



     4.18. Anti-takeover Provisions Not Applicable. 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.



     4.19. Investment Company Act. None of Borrower 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.



     4.20. No Misstatement of Material Fact. No information, exhibit, report or document
furnished by Borrower to Lender in connection with the negotiation or execution of this Agreement
or any of the other Loan 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 Lender.



     4.21. Representations and Warranties Generally. The representations and warranties set
forth in this Agreement or in any other Loan Document will be true and correct on the date of this
Agreement and as otherwise provided herein with the same force and effect as if made on each such
date. All representations, warranties, covenants and agreements made in this Agreement or in any
certificate or other document delivered to Lender by or on behalf of Borrower pursuant to or in
connection with this Agreement shall be deemed to have been relied upon by Lender notwithstanding
Lender’s review of any documents or materials delivered by Borrower to Lender pursuant to the terms
hereof and notwithstanding any investigation heretofore or hereafter made by Lender or on its
behalf (and Borrower hereby acknowledges such reliance by Lender in making the Loans and all
disbursements thereunder) and, furthermore, shall survive the making of any or all of the
disbursements of proceeds under the Loans and continue in full force and effect as long as there
remains unperformed any obligations to Lender hereunder or under any of the other Loan Documents.


5. GENERAL COVENANTS, CONDITIONS AND AGREEMENTS. Borrower hereby further covenants and
agrees with Lender as follows:




     5.1. Negative Covenants. Borrower agrees that until (i) it satisfies all of its obligations
to Lender, including its obligations to pay in full all principal, interest and other amounts due
in accordance with the terms of this Agreement, the Note, the Pledge Agreement and the other Loan
Documents or (ii) the Note is fully converted pursuant to Section 2.8, it shall not take
any of the actions set forth below in this Section 5.1, nor permit any of its Subsidiaries
to take any of the following actions, without the prior written consent of Lender.



          5.1.1. Indebtedness. Borrower shall not, nor shall it cause, permit or allow any Subsidiary
to, directly or indirectly, create, assume, incur or have outstanding any Indebtedness, including,
without limitation, incur any indebtedness under the Existing Loan Agreement.




          5.1.2. Encumbrances. Borrower shall not, nor shall it cause, permit or allow any Subsidiary
to, directly or indirectly, create, assume, incur or suffer or permit to exist any mortgage,
pledge, encumbrance, security interest, assignment, lien or charge of any kind or character upon
any asset of Borrower or any Subsidiary, whether owned at the date hereof or hereafter acquired
except:




16









 









               5.1.2.1. mechanics’, workmen’s, materialmen’s, landlords’, carriers’, or other similar liens
arising in the ordinary course of business with respect to obligations which are not liens for
taxes, assessments or other governmental charges not yet due or which are being contested in good
faith by appropriate proceedings in such a manner as not to make the property forfeitable;




               5.1.2.2. mortgages, liens, charges and encumbrances incidental to the conduct of its business
or the ownership of its property and assets which were not incurred in connection with the
borrowing of money or the obtaining of an advance or credit, other than for property to be used for
a branch office of Bank or any other Depository Institution Subsidiary of Borrower, and which do
not in the aggregate materially detract from the value of its property or assets or materially
impair the use thereof in the operation of its business;




               5.1.2.3. liens arising out of judgments or awards against Borrower with respect to which it
shall concurrently therewith be prosecuting a timely appeal or proceeding for review and with
respect to which it shall have secured a stay of execution pending such appeal or proceedings for
review;




               5.1.2.4. pledges or deposits to secure obligations under worker’s compensation laws or similar
legislation;




               5.1.2.5. good faith deposits in connection
with lending contracts or leases
to which Borrower is a party;




               5.1.2.6. deposits to secure public or statutory obligations of Borrower;




               5.1.2.7. liens existing on the date hereof; and




               5.1.2.8. liens and security interests granted to Lender.



          5.1.3. Transfer; Merger; Change-in-Control Transaction. Borrower shall not, nor shall
it cause, permit or allow any Subsidiary to, directly or indirectly, merge, consolidate, sell,
transfer, lease, encumber or otherwise dispose of all or a substantial part of its property or
business or all or any substantial part of its assets, or sell or discount (with or without
recourse) any of its notes or accounts, except (i) for the sale of loans, securities or other
assets by Borrower or any of its Subsidiaries in the ordinary course of business, (ii) for the
merger of Borrower with any of its Subsidiaries or the merger of any Subsidiary of Borrower with
another Subsidiary of Borrower and (iii) for any business combination of Borrower or one of its
Subsidiaries with another Person, or any disposition of a Subsidiary of Borrower, which other
Person or Subsidiary, as the case may be, meets the definition of “significant subsidiary” in Rule
1-02(w) of Regulation S-X of the SEC with respect to Borrower. In addition, Borrower shall not
enter into any other transaction which would result in any Person other than Lender being deemed
the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of 20.0% or more of the
total number of Borrower’s shares of Common Stock issued and outstanding immediately following such
transaction.




          5.1.4. Certain Business Activities. Borrower shall not, nor shall it cause, permit or
allow any Subsidiary to, engage in any business or activity not permitted by all applicable laws
and regulations, except for any unpermitted business or activity which would not reasonably be
expected to have a material adverse effect on the financial condition, results of operations
or business of Borrower and its Subsidiaries, taken as a whole.





17











 





          5.1.5. Loans. Borrower shall not, nor shall it cause, permit or allow any Subsidiary to,
make any loans or advances, whether secured or unsecured, to any Person other than loans or
advances made in the ordinary course of business and in accordance with applicable laws and
regulations and safe and sound business practices.



          5.1.6. Redemption of Capital Stock; Change in Capital Structure. Borrower shall not,
nor shall it cause, permit or allow any Subsidiary to, redeem any of its capital stock or otherwise
change its capital structure (except for (i) the issuance of Common Stock as provided in
Section 2.8, (ii) the issuance of Common Stock pursuant to the Stock Purchase Agreement or
contemplated by the Stock Purchase Agreement (including the transactions contemplated by Sections
5.18 and 5.19 of the Stock Purchase Agreement and (iii) the pre-emptive rights offering of up to
100 million shares of common stock to Borrower shareholders) where the same would reasonably be
expected to have a material adverse effect on the financial condition, results of operations or
business of Borrower and its Subsidiaries, taken as a whole.



          5.1.7. Distributions. So long as any principal, interest or other amounts are
outstanding under this Agreement, Borrower shall not itself declare or pay any cash dividend or
make (or otherwise become obligated to make) any other distribution in respect of its capital stock
or other outstanding equity securities (including, without limitation, a stock dividend or stock
split) other than dividends on (i) its preferred stock that has been issued to the U.S. Treasury
pursuant to the Capital Purchase Program and (ii) its Common Stock in an amount not to exceed a
quarterly dividend level of $0.01 per share; provided, however, that no such dividend shall be paid
if an Event of Default or Potential Event of Default has occurred and is continuing, or if the
declaration or payment of a dividend would result in the occurrence of an Event of Default or
Potential Event of Default.



          5.1.8. Change in Capitalization. Borrower shall not itself: (i) change its authorized
or issued capital stock (except as may be necessary to issue shares of Common Stock pursuant to the
terms of this Agreement, in connection with an equity incentive plan in existence as of the date of
this Agreement); (ii) grant any stock option or right to purchase shares of its capital stock
(except pursuant to an equity incentive plan in existence as of the date of this Agreement); (iii)
issue any security convertible into its capital stock; or (iv) purchase, redeem, retire or
otherwise acquire any shares of its capital stock.



          5.1.9. Unsafe and Unsound Practices. Borrower shall not, nor shall it cause, permit or
allow any Subsidiary to, engage in any unsafe or unsound business practice that would reasonably be
expected to have a material adverse effect on the financial condition, results of operations or
business of Borrower and its Subsidiaries, taken as a whole.



          5.1.10. Compliance with Loan Documents. Borrower shall not, nor shall it cause, permit
or allow any Subsidiary to, breach or fail to perform or observe any of the material terms and
conditions of this Agreement, the Note, the Pledge Agreement or any other document or agreement
entered into or delivered in connection with, or relating to, the Loan.



          5.1.11. USA Patriot Act Matters. Borrower shall not, nor shall it cause, permit or
allow, any Subsidiary (a) to be or become subject at any time to any law, regulation, or list of
any Government Agency (including, without limitation, the U.S. Office of Foreign Asset Control
list) that prohibits or materially limits Lender from making any advance or extension of credit to
Borrower or from otherwise conducting business with Borrower, or (b) to fail to provide documentary
or other evidence of Borrower’s identity as may be reasonably requested by Lender at any time to
enable Lender to verify Borrower’s identity or to comply with any applicable law or regulation,
including, without limitation, Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318.



18









 





     5.2. Affirmative Covenants. Borrower agrees that until (i) it satisfies all of its
obligations to Lender, including its obligations to pay in full all principal, interest and other
amounts due in accordance with the terms of this Agreement, the Note, the Pledge Agreement and the
other Loan Documents, or (ii) the Note is fully converted into shares of Common Stock pursuant to
Section 2.8, it shall perform the covenants set forth below in this Section 5.2.



          5.2.1. Corporate Existence. Borrower shall at all times preserve and maintain its and its
Subsidiaries’ corporate (or other entity) existence, rights, franchises and privileges, except to
the extent the failure to do so would not have a material adverse effect on the financial
condition, results of operations or business of Borrower and its Subsidiaries, taken as a whole,
and provided that any Depository Institution Subsidiary of Borrower may undergo a charter
conversion (e.g., from a national banking association to a state-chartered institution or
vice-versa) and Borrower or any other Subsidiary of Borrower may change its jurisdiction of
organization.



          5.2.2. Maintain Property. Borrower shall at all times, and shall cause its Subsidiaries at
all times to, maintain, preserve and keep its plant, properties and equipment in good repair,
working order and condition, and shall from time to time make all needful and proper repairs,
renewals, replacements, and additions thereto. Borrower shall permit Lender to examine and inspect
such plant, properties and equipment at least once annually and with at least ten Business Days’
advance notice.



          5.2.3. Maintain Insurance. Borrower shall at all times, and shall cause its Subsidiaries at
all times to, insure and keep insured in insurance companies of recognized financial
responsibility, all insurable property owned by it which is of a character usually insured by
companies similarly situated and operating like properties, against loss or damage from fire and
such other hazards or risks as are customarily insured against by companies similarly situated and
operating like properties; and shall similarly insure employers’, public and professional liability
risks.



          5.2.4. ERISA Liabilities. Borrower shall at all times promptly pay and discharge, and
shall cause its Subsidiaries at all times to promptly pay and discharge, all ERISA obligations and
liabilities of a character which if unpaid or unperformed might result in the imposition of a
material lien against any of its or their properties or assets and will promptly notify Lender of
(i) the occurrence of any reportable event (as defined in ERISA) which might result in the
termination by the Pension Benefit Guaranty Corporation (“PBGC”) of any defined benefit plan within
the meaning of Section 3(3) of ERISA (the “Plan”) covering any officers or employees of Borrower or
any Subsidiary, any benefits of which are, or are required to be, guaranteed by PBGC, (ii) receipt
of any notice from PBGC of its intention to seek termination of the Plan or appointment of a
trustee therefor, and (iii) its intention to terminate or withdraw from the Plan. Borrower shall
not, and shall cause its Subsidiaries to not, terminate any such Plan or withdraw therefrom unless
it shall be in compliance with all of the terms and conditions of this Agreement after giving
effect to any liability to PBGC resulting from such termination or withdrawal.



          5.2.5. Financial Statements. Borrower shall at all times maintain and cause its
Subsidiaries to maintain a system of accounting, on the accrual basis of accounting and in all
material respects in accordance with GAAP, and shall furnish to Lender or its authorized
representatives the following information:




               5.2.5.1. as soon as available, and in any event within ninety (90) days after the close of
each of its fiscal years, a copy of the annual financial statements of Borrower, on a consolidated
and consolidating basis, including balance sheet, statement of income and retained earnings,
statement of cash flows, audited by Borrower’s Accountant, for the fiscal year then ended and such
other financial information as Lender may reasonably request; and



19









 






               5.2.5.2. as soon as available, and in any event within forty five (45) days following the end
of each quarter, a copy of the consolidated financial statements of Borrower regarding such
quarter, including balance sheet, statement of income and retained earnings and statement of cash
flows for the month then ended.



     Borrower represents and warrants to Lender that the financial statements delivered to Lender at or
prior to the execution and delivery of this Agreement and to be delivered at all times thereafter
accurately reflect and will accurately reflect the financial condition of Borrower in all material
respects. Borrower agrees to promptly advise Lender of any material adverse change in the financial
condition, results of operations or business of Borrower and its Subsidiaries, taken as a whole,
provided that furnishing such information to Lender is not prohibited by applicable laws and
regulations and Lender agrees in writing not to disclose such information to any other person,
except as required by law or regulation or as agreed to by Borrower, and provided further that a
material adverse change shall not include the impact on Borrower and its Subsidiaries of any of the
following: (a) changes in banking and similar laws of general applicability to depository
institutions generally or interpretations thereof by Governmental Agencies, or other changes
affecting depository institutions generally, including changes in general economic conditions and
changes in prevailing interest and deposit rates; (b) changes in GAAP or regulatory accounting
requirements applicable to banks and their affiliates; (c) any modifications or changes to
policies, practices or charges in accordance with GAAP; (d) changes in national or international
political or social conditions including the engagement by the United States in hostilities whether
or not pursuant to the declaration of a national emergency or war, or the occurrence of any
military or terrorist attack upon or within the United States, or any of its territories,
possession or diplomatic or consular offices or upon any military installation, equipment or a
personnel of the United States, unless it uniquely affects Borrower or its Subsidiaries; and (e)
any change in the value of Borrower’s securities or loan portfolio, or any change in value of the
deposits or borrowings of Borrower, resulting from a change in interest rates generally.



          5.2.6. Notice of Default. Borrower shall, promptly after becoming aware of the
commencement thereof, give notice to Lender in writing of the occurrence of an Event of Default or
Potential Event of Default provided that furnishing such information to Lender is not prohibited by
applicable laws and regulations and Lender agrees in writing not to disclose such information to
any other person, except as required by law or regulation or as agreed to by Borrower.



          5.2.7. Payment of Taxes. Borrower shall, and shall cause its Subsidiaries to, promptly
pay and discharge all taxes, assessments and other governmental charges imposed upon Borrower or
any of its Subsidiaries, upon the income, profits, or property of Borrower or any of its
Subsidiaries, and all claims for labor, material or supplies which, if unpaid, might by law become
a material lien or charge upon the property of Borrower or any of its Subsidiaries; provided,
however, that Borrower or its Subsidiaries, as the case may be, shall not be required to pay any
such tax, assessment, charge or claim, so long as the validity thereof is being contested in good
faith by appropriate proceedings, and reserves therefor are maintained on the books of Borrower or
any of its Subsidiaries, as the case may be.



          5.2.8. Filings with Governmental Agencies. Borrower shall file or cause to be filed in
a timely manner (including any period of extension pursuant to Rule 12b-25 under the Exchange Act)
all filings required of it and each of its Subsidiaries with all Governmental Agencies and cause
such filings to be true and correct in all material respects.



          5.2.9. Books and Records. Borrower shall maintain or cause to be maintained its books,
accounts and records and those of each of its Subsidiaries in the usual, regular and ordinary
manner, on a basis consistent with prior years and in material compliance with any legal
requirements.



20









 





          5.2.10. Compliance with Laws. Borrower shall comply and cause each of its Subsidiaries
to comply with each federal, state, local, municipal, foreign, international or other
administrative order, law, ordinance, principle of common law, regulation or statute, and each
condition imposed by or undertaking provided to any Governmental Agency, applicable to it or to the
conduct or operation of its respective business or the ownership or use of any of its respective
assets, except where the failure to so comply would not have a material adverse effect on the
financial condition, results of operations or business of Borrower and its Subsidiaries, taken as a
whole.



          5.2.11. Inspection Rights. Except to the extent prohibited by applicable laws and
regulations, Borrower shall, and shall cause each Subsidiary to, permit Lender and its duly
authorized representatives and agents to visit and inspect the corporate books and financial
records of Borrower and each of its Subsidiaries, to examine and make copies of the books of
accounts and other financial records of Borrower and each of its Subsidiaries, and to discuss the
affairs, finances and accounts of Borrower and each of its Subsidiaries with, and to be advised as
to the same by, its officers, employees and independent public accountants (and by this provision
Borrower hereby authorizes such accountants to discuss with Lender the finances and affairs of
Borrower and of each of its Subsidiaries) at such reasonable times and reasonable intervals as
Lender may designate, provided, however, that this right shall not be exercised more than four
times per year and only with 15 days’ prior notice so long as
(a) Borrower shall be “adequately capitalized” in accordance with the rules and regulations of its
primary federal regulator and (b) no Event of Default shall have occurred and be continuing, and
provided, further, that Lender agrees to maintain the confidentiality of all information regarding
Borrower and its Subsidiaries obtained as a result of the exercise of this right and through any
other means, except as required otherwise by law or regulation, and that neither Borrower nor any
of its Subsidiaries shall be required to make available to Lender any customer lists or other
proprietary information unless such information is required by Lender to determine the financial
condition of Borrower or any of its Subsidiaries or to determine the ability of either to meet its
obligations hereunder.



          5.2.12. Reservation for Issuance. Borrower shall at all times reserve and keep
available, out of its authorized but unissued Common Stock, solely for the purpose of effecting the
conversion of the Note and the payment of a portion of the interest payment in Common Stock, a
sufficient number of shares of Common Stock issuable upon the conversion of the Note from time to
time outstanding.



          5.2.13. Conversion of Shares. Upon Lender notifying Borrower of its intent to convert
the Note into shares of Common Stock pursuant to Section 2.8 Borrower shall issue the
Shares of Common Stock to Borrower within three (3) Business Days.



          5.2.14. Exchange Listing. Borrower shall promptly use its reasonable best efforts to
cause the shares of Common Stock to be issued pursuant to this Agreement and the shares of Common
Stock reserved for issuance pursuant to the conversion of the Note or the payment of interest in
Common Stock to be approved for listing on the NASDAQ Stock Market, subject to official notice of
issuance (upon receipt of Shareholder Approval of such conversion), as promptly as practicable.



          5.2.15. Independent Loan Review. For each fiscal quarter beginning with the quarter
ended March 31, 2010, Borrower shall engage an independent loan review firm acceptable to Lender to
conduct a review and analysis of Borrower’s loan portfolio. The results of such review and
analysis, which shall be completed prior to Borrower’s filing of its quarterly report on Form 10-Q
with the SEC for each such quarter, shall be reflected in Borrower’s calculation of its Reserve for
Loan and Lease Losses as of the end of the applicable quarter.



21









 





          5.2.16. Additional Information. Except to the extent it is prohibited from doing so by
applicable laws or regulations, Borrower shall provide promptly to Lender other information
concerning the business, operations, financial condition and regulatory status of Borrower and its
Subsidiaries as Lender may from time to time reasonably request.


6. ADDITIONAL COVENANTS. Each of Borrower and Lender further agree with the other party as
follows in this Section 6.




     6.1. Compliance Certificate. Borrower shall furnish Lender, at the same time as the
quarterly financial reports referred to in Section 5.2.5, a quarterly compliance
certificate in the form attached as Exhibit D hereto, which certificate shall state that
(a) Borrower is in compliance in all material respects with all covenants contained in this
Agreement, (b) that no Event of Default has occurred or is continuing, or, if there is any such
event, describing such event, the steps, if any, that are being taken to cure it, and the time
within which such cure will occur and (c) all representations and warranties made by Borrower
herein continue to be true as of the date of such certificate. Such quarterly compliance
certificate shall be signed by the President or Chief Financial Officer of Borrower and shall also
contain, in a form and with such specificity as is reasonably satisfactory to Lender, a computation
of the financial covenants set forth in Section 7 hereof and such additional information as
Lender shall have reasonably requested by Borrower prior to the submission thereof.



     6.2. Proceedings. Promptly after receiving knowledge thereof, notice in writing of all
charges, assessments, actions, suits and proceedings (as well as notice of the outcome of any such
charges, assessments, actions, suits and proceedings) that are initiated by, or brought before, any
court or Governmental Agency, in connection with Borrower or any Subsidiary, other than litigation
not involving the OTS, the FDIC or the FRB, which, if adversely decided, would not have a material
adverse effect on the financial condition, results of operations or business of Borrower and its
Subsidiaries, taken as a whole.



     6.3. Lender Expenses. Whether or not any Loan is made, Borrower will (a) pay all reasonable
costs and expenses of Lender incident to the transactions contemplated by this Agreement including,
without limitation, all costs and expenses incurred in connection with the preparation, negotiation
and execution of the Loan Documents, or in connection with any modification, amendment, alteration,
or the enforcement of this Agreement, the Note or the other Loan Documents, including, without
limitation, Lender’s out-of-pocket expenses and the charges and disbursements to counsel retained
by Lender, and (b) pay and save Lender and all other holders of the Note harmless against any and
all liability with respect to amounts payable as a result of (i) any taxes which may be determined
to be payable in connection with the execution and delivery of this Agreement, the Note or the
other Loan Documents or any modification, amendment or alteration of the terms or provisions of
this Agreement, the Note or the other Loan Documents, other than income taxes, (ii) any interest or
penalties resulting from nonpayment or delay in payment of such expenses, charges, disbursements,
liabilities or taxes, and (iii) any income taxes in respect of any reimbursement by Borrower for any of such violations,
taxes, interests or penalties paid by Lender. The obligations of Borrower under this Section
6.3 shall survive the repayment in full of the Note, the conversion of the Note or the
termination of this Agreement. Any of the foregoing amounts incurred by Lender and not paid by
Borrower within ten days after demand for payment shall bear interest from the date incurred at the
rate equal to 18.00% per annum and shall be deemed part of Borrower’s Liabilities hereunder.



     6.4. Retain Certain Qualified Executive Officers. Lender shall use its commercially
reasonable best efforts to identify and retain, as promptly as practicable, a qualified Chief
Financial Officer and a qualified Chief Credit Officer. Prior to hiring any such executive officer,
Borrower shall



22









 







provide information about the candidate to Lender and afford Lender at least ten Business Days to
review such information and provide input to Lender with respect to such candidate.



7. FINANCIAL COVENANTS.




     7.1. Capitalization. Borrower shall cause Bank to maintain such capital as may be necessary
to cause Bank to be classified as “well capitalized” in accordance with the rules and regulations
of Bank’s primary federal regulator, as in effect from time to time, and, except as otherwise set
forth in Section 7.3, consistent with the financial information and reports contemplated in
Section 5.2.5 hereof.



     7.2. Nonperforming Asset Ratio. Borrower shall cause Bank to maintain at all times the
ratio of (a) Nonperforming Assets to (b) the sum of total shareholders’ equity and Reserve for Loan
and Lease Losses at not more than 50%. The ratio set forth in this Section 7.2 shall be
calculated quarterly beginning with the quarter ended June 30, 2010, shall be derived from the
quarterly report filed with Bank’s primary federal regulator and shall be consistent with the
financial information and reports contemplated in Section 5.2.5 hereof.



     7.3. Loan Loss Reserve. Borrower shall cause Bank at all times to maintain its Reserve for
Loan and Lease Losses at an amount considered to be adequate in accordance with GAAP. In addition,
as of the end of each quarterly period, Borrower shall cause Bank to calculate its Pro Forma
Reserve for Loan and Lease Losses, which amount shall be used for purposes of calculating the
Bank’s compliance with the covenants in Section 7.1 and Section 7.4. The covenant
set forth in the immediately preceding sentence of this Section 7.3 shall be calculated
quarterly beginning with the quarter ended June 30, 2010.



     7.4. Return on Assets. For each quarterly period beginning with the quarter ending June 30,
2010, through the quarter ending June 30, 2011, Borrower shall cause Bank to maintain, on an
annualized basis, a return on Average Total Assets of not less than 0.25%. For each quarterly
period thereafter, Borrower shall cause Bank to maintain, on an annualized basis, a return on
Average Total Assets of not less than 0.65%. The covenant set forth in this Section 7.4
shall be calculated quarterly beginning with the quarter ended June 30, 2010, shall be derived
from the quarterly report filed by Bank with its primary federal regulator and shall be consistent
with the financial information and reports contemplated in Section 5.2.5; provided,
however, that in computing Bank’s return on Average Total Assets for any given quarter, Bank shall
adjust the net income reported in the applicable quarterly report to reflect the amount of net
income that would have been reported if Bank had used the Pro Forma Reserve for Loan and Lease
Losses instead of the actual Reserve for Loan and Lease Losses to prepare such quarterly report.



     7.5. Additional Definitions. For purposes of this Agreement, the following terms have the
meanings set forth below:



          7.5.1.
“Average Total Assets” shall have the same meaning as the definition provided in, and shall
be determined in accordance with, the rules and regulations of Bank’s primary federal regulator.



          7.5.2. “Nonperforming Assets” shall mean, with respect to Bank, the sum of all other real
estate owned and repossessed assets, non-accrual loans, restructured loans and loans on which any
payment is 90 or more days past due but which continue to accrue interest.



          7.5.3. “Pro Forma Reserve for Loan and Lease Losses” shall mean the greater of: (i) the Reserve for
Loan and Lease Losses; and (ii) the sum of (1) 50% of Nonperforming Assets and
(2) 1.20% of the Total Loans Outstanding.



23









 





          7.5.4. “Reserve for Loan and Lease Losses” shall mean the amount of reserves for loan and
lease losses set forth in the applicable quarterly report filed by Bank with its primary federal
regulator, which shall be consistent with the financial information and reports contemplated in
Section 5.2.5 hereof.



          7.5.5. “Total Loans Outstanding” shall mean the gross amount of loans set forth in the applicable
quarterly report filed by Bank with its primary federal regulator, which shall be consistent with
the financial information and reports contemplated in Section 5.2.5 hereof.



8. BORROWER’S DEFAULT.




     8.1. Events of Default and Lender’s Remedies.



          8.1.1. Events of Default. Each of the following shall constitute an “Event of Default”
under this Agreement:




               8.1.1.1. Borrower fails to pay, when due, any principal of or, within five Business Days after
the due date, any installment of interest on the Note; or




               8.1.1.2. Borrower fails to pay, when due, any other amount payable under this Agreement, the
Notes (other than principal or interest) or any other Loan Document, and such failure continues for
a period of five Business Days after notice thereof from Lender to Borrower; or




               8.1.1.3. Borrower materially fails to keep or perform any of its agreements, undertakings,
obligations, covenants or conditions under this Agreement not expressly referred to in another
clause of this Section 8.1 and such failure continues for a period of 30 days after notice
thereof from Lender to Borrower; or




               8.1.1.4. Any “Event of Default” or “Default” as defined under, or a default or breach in any
respect by Borrower of any representation, warranty, covenant or agreement under, any of the Loan
Documents occurs and is continuing 30 days after notice thereof from Lender to Borrower; or




               8.1.1.5. Any representation, warranty or certification made in this Agreement by Borrower or
otherwise made in writing in connection with or as contemplated by this Agreement or any of the
other Loan Documents by Borrower shall be or become materially incorrect or false, or any
representation to Lender by Borrower as to the financial condition or credit standing of Borrower
is or proves to be false or misleading in any material respect as of the time when given and such
incorrect, false or misleading condition continues uncured for 30 days after written notice thereof
from Lender to Borrower; or




               8.1.1.6. There occurs a material adverse change in the financial condition of Borrower that,
in the reasonable judgment of Lender, is reasonably likely to cause a payment default under a Loan
as of the next interest or principal payment date; or




               8.1.1.7. The dissolution of Borrower; or




               8.1.1.8. The execution by Borrower of any secondary or additional financing agreements or
arrangements of any kind whatsoever secured, in whole or in part, by all or any part of or interest
in any Collateral; or



24









 






               8.1.1.9. Any order or decree is entered by any court of competent jurisdiction directly or
indirectly enjoining or prohibiting Lender or Borrower from performing any of their obligations
under this Agreement or any of the Loan Documents, and such order or decree is not vacated, and the
proceedings out of which such order or decree arose are not dismissed, within 60 days after the
granting of such decree or order; or




               8.1.1.10. The filing of formal criminal charges by any governmental or quasi-governmental
entity, including, without limitation, the issuance of an indictment, under a RICO Related Law
against Borrower or Bank; or




               8.1.1.11. Final judgment or judgments for the payment of money in an amount in excess of $2.0
million is or are outstanding against Borrower or against any of its property or assets, and any
one of such judgments has remained unpaid, unvacated, unbonded or unstayed by appeal or otherwise
for a period of 60 days from the date of its entry; or




               8.1.1.12. The OTS, the FDIC, the FRB or other Governmental Agency charged with the regulation
of bank holding companies or depository institutions issues to Borrower or Bank, or initiates any
action, suit or proceeding to obtain against, impose on or require from Borrower or Bank, a cease
and desist order or similar regulatory order, the assessment of civil monetary penalties, articles
of agreement, a memorandum of understanding setting forth a material restriction or directive, a
capital directive, a capital restoration plan, restrictions that prevent the payment of dividends
by Bank, or the payments of any debt by Borrower, restrictions that make the payment of the
dividends by Bank, or the payment of debt by Borrower subject to prior regulatory approval, a
notice or finding under Section 8(a) of the FDI Act, or any similar enforcement action, measure or
proceeding, the effect of which is, in the reasonable judgment of Lender, a material adverse effect
on the financial condition, results of operations or business of Borrower and its Subsidiaries,
taken as a whole; or




               8.1.1.13. Bank is notified that it is considered an institution in “troubled condition” within
the meaning of 12 U.S.C. Section 1831i and the regulations promulgated thereunder, or if a
conservator or receiver is appointed for Bank; or




               8.1.1.14. Borrower or Bank becomes insolvent or is unable to pay its debts as they mature; or
makes an assignment for the benefit of creditors or admits in writing its inability to pay its
debts as they mature; or suspends transaction of its usual business; or if a trustee of any
substantial part of the assets of Borrower or Bank is applied for or appointed, and if appointed in
a proceeding brought against Borrower, Borrower by any action or failure to act indicates its
approval of, consent to, or acquiescence in such appointment, or within 60 days after such
appointment, such appointment is not vacated or stayed on appeal or otherwise, or shall not
otherwise have ceased to continue in effect; or




               8.1.1.15. Any proceedings involving Borrower or Bank are commenced by or against Borrower or
Bank under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law or statute of the federal government or any state government and,
with respect to Borrower only, if such proceedings are instituted against Borrower, Borrower by any
action or failure to act indicates its approval of, consent to or acquiescence therein, or an order
shall be entered approving the petition in such proceedings and within 60 days after the entry
thereof such order is not vacated or stayed on appeal or otherwise, or shall not otherwise have
ceased to continue in effect; or



25









 






               8.1.1.16. Borrower applies for, consents to or acquiesces in the appointment of a trustee,
receiver, conservator or liquidator for itself under Chapter 7 or Chapter 11 of the Bankruptcy Code
(the “Code Provisions”), or in the absence of such application, consent or acquiescence, a trustee,
conservator, receiver or liquidator is appointed for Borrower under the Code Provisions, and is not
discharged within 60 days, or any bankruptcy, reorganization, debt arrangement or other proceeding
or any dissolution, liquidation, or conservatorship proceeding is instituted by or against Borrower
under the Code Provisions, and if instituted against Borrower, is consented or acquiesced in by it
or remains for 60 days undismissed, or if Borrower is enjoined, restrained or in any way prevented
from conducting all or any material part of its business under the Code Provisions; or




               8.1.1.17. Bank applies for, consents to or acquiesces in the appointment of a receiver for
itself, or in the absence of such application, consent or acquiescence, a receiver is appointed for
Bank, and is not discharged within 60 days; or




               8.1.1.18. Thirty days after notice thereof, Borrower or any Subsidiary continues to be in
default in any payment of principal or interest for any other obligation or in the performance of
any other term, condition or covenant contained in any agreement (including, without limitation, an
agreement in connection with the acquisition of capital equipment on a title retention or net lease
basis), under which any such obligation is created the effect of which default is to cause or
permit the holder of such obligation to cause such obligation to become due prior to its stated
maturity, except where such an acceleration of maturity would not have a material adverse effect on
the financial condition, results of operations or business of Borrower and its Subsidiaries, taken
as a whole; or




               8.1.1.19. The Pledged Subsidiary Shares are attached, seized, subjected to a writ of distress
warrant, or is levied upon or becomes subject to any lien, claim, security interest or other
encumbrance of any kind, or comes within the possession of any receiver, trustee, custodian or
assignee for the benefit of creditors; or




               8.1.1.20. Borrower fails to issue to Lender the shares of Common Stock pursuant to Section
5.2.13.



          8.1.2. Lender’s Remedies. Upon the occurrence of any Event of Default, Lender shall
have the right, if such Event of Default shall then be continuing, in addition to all the remedies
conferred upon Lender by law or equity or the terms of any Loan Document, to do any or all of the
following, concurrently or successively, without notice to Borrower:




               8.1.2.1. Declare the Note to be, and they shall thereupon become, immediately due and payable
without presentment, demand, protest or notice of any kind, all of which are hereby expressly
waived, anything contained herein or in the Note to the contrary notwithstanding;




               8.1.2.2. Terminate Lender’s obligations under this Agreement to extend credit of any kind or
to make any disbursement, whereupon the commitment and obligation of Lender to extend credit or to
make disbursements hereunder shall terminate; or




               8.1.2.3. Exercise all of its rights and remedies at law, in equity and/or pursuant to any or
all Collateral Documents, including foreclosing on the Collateral.



26









 





     8.2. Protective Advances. If an Event of Default occurs, Lender may (but shall in no event
be required to) cure any such Event of Default and any amounts expended by Lender in so doing, as
determined by Lender in its sole and absolute discretion, shall (a) be deemed advanced by Lender
under an obligation to do so regardless of the identity of the Person or Persons to whom such funds
are furnished, (b) constitute additional advances hereunder, the payment of which is additional
indebtedness evidenced by the Note, and (c) become due and owing, at Lender’s demand, with interest
accruing from the date of disbursement thereof until fully paid at the Default Rate. Lender may, in
its sole and absolute discretion, require that any amounts due and owing by Borrower to Lender
pursuant to this Section 8.2 be satisfied by delivering to a number of shares of Common
Stock equal to the quotient obtained by dividing (i) the amount due and owing by Borrower to Lender
pursuant to this Section 8.2 by (ii) the Conversion Price.



     8.3. Other Remedies. If any Event of Default shall occur and be continuing, Lender may, in
addition to any other rights and remedies hereunder, exercise any and all remedies provided in any
of the other Loan Documents and other related documents.



     8.4. No Lender Liability. To the extent permitted by law, Lender shall have no liability
for any loss, damage, injury, cost or expense resulting from any action or omission by it, or any
of its representatives, which was taken, omitted or made in good faith, other than any loss,
damage, injury, cost or expense arising by reason of the willful misconduct or gross negligence of
Lender or any of its Affiliates.



     8.5. Lender’s Fees and Expenses. In case of any Event of Default hereunder, Borrower shall
pay Lender’s reasonable fees and expenses including, without limitation, attorneys’ fees and
expenses, in connection with the enforcement of this Agreement or any of the other Loan Documents
or other related documents.



9. MISCELLANEOUS.




     9.1. Release; Indemnification. Borrower hereby releases Lender from any and all causes of
action, claims or rights which Borrower may now or hereafter have for, or which may arise from, any
loss or damage caused by or resulting from (a) any failure of Lender to protect, enforce or collect
in whole or in part any of the Collateral and (b) any other act or omission to act on the part of
Lender, its officers, agents or employees, except in each instance for willful misconduct or gross
negligence, and except for any breach by Lender of this Agreement or any other Loan Document.
Borrower shall indemnify, defend and hold Lender and its Affiliates harmless from and against any
and all losses, liabilities, obligations, penalties, claims, fines, demands, litigation, defenses,
costs, judgments, suits, proceedings, actual damages, disbursements or expenses of any kind or
nature whatsoever (including, without limitation, attorneys’ fees and expenses) which may at any
time be either directly or indirectly imposed upon, incurred by or asserted or awarded against
Lender or any of Lender’s Affiliates in connection with, arising from or relating to Lender’s
entering into or carrying out the terms of this Agreement or being the holder of the Note, other
than any loss, liability, damage, suit, claim, expense, fees or costs arising solely by reason of
Lender’s or any of Lender’s Affiliates’ willful misconduct or gross negligence. This section shall
survive the termination of this Agreement.



     9.2. Assignment and Participation. Lender may pledge or otherwise hypothecate all or any
portion of this Agreement or grant participations herein (provided Lender acts as agent for any
participants, except as provided below) or in any of its rights and security hereunder, including,
without limitation, the Note. Lender may also assign all or any part of the Loan and Lender’s
obligations in connection therewith to one or more commercial banks or other financial institutions
or investors with the consent of Borrower, which consent shall not be unreasonably withheld (each
an “Assignee



27









 







Lender”). Lender shall notify Borrower in advance of the identity of any proposed Assignee Lender.
Upon delivery to Borrower of an executed copy of the Assignee Lender’s assignment and acceptance
(a) each such Assignee Lender shall be deemed to be a party hereto and, to the extent that rights
and obligations hereunder have been assigned and delegated to such Assignee Lender, such Assignee
Lender shall have the rights and obligations of Lender hereunder and under the other Loan Documents
and other related documents (b) Lender, to the extent that rights and obligations hereunder have
been assigned and delegated by it, shall be released from its obligations hereunder and under the
other Loan Documents (including, without limitation, the obligation to fund the Assignee Lender’s
share of the Loans) and other related documents, except for any liability from actions or omissions
of Lender occurring prior to such assignment. Within five Business Days after receipt of a copy of
the executed assignment and acceptance document, Borrower shall execute and deliver to Lender a new
Note or Notes, as applicable (for delivery to the relevant Assignee Lender), evidencing such
Assignee Lender’s assigned portion of the Loans and a replacement Note or Notes, as applicable, in
the principal amount of the Loans retained by Lender (such Note to be in exchange for, but not in
payment of, the Note then held by Lender). Such Note shall be dated the date of the predecessor
Note. Lender shall mark the predecessor Note “exchanged” and deliver it to Borrower. Accrued
interest on that part of the predecessor Note evidenced by the new Note, and accrued fees, shall be
paid as provided in the assignment agreement between Lender and to the Assignee Lender. Accrued
interest on that part of the predecessor Note evidenced by the replacement Note shall be paid to
Lender. Accrued interest and accrued fees shall be so apportioned between the Notes and paid at the
same time or times provided in the predecessor Note and in this Agreement. Borrower authorizes
Lender to disclose to any prospective Assignee Lender any financial or other information pertaining
to Borrower or the Loans, provided that such prospective Assignee Lender agrees in writing not to
disclose such information to any other Person, except as required by law or regulation or as agreed
to by Borrower. In addition, Borrower agrees that, if so requested by Lender, Borrower will cause
all insurance policies, binders and commitments (including, without limitation, casualty insurance
and title insurance) required by the Loan Documents or other related documents to be delivered to
Lender to name the Assignee Lender as an additional insured or obligee, as Lender may request.
Anything in this Agreement to the contrary notwithstanding, and without the need to comply with any
of the formal or procedural requirements of this Agreement, including this Section 9.2,
Lender may at any time and from time to time pledge and assign all or any portion of its rights
under all or any of the Loan Documents and other related documents to a Federal Reserve Bank;
provided that no such pledge or assignment shall release Lender from its obligations thereunder.



     9.3. Prohibition on Assignment. Borrower shall not assign or attempt to assign its rights
under this Agreement, either voluntarily or by operation of law.



     9.4. Time of the Essence. Time is of the essence of this Agreement.



     9.5. No Waiver. No waiver of any term, provision, condition, covenant or agreement herein
contained shall be effective unless set forth in a writing signed by Lender, and any such waiver
shall be effective only to the extent set forth in such writing. No failure to exercise or delay in
exercising, by Lender or any holder of the Note, of any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any right, power or
privilege preclude any other or further exercise thereof, or the exercise of any other right or
remedy provided by law. The rights and remedies provided in this Agreement are cumulative and not
exclusive of any right or remedy provided by law or equity. No notice or demand on Borrower in any
case shall, in itself, entitle Borrower to any other or further notice or demand in similar or
other circumstances or constitute a waiver of the rights of Lender to any other or further action
in any circumstances without notice or demand. No consent or waiver, expressed or implied, by
Lender to or of any breach or default by Borrower in the performance of its obligations hereunder
shall be deemed or construed to be a consent or waiver to or of any other breach or default in the
performance of the same or any other obligations of Borrower hereunder.



28









 







Failure on the part of Lender to complain of any acts or failure to act or to declare an Event of
Default, irrespective of how long such failure continues, shall not constitute a waiver by Lender
of its rights hereunder or impair any rights, powers or remedies on account of any breach or
default by Borrower.



     9.6. Severability. Any provision of this Agreement which is unenforceable or invalid or
contrary to law, or the inclusion of which would adversely affect the validity, legality or
enforcement of this Agreement, shall be of no effect and, in such case, all the remaining terms and
provisions of this Agreement shall subsist and be fully effective according to the tenor of this
Agreement the same as though any such invalid portion had never been included herein.
Notwithstanding any of the foregoing to the contrary, if any provisions of this Agreement or the
application thereof are held invalid or unenforceable only as to particular persons or situations,
the remainder of this Agreement, and the application of such provision to persons or situations
other than those to which it shall have been held invalid or unenforceable, shall not be affected
thereby, but shall continue valid and enforceable to the fullest extent permitted by law.



     9.7. Usury; Revival of Liabilities. All agreements between Borrower and Lender (including,
without limitation, this Agreement and any other Loan Documents) are expressly limited so that in
no event whatsoever shall the amount paid or agreed to be paid to Lender exceed the highest lawful
rate of interest permissible under the laws of the State of Illinois. If, from any circumstances
whatsoever, fulfillment of any provision hereof or of any other Loan Documents, at the time
performance of such provision shall be due, shall involve exceeding the limit of validity
prescribed by law which a court of competent jurisdiction may deem applicable hereto, then, ipso
facto, the obligation to be fulfilled shall be reduced to the highest lawful rate of interest
permissible under the laws of the State of Illinois, and if for any reason whatsoever, Lender shall
ever receive as interest an amount which would be deemed unlawful, such interest shall be applied
to the payment of the last maturing installment or installments of the indebtedness secured by the
Collateral (whether or not then due and payable) and not to the payment of interest. To the extent
that Lender received any payment on account of Borrower’s Liabilities and any such payment(s)
and/or proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside, subordinated and/or required to be repaid to a trustee, receiver or any
other Person under any bankruptcy act, state or federal law, common law or equitable cause, then to
the extent of such payment(s) or proceeds received, Borrower’s Liabilities or part thereof intended
to be satisfied shall be revived and continue in full force and effect, as if such payment(s)
and/or proceeds had not been received by Lender and applied on account of Borrower’s Liabilities;
provided, however, if Lender successfully contests any such invalidation, declaration, set aside,
subordination or other order to pay any such payment and/or proceeds to any third party, the
revived Borrower’s Liabilities shall be deemed satisfied.



     9.8. Notices. Any notice which either party hereto may be required or may desire to give
hereunder shall be deemed to have been given if in writing and if delivered personally, or if
mailed, postage prepaid, by United States registered or certified mail, return receipt requested,
or if delivered by a responsible overnight courier, addressed:



	 	 	 	 	 	 	 
	 	 	if to Borrower:	 	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






29









 





	 	 	 	 	 	 	 
	 	 	if to Lender:	 	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





or to such other address or addresses as the party to be given notice may have furnished in writing
to the party seeking or desiring to give notice, as a place for the giving of notice, provided that
no change in address shall be effective until seven days after being given to the other party in
the manner provided for above. Any notice given in accordance with the foregoing shall be deemed
given when delivered personally or, if mailed, five Business Days after it shall have been
deposited in the United States mails as aforesaid or, if sent by overnight courier, the Business
Day following the date of delivery to such courier.




     9.9. Successors and Assigns. This Agreement shall inure to the benefit of the parties and
their respective heirs, legal representatives, successors and assigns except that, unless Lender
consents in writing, no assignment made by Borrower in violation of this Agreement shall confer any
rights on any assignee of Borrower.



     9.10. No Joint Venture. Nothing contained herein or in any document executed pursuant
hereto and no action or inaction whatsoever on the part of Lender, shall be deemed to make Lender a
partner or joint venturer with Borrower.



     9.11. Brokerage Commissions. Borrower shall indemnify, defend and hold Lender and its
Affiliates harmless from and against any and all losses, liabilities, obligations, penalties,
claims, fines, lost profits, demands, litigation, defenses, costs, judgments, suits, proceedings,
damages, disbursements or expenses of any kind or nature whatsoever (including, without limitation,
attorneys’ fees and expenses), consequential or otherwise, which may at any time be either directly
or indirectly imposed upon, incurred by or asserted or awarded against Lender or any of its
Affiliates in connection with, arising out of or relating to any claim of a broker’s or finder’s
fee against Lender or any Person in connection with the transaction herein contemplated arising out
of or relating to Borrower’s or Lender’s action or inaction.



     9.12. Publicity. Except in accordance with its obligations under the Exchange Act, Borrower
shall not publicize any Loan without the prior written consent of Lender.



     9.13. Documentation. All documents and other matters required by any of the provisions of
this Agreement to be submitted or furnished to Lender shall be in form and substance satisfactory
to Lender.



     9.14. Additional Assurances. Borrower agrees that, at any time or from time to time, upon
the written request of Lender, it will execute all such further documents and do all such other
acts and things as Lender may reasonably request to effectuate the transaction herein contemplated.



     9.15. Entire Agreement. This Agreement and the Disclosure Schedule and Exhibits hereto
constitute the entire agreement between the parties hereto with respect to the subject matter
hereof and may not be modified or amended in any manner other than by supplemental written
agreement executed by the parties hereto. In entering into this Agreement neither party has relied
upon any representation,



30









 







warranty, covenant, obligation or other agreement that is not set forth herein or in the other Loan
Documents.



     9.16. Choice of Law. This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Illinois. Nothing herein shall be deemed to limit any rights,
powers or privileges which Lender may have pursuant to any law of the United States of America or
any rule, regulation or order of any department or agency thereof and nothing herein shall be
deemed to make unlawful any transaction or conduct by Lender which is lawful pursuant to, or which
is permitted by, any of the foregoing.



     9.17. Forum; Venue. To induce Lender to accept this Agreement and the other Loan Documents,
Borrower irrevocably agrees that all actions or proceedings in any way, manner, or respect, arising
out of or from or related to this Agreement or the other Loan Documents shall be litigated only in
courts having suits within Chicago, Illinois. Borrower hereby consents and submits to the
jurisdiction of any local, state, or federal court located within said city. Borrower hereby waives
any right it may have to transfer or change the venue of any litigation brought against Borrower by
Lender.



     9.18. No Third Party Beneficiary. This Agreement is made for the sole benefit of Borrower
and Lender, and no other person shall be deemed to have any privity of contract hereunder nor any
right to rely hereon to any extent or for any purpose whatsoever, nor shall any other person have
any right of action of any kind hereon or be deemed to be a third party beneficiary hereunder.



     9.19. Legal Tender of United States. All payments hereunder shall be made in coin or
currency which at the time of payment is legal tender in the United States of America for public
and private debts.



     9.20. Captions; Counterparts. Captions contained in this Agreement in no way define, limit
or extend the scope or intent of their respective provisions. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts, each of which when
so executed and delivered shall be deemed to be an original and all of which taken together shall
constitute but one and the same instrument.



     9.21. Knowledge; Discretion. All references herein to a party’s best knowledge shall be
deemed to mean the best knowledge of such party based on commercially reasonable inquiry. All
references herein to Borrower’s knowledge shall be deemed to refer to the knowledge of Borrower and
each Subsidiary. Unless specified to the contrary herein, all references herein to an exercise of
discretion or judgment by Lender, to the making of a determination or designation by Lender, to the
application of Lender’s discretion or opinion, to the granting or withholding of Lender’s consent
or approval, to the consideration of whether a matter or thing is satisfactory or acceptable to
Lender, or otherwise involving the decision making of Lender, shall be deemed to mean that Lender
shall decide unilaterally using its sole and absolute discretion or judgment.



     9.22. Lender’s Representations and Warranties. Lender hereby represents and warrants to
Borrower that this Agreement and the other Loan Documents have been duly authorized, executed and
delivered, and are the legal, valid and binding obligations of Lender, enforceable in accordance
with their terms, except as enforceability thereof may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization or other similar laws relating to or affecting
the rights of creditors generally, by general principles of equity and by federal or state
securities laws or the public policy underlying such laws.



[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY — SIGNATURE PAGE FOLLOWS]




31









 




WAIVER OF RIGHT TO JURY TRIAL. BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION ARISING IN ANY WAY IN
CONNECTION WITH THIS AGREEMENT, THE NOTES OR ANY OF THE OTHER LOAN DOCUMENTS, OR ANY OTHER
STATEMENTS OR ACTIONS OF BORROWER OR LENDER. BORROWER ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED IN
THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL
SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS DISCUSSED THIS WAIVER WITH SUCH LEGAL COUNSEL.
BORROWER FURTHER ACKNOWLEDGES THAT (a) IT HAS READ AND UNDERSTANDS THE MEANING AND RAMIFICATIONS OF
THIS WAIVER, (b) THIS WAIVER HAS BEEN REVIEWED BY BORROWER AND BORROWER’S COUNSEL AND IS A MATERIAL
INDUCEMENT FOR LENDER TO ENTER INTO THE AGREEMENT AND THE OTHER LOAN DOCUMENTS (c) THIS WAIVER
SHALL BE EFFECTIVE AS TO EACH OF SUCH OTHER LOAN DOCUMENTS AS IF FULLY INCORPORATED THEREIN.




     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly
authorized representatives as of the date first above written.



	 	 	 	 	 
	 	ANCHOR BANCORP WISCONSIN INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	BADGER ANCHOR HOLDINGS, LLC

    By: BADGER CAPITAL, LLC, ITS MANAGER
 	 
	 	  	
 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



S-1









 








EXHIBIT A 



FORM OF NOTE




			
	 	 	 
	$110,000,00
	 	Chicago, Illinois
	 
	 	                          , 2010
	 	 	 





     FOR VALUE RECEIVED, the undersigned, ANCHOR BANCORP WISCONSIN INC., a Wisconsin corporation
(“Borrower”), promises to pay to the order of BADGER ANCHOR HOLDINGS, LLC, a Delaware limited
liability company, or the holder hereof from time to time (“Lender”), at such place as may be
designated in writing by Lender, the principal sum of ONE HUNDRED TEN MILLION DOLLARS
($110,000,000), with interest thereon as hereinafter provided. This note (this “Note”) is issued
pursuant to the terms of a Loan Agreement of even date herewith by and between Borrower and Lender,
as amended, restated, supplemented or modified from time to time, the “Loan Agreement”). All
capitalized terms used but not defined herein shall have the respective meanings ascribed to them
in the Loan Agreement.



     Interest shall accrue on all sums as advanced and outstanding from time to time under this Note and
Loan Agreement as set forth in the Loan Agreement, and such interest shall be due and payable on
the last day of each March, June, September and December as set forth in the Loan Agreement,
commencing on the first such date following the Closing. All sums owing hereunder are payable in
lawful money of the United States of America, in immediately available funds; provided, however,
that a portion of each interest payment may be paid in shares of Borrower common stock as set forth
in the Loan Agreement.



     The outstanding principal balance of this Note, together with all accrued and unpaid interest,
shall be due and payable on the Maturity Date. Additional principal payments shall be made in
accordance with the provisions of the Loan Agreement.



     This Note is convertible into shares of Common Stock as set forth in the Loan Agreement.



     This Note is issued pursuant to the terms of the Loan Agreement and is secured by and entitled to
the benefits of, among other things, the Term Collateral Documents. In case an Event of Default
shall occur and be continuing, the principal of this Note together with all accrued interest
thereon may, at the option of the holder hereof, immediately become due and payable on demand;
provided, however, that if any document related to this Note provides for automatic acceleration of
payment of sums owing hereunder, all sums owing hereunder shall be automatically due and payable in
accordance with the terms of that document.



     Unless otherwise provided in the Loan Agreement, all payments on account of the indebtedness
evidenced by this Note shall be first applied to the payment of costs and expenses of Lender which
are due and payable, then to past-due interest on the unpaid principal balance and the remainder to
principal.



     If any interest payment required hereunder is not received by Lender on or before the tenth day
following the date it becomes due, Borrower shall pay, at Lender’s option, a late or collection
charge equal to 5.00% of the amount of such unpaid interest payment.



     From and after the Maturity Date, or such earlier date as all sums owing on this Note become due
and payable by acceleration or otherwise, or after the occurrence of an Event of Default, interest
shall be computed on all amounts then due and payable under this Note at a “Default Rate” equal to
300 basis points per annum (based on a 360-day year and charged on the basis of actual days
elapsed) in excess of the interest rate otherwise accruing under this Note.



A-1









 





     If any attorney is engaged by Lender to enforce or defend any provision of this Note or any of the
other Loan Documents, or as a consequence of any Event of Default, with or without the filing of
any legal action or proceeding, then Borrower shall pay to Lender immediately upon demand all
attorneys’ fees and expenses, together with interest thereon from the date of such demand until
paid at the rate of interest applicable to the principal balance owing hereunder as if such unpaid
attorneys’ fees and expenses had been added to the principal.



     No previous waiver and no failure or delay by Lender or Borrower in acting with respect to the
terms of this Note or any of the other Loan Documents shall constitute a waiver of any breach,
default or failure of condition under this Note, the Loan Agreement or any of the other Loan
Documents or the obligations secured thereby. A waiver of any term of this Note or any of the other
Loan Documents or of any of the obligations secured thereby must be made in writing and shall be
limited to the express written terms of such waiver. In the event of any inconsistencies between
the terms of this Note and the terms of any other document related to the Loan evidenced by this
Note, the terms of this Note shall prevail.



     Except as otherwise provided in the Loan Agreement, Borrower expressly waives presentment, demand,
notice of dishonor, notice of default or delinquency, notice of acceleration, notice of protest and
nonpayment, notice of costs, expenses or losses and interest thereon, notice of late charges, and
diligence in taking any action to collect any sums owing under this Note or in proceeding against
any of the rights or interests in or to properties securing payment of this Note. In addition,
Borrower expressly agrees that this Note and any payment coming due hereunder may be extended from
time to time without in any way affecting the liability of any such party hereunder.



     Time is of the essence with respect to every provision hereof. This Note shall be construed and
enforced in accordance with the laws of the State of Illinois, except to the extent that federal
laws preempt the laws of the State of Illinois, and all persons and entities in any manner
obligated under this Note consent to the jurisdiction of any Federal or State court within the
State of Illinois having proper venue and also consent to service of process by any means
authorized by Illinois or Federal law. Any reference contained herein to attorneys’ fees and
expenses shall be deemed to be to reasonable fees and expenses and to include all reasonable fees
and expenses of third-party attorneys and the reasonable fees and expenses of any other experts or
consultants.



     All agreements between Borrower and Lender (including, without limitation, this Note and the Loan
Agreement, and any other documents securing all or any part of the indebtedness evidenced hereby)
are expressly limited so that in no event whatsoever shall the amount paid or agreed to be paid to
Lender exceed the highest lawful rate of interest permissible under applicable law. If, from any
circumstances whatsoever, fulfillment of any provision hereof, the Loan Agreement or any other
documents securing all or any part of the indebtedness evidenced hereby at the time performance of
such provisions shall be due, shall involve exceeding the limit of validity prescribed by law which
a court of competent jurisdiction may deem applicable hereto, then, ipso facto, the obligation to
be fulfilled shall be reduced to the highest lawful rate of interest permissible under such
applicable laws, and if, for any reason whatsoever, Lender shall ever receive as interest an amount
which would be deemed unlawful under such applicable law, such interest shall be automatically
applied to the payment of the principal of this Note (whether or not then due and payable) and not
to the payment of interest or refunded to Borrower if such principal has been paid in full.



     Any notice which either party hereto may be required or may desire to give hereunder shall be
governed by the notice provisions of the Loan Agreement.



A-2









 




BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT THAT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LITIGATION ARISING IN ANY WAY IN CONNECTION WITH THIS NOTE OR ANY OF THE OTHER
LOAN DOCUMENTS, OR ANY OTHER STATEMENTS OR ACTIONS OF BORROWER OR LENDER. BORROWER ACKNOWLEDGES
THAT IT HAS BEEN REPRESENTED IN THE SIGNING OF THIS NOTE AND IN THE MAKING OF THIS WAIVER BY
INDEPENDENT LEGAL COUNSEL SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS DISCUSSED THIS WAIVER WITH
SUCH LEGAL COUNSEL. BORROWER FURTHER ACKNOWLEDGES THAT (i) IT HAS READ AND UNDERSTANDS THE MEANING
AND RAMIFICATIONS OF THIS WAIVER, (ii) THIS WAIVER HAS BEEN REVIEWED BY BORROWER AND BORROWER’S
COUNSEL AND IS A MATERIAL INDUCEMENT FOR LENDER TO ENTER INTO THE LOAN DOCUMENTS, AND (iii) THIS
WAIVER SHALL BE EFFECTIVE AS TO EACH OF THE LOAN DOCUMENTS AS IF FULLY INCORPORATED THEREIN.




     IN WITNESS WHEREOF, the undersigned has executed this Note or caused this Note to be executed by
its duly authorized representative as of the date first above written.



	 	 	 	 	 
	 	ANCHOR BANCORP WISCONSIN INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




A-3









 





EXHIBIT B 




FORM OF PLEDGE AND SECURITY AGREEMENT




B-1









 





EXHIBIT C 




FORM OF OPINION OF BORROWER’S COUNSEL




C-1









 





EXHIBIT D



FORM OF QUARTERLY COMPLIANCE CERTIFICATE

for the Quarter Ended                                         




     The undersigned, the                                          of Anchor Bancorp Wisconsin Inc. (“Borrower”), hereby
delivers this certificate pursuant to Section 6.1 of that certain Loan Agreement dated as
of                           , 2009, between Borrower and Badger Anchor Holdings, LLC (as amended, the
“Agreement”) and certifies as of the date hereof as follows:



     1. Attached hereto are the quarterly financial reports described in Section 5.2.5.2 of the
Agreement for the above-referenced quarter.



     2. Borrower is in compliance in all material respects with all covenants contained in the
Agreement, and has provided a detailed calculation, as of the above-referenced quarter-end, of the
financial covenants set forth in Section 7 of the Agreement on Annex A attached hereto.



     3. No Event of Default has occurred or is continuing under the Agreement. [Or, if incorrect,
provide detail regarding the Event of Default and the steps being taken to cure it and the time
within which such cure will occur.]



     Capitalized terms in this Quarterly Compliance Certificate that are otherwise undefined shall have
the meanings given them in the Agreement.



Dated: [INSERT DATE]







	 	 	 	 	 
	 	ANCHOR BANCORP WISCONSIN INC.	 
	 	 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




D-1









 





ANNEX A




to




QUARTERLY COMPLIANCE CERTIFICATE




 









 





[DISCLOSURE SCHEDULES TO BE ATTACHED]





H-1