Document:

Exhibit 10.2

 

SECOND AMENDMENT TO BUSINESS MANAGEMENT AGREEMENT

 

THIS SECOND AMENDMENT TO
BUSINESS MANAGEMENT AGREEMENT, dated as of August 3, 2010 (the “Amendment”),
by and between CommonWealth REIT, formerly known as HRPT Properties Trust, a
Maryland real estate investment trust (the “Company”), and Reit
Management & Research LLC, a Delaware limited liability company (the “Manager”).

 

WHEREAS, the Company and the Manager are parties to
a Business Management Agreement, dated as of June 8, 2009 (as previously
amended, the “Business Management Agreement”); and

 

WHEREAS, the Company effected on July 1, 2010,
a reverse share split, which resulted in a four for one combination of the
Company’s common shares of beneficial interest, $0.01 par value per share (the “Reverse
Share Split”); and

 

WHEREAS, the Company and the Manager wish to amend
the Business Management Agreement to revise the determination of the Incentive
Fee (as defined in the Business Management Agreement) to give effect to the
Reverse Share Split and any future share split, dividend, subdivision,
combination, consolidation or recapitalization with respect to the Company’s
common shares of beneficial interest, $0.01 par value per share;

 

NOW, THEREFORE, in
consideration of the mutual agreements herein set forth, the parties hereto
agree as follows:

 

1.             Clause
(ii) of Section 10(b) of the Business Management Agreement is
hereby amended to add immediately after the reference to “$.01” included
therein the following defined term:  “(the
‘Per Share Amount’)”.

 

2.             A
new Section 10(d) is hereby added to the Business Management
Agreement to read in its entirety as follows:

 

(d)           For
purposes of determining the Incentive Fee, if there shall occur a share split,
dividend, subdivision, combination, consolidation or recapitalization with
respect to the Common Shares during a fiscal year involved in such
determination, the number of Common Shares outstanding during the relevant
periods and the Per Share Amount shall be proportionally adjusted to give
effect to such share split, dividend, subdivision, combination, consolidation
or recapitalization as if it had occurred as of the first day of the earliest
of the applicable fiscal years.

 

 

3.             Section 27(a) of
the Business Management Agreement is hereby replaced in its entirety to read as
follows:

 

(a)           Any
disputes, claims or controversies between the parties (i) arising out of
or relating to this Agreement or the provision of services by the Manager
pursuant to this Agreement, or (ii) brought by or on behalf of any shareholder
of the Company (which, for purposes of this Section 27, shall mean
any shareholder of record or any beneficial owner of shares of the Company, or
any former shareholder of record or beneficial owner of shares of the Company),
either on his, her or its own behalf, on behalf of the Company or on behalf of
any series or class of shares of the Company or shareholders of the Company
against the Company or any trustee, officer, manager (including Reit Management &
Research LLC or its successor), agent or employee of the Company, including
disputes, claims or controversies relating to the meaning, interpretation,
effect, validity, performance or enforcement of this Agreement, including this
arbitration agreement, the Declaration of Trust or the Bylaws (all of which are
referred to as “Disputes”), or relating in any way to such a Dispute or
Disputes shall, on the demand of any party to such Dispute be resolved through
binding and final arbitration in accordance with the Commercial Arbitration Rules (the
“Rules”) of the American Arbitration Association (“AAA”) then in
effect, except as those Rules may be modified in this Section 27.  For the avoidance of doubt, and not as a
limitation, Disputes are intended to include derivative actions against
trustees, officers or managers of the Company and class actions by a
shareholder against those individuals or entities and the Company.  For the avoidance of doubt, a Dispute shall
include a Dispute made derivatively on behalf of one party against another
party.

 

4.             This
Amendment shall be effective as of the day and year first above written.  Except as amended hereby, and as so amended,
the Business Management Agreement shall remain in full force and effect and
shall be otherwise unaffected hereby.

 

5.             The
provisions of this Amendment shall be governed by and construed in accordance
with the laws of The Commonwealth of Massachusetts.

 

6.             This
Amendment may be executed in separate counterparts, each of such counterparts
shall for all purposes be deemed to be an original and all such counterparts
shall together constitute but one and the same instrument.

 

[Signature Page To
Follow]

 

2

 

IN WITNESS WHEREOF, the
parties hereto have caused this Second Amendment to Business Management
Agreement to be executed by their duly authorized officers, under seal, as of
the day and year first above written.

 

	
   

  	
  COMMONWEALTH REIT

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John C. Popeo

  
	
   

  	
   

  	
  Its: Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  REIT MANAGEMENT &
  RESEARCH LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Adam Portnoy

  
	
   

  	
   

  	
  Its: President & CEO

  

 

3Exhibit 10.1

 

FEDERAL DEPOSIT INSURANCE
CORPORATION

 

WASHINGTON, D.C.

 

AND

 

STATE OF ILLINOIS

 

DEPARTMENT OF FINANCIAL AND
PROFESSIONAL REGULATION

 

DIVISION OF BANKING

 

SPRINGFIELD, ILLINOIS

 

	
   

  	
  )

  	
   

  
	
  IN THE MATTER OF

  	
  )

  	
   

  
	
   

  	
  )

  	
  ORDER TO CEASE AND DESIST

  
	
  WEST SUBURBAN BANK

  	
  )

  	
   

  
	
  LOMBARD, ILLINOIS

  	
  )

  	
  FDIC-08-183b

  
	
   

  	
  )

  	
  DB NO. 2008-DB-49

  
	
  (Illinois Chartered

  	
  )

  	
   

  
	
  Insured Nonmember Bank)

  	
  )

  	
   

  
	
   

  	
  )

  	
   

  

 

West Suburban Bank, Lombard, Illinois (the “Bank”), having been
advised of its right to a NOTICE OF CHARGES AND OF HEARING detailing the
alleged unsafe or unsound banking practices and violations of law, rule or
regulation related to the Bank Secrecy Act, 31 U.S.C. §§ 5311-5330, and
regulations implementing the Bank Secrecy Act, including 12 C.F.R. Part 326,
Subpart B, and 31 C.F.R. Part 103 (hereinafter collectively, the “Bank
Secrecy Act” or “BSA”), which are alleged to have been committed by the Bank,
and of its right to a hearing on the charges under section 8(b) of the
Federal Deposit Insurance Act 

 

 

(the “Act”), 12 U.S.C. § 1818(b), and 38 Ill. Adm. Code, Section 392.30,
regarding hearings before the Illinois Department of Financial and Professional
Regulation, Division of Banking (the “Division”), and having waived those
rights, entered into a STIPULATION AND CONSENT TO THE ISSUANCE OF AN ORDER TO
CEASE AND DESIST (“STIPULATION”) with representatives of the Federal Deposit
Insurance Corporation (the “FDIC”) and the Division, dated December 2,
2008, whereby, solely for the purpose of this proceeding and without admitting
or denying the alleged charges of unsafe or unsound banking practices and
violations of law, rule, or regulation related to the BSA, the Bank consented
to the issuance of an ORDER TO CEASE AND DESIST (“ORDER”) by the FDIC and the
Division.

 

The FDIC and the Division considered the matter and determined that
there was reason to believe that the Bank had engaged in unsafe or unsound
banking practices and had violated laws, rules, or regulations related to the
BSA. The FDIC and the Division, therefore, accepted the STIPULATION and issued
the following:

 

ORDER TO CEASE AND DESIST

 

IT IS HEREBY ORDERED, that the Bank, its institution-affiliated
parties, as that term is defined in section 3(u) of the Act, 12 U.S.C. §
1813(u), and its successors and assigns, cease and desist from the following
unsafe or unsound banking 

 

2

 

practices and violations of law, rule, or regulation related to the
BSA:

 

A.                                   Operating the
Bank with a board of directors (“Board”) which has failed to provide adequate
supervision over and direction to the executive management of the Bank to
prevent unsafe or unsound banking practices and violations of law, rule and
regulations related to the BSA.

 

B.                                     Operating the
Bank with an ineffective system of internal controls to ensure ongoing
compliance with the BSA.

 

C.                                     Operating the
Bank without adequate independent testing commensurate with the level of BSA
risk.

 

D.                                    Operating in
violation of section 326.8, of the FDIC’s Rules and Regulations, 12.
C.F.R. § 326.8, and the Treasury Department’s Financial Recordkeeping
Regulations, 31 C.F.R Part 103.

 

E.                                      Operating the
Bank with management whose practices have resulted in violations of law and
regulation related to the BSA.

 

IT IS FURTHER ORDERED that the Bank, its institution-affiliated
parties, as that term is defined in section 3(u) of the Act, 12 U.S.C. §
1813(u), and its successors and assigns, take affirmative action as follows:

 

3

 

WRITTEN BSA COMPLIANCE PROGRAM

 

1.             (a)           Within sixty (60) days of the
effective date of this ORDER, the Bank shall develop, adopt, and implement a
revised written BSA Compliance Program, which fully meets all applicable
requirements of section 326.8 of the FDIC’s Rules and Regulations (“FDIC
Rules”), 12 C.F.R. § 326.8, and which is designed to, among other things,
assure and maintain full compliance by the Bank with the BSA and the rules and
regulations issued pursuant thereto.

 

(b)           The Bank shall
provide the Regional Director of the Chicago Regional Office of the FDIC (“Regional
Director”) and the Division with a copy of the revised written BSA Compliance
Program for review and comment. Thereafter, the revised program shall be
implemented in a manner acceptable to the Division and the Regional Director,
as determined at subsequent examinations and/or visitations of the Bank. At a
minimum, the program shall:

 

i.                                                  Require the
Bank to develop, adopt and implement a revised, effective written policy
designed to assure full compliance with all provisions of the BSA.

 

ii.                                               Require the
Bank to develop a system of internal controls to assure full compliance with
the BSA and the rules and 

 

4

 

regulations issued pursuant thereto, including procedures to detect and
monitor all transactions, to assure the identification and proper reporting of
all known or suspected criminal activity, money laundering activity, or
violations of the BSA.

 

iii.                                            Provide for
improved, comprehensive independent testing of compliance with all applicable rules and
regulations related to the BSA, including assurance that compliance audits are
performed at least annually, are fully documented, require a comprehensive
scope, and are conducted with the appropriate segregation of duties by a party
who is qualified to perform such audits. Written findings of each independent
test shall be presented to the Board and noted in the minutes of the Board’s
meeting at which received.

 

iv.                                           Designate a
senior Bank official to be responsible for overall BSA compliance. This
designated senior Bank official shall be in a position, and have the authority,

 

5

 

to make and enforce policies with respect to BSA compliance, and to
assure that full and complete corrective action is taken regarding previously
identified violations and deficiencies. This senior Bank official shall have
the necessary knowledge and expertise to effectively oversee the Bank’s BSA
program commensurate with the level of risk in the Bank’s operations. The Bank
shall request and obtain the Regional Director’s and Division’s prior written
approval to the addition of any individual as a BSA Compliance Officer.

 

v                                                 Provide for
accurate and comprehensive risk assessments for BSA and OFAC compliance which
fully take into account the nature of the Bank’s operations.

 

vi.                                           Establish due
diligence practices and written guidelines for all customers that are
commensurate with the level of BSA and money laundering risk posed by each
customer.

 

vii.                                        Establish due
diligence practices and 

 

6

 

written guidelines for Money Services Businesses (“MSBs”) that are
fully consistent with the Interagency Interpretive Guidance on Providing
Banking Services to Money Services Businesses Operating in the United States,
as set forth in FDIC Financial Institution Letter 32-2005, dated April 26,
2005 (“FIL-32- 2005”).

 

viii.                                     Provide for and
document effective training of all appropriate personnel, including, without limitation,
tellers, customer service representatives, lending officers, private and
personal banking officers, and all other customer contact personnel. The
training shall be conducted by qualified staff and/or independent contractors,
and the training requirement shall apply to all individuals involved in Bank
operations, and shall include training in all aspects of regulatory and
internal policies and procedures related to the BSA, with a specific emphasis
on the detection and reporting of known 

 

7

 

and/or suspected criminal activity. The training curriculum shall be
updated on a regular basis, not less frequent than annually, to assure that all
personnel are provided with the most current and up to date information.

 

BSA STAFF

 

2.             Within thirty (30)
days from the effective date of this ORDER, the Bank shall analyze and assess
the Bank’s staffing needs in order to provide for an adequate number of
qualified staff for the Bank’s BSA Department, including provision for
succession of BSA responsibilities. The BSA Department staff shall be evaluated
to determine whether these individuals possess the ability, experience,
training and other necessary qualifications required to perform present and
anticipated duties, including adherence to the Bank’s BSA Compliance Program,
the requirements of the BSA regulations, and the provisions of this ORDER.

 

DIRECTORS’ BSA COMMITTEE

 

3.             Within thirty (30)
days from the effective date of this ORDER, the Board shall establish a Directors’
BSA Committee (“BSA Committee”) to oversee the Bank’s compliance with BSA
regulations and the Bank’s BSA Compliance Program Policies and

 

8

 

Procedures. A majority of the members of the BSA Committee shall be
independent, outside directors. The BSA Committee shall receive comprehensive
monthly reports from the BSA Compliance Officer, appointed pursuant to
paragraph 1(b)(iv) above, regarding the Bank’s compliance with BSA
regulations and the Bank’s BSA Compliance Program described in paragraph 1
above. The BSA Committee shall present a report to the Board, at each regularly
scheduled board meeting, regarding the Bank’s compliance with BSA regulations
and the Bank’s BSA Compliance Program, which shall be recorded in the
appropriate minutes of the board meeting and retained in the Bank’s records.

 

INDEPENDENT TESTING

 

4.             (a)           Within two hundred twenty (220) days
of the effective date of this ORDER, the Bank shall assure that an effective
and comprehensive independent test of compliance with the BSA and 31 C.F.R. Part 103
is conducted by a qualified independent third party. The independent testing
should thereafter be conducted on an annual basis.

 

(b)           The Bank shall
provide to the Regional Director and Division a copy of the written reports
documenting the scope of testing procedures performed, the findings and results
made, and any recommendations for improvement based on those findings. At a
minimum, the independent testing shall include, and the

 

9

 

contract or engagement letter entered into with any third party
performing the testing shall provide for, the following:

 

i.                                          Testing of the
Bank’s internal procedures for monitoring BSA compliance;

 

ii.                                       Testing to
ensure all reportable transactions have been identified and Currency
Transaction Reports (“CTRs”) have been filed within the prescribed time frames;

 

iii.                                    Testing to
ensure the Bank is reviewing all applicable reports;

 

iv.                                   Testing to
ensure Bank personnel are reviewing and monitoring reports for structuring and
other suspicious activity and, if applicable, that appropriate Suspicious
Activity Reports (“SARs”) are filed in a timely manner with the appropriate law
enforcement agencies;

 

v.                                      Sampling of
large currency transactions followed by a review of the CTR filings;

 

vi.                                   Testing of the
Bank’s monitoring, analyzing, and filing procedures for high-risk customer
accounts including high-risk MSBs and non-resident aliens, to ensure the

 

10

 

proper filing of CTRs and SARs thereon;

 

vii.                                Testing of the
validity and reasonableness of the customer exemptions granted by the Bank;

 

viii.                             Testing of the
Bank’s customer identification program;

 

ix.                                     Testing of the
Bank’s recordkeeping system for compliance with the BSA;

 

x.                                        Testing to
ensure that the Bank is in compliance with rules and regulations related
to:

 

·                          Identifying and reporting
suspicious activities;

 

·                          Funds transfer operations;

 

·                          On-going training of
appropriate personnel;

 

·                          OFAC restrictions and
requirements;

 

·                          High-risk activities related
to customers and other areas of the Bank;

 

·                          Compliance with information
sharing requirements;

 

·                          Testing of the accuracy and
validity of the automated large transaction identification system;

 

11

 

·                          Confirming the integrity and
accuracy of management information reports used in the BSA Compliance Program;
and

 

·                          Retention of required
records.

 

xi.                                     Allowing
unrestricted examiner access to auditor workpapers if testing is conducted by
an outside third party.

 

LOOK BACK REVIEW

 

5.             (a)           Within sixty (60) days of the
effective date of this ORDER, the Bank shall develop a written plan (“Plan”)
detailing how it will conduct, with the supervision and oversight of an
independent and qualified auditor, a review of deposit account and transaction
activity for the time period beginning April 17, 2006 through the
effective date of this ORDER, to determine whether suspicious activity
involving any accounts of, or transactions through, the Bank were properly
identified and reported in accordance with the applicable suspicious activity
reporting requirements (“Look Back Review” or “Review”)).

 

(b)           The Plan, and any
subsequent contract or engagement letter entered into with the auditor
performing the Review, shall include, at a minimum:

 

12

 

i.                                          The scope of
the Review shall specify the types of accounts and transactions to be reviewed
and shall include the Bank’s cash intensive customers, whether businesses or
individuals, customers with international wire transactions, all customers identified
by the Bank as high risk, customers on whom the Bank has ever filed a
suspicious activity report, and all customers related to any of these types of
customers;

 

ii.                                       The methodology
for conducting the Look Back Review, including any sampling procedures to be
followed;

 

iii.                                    The resources
and expertise to be dedicated to the Look Back Review;

 

iv.                                   The anticipated
date of completion of the Look Back Review;

 

v.                                      A provision for
unrestricted examiner access to auditor workpapers; and

 

vi.                                   A provision that
the auditor will present the findings from the Look Back Review directly to the
Bank’s Board.

 

(c)           The Plan, and any
subsequent modifications thereof, shall be prepared and implemented in a manner

 

13

 

acceptable to the Regional Director and Division. For this purpose, the
draft Plan shall be submitted to the Regional Director and the Division for
review and comment prior to implementation. After consideration of all such
comments, and after adoption of recommended changes, the Board shall approve
the Plan, which approval shall be recorded in the minutes of the Board’s
meeting at which approved.

 

(d)           Within ten (10) days
of receipt of written notice from the Regional Director and the Division
indicating acceptability of the Plan, the Bank shall begin implementation of
the Plan and commence the Review in accordance with the timetable set forth in
the Plan.

 

(e)           By the 10th business
day of each calendar month in which the Review is being conducted, the Bank shall
provide to the Regional Director and the Division a written report detailing
the actions taken under the Review and the results obtained since the prior
month’s report.

 

(f)            Within thirty (30)
days of completion of the Review, the Bank shall provide a list to the Regional
Director and the Division, specifying all outstanding matters or transactions
identified by the Review which have yet to be reported to FINCEN, and detailing
how and when these matters

 

14

 

will be reported in accordance with applicable law and regulation.

 

PREVIOUSLY FILED REPORTS

 

6.             Within sixty (60)
days from the effective date of this ORDER, the Bank shall review all
Suspicious Activity Reports previously filed by the Bank since April 17,
2006 through the effective date of this ORDER, and amend and resubmit as
required any such report that is incomplete or factually inaccurate.

 

DUE DILIGENCE PROGRAM

 

7.             (a)           Within ninety (90) days from the
effective date of this ORDER, the Bank shall develop, adopt, and begin
implementation of a written Customer Due Diligence (“CDD”) Program. The CDD
Program and its implementation shall be prepared and conducted in a manner
acceptable to the Regional Director and Division as determined at subsequent examinations
and/or visitations of the Bank.

 

(b)           At a minimum, the
CDD Program shall provide for a risk focused assessment of the customer base of
the Bank to determine the appropriate level of ongoing monitoring required to
assure that the Bank can reasonably detect suspicious activity, and determine
which customers require Enhanced Due Diligence (“EDD”) necessary for those
categories of customers the Bank has reason to believe pose a heightened risk
of illicit

 

15

 

activity. For purposes of this ORDER, a “high-risk MSB” is deemed to be
an MSB which exhibits one or more of the “potentially higher risk indicators,”
as set forth under the Risk Indicators Section of FIL-32-2005, or an MSB
which exhibits traits or characteristics posing a substantially similar or
equivalent level of risk.

 

(c)           At a minimum, the
CDD Program shall provide for:

 

i.                                          Risk rating of
the Bank’s customers, specifically including MSBs, based on the potential risk
for money laundering or terrorist financing posed by the customer’s activities,
with consideration given to the purpose of the account, the anticipated type
and volume of account activity, types of products and services offered, and
locations and markets served by the customer;

 

ii.                                       Obtaining,
analyzing, and maintaining sufficient customer information necessary to allow
effective suspicious activity monitoring, including documentation of normal and
expected transactions of the customer;

 

iii.                                    Guidance for
documenting the analysis

 

16

 

conducted under the CDD process, including guidance for resolving
issues when insufficient or inaccurate information is obtained;

 

iv.                                   Monitoring
procedures required for each customer category under the BSA/AML risk ratings;

 

v.                                      Guidelines to
reasonably assure the identification and timely, accurate reporting of known or
suspected criminal activity, as required by the suspicious activity reporting
provisions of Part 353 of the FDIC Rules, 12 C.F.R. § 353; and

 

vi.                                   Periodic,
risk-based monitoring of customer relationships to determine whether the
original risk profile remains accurate.

 

(d)           At a minimum, EDD
for high-risk MSBs shall include the following procedures:

 

i.                                          Identification
of customers requiring site visitations and the required frequency of
visitations;

 

ii.                                       Identification
and proper risk coding of all MSBs;

 

17

 

iii.                                    Periodic,
comprehensive on-site visitations of all high-risk MSBs;

 

iv.                                   Periodic review
of the high-risk MSB’s anti-money laundering program;

 

v.                                      Review the
results of independent testing of the MSB’s anti-money laundering program;

 

vi.                                   Review the list
of all MSB agents that will be using or receiving services directly or
indirectly through the MSB;

 

vii.                                Review the MSB’s
written agent management and termination practices and procedures; and

 

viii.                             Review of the
MSB’s written employee screening practices and procedures.

 

ACCOUNT MONITORING

 

8.             (a)           Within sixty (60) days from the
effective date of this ORDER, the Bank shall adopt and begin implementation of
appropriate policies and procedures for identifying and verifying the type and
dollar volume of transactions in each deposit account that exceed expected
levels of customer cash or wire transfer activity.

 

(b)           The policies and
procedures adopted by the Bank shall be prepared and implemented in a manner
acceptable to the

 

18

 

Regional Director and the Division as determined at subsequent
examinations or visitations of the Bank.

 

CORRECTION OF VIOLATIONS

 

9.             Within ninety (90)
days from the effective date of this ORDER, the Bank shall eliminate and/or
correct all violations of law or regulation detailed in the Joint Report of
Examination dated May 5, 2008 (“Joint Report”).

 

DISCLOSURE TO SHAREHOLDER

 

10.          Following the
effective date of this ORDER, the Bank shall send to its shareholder a copy or
description of this ORDER: (1) in conjunction with the Bank’s next
shareholder communication; or (2) in conjunction with its notice or proxy
statement preceding its next Board of Directors meeting. The description shall
fully describe this ORDER in all material respects. The description and any
accompanying communication, notice or statement shall be sent to Scott D.
Clarke, Assistant Director, Division of Banking, 122 South Michigan Avenue, Suite 1900,
Chicago, Illinois 60603, and to the FDIC’s Registration and Disclosure
Section, 550 17th Street, N.W., Washington, D.C. 20429, for review at least 20
days prior to dissemination to its shareholder. Any changes requested to be
made by the FDIC or the Division shall be made prior to dissemination of the
description, communication, notice or statement.

 

19

 

PROGRESS REPORTS

 

11.          Within thirty (30)
days from the end of each calendar quarter following the effective date of this
ORDER, the Bank shall furnish to the Regional Director and the Division written
progress reports signed by each member of the Board, detailing the actions
taken to secure compliance with the ORDER and the results thereof. Along with
each progress report, the Bank shall also provide reports on the Look Back
Review, detailing the findings and actions taken as required under this ORDER.
Such reports may be discontinued when the corrections required by this ORDER
have been accomplished and the Regional Director and the Division have, in
writing, released the Bank from making further reports.

 

CLOSING PARAGRAPHS

 

The effective date of this ORDER shall be the day of its issuance by
the Division and the FDIC.

 

The provisions of this ORDER shall be binding upon the Bank, its
institution-affiliated parties, and any successors and assigns thereof.

 

The provisions of this ORDER shall remain effective and enforceable
except to the extent that, and until such time as, any provision has been
modified, terminated, suspended, or set aside by the Division and the FDIC.

 

Pursuant to delegated authority.

 

20

 

Dated:    December 3, 2008.

 

	
  /s/ Scott D. Clarke

  	
   

  	
  /s/ M. Anthony Lowe

  
	
  Scott D. Clarke

  	
   

  	
  M. Anthony Lowe

  
	
  Assistant Director

  	
   

  	
  Regional Director

  
	
  Division of Banking

  	
   

  	
  Chicago Regional Office

  
	
  Illinois Department of Financial and Professional Regulation

  	
   

  	
  Federal Deposit Insurance Corporation

  

 

21

 

FEDERAL DEPOSIT INSURANCE
CORPORATION

 

WASHINGTON, D.C.

 

AND

 

STATE OF ILLINOIS

 

DEPARTMENT OF FINANCIAL AND
PROFESSIONAL REGULATION

 

DIVISION OF BANKING

 

SPRINGFIELD, ILLINOIS

 

	
   

  	
  )

  	
   

  
	
  In the Matter of

  	
  )

  	
  STIPULATION AND CONSENT

  
	
   

  	
  )

  	
  TO THE ISSUANCE OF AN

  
	
  WEST SUBURBAN BANK

  	
  )

  	
  ORDER TO CEASE AND

  
	
  LOMBARD, ILLINOIS

  	
  )

  	
  DESIST

  
	
   

  	
  )

  	
   

  
	
  (Illinois Chartered

  	
  )

  	
  FDIC-08-183b

  
	
  Insured Nonmember Bank)

  	
  )

  	
  DB NO. 2008-DB-49

  
	
   

  	
  )

  	
   

  

 

Subject to the acceptance of this STIPULATION AND CONSENT TO THE
ISSUANCE OF AN ORDER TO CEASE AND DESIST (“STIPULATION”) by the Federal Deposit
Insurance Corporation (“FDIC”) and Illinois Department of Financial and
Professional Regulation, Division of Banking (“Division”) it is hereby
stipulated and agreed by and among representatives of the FDIC, Division and
West Suburban Bank, Lombard, Illinois, (“Bank”) as follows:

 

1.             The Bank has been
advised of its right to receive a NOTICE OF CHARGES AND OF HEARING (“NOTICE”)
detailing the

 

 

alleged unsafe or unsound banking practices and violations of law, rule or
regulation related to the Bank Secrecy Act, 31 U.S.C. §§ 5311-5330, and
implementing regulations, including 12 C.F.R. Part 326, Subpart B, and 31
C.F.R. Part 103, alleged to have been committed by the Bank, and of its
right to a hearing on the charges under Section 8(b) of the Federal
Deposit Insurance Act (“Act”), 12 U.S.C. § 1818(b), and 38 Ill. Adm. Code, Section 392.30,
regarding hearings before the Division, and has knowingly waived those rights;

 

2.             The Bank, solely
for the purpose of this proceeding and without admitting or denying any of the
alleged charges of unsafe or unsound banking practices or violations of law, rule or
regulation related to the Bank Secrecy Act, hereby consents and agrees to the
issuance of an ORDER TO CEASE AND DESIST (“ORDER”) by the FDIC and the
Division;

 

3.             The Bank further
stipulates and agrees that such ORDER shall be deemed to be a cease-and-desist
order which has become final and unappealable, and that the ORDER shall become
effective immediately after its issuance by the FDIC and the Division and fully
enforceable by the FDIC and the Division pursuant to the provisions Section 8(i) of
the Act, 12 U.S.C. § 1818(i), and Section 48(6)(b) of the Illinois
Banking Act, 205 ILCS 5/48 (6) (the “Illinois Act”), respectively, subject

 

2

 

only to the conditions set forth in paragraph 4 of this STIPULATION;

 

4.             In the event the
FDIC and. the Division accept this STIPULATION and issue the ORDER, it is
agreed that no action to enforce the ORDER will be taken by the FDIC in the
United States District Court or the appropriate Federal Circuit Court, or by
the Division in the appropriate State Circuit Court, unless the Bank, any of
its institution-affiliated parties, as that term is defined in Section 3(u) of
the Act, 12 U.S.C.§ 1813(u), or any of its successors or assigns, has violated or
is about to violate any provision of the ORDER;

 

5.             The Bank hereby
waives:

 

(a)           The receipt of a
NOTICE;

 

(b)           All defenses and
counterclaims of any kind to this proceeding;

 

(c)           A hearing for the
purpose of taking evidence on the allegations in the NOTICE;

 

(d)           The filing of
proposed findings of fact and conclusions of law;

 

(e)           A recommended
decision of an Administrative Law Judge; and

 

(f)            Exceptions and
briefs with respect to such recommended decision.

 

3

 

Dated this 2nd day of December 2008.

 

	
  FEDERAL DEPOSIT INSURANCE

  	
   

  	
  WEST SUBURBAN BANK

  
	
  CORPORATION

  	
   

  	
  LOMBARD, ILLINOIS

  
	
  LEGAL DIVISION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  By:

  
	
   

  	
   

  	
   

  
	
  /s/ Richard C. Rowley

  	
   

  	
  /s/ Craig R. Acker

  
	
  Richard C. Rowley

  	
   

  	
  Craig R. Acker

  
	
  Senior Regional Attorney

  	
   

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Keith W. Acker

  
	
   

  	
   

  	
  Keith W. Acker

  
	
   

  	
   

  	
  President and Director

  
	
  STATE OF ILLINOIS

  	
   

  	
   

  
	
  DEPARTMENT OF FINANCIAL AND

  	
   

  	
  /s/ Earl K. Harbaugh

  
	
  PROFESSIONAL REGULATION

  	
   

  	
  Earl K. Harbaugh

  
	
   

  	
   

  	
  Director

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Ronald J. Kuhn

  
	
  /s/ Scott D. Clarke

  	
   

  	
  Ronald J. Kuhn

  
	
  Scott D. Clarke

  	
   

  	
  Director

  
	
  Assistant Director

  	
   

  	
   

  
	
  Division of Banking

  	
   

  	
  /s/ Robert W. Schulz

  
	
   

  	
   

  	
  Robert W. Schulz

  
	
   

  	
   

  	
  Chairman and Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ John G. Williams, Jr.

  
	
   

  	
   

  	
  John G. Williams, Jr.

  
	
   

  	
   

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Comprising the Board of

  
	
   

  	
   

  	
  Directors of

  
	
   

  	
   

  	
  WEST SUBURBAN BANK

  
	
   

  	
   

  	
  LOMBARD, ILLINOIS

  

 

4

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