Downey Financial Corp Watch

from 10-K ~5 pages Downey Savings and Loan Association, F.A. Change in Control Agreement

from 10-K ~5 pages Downey Savings and Loan Association, F.A. Change in Control Agreement

from 10-K ~10 pages The Plan Allows You to Defer a Portion of Your Total Annual Compensation, Bonus/Incentive Earnings, or Director Fees. This Reduces Your Current Taxable Income and Allows You to Save on a Pre-Tax Basis. for Example, if You Defer $10,000 and Are in a 40% Tax Bracket, Your Taxable Income Is Reduced by $10,000 and You Have $10,000 in Your Deferred Compensation Account Earning Interest as Opposed to $6,000 Invested After-Tax. Your Deferred Compensation Account Also Accumulates Interest on a Tax-Deferred Basis. Not Only Are Pre-Tax Dollars Invested, but the Earnings on the Account Grows on a Pre-Tax Basis. Crediting Interest Rate

from 8-K ~5 pages Indemnification Agreement Dated as of December 15, 2004 Between Downey Savings and Loan Association, F.A. ("Downey Savings"), And

from 10-K ~1 page Congratulations! On Behalf of Downey Financial Corp. ("Dfc"), I Am Pleased to Offer You the Position of Chief Executive Officer of Dfc and Downey Savings and Loan Association, F.A. ("Downey Savings" and With Dfc, Collectively, "Downey"), Pending Approval of the Downey Board of Directors. You Will Also Be Appointed to the Board of Directors of Dfc and Downey Savings, Pending the Approval of the Dfc Shareholders at Our Next Annual Shareholders Meeting. Unless Mutually Agreed Upon, We Expect You to Start No Later Than February 2, 2004, in Our Newport Beach Offices. You Will Report Directly to the Chairman of Downey. This Letter Outlines the Terms of Your New Position. Compensation Your Base Salary Will Be $750,000 Per Year. You Are Also Eligible for a Bonus Each Year, Up to $1 Million Per Year, as Follows: 1. if Downey’s Return on Equity ("Roe") for the Year Is at Least 12.5%, Your Bonus Will Be $333,333. 2. if Downey’s Roe for the Year Is at Least 14% on an Annualized Basis, Then Your Bonus Will Be $666,667. 3. if Downey’s Roe for the Year Is 15% or More on an Annualized Basis, Then Your Bonus Will Be $1 Million. for 2004 Only, the Roe Calculation Will Be Based on the Fourth Quarter 2004 Results, Calculated on an Annualized Basis

from 10-K 1 page Amendment No. 1 Downey Savings and Loan Association, F.A. Employee Stock Purchase Plan (Amended and Restated as of January 1, 1996) Amendment No. 1, Effective and Adopted January 22, 1997 Whereas, the Board of Directors of Downey Savings Has Been Advised by Counsel That, in Order to Be More Fully Assured That the Downey Savings and Loan Association, F.A., Employee Stock Purchase Plan (The "Plan") Is Eligible for Exemption From Registration Under the Securities Act of 1933, as Amended, the Plan Should Be Amended to Provide That Participants Vote All Shares of Downey Financial Corp. Common Stock Acquired Pursuant to the Plan, Whether Distributed or Undistributed; and Whereas, the Board of Directors Has Determined That It Is in the Best Interest of Downey Savings to So Amend the Plan; Now, Therefore, Be It Hereby Resolved, That Section 8.1 of the Plan Be Amended to Read in Its Entirety as Follows (The "Amendment"): "Section 8.1 Rights of Stockholder. Each Participant Shall Be Entitled to Direct the Voting of All Shares of Downey Financial Corp. Common Stock Purchased on His Behalf Under the Plan." Be It Further Resolved, That the Officers of Downey Savings Hereby Are Authorized, Empowered and Directed to Take Such Further Actions as They Shall Deem Necessary or Appropriate to Permit the Amendment to Become Effective or to Otherwise Carry Out and Fulfill the Purposes and Intent of the Foregoing Resolutions. in Witness Whereof, Downey Savings and Loan Association, F.A. Has Caused This Amendment No. 1 to Be Executed by Its Duly Authorized Officers. Sponsoring Employer: Downey Savings and Loan Association, F.A. /S/ Stephen W. Prough - Stephen W. Prough /S/ Thomas E. Prince - Thomas E. Prince /S/ Jolene Bryant - Jolene Bryant