Exhibit 10.16

DOWNEY SAVINGS AND LOAN ASSOCIATION, F.A.
CHANGE IN CONTROL AGREEMENT

     THIS CHANGE IN CONTROL AGREEMENT (the "Agreement") is made and entered into
as of February 28, 2007, by and between Downey Savings and Loan Association,
F.A. (the "Association") and _______________________________ ("Employee").

     WHEREAS, the Board of Directors of Downey Financial Corp. ("Parent"), which
is the parent corporation of the Association, has determined that, in the event
of a possible, threatened or pending sale or other change in control of the
Association or Parent, it is imperative that the Association, Parent and the
Board be able to rely upon Employee to continue in Employee’s position, and that
the Association, Parent and the Board be able to receive and rely upon
Employee’s services without concern that Employee might be distracted by the
personal uncertainties and risks created by any such possible transactions; and

     WHEREAS, the Association’s Board of Directors has determined that Employee
should be provided severance benefits in the event Employee’s employment is
terminated in connection with a Change in Control, so that Employee will not be
distracted by personal uncertainties and risks concerning Employee’s employment
with the Association; and

     WHEREAS, the Board and the Association’s Board of Directors have authorized
the Association to enter into an agreement with Employee providing severance
benefits in connection with a Change in Control as set forth herein;

     NOW, THEREFORE, to assure the Association that it will have the continued
dedication and services of Employee and to induce Employee to remain in the
employ of the Association, and for other good and valuable consideration, the
Association and Employee agree as follows:

     1.     Definitions.

          (a)     "Annual Compensation" means Employee’s annual base salary in
effect immediately before the time of the Change in Control or the time of the
termination of Employee’s employment, whichever is greater, plus the Target
Bonus.

          (b)     "Board" means the Board of Directors of Downey Financial Corp.

          (c)     "Cause" means the occurrence of any one or more of the
following:

                    (i)          The Employee’s willful violation of any
applicable state or federal banking or securities law;

                    (ii)          The Employee’s willful violation of the rules
or regulations of the Office of Thrift Supervision ("OTS"), the Federal Deposit
Insurance Corporation ("FDIC"), or any other regulatory agency or governmental
authority having jurisdiction over the Association;

                    (iii)          The Employee’s willful violation of the
rules, policies or resolutions of the Association;

                    (iv)          The Employee’s conviction of a crime involving
moral turpitude;

                    (v)          The Employee’s incompetence, intentional
failure to perform stated duties, material breach of Employee’s obligations
under this Agreement, breach of fiduciary duty involving personal profit,
fraudulent conduct or dishonest conduct.

          (d)     "Change in Control" means the first to occur of any of the
following events:

                    (i)          Any "person" or "group" (as defined in or
pursuant to Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) becomes the beneficial owner (as that term is used
in Section 13(d) of the Exchange Act), directly or indirectly, of more than
fifty percent (50%) of the capital stock of the Association or of Parent
entitled to vote in the election of directors, other than (A) a trustee or other
fiduciary holding securities under an employee benefit plan maintained for the
benefit of employees of Parent or the Association, (B) Parent or any successor
to Parent by means of a transaction that is not a Change in Control pursuant to
clause (iii) of this Subsection 1(d), or (C) a group of two or more persons not
(1) acting in concert for the purpose of acquiring, holding or disposing of such
stock or (2) otherwise required to file any form or report with any governmental
agency or regulatory authority having jurisdiction over the Association or
Parent which requires the reporting of any change in control. The acquisition of
additional stock by any person who immediately prior to such acquisition already
is the beneficial owner of more than fifty percent (50%) of the capital stock of
the Association or of Parent entitled to vote in the election of directors is
not a Change in Control.

                    (ii)          During any period of not more than twelve (12)
consecutive months during which Parent continues in existence, not including any
period prior to the effective date of this Agreement, Continuing Directors cease
for any reason to constitute at least a majority of the Board.

                    (iii)          The effective date of any consolidation or
merger of the Association or Parent (after all requisite shareholder, applicable
regulatory and other approvals and consents have been obtained), other than (A)
a consolidation or merger of the Association or Parent in which the holders of
the voting capital stock of the Association or Parent (whichever entity is
participating in the consolidation or merger) immediately prior to the
consolidation or merger hold at least fifty percent (50%) of the voting capital
stock of the surviving entity immediately after the consolidation or merger or
(B) a consolidation or merger of the Association or Parent with one or more
other persons that are related to the Association or Parent immediately prior to
the consolidation or merger. For purposes of this provision, persons are
"related" if one of them owns, directly or indirectly, at least fifty percent
(50%) of the voting capital stock of the other or a third person owns, directly
or indirectly, at least fifty percent (50%) of the voting capital stock of each
of them.

                    (iv)          The sale or transfer of all or substantially
all of the Association’s assets or of Parent’s assets, respectively, to one or
more persons that are not related (as defined in clause (iii) of this Subsection
1(d)) to the Association or Parent immediately prior to the sale or transfer.

                    (v)          The occurrence of an event which would result
in a change in control of the Association within the meaning of the Home Owners’
Loan Act of 1933, as amended, and the Rules and Regulations promulgated by the
OTS, as in effect on the date hereof (provided that in applying the definition
of change in control as set forth in the Rules and Regulations of the OTS, the
Board shall substitute its judgment for that of the OTS).

          (e)     "Code" means the Internal Revenue Code of 1986, as amended.

          (f)     "Continuing Director" means (i) each Director in office on the
effective date of this Agreement, and (ii) any successor to any such Director
whose nomination or selection to the Board was recommended or approved by a
majority of the Directors in office at the time of the Director’s nomination or
selection.

          (g)     "Director" means a member of the Board.

          (h)     "Good Reason" means the occurrence of any of the following
without Employee’s consent: (i) a material change in Employee’s status,
position, authority, function or responsibilities, or the assignment to Employee
of any duties or responsibilities that are inconsistent with Employee’s status,
position, authority, function or responsibilities; (ii) a reduction in
Employee’s base salary or target bonus compensation; (iii) the failure of any
successor-in-interest to assume all of the obligations of the Association under
this Agreement; (iv) material breach of this Agreement by the Association or
material breach by the Association of any other material agreement between the
Association and Employee which breach continues after written notice from
Employee and a reasonable opportunity by the Association to cure any such
breach; or (v) a relocation of Employee’s principal place of employment to a new
work site requiring an increase in one-way commute from Employee’s residence of
more than thirty-five (35) miles.

          (i)     "Target Bonus" means the Target Bonus Percentage multiplied by
Employee’s annual base salary in effect immediately before the time of the
Change in Control or the time of the termination of Employee’s employment,
whichever is greater.

          (j)     "Target Bonus Percentage" means the target percentage, if any,
in effect immediately before the time of the Change in Control or the time of
the termination of Employee’s employment, whichever percentage is greater, that
would apply to Employee’s annual base salary if all individual and corporate
performance goals were met at target levels for purposes of determining
Employee’s annual bonus under the Association’s Annual Incentive Plan or
Management Incentive Plan, whichever is applicable to Employee.

          (k)     "Welfare Benefits" means and includes, without limitation, all
life, dental, health, accident and disability benefit plans, other similar
welfare plans, and any equivalent successor policy, plan, program or arrangement
that may now exist or be adopted hereafter by the Association or Parent.

     2.     Term of Agreement. Subject to the provisions of Section 9 below,
this Agreement shall continue in effect for a period of three (3) years
following the date of this Agreement, unless earlier terminated or extended by
agreement of the parties hereto. In the event that a Change in Control occurs
during the term of this Agreement, this Agreement shall continue in effect
indefinitely until all obligations hereunder have been satisfied. The provisions
of Sections 10 and 11 of this Agreement shall survive the expiration of the term
or earlier termination of this Agreement.

     3.     Severance Benefits.

          (a) In the event that a Change in Control occurs and within
twenty-four (24) months after the Change in Control, either (i) Employee’s
employment is terminated by the Association or Parent without Cause or (ii)
Employee voluntarily terminates employment with the Association while Good
Reason exists, and, in either case, Employee executes a Separation Agreement and
Release in the form attached hereto as Exhibit A, the Association (or its
successor) shall pay Employee, within ten (10) business days after Employee
executes and returns the Separation Agreement and Release, a lump sum amount
equal to the following:

          Three (3) multiplied by the Employee’s Annual Compensation.

A change in Employee’s employer from the Association to Parent or to any
successor in interest to the Association or Parent alone shall not be considered
a termination of Employee’s employment for purposes of this Agreement.

          (b) Notwithstanding anything to the contrary in this Agreement, solely
to the extent that such delay is required in order to avoid the imposition of an
excise tax under Section 409A of the Code, if Employee is a "specified employee"
for purposes of Section 409A(a)(2)(B) of the Code, any payments to be made
pursuant to the Agreement that are considered to be non-qualified deferred
compensation distributable in connection with separation from service for
purposes of Section 409A of the Code, and which otherwise would have been
payable at any time during the six-month period immediately following such
separation from service, shall not be paid prior to, and shall instead be
payable in a lump sum within ten (10) business days following, the expiration of
such six-month period.

          (c) Notwithstanding anything to the contrary in this Agreement, within
thirty (30) days prior to or twelve (12) months following a Change in Control
event set forth in clause (i), (ii), (iii) or (iv) of Subsection 1(d) above, the
Association unilaterally may terminate its severance benefit obligations under
this Section 3 and Section 6 below by notifying Employee of such termination and
paying Employee the amounts provided in Section 3 and Section 6, within ten (10)
business days after Employee executes and returns the Separation Agreement and
Release, without regard to whether Employee’s employment with the Association
has terminated. Such payment shall in no event be made later than twelve (12)
months following the Association’s termination of such obligations, and the
Association shall have no obligation to make such payment if Employee fails to
execute and return the Separation Agreement and Release at least ten (10)
business days prior to the end of such twelve (12) month period. The Association
may exercise this right to terminate only if the Association terminates all
arrangements that are substantially similar to those set forth in Sections 3 and
6 that the Association has at that time with other employees. The Association
may exercise this right to terminate only in a manner and to the extent that it
will not subject Employee to an excise tax under Section 409A of the Code.

     4.     Current Year Target Bonus. In the event that Employee’s employment
with the Association terminates under circumstances qualifying Employee for a
severance payment under Section 3 above (including the signing of a Separation
Agreement and Release), the Association shall pay the Employee, within ten (10)
business days after Employee executes and returns the Separation Agreement and
Release, an additional lump sum amount equal to a prorata portion of the Target
Bonus. The prorata portion shall be based on the number of days that Employee is
employed by the Association in the calendar year in which Employee’s employment
terminates relative to the total number of days in such calendar year.

     5.     Welfare Benefits.

          (a) For a period of Thirty Six (36) months following the termination
of Employee’s employment with the Association under circumstances qualifying
Employee for a severance payment under Section 3 above (including the signing of
a Separation Agreement and Release), the Association shall provide to Employee
(and Employee’s spouse and other qualified dependents) all Welfare Benefits at
the Association’s expense that the Association provided to Employee at the
Association’s expense (and Employee’s spouse and qualified dependents)
immediately prior to the termination of Employee’s employment. Notwithstanding
the foregoing, with respect to any Welfare Benefits provided through an
insurance policy, the Association’s obligation to provide such Welfare Benefits
shall be limited by the terms of such policy; provided, however, that (i) the
Association shall make reasonable efforts to amend such policy to provide the
continued coverage described in this Subsection 5(a), and (ii) if such policy is
not amended to provide the continued benefits described in this Subsection 5(a),
the Association shall pay Employee’s cost of comparable replacement coverage.

          (b) If prior to the termination of Employee’s employment, Employee was
required to contribute towards the cost of a Welfare Benefit as a condition of
receiving such Welfare Benefit, Employee may be required to continue
contributing towards the cost of such Welfare Benefit under the same terms and
conditions as applied to Employee while employed in order to receive such
Welfare Benefit.

     6.     Excise Tax.

          (a) If apart from the provisions of this Section 6 all or any portion
of the amounts payable to Employee under this Agreement, either alone or
together with other payments Employee receives from the Association (or a
successor), would constitute "excess parachute payments" within the meaning of
Section 280G of the Code that would be subject to the excise tax imposed by
Section 4999 of the Code (the "Excise Tax"), then the amounts payable hereunder
shall be reduced if and to the extent set forth in this Section 6. The payments
hereunder shall be reduced by the minimum amount necessary to eliminate
application of the Excise Tax (the "Reduction Amount") if and only if Employee’s
net after-tax economic benefit under this Agreement after such reduction exceeds
what Employee’s net after-tax economic benefit under this Agreement would be
without such reduction. In each case Employee’s net after-tax economic benefit
shall be determined as the amount of the cash payments to be made to Employee
under this Agreement reduced by Employee’s state and federal income tax, Excise
Tax, FICA tax and other tax liabilities attributable to all payments to be made
to Employee under this Agreement and under any other agreements and arrangements
providing payments to Employee from the Association (or a successor) that would
constitute "parachute payments" within the meaning of Section 280G of the Code.

          (b) The determination of the amount of the Excise Tax, the Reduction
Amount, Employee’s net after-tax economic benefit and the assumptions to be
utilized in arriving at such determinations, shall be made, at the Association’s
expense, by an independent accounting firm (the "Accounting Firm") retained by
the Association and identified to Employee prior to any Change in Control. If no
other Accounting Firm is identified to Employee prior to a Change in Control,
the Accounting Firm shall be KPMG LLP. The Accounting Firm shall provide
detailed supporting calculations both to the Association and the Employee at
such time or times as may be requested by the Association and, if requested by
Employee, within fifteen (15) business days following the Accounting Firm’s
receipt of notice from the Employee. Such calculations shall be made from
information available to the Accounting Firm, which information may be
supplemented by the Association and/or Employee after reviewing the Accounting
Firm’s initial calculations. Any final determination by the Accounting Firm
shall be binding upon the Association and Employee absent clear error. The
Association shall provide the Accounting Firm the Employee’s payroll records for
the current year and prior five years and shall cause the Accounting Firm to
make and complete the determinations and supporting calculations required
hereunder in sufficient time to effect any reduction in payment as set forth
herein.

     7.     Other Employee Benefits. The benefits provided to Employee hereunder
shall not be affected by or reduced because of any other benefits (including,
but not limited to, salary, bonus, pension, stock option or stock purchase plan)
to which Employee may be entitled by reason of Employee’s employment with the
Association or the termination of Employee’s employment with the Association,
and no other such benefit by reason of such employment shall be so affected or
reduced because of the benefits bestowed by this Agreement. Notwithstanding the
foregoing, if Employee qualifies for severance pay under Section 3 of this
Agreement, such severance pay will be in lieu of, and not in addition to, any
severance or other termination payments to which Employee may be entitled under
any plan or arrangement of the Association.

     8.     Withholding. All amounts payable by the Association hereunder shall
be subject to all federal, state, local and other withholdings and employment
taxes as required by applicable law.

     9.     Regulatory Restrictions. Notwithstanding anything in this Agreement
to the contrary, the restrictions set forth below shall apply:

          (a) Any payments and other benefits provided to Employee pursuant to
this Agreement, or otherwise, are subject to and conditioned upon their
compliance with Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C.
Section 1828(k), and any regulations promulgated thereunder, including, without
limitation, FDIC Regulation 12 CFR Part 359, Golden Parachute and
Indemnification Payments.

          (b) If Employee is suspended and/or temporarily prohibited from
participating in the conduct of the Association’s affairs by a notice served
under Section 8 (e)(3) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C.
Section 1818 (e)(3) and (g)(1)), the Association’s obligations under this
Agreement shall be suspended as of the date of service of the notice unless
stayed by appropriate proceedings. If the charges in the notice are dismissed,
the Association shall pay Employee any amounts withheld while its contract
obligations were suspended and shall reinstate any of its obligations hereunder
that were suspended.

          (c) If Employee is removed and/or permanently prohibited from
participating in the conduct of the Association’s affairs by an order issued
under Section 8 (e)(4) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C.
Section 1818 (e)(4) or (g)(1)), all obligations of the Association under this
Agreement shall terminate as of the effective date of the order, except to the
extent that Employee’s rights hereunder vested prior to such date.

          (d) If the Association is in default (as defined in Section 3(x)(1) of
the Federal Deposit Insurance Act), all obligations under this Agreement shall
terminate as of the date of default, but this Subsection 9(d) shall not affect
any vested rights of Employee.

          (e) All obligations under this Agreement shall be terminated, except
to the extent determined that continuation of this Agreement is necessary for
the continued operation of the Association (i) by the Director of the FDIC or
his or her designee, at the time the FDIC or Resolution Trust Corporation enters
into an agreement to provide assistance to or on behalf of the Association under
the authority contained in Section 13(c) of the Federal Deposit Insurance Act,
or (ii) by the Director of the FDIC or his or her designee, at the time the
Director of the FDIC or his or her designee approves a supervisory merger to
resolve problems related to operation of the Association or when the Association
is determined by the Director of the FDIC to be in an unsafe or unsound
condition. Any rights of the parties that have already vested, however, shall
not be affected by such action.

     10.    Confidentiality. Employee agrees that information not generally
known to the public to which Employee has been or will be exposed as a result of
Employee’s employment by the Association is confidential information that
belongs to the Association. This includes information developed by Employee,
alone or with others, or entrusted to the Association by its customers or
others.  The Association’s confidential information includes, without
limitation, information relating to the Association’s customers, clients and
employees.  Employee will hold the Association’s confidential information in
strict confidence and will not disclose or use it except (i) as authorized by
the Association, (ii) in the ordinary course of Employee’s employment, (iii)
when disclosure is required by law or by any court, arbitrator, or
administrative or legislative body (including any committee thereof) with
apparent jurisdiction to require such disclosure, (iv) with respect to any
litigation involving this Agreement or Employee’s employment with the
Association, provided that such confidential information not become part of any
public record and will be used only in a way that will preserve its
confidentiality, and (v) if such information becomes generally known to the
public other than due to Employee’s violation of this Section 10.

     11.    Possession of Materials. Employee agrees that upon conclusion of
employment or request by the Association, Employee shall turn over to the
Association all documents, files, office supplies and any other material or work
product in Employee’s possession or control that were created pursuant to or
derived from Employee’s services for the Association.

     12.    Entire Agreement; Effect of Prior Agreements. This is the complete
agreement of the parties on the subject set forth herein. This Agreement
supersedes any prior oral or written agreement or understanding on such subject.
No party is relying on any representations, oral or written, on the subject of
the effect, enforceability, or meaning of this Agreement, except as specifically
set forth in this Agreement.

     13.    Time is of the Essence. Time is of the essence hereunder wherever
time is a factor.

     14.    Attorneys’ Fees. In the event that any legal proceeding is commenced
to interpret or enforce this Agreement, the prevailing party in such proceeding
shall be entitled to recover from the other party the prevailing party’s
reasonable attorneys’ fees, costs and expenses relating to such proceeding.

     15.    Amendment. This Agreement may not be amended without the prior
written consent of both Employee and the Association.

     16.    No Right to Continued Employment. This Agreement does not constitute
a contract of employment, does not change the status of Employee’s employment on
an at-will basis or otherwise and does not change the Association’s policies
regarding termination of employment. Nothing in this Agreement shall be deemed
to give Employee the right to be retained in the service of the Association or
to deny the Association any right it may have to discharge or demote Employee at
any time; provided, however, that Employee shall not be denied the benefits of
this Agreement by any action taken by the Association in contemplation of a
Change in Control. No provision of this Agreement shall in any way limit,
restrict or prohibit Employee’s right to terminate employment with the
Association.

     17.    Severability. If a court or other body of competent jurisdiction
determines that any provision of this Agreement is invalid or unenforceable,
that provision will be adjusted rather than voided, if possible, so that it is
enforceable to the maximum extent possible, or, if it is not possible to so
adjust such provision, this Agreement shall be construed in all respects as if
such invalid or unenforceable provision were omitted. The invalidity and
unenforceability of any particular provision of this Agreement shall not affect
any other provision hereof, and all other provisions of the Agreement shall be
valid and enforceable to the fullest extent possible.

     18.    Successors.

          (a) The Association will require any successor, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all of the business and/or assets of the Association to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Association would be required to perform it if no such
succession had taken place.

          (b) This Agreement shall inure to the benefit of, and be enforceable
by, Employee’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.

     19.    Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, except to the extent
preempted by federal law including without limitation the federal laws
applicable to federally chartered savings associations, without regard or
reference to the rules of conflicts of law that would require the application of
the laws of any other jurisdiction. Any action to interpret or enforce this
Agreement, or to resolve any dispute that may arise out of or relate to this
Agreement, shall be brought solely in the Superior Court of California in and
for Orange County.

     20.    No Duty to Mitigate. Employee is under no contractual or legal
obligation to mitigate damages in order to receive the severance benefits
provided under this Agreement.

     21.    Notices. All notices and other communications under this Agreement
shall be in writing and mailed, telecopied, or delivered by hand or by a
nationally recognized courier service guaranteeing overnight delivery to a
party, at the following address (or to such other address as
such party may have specified by notice given to the other party pursuant to
this provision):

 

If to Employee, to:

 

_________________________________ 
Address: _________________________________  
Telephone: _________________________________  

 

If to the Association, to:

 

Downey Savings and Loan Association, F.A.
Address: 3501 Jamboree Road
Newport Beach, CA  92660
Attention: General Counsel
Telephone: (949) 725-4790
Facsimile: (949) 725-0619

   

             All such notices and communications shall, when mailed, telecopied,
or delivered, be effective three days after deposit in the United States mail,
telecopied with confirmation of receipt, or delivered by hand to the addressee
or one day after delivery to the courier service.

     22.     Counterparts. This Agreement may be executed in more than one
counterpart, each of which shall be deemed to be an original, and all such
counterparts together shall constitute one and the same instrument.

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     23.     Consultation With Counsel. Employee acknowledges that he or she has
had a full and complete opportunity to consult with counsel and other advisors
of Employee’s own choosing concerning the terms, enforceability and implications
of this Agreement, and that neither the Association nor Parent has made any
representations or warranties to Employee concerning the terms, enforceability
or implications of this Agreement other than as reflected in this Agreement.

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

DOWNEY SAVINGS AND LOAN                              EMPLOYEE
ASSOCIATION, F.A.

By _________________________________          _________________________________

Name:______________________________          [Insert Name]

Its: _________________________________