DOWNEY SAVINGS AND LOAN
                                ASSOCIATION, F.A.

                          EMPLOYEE STOCK PURCHASE PLAN

                  (Amended and Restated as of January 1, 1996)



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                                TABLE OF CONTENTS

                                                                           Page
ARTICLE I           PURPOSE OF PLAN

         1.1   Purpose of Plan................................................1

ARTICLE II          DEFINITIONS

         2.1   "Account"......................................................1
         2.2   "Administrator" ...............................................1
         2.3   "Affiliate"....................................................1
         2.4   "Board of Directors"...........................................2
         2.5   "Code".........................................................2
         2.6   "Common Stock".................................................2
         2.7   "Compensation".................................................2
         2.8   "Custodian"....................................................2
         2.9   "Effective Date"...............................................2
         2.10  "Employee" ....................................................2
         2.11  "Employer".....................................................2
         2.12  "Enrollment Date"..............................................2
         2.13  "Exercise Date"................................................2
         2.14  "Fair Market Value"............................................2
         2.15  "Participant"..................................................3
         2.16  "Plan".........................................................3
         2.17  "Plan Year"....................................................3
         2.18  "Purchase Price"...............................................3
         2.19  "Recodkeeper"..................................................3

 ARTICLE III        ELIGIBILITY AND PARTICIPATION.............................3

         3.1   Eligibility....................................................3
         3.2   Participation..................................................3
         3.3   Payroll Deductions.............................................3
         3.4   Purchase of Common Stock.......................................4
         3.5   In-Service Withdrawal of Common Stock..........................4
         3.6   Termination of Contributions...................................5
         3.7   Termination of Participation...................................5
         3.8   Termination of Employment and Termination of Plan..............5
         3.9   Non-Transferability of Right to Purchase.......................5
         3.10  Interest.......................................................6




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ARTICLE IV PLAN ADMINISTRATION................................................6

         4.1   Administration.................................................6
         4.2   Indemnification of the Administrator...........................6
         4.3   Designation of Beneficiary.....................................7
         4.4   Treatment of Funds.............................................7
         4.5   Reports........................................................7

ARTICLE V PLAN AMENDMENT AND TERMINATION......................................7

         5.1   Amendment or Termination.......................................7

ARTICLE VI CLAIMS PROCEDURE...................................................8

ARTICLE VII PARTICIPATION BY PARTICIPATING EMPLOYERS..........................8

         7.1   Affiliate Participation........................................8
         7.2   Action Binding on Participating Affiliates and Other Employers.8
         7.3   Termination of Participation of Affiliate or Other Employer....8

ARTICLE VIII MISCELLANEOUS MATTERS............................................9

         8.1   Rights as a Stockholder........................................9
         8.2   No Employment Rights...........................................9
         8.3   Effect of Plan.................................................9
         8.4   Governing Law Notices..........................................9
         8.5   Notices........................................................9
         8.6   Interpretation................................................10






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                    DOWNEY SAVINGS AND LOAN ASSOCIATION, F.A.
                             EMPLOYEE STOCK PURCHASE
                   (Amended and Restated as of Januay 1, 1996)

                                    ARTICLE I
                                 PURPOSE OF PLAN

     1.1  Purpose  of  Plan.   The  purpose  of  the  Downey  Savings  and  Loan
Association,  F.A.  Employee  Stock  Purchase  Plan (the  "Plan")  is to provide
Employees an  opportunity  to purchase  Common Stock of Downey  Financial  Corp.
through  voluntary and systematic  payroll deduct ions.  Downey Savings and Loan
Association,  F.A. (the  "Employer")  believes that ownership of Common Stock by
Employees under the Plan will foster greater employee interest in the Employer's
success,  growth and  development.  The Plan is not  intended  to be an employee
stock purchase plan under Internal  Revenue Code Section 423 or a qualified plan
under Internal Revenue Code Section 401(a).

                                   ARTICLE II
                                  DlIFINITIONS

     Whenever  capitalized  in the text,  the  following  terms  shall  have the
meanings set forth below.

     2.1  "Account"  shall mean the  account  established  by the  Administrator
pursuant to Section 4.5 to hold a  Participant's  contributions  to the Plan for
purposes of purchasing Common Stock.

     2.2  "Administrator''  shall mean the person or commit tee appointed by the
Board of Directors to administer the Plan.

     2.3 "Affiliate" shall mean

         (a) Any  corporation  which  is  included  in  a  controlled  group  of
corporations  (within the meaning of Section  414(b) of the Code),  of which the
sponsoring Employer is a member;

         (b) Any  trade or  business  which is under  common  control  with  the
sponsoring Employer (within the meaning of Section 414(c) of the Code); and

         (c) Any member of an affiliated  service group  of which the sponsoring
Employer is a member (within the meaning of Section 414(m) of the Code).

     Unless  expressly  provided to the contrary by  resolution  of the Board of
Directors,  a corporation,  other trade or business, or affiliated service group
member shall not be deemed to

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constitute an Affiliate with respect to periods prior to its coming under common
control  with  the  sponsoring  Employer  or prior to its  being  included  in a
controlled group or affiliated group, as provided in the preceding sentence.  An
employee of an entity which  becomes an  Affiliate  shall be deemed to have been
employed by such Affiliate the date it becomes an Affiliate.

     2.4  "Board  of  Directors"  shall  mean the Board of  Directors  of Downey
Savings and Loan Association, F.A.

     2.5 "Code" shall mean the Internal Revenue Code of 1986, as amended.

     2.6"Common Stock" shall mean the common stock of Downey Financial Corp.

     2.7 "Compensation"  shall mean all amounts of salaries and wages paid to an
Employee  subject to tax under Section 3101(a) of the Code,  including  bonuses,
overtime pay and commissions, but excluding any items of deferred compensation.

     2.8  "Custodian"   shall  mean  the  person  or  entity  appointed  by  the
Administrator  to receive  contributions  made to the Plan by  Participants,  to
purchase  Common  Stock with such  contributions,  to sell  Common  Stock and to
oversee  the  safekeeping  of any cash and  certificates  of  Common  Stock,  in
accordance with the directions of the Administrator.

     2.9  "Effective  Date"  shall  mean  January  1, 1996 for the  Amended  and
Restated Plan,  unless  otherwise  provided in the Plan. The original  Effective
Date of the Plan was January 1, 1 973.

     2.10 "Employee" shall mean any person,  including  officers and, subject to
the following sentence, directors, employed by the Employer. The term "Employee"
shall not  include  directors  unless  they are  employed  by the  Employer in a
position in addition to their duties as a director.

     2.11 "Employer" shall mean Downey Savings and Loan Association, F.A., which
shall  be the  sponsoring  Employer,  and  shall  include  any  Affiliate  whose
employees participate in the Plan with the consent of the Board of Directors.

     2.12  "Enrollment  Date" shall mean the first business day of each calendar
month.

     2.13  "Exercise  Date" shall mean the date following each calendar month on
which shares of common stock are purchased.

     2.14 "Fair  Market  Value"  shall mean as of any date,  the value of Common
Stock  determined by reference to the closing sales price for such Stock (or the
closing  bid,  if no sales  were  reported),  as  quoted  as of that date on any
established stock exchange or a national market system on which the Common Stock
is listed,  including  without  limitation,  the New York Stock Exchange and the
Pacific  Stock  Exchange.  Where  Common  Stock is listed on more than one stock
exchange,  "Fair Market  Value" shall be  determined  by reference  first to the
closing sales

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ge and next to the closing sales price listed on the Pacific  Stock  Exchange or
other exchange.

     2.15  "Participant"  means any Employee who has completed  the  eligibility
requirement  set forth under Section 3.1 of the Plan,  who elects to participate
in the Plan as  provided in Section 3.2  hereof,  and who is  purchasing  Common
Stock under the Plan through payroll deductions.

     2.16  "Plan"  shall  mean the Downey  Savings  and Loan  Association,  F.A.
Employee Stock Purchase Plan, as amended from time to time.

     2.17 "Plan Year" shall mean the twelve  (12) month  computation  period for
the Plan, which is the calendar year.

     2.18  "Purchase  Price" shall mean an amount  equal to one hundred  percent
(100%) of the Fair Market Value of a share of Common Stock on the Exercise Date.

     2.19  "Recordkeeper"  shall  mean the  person  or entity  appointed  by the
Administrator  to record  the  individual  Participant's  account  balances  and
transactions.

                                   ARTICLE III
                          ELIGIBILITY AND PARTICIPATION

     3.1  Eligibility  An Employee who is a Participant as of the Effective Date
shall  continue to be a  Participant.  Each other  Employee shall be eligible to
participate  in the Plan as of the next  Enrollment  Date  following the date he
performs his first hour of service for the Employer.

     3.2  Participation.  An Employee who has completed the service  requirement
set  forth  in  Section  3.1  above  may  become  a  Participant  in the Plan by
completing the Employee Stock Purchase Plan Enrollment Form ("Form") authorizing
payroll  deductions in the form of Exhibit A to this Plan and filing it with the
Administrator  prior to the fifth (5th)  calendar day of the month in which such
Participant's payroll deductions will commence.

     3.3 Payroll Deductions.

         (a) Payroll  Deduction  Authorization.  At the time a Participant files
an Enrollment Form with the  Administrator,  the Participant shall elect to have
payroll deductions made for each pay period, for which Compensation is received,
in an amount specified on the Participant's  Enrollment Form, which amount shall
not be less than Five  Dollars  ($5.00) per pay period nor more than one hundred
percent (100%) of the  Compensation  which the Participant  receives for any pay
period.  All payroll  deductions made for a Participant shall be credited to the
Participant's  Account under the Plan. A Participant may not make any additional
payments into such Account.

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         Payroll  deductions for a Participant shall commence with the first pay
period  following  the  Participant's  Enrollment  Date and  shall  end upon the
Participant's  termination  of  employment,  unless  sooner  terminated  by  the
Participant as provided in Section 3.6 or Section 3.7 below.

         (b)  Changes to  payroll  Deductions.  A  Participant  may  increase or
decrease the amount of the Participant's payroll deductions, effective as of the
first pay period of the calendar quarter following the date of the Participant's
request for the change,  by filing with the  Administrator a completed  Employee
Stock Purchase Plan Authorization Form ("Change Authorization Form") in the form
of Exhibit B to the  Participant's  Plan  authorizing an increase or decrease in
the   Participant's   payroll  deduction   amount.   The  Participant's   Change
Authorization Form shall remain in effect unless and until the Participant files
a  new  Change   Authorization   Form  with  the   Administrator  or  terminates
participation  in the  Plan as  provided  in  Section  3.6 or  Section  3.7.  In
addition,  a Participant  can suspend  deductions at any time by completing  the
Change Authorization Form.

         (c)  Payroll Deductions During Leave of Absence. Payroll deductions for
a Participant who takes an unpaid leave of absence shall cease during the leave.
They will  resume in the same  amount as in effect  prior to such leave upon the
Participant's  return to employment after the leave unless changed or terminated
by such  Participant in accordance with the provisions of Section 3.6 or Section
3.7, as applicable.

     3.4  Purchase  of Common  Stock.  The  Administrator  shall  allocate  to a
Participant's Account contributions made by the Participant to the Plan each pay
period. On a monthly basis, unless  participation in the Plan is terminated by a
Participant  before the Exercise Date, the Custodian shall purchase whole shares
of Common Stock for each Participant by dividing the Participant's  cash balance
for the month by the  applicable  Purchase Price as of the Exercise Date for the
month.  The  Custodian  shall  purchase only whole shares of Common Stock on the
open market. Commissions associated with the purchase of such Common Stock shall
be paid by the Employer.

         After  each  Exercise  Date on which a purchase of shares  occurs,  the
Administrator  shall notify the Recordkeeper of the names,  addresses and social
security numbers of the Participants for which Common Stock is purchased for the
month and the Recordkeeper shall allocate to the Account of each Participant the
number of shares of Common Stock  purchased with the  contributions  held in the
Participant's  Account for the month. Any contributions  held in a Participant's
Account which are not  sufficient to purchase a full share shall be carried over
to the  next  Exercise  Date  or  returned  to the  Participant  in  cash if the
Participant terminates participation in the Plan after the Exercise Date.

     3.5 In-Service  Withdrawal of Common Stock. While a Participant is employed
by the  Employer,  the  Participant  may request a withdrawal  of not fewer than
fifty (50) shares of Common Stock held in the Participant's  Account at any time
by  submitting  a  properly   completed   Change   Authorization   Form  to  the
Administrator indicating the Participant's request for a

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distribution of shares. Upon the receipt of an in-service  distribution request,
the  Administrator  shall furnish the Custodian with written  directions to make
the  distribution  of  shares  to the  Participant  as soon as  administratively
practicable  after  the  Exercise  Date of the  month in which  the  Participant
submits a Change Authorization Form.

         A  Participant  is  not  permitted  to  withdraw   any  cash  from  the
Participant's  Account until the  Participant  terminates  participation  in the
Plan.

     3.6   Termination  of   Contributions.   A  Participant  may  cease  making
contributions to the Plan at any time by submitting a properly  completed Change
Authorization Form to the Administrator indicating the Participant's election to
cease making contributions.

     3.7 Termination of Participation.  Upon receiving the Participant's  Change
Authorization Form indicating an election to terminate Plan  participation,  all
payroll  deductions for the Participant shall cease, and the Recordkeeper  shall
notify the  Custodian  of the number of shares of Common  Stock and cash held in
the Participant's Account. The Administrator shall provide written directions to
the  Custodian  to make a total  distribution  to the  Participant  of the total
Account  balance of shares of Common Stock and cash. The Custodian shall pay any
cash held in the Participant's  Account in the form of cash. The Custodian shall
distribute  to  the   Participant  the  shares  of  Common  Stock  held  in  the
Participant's  Account in accordance with the  Participant's  election either in
the  form  of a  stock  certificate,  in the  form  of  cash,  or  transfer  the
Participant's  shares to an individual  broker account with the Custodian if the
value of the Participant's Account is at least Five Hundred Dollars ($500) as of
the date of the Participant's request for termination of participation under the
Plan.

         The  Custodian  shall  make  a  distribution  to   the  Participant  in
accordance  with the  Participant's  election as soon as  practicable  after the
Exercise  Date  of  the  month  in  which  the  Participant   submits  a  Change
Authorization Form. The Participant shall be responsible for any and all fees or
commissions assessed in connection with such distribution.

         A  Participant who terminates Plan participation  shall not be eligible
to  participate  in the Plan  again  before  the first  pay  period of the month
following the month in which the  Participant  received a distribution  from the
Plan.

     3.8 Termination of Emplovment and Termination of Plan. Upon the termination
of  employment  or  termination  of the Plan as  provided  in Section 5.1 below,
subject to the  provisions  of Section  5.1, a  Participant's  right to purchase
Common Stock shall cease,  and the Custodian  shall make  distributions  to each
Participant  of the total  Account  balance in the same  manner as  provided  in
Section 3.7.

     3.9 Non-Transferability of Right to Purchase.  Prior to a distribution from
the Plan,  Common Stock and cash held in a Participant's  Account under the Plan
may not be pledged,  assigned,  Hypothecated,  transferred or disposed of in any
manner other than by will and the laws of descent and  distribution.  During the
lifetime of a Participant,  the right to purchase Common Stock hereunder belongs
solely to the Participant. The Administrator may treat any such attempt

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at assignment, transfer, pledge or other disposition as an election to terminate
participation under the Plan as provided in Section 3.6.

     3.10  Interest.  No interest  shall accrue on the payroll  deductions  of a
Participant in the Plan,  whether such amounts are, pursuant to the terms of the
Plan, applied to purchase shares or returned to the Participant upon termination
of Plan participation.

                                   ARTICLE IV
                               PLAN ADMINISTRATION

     4.1  Administration.  The Plan shall be administered by the  Administrator.
Subject to the provisions of the Plan, the Administrator shall have authority:

         (a) To construe, interpret and apply the terms of the Plan;

         (b) To determine eligibility;

         (c) To prescribe rules and procedures relating to the Plan;

         (d) To adjudicate all disputed claims filed under the Plan, and

         (e) To  take   all  other  actions  necessary  or   advisable  for  the
administration of the Plan.

         All  decisions of the  Administrator  shall be final and binding on all
Participants.

     4.2  Indemnification of the Administrator.  The Administrator  shall not be
liable for any action.  or determination  made in good faith with respect to the
Plan. To the maximum extent  permitted by law, the Employer shall  indemnify the
Administrator and any other Employee with duties under the Plan against expenses
(including, but not limited to, any amount paid in settlement or in satisfaction
of a judgment)  reasonably  incurred by the  individual in  connection  with any
claims against him by reason of the performance of his duties under the Plan.

         This indemnity shall not apply, however, if:

         (a) It  is determined in the action,  lawsuit,  or proceeding  that the
Administrator  is guilty of gross  negligence or  intentional  misconduct in the
performance of its duties; or

         (b) The   Administrator  fails to  assist  the  Employer  in  defending
against any such claim.

         Notwithstanding  the above, the Employer shall have the right to select
counsel  and to control the  prosecution  or defense of the suit.  The  Employer
shall not be obligated to

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indemnify  any  person  for  any  amount  incurred  through  any  settlement  or
compromise  of any  action  unless  the  Employer  consents  in  writing  to the
settlement or compromise.

     4.3  Designation  of  Beneficiary.  Each  Participant  shall file a written
designation of a beneficiary who is to receive any shares and cash, if any, from
the  Participant's  Account  under the Plan in the  event of such  Participant's
death subsequent to an Exercise Date, but prior to a distribution  from the Plan
of the Participant's shares of Common Stock and cash to the Participant.

         A  Participant may change the Participant's  designation of beneficiary
at any time by written notice. In the event of the death of a Participant and in
the absence of a beneficiary  validly designated under the Plan who is living at
the time of such  Participant's  death,  the  Administrator  shall  deliver such
shares  and/or  cash to the  executor  or  administrator  of the  estate  of the
Participant,  or if no such executor or administrator has been appointed (to the
knowledge of the  Administrator),  the  Administrator,  in its  discretion,  may
deliver such shares  and/or cash to the spouse or to any one or more  dependents
or relatives of the Participant, or is no spouse, dependent or relative is known
to the  Administrator,  then to  such  other  person  as the  Administrator  may
designate.

     4.4  Treatment  of Funds.  All payroll  deductions  received or held by the
Employer under the Plan shall be segregated and then forwarded to the Custodian.

     4.5 Reports.  The Recordkeeper shall maintain  individual accounts for each
Participant  in the Plan.  The  Administrator  shall furnish each  Participant a
statement of Account at least  annually,  which  statements  shall set forth the
Participant's payroll deductions for the Plan Year, the dividends credited,  the
average  Purchase Price,  the number of shares  purchased and the remaining cash
balance,  number of shares withdrawn during the Plan Year, and the beginning and
ending balances for the Account.

                                    ARTICLE V
                         PLAN AMENDMENT AND TERMINATION

     5.1 Amendment or Termination.  The Board of Directors reserves the right at
any time and for any reason to terminate or amend the Plan. Upon the termination
of the Plan, it shall be within the sole discretion of the Board of Directors to
determine  whether  to  direct  the  Custodian  to  apply  the  balance  of cash
contributions  held in the  Accounts  of  Participants  for a final  purchase of
Common Stock under the Plan, or to have the Custodian distribute to Participants
their  shares of Common  Stock and the  remaining  cash  without any  additional
purchase of Common Stock.

         Upon  receiving directions from the Administrator,  the Custodian shall
make  distributions to Participants in accordance with the provisions of Section
3.7.

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                                   ARTICLE VI
                                CLAIMS PROCEDURE

         If  a Participant's or a Participant's beneficiary's claim for benefits
under the Plan is denied either totally or partially,  the  Administrator or its
delegate will furnish the  Participant  with a written  notice.  The notice will
explain the reason for the  denial,  refer to the  specific  Plan  provision  or
provisions  on which the  denial is based,  describe  any  necessary  additional
information,  describe  how claims are  reviewed,  and  explain the steps for an
appeal.  If the  Administrator  does not respond  within 180 days,  the claim is
considered denied.

         If  the  Participant or a  Participant's  beneficiary  disagrees with a
denial  of  the   Participant's   claim,  the  Participant,   the  Participant's
beneficiary,  or an authorized  representative may make a written request to the
Administrator for a review of the claim. The request must be made within 60 days
after the claim is denied.

         Within  60 days after the Administrator  receives a written request for
review, the Participant or the Participant's  beneficiary will receive a written
notice of the final  decision or of the reasons for delay on the final  decision
if special  circumstances require more time. In any event, a final decision will
be  reached,  and  the  Participant  or the  Participant's  beneficiary  will be
notified within 120 days after the  Participant's  written request for review is
received. If no one responds, consider the claim denied.

                                   ARTICLE VII
                    PARTICIPATION BY PARTICIPATING EMPLOYERS

     7.1 Affiliate Participation.  An Affiliate or another employer may become a
party to the Plan by adopting the Plan for the benefit of any specified group of
its Employees, effective as of any Enrollment Date or any other date approved by
the sponsoring  Employer by filing with the sponsoring Employer a certified copy
of a  resolution  of its  board of  directors  to that  effect,  and such  other
instruments as the sponsoring Employer may require. Acceptance by the sponsoring
Employer of such resolution shall constitute the sponsoring  Employer's approval
of the Affiliate's participation in the Plan as a participating Employer.

     7.2 Action Binding on Participating Affiliates and Other Employers. As long
as the  sponsoring  Employer is a party to the Plan it shall be empowered to act
thereunder for any  participating  Employer in all matters  respecting the Plan,
the  Administrator  and the  Custodian,  and any action taken by the  sponsoring
Employer with respect  thereto shall  automatically  include and be binding upon
any participating Employer.

     7.3  Termination  of  Participation  of  Affiliate or Other  Employer.  The
sponsoring  Employer may in its sole  discretion and at any time,  terminate the
participation  in  this  Plan  of  any  or  all  participating  Employers.  Such
termination  shall be effective upon thirty (30) days notice of such termination
from the sponsoring Employer to the Administrator, the Custodian and the

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<PAGE>

participating  Employer(s) being terminated.  A participating  Employer may also
withdraw from participating in the Plan by giving the Employer thirty (30) days'
written notice to that effect.

         In  event of such  termination  or  withdrawal,  this  Plan  shall  not
terminate and the sponsoring  Employer shall inform the Custodian of the portion
of the  Plan  that is  attributable  to the  participation  of  such  terminated
participating   Employer.   Such  portion   shall  as  soon   thereafter  as  is
administratively feasible be set apart by the Custodian as a separate fund which
shall be part of the separate plan of such  terminated  participating  Employer.
Thereafter, the administration,  control, and operation of the Plan with respect
to such  terminated  participating  Employer  shall  be on a  separate  basis in
accordance with the terms hereof, or as such terms may be amended by appropriate
action  of  such  terminated  participating  Employer  in  accordance  with  the
provisions of this Article VII.

                                  ARTICLE VIII
                              MISCELLANEOUS MATTERS

     8.1 Rights as a  Stockholder.  No  Participant  shall have any  stockholder
voting  rights with  respect to shares  purchased  on his behalf  under the Plan
until the Participant  receives a distribution of such shares. The Administrator
shall vote the shares on behalf of the Participants.

     8.2 No Employment Rights. The Plan does not create in any Employee or class
of  Employees  any right  with  respect to  continuation  of  employment  by the
Employer, and it shall not be deemed to interfere in any way with the Employer's
right to terminate or otherwise modify an Employee's employment at any time.

     8.3 Effect of Plan.  The provisions of the Plan shall,  in accordance  with
its terms,  be binding upon, and inure to the benefit of, all successors of each
Participant  in the Plan,  including,  without  limitation,  such  Participant's
estate  and  the  executors,  administrators  or  trustees  thereof,  heirs  and
legatees, and any receiver, trustee in bankruptcy or representative of creditors
of such Participant.

     8.4  Governing  Law.  The law of the State of  California  will  govern all
matters  relating to this Plan except to the extent it is superseded by the laws
of the United States.

     8.5 Notices.  All notices or other  communications  by a Participant to the
Employer under or in connection  with the Plan shall be deemed to have been duly
given when received in the form specified by the Employer at the location, or by
the person, designated by the Employer for the receipt thereof.

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<PAGE>

     8.6 Interpretation.

         (A) If  any provision of the Plan is held invalid or unenforceable, its
invalidity  or  unenforceability  shall not affect any other  provisions  of the
Plan,  and the Plan will be construed  and enforced as if the  provision had not
been included in it.

         (B) Unless  the context  clearly  indicates  otherwise,  the  masculine
gender shall include the feminine,  the singular  shall include the plural,  and
the plural shall include the singular.

         (C) Article  and Section headings are for convenient reference only and
shall not be deemed to be part of the substance of this instrument or in any way
to enlarge or limit the contents of any Article or Section.

IN WITNESS WHEREOF,  Downey Savings and Loan  Association,  F.A. has caused this
instrument to be executed by its duly authorized officers.

SPONSORING EMPLOYER:

DOWNEY SAVINGS AND LOAN ASSOCIATION, F.A.

By: /s/ Stephen W. Prough
   ------------------------------------------ 
     Stephen W. Prough
     President and Chief Executive Of Officer

By:  /s/ Thomas E. Prince
   ------------------------------------------ 
     Thomas E. Prince, EVP
 Chief Financial Officer                \

By:  /s/ JoLene M. Bryant
   ------------------------------------------ 
     JoLene M. Bryant, SVP
     Director of Human Resources

Date:    October 11, 1996
     ---------------------------------------- 

                                       10

<PAGE>

                                                                    Exhibit A
                    DOWNEY SAVINGS AND LOAN ASSOCIATION, F.A.
                       STOCK PURCHASE PLAN ENROLLMENT FORM

If you would like to participate in the Stock Purchase Plan, please complete (A)
& (B). If you are not interested in participating, please complete (C).

(A) AUTHORIZATION TO MAKE PAYROLL DEDUCTIONS
    ----------------------------------------

In accordance with and subject to rules governing  operation and distribution of
the Employee  Stock  Purchase Plan as set forth in the Plan Summary,  receipt of
which is acknowledged:

I hereby  authorize  the Payroll  Department  to deduct from my pay each payroll
period the amount of $__________.

Payroll  deductions  shall begin with the 1st pay period of the  calendar  month
following date of hire: (Circle One)
 Jan 1 Feb 1 Mar 1 Apr 1 May 1  Jun 1  Jul 1  Aug 1  Sep 1  Oct 1  Nov 1  Dec 1

I direct my deductions to the Downey  Savings  Employee  Stock Purchase Plan for
the purpose of buying Downey stock.

================================================================================
(B) DESIGNATION OR CHANGE OF BENEFICIARY
    ------------------------------------

I hereby  designate  the  following  person as my  beneficiary  to  receive  all
proceeds  under the Downey  Savings and Loan  Association,  F.A.  Employee Stock
Purchase Plan in the event of my death.

--------------------------------------    --------------------------------------
Name                                      Relationship

This designation supersedes all previous beneficiary designations.

--------------------------------------    --------------------------------------
Employee Signature                        Date

--------------------------------------    --------------------------------------
Employee Name (Please Print)              Social Security Number

----------------------------- --------    ------------------         -----------
Branch/Department            #            Employee Number            Hire Date

================================================================================
(C)        I do not wish to participate in the Company's Employee Stock Purchase
    ------
Plan at this time.


--------------------------------------    --------------------------------------
Employee Signature                        Date


--------------------------------------
Employee Name (Please Print)

PLEASE FORWARD TO THE HUMAN RESOURCE DEPARTMENT
8/96


<PAGE>

                                                                      Exhibit B
                    DOWNEY SAVINGS AND LOAN ASSOCIATION, F.A.
                  STOCK PURCHASE PLAN CHANGE/AUTHORIZATION FORM

--------------------------------------------------------------------------------
Employee Name/Number:                 | Department Name/Number:
                                      |
--------------------------------------------------------------------------------
Street Address:                       | City, State. Zip:
                                      |
--------------------------------------------------------------------------------
Work Phone:                           | Social Security Number:
                                      |
--------------------------------------------------------------------------------
Home Phone:                           | Birthdate:
                                      |
--------------------------------------------------------------------------------
================================================================================
  __  SUSPEND PAYROLL DEDUCTION (CHANGE TO $0)

================================================================================
  __  CHANGE IN THE AMOUNT OF PAYROLL DEDUCTION TO $_________________

                    This change will take place (circle one):
 Jan 1 Feb 1 Mar 1 Apr 1 May 1  Jun 1  Jul 1  Aug 1  Sep 1  Oct 1  Nov 1  Dec 1
 _____(Year)
================================================================================
TERMINATION/WITHDRAWL OF STOCK FROM PLAN

  __  Check if terminating from plan

  __  Check if requesting a withdrawal of stock

      Number of shares to be withdrawn______________
      (Shares can be withdrawn in 50 share increments only)

Applies to Withdrawals and Terminations
---------------------------------------

You have three options  available for disbursement of your stock.  Please choose
one:

 ___ l)   An individual account in your name can be opened with Charles Schwab &
          Co.  if the  value  of your  stock  is  $500 or  more.  To  obtain  an
          application, please contact Schwab at (714) 759-8195 and indicate that
          you are a Downey  Savings  Stock  Purchase  Plan  participant.  Please
          indicate account number to process your request:

          Charles Schwab Account Number:________________

___  2)   The stock will be sold and a check for the proceeds  will be issued in
          your  name.  Brokerage  commissions  related to the stock sale will be
          deducted from the proceeds.

___  3)   A stock  certificate for the shares will be issued in your name. A fee
          to cover the costs of issuing the stock  certificate  will be deducted
          from your Stock Purchase Plan account balance.

================================================================================

--------------------------------------------------------------------------------
EMPLOYEE SIGNATURE                                          DATE

PLEASE FORWARD TO THE HUMAN RESOURCE DEPARTMENT                             8/96