TRUST AGREEMENT
                                       FOR
                    DOWNEY SAVINGS AND LOAN ASSOCIATION, F.A.
                     EMPLOYEES' RETIREMENT AND SAVINGS PLAN















     Fidelity  Management  Trust  Company,  its affiliates and employees may not
     provide you with legal or tax advice in  connection  with the  execution of
     this  document.  It should be reviewed by your attorney  and/or  accountant
     prior to execution.


                          CORPORATEplan for RETIREMENT
                                VOLUME SUBMITTER

                              PLAN DOCUMENT SYSTEMS

<PAGE>


                                TABLE OF CONTENTS


ARTICLE I
  DEFINITIONS; PURPOSE; RIGHTS OF
  ELIGIBLE EMPLOYEES AND BENEFICIARIES

    1.1 - Definitions
    1.2 - Purpose
    1.3 - Rights of Eligible Employees and Beneficiaries

ARTICLE II
  POWERS AND DUTIES OF THE TRUSTEE

    2.1 - Powers and Duties of Trustee
    2.2 - Selection of Investment Funds
    2.3 - Available Investment Funds
    2.4 - Participant Direction
    2.5 - Adjustment of Claims
    2.6 - Voting Rights
    2.7 - Participant Loans
    2.8 - Registration of Securities; Nominees
    2.9 - Agents, Attorneys, Actuaries, and Accountants
    2.10 - Deposit of Funds
    2.11 - Payment of Taxes; Indemnity
    2.12 - Records and Statements
    2.13 - Authority
    2.14 - Court Action Not Required
    2.15 - Reliance on Written Directions
    2.16 - Trustee's Performance
    2.17 - Counsel
    2.18 - Annuity Contracts
    2.19 - Sponsor Stock

ARTICLE III
  PAYMENTS OUT OF THE TRUST

    3.1 - Payments
    3.2 - Compensation and Expenses
    3.3 - Return of Contributions to the Sponsor

ARTICLE IV
  SUCCESSION TO THE TRUSTEESHIP

    4.1 - Resignation of the Trustee
    4.2 - Removal of the Trustee
    4.3 - Appointment of a Successor Trustee

                                      (i)

<PAGE>

ARTICLE V
  AMENDMENT

    5.1 - Right of Amendment
    5.2 - Limitation on Amendment

    ARTICLE VI
  MISCELLANEOUS

    6.1 - Validity of Trust Agreement
    6.2 - No Guarantees
    6.3 - Duty to Furnish Information
    6.4 - Federal Income Tax Withholding
    6.5 - Parties Bound
    6.6 - Indemnification by Sponsor
    6.7 - Bonding Requirements
    6.8 - Separate Trust or Fund for Existing Plan Assets


                                      (ii)

<PAGE>


                                    PREAMBLE


THIS Trust  Agreement  is entered  into by and between  Downey  Savings and Loan
Association,  F.A. (the  "Sponsor") and Fidelity  Management  Trust  Company,  a
corporation  organized  and  operating  under  the laws of the  Commonwealth  of
Massachusetts, and authorized to carry on a trust business (the "Trustee");

WHEREAS,  the Sponsor has adopted the Downey Savings and Loan Association,  F.A.
Employees'  Retirement and Savings Plan (the "Plan") for the benefit of eligible
employees and their beneficiaries; and

WHEREAS,  the Sponsor desires to establish a trust for the exclusive  benefit of
eligible employees and their beneficiaries to hold assets of the Plan; and

WHEREAS, the Trustee agrees to act as trustee of said trust; and

WHEREAS,  the  Sponsor  and any person  designated  by the  Sponsor  pursuant to
Article XVIII of the Plan,  serves as a named fiduciary of the Plan for purposes
of Section 402(a)(2) of ERISA (the "Named Fiduciary");

NOW,  THEREFORE,  the parties  agree that  effective as of October 1, 1997,  the
Trustee shall hold all funds and other property from time to time contributed or
transferred to it pursuant to the provisions of the Plan,  together with all the
increments,  proceeds,  investments and reinvestments thereof, in trust, for the
uses and purposes and upon the terms and conditions hereinafter set forth.


                                       1
<PAGE>

                                    ARTICLE I
                    DEFINITIONS; PURPOSE; RIGHTS OF ELIGIBLE
                           EMPLOYEES AND BENEFICIARIES


1.1 - DEFINITIONS

For all purposes of this Trust  Agreement,  the terms  defined in the Plan shall
have the  meanings  therein set forth,  unless,  as the case may be, a different
meaning is clearly required by the context hereof.

1.2 - PURPOSE

The Trust is established  to provide  retirement and other benefits for eligible
employees and their  beneficiaries.  Except as provided in Section 3.3, prior to
the satisfaction of all liabilities  under the Plan, no part of the Trust assets
may be applied to any purpose other than  providing  benefits under the Plan and
for defraying expenses of administering the Plan and the Trust.

1.3 - RIGHTS OF ELIGIBLE EMPLOYEES AND BENEFICIARIES

The rights of eligible  employees  and their  beneficiaries  shall be determined
solely under the Plan.


                                       2
<PAGE>

                                   ARTICLE II
                        POWERS AND DUTIES OF THE TRUSTEE


2.1 - POWERS AND DUTIES OF TRUSTEE

In the administration of the Trust, the Trustee shall have the powers and duties
set forth in this  Article II,  in addition  to all powers and duties  otherwise
expressly set forth in this Trust Agreement.  Subject to the other provisions of
this Agreement, the Trustee is empowered:

(a)  to  invest  and  reinvest  all or any  part of Trust  units  or the  Trust,
     including  both  principal  and  income,  in  securities  pursuant  to this
     Agreement;

(b)  to purchase  annuities  and hold and retain such  contract or  contracts as
     part of the Trust;

(c)  to invest  and  reinvest  all or any part of the Trust  under an  insurance
     contract or contracts that contain provisions  relating to a specified rate
     of return on such investment;

(d)  to sell,  lease,  exchange,  or otherwise dispose of all or any part of the
     Trust at such prices, upon such terms and conditions, and in such manner as
     it shall determine, including the right to surrender an annuity contract or
     contracts at any time held in the Trust;

(e)  to exercise, buy, or sell rights of conversion or subscription;

(f)  to enter into or oppose any plan of consolidation,  merger, reorganization,
     capital readjustment,  or liquidation of any corporation or other issuer of
     securities  held  hereunder  (including  any plan for the sale,  lease,  or
     mortgage of any of its property or the  adjustment or liquidation of any of
     its indebtedness)  and, in connection with any such plan, to enter into any
     security  holders'  trust  agreement,  to  deposit  securities  under  such
     agreement,  and to pay assessments or  subscriptions  from the other assets
     held hereunder;

(g)  to  retain  in cash or in forms of  investment  otherwise  unproductive  of
     income  such  portion  of  the  Trust  as  determined  by  the  Sponsor  is
     necessitated  by the cash  requirements  of the Trust;  provided,  however,
     that, to the maximum extent feasible,  such amounts shall be held which are
     productive  of  income  but  are  sufficiently  liquid  to meet  such  cash
     requirements;



                                       3
<PAGE>


(h)  to deposit securities held hereunder in any depository;

(i)  to transfer  to and invest all or any  part of the Trust in any  collective
     investment  trust which  constitutes  an exempt trust within the meaning of
     the Code and which is then maintained by a bank or trust company, or any of
     its  affiliates,  when such bank or trust  company  is acting as Trustee or
     agent for the  Trustee;  provided  that the  instrument  establishing  such
     collective investment trust, as amended from time to time, shall govern any
     investment therein, and is hereby made a part of this Trust Agreement as if
     fully set forth herein;

     provided  further,  that, to the extent that the Named Fiduciary selects as
     an investment  option the Managed  Income  Portfolio of the Fidelity  Group
     Trust for Employee  Benefit Plans (the "Group  Trust"),  the Sponsor hereby
     agrees to the terms of the Group  Trust and adopts  said terms as a part of
     this Trust Agreement and acknowledges that it has received from the Trustee
     a copy of the Group Trust, the Declaration of Separate Fund for the Managed
     Income  Portfolio  of the Group  Trust,  and the  Circular  for the Managed
     Income Portfolio;

(j)  pursuant  to the  direction  of the  Administrator,  to  purchase  and sell
     interests  in  a  registered   investment   company  registered  under  the
     Investment Company Act of 1940, including those for which the Trustee or an
     affiliate of the Trustee serves as investment  advisor or  sub-advisor  and
     receives  compensation  from  the  registered  investment  company  for its
     services as investment advisor or sub-advisor, provided that the applicable
     conditions of Department of Labor Transaction Exemption 77-4 are satisfied;
     and

(k)  to  transfer  to and invest all or any part of the Trust in any trust which
     forms a part of a  pension  or  profit-sharing  plan  of an  Employer  or a
     Related Company  qualified  under the Code and which  constitutes an exempt
     trust  within  the  meaning  of the  Code;  provided  that  the  instrument
     establishing  such trust,  as amended  from time to time,  shall govern any
     investment therein, and is hereby made a part of this Trust Agreement as if
     fully set forth herein.

The term  "securities",  wherever  used in this Trust  Agreement,  shall include
common and preferred  stocks,  contractual  obligations  of every kind,  whether
secured or  unsecured,  equitable  interests in real or personal  property,  and
intangible property of every description and howsoever evidenced.




                                       4
<PAGE>

2.2 - SELECTION OF INVESTMENT FUNDS

The Trustee shall have no  responsibility  for the selection of Investment Funds
under  the  Trust  and shall  not  render  investment  advice  to any  person in
connection with the selection of such options.

2.3 - AVAILABLE INVESTMENT FUNDS

The Named Fiduciary shall direct the Trustee as to (i) the Investment  Funds the
Trust shall be invested in during the Participant  recordkeeping  reconciliation
period, and (ii) the Investment Funds in which Plan Participants  and/or Sponsor
may invest in,  subject to the following  limitations.  The Named  Fiduciary may
determine to offer as Investment Funds only (i) securities  issued by registered
investment  companies  registered  under  the  Investment  Company  Act of  1940
("Mutual Funds"), (ii) notes evidencing loans to Plan Participants in accordance
with the terms of the Plan, (iii) collective  investment funds maintained by the
Trustee for qualified plans, and (iv) equity securities issued by the Sponsor or
an  affiliate  which are  publicly-traded  and which  are  "qualifying  employer
securities"  within the meaning of Section 407(d)(5) of ERISA ("Sponsor Stock");
provided,  however,  that the  Trustee  shall be  considered  a  fiduciary  with
investment  discretion  only with  respect to Plan assets  that are  invested in
collective  investment  funds maintained by the Trustee for qualified plans. The
Mutual Funds and/or collective  investment funds initially selected by the Named
Fiduciary are identified in Schedule A attached hereto.  The Named Fiduciary may
add additional Mutual Funds and/or collective  investment funds with the consent
of the Trustee and upon mutual  amendment of Schedule A of this Trust Agreement.
The Sponsor hereby  acknowledges that it has received from the Trustee a copy of
the  prospectus  for each Mutual Fund selected by the Named  Fiduciary as a Plan
Investment Fund.

2.4 - PARTICIPANT DIRECTION

Each Plan Participant  shall direct the Trustee in which  Investment  Fund(s) to
invest the assets in the Participant's Separate Account as provided in the Plan.
Such  directions  may be  made  by  Plan  Participants  by use of the  telephone
exchange  system  maintained  for such purposes by the Trustee or its agent,  in
accordance with written telephone  exchange  guidelines set forth in the service
agreement  between  the Sponsor  and  Fidelity  Management  Trust  Company  (the
"Service  Agreement").  In the event that the Trustee  fails to receive a proper
direction, the assets shall be invested in the securities of the Mutual Fund set
forth for such purpose in the Service Agreement, until the Trustee



                                       5
<PAGE>

receives  a proper  direction.  Additionally,  in the  event  any  assets in the
Participant's  Separate Account are not subject to the Participant's  investment
direction,  such  assets  shall  be  invested  as  directed  by the  Sponsor  in
accordance with the Service Agreement.

2.5 - ADJUSTMENT OF CLAIMS

Subject to the consent of the Sponsor,  the Trustee  is empowered to  compromise
and adjust any and all claims,  debts, or obligations in favor of or against the
Trust,  whether  such  claims  be in  litigation  or not,  upon  such  terms and
conditions  as it shall  determine,  and to reduce the rate of  interest  on, to
extend or otherwise modify,  to foreclose upon default,  or otherwise to enforce
any such claim, debt, or obligation.

2.6 - VOTING RIGHTS

At the time of mailing of notice of each annual or special stockholders' meeting
of any Mutual  Fund,  the Trustee  shall send a copy of the notice and all proxy
solicitation  materials  to each  Participant  who has shares of the Mutual Fund
credited to the Participant's Separate Account, together with a voting direction
form for return to the Trustee or designee. The Participant shall have the right
to direct  the  Trustee  as to the  manner in which the  Trustee  is to vote the
shares  credited  to  the  Participant's   Separate  Account  (both  vested  and
unvested),  except as otherwise  provided in this Section 2.6. The Trustee shall
vote the shares as  directed by the  Participant;  provided,  however,  that the
Trustee may, in the absence of instructions, vote "present" for the sole purpose
of  allowing  such  shares  to be  counted  for  establishment  of a quorum at a
shareholders' meeting. The Sponsor shall have the right to direct the Trustee as
to the manner in which the Trustee is to vote the shares of the Mutual  Funds in
the Trust during the  Participant  recordkeeping  reconciliation  period and any
shares credited to the  Participant's  Separate Account which are not subject to
Participant direction.  With respect to all rights other than the right to vote,
the Trustee  shall follow the  directions  of the Named  Fiduciary.  The Trustee
shall have no duty to solicit directions from Participants or the Sponsor.

2.7 - PARTICIPANT LOANS

If provided  under the terms of the Plan,  the Sponsor may direct the Trustee in
writing  to  establish  a  separate  loan  Investment  Fund  with  respect  to a
Participant  and to  transfer  assets  from any of the other  Trust Funds to the
separate loan Investment Fund for the purpose of making loans to the Participant
as provided in



                                       6
<PAGE>

the Plan. The Trustee shall be required to follow the directions so given to it;
provided,  however,  that the  Trustee  shall  not be  required  to  follow  any
directions which would result in a breach of the Trustee's fiduciary duties.

2.8 - REGISTRATION OF SECURITIES; NOMINEES

The Trustee is empowered to register  securities in its own name, or in the name
of its  nominee,  without  disclosing  the trust,  or to hold the same in bearer
form,  and to take title to other property in its own name or in the name of its
nominee without disclosing the trust; provided,  however, that the Trustee shall
be responsible for the acts of its nominees.

2.9 - AGENTS, ATTORNEYS, ACTUARIES, AND ACCOUNTANTS

The Trustee is empowered to employ such agents,  attorneys  (including attorneys
who may be of counsel for the Sponsor),  actuaries,  and  accountants  as it may
deem  necessary  or proper  in  connection  with its  duties  hereunder,  and to
determine  and pay the  reasonable  compensation  and  expenses of such  agents,
attorneys, actuaries, and accountants.

2.10 -   DEPOSIT OF FUNDS

The Trustee is empowered to deposit funds,  pending  investment or  distribution
thereof,  in the commercial or savings  department of any bank, savings and loan
association  or trust  company  supervised  by the  United  States or a state or
agency  thereof;  and it is authorized to accept such  regulations  covering the
withdrawal  of funds so  deposited  as it shall deem  proper.  The  Trustee  may
deposit all or any part of the Trust,  including both principal and interest, in
the banking  department  of the Trustee (and any of its  affiliates)  and of any
other  fiduciary  or  party-in-interest  with  respect to the  Trust;  provided,
however, that the deposits bear a reasonable rate of interest and are authorized
pursuant to the provisions of Section 408 of ERISA.

2.11 -   PAYMENT OF TAXES; INDEMNITY

The Trustee is empowered to pay out of the Trust,  as a general charge  thereon,
any and all taxes of whatsoever  nature  assessed on or in respect to the Trust;
provided, however, that, if the Sponsor shall notify the Trustee in writing that
in the  opinion  of its  counsel  any such  tax is not  lawfully  assessed,  the
Trustee, if so requested by the Sponsor,  shall contest the validity of such tax
in any  manner  deemed  appropriate  by the  Sponsor  or its  counsel.  The word
"taxes",  as used  herein,  shall be deemed to include any interest or penalties
assessed in



                                       7
<PAGE>

respect to such taxes.  Unless the Trustee first shall have been  indemnified to
its  satisfaction  by the Sponsor,  the Trustee shall not be required to contest
the validity of any tax, to  institute,  maintain,  or defend  against any other
action or  proceeding,  or to incur any other  expense  in  connection  with the
Trust, except to the extent that the Trust is sufficient therefor.

2.12 -   RECORDS AND STATEMENTS

The Trustee shall keep  accurate  records of all  receipts,  disbursements,  and
other  transactions   affecting  the  Trust  which,  together  with  the  assets
comprising  the  Trust  and  all  evidences  thereof,  shall  be  available  for
inspection or for the purpose of making copies or  reproductions  thereof by the
Sponsor or any of its duly authorized representatives.  The Trustee shall render
to the Sponsor at intervals agreed to by the Sponsor and the Trustee  statements
of receipts  and  disbursements  and of all  transactions  during the  preceding
interval affecting the Trust and a statement of all assets held in the Trust and
the investment performance of the Investment Funds.

2.13 -   AUTHORITY

The Trustee is authorized to execute and deliver any and all  instruments and to
perform  any and all acts  which  may be  necessary  or  proper  to enable it to
discharge its duties under this Trust  Agreement and to carry out the powers and
authority  conferred  upon  it.  The  Sponsor   specifically   acknowledges  and
authorizes  that  affiliates  of  the  Trustee  may  act  as  its  agent  in the
performance of ministerial,  non-fiduciary  duties under the Trust. The expenses
and compensation of such agent shall be paid by the Trustee.

2.14 -   COURT ACTION NOT REQUIRED

All the  powers  and  authority  herein  conferred  upon  the  Trustee  shall be
exercised  by it without  the  necessity  of  applying to any court for leave or
confirmation.  No person, firm, or corporation dealing with the Trustee shall be
required to ascertain  whether the Trustee  shall have  obtained the approval of
any court or of any person  with  respect to any action  which it may propose to
take hereunder,  but every such person,  firm, or corporation shall be protected
in relying solely upon the deed, transfer, or assurance of the Trustee.

2.15 -   RELIANCE ON WRITTEN DIRECTIONS

Any written direction,  request,  approval, or other document signed in the name
of the Sponsor or the Administrator by a duly



                                       8
<PAGE>

authorized  individual  shall be  conclusively  deemed to constitute the written
direction,   request,  approval,  or  other  document  of  the  Sponsor  or  the
Administrator  and the Trustee shall not be liable for any loss, or by reason of
any breach,  arising from the  direction  unless it is clear on the  direction's
face that the actions to be taken under the direction would be prohibited by the
fiduciary  duty rules of  Section  404(a) of ERISA or would be  contrary  to the
terms of the Plan or this Trust Agreement.  The Trustee will be entitled to rely
on the latest  certificate it has received from the Sponsor or  Administrator as
to any  person or persons  authorized  to act for the  Sponsor or  Administrator
hereunder and to sign on behalf of the Sponsor or  Administrator  any directions
or  instructions,  until it receives from the Sponsor or  Administrator  written
notice that such authority has been revoked.

2.16 -   TRUSTEE'S PERFORMANCE

In the exercise of any of the powers and authority herein conferred upon it, the
Trustee  shall adhere at all times to the  fiduciary  standards  established  by
ERISA.

2.17 -   COUNSEL

The Trustee may consult with  counsel  selected by it, who may be of counsel for
the Sponsor,  as to any matters or questions arising hereunder,  and the opinion
of such counsel shall be full and complete  authority and  protection in respect
to any action  taken,  suffered,  or omitted by the Trustee in good faith and in
accordance with the opinion of such counsel.

2.18 -   ANNUITY CONTRACTS

Notwithstanding  any other  provision of this Trust Agreement or the Plan to the
contrary, the Administrator shall retain all discretionary power relating to any
annuity  contract  acquired by or delivered  to the Trustee.  As directed by the
Administrator,  the Trustee will acquire, hold and dispose of annuity contracts,
deliver  the  purchase  price,  and  exercise  any and all  rights,  privileges,
options,  and  elections  under  those  policies.  The  Trustee  will  be  fully
discharged with respect to any policy when it is delivered to the Administrator.

2.19 -   SPONSOR STOCK

Trust Investments in Sponsor Stock shall be made via the Sponsor Stock Fund (the
"Stock  Fund")  which shall  consist of shares of Sponsor  Stock and  short-term
liquid  investments  consisting of Mutual Fund shares or commingled money market
pool units as



                                       9
<PAGE>

agreed to by the Sponsor and the  Trustee,  necessary to satisfy the Fund's cash
needs for transfers and payments. A cash target range shall be maintained in the
Stock  Fund.  Such  target  range may be  changed as agreed to in writing by the
Sponsor and the Trustee. The Trustee is responsible for ensuring that the actual
cash held in the Stock Fund falls  within the agreed upon range over time.  Each
participant's proportional interest in the Stock Fund shall be measured in units
of  participation,  rather  than  shares of  Sponsor  Stock.  Such  units  shall
represent  a  proportionate  interest  in all  assets of the Stock  Fund,  which
includes  shares  of  Sponsor  Stock,   short-term  investments  and  at  times,
receivables  for  dividends  and/or  Sponsor Stock sold and payables for Sponsor
Stock purchased. A Net Asset Value ("NAV") per unit will be determined daily for
each cash unit  outstanding  of the Stock Fund.  The return  earned by the Stock
Fund will represent a combination of the dividends paid on the shares of Sponsor
Stock  held by the Stock  Fund,  gains or losses  realized  on sales of  Sponsor
Stock,  appreciation  or depreciation in the market price of those shares owned,
and interest on the  short-term  investments  held by the Stock Fund.  Dividends
received by the Stock Fund are reinvested in additional shares of Sponsor Stock.
Investments in Sponsor Stock shall be subject to the following limitations:

(a)  Acquisition  Limit.  Pursuant  to the Plan,  the Trust may be  invested  in
     Sponsor Stock to the extent necessary to comply with investment  directions
     under Section 2.4 of this Agreement.

(b)  Fiduciary Duty of Named Fiduciary.  The Named Fiduciary shall  continuously
     monitor the suitability under the fiduciary duty rules of section 404(a)(1)
     of ERISA (as  modified  by section  404(a)(2)  of ERISA) of  acquiring  and
     holding Sponsor Stock.  The Trustee shall not be liable for any loss, or by
     reason  of any  breach,  which  arises  from the  directions  of the  Named
     Fiduciary  with respect to the  acquisition  and holding of Sponsor  Stock,
     unless it is clear on their face that the  actions to be taken  under those
     directions  would be prohibited by the  foregoing  fiduciary  duty rules or
     would be contrary to the terms of the Plan or this Agreement.

(c)  Execution  of Purchases  and Sales.  Purchases  and sales of Sponsor  Stock
     (other than for exchanges)  shall be made on the open market on the date on
     which the Trustee  receives from the Sponsor in good order all  information
     and  documentation  necessary to accurately effect such purchases and sales
     (or, in the case of purchases, the subsequent date on which the Trustee has
     received a wire transfer of the



                                       10
<PAGE>

     funds necessary to make such purchases). Such general rules shall not apply
     in the following circumstances:

     (i)  If the Trustee is unable to determine the number of shares required to
          be purchased or sold on such day;

     (ii) If the  Trustee  is unable  to  purchase  or sell the total  number of
          shares  required  to be  purchased  or sold on such day as a result of
          market conditions; or

     (iii)If  the  Trustee  is  prohibited  by  the   Securities   and  Exchange
          Commission,  the New York Stock Exchange, or any other regulatory body
          from  purchasing  or selling  any or all of the shares  required to be
          purchased or sold on such day.

     In the event of the occurrence of the circumstances described in (i), (ii),
     or (iii) above,  the Trustee shall  purchase or sell such shares as soon as
     possible  thereafter  and shall  determine  the price of such  purchases or
     sales  to be the  average  purchase  or  sales  price  of all  such  shares
     purchased or sold, respectively. The Trustee may follow directions from the
     Named  Fiduciary  to deviate from the above  purchase  and sale  procedures
     provided that such direction is made in writing by the Named Fiduciary.

(d)  Purchases  and Sales from or to  Sponsor.  If  directed  by the  Sponsor in
     writing prior to the trading date, the Trustee may purchase or sell Sponsor
     Stock  from or to the  Sponsor  if the  purchase  or  sale is for  adequate
     consideration  (within  the  meaning  of  Section  3(18) of  ERISA)  and no
     commission is charged.  If Sponsor  contributions or contributions  made by
     the Sponsor on behalf of the Participants under the Plan are to be invested
     in Sponsor Stock, the Sponsor may transfer Sponsor Stock in lieu of cash to
     the Trust.  In either case, the number of shares to be transferred  will be
     determined by dividing the total amount of Sponsor Stock to be purchased or
     sold by the closing price of the Sponsor  Stock on any national  securities
     exchange on the trading date.

(e)  Securities Law Reports. The Named Fiduciary shall be responsible for filing
     all reports required under Federal or state securities laws with respect to
     the Trust's ownership of Sponsor Stock; including,  without limitation, any
     reports  required under Section 13 or 16 of the Securities  Exchange Act of
     1934 and shall immediately notify the Trustee in writing of any requirement
     to stop  purchases  or sales of  Sponsor  Stock  pending  the filing of any
     report. The Trustee



                                       11
<PAGE>

     shall  provide  to the Named  Fiduciary  such  information  on the  Trust's
     ownership of Sponsor Stock as the Named Fiduciary may reasonably request in
     order to comply with Federal or state securities laws.

(f)  Voting and  Tender  Offers.  Notwithstanding  any other  provision  of this
     Agreement,  the  provisions  of this  Section  shall  govern the voting and
     tendering of Sponsor Stock.  Each  Participant  shall be designated a named
     fiduciary under ERISA with respect to shares of Sponsor Stock  attributable
     to units in the Sponsor Stock Fund credited to the  Participant's  Separate
     Account not acquired at the direction of the Participant in accordance with
     Section 404(c) of ERISA. The Sponsor,  after consultation with the Trustee,
     shall provide and pay for all printing, mailing, tabulation and other costs
     associated with the voting and tendering of Sponsor Stock.

     (i)  Voting.

          (I)  When the issuer of the Sponsor  Stock  prepares for any annual or
               special meeting, the Sponsor shall notify the Trustee thirty (30)
               days in advance of the  intended  record  date and shall  cause a
               copy of all  materials to be sent to the Trustee.  Based on these
               materials the Trustee shall prepare a voting instruction form. At
               the  time  of  mailing  of  notice  of  each  annual  or  special
               stockholders'  meeting of the issuer of the  Sponsor  Stock,  the
               Sponsor   shall  cause  a  copy  of  the  notice  and  all  proxy
               solicitation  materials  to be sent to each  Participant  with an
               interest in Sponsor  Stock held in the Trust,  together  with the
               foregoing  voting  instruction form to be returned to the Trustee
               or its designee. The form shall show the proportional interest in
               the  number  of full  and  fractional  shares  of  Sponsor  Stock
               credited  to the  Participant's  Sub-Accounts  held in the  Stock
               Fund.  The Sponsor  shall  provide the Trustee with a copy of any
               materials  provided to the Participants and shall (if the mailing
               is not handled by the Trustee)  certify that the  materials  have
               been mailed or otherwise sent to Participants.

          (II) Each  Participant  with an  interest in the Stock Fund shall have
               the right to direct  the  Trustee  as to the  manner in which the
               Trustee is to vote (including not to vote) that number



                                       12
<PAGE>

               of  shares  of  Sponsor  Stock   reflecting  such   Participant's
               proportional   interest  in  the  Stock  Fund  (both  vested  and
               unvested).   Directions   from  a  Participant   to  the  Trustee
               concerning the voting of Sponsor Stock shall be  communicated  in
               writing,  or by mailgram or similar means. These directions shall
               be held in confidence by the Trustee and shall not be divulged to
               the  Sponsor,  or any officer or employee  thereof,  or any other
               person.  Upon its receipt of the  directions,  the Trustee  shall
               vote the shares of Sponsor  Stock  reflecting  the  Participant's
               proportional  interest  in the  Stock  Fund  as  directed  by the
               Participant.  The Trustee  shall not vote shares of Sponsor Stock
               reflecting  a  Participant's  proportional  interest in the Stock
               Fund for which it has received no direction from the Participant.

     (ii) Tender Offers.


          (I)  Upon  commencement  of a tender offer for any securities  held in
               the Trust that are Sponsor  Stock,  the Sponsor shall notify each
               Participant  with an interest in such Sponsor Stock of the tender
               offer and utilize its best efforts to timely  distribute or cause
               to be distributed to the Participant the same information that is
               distributed  to  shareholders  of the issuer of Sponsor  Stock in
               connection with the tender offer,  and, after consulting with the
               Trustee,  shall  provide  and  pay  for  a  means  by  which  the
               Participant  may direct the Trustee  whether or not to tender the
               Sponsor Stock reflecting such Participant's proportional interest
               in the Stock Fund (both vested and  unvested).  The Sponsor shall
               provide the Trustee with a copy of any  material  provided to the
               Participants  and shall (if the  mailing  is not  handled  by the
               Trustee)  certify to the  Trustee  that the  materials  have been
               mailed or otherwise sent to Participants.

          (II) Each  Participant  shall have the right to direct the  Trustee to
               tender or not to  tender  some or all of the  shares  of  Sponsor
               Stock reflecting such Participant's proportional



                                       13
<PAGE>

               interest in the Stock Fund (both vested and unvested). Directions
               from a  Participant  to the  Trustee  concerning  the  tender  of
               Sponsor Stock shall be communicated in writing, or by mailgram or
               such  similar  means as is  agreed  upon by the  Trustee  and the
               Sponsor under the preceding paragraph.  These directions shall be
               held in  confidence  by the  Trustee and shall not be divulged to
               the  Sponsor,  or any officer or employee  thereof,  or any other
               person,  except  to the  extent  that  the  consequences  of such
               directions are reflected in reports regularly communicated to any
               such persons in the  ordinary  course of the  performance  of the
               Trustee's  services  hereunder.  The Trustee  shall tender or not
               tender  shares of Sponsor  Stock as directed by the  Participant.
               The Trustee shall not tender shares of Sponsor Stock reflecting a
               Participant's  proportional  interest in the Stock Fund for which
               it has received no direction from the Participant.

          (III)A Participant  who has directed the Trustee to tender some or all
               of the  shares of  Sponsor  Stock  reflecting  the  Participant's
               proportional interest in the Stock Fund may, at any time prior to
               the tender offer withdrawal date,  direct the Trustee to withdraw
               some or all of the tendered shares  reflecting the  Participant's
               proportional   interest,  and  the  Trustee  shall  withdraw  the
               directed  number of shares  from the  tender  offer  prior to the
               tender offer  withdrawal  deadline.  A  Participant  shall not be
               limited as to the number of directions to tender or withdraw that
               the Participant may give to the Trustee.

          (IV) A direction by a  Participant  to the Trustee to tender shares of
               Sponsor Stock reflecting the Participant's  proportional interest
               in the Stock  Fund  shall not be  considered  a written  election
               under  the  Plan  by  the   Participant  to  withdraw,   or  have
               distributed,  any or all of his withdrawable  shares. The Trustee
               shall  credit to each  proportional  interest of the  Participant
               from which the tendered  shares were taken the proceeds  received
               by the  Trustee  in  exchange  for the  shares of  Sponsor  Stock
               tendered from that interest. Pending



                                       14
<PAGE>

               receipt  of  direction  (through  the  Administrator)   from  the
               Participant or the Named  Fiduciary,  as provided in the Plan, as
               to which of the remaining Investment Funds the proceeds should be
               invested in, the Trustee  shall invest the proceeds in the Mutual
               Fund set forth for such purposes in the Service Agreement.

(g)  Shares Credited.  For all purposes of this Section, the number of shares of
     Sponsor  Stock  deemed   "credited"  or  "reflected"  to  a   Participant's
     proportional  interest  shall  be  determined  as of  the  last  proceeding
     Valuation Date. The trade date is the date the transaction is valued.

(h)  General. With respect to all rights other than the right to vote, the right
     to tender,  and the right to withdraw shares  previously  tendered,  in the
     case of Sponsor Stock credited to a Participant's  proportional interest in
     the Stock Fund, the Trustee shall follow the directions of the  Participant
     and if no  such  directions  are  received,  the  directions  of the  Named
     Fiduciary.  The  Trustee  shall  have no duty to  solicit  directions  from
     Participants.

(i)  Conversion.  All  provisions  in this  Section 2.19 shall also apply to any
     securities received as a result of a conversion to Sponsor Stock.


                                       15
<PAGE>

                                   ARTICLE III
                            PAYMENTS OUT OF THE TRUST


3.1 - PAYMENTS

The Trustee  shall make  payments from the Trust to such persons in such amounts
and at such times as the  Sponsor or the  Administrator  from time to time shall
direct in writing to be payable under the Plan.

3.2 - COMPENSATION AND EXPENSES

The Trustee shall be entitled to such reasonable  compensation  for its services
as the  Sponsor  and the  Trustee  from time to time shall  agree,  and shall be
entitled to reimbursement for all reasonable expenses incurred by the Trustee in
the administration of the Trust. All compensation,  if applicable,  and expenses
of  administering  the Plan or Trust,  including fees assessed against the Plan,
the Trust, the Sponsor, or the Administrator,  shall be paid out of the Trust as
a general charge thereon, unless the Sponsor elects to make payment thereof.

3.3 - RETURN OF CONTRIBUTIONS TO THE SPONSOR

Upon written  notice of the Sponsor,  the Trustee  shall pay over to the Sponsor
the  amount  of any  contribution  (i) made  under a  mistake  of fact,  or (ii)
disallowed as a deduction  contribution  under Section 404 of the Code, or (iii)
with respect to which the Plan does not qualify  initially  under Section 401(a)
of the Code or the Trust is not exempt under  Section  501(a) of the Code. In no
event  shall the  Trustee  make such  payment  later than one year after (i) the
payment of the  contribution,  or (ii) the  disallowance of the deduction to the
extent disallowed,  or (iii) the date of denial of the initial  qualification of
the Plan.


                                       16
<PAGE>

                                   ARTICLE IV
                          SUCCESSION TO THE TRUSTEESHIP


4.1 - RESIGNATION OF THE TRUSTEE

Any Trustee acting  hereunder may resign at any time by giving notice in writing
to the Sponsor at least 60 days before such resignation is to become  effective,
unless the Sponsor shall accept as adequate a shorter notice.

4.2 - REMOVAL OF THE TRUSTEE

The Sponsor may, with or without cause,  remove any Trustee acting  hereunder by
giving  notice in writing to the Trustee at least 60 days before such removal is
to become  effective,  unless the  Trustee  shall  accept as  adequate a shorter
notice.

4.3 - APPOINTMENT OF A SUCCESSOR TRUSTEE

If for any reason a vacancy should occur in the trusteeship, a successor Trustee
shall  forthwith be appointed by the Sponsor.  Any successor  Trustee  appointed
hereunder shall execute,  acknowledge,  and deliver to the Sponsor an instrument
in  writing  accepting  such  appointment  hereunder.   Such  successor  Trustee
thereupon shall become vested with the same title to the property comprising the
Trust,  and shall have the same powers and duties with respect  thereto,  as are
hereby vested in the original Trustee. The predecessor Trustee shall execute all
such  instruments  and perform all such other acts as the  successor  Trustee or
Sponsor  shall  reasonably  request to effectuate  the  provisions  hereof.  The
successor  Trustee shall have no duty to inquire into the  administration of the
Trust for any period prior to its succession.


                                       17
<PAGE>

                                    ARTICLE V
                                    AMENDMENT


5.1 - RIGHT OF AMENDMENT

The Sponsor  reserves the right,  at its sole  discretion,  from time to time to
amend the provisions of this Trust Agreement in any manner;  provided,  however,
that the  powers,  duties,  and  immunities  of the  Trustee  under  this  Trust
Agreement shall not be substantively  changed without its written approval.  Any
such  amendment  shall be by written  instrument  executed  by the  Sponsor  and
delivered to the Trustee, and may be made retroactively if in the opinion of the
Sponsor such amendment is necessary to enable the Plan and the Trust to meet the
requirements   of the  Code   (including  the  regulations  and  rulings  issued
thereunder) or the requirements of any governmental authority.

5.2 - LIMITATION ON AMENDMENT

The Sponsor shall make no amendment to this Trust  Agreement that results in the
forfeiture  or  reduction  of  the  accrued   benefit  of  any   Participant  or
Beneficiary.  Notwithstanding the preceding  sentence,  nothing herein contained
shall  restrict  the  right to amend  the  provisions  of this  Trust  Agreement
relating  to the  administration  of the Plan and the Trust.  Moreover,  no such
amendment  shall be made under this  Article  which shall permit any part of the
Trust to revert to the  Sponsor or any  Related  Company or to be used for or be
diverted to purposes other than for the exclusive  benefit of  Participants  and
Beneficiaries.


                                       18
<PAGE>

                                   ARTICLE VI
                                  MISCELLANEOUS


6.1 - VALIDITY OF TRUST AGREEMENT

The  validity  of this  Trust  Agreement  shall be  determined  and  this  Trust
Agreement shall be construed in accordance with the laws of the  Commonwealth of
Massachusetts,  except to the extent that they are  superseded by Section 514 of
ERISA.  The  invalidity or  illegality of any provision of this Trust  Agreement
shall not affect the validity or legality of any other part hereof.

6.2 - NO GUARANTEES

Neither  the  Sponsor  nor  the  Trustee  guarantees  the  Trust  from  loss  or
depreciation.

6.3 - DUTY TO FURNISH INFORMATION

The  Administrator,  the Employers,  and the Trustee shall furnish to any of the
others any documents,  reports,  returns,  statements, or other information that
such other  reasonably  deems  necessary to perform its duties imposed under the
Plan or this Trust Agreement or otherwise imposed by law.

6.4 - FEDERAL INCOME TAX WITHHOLDING

The Trustee shall not be responsible  for  withholding  federal and state income
tax from  distributions  unless the Administrator  provides the Trustee with the
following information concerning each distribution:

(a)  The name,  address,  and social security number of the Participant (and the
     Participant's  spouse or other  Beneficiary if  applicable).  By forwarding
     such  information,  the  Administrator  shall  be  deemed  hereby  to  have
     certified the accuracy of such information.

(b)  A statement of the reason for the payment or distribution and directions as
     to  the  type  of  distribution  (e.g.,  eligible  rollover   distribution)
     requested.

If the  Administrator  does not provide the Trustee with the above  information,
the  responsibility  for  withholding  federal  and state  income  taxes and the
reporting thereof shall remain with the Administrator.




                                       19
<PAGE>

6.5 - PARTIES BOUND

This Trust Agreement shall be binding upon the parties hereto, all Participants,
and persons  claiming  under or through them  pursuant to the Plan,  and, as the
case may be, the heirs, executors,  administrators,  successors,  and assigns of
each of them.

6.6 - INDEMNIFICATION BY SPONSOR

The  Sponsor  shall  indemnify  and save  harmless  from and against any and all
liability  to which the Trustee may be subjected by reason of any act or conduct
in its capacity as Trustee,  including all expenses  reasonably  incurred in its
defense,  except for losses or expenses resulting from the negligence or willful
misconduct of the Trustee or its affiliates.

6.7 - BONDING REQUIREMENTS

Every fiduciary, except a bank or an insurance company, unless exempted by ERISA
and the regulations  thereunder,  shall be bonded in an amount not less than ten
percent of the funds such fiduciary handles; provided, however, that the minimum
bond shall be $1,000 and the maximum bond shall be $500,000. The amount of funds
handled  shall be determined at the beginning of each Plan Year by the amount of
funds  handled  by  such  person,  group,  or  class  to be  covered  and  their
predecessors,  if any,  during  the  preceding  Plan  Year,  or if  there  is no
preceding  Plan Year,  then by the amount of the funds to be handled  during the
then current Plan Year.  The bond shall  provide  protection to the Plan against
any loss by reason of acts of fraud or dishonesty  by the fiduciary  alone or in
connivance with others.  The surety shall be a corporate surety company (as such
term is used in Section  412(a)(2)  of  ERISA),  and the bond shall be in a form
approved by the  Secretary  of Labor.  Notwithstanding  anything to the contrary
contained in the Plan or this Trust  Agreement,  the cost of such bonds shall be
an expense of and may, at the election of the Sponsor, be paid from the Trust or
by the Sponsor.

6.8 - SEPARATE TRUST OR FUND FOR EXISTING PLAN ASSETS

With the  consent  of the  Trustee,  an  Employer  may  maintain a trust or fund
(including a group annuity contract) under the Plan separate from the Trust Fund
to hold Plan assets acquired prior to the effective date of this Trust Agreement
which are not among the available  Investment  Funds provided under Section 2.3.
The  duties  and   responsibilities   of  the  trustee  of  the  separate  trust
(hereinafter referred to as the "trustee") shall be provided by a separate trust
agreement between the Employer and the trustee.



                                       20
<PAGE>


Notwithstanding  the  preceding  paragraph,  the Trustee or an  affiliate of the
Trustee may agree in writing to provide  ministerial  recordkeeping  service for
guaranteed  investment  contracts  held in the separate  trust or fund. Any such
guaranteed  investment  contract  shall be valued as directed by the Employer or
the trustee.

The trustee shall be the owner of any insurance  contract purchased prior to the
effective date of this Trust Agreement. Any such insurance contract must provide
that the proceeds will be payable to the trustee;  provided,  however,  that the
trustee  shall be  required  to pay over all  proceeds  of the  contract  to the
Participant's  Beneficiary in accordance with the distribution provisions of the
Plan.  Under  no  circumstances  will  the  Trust  Fund  retain  any part of the
proceeds.  In the event of any  conflict  between  the terms of the Plan and the
terms of any  insurance  contract  held  hereunder,  the Plan  provisions  shall
control.

Any life  insurance  contracts  held in the Trust Fund or in the separate  trust
shall be subject to the provisions of Article IX of the Plan.


                                       21
<PAGE>



                                      * * *



         EXECUTED AT      Newport Beach                          ,
                     --------------------------------------------
  California           , this  18th day of   September   , 1997.
-----------------------       -----        --------------  ----              


                                      DOWNEY SAVINGS AND LOAN
                                      ASSOCIATION, F.A.
 


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



                                      FIDELITY MANAGEMENT TRUST COMPANY


                                      By     /s/ Bernadine C. Topazio  
                                         ------------------------------
                                         Title:


                                       22
<PAGE>



                                                       * * *



         EXECUTED AT      Newport Beach                          ,
                     --------------------------------------------
  California           , this  18th day of   September   , 1997.
-----------------------       -----        --------------  ----              


                                      DOWNEY SAVINGS AND LOAN
                                      ASSOCIATION, F.A.
 


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



                                      FIDELITY MANAGEMENT TRUST COMPANY


                                      By     /s/ Bernadine C. Topazio  
                                         ------------------------------
                                         Title:









                                       23
<PAGE>

                                   SCHEDULE A

                                INVESTMENT FUNDS


Participant accounts under the Trust shall be invested among the Mutual Funds or
collective  investment funds listed below pursuant to Participant and/or Sponsor
directions.

                Fund Name                            Fund Number
                ---------                            -----------

1)   Fidelity Retirement Money Market Portfolio          0631

2)   Fidelity Puritan Fund                               0004

3)   Fidelity Growth & Income Portfolio                  0027

4)   Fidelity Low Priced Stock Fund                      0316

5)   PIMCO Low Duration Fund                             OFP6

6)   Templeton Foreign Fund                              OFJT


                                       24