COUNTRYWIDE FINANCIAL CORPORATION CHANGE IN CONTROL SEVERANCE PLAN

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Exhibit 10.118

COUNTRYWIDE FINANCIAL CORPORATION
CHANGE IN CONTROL SEVERANCE PLAN
(As Amended and Restated June 24, 2008)

        WHEREAS, the Board of Directors (the "Board") of COUNTRYWIDE FINANCIAL CORPORATION, a Delaware corporation (the "Company"), originally adopted this Plan on September 12, 1996, amended and restated it on February 23, 2005 and subsequently amended and restated it on June 14, 2006, recognizing that the threat of an unsolicited takeover or other change in control of the Company may occur which can result in significant distractions of its personnel and disrupt the business of the Company with respect to attracting and retaining employees of every level because of the uncertainties inherent in such a situation; and

        WHEREAS, the Board has determined that it is essential and in the best interests of the Company and its shareholders to be able to retain the services of its personnel at a time when the Company is considering its strategic alternatives, including possible change in control transactions, in order to ensure their continued dedication and efforts without undue concern for their personal financial and employment security.

        NOW, THEREFORE, in order to fulfill the above objectives, the following plan has been developed and is hereby adopted.

1.      Purpose

It is the purpose of the Company, through this Plan, to provide a salary continuation payment and certain other benefits for each of its employees who is a Participant in the Plan and (a) who separates from service with the Company for Good Reason or (b) whose employment with the Company is involuntarily terminated (other than for Cause, death or an Excluded Termination), in either case, on or after the date on which a Change in Control occurs and within the time limits specified in Section 5.1.

It is intended that the Plan shall be a "severance pay arrangement" within the meaning of Section 3(2)(B)(i) of ERISA, and that it shall meet the criteria for treatment as a "severance pay plan" set forth in 29 C.F.R. §2510.3-2(b). The Plan shall be interpreted and applied in accordance with the foregoing intention.

2.      Contractual Right

Upon and after a Change in Control, each Participant shall have a fully vested, nonforfeitable contractual right, enforceable against the Company, to the benefits provided for under Section 6 of this Plan upon the occurrence of the conditions specified in Section 5.1. Such contractual right to receive such benefits if the conditions specified in Section 5.1 are fulfilled shall arise on the date on which the Change in Control occurs.

3.      Duration

This Plan shall be effective as of the date the Plan is approved by the Board or such other date as the Board shall designate in its resolution approving the Plan. The Plan shall continue in effect until terminated in accordance with Section 11.

4.

Definitions.     For purposes of this Plan, the following definitions shall apply:

4.1

Affiliate:     "Affiliate" shall mean with respect to any person or entity, any entity, directly or indirectly, controlled by, controlling or under common control with such person or entity.

4.2

Board:     "Board" shall mean the Board of Directors of Countrywide Financial Corporation.

4.3

Cause:     "Cause" shall exist where the Participant (a) intentionally and continually failed to perform reasonably assigned duties, (b) willfully engaged in misconduct which is demonstrably and materially injurious to the Company, monetarily or otherwise, (c) engaged in a transaction in connection with the performance of his or her duties to the Company for personal profit to himself or herself or (d) willfully violated any law, rule or regulation in connection with the performance of his or her duties (other than traffic violations or similar offenses). Failure by a Participant to perform the Participant's duties during any period of disability shall not constitute Cause.

4.4

Change in Control:     A "Change in Control" shall mean the occurrence during the term of this Plan, of any one of the following events:

(a)

An acquisition (other than directly from Company) of any common stock or other "Voting Securities" (as hereinafter defined) of Company by any "Person" (as the term person is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), immediately after which such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty five percent (25%) or more of the then outstanding shares of Company's common stock or the combined voting power of Company's then outstanding Voting Securities; provided, however, in determining whether a Change in Control has occurred, Voting Securities which are acquired in a "Non-Control Acquisition" (as hereinafter defined) shall not constitute an acquisition which would cause a Change in Control. For purposes of this Plan, (1) "Voting Securities" shall mean Company's outstanding voting securities entitled to vote generally in the election of directors and (2) a "Non-Control Acquisition" shall mean an acquisition by (i) an employee benefit plan (or a trust forming a part thereof) maintained by (A) the Company or (B) any corporation or other Person of which a majority of its voting power or its voting equity securities or equity interest is owned, directly or indirectly, by the Company (for purposes of this definition, a "Subsidiary"), (ii) the Company or any of its Subsidiaries, or (iii) any Person in connection with a "Non-Control Transaction" (as hereinafter defined);

(b)

During any period of twenty-four (24) consecutive months, the individuals who at the beginning of such period constitute the Board (the "Incumbent Board"), cease for any reason to constitute at least fifty percent (50%) of the members of the Board; provided, however, that if the election, or nomination for election by the Company's common stockholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of this Plan, be considered as a member of the Incumbent Board; provided, further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened "Election Contest" (as described in Rule 14a-11 promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a "Proxy Contest") including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or

(c)

The consummation of:

(i)

A merger, consolidation or reorganization involving the Company, unless such merger, consolidation or reorganization is a "Non-Control Transaction." A "Non-Control Transaction" shall mean a merger, consolidation or reorganization of the Company where:

(A)

the Company's stockholders, immediately before such merger, consolidation or reorganization, own directly or indirectly immediately following such merger,

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consolidation or reorganization, at least fifty percent (50%) of the combined voting power of the outstanding Voting Securities of the corporation resulting from such merger, consolidation or reorganization (the "Surviving Corporation") in substantially the same proportion as their ownership of the Voting Securities immediately before such merger, consolidation or reorganization;

(B)

the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation or reorganization constitute at least fifty percent (50%) of the members of the board of directors of the Surviving Corporation, or in the event that, immediately following the consummation of such transaction, a corporation beneficially owns, directly or indirectly, a majority of the Voting Securities of the Surviving Corporation, the board of directors of such corporation; and

(C)

no Person other than (i) the Company, (ii) any Subsidiary, (iii) any employee benefit plan (or any trust forming a part thereof) maintained by the Company, the Surviving Corporation, or any Subsidiary, or (iv) any Person who, immediately prior to such merger, consolidation or reorganization had Beneficial Ownership of twenty five percent (25%) or more of the then outstanding Voting Securities or common stock of the Company, has Beneficial Ownership of twenty five percent (25%) or more of the combined voting power of the Surviving Corporation's then outstanding Voting Securities or its common stock;

(ii)

A complete liquidation or dissolution of the Company; or

(iii)

The sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to a Subsidiary).

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any Person (the "Subject Person") acquired Beneficial Ownership of more than the permitted amount of the then outstanding common stock or Voting Securities as a result of the acquisition of common stock or Voting Securities by the Company which, by reducing the number of shares of common stock or Voting Securities then outstanding, increases the proportional number of shares Beneficially Owned by the Subject Person; provided, however, that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of common stock or Voting Securities by the Company, and after such share acquisition by the Company, the Subject Person becomes the Beneficial Owner of any additional common stock or Voting Securities which increases the percentage of the then outstanding common stock or Voting Securities Beneficially Owned by the Subject Person, then a Change in Control shall occur.

4.5

Committee:     "Committee" shall mean the Committee described in Section 9.

4.6

Company:     "Company" shall mean Countrywide Financial Corporation and any successor thereto, including, without limitation, any person (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended), partnership(s) or corporation(s) acquiring directly or indirectly all or substantially all of the business or assets of the Company.

4.7

ERISA:     "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended. References to ERISA include the valid and binding governmental regulations, court decisions and other regulatory and judicial authority issued or rendered thereunder.

4.8

Excluded Termination:     "Excluded Termination" shall have the meaning as set forth in Section 5.2 of this Plan.

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4.9

Good Reason:     A Participant who immediately prior to a Change in Control is a member of employee classification X (as set forth in Appendix A) shall have "Good Reason" for terminating employment with the Company only if one or more of the following occurs, within twenty-four months after a Change in Control, without the Participant's express written consent:

(a)

a reduction by the Company in the Participant's base salary or the termination or reduction of award opportunities (other than equity-based opportunities) under any bonus or incentive award plan, practice or formula in which the Participant participates unless a comparable arrangement (embodied in an ongoing substitute or alternative plan, practice or formula) has been made with respect to the Participant's participation in such bonus or incentive award plan, practice or formula; or

(b)

a change in the Participant's title, position, duties or responsibilities which represents an adverse change from his or her title, position, duties or responsibilities as in effect immediately prior to such change; or

(c)

the relocation of the office at which the Participant is principally employed immediately prior to the Change in Control to a location more than fifty (50) miles from the location of such office, or the Participant being required to be based anywhere other than such office, except to the extent the Participant was not previously assigned to a principal location and except for required travel on the Company's business to an extent substantially consistent with the Participant's business travel obligations at the time of the Change in Control.

(d)

Notwithstanding the foregoing, the Participant shall not have Good Reason to terminate employment with the Company due solely to the fact that the Company shall cease to be a public company and shall become a subsidiary of another publicly-traded corporation, so long as the Participant retains his or her title and retains job authorities and responsibilities consistent in all material respects with those of the Participant's counterparts in the substantial subsidiaries of the parent.

Notwithstanding the foregoing, no action by the Company shall give rise to Good Reason if it results from the Participant's termination for Cause, death or an Excluded Termination.

4.10

Operating Unit:     "Operating Unit" shall mean any subsidiary, division or other business unit of Company or any Affiliate.

4.11

Participant:     "Participant" shall mean an active, full-time employee of the Company or any of its U.S. subsidiaries who, on the date immediately preceding the date of a Change in Control, is employed in one of the employee classifications set forth in Appendix A. Employees of the Company who are Executive Managing Directors and above who are covered under individual employment agreements shall not be Participants in this Plan.

4.12

Plan:     "Plan" shall mean the Countrywide Financial Corporation Change in Control Severance Plan (As Amended and Restated June 24, 2008).

4.13

Post-Transaction Good Reason:     "Post-Transaction Good Reason" shall mean, with respect to offered employment or the continued employment, as the case may be, to employees who immediately prior to a Change in Control are members of employee classification X (as set forth in Appendix A) with a Post-Transaction Employer (as defined in Section 5.2) following a Transaction (as defined in Section 5.2):

(a)

a reduction in the Participant's annual base salary or the termination or reduction of award opportunities (other than equity-based opportunities) under any bonus or incentive award plan, practice or formula in which the Participant participates unless a comparable

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arrangement (embodied in an ongoing substitute or alternative plan, practice or formula) has been made with respect to the Participant's participation in such bonus or incentive award plan, practice or formula, in either case below the greater of the rate in effect (i) as of the date of the Transaction or (ii) on any date following the Transaction;

(b)

a change in the Participant's title, position, duties or responsibilities which represents an adverse change from his or her title, position, duties or responsibilities as in effect immediately prior to such change, in any case as determined by the Participant in good faith; or

(c)

the relocation of the office at which the Participant is principally employed immediately prior to the Transaction to a location more than fifty (50) miles from the location of such office, or the Participant being required to be based anywhere other than such office, except to the extent the Participant was not previously assigned to a principal location and except for required travel on the Company's business to an extent substantially consistent with the Participant's business travel obligations at the time of the Transaction;

4.14

Senior Human Resources Manager:     "Senior Human Resources Manager" shall mean the Senior Human Resources Officer of the Company prior to a Change in Control or such person's designee.

4.15

Severance Benefit:     "Severance Benefit" shall mean the benefits payable in accordance with Section 6 of this Plan.

5.      When Provisions Apply

5.1

The benefits provided for under Section 6 shall be provided to each Participant who incurs a "Qualifying Termination." For purposes of this Plan, a "Qualifying Termination" shall occur only if a Change in Control occurs and

(a)

within twenty-four months after the Change in Control occurs, the Company terminates the Participant's employment other than for Cause; or

(b)

(i)    within twenty-four months after the Change in Control occurs, Good Reason occurs, and

(ii)

the Participant terminates employment with the Company within six months after the Good Reason occurs;

provided, however, that a Qualifying Termination shall not occur if the Participant's employment with the Company terminates by reason of Cause, the Participant's death, or an Excluded Termination (as defined in Section 5.2).

5.2

Sale of Business or Assets.     If, following a Change in Control, a Participant's employment with the Company and its Affiliates terminates in connection with the sale, divestiture or other disposition of any Operating Unit (or part thereof) (a "Transaction"), such termination shall not be a termination of employment of the Participant for purposes of the Plan, and (notwithstanding the rights provided to the Participant by Section 5.1) the Participant shall not be entitled to a Severance Benefit as a result of such termination of employment if (i) the Participant is offered continued employment, or continues in employment, with the divested Operating Unit or the purchaser of the assets of the Operating Unit, as the case may be, (the "Post-Transaction Employer") or their respective Affiliates on terms and conditions that would not constitute Post-Transaction Good Reason and (ii) the Company obtains an agreement from the acquirer of the stock or assets of the divested Operating Unit, enforceable by the Participant, to provide or cause the Post-Transaction Employer to provide severance pay and benefits, if the Participant accepts the offered employment or continues in employment with

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the Post-Transaction Employer or its Affiliates following the Transaction, (A) at least equal to the Severance Benefit and (B) payable upon a termination of the Participant's employment with the Post-Transaction Employer and its Affiliates within the period described in Section 5.1 (or such part of it as is then remaining) for any reason other than Cause, the Participant's death or a termination by the Participant without Post-Transaction Good Reason. For purposes of this Section 5.2, the term Cause shall have the meaning ascribed to it in Section 4.3, but the term Company as it is used in Section 4.3 shall be deemed to refer to the entity employing the Participant after the Transaction.

A termination of employment described in this Section 5.2 is herein referred to as an "Excluded Termination." In the circumstances described in this Section 5.2, the Participant shall not be entitled to receive any Severance Benefit under this Plan whether or not the Participant accepts the offered employment or continues in employment. The provisions of this Section 5.2 do not create any entitlement to any Severance Benefit from the Company and its Affiliates in any circumstances whatsoever and are to be construed solely as a limitation on such entitlement in the circumstances herein set forth.

5.3

The fact that a Participant is eligible to immediately receive retirement benefits under the Countrywide Financial Corporation Defined Benefit Pension Plan or any other Company employee benefit plan, practice or policy shall not render him or her ineligible for the benefits under this Plan.

6.      Severance Benefits

6.1

Severance Payment.

(a)

Each Participant entitled to benefits under this Plan shall receive as continuation of salary and bonus an amount as determined in accordance with Appendix A (the "Salary Separation Payment") (or, if greater, the amount determined pursuant to any individual employment, offer, letter or similar agreement by and between the Participant and the Company (an "Individual Agreement"), provided that notwithstanding anything to the contrary in such Individual Agreement any amounts payable under such Individual Agreement shall in all cases be payable in accordance with the payment schedules set forth in this Plan), and in no event shall a Participant be entitled to duplicate payments under the Plan and any Individual Agreement.

For purposes of calculating the Salary Separation Payment, (1) the Participant's "Base Pay" shall be the Participant's base annual salary as of the date of his or her termination of employment or, if greater, as of the date on which the Change in Control occurs, (2) the Participant's "Bonus" shall be the greater of (x) the average of the aggregate bonus and/or incentive award, if any, paid or payable to the Participant for each of the two (2) fiscal years preceding the fiscal year in which the Participant's termination of employment occurs (or such fewer number of fiscal years for which the Participant was eligible to receive a bonus and/or incentive award) and (y) the bonus and/or incentive award paid for the fiscal year immediately preceding the date of the Change in Control, and (3) the Participant's "Pay" for Classification C, D and E is base pay and bonus paid for the preceding twelve months (annualized for employees who have worked for less than twelve months) and converted to a weekly amount.

(b)

Except as required by Section 7, the Salary Separation Payment provided for in Section 6.1(a) shall be payable in addition to, and not in lieu of, all other accrued, vested, earned, or deferred compensation rights, options, or other benefits (other than severance pay or similar benefits) which may be payable or owing to a Participant following termination of his or her employment under any plan, including but not limited to

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retirement and supplemental retirement benefits, bonus, accrued vacation or sick pay, compensation, or benefits payable under any of the Company's employee benefit plans, practices or policies.

(c)

The Salary Separation Payment shall not be offset or reduced by any unemployment insurance benefit, payment in lieu of notice required under any law or act, or income from subsequent employment that the Participant may receive.

(d)

Except as otherwise provided by Section 6.4, the Salary Separation Payment shall be paid in a series of substantially equal installments in accordance with the regular payroll practices of the Company (as in effect as of the date of termination) over the period used in computing the Salary Separation Payment pursuant to Section 6.1(a) (the "Salary Separation Pay Period"), commencing as soon as administratively practicable, but in no event more than sixty (60) days, following the Participant's Qualifying Termination (except as otherwise required by Section 16).

6.2

The Salary Separation Pay Period shall be included as accredited service for the purpose of receiving or accruing benefits under all employee benefit plans of the Company, including, but not limited to, group health and life insurance, long-term disability, the Countrywide Financial Corporation Defined Benefit Pension Plan (the "Pension Plan"), the Countrywide Financial Corporation 401(k) Savings and Investment Plan, the Countrywide Financial Corporation Supplemental Executive Retirement Plan, the Countrywide Financial Corporation Executive Deferred Compensation Plan,