Exhibit 10.2

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

This Executive Employment Agreement (“Agreement”) entered into between
Accredited Home Lenders, Inc. (“Company”) and Stuart Marvin (“Executive”) sets
forth the discussions that have been held and the specific issues that have been
agreed to as follows:

 

1. Employment. Company hereby employs Executive, and Executive hereby accepts
such employment, upon the terms and conditions set forth herein.

 

2. Duties.

 

2.1 Position. Executive is employed as the Executive Vice President, Finance and
Capital Markets and shall have the duties and responsibilities assigned by
Company’s Chief Executive Officer (“CEO”) both upon initial hire and as may be
reasonably assigned from time to time. Executive shall perform faithfully and
diligently all duties assigned to Executive. Company reserves the right to
modify Executive’s position and duties at any time in its sole and absolute
discretion.

 

2.2 Best Efforts/Full-time. Executive will expend Executive’s best efforts on
behalf of Company, and will abide by all policies and decisions made by Company,
as well as all applicable federal, state and local laws, regulations or
ordinances. Executive will act in the best interest of Company at all times.
Executive shall devote Executive’s full business time and efforts to the
performance of Executive’s assigned duties for Company, unless Executive
notifies the CEO in advance of Executive’s intent to engage in other paid work
and receives the CEO’s express written consent to do so.

 

2.3 Work Location. Executive’s duties will eventually be performed primarily at
the Company’s offices in the San Diego, California area. However, as discussed
and has been the practice for the past several weeks, it is expected that during
the first several months of Executive’s employment with the Company he will be
traveling extensively to meet with investors who are interested in purchasing
whole loans, and bonds from Company’s securitizations as well as investors in
its equity products. He will also be expected to attend various conferences and
association meetings where the Company involvement and his participation will
range from making formal presentations at various Company specific meetings to
simply attending the event and networking with other attendees. Because
virtually all of these meetings and events will be outside of Southern
California and because Ray McKewon will continue to be employed full time until
July 15, 2005, there is no need for the Executive to relocate to San Diego
before that date. To that end, for those days where Executive is not traveling
on company business, the Company has provided him with an office in its Houston
location. The office is equipped with full access to the Company’s computer and
telephone networks, a desk, and a full compliment of office equipment. On those
days where he will not require full access to all of those items, he can work
out of his home using his laptop and cell phone. While there will be occasions
where he will need to be in San Diego, for specific meetings or events, prior to
July 15, 2005, the Company will schedule those well in advance so he can arrange
his total travel schedule accordingly. During this time period, the Company
urges the Executive to begin the process of acquiring living accommodations in
the San Diego area so that he will be able to move into a home in San Diego no
later than July 15, 2005, and minimize temporary accommodations after that date.

 

3. At-Will Employment.

 

3.1 Effective Date. The effective date of this Agreement shall be April 11,
2005. This Agreement is for an unspecified term and is terminable by either
party, with or without cause, at anytime with or without notice.

--------------------------------------------------------------------------------

3.2 At-Will. Executive’s employment is not for a specified term and it may be
terminated by the Company or by the Executive at any time with or without cause.
The parties agree that the provisions of this Agreement are intended by
Executive and by the Company as the complete and final expression of their
understanding regarding the conditions under which Executive’s employment may be
terminated. The parties further agree that no contrary or inconsistent agreement
or representation (past, present, or future) is valid, and that this provision
may not be augmented, contradicted, or modified in any way except in writing
signed by the Executive and the CEO of the Company.

 

4. Compensation.

 

4.1 Base Salary. As compensation for Executive’s performance of Executive’s
duties hereunder, Company shall pay to Executive an initial Base Salary of
$425,000 per year, payable in accordance with the normal payroll practices of
Company, less required deductions for state and federal withholding tax, social
security and all other employment taxes and payroll deductions.

 

4.2 Inducement Stock Award: Shares of restricted common stock of Accredited Home
Lenders Holding Co. (“Common Stock”) with a total value of $1,000,000 will be
awarded to Executive as a material inducement to his employment with the
Company. The shares shall be granted to Executive in two (2) separate awards of
$500,000 in value each based upon the closing price of the Common Stock on April
14, 2005 (each an “Award,” and collectively “Awards”). Both Awards shall be made
effective as of the date upon which Accredited Home Lenders Holding Co. files an
S-8 Registration Statement registering the shares underlying the Awards (the
“Effective Date”). The shares underlying the first Award shall vest according to
the following schedule: 50% on the second anniversary of the Effective Date,
with an additional 25% vesting on each of the third and fourth anniversaries of
the Effective Date. The shares underlying the second Award shall vest as
follows: 50% on February 15, 2008, with an additional 25% vesting on February
15, 2009 and the last 25% vesting on February 15, 2010. Any unvested portion of
the stock awards at the time of Executive’s termination of employment for any
reason shall be automatically reacquired by Accredited Home Lenders Holding Co.
without any payment to Executive. Executive will be paid additional cash amounts
sufficient to cover the federal and state income tax associated with both Awards
(to the extent such income tax must be paid), and conditioned upon Executive’s
83(b) election at the time of each stock award. The terms and conditions of
these Awards are more fully set forth in the Restricted Stock Agreements
attached hereto as Exhibits A and B, respectively, and incorporated herein by
reference.

 

4.3 Signing Bonus: Executive shall be paid a $250,000 cash signing bonus to be
paid on May 1, 2005. Said signing bonus shall be repaid by Executive on a
pro-rata basis should he voluntarily terminate his position with the Company or
if his employment is terminated by the Company with cause (as defined in Section
9.1 below) during the first twelve months of his employment.

 

4.4 Incentive Compensation. Executive will be eligible to earn incentive
compensation in accordance with the provisions of the Executive Management
Incentive Compensation Plan (“the Plan”), a copy of which is attached hereto as
Exhibit C, subject to the following modifications:

 

(a) Cash Bonus Award: For the year 2005, Executive will receive a cash bonus
award of the greater of $400,000 or the amount awarded under the Plan. In
addition, Executive will be given credit as though he earned the Base Salary for
all of 2005 when the cash bonus awards are determined as a percentage of such
Base Salary. For the years 2006 and 2007, Executive will also receive a bonus
award of the greater of $100,000 or the amount awarded under the Plan. Executive
will only be entitled to such payments if he is employed by the Company on the
date payment is made. Nothing in this paragraph alters the at-will relationship
between the Executive and the Company.

 

-2-

--------------------------------------------------------------------------------

(b) Equity Awards: Executive will also be eligible for equity awards under the
Plan, except that his participation in such equity component for the 2005 year,
if any, will be limited to payments under the Plan only to the extent such
payments exceed $1,000,000 in value. As a result, Executive’s participation in
the equity component of the Plan for 2005 is intended to be active only to the
extent the “floor” value of $1,000,000, which has already been awarded to
Executive through the Awards noted above in Section 4.2, has been exceeded.
Executive will be given credit as though he earned the Base Salary for all of
2005 when the stock award bonuses are determined as a percentage of such Base
Salary.

 

4.5 Stock Options. At the April 27, 2005 Board Meeting, Executive was granted an
incentive stock option to purchase 80,000 shares of Company’s Common Stock with
regular vesting.

 

5. Customary Fringe Benefits. Executive will be eligible for all customary and
usual fringe benefits generally available to executives of Company subject to
the terms and conditions of Company’s benefit plan documents. Company reserves
the right to change or eliminate the fringe benefits on a prospective basis, at
any time, effective upon notice to Executive.

 

6. Paid Time Off. Executive shall not be entitled to participate in the
Company’s Paid Time Off (“PTO”) Program. As a result, Executive will not accrue
PTO while employed with the Company. However, Executive shall be entitled to
take paid time off on an as needed basis subject to the needs of the Company and
review by the CEO.

 

7. Moving Expenses. Executive will be reimbursed for all reasonable expenses
associated with relocating to San Diego, California, including real estate
commissions for the sale of two properties in Texas (primary residence and
vacation) together valued at less than $700,000. In the event the Executive’s
employment with Accredited terminates within twelve months of such
reimbursement, other than through a termination without cause, the Executive
will repay the amount on a pro rata basis.

 

8. Business Expenses. Executive will be reimbursed for all reasonable,
out-of-pocket business expenses incurred in the performance of Executive’s
duties on behalf of Company. To obtain reimbursement, expenses must be submitted
promptly with appropriate supporting documentation in accordance with Company’s
policies.

 

9. Termination of Executive’s Employment.

 

9.1 Termination for Cause by Company. Although Company anticipates a mutually
rewarding employment relationship with Executive, Company may terminate
Executive’s employment immediately at any time for Cause. For purposes of this
Agreement, “Cause” is defined as: (a) acts or omissions constituting gross
negligence, recklessness or willful misconduct on the part of Executive with
respect to Executive’s obligations or otherwise relating to the business of
Company; (b) Executive’s material breach of this Agreement or Company’s Employee
Innovations and Proprietary Rights Agreement; (c) Executive’s conviction or
entry of a plea of nolo contendere for fraud, misappropriation or embezzlement,
or any felony or crime of moral turpitude; (d) Executive’s willful neglect of
duties as determined in the sole and exclusive discretion of the CEO; or (e)
Executive’s failure to perform the essential functions of Executive’s position,
with or without reasonable accommodation, due to a mental or physical
disability. “Cause” shall exist to terminate this Agreement if Employer makes a
determination, in good faith, that facts exist to constitute cause as defined
herein. In the event Executive’s employment is terminated for cause, Executive
shall be entitled to receive only the Base Salary then in effect, prorated to
the date of termination. All other Company obligations to Executive pursuant to
this Agreement will become automatically terminated and completely extinguished,
except as to any options that have vested under the schedule contained in the
attached Exhibits A and B as of the day of termination.

 

-3-

--------------------------------------------------------------------------------

9.2 Termination Without Cause by Company. Company may terminate Executive’s
employment under this Agreement without Cause at any time for any reason
(‘termination without cause”). In the event of a termination without cause,
Executive will be entitled to receive (a) any salary unpaid as of the date of
termination; (b) no other severance pay or benefits. In the event of a
termination without cause, all other Company obligations to Executive pursuant
to this Agreement will become automatically terminated and completely
extinguished, except as to any options that have vested under the schedule
contained in the attached Exhibits A and B as of the last day of the month in
which the termination without cause occurs.

 

9.3 Voluntary Resignation by Executive. Executive’s employment under this
Agreement may be terminated by Executive at any time for any reason. In the
event of a termination by Executive, Executive will be entitled to receive (a)
any salary accrued and unpaid as of the date of termination, and (b) no other
severance. In the event of a termination at the Executive’s election, all other
Company obligations to Executive pursuant to this Agreement will become
automatically terminated and completely extinguished, except as to any options
that have vested under the schedule contained in the attached Exhibits A and B
as of the last day of the month in which the voluntary termination occurs.

 

10. No Conflict of Interest. During the term of Executive’s employment with
Company, Executive must not engage in any work, paid or unpaid, that creates an
actual conflict of interest with Company. Such work shall include, but is not
limited to, directly or indirectly competing with Company in any way, or acting
as an officer, director, employee, consultant, stockholder, volunteer, lender,
or agent of any business enterprise of the same nature as, or which is in direct
competition with, the business in which Company is now engaged or in which
Company becomes engaged during the term of Executive’s employment with Company,
as may be determined by the Board of Directors in its sole discretion. If the
Board of Directors believes such a conflict exists during the term of this
Agreement, the Board of Directors may ask Executive to choose to discontinue the
other work or resign employment with Company. In addition, Executive agrees not
to refer any client or potential client of Company to competitors of Company,
without obtaining Company’s prior written consent, during the term of
Executive’s employment.

 

11. Confidentiality and Proprietary Rights. All non-pubic information relating
to the Company’s operations, procedures, methods, pricing, customers, employees,
contractors, vendors, investors, lenders, financial condition or results of
operations, and any other information relating to the Company acquired by
Executive during his employment does and shall constitute valuable, proprietary
and confidential information of the Company (“Confidential Information”), and
shall not, either during or after his employment, be disclosed by him to any
third party or used by him for his own advantage or the advantage of any third
party, except in connection with the performance of his duties and
responsibilities as an employee of Company. Upon termination of his employment,
Executive will return to Company the originals and any copies of Confidential
Information provided by the Company to him.

 

12. Injunctive Relief. Executive acknowledges that Executive’s breach of the
covenants contained in sections 10 and 11 (collectively “Covenants”) would cause
irreparable injury to Company and agrees that in the event of any such breach,
Company will be entitled to seek temporary, preliminary and permanent injunctive
relief without the necessity of proving actual damages or posting any bond or
other security.

 

13. Agreement to Arbitrate. To the fullest extent permitted by law, Executive
and Company agree to arbitrate any controversy, claim or dispute between them
arising out of or in any way related to this Agreement, the employment
relationship between Company and Executive and any disputes upon

 

-4-

--------------------------------------------------------------------------------

termination of employment, including but not limited to breach of contract,
tort, discrimination, harassment, wrongful termination, demotion, discipline,
failure to accommodate, family and medical leave, compensation or benefits
claims, constitutional claims; and any claims for violation of any local, state
or federal law, statute, regulation or ordinance or common law. Claims for
workers’ compensation, unemployment insurance benefits, and Company’s right to
obtain injunctive relief pursuant to section 12 above are excluded. For the
purpose of this agreement to arbitrate, references to “Company” include all
parent, subsidiary or related entities and their employees, supervisors,
officers, directors, agents, pension or benefit plans, pension or benefit plan
sponsors, fiduciaries, administrators, affiliates and all successors and assigns
of any of them, and this agreement shall apply to them to the extent Executive’s
claims arise out of or relate to their actions on behalf of Company.

 

13.1 Consideration. The mutual promise by Company and Executive to arbitrate any
and all disputes between them (except for those referenced above) rather than
litigate them before the courts or other bodies, provides the consideration for
this agreement to arbitrate.

 

13.2 Initiation of Arbitration. Either party may exercise the right to arbitrate
by providing the other party with written notice of any and all claims forming
the basis of such right in sufficient detail to inform the other party of the
substance of such claims. In no event shall the request for arbitration be made
after the date when institution of legal or equitable proceedings based on such
claims would be barred by the applicable statute of limitations.

 

13.3 Arbitration Procedure. The arbitration will be conducted in San Diego,
California by a single neutral arbitrator and in accordance with the then
current rules for resolution of employment disputes of the American Arbitration
Association (“AAA”) (available on-line at www.adr.org). The parties are entitled
to representation by an attorney or other representative of their choosing. The
arbitrator shall have the power to enter any award that could be entered by a
judge of the trial court of the State of California, and only such power, and
shall follow the law. The parties agree to abide by and perform any award
rendered by the arbitrator. The arbitrator shall issue the award in writing and
therein state the essential findings and conclusions on which the award is
based. Judgment on the award may be entered in any court having jurisdiction
thereof.

 

14. General Provisions.

 

14.1 Successors and Assigns. The rights and obligations of Company under this
Agreement will inure to the benefit of and will be binding upon the successors
and assigns of Company. Executive will not be entitled to assign any of
Executive’s rights or obligations under this Agreement.

 

14.2 Waiver. Either party’s failure to enforce any provision of this Agreement
will not in any way be construed as a waiver of any such provision, or prevent
that party thereafter from enforcing each and every other provision of this
Agreement.

 

14.3 Attorneys’ Fees. Each side will bear its own attorneys’ fees in any dispute
unless a statutory section at issue, if any, authorizes the award of attorneys’
fees to the prevailing party.

 

14.4 Severability. In the event any provision of this Agreement is found to be
unenforceable by an arbitrator or court of competent jurisdiction, such
provision will be deemed modified to the extent necessary to allow
enforceability of the provision as so limited, it being intended that the
parties will receive the benefit contemplated herein to the fullest extent
permitted by law. If a deemed modification is not satisfactory in the judgment
of such arbitrator or court, the unenforceable provision shall be deemed
deleted, and the validity and enforceability of the remaining provisions shall
not be affected thereby.

 

-5-

--------------------------------------------------------------------------------

14.5 Interpretation; Construction. The headings set forth in this Agreement are
for convenience only and shall not be used in interpreting this Agreement. This
Agreement has been drafted by legal counsel representing Company, but Executive
has participated in the negotiation of its terms. Furthermore, Executive
acknowledges that Executive has had an opportunity to review and revise the
Agreement and have it reviewed by legal counsel, if desired, and, therefore, the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of this Agreement.

 

14.6 Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the United States and the State of California. Each
party consents to the jurisdiction and venue of the state or federal courts in
San Diego, California, if applicable, in any action, suit, or proceeding arising
out of or relating to this Agreement.

 

14.7 Notices. Any notice required or permitted by this Agreement shall be in
writing and shall be delivered as follows with notice deemed given as indicated:
(a) by personal delivery when delivered personally; (b) by overnight courier
upon written verification of receipt; (c ) by telecopy or facsimile transmission
upon acknowledgment of receipt of electronic transmission; or (d) by certified
or registered mail, return receipt requested, upon verification of receipt.
Notice shall be sent to the address as either party may specify in writing.

 

14.8 Survival. Sections 10 (“No Conflict of Interest”), 11 (“Confidentiality and
Proprietary Rights”), 12 (“Injunctive Relief”), 13 (“Agreement to Arbitrate”),
14 (“General Provisions”), and 15 (“Entire Agreement”) of this Agreement shall
survive Executive’s employment by Company.

 

15. Entire Agreement. This Agreement, and the attached Exhibits A through C,
inclusive, constitutes the entire agreement between the parties relating to this
subject matter and supersedes all prior or simultaneous representations,
discussions, negotiations, and agreements, whether written or oral. This
Agreement may be amended or modified only with the written consent of Executive
and the CEO. No oral waiver, amendment or modification will be effective under
any circumstances whatsoever.

 

16. Execution of Exhibits. Executive agrees as part of this Employment Agreement
to be bound by the following agreements:

 

Exhibit A—Restricted Stock Agreement

 

Exhibit B—Restricted Stock Agreement

 

Exhibit C—Executive Management Incentive Compensation Plan

 

Each of the above agreements or documents is incorporated herein by this
reference. Executive acknowledges that he has read each such agreement or
document. Executive agrees to be bound at this time by the terms of Exhibits A
through C, inclusive.

 

-6-

--------------------------------------------------------------------------------

THE PARTIES TO THIS AGREEMENT HAVE READ THE FOREGOING AGREEMENT AND FULLY
UNDERSTAND EACH AND EVERY PROVISION CONTAINED HEREIN. WHEREFORE, THE PARTIES
HAVE EXECUTED THIS AGREEMENT ON THE DATES SHOWN BELOW.

 

        STUART MARVIN Dated:                       

 

--------------------------------------------------------------------------------

Dated:                        By:  

 

--------------------------------------------------------------------------------

            JAMES A. KONRATH, CEO             ACCREDITED HOME LENDERS, INC.

 

-7-

--------------------------------------------------------------------------------

Exhibit A

 

ACCREDITED HOME LENDERS HOLDING CO.

RESTRICTED STOCK AGREEMENT

 

Accredited Home Lenders Holding Co. (the “Company”) has granted to Stuart D.
Marvin (the “Participant”) an Award consisting of Shares subject to the terms
and conditions set forth in this Restricted Stock Agreement (the “Agreement”).
The Award has been granted pursuant to an offer of employment between the
Company and the Participant. By signing this Agreement, the Participant: (a)
represents that the Participant has read and is familiar with the terms and
conditions of the Award and this Agreement, (b) accepts the Award subject to all
of the terms and conditions of this Agreement, (c) agrees to accept as binding,
conclusive and final all decisions or interpretations of the Board upon any
questions arising under this Agreement, and (d) acknowledges receipt of a copy
of this Agreement.

 

1. DEFINITIONS AND CONSTRUCTION.

 

1.1 Definitions. Whenever used herein, the following terms shall have their
respective meanings set forth below:

 

(a) “Date of Grant” means April 15, 2005.

 

(b) “Award” means a total of Fourteen Thousand Two Hundred and Forty (14,240)
shares of Stock granted to the Participant pursuant to the terms and conditions
of this Agreement.

 

(c) “Board” means the Board of Directors of the Company. If one or more
Committees have been appointed by the Board to administer this Agreement,
“Board” also means such Committee(s).

 

(d) “Cause” shall mean a Participant’s termination of employment for any of the
following reasons: (i) theft, dishonesty or falsification of business records;
(ii) improper use or disclosure of confidential or proprietary information
regarding the Company; (iii) failure of the Participant to perform his or her
job, including all assigned duties; (iv) any material breach of a written
employment agreement which is not cured pursuant to the terms of the agreement;
(v) the Participant’s conviction of a criminal act which impairs his or her
ability to perform duties for the Company; or (vi) any action by the Participant
which has a detrimental effect on the business of the Company.

 

(e) “Change in Control” shall mean: (i) the acquisition by an individual
“person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
or entity or a group of individuals or entities acting in concert, directly or
indirectly, through one transaction or a series of related transactions, of more
than 50% of the outstanding voting securities of the Company; (ii) a merger or
consolidation of the Company with or into another entity after which the
stockholders of the Company immediately prior to such transaction hold less than
50% of the

 

1

--------------------------------------------------------------------------------

voting securities of the surviving entity; or (iii) a sale of all or
substantially all of the assets of the Company.

 

(f) “Code” means the Internal Revenue Code of 1986, as amended, and any
applicable regulations promulgated thereunder.

 

(g) “Committee” means the Compensation Committee or other committee of the Board
duly appointed to administer the Agreement and having such powers as shall be
specified by the Board. If no committee of the Board has been appointed to
administer the Agreement, the Board shall exercise all of the powers of the
Committee granted herein, and, in any event, the Board may in its discretion
exercise any or all of such powers.

 

(h) “Company” means Accredited Home Lenders Holding Co., a Delaware corporation,
or any successor corporation thereto.

 

(i) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(j) “Fair Market Value” means, as of any date, the value of a share of Stock or
other property as determined by the Board, in its discretion, or by the Company,
in its discretion, if such determination is expressly allocated to the Company
herein, subject to the following:

 

(i) If, on such date, the Stock is listed on a national or regional securities
exchange or market system, the Fair Market Value of a share of Stock shall be
the closing price of a share of Stock (or the mean of the closing bid and asked
prices of a share of Stock if the Stock is so quoted instead) as quoted on the
Nasdaq National Market, The Nasdaq SmallCap Market or such other national or
regional securities exchange or market system constituting the primary market
for the Stock, as reported in The Wall Street Journal or such other source as
the Company deems reliable. If the relevant date does not fall on a day on which
the Stock has traded on such securities exchange or market system, the date on
which the Fair Market Value shall be established shall be the last day on which
the Stock was so traded prior to the relevant date, or such other appropriate
day as shall be determined by the Board, in its discretion.

 

(ii) If, on such date, the Stock is not listed on a national or regional
securities exchange or market system, the Fair Market Value of a share of Stock
shall be as determined by the Board in good faith without regard to any
restriction other than a restriction which, by its terms, will never lapse.

 

(k) “Good Reason” means: (i) the Participant’s compensation, including salary,
bonus and perquisites, are reduced from the compensation level in effect for the
Participant during the year preceding the Change in Control (or such shorter
period of time as the Participant was employed by the Company); or (2) without
the Participant’s consent, the relocation of the principal place of the
Participant’s employment to a location that is more than

 

2

--------------------------------------------------------------------------------

fifty (50) miles from the Participant’s current place of employment; or (3) a
material diminution of the Participant’s title or duties with the Company.

 

(l) “Parent Corporation” means any present or future “parent corporation” of the
Company, as defined in Section 424(e) of the Code.

 

(m) “Participant” means Stuart D. Marvin.

 

(n) “Participating Company” means the Company or any Parent Corporation or
Subsidiary Corporation.

 

(o) “Participating Company Group” means, at any point in time, all corporations
collectively which are then Participating Companies.

 

(p) “Restriction Period” means the period established in accordance with Section
3 during which shares subject the Award are subject to Vesting Conditions.

 

(q) “Securities Act” means the Securities Act of 1933, as amended.

 

(r) “Service” means the Participant’s employment or service with the
Participating Company Group, whether in the capacity of an Employee, a director
or a consultant. The Participant’s Service shall not be deemed to have
terminated merely because of a change in the capacity in which the Participant
renders service to the Participating Company Group or change in the
Participating Company for which the Participant renders Service, provided that
there is no interruption or termination of the Participant’s Service.
Furthermore, the Participant’s Service with the Participating Company Group
shall not be deemed to have terminated if the Participant takes any military
leave, sick leave, or other bona fide leave of absence approved by the Company;
provided, however, that if any such leave exceeds ninety (90) days, on the
ninety-first (91st) day of such leave the Participant’s Service shall be deemed
to have terminated unless the Participant’s right to return to Service with the
Participating Company Group is guaranteed by statute or contract.
Notwithstanding the foregoing, unless otherwise designated by the Company or
required by law, a leave of absence shall not be treated as Service for purposes
of determining the Participant’s Vested Shares. The Participant’s Service shall
be deemed to have terminated either upon an actual termination of Service or
upon the corporation for which the Participant performs Service ceasing to be a
Participating Company. Subject to the foregoing, the Company, in its sole
discretion, shall determine whether the Participant’s Service has terminated and
the effective date of such termination.

 

(s) “Stock” means the common stock of the Company, as adjusted from time to time
in accordance with Section 4.2.

 

(t) “Subsidiary Corporation” means any present or future “subsidiary
corporation” of the Company, as defined in Section 424(f) of the Code.

 

3

--------------------------------------------------------------------------------

(u) “Vesting Conditions” mean those conditions established in accordance with
Section 3 of this Agreement prior to the satisfaction of which shares subject to
the Award remain subject to forfeiture or a repurchase option in favor of the
Company.

 

1.2 Construction. Captions and titles contained herein are for convenience only
and shall not affect the meaning or interpretation of any provision of this
Agreement. Except when otherwise indicated by the context, the singular shall
include the plural and the plural shall include the singular. Use of the term
“or” is not intended to be exclusive, unless the context clearly requires
otherwise.

 

2. THE AWARD.

 

2.1 Grant and Issuance of Shares. On the Date of Grant, the Participant will
acquire and the Company will issue, subject to the provisions of this Agreement,
a number of Shares equal to the Award provided by this Agreement. As a condition
to the issuance of the Shares, the Participant shall execute and deliver to the
Company along with this Agreement (a) the Joint Escrow Instructions in the form
attached to this Agreement and (b) the Assignment Separate from Certificate duly
endorsed (with date and number of shares blank) in the form attached to this
Agreement.

 

2.2 No Monetary Payment Required. The Participant is not required to make any
monetary payment (other than applicable tax withholding, if any) as a condition
to receiving the Shares, the consideration for which shall be past services
actually rendered and/or future services to be rendered to the Company or for
its benefit.

 

2.3 Certificate Registration. The certificate for the Shares shall be registered
in the name of the Participant, or, if applicable, in the names of the heirs of
the Participant.

 

2.4 Issuance of Shares in Compliance with Law. The issuance of the Shares shall
be subject to compliance with all applicable requirements of federal, state or
foreign law with respect to such securities. No Shares shall be issued hereunder
if their issuance would constitute a violation of any applicable federal, state
or foreign securities laws or other law or regulations or the requirements of
any stock exchange or market system upon which the Stock may then be listed. The
inability of the Company to obtain from any regulatory body having jurisdiction
the authority, if any, deemed by the Company’s legal counsel to be necessary to
the lawful issuance of any Shares shall relieve the Company of any liability in
respect of the failure to issue such Shares as to which such requisite authority
shall not have been obtained. As a condition to the issuance of the Shares, the
Company may require the Participant to satisfy any qualifications that may be
necessary or appropriate, to evidence compliance with any applicable law or
regulation and to make any representation or warranty with respect thereto as
may be requested by the Company.

 

3. VESTING CONDITIONS.

 

3.1 Normal Vesting. Fifty percent (50%) of the Shares granted under this Award
shall vest on the second anniversary of the Date of Grant, provided that the
Participant’s

 

4

--------------------------------------------------------------------------------

Service to the Company has not terminated prior to such date. An additional
twenty-five percent (25%) of the Shares granted under this Award shall vest on
the third anniversary of the Date of Grant, and the remaining twenty-five
percent (25%) of the Shares granted under this Awards shall vest on the fourth
anniversary of the Date of Grant, provided that the Participant’s Service to the
Company has not terminated prior to any such date. No additional Shares will
become vested following the Participant’s termination of Service for any reason.
Shares that are not vested (“Unvested Shares”) shall be subject to the
reacquisition rights set forth in Section 4.1 below.

 

3.2 Acceleration of Vesting Upon a Termination After a Change in Control. A
Participant shall become one hundred percent (100%) vested in the Award in the
event that if within one (1) year after a Change in Control the Participant’s
employment is terminated without Cause, or if the Participant resigns for Good
Reason. The Committee shall determine whether a termination of Service is for
Cause or on account of Good Reason in accordance with this Agreement.

 

4. COMPANY REACQUISITION RIGHT.

 

4.1 Grant of Company Reacquisition Right. In the event that (a) the
Participant’s Service terminates for any reason or no reason, with or without
cause, or (b) the Participant, the Participant’s legal representative, or other
holder of the Shares, attempts to sell, exchange, transfer, pledge, or otherwise
dispose of (other than pursuant to a Change in Control), including, without
limitation, any transfer to a nominee or agent of the Participant, any Unvested
Shares, the Company shall automatically reacquire the Unvested Shares, and the
Participant shall not be entitled to any payment therefor (the “Company
Reacquisition Right”).

 

4.2 Change in Control. Upon the occurrence of a Change in Control, any and all
new, substituted or additional securities or other property to which the
Participant is entitled by reason of the Participant’s ownership of Unvested
Shares shall be immediately subject to the Company Reacquisition Right and
included in the terms “Shares,” “Stock,” and “Unvested Shares” for all purposes
of the Company Reacquisition Right with the same force and effect as the
Unvested Shares immediately prior to the Change in Control.

 

5

--------------------------------------------------------------------------------

5. TAX MATTERS.

 

5.1 Tax Withholding. At the time this Agreement is executed, or at any time
thereafter as requested by the Company, the Participant hereby authorizes
withholding from any amounts payable to the Participant, and otherwise agrees to
make adequate provision for, any sums required to satisfy the federal, state,
local and foreign tax withholding obligations of the Company, if any, which
arise in connection with the Award, including, without limitation, obligations
arising upon (a) the transfer of Shares to the Participant, (b) the lapsing of
any Vesting Conditions with respect to any Shares, (c) the filing of an election
to recognize tax liability, or (d) the transfer by the Participant of any
Shares. The Company shall have no obligation to deliver the Shares or to release
any Shares from an escrow established pursuant to this Agreement until the tax
withholding obligations of the Company have been satisfied by the Participant.

 

5.2 Election Under Section 83(b) of the Code.

 

(a) The Participant understands that Section 83 of the Code taxes as ordinary
income the difference between the amount paid for the Shares, if anything, and
the Fair Market Value of the Shares as of the date on which the Shares are
“substantially vested,” within the meaning of Section 83. In this context,
“substantially vested” means that the right of the Company to reacquire the
Shares pursuant to the Company Reacquisition Right has lapsed. The Participant
understands that he or she may elect to have his or her taxable income
determined at the time he or she acquires the Shares rather than when and as the
Company Reacquisition Right lapses by filing an election under Section 83(b) of
the Code with the Internal Revenue Service no later than thirty (30) days after
the date of acquisition of the Shares. The Participant understands that failure
to make a timely filing under Section 83(b) will result in his or her
recognition of ordinary income, as the Company Reacquisition Right lapses, on
the difference between the purchase price, if anything, and the Fair Market
Value of the Shares at the time such restrictions lapse. The Participant further
understands, however, that if Shares with respect to which an election under
Section 83(b) has been made are forfeited to the Company pursuant to its Company
Reacquisition Right, such forfeiture will be treated as a sale on which there is
realized a loss equal to the excess (if any) of the amount paid (if any) by the
Participant for the forfeited Shares over the amount realized (if any) upon
their forfeiture. If the Participant has paid nothing for the forfeited Shares
and has received no payment upon their forfeiture, the Participant understands
that he or she will be unable to recognize any loss on the forfeiture of the
Shares even though the Participant incurred a tax liability by making an
election under Section 83(b).

 

(b) The Participant understands that he or she should consult with his or her
tax advisor regarding the advisability of filing with the Internal Revenue
Service an election under Section 83(b) of the Code, which must be filed no
later than thirty (30) days after the date of the acquisition of the Shares
pursuant to this Agreement. Failure to file an election under Section 83(b), if
appropriate, may result in adverse tax consequences to the Participant. The
Participant acknowledges that he or she has been advised to consult with a tax
advisor

 

6

--------------------------------------------------------------------------------

regarding the tax consequences to the Participant of the acquisition of Shares
hereunder. ANY ELECTION UNDER SECTION 83(b) THE PARTICIPANT WISHES TO MAKE MUST
BE FILED NO LATER THAN 30 DAYS AFTER THE DATE ON WHICH THE PARTICIPANT ACQUIRES
THE SHARES. THIS TIME PERIOD CANNOT BE EXTENDED. THE PARTICIPANT ACKNOWLEDGES
THAT TIMELY FILING OF A SECTION 83(b) ELECTION IS THE PARTICIPANT’S SOLE
RESPONSIBILITY, EVEN IF THE PARTICIPANT REQUESTS THE COMPANY OR ITS
REPRESENTATIVE TO FILE SUCH ELECTION ON HIS OR HER BEHALF.

 

(c) The Participant will notify the Company in writing if the Participant files
an election pursuant to Section 83(b) of the Code. The Company intends, in the
event it does not receive from the Participant evidence of such filing, to claim
a tax deduction for any amount which would otherwise be taxable to the
Participant in the absence of such an election.

 

6. ESCROW.

 

6.1 Establishment of Escrow. To ensure that Shares subject to the Company
Reacquisition Right will be available for reacquisition, the Participant agrees
to deliver to and deposit with an escrow agent designated by the Company the
certificate evidencing the Shares, together with an Assignment Separate from
Certificate with respect to such certificate duly endorsed (with date and number
of shares blank) in the form attached to this Agreement, to be held by the agent
under the terms and conditions of the Joint Escrow Instructions in the form
attached to this Agreement (the “Escrow”). The Company shall bear the expenses
of the Escrow.

 

6.2 Delivery of Shares to Participant. As soon as practicable after the
expiration of the Company’s Reacquisition Right, but not more frequently than
twice each calendar year, the Company shall give to the escrow agent a written
notice directing the escrow agent to deliver such Shares to the Participant. As
soon as practicable after receipt of such notice, the escrow agent shall deliver
to the Participant the Shares specified in such notice, and the Escrow shall
terminate with respect to such Shares.

 

7. ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE.

 

In the event of any stock dividend, stock split, reverse stock split,
recapitalization, merger, combination, exchange of shares, reclassification, or
similar change in the capital structure of the Company, appropriate adjustments
shall be made in the number and class of shares subject to this Agreement. Any
and all new, substituted or additional securities or other property to which
Participant is entitled by reason of his or her ownership of the Shares will be
immediately subject to the provisions of this Agreement and the Escrow on the
same basis as all Shares originally acquired hereunder and will be included in
the terms “Shares” and “Stock” for all purposes of this Agreement and the Escrow
with the same force and effect as the Shares

 

7

--------------------------------------------------------------------------------

presently subject thereto. The adjustments determined by the Board pursuant to
this Section 7 shall be final, binding and conclusive.

 

8. LEGENDS.

 

The Company may at any time place legends referencing the Company Reacquisition
Right and any applicable federal, state or foreign securities law restrictions
on all certificates representing the Shares. The Participant shall, at the
request of the Company, promptly present to the Company any and all certificates
representing the Shares in the possession of the Participant in order to carry
out the provisions of this Section.

 

9. TRANSFERS IN VIOLATION OF AGREEMENT.

 

No Shares may be sold, exchanged, transferred (including, without limitation,
any transfer to a nominee or agent of the Participant), assigned, pledged,
hypothecated or otherwise disposed of, including by operation of law, in any
manner which violates any of the provisions of this Agreement and, except
pursuant to a “Change in Control” as defined in the “Change-in-Control
Agreement, until the date on which such shares become Vested Shares, and any
such attempted disposition shall be void. The Company shall not be required (a)
to transfer on its books any Shares which will have been transferred in
violation of any of the provisions set forth in this Agreement or (b) to treat
as owner of such Shares or to accord the right to vote as such owner or to pay
dividends to any transferee to whom such Shares will have been so transferred.
In order to enforce its rights under this Section, the Company shall be
authorized to give a stop transfer instruction with respect to the Shares to the
Company’s transfer agent.

 

10. RIGHTS AS A STOCKHOLDER.

 

The Participant shall have no rights as a stockholder with respect to any Shares
subject to the Award until the date of the issuance of a certificate for such
Shares (as evidenced by the appropriate entry on the books of the Company or of
a duly authorized transfer agent of the Company). No adjustment shall be made
for dividends, distributions or other rights for which the record date is prior
to the date such certificate is issued, except as provided in Section 7. Subject
to the provisions of this Agreement, the Participant shall be entitled to all
rights and privileges of a stockholder of the Company with respect to Shares
deposited in the Escrow pursuant to Section 6.

 

11. RIGHT TO CONTINUED SERVICE WITH THE COMPANY.

 

Nothing in this Agreement shall confer upon the Participant any right to
continue in the Service of the Company or interfere in any way with any right of
the Company to terminate the Participant’s Service at any time.

 

12. MISCELLANEOUS PROVISIONS.

 

12.1 Administration. All questions of interpretation concerning this Agreement
shall be determined by the Board. All determinations by the Board shall be final
and

 

8

--------------------------------------------------------------------------------

binding upon all persons having an interest in the Award. Any officer of the
Company shall have the authority to act on behalf of the Company with respect to
any matter, right, obligation, or election which is the responsibility of or
which is allocated to the Company herein, provided the officer has apparent
authority with respect to such matter, right, obligation, or election.

 

12.2 Amendment. The Board may amend this Agreement at any time; provided,
however, that no such amendment may adversely affect the Participant’s rights
under this Agreement without the consent of the Participant. No amendment or
addition to this Agreement shall be effective unless in writing.

 

12.3 Nontransferability of the Award. The right to acquire Shares pursuant to
the Award may not be assigned or transferred in any manner except by will or by
the laws of descent and distribution. During the lifetime of the Participant,
all rights with respect to this Award shall be exercisable only by the
Participant.

 

12.4 Further Instruments. The parties hereto agree to execute such further
instruments and to take such further action as may reasonably be necessary to
carry out the intent of this Agreement.

 

12.5 Binding Effect. This Agreement shall inure to the benefit of the successors
and assigns of the Company and, subject to the restrictions on transfer set
forth herein, be binding upon the Participant and the Participant’s heirs,
executors, administrators, successors and assigns.

 

12.6 Notices. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given (except to the extent that this
Agreement provides for effectiveness only upon actual receipt of such notice)
upon personal delivery or upon deposit in the United States Post Office, by
registered or certified mail, with postage and fees prepaid, addressed to the
other party at the address shown below that party’s signature in this Agreement
or at such other address as such party may designate in writing from time to
time to the other party.

 

12.7 Integrated Agreement. This Agreement constitutes the entire understanding
and agreement of the Participant and the Company with respect to the subject
matter contained herein and there are no agreements, understandings,
restrictions, representations, or warranties among the Participant and the
Participating Company Group with respect to such subject matter other than those
as set forth or provided for herein or therein.

 

12.8 Applicable Law. The Agreement shall be governed by the laws of the State of
California as such laws are applied to agreements between California residents
entered into and to be performed entirely within the State of California.

 

12.9 Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.

 

9

--------------------------------------------------------------------------------

By their signatures below, the Company and the Participant agree that the Award
is governed by the provisions of this Agreement. The Participant acknowledges
receipt of a copy of this Agreement, and represents that the Participant has
read and is familiar with the provisions of the Agreement, and hereby accepts
the Award subject to all applicable terms and conditions.

 

ACCREDITED HOME LENDERS

HOLDING CO.

     

PARTICIPANT

         

James A. Konrath, Chief Executive Officer

     

Stuart D. Marvin

           

Dated as of April 15, 2005

Address: 

 

ATTN: Chief Executive Officer

           

15090 Avenue of Science

     

Address:

   

San Diego, CA 92128

                     

 

ATTACHMENTS:    Joint Escrow Instructions and Assignment Separate from
Certificate

 

10

--------------------------------------------------------------------------------

ACCREDITED HOME LENDERS HOLDING CO.

RESTRICTED STOCK AGREEMENT

JOINT ESCROW INSTRUCTIONS

 

These Joint Escrow Instructions are entered into as of April 15, 2005.

 

RECITALS

 

A. Accredited Home Lenders Holding Co., a Delaware corporation (the “Company”),
and its undersigned employee (the “Participant”) desire to appoint David E.
Hertzel, General Counsel of the Company, as their agent (the “Agent”) with
respect to certain certificate(s) evidencing shares of the Company’s common
stock (the “Stock”) awarded to the Participant pursuant to the terms and
conditions of the Restricted Stock Agreement attached hereto as Exhibit A (the
“Agreement”).

 

ESCROW INSTRUCTIONS

 

The Company and the Participant hereby authorize and direct the Agent to hold
the documents and certificate(s) delivered to the Agent pursuant to these Escrow
Instructions and to take the following actions with respect thereto, and the
Company and the Participant hereby agree as follows:

 

1. The Participant hereby delivers and/or agrees to deliver to the Agent the
Participant’s certificate(s) evidencing the Stock and an Assignment Separate
From Certificate executed in blank. The Participant irrevocably authorizes the
Company to deposit with the Agent any certificate(s) evidencing shares of the
Company’s common stock acquired by the Participant pursuant to the Agreement
which the Company may from time to time issue to the Participant during the term
of these Escrow Instructions.

 

2. The provisions of these Escrow Instructions shall apply for so long as the
Stock is subject to the Company Reacquisition Right set forth in the Agreement
(the “Reacquisition Rights”). Upon termination of the Company’s Reacquisition
Rights this escrow will terminate.

 

3. In the event the Company shall elect to exercise any of the Reacquisition
Rights, the Company shall give to the Participant and the Agent a written notice
(the “Reacquisition Notice”) which states (a) the terms and conditions of such
purchase, determined in accordance with the provisions of the Stock Purchase
Agreement, and (b) a time and date for a closing hereunder at the principal
office of the Company. The Participant and the Company hereby irrevocably
authorize and direct the Agent to close the transaction contemplated by the
Reacquisition Notice in accordance with the terms of the Reacquisition Notice.
At the closing, the Agent shall deliver the certificate(s) evidencing the shares
of Stock to be transferred to the Company against the simultaneous delivery by
the Company to the Agent of the consideration, if any, for the number of shares
of Stock being thus purchased. The balance of any such shares of Stock and the
consideration so received shall be retained by the Agent and held in accordance
with these Escrow Instructions.

 

1

--------------------------------------------------------------------------------

4. The Company may at any time release some or all of the Stock from the
provisions of these Escrow Instructions by giving written notice to the
Participant and the Agent directing delivery to the Participant of the shares of
Stock to be released. Twice per calendar year the Participant may request that
the Company direct the Agent to release from the provisions of these Escrow
Instructions the shares of Stock which are no longer subject to any of the
Company’s Reacquisition Rights. The Company shall give to the Participant and
the Agent written notice directing delivery to the Participant of the shares of
Stock to be released. The Agent shall use the Agent’s best efforts to cause the
certificate(s) evidencing the Stock held by the Agent to be delivered to the
Participant pursuant to such notice within ten (10) days from receipt of such
notice.

 

5. To facilitate the exercise of any of the Reacquisition Rights and the
performance of these instructions, the Participant does hereby constitute and
appoint the Agent as the Participant’s attorney-in-fact and agent for the term
of this escrow to execute with respect to such securities all stock
certificates, stock assignments, or other instruments which shall be necessary
or appropriate to make such securities negotiable and complete any transaction
herein contemplated, including the Company’s exercise of its rights as a secured
party. The Participant understands that such appointment is coupled with an
interest and is irrevocable. Subject to the provisions of these Escrow
Instructions, the Participant shall exercise all rights and privileges of a
stockholder of the Company while the Stock is held by the Agent; provided,
however, the Participant may not sell, transfer, dispose of, or in any manner
encumber any shares of the Stock while such shares of Stock are held by the
Agent hereunder.

 

6. If at the time of termination of this escrow, the Agent shall have in the
Agent’s possession any documents, securities, or other property belonging to the
Participant, the Agent shall deliver all of same to the Participant and shall be
discharged of all further obligations hereunder.

 

7. The Agent’s duties hereunder may be altered, amended, modified, or revoked
only by a writing signed by the Company and the Participant, and approved by the
Agent.

 

8. The Agent shall not be personally liable for any act the Agent may do or omit
to do hereunder as escrow agent, agent for the Company, or attorney in fact for
the Participant while acting in good faith and in the exercise of the Agent’s
own good judgment, and any act done or omitted by the Agent pursuant to the
advice of the Agent’s own attorneys shall be conclusive evidence of such good
faith.

9. The Agent is hereby expressly authorized to disregard any and all warnings by
any of the parties hereto or by any other person, firm, corporation, or other
entity, excepting only orders or process of courts of law, and is hereby
expressly authorized to comply with and obey orders, judgments, or decrees of
any court. In the event the Agent obeys or complies with any such order,
judgment, or decree of any court, the Agent shall not be liable to any of the
parties hereto or to any other person, firm, corporation, or other entity by
reason of such compliance notwithstanding that any such order, judgment, or
decree shall be subsequently reversed, modified, annulled, set aside, vacated,
or found to have been entered without jurisdiction.

 

10. The Agent shall not be liable in any respect on account of the identity,
authorities, or rights of the parties executing or delivering or purporting to
execute or deliver any agreements

 

2

--------------------------------------------------------------------------------

or documents called for by the Stock Purchase Agreement or any documents or
papers deposited or called for hereunder.

 

11. The Agent shall not be liable for the barring of any rights under the
statute of limitations with respect to these Escrow Instructions or any
documents deposited with the Agent.

 

12. By signing these Escrow Instructions, the Agent becomes a party hereto only
for the purpose of said Escrow Instructions. The Agent shall not be considered a
party to the Stock Purchase Agreement or to any documents or agreements called
for by the Stock Purchase Agreement.

 

13. The Agent may resign from the Agent’s duties hereunder at any time upon
written notice to the Company and the Participant and delivery of all documents
and certificates held in this escrow to the successor escrow agent. If a
successor escrow agent has not been appointed within thirty (30) days, the Agent
may deliver all such documents and certificates to the Company, at which time,
all further responsibilities and duties of the Agent shall cease.

 

14. If prior to the termination of these Escrow Instructions the Agent shall
resign or otherwise cease to operate as escrow agent, a successor escrow agent
shall be designated by the Board of Directors of the Company. The Board of
Directors of the Company may, at any time, substitute another party in the
Agent’s place as escrow agent hereunder, and the Participant hereby expressly
accepts such substitution.

 

15. All notices and other communications hereunder shall be in writing and shall
be deemed given if delivered personally or mailed by registered or certified
mail (return receipt requested) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):

 

(a)

  if to the Company, to:     Accredited Home Lenders Holding Co.     15090
Avenue of Science     San Diego, CA 92128     Attn: General Counsel

(b)

  if to the Participant, to the address set forth below the Participant’s
signature below.

(c)

  if to the Agent, to:     General Counsel     Accredited Home Lenders Holding
Co.     15090 Avenue of Science     San Diego, CA 92128

 

16. The provisions of these Escrow Instructions shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns.

 

3

--------------------------------------------------------------------------------

17. These Escrow Instructions shall be governed, to the fullest extent possible,
by the laws contained in the California Commercial Code, including any
regulations or judicial interpretations with respect thereto. To the extent that
any matter is not governed by the laws contained in the California Commercial
Code, such matter shall be governed by the laws of the state of the
Participant’s residence as such laws are applied to agreements between residents
of such state entered into and to be performed entirely within such state.

 

18. The terms and conditions of these Escrow Instructions, including all terms
and conditions incorporated by reference herein, shall survive the exercise of
the stock purchase right granted pursuant to the Stock Purchase Agreement and
shall continue in full force and effect thereafter.

 

19. These Escrow Instructions, the Notice and the Stock Purchase Agreement
contain the entire understanding of the Company and the Participant with respect
to the subject matter contained herein, and there are no other contracts,
agreements, understandings, representations, warranties, or covenants with
respect to the subject matter contained herein.

 

IN WITNESS WHEREOF, the Company and the Participant have executed these Escrow
Instructions as of the date first above written.

 

ACCREDITED HOME LENDERS

HOLDING CO.

 

James A. Konrath, Chief Executive Officer

PARTICIPANT:

 

Stuart D. Marvin

Address:

   

ESCROW AGENT:

 

David E. Hertzel, General Counsel

 

4

--------------------------------------------------------------------------------

The undersigned, being the spouse of the above-named Participant, does hereby
acknowledge that the undersigned has read and is familiar with the provisions of
the above Joint Escrow Instructions, and the undersigned hereby agrees thereto
and joins therein to the extent, if any, that the agreement and joinder of the
undersigned may be necessary.

 

 

Signature of Spouse, if applicable

 

5

--------------------------------------------------------------------------------

ASSIGNMENT SEPARATE FROM CERTIFICATE

 

FOR VALUE RECEIVED the undersigned does hereby sell, assign and transfer
unto                                     
                                        
                                        
                                        
                                                     
                                                         (            ) shares
of the common stock of Accredited Home Lenders Holding Co. (the “Company”)
standing in the undersigned’s name on the books of said corporation represented
by Certificate No.                     herewith and does hereby irrevocably
constitute and appoint the General Counsel of the Company as Attorney to
transfer the said stock on the books of said corporation with full power of
substitution in the premises.

 

Dated:

                         

Signature

                            

Print Name

--------------------------------------------------------------------------------

Exhibit B

 

ACCREDITED HOME LENDERS HOLDING CO.

RESTRICTED STOCK AGREEMENT

 

Accredited Home Lenders Holding Co. (the “Company”) has granted to Stuart D.
Marvin (the “Participant”) an Award consisting of Shares subject to the terms
and conditions set forth in this Restricted Stock Agreement (the “Agreement”).
The Award has been granted pursuant to an offer of employment between the
Company and the Participant. By signing this Agreement, the Participant: (a)
represents that the Participant has read and is familiar with the terms and
conditions of the Award and this Agreement, (b) accepts the Award subject to all
of the terms and conditions of this Agreement, (c) agrees to accept as binding,
conclusive and final all decisions or interpretations of the Board upon any
questions arising under this Agreement, and (d) acknowledges receipt of a copy
of this Agreement.

 

1. DEFINITIONS AND CONSTRUCTION.

 

1.1 Definitions. Whenever used herein, the following terms shall have their
respective meanings set forth below:

 

(a) “Date of Grant” means April 15, 2005.

 

(b) “Award” means a total of Fourteen Thousand Two Hundred and Forty (14,240)
shares of Stock granted to the Participant pursuant to the terms and conditions
of this Agreement.

 

(c) “Board” means the Board of Directors of the Company. If one or more
Committees have been appointed by the Board to administer this Agreement,
“Board” also means such Committee(s).

 

(d) “Cause” shall mean a Participant’s termination of employment for any of the
following reasons: (i) theft, dishonesty or falsification of business records;
(ii) improper use or disclosure of confidential or proprietary information
regarding the Company; (iii) failure of the Participant to perform his or her
job, including all assigned duties; (iv) any material breach of a written
employment agreement which is not cured pursuant to the terms of the agreement;
(v) the Participant’s conviction of a criminal act which impairs his or her
ability to perform duties for the Company; or (vi) any action by the Participant
which has a detrimental effect on the business of the Company.

 

(e) “Change in Control” shall mean: (i) the acquisition by an individual
“person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
or entity or a group of individuals or entities acting in concert, directly or
indirectly, through one transaction or a series of related transactions, of more
than 50% of the outstanding voting securities of the Company; (ii) a merger or
consolidation of the Company with or into another entity after which the
stockholders of the Company immediately prior to such transaction hold less than
50% of the

 

1

--------------------------------------------------------------------------------

voting securities of the surviving entity; or (iii) a sale of all or
substantially all of the assets of the Company.

 

(f) “Code” means the Internal Revenue Code of 1986, as amended, and any
applicable regulations promulgated thereunder.

 

(g) “Committee” means the Compensation Committee or other committee of the Board
duly appointed to administer the Agreement and having such powers as shall be
specified by the Board. If no committee of the Board has been appointed to
administer the Agreement, the Board shall exercise all of the powers of the
Committee granted herein, and, in any event, the Board may in its discretion
exercise any or all of such powers.

 

(h) “Company” means Accredited Home Lenders Holding Co., a Delaware corporation,
or any successor corporation thereto.

 

(i) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(j) “Fair Market Value” means, as of any date, the value of a share of Stock or
other property as determined by the Board, in its discretion, or by the Company,
in its discretion, if such determination is expressly allocated to the Company
herein, subject to the following:

 

(i) If, on such date, the Stock is listed on a national or regional securities
exchange or market system, the Fair Market Value of a share of Stock shall be
the closing price of a share of Stock (or the mean of the closing bid and asked
prices of a share of Stock if the Stock is so quoted instead) as quoted on the
Nasdaq National Market, The Nasdaq SmallCap Market or such other national or
regional securities exchange or market system constituting the primary market
for the Stock, as reported in The Wall Street Journal or such other source as
the Company deems reliable. If the relevant date does not fall on a day on which
the Stock has traded on such securities exchange or market system, the date on
which the Fair Market Value shall be established shall be the last day on which
the Stock was so traded prior to the relevant date, or such other appropriate
day as shall be determined by the Board, in its discretion.

 

(ii) If, on such date, the Stock is not listed on a national or regional
securities exchange or market system, the Fair Market Value of a share of Stock
shall be as determined by the Board in good faith without regard to any
restriction other than a restriction which, by its terms, will never lapse.

 

(k) “Good Reason” means: (i) the Participant’s compensation, including salary,
bonus and perquisites, are reduced from the compensation level in effect for the
Participant during the year preceding the Change in Control (or such shorter
period of time as the Participant was employed by the Company); or (2) without
the Participant’s consent, the relocation of the principal place of the
Participant’s employment to a location that is more than

 

2

--------------------------------------------------------------------------------

fifty (50) miles from the Participant’s current place of employment; or (3) a
material diminution of the Participant’s title or duties with the Company.

 

(l) “Parent Corporation” means any present or future “parent corporation” of the
Company, as defined in Section 424(e) of the Code.

 

(m) “Participant” means Stuart D. Marvin.

 

(n) “Participating Company” means the Company or any Parent Corporation or
Subsidiary Corporation.

 

(o) “Participating Company Group” means, at any point in time, all corporations
collectively which are then Participating Companies.

 

(p) “Restriction Period” means the period established in accordance with Section
3 during which shares subject the Award are subject to Vesting Conditions.

 

(q) “Securities Act” means the Securities Act of 1933, as amended.

 

(r) “Service” means the Participant’s employment or service with the
Participating Company Group, whether in the capacity of an Employee, a director
or a consultant. The Participant’s Service shall not be deemed to have
terminated merely because of a change in the capacity in which the Participant
renders service to the Participating Company Group or change in the
Participating Company for which the Participant renders Service, provided that
there is no interruption or termination of the Participant’s Service.
Furthermore, the Participant’s Service with the Participating Company Group
shall not be deemed to have terminated if the Participant takes any military
leave, sick leave, or other bona fide leave of absence approved by the Company;
provided, however, that if any such leave exceeds ninety (90) days, on the
ninety-first (91st) day of such leave the Participant’s Service shall be deemed
to have terminated unless the Participant’s right to return to Service with the
Participating Company Group is guaranteed by statute or contract.
Notwithstanding the foregoing, unless otherwise designated by the Company or
required by law, a leave of absence shall not be treated as Service for purposes
of determining the Participant’s Vested Shares. The Participant’s Service shall
be deemed to have terminated either upon an actual termination of Service or
upon the corporation for which the Participant performs Service ceasing to be a
Participating Company. Subject to the foregoing, the Company, in its sole
discretion, shall determine whether the Participant’s Service has terminated and
the effective date of such termination.

 

(s) “Stock” means the common stock of the Company, as adjusted from time to time
in accordance with Section 4.2.

 

(t) “Subsidiary Corporation” means any present or future “subsidiary
corporation” of the Company, as defined in Section 424(f) of the Code.

 

3

--------------------------------------------------------------------------------

(u) “Vesting Conditions” mean those conditions established in accordance with
Section 3 of this Agreement prior to the satisfaction of which shares subject to
the Award remain subject to forfeiture or a repurchase option in favor of the
Company.

 

1.2 Construction. Captions and titles contained herein are for convenience only
and shall not affect the meaning or interpretation of any provision of this
Agreement. Except when otherwise indicated by the context, the singular shall
include the plural and the plural shall include the singular. Use of the term
“or” is not intended to be exclusive, unless the context clearly requires
otherwise.

 

2. THE AWARD.

 

2.1 Grant and Issuance of Shares. On the Date of Grant, the Participant will
acquire and the Company will issue, subject to the provisions of this Agreement,
a number of Shares equal to the Award provided by this Agreement. As a condition
to the issuance of the Shares, the Participant shall execute and deliver to the
Company along with this Agreement (a) the Joint Escrow Instructions in the form
attached to this Agreement and (b) the Assignment Separate from Certificate duly
endorsed (with date and number of shares blank) in the form attached to this
Agreement.

 

2.2 No Monetary Payment Required. The Participant is not required to make any
monetary payment (other than applicable tax withholding, if any) as a condition
to receiving the Shares, the consideration for which shall be past services
actually rendered and/or future services to be rendered to the Company or for
its benefit.

 

2.3 Certificate Registration. The certificate for the Shares shall be registered
in the name of the Participant, or, if applicable, in the names of the heirs of
the Participant.

 

2.4 Issuance of Shares in Compliance with Law. The issuance of the Shares shall
be subject to compliance with all applicable requirements of federal, state or
foreign law with respect to such securities. No Shares shall be issued hereunder
if their issuance would constitute a violation of any applicable federal, state
or foreign securities laws or other law or regulations or the requirements of
any stock exchange or market system upon which the Stock may then be listed. The
inability of the Company to obtain from any regulatory body having jurisdiction
the authority, if any, deemed by the Company’s legal counsel to be necessary to
the lawful issuance of any Shares shall relieve the Company of any liability in
respect of the failure to issue such Shares as to which such requisite authority
shall not have been obtained. As a condition to the issuance of the Shares, the
Company may require the Participant to satisfy any qualifications that may be
necessary or appropriate, to evidence compliance with any applicable law or
regulation and to make any representation or warranty with respect thereto as
may be requested by the Company.

 

3. VESTING CONDITIONS.

 

3.1 Normal Vesting. Fifty percent (50%) of the Shares granted under this Award
shall vest on February 15, 2008, provided that the Participant’s Service to the
Company

 

4

--------------------------------------------------------------------------------

has not terminated prior to such date. An additional twenty-five percent (25%)
of the Shares granted under this Award shall vest on February 15, 2009, and the
remaining twenty-five percent (25%) of the Shares granted under this Awards
shall vest on February 15, 2010, provided that the Participant’s Service to the
Company has not terminated prior to any such date. No additional Shares will
become vested following the Participant’s termination of Service for any reason.
Shares that are not vested (“Unvested Shares”) shall be subject to the
reacquisition rights set forth in Section 4.1 below.

 

3.2 Acceleration of Vesting Upon a Termination After a Change in Control. A
Participant shall become one hundred percent (100%) vested in the Award in the
event that if within one (1) year after a Change in Control the Participant’s
employment is terminated without Cause, or if the Participant resigns for Good
Reason. The Committee shall determine whether a termination of Service is for
Cause or on account of Good Reason in accordance with this Agreement.

 

4. COMPANY REACQUISITION RIGHT.

 

4.1 Grant of Company Reacquisition Right. In the event that (a) the
Participant’s Service terminates for any reason or no reason, with or without
cause, or (b) the Participant, the Participant’s legal representative, or other
holder of the Shares, attempts to sell, exchange, transfer, pledge, or otherwise
dispose of (other than pursuant to a Change in Control), including, without
limitation, any transfer to a nominee or agent of the Participant, any Unvested
Shares, the Company shall automatically reacquire the Unvested Shares, and the
Participant shall not be entitled to any payment therefor (the “Company
Reacquisition Right”).

 

4.2 Change in Control. Upon the occurrence of a Change in Control, any and all
new, substituted or additional securities or other property to which the
Participant is entitled by reason of the Participant’s ownership of Unvested
Shares shall be immediately subject to the Company Reacquisition Right and
included in the terms “Shares,” “Stock,” and “Unvested Shares” for all purposes
of the Company Reacquisition Right with the same force and effect as the
Unvested Shares immediately prior to the Change in Control.

 

5. TAX MATTERS.

 

5.1 Tax Withholding. At the time this Agreement is executed, or at any time
thereafter as requested by the Company, the Participant hereby authorizes
withholding from any amounts payable to the Participant, and otherwise agrees to
make adequate provision for, any sums required to satisfy the federal, state,
local and foreign tax withholding obligations of the Company, if any, which
arise in connection with the Award, including, without limitation, obligations
arising upon (a) the transfer of Shares to the Participant, (b) the lapsing of
any Vesting Conditions with respect to any Shares, (c) the filing of an election
to recognize tax liability, or (d) the transfer by the Participant of any
Shares. The Company shall have no obligation to deliver the Shares or to release
any Shares from an escrow established pursuant to this Agreement until the tax
withholding obligations of the Company have been satisfied by the Participant.

 

5

--------------------------------------------------------------------------------

5.2 Election Under Section 83(b) of the Code.

 

(a) The Participant understands that Section 83 of the Code taxes as ordinary
income the difference between the amount paid for the Shares, if anything, and
the Fair Market Value of the Shares as of the date on which the Shares are
“substantially vested,” within the meaning of Section 83. In this context,
“substantially vested” means that the right of the Company to reacquire the
Shares pursuant to the Company Reacquisition Right has lapsed. The Participant
understands that he or she may elect to have his or her taxable income
determined at the time he or she acquires the Shares rather than when and as the
Company Reacquisition Right lapses by filing an election under Section 83(b) of
the Code with the Internal Revenue Service no later than thirty (30) days after
the date of acquisition of the Shares. The Participant understands that failure
to make a timely filing under Section 83(b) will result in his or her
recognition of ordinary income, as the Company Reacquisition Right lapses, on
the difference between the purchase price, if anything, and the Fair Market
Value of the Shares at the time such restrictions lapse. The Participant further
understands, however, that if Shares with respect to which an election under
Section 83(b) has been made are forfeited to the Company pursuant to its Company
Reacquisition Right, such forfeiture will be treated as a sale on which there is
realized a loss equal to the excess (if any) of the amount paid (if any) by the
Participant for the forfeited Shares over the amount realized (if any) upon
their forfeiture. If the Participant has paid nothing for the forfeited Shares
and has received no payment upon their forfeiture, the Participant understands
that he or she will be unable to recognize any loss on the forfeiture of the
Shares even though the Participant incurred a tax liability by making an
election under Section 83(b).

 

(b) The Participant understands that he or she should consult with his or her
tax advisor regarding the advisability of filing with the Internal Revenue
Service an election under Section 83(b) of the Code, which must be filed no
later than thirty (30) days after the date of the acquisition of the Shares
pursuant to this Agreement. Failure to file an election under Section 83(b), if
appropriate, may result in adverse tax consequences to the Participant. The
Participant acknowledges that he or she has been advised to consult with a tax
advisor regarding the tax consequences to the Participant of the acquisition of
Shares hereunder. ANY ELECTION UNDER SECTION 83(b) THE PARTICIPANT WISHES TO
MAKE MUST BE FILED NO LATER THAN 30 DAYS AFTER THE DATE ON WHICH THE PARTICIPANT
ACQUIRES THE SHARES. THIS TIME PERIOD CANNOT BE EXTENDED. THE PARTICIPANT
ACKNOWLEDGES THAT TIMELY FILING OF A SECTION 83(b) ELECTION IS THE PARTICIPANT’S
SOLE RESPONSIBILITY, EVEN IF THE PARTICIPANT REQUESTS THE COMPANY OR ITS
REPRESENTATIVE TO FILE SUCH ELECTION ON HIS OR HER BEHALF.

 

(c) The Participant will notify the Company in writing if the Participant files
an election pursuant to Section 83(b) of the Code. The Company intends, in the
event it does not receive from the Participant evidence of such filing, to claim
a tax deduction for any amount which would otherwise be taxable to the
Participant in the absence of such an election.

 

6

--------------------------------------------------------------------------------

6. ESCROW.

 

6.1 Establishment of Escrow. To ensure that Shares subject to the Company
Reacquisition Right will be available for reacquisition, the Participant agrees
to deliver to and deposit with an escrow agent designated by the Company the
certificate evidencing the Shares, together with an Assignment Separate from
Certificate with respect to such certificate duly endorsed (with date and number
of shares blank) in the form attached to this Agreement, to be held by the agent
under the terms and conditions of the Joint Escrow Instructions in the form
attached to this Agreement (the “Escrow”). The Company shall bear the expenses
of the Escrow.

 

6.2 Delivery of Shares to Participant. As soon as practicable after the
expiration of the Company’s Reacquisition Right, but not more frequently than
twice each calendar year, the Company shall give to the escrow agent a written
notice directing the escrow agent to deliver such Shares to the Participant. As
soon as practicable after receipt of such notice, the escrow agent shall deliver
to the Participant the Shares specified in such notice, and the Escrow shall
terminate with respect to such Shares.

 

7. ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE.

 

In the event of any stock dividend, stock split, reverse stock split,
recapitalization, merger, combination, exchange of shares, reclassification, or
similar change in the capital structure of the Company, appropriate adjustments
shall be made in the number and class of shares subject to this Agreement. Any
and all new, substituted or additional securities or other property to which
Participant is entitled by reason of his or her ownership of the Shares will be
immediately subject to the provisions of this Agreement and the Escrow on the
same basis as all Shares originally acquired hereunder and will be included in
the terms “Shares” and “Stock” for all purposes of this Agreement and the Escrow
with the same force and effect as the Shares presently subject thereto. The
adjustments determined by the Board pursuant to this Section 7 shall be final,
binding and conclusive.

 

8. LEGENDS.

 

The Company may at any time place legends referencing the Company Reacquisition
Right and any applicable federal, state or foreign securities law restrictions
on all certificates representing the Shares. The Participant shall, at the
request of the Company, promptly present to the Company any and all certificates
representing the Shares in the possession of the Participant in order to carry
out the provisions of this Section.

 

9. TRANSFERS IN VIOLATION OF AGREEMENT.

 

No Shares may be sold, exchanged, transferred (including, without limitation,
any transfer to a nominee or agent of the Participant), assigned, pledged,
hypothecated or otherwise disposed of, including by operation of law, in any
manner which violates any of the provisions of this Agreement and, except
pursuant to a “Change in Control” as defined in the “Change-in-Control
Agreement, until the date on which such shares become Vested Shares, and any
such attempted disposition shall be void. The Company shall not be required (a)
to transfer on its

 

7

--------------------------------------------------------------------------------

books any Shares which will have been transferred in violation of any of the
provisions set forth in this Agreement or (b) to treat as owner of such Shares
or to accord the right to vote as such owner or to pay dividends to any
transferee to whom such Shares will have been so transferred. In order to
enforce its rights under this Section, the Company shall be authorized to give a
stop transfer instruction with respect to the Shares to the Company’s transfer
agent.

 

10. RIGHTS AS A STOCKHOLDER.

 

The Participant shall have no rights as a stockholder with respect to any Shares
subject to the Award until the date of the issuance of a certificate for such
Shares (as evidenced by the appropriate entry on the books of the Company or of
a duly authorized transfer agent of the Company). No adjustment shall be made
for dividends, distributions or other rights for which the record date is prior
to the date such certificate is issued, except as provided in Section 7. Subject
to the provisions of this Agreement, the Participant shall be entitled to all
rights and privileges of a stockholder of the Company with respect to Shares
deposited in the Escrow pursuant to Section 6.

 

11. RIGHT TO CONTINUED SERVICE WITH THE COMPANY.

 

Nothing in this Agreement shall confer upon the Participant any right to
continue in the Service of the Company or interfere in any way with any right of
the Company to terminate the Participant’s Service at any time.

 

12. MISCELLANEOUS PROVISIONS.

 

12.1 Administration. All questions of interpretation concerning this Agreement
shall be determined by the Board. All determinations by the Board shall be final
and binding upon all persons having an interest in the Award. Any officer of the
Company shall have the authority to act on behalf of the Company with respect to
any matter, right, obligation, or election which is the responsibility of or
which is allocated to the Company herein, provided the officer has apparent
authority with respect to such matter, right, obligation, or election.

 

12.2 Amendment. The Board may amend this Agreement at any time; provided,
however, that no such amendment may adversely affect the Participant’s rights
under this Agreement without the consent of the Participant. No amendment or
addition to this Agreement shall be effective unless in writing.

 

12.3 Nontransferability of the Award. The right to acquire Shares pursuant to
the Award may not be assigned or transferred in any manner except by will or by
the laws of descent and distribution. During the lifetime of the Participant,
all rights with respect to this Award shall be exercisable only by the
Participant.

 

12.4 Further Instruments. The parties hereto agree to execute such further
instruments and to take such further action as may reasonably be necessary to
carry out the intent of this Agreement.

 

8

--------------------------------------------------------------------------------

12.5 Binding Effect. This Agreement shall inure to the benefit of the successors
and assigns of the Company and, subject to the restrictions on transfer set
forth herein, be binding upon the Participant and the Participant’s heirs,
executors, administrators, successors and assigns.

 

12.6 Notices. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given (except to the extent that this
Agreement provides for effectiveness only upon actual receipt of such notice)
upon personal delivery or upon deposit in the United States Post Office, by
registered or certified mail, with postage and fees prepaid, addressed to the
other party at the address shown below that party’s signature in this Agreement
or at such other address as such party may designate in writing from time to
time to the other party.

 

12.7 Integrated Agreement. This Agreement constitutes the entire understanding
and agreement of the Participant and the Company with respect to the subject
matter contained herein and there are no agreements, understandings,
restrictions, representations, or warranties among the Participant and the
Participating Company Group with respect to such subject matter other than those
as set forth or provided for herein or therein.

 

12.8 Applicable Law. The Agreement shall be governed by the laws of the State of
California as such laws are applied to agreements between California residents
entered into and to be performed entirely within the State of California.

 

12.9 Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.

 

By their signatures below, the Company and the Participant agree that the Award
is governed by the provisions of this Agreement. The Participant acknowledges
receipt of a copy of this Agreement, and represents that the Participant has
read and is familiar with the provisions of the Agreement, and hereby accepts
the Award subject to all applicable terms and conditions.

 

ACCREDITED HOME LENDERS

HOLDING CO.

     

PARTICIPANT

                

James A. Konrath, Chief Executive Officer

     

Stuart D. Marvin

           

Dated as of April 15, 2005

Address:

 

ATTN: Chief Executive Officer

           

15090 Avenue of Science

     

Address:

   

San Diego, CA 92128

                     

 

ATTACHMENTS:     Joint Escrow Instructions and Assignment Separate from
Certificate

 

9

--------------------------------------------------------------------------------

ACCREDITED HOME LENDERS HOLDING CO.

RESTRICTED STOCK AGREEMENT

JOINT ESCROW INSTRUCTIONS

 

These Joint Escrow Instructions are entered into as of April 15, 2005.

 

RECITALS

 

A. Accredited Home Lenders Holding Co., a Delaware corporation (the “Company”),
and its undersigned employee (the “Participant”) desire to appoint David E.
Hertzel, General Counsel of the Company, as their agent (the “Agent”) with
respect to certain certificate(s) evidencing shares of the Company’s common
stock (the “Stock”) awarded to the Participant pursuant to the terms and
conditions of the Restricted Stock Agreement attached hereto as Exhibit A (the
“Agreement”).

 

ESCROW INSTRUCTIONS

 

The Company and the Participant hereby authorize and direct the Agent to hold
the documents and certificate(s) delivered to the Agent pursuant to these Escrow
Instructions and to take the following actions with respect thereto, and the
Company and the Participant hereby agree as follows:

 

1. The Participant hereby delivers and/or agrees to deliver to the Agent the
Participant’s certificate(s) evidencing the Stock and an Assignment Separate
From Certificate executed in blank. The Participant irrevocably authorizes the
Company to deposit with the Agent any certificate(s) evidencing shares of the
Company’s common stock acquired by the Participant pursuant to the Agreement
which the Company may from time to time issue to the Participant during the term
of these Escrow Instructions.

 

2. The provisions of these Escrow Instructions shall apply for so long as the
Stock is subject to the Company Reacquisition Right set forth in the Agreement
(the “Reacquisition Rights”). Upon termination of the Company’s Reacquisition
Rights this escrow will terminate.

 

3. In the event the Company shall elect to exercise any of the Reacquisition
Rights, the Company shall give to the Participant and the Agent a written notice
(the “Reacquisition Notice”) which states (a) the terms and conditions of such
purchase, determined in accordance with the provisions of the Stock Purchase
Agreement, and (b) a time and date for a closing hereunder at the principal
office of the Company. The Participant and the Company hereby irrevocably
authorize and direct the Agent to close the transaction contemplated by the
Reacquisition Notice in accordance with the terms of the Reacquisition Notice.
At the closing, the Agent shall deliver the certificate(s) evidencing the shares
of Stock to be transferred to the Company against the simultaneous delivery by
the Company to the Agent of the consideration, if any, for the number of shares
of Stock being thus purchased. The balance of any such shares of Stock and the
consideration so received shall be retained by the Agent and held in accordance
with these Escrow Instructions.

 

1

--------------------------------------------------------------------------------

4. The Company may at any time release some or all of the Stock from the
provisions of these Escrow Instructions by giving written notice to the
Participant and the Agent directing delivery to the Participant of the shares of
Stock to be released. Twice per calendar year the Participant may request that
the Company direct the Agent to release from the provisions of these Escrow
Instructions the shares of Stock which are no longer subject to any of the
Company’s Reacquisition Rights. The Company shall give to the Participant and
the Agent written notice directing delivery to the Participant of the shares of
Stock to be released. The Agent shall use the Agent’s best efforts to cause the
certificate(s) evidencing the Stock held by the Agent to be delivered to the
Participant pursuant to such notice within ten (10) days from receipt of such
notice.

 

5. To facilitate the exercise of any of the Reacquisition Rights and the
performance of these instructions, the Participant does hereby constitute and
appoint the Agent as the Participant’s attorney-in-fact and agent for the term
of this escrow to execute with respect to such securities all stock
certificates, stock assignments, or other instruments which shall be necessary
or appropriate to make such securities negotiable and complete any transaction
herein contemplated, including the Company’s exercise of its rights as a secured
party. The Participant understands that such appointment is coupled with an
interest and is irrevocable. Subject to the provisions of these Escrow
Instructions, the Participant shall exercise all rights and privileges of a
stockholder of the Company while the Stock is held by the Agent; provided,
however, the Participant may not sell, transfer, dispose of, or in any manner
encumber any shares of the Stock while such shares of Stock are held by the
Agent hereunder.

 

6. If at the time of termination of this escrow, the Agent shall have in the
Agent’s possession any documents, securities, or other property belonging to the
Participant, the Agent shall deliver all of same to the Participant and shall be
discharged of all further obligations hereunder.

 

7. The Agent’s duties hereunder may be altered, amended, modified, or revoked
only by a writing signed by the Company and the Participant, and approved by the
Agent.

 

8. The Agent shall not be personally liable for any act the Agent may do or omit
to do hereunder as escrow agent, agent for the Company, or attorney in fact for
the Participant while acting in good faith and in the exercise of the Agent’s
own good judgment, and any act done or omitted by the Agent pursuant to the
advice of the Agent’s own attorneys shall be conclusive evidence of such good
faith.

 

9. The Agent is hereby expressly authorized to disregard any and all warnings by
any of the parties hereto or by any other person, firm, corporation, or other
entity, excepting only orders or process of courts of law, and is hereby
expressly authorized to comply with and obey orders, judgments, or decrees of
any court. In the event the Agent obeys or complies with any such order,
judgment, or decree of any court, the Agent shall not be liable to any of the
parties hereto or to any other person, firm, corporation, or other entity by
reason of such compliance notwithstanding that any such order, judgment, or
decree shall be subsequently reversed, modified, annulled, set aside, vacated,
or found to have been entered without jurisdiction.

 

10. The Agent shall not be liable in any respect on account of the identity,
authorities, or rights of the parties executing or delivering or purporting to
execute or deliver any agreements

 

2

--------------------------------------------------------------------------------

or documents called for by the Stock Purchase Agreement or any documents or
papers deposited or called for hereunder.

 

11. The Agent shall not be liable for the barring of any rights under the
statute of limitations with respect to these Escrow Instructions or any
documents deposited with the Agent.

 

12. By signing these Escrow Instructions, the Agent becomes a party hereto only
for the purpose of said Escrow Instructions. The Agent shall not be considered a
party to the Stock Purchase Agreement or to any documents or agreements called
for by the Stock Purchase Agreement.

 

13. The Agent may resign from the Agent’s duties hereunder at any time upon
written notice to the Company and the Participant and delivery of all documents
and certificates held in this escrow to the successor escrow agent. If a
successor escrow agent has not been appointed within thirty (30) days, the Agent
may deliver all such documents and certificates to the Company, at which time,
all further responsibilities and duties of the Agent shall cease.

 

14. If prior to the termination of these Escrow Instructions the Agent shall
resign or otherwise cease to operate as escrow agent, a successor escrow agent
shall be designated by the Board of Directors of the Company. The Board of
Directors of the Company may, at any time, substitute another party in the
Agent’s place as escrow agent hereunder, and the Participant hereby expressly
accepts such substitution.

 

15. All notices and other communications hereunder shall be in writing and shall
be deemed given if delivered personally or mailed by registered or certified
mail (return receipt requested) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):

 

(a)   if to the Company, to:     Accredited Home Lenders Holding Co.     15090
Avenue of Science     San Diego, CA 92128     Attn: General Counsel (b)   if to
the Participant, to the address set forth below the Participant’s signature
below. (c)   if to the Agent, to:     General Counsel     Accredited Home
Lenders Holding Co.     15090 Avenue of Science     San Diego, CA 92128

 

16. The provisions of these Escrow Instructions shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns.

 

3

--------------------------------------------------------------------------------

17. These Escrow Instructions shall be governed, to the fullest extent possible,
by the laws contained in the California Commercial Code, including any
regulations or judicial interpretations with respect thereto. To the extent that
any matter is not governed by the laws contained in the California Commercial
Code, such matter shall be governed by the laws of the state of the
Participant’s residence as such laws are applied to agreements between residents
of such state entered into and to be performed entirely within such state.

 

18. The terms and conditions of these Escrow Instructions, including all terms
and conditions incorporated by reference herein, shall survive the exercise of
the stock purchase right granted pursuant to the Stock Purchase Agreement and
shall continue in full force and effect thereafter.

 

19. These Escrow Instructions, the Notice and the Stock Purchase Agreement
contain the entire understanding of the Company and the Participant with respect
to the subject matter contained herein, and there are no other contracts,
agreements, understandings, representations, warranties, or covenants with
respect to the subject matter contained herein.

 

IN WITNESS WHEREOF, the Company and the Participant have executed these Escrow
Instructions as of the date first above written.

 

ACCREDITED HOME LENDERS

HOLDING CO.

 

James A. Konrath, Chief Executive Officer

PARTICIPANT:  

Stuart D. Marvin

Address:

    ESCROW AGENT:  

David E. Hertzel, General Counsel

 

4

--------------------------------------------------------------------------------

The undersigned, being the spouse of the above-named Participant, does hereby
acknowledge that the undersigned has read and is familiar with the provisions of
the above Joint Escrow Instructions, and the undersigned hereby agrees thereto
and joins therein to the extent, if any, that the agreement and joinder of the
undersigned may be necessary.

 

 

Signature of Spouse, if applicable

 

5

--------------------------------------------------------------------------------

ASSIGNMENT SEPARATE FROM CERTIFICATE

 

FOR VALUE RECEIVED the undersigned does hereby sell, assign and transfer unto
__________________________________________________________________________________________
__________________________________________(_____________) shares of the common
stock of Accredited Home Lenders Holding Co. (the “Company”) standing in the
undersigned’s name on the books of said corporation represented by Certificate
No.______________ herewith and does hereby irrevocably constitute and appoint
the General Counsel of the Company as Attorney to transfer the said stock on the
books of said corporation with full power of substitution in the premises.

 

Dated:                     

                

Signature

                   

Print Name

--------------------------------------------------------------------------------

Exhibit C

 

ACCREDITED HOME LENDERS, INC.

INCENTIVE COMPENSATION PLAN FOR

EXECUTIVE MANAGEMENT

 

1. The Plan Objectives. This document defines the Compensation Plan (“Plan”) of
Accredited Home Lenders, Inc. (“Company”) for Executive Management (“Employee”).
This Plan constitutes the complete statement of the Employee’s incentive
compensation at the Company. This Plan supercedes all prior plans and incentive
compensation statements and applies with regard to the earning of incentive
compensation. However, nothing in this Plan limits the Company’s ability to
periodically implement special purpose incentive programs and bonuses to
accentuate Employee’s performance. The purpose of this Plan is to reward
performance and to provide a fully competitive level of compensation. This is
not an employment contract, but rather strictly a guide for compensation.

 

2. Term of Plan: This Plan shall be effective from January 1, 2005 through
December 31, 2005, unless otherwise amended or terminated by the Company in
accordance with the terms of this Plan.

 

3. Compensation. Compensation will consist of the following:

 

3.1 Base Salary. Base Salary is the Employee’s regular monthly salary, which is
paid according to the Company’s standard payroll procedures.

 

3.2 Incentive Compensation. The Incentive Compensation for an eligible Employee
(as defined in Section 4 below) may be comprised of both a cash distribution as
well as a stock award made pursuant to the Company’s Deferred Compensation Plan.
The cash distribution and stock award that an Employee may be eligible to
receive is based upon individual performance and achievement of certain
performance objectives as well as the Company’s overall financial performance
(which is based upon the Company’s net income after tax for the Plan year). The
maximum awards that may be granted are based upon different levels of the
Company’s financial performance and the Employee’s Base Salary earnings in
accordance with the table set forth below:

 

Net Income After Tax

--------------------------------------------------------------------------------

   

Maximum Award

(Pct. of base salary)

--------------------------------------------------------------------------------

 

Dollars

(in millions)

--------------------------------------------------------------------------------

   Percentage of 2005
Operating Plan

--------------------------------------------------------------------------------

    Cash

--------------------------------------------------------------------------------

    Stock Award

--------------------------------------------------------------------------------

  $ 92.4    60 %   25 %   0 % $ 115.6    75 %   67 %   0 % $ 154.1    100 %  
125 %   140 % $ 169.5    110 %   125 %   170 % $ 184.9    120 %   125 %   200 %
$ 200.3    130 %   125 %   225 % $ 215.7    140 %   125 %   245 % $ 231.1    150
%   125 %   260 % $ 246.5    160 %   125 %   275 %

 

- 1 -

--------------------------------------------------------------------------------

Thereafter, each additional full 10% increase in the Company’s net income after
tax as a percentage of the Company’s 2005 Operating Plan net income after tax
results in a 10 percentage point increase in the Stock Maximum Award. The number
of shares included in a stock award would be based upon the closing price for
the stock as of the date the stock is awarded. The maximum award levels, as well
as actual Employee Incentive Compensation awards made pursuant to the Plan, are
subject to approval by the Compensation Committee of the Company’s Board of
Directors. There is no guarantee that any Employee will receive any or all of
the maximum award that is available based upon the Company’s financial
performance.

 

4. Eligibility: To be eligible for the Incentive Compensation, the Employee must
meet the following requirements: (1) Employee must be employed as of September
1, 2005; (2) Employee must be employed in one of the following capacities: Chief
Executive Officer, the President, the Executive Vice President or the Director
of Operations; and (3) Employee must be employed with the Company at the time
payment is made.

 

5. Timing of Payment, Distribution and Vesting: Incentive Compensation will be
awarded when accurate financial data is available for 2005, but in no event
later than March 15, 2006. The cash portion of the Incentive Compensation will
not be subject to any contingencies and will be currently taxable to the
Employee and subject to normal withholdings. Any stock award will be made
pursuant to the Company’s Deferred Compensation Plan and will not be
distributable until it has vested in accordance with the following schedule:

 

Vesting Date

--------------------------------------------------------------------------------

   Percentage Vested

--------------------------------------------------------------------------------

 

2nd Anniversary of the Award Date

   50 %

3rd Anniversary of the Award Date

   Additional25 %

4th Anniversary of the Award Date

   Additional 25 %

 

Distributions of stock awards shall be made in common stock of Accredited Home
Lenders Holding Co., and the fair market value of the stock distributed shall be
subject to customary payroll withholdings. Arrangements satisfactory to the
Company for payment of the withholdings must be made prior to distribution.
Distribution alternatives for stock awards and procedures for selecting among
those alternatives, as well as other terms and conditions of the Company’s
Deferred Compensation Plan, shall be separately communicated to Employee.

 

6. Plan Changes or Termination. The Company reserves the right to add, change or
delete any element of the Plan, or terminate the Plan in its entirety, with a
reasonable written notice to the Employee.

 

7. At-Will Employment. The Employee understands that employment at the Company
is “at will” and for no definite period of time. Either party may terminate
employment at any time with or without notice and for any reason or for no
reason. The employment at will relationship remains in effect regardless of any
statements made in this Plan or any other written or oral communication. The
statements and policies set forth in this Plan are not intended to create a
contract, nor are they to be construed to constitute contractual obligations of
any kind or a contract of employment between the Company and the Employee.
Finally, any oral promises or commitments of any kind made by a supervisor or
manager are not valid and binding unless contained in this Plan.

 

8. Future Participation. Nothing in this Plan creates any rights in any employee
of future participation in this Plan or any other Plan, or constitutes any
guarantee of compensation or

 

- 2 -

--------------------------------------------------------------------------------

employment with the Company. Further, the Company does not have any obligation
under this Plan or otherwise to adopt this or any other compensation plan in the
future. This Plan will be administered and interpreted by the Company in its
sole discretion. Any modification to this Plan may only be made in a writing
signed by the Company’s President and/or Chief Executive Officer.

 

9. Plan Acknowledgement. I acknowledge that I have received a copy of this Plan
effective as of January 1, 2005. I also acknowledge that I have read,
understand, and agree to abide by the terms and conditions contained therein.

 

         

Date:                    , 2005.

                

Signature

                   

Print Name

 

- 3 -