Deferred Compensation Plan


 Exhibit 10.1 
 ACCREDITED HOME LENDERS HOLDING CO. 
 DEFERRED COMPENSATION PLAN

 9/18/07 






 Accredited Home Lenders Holding Co. Deferred Compensation Plan 
  

			
	ARTICLE I	  	
	 Establishment and Purpose
	  	1
		
	ARTICLE II	  	
	 Definitions
	  	1
		
	ARTICLE III	  	
	 Eligibility and Participation
	  	9
		
	ARTICLE IV	  	
	 Deferrals
	  	10
		
	ARTICLE V	  	
	 Company Contributions
	  	13
		
	ARTICLE VI	  	
	 Benefits
	  	14
		
	ARTICLE VII	  	
	 Modifications to Payment Schedules
	  	20
		
	ARTICLE VIII	  	
	 Valuation of Account Balances; Investments
	  	21
		
	ARTICLE IX	  	
	 Administration
	  	22
		
	ARTICLE X	  	
	 Amendment and Termination
	  	24
		
	ARTICLE XI	  	
	 Informal Funding
	  	25
		
	ARTICLE XII	  	
	 Claims
	  	25
		
	ARTICLE XIII	  	
	 General Provisions
	  	29







 Accredited Home Lenders Holding Co. Deferred Compensation Plan 
 ARTICLE I 
 Establishment and Purpose 

Accredited Home Lenders Holding Co. (the “Company”) hereby amends and restates the Accredited Home Lenders Holding Co. Deferred Compensation Plan (the
“Plan”), effective January 1, 2008, except as otherwise provided herein. This amendment and restatement applies only to amounts deferred under the Plan on or after January 1, 2005, and to amounts deferred prior to January 1,
2005 that were not vested as of December 31, 2004. Amounts deferred under the Plan prior to January 1, 2005 that were vested as of December 31, 2004 (the “Grandfathered Accounts”) shall be subject to the provisions of the
Plan as in effect on October 3, 2004, as the same may be amended from time to time by the Company without material modification, it being expressly intended that such Grandfathered Accounts are to remain exempt from the requirements of Code
Section 409A. The provisions of the Plan applicable to Grandfathered Accounts are reflected in this document for ease of reference. 
 The purpose of
the Plan is to attract and retain key employees by providing each Participant with an opportunity to defer receipt of a portion of their salary, bonus, and other specified compensation. The Plan is not intended to meet the qualification requirements
of Code Section 401(a), but is intended to meet the requirements of Code Section 409A, and shall be operated and interpreted consistent with that intent. 
 The Plan constitutes an unsecured promise by a Participating Employer to pay benefits in the future. Participants in the Plan shall have the status of general unsecured creditors of the Company or the Adopting Employer, as applicable. Each
Participating Employer shall be solely responsible for payment of the benefits of its employees and their beneficiaries. The Plan is unfunded for Federal tax purposes and is intended to be an unfunded arrangement for eligible employees who are part
of a select group of management or highly compensated employees of the Employer within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA. Any amounts set aside to defray the liabilities assumed by the Company or an Adopting Employer
will remain the general assets of the Company or the Adopting Employer and shall remain subject to the claims of the Company’s or the Adopting Employer’s creditors until such amounts are distributed to the Participants. 
 ARTICLE II 
 Definitions 
  

	2.1	Account. Account means a bookkeeping account maintained by the Committee to record the payment obligation of a Participating Employer to a Participant as determined under the
terms of the Plan. The Committee may maintain an Account to record the total obligation to a Participant and component Accounts to reflect amounts payable at different times and in different forms. Reference to an Account means any such Account
established by the Committee, as the context requires. Accounts are intended to constitute unfunded obligations within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA. 

  

 Page 1 of 30 








 Accredited Home Lenders Holding Co. Deferred Compensation Plan 
  


	2.2	Account Balance. Account Balance means, with respect to any Account, the total payment obligation owed to a Participant from such Account as of the most recent Valuation
Date. 

  

	2.3	Adopting Employer. Adopting Employer means an Affiliate who, with the consent of the Company, has adopted the Plan for the benefit of its Eligible Employees.


  

	2.4	Affiliate. Affiliate means a corporation, trade or business that, together with the Company, is treated as a single employer under Code Section 414(b) or (c).


  

	2.5	Beneficiary. Beneficiary means a natural person, estate, or trust designated by a Participant to receive payments to which a Beneficiary is entitled in accordance with
provisions of the Plan. The Participant’s spouse, if living, otherwise the Participant’s estate, shall be the Beneficiary if: (i) the Participant has failed to properly designate a Beneficiary, or (ii) all designated
Beneficiaries have predeceased the Participant. 

 A former spouse shall have no interest under the Plan, as Beneficiary or
otherwise, unless the Participant designates such person as a Beneficiary after dissolution of the marriage, except to the extent provided under the terms of a domestic relations order as described in Code Section 414(p)(1)(B). 
  

	2.6	Business Day. A Business Day is each day on which the New York Stock Exchange is open for business. 

  

	2.7	Cause. Cause means a 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 an Employee 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) an Employee’s conviction of a criminal act which impairs his or her ability to perform duties for the Company; or (vi) any action by an Employee which has a detrimental effect on the
business of the Company. 

  

	2.8	 Change in Control. Change in Control means: (i) the acquisition by an individual “person” (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934 (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
voting 



  

 Page 2 of 30 








 Accredited Home Lenders Holding Co. Deferred Compensation Plan 
  


	 	 
securities of the surviving entity; or (iii) a sale of all or substantially all of the assets of the Company. Notwithstanding the foregoing, a Change in
Control shall not be deemed to have occurred if and to the extent that the Company completes the initial registration of its securities under Section 12 of the Exchange Act. 


  

	2.9	Claimant. Claimant means a Participant or Beneficiary filing a claim under Article XII of this Plan. 

  

	2.10	Code. Code means the Internal Revenue Code of 1986, as amended from time to time. 

  

	2.11	Code Section 409A. Code Section 409A means section 409A of the Code, and regulations and other guidance issued by the Treasury Department and Internal Revenue
Service thereunder. 

  

	2.12	Committee. Committee means the committee appointed by the Board of Directors of the Company (or the appropriate committee of such board) to administer the Plan. If no
designation is made, the Chief Executive Officer of the Company or his delegate shall have and exercise the powers of the Committee. 

  

	2.13	Company. Company means Accredited Home Lenders Holding Co. 

  

	2.14	Company Contribution. Company Contribution means a credit by a Participating Employer to a Participant’s Account(s) in accordance with the provisions of Article V of the
Plan. Company Contributions are credited at the sole discretion of the Participating Employer and the fact that a Company Contribution is credited in one year shall not obligate the Participating Employer to continue to make such Company
Contribution in subsequent years. Unless the context clearly indicates otherwise, a reference to Company Contributions shall include Earnings attributable to such contribution. 

  

	2.15	Company Stock. Company Stock means shares of common stock issued by Company. 

  

	2.16	Compensation. Compensation means a Participant’s base salary, bonus, commission, and such other cash or equity-based compensation (if any) approved by the Committee as
Compensation that may be deferred under this Plan. Compensation shall not include any compensation that has been previously deferred under this Plan or any other arrangement subject to Code Section 409A. For Directors, Compensation means
director fees paid by the Company. 

  

	2.17	 Compensation Deferral Agreement. Compensation Deferral Agreement means an agreement between a Participant and a Participating Employer that specifies
(i) the amount of each component of Compensation that the Participant has elected to defer to the Plan in accordance with the provisions of Article IV, and (ii) the Payment Schedule applicable to one or more Accounts. The specified
distribution date for any Specified 



  

 Page 3 of 30 








 Accredited Home Lenders Holding Co. Deferred Compensation Plan 
  


	 	 
Date Account must be at least two (2) years after the end of the Plan Year for which Deferrals to such Account are made. The specified distribution date
for any Company Contributions must be at least two (2) years after the end of the Plan Year for which the Company Contributions are credited to the Participant’s Account. Unless otherwise specified by the Committee in the Compensation
Deferral Agreement, Participants may defer up to 100% of their Compensation for a Plan Year. A Compensation Deferral Agreement may also specify the investment allocation described in Section 8.4. 


  

	2.18	Death Benefit. Death Benefit means the benefit payable under the Plan to a Participant’s Beneficiary(ies) upon the Participant’s death as provided in
Section 6.1(e) of the Plan. 

  

	2.19	Deferral. Deferral means a credit to a Participant’s Account(s) that records that portion of the Participant’s Compensation that the Participant has elected to
defer to the Plan in accordance with the provisions of Article IV. Unless the context of the Plan clearly indicates otherwise, a reference to Deferrals includes Earnings attributable to such Deferrals. 

 Deferrals shall be calculated with respect to the gross cash Compensation payable to the Participant prior to any deductions or withholdings, but shall be
reduced by the Committee as necessary so that it does not exceed 100% of the cash Compensation of the Participant remaining after deduction of all required income and employment taxes, 401(k) and other employee benefit deductions, and other
deductions required by law. Changes to payroll withholdings that affect the amount of Compensation being deferred to the Plan shall be allowed only to the extent permissible under Code Section 409A. 
  

	2.20	Director. Director means each member of the Board of Directors of the Company who is not otherwise an Employee of the Company. 

  

	2.21	Disability Benefit. Disability Benefit means the benefit payable under the Plan to a Participant in the event such Participant is determined to be Disabled.


  

	2.22	Disabled. Disabled means that a Participant is, by reason of any medically-determinable physical or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than twelve months, (i) unable to engage in any substantial gainful activity, or (ii) receiving income replacement benefits for a period of not less than three months under an accident
and health plan covering employees of the Participant’s employer. The Committee shall determine whether a Participant is Disabled in accordance with Code Section 409A provided, however, that a Participant shall be deemed to be Disabled if
determined to be totally disabled by the Social Security Administration or the Railroad Retirement Board. 

  

	2.23	Earnings. Earnings means an adjustment to the value of an Account in accordance with Article VIII. 

  

 Page 4 of 30 








 Accredited Home Lenders Holding Co. Deferred Compensation Plan 
  


	2.24	Effective Date. Effective Date means January 1, 2008. 

  

	2.25	Eligible Individual. Eligible Individual means (i) a Director and (ii) a member of a “select group of management or highly compensated employees” of a
Participating Employer within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, as determined by the Committee from time to time in its sole discretion. 

  

	2.26	Employee. Employee means a common-law employee of an Employer. 

  

	2.27	Employer. Employer means, with respect to Employees it employs, the Company and each Affiliate. 

  

	2.28	ERISA. ERISA means the Employee Retirement Income Security Act of 1974, as amended from time to time. 

  

	2.29	Fiscal Year Compensation. Fiscal Year Compensation means Compensation earned during one or more consecutive fiscal years of a Participating Employer, all of which is paid
after the last day of such fiscal year or years. 

  

	2.30	Good Reason. Good Reason means: (i) a Participant’s compensation, including salary, bonus and perquisites, are reduced from the compensation level in effect for the
Participant during the year preceding a 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 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.


  

	2.31	Grandfathered Account. Grandfathered Account means amounts deferred under the Plan prior to January 1, 2005 that were vested as of December 31, 2004.


  

	2.32	Merger Agreement. Merger Agreement means the agreement dated June 4, 2007, between the Company, LSF5 Accredited Investments, LLC (“Parent”) and LSF5 Accredited
Merger Co., Inc. (“Purchaser”), as amended June 15, 2007, pursuant to which the Company agrees to merge with the Purchaser and become a wholly-owed subsidiary of Parent. 

  

	2.33	Participant. Participant means an Eligible Individual who has received notification of his or her eligibility to defer Compensation under the Plan under Section 3.1 and
any other person with an Account Balance greater than zero, regardless of whether such individual continues to be an Eligible Individual. A Participant’s continued participation in the Plan shall be governed by Section 3.2 of the Plan.


  

 Page 5 of 30 








 Accredited Home Lenders Holding Co. Deferred Compensation Plan 
  


	2.34	Participating Employer. Participating Employer means the Company and each Adopting Employer. 

  

	2.35	Payment Schedule. Payment Schedule means the date as of which payment of an Account under the Plan will commence and the form in which payment of such Account will be made.


  

	2.36	Performance-Based Compensation. Performance-Based Compensation means Compensation where the amount of, or entitlement to, the Compensation is contingent on the satisfaction
of pre-established organizational or individual performance criteria relating to a performance period of at least twelve consecutive months. Organizational or individual performance criteria are considered pre-established if established in writing
by not later than ninety (90) days after the commencement of the period of service to which the criteria relate, provided that the outcome is substantially uncertain at the time the criteria are established. The determination of whether
Compensation qualifies as “Performance-Based Compensation” will be made in accordance with Treas. Reg. Section 1.409A-1(e) and subsequent guidance. 

  

	2.37	Plan. Generally, the term Plan means the “Accredited Home Lenders Holding Co. Deferred Compensation Plan” as documented herein and as may be amended from time to
time hereafter. However, to the extent permitted or required under Code Section 409A, the term Plan may in the appropriate context also mean a portion of the Plan that is treated as a single plan under Treas. Reg. Section 1.409A-1(c), or
the Plan or portion of the Plan and any other nonqualified deferred compensation plan or portion thereof that is treated as a single plan under such section. 

  

	2.38	Plan Year. Plan Year means January 1 through December 31. 

  

	2.39	Retirement. Retirement means a Participant’s voluntary Separation from Service if the sum of such Participant’s age and Years of Service equals or exceeds 70. A
Participant who terminates Service with the Employer and resumes Service more than 6 months after his or her original termination date, will not have his or her Service with the Employer prior to his or her original termination date count for
purposes of determining Retirement. 

  

	2.40	Retirement Benefit. Retirement Benefit means the benefit payable to a Participant under the Plan following the Retirement of the Participant. 

  

	2.41	Retirement/Termination Account. Retirement/Termination Account means an Account established by the Committee to record the amounts payable to a Participant that have not been
allocated to a Specified Date Account. Unless the Participant has established a Specified Date Account, all Deferrals and Company Contributions shall be allocated to a Retirement/Termination Account on behalf of the Participant.


  

 Page 6 of 30 








 Accredited Home Lenders Holding Co. Deferred Compensation Plan 
  


	2.42	Separation from Service. An Employee incurs a Separation from Service upon termination of employment with the Employer. Whether a Separation from Service has occurred shall
be determined by the Committee in accordance with Code Section 409A. Except in the case of an Employee on a bona fide leave of absence as provided below, an Employee is deemed to have incurred a Separation from Service if the Employer and the
Employee reasonably anticipated that the level of services to be performed by the Employee after a date certain would be reduced to 20% or less of the average services rendered by the Employee during the immediately preceding 36-month period (or the
total period of employment, if less than 36 months), disregarding periods during which the Employee was on a bona fide leave of absence. 

 An Employee who is absent from work due to military leave, sick leave, or other bona fide leave of absence shall incur a Separation from Service on the first date immediately following the later of (i) the
six-month anniversary of the commencement of the leave or (ii) the expiration of the Employee’s right, if any, to reemployment under statute or contract. 
 For purposes of determining whether a Separation from Service has occurred, the Employer means the Employer as defined in Section 2.27 of the Plan, except that for purposes of determining whether another
organization is an Affiliate of the Company, common ownership of at least 50% shall be determinative. 
 The Committee specifically reserves
the right to determine whether a sale or other disposition of substantial assets to an unrelated party constitutes a Separation from Service with respect to a Participant providing services to the seller immediately prior to the transaction and
providing services to the buyer after the transaction. Such determination shall be made in accordance with the requirements of Code Section 409A. 
  

	2.43	Service. Service means the Participant’s employment with the Employer on a substantially full-time basis, or service as a Director. A Participant’s Service shall
not be deemed to have terminated merely because of a change in the capacity under which the Participant renders Service to the Employer, provided there is no interruption or termination of the Participant’s Service. A Participant’s Service
shall terminate upon an actual termination of Service, whether by death, Disability, or otherwise. 

  

	2.44	Specified Date Account. A Specified Date Account means an Account established pursuant to Section 4.3 that will be paid (or that will commence to be paid) at a future
date as specified in the Participant’s Compensation Deferral Agreement. Unless otherwise determined by the Committee, a Participant may maintain no more than five Specified Date Accounts. A Specified Date Account may be identified in enrollment
materials as an “In-Service Account”. 

  

 Page 7 of 30 








 Accredited Home Lenders Holding Co. Deferred Compensation Plan 
  


	2.45	Specified Date Benefit. Specified Date Benefit means the benefit payable to a Participant under the Plan in accordance with Section 6.1(c). 

  

	2.46	Specified Employee. Specified Employee means an Employee who, as of the date of his Separation from Service, is a “key employee” of the Company or any Affiliate,
any stock of which is actively traded on an established securities market or otherwise. An Employee is a key employee if he meets the requirements of Code Section 416(i)(1)(A)(i), (ii), or (iii) (applied in accordance with applicable
regulations thereunder and without regard to Code Section 416(i)(5)) at any time during the 12-month period ending on the Specified Employee Identification Date. Such Employee shall be treated as a key employee for the entire 12-month period
beginning on the Specified Employee Effective Date. 

 For purposes of determining whether an Employee is a Specified Employee,
the compensation of the Employee shall be determined in accordance with the definition of compensation provided under Treas. Reg. Section 1.415(c)-2(d)(3) (wages within the meaning of Code section 3401(a) for purposes of income tax withholding
at the source, plus amounts excludible from gross income under section 125(a), 132(f)(4), 402(e)(3), 402(h)(1)(B), 402(k) or 457(b), without regard to rules that limit the remuneration included in wages based on the nature or location of the
employment or the services performed); provided, however, that, with respect to a nonresident alien who is not a Participant in the Plan, compensation shall not include compensation that is not includible in the gross income of the Employee under
Code Sections 872, 893, 894, 911, 931 and 933, provided such compensation is not effectively connected with the conduct of a trade or business within the United States. 
 Notwithstanding anything in this paragraph to the contrary, (i) if a different definition of compensation has been designated by the Company with respect to another nonqualified deferred compensation plan in
which a key employee participates, the definition of compensation shall be the definition provided in Treas. Reg. Section 1.409A-1(i)(2), and (ii) the Company may through action that is legally binding with respect to all nonqualified
deferred compensation plans maintained by the Company, elect to use a different definition of compensation. 
 In the event of corporate
transactions described in Treas. Reg. Section 1.409A-1(i)6), the identification of Specified Employees shall be determined in accordance with the default rules described therein, unless the Employer elects to utilize the available alternative
methodology through designations made within the timeframes specified therein. 
  

	2.47	Specified Employee Identification Date. Specified Employee Identification Date means December 31, unless the Employer has elected a different date through action that is
legally binding with respect to all nonqualified deferred compensation plans maintained by the Employer. 

  

 Page 8 of 30 








 Accredited Home Lenders Holding Co. Deferred Compensation Plan 
  


	2.48	Specified Employee Effective Date. Specified Employee Effective Date means the first day of the fourth month following the Specified Employee Identification Date, or such
earlier date as is selected by the Committee. 

  

	2.49	Substantial Risk of Forfeiture. Substantial Risk of Forfeiture shall have the meaning specified in Treas. Reg. Section 1.409A-1(d). 

  

	2.50	Supplemental Death Benefit. Supplemental Death Benefit means the benefit payable under the Plan in accordance with Section 6.1(f). 

  

	2.51	Termination Benefit. Termination Benefit means the benefit payable to a Participant under the Plan following the Participant’s Separation from Service prior to
Retirement. 

  

	2.52	Unforeseeable Emergency. An Unforeseeable Emergency means a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the
Participant’s spouse, the Participant’s dependent (as defined in Code section 152, without regard to section 152(b)(1), (b)(2), and (d)(1)(B)), or a Beneficiary; loss of the Participant’s property due to casualty (including the need
to rebuild a home following damage to a home not otherwise covered by insurance, for example, as a result of a natural disaster); or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the
Participant. The types of events which may qualify as an Unforeseeable Emergency may be limited by the Committee. 

  

	2.53	Valuation Date. Valuation Date shall mean each Business Day. 

  

	2.54	Year of Service. A Year of Service shall mean each 12-month period of continuous service with the Employer. 

 ARTICLE III 
 Eligibility and Participation 

  

	3.1	Eligibility and Participation. An Eligible Individual becomes a Participant upon the earlier to occur of (i) a credit of Company Contributions under Article V or
(ii) receipt of notification of eligibility to participate. 

  

	3.2	 Duration. A Participant shall be eligible to defer Compensation and receive allocations of Company Contributions, subject to the terms of the Plan, for as
long as such Participant remains an Eligible Individual. A Participant who is no longer an Eligible Individual but has not Separated from Service may not defer Compensation under the Plan but may otherwise exercise all of the rights of a Participant
under the Plan with respect to his or her Account(s). On and after a Separation from Service, a Participant shall remain a Participant as long as his or her Account Balance is greater than zero and during such 



  

 Page 9 of 30 








 Accredited Home Lenders Holding Co. Deferred Compensation Plan 
  


	 	 
time may continue to make allocation elections as provided in Section 8.4. An individual shall cease being a Participant in the Plan when all benefits
under the Plan to which he or she is entitled have been paid. 


 ARTICLE IV 
 Deferrals 
  

	4.1	Deferral Elections, Generally. 

  

	 	(a)	An Eligible Individual shall submit a Compensation Deferral Agreement during the enrollment periods established by the Committee and in the manner specified by the Committee, but in
any event, in accordance with Section 4.2. A Compensation Deferral Agreement that is not timely filed with respect to a service period or component of Compensation shall be considered void and shall have no effect with respect to such service
period or Compensation. The Committee may modify any Compensation Deferral Agreement prior to the date the election becomes irrevocable under the rules of Section 4.2. 

  

	 	(b)	The Participant shall specify on his or her Compensation Deferral Agreement whether to allocate Deferrals to a Retirement/Termination Account or to a Specified Date Account. If no
designation is made, all Deferrals shall be allocated to the Retirement/Termination Account. A Participant may also specify in his or her Compensation Deferral Agreement the Payment Schedule applicable to his or her Plan Accounts. If the Payment
Schedule is not specified in a Compensation Deferral Agreement, the Payment Schedule shall be the Payment Schedule specified in Section 6.2. 

  

	 	(c)	Notwithstanding other provisions in this document, a Participant must defer a minimum of $5,000 each Plan Year, or for any Plan Year in which such Participant begins participation
in the Plan after July 1, a minimum of $2,500. 

  

	4.2	Timing Requirements for Compensation Deferral Agreements. 

  

	 	(a)	First Year of Eligibility. In the case of the first year in which an Eligible Individual becomes eligible to participate in the Plan, he has up to 30 days following his
initial eligibility to submit a Compensation Deferral Agreement with respect to Compensation to be earned during such year. The Compensation Deferral Agreement described in this paragraph becomes irrevocable upon the end of such 30-day period. The
determination of whether an Eligible Individual may file a Compensation Deferral Agreement under this paragraph shall be determined in accordance with the rules of Code Section 409A, including the provisions of Treas. Reg.
Section 1.409A-2(a)(7). 

  

 Page 10 of 30 








 Accredited Home Lenders Holding Co. Deferred Compensation Plan 
  

 A Compensation Deferral Agreement filed under this paragraph applies to Compensation earned on and
after the date the Compensation Deferral Agreement becomes irrevocable. 
  

	 	(b)	Prior Year Election. Except as otherwise provided in this Section 4.2, Participants may defer Compensation by filing a Compensation Deferral Agreement no later than
December 31 of the year prior to the year in which the Compensation to be deferred is earned. A Compensation Deferral Agreement described in this paragraph shall become irrevocable with respect to such Compensation as of January 1 of the
year in which such Compensation is earned. 

  

	 	(c)	Performance-Based Compensation. Participants may file a Compensation Deferral Agreement with respect to Performance-Based Compensation no later than the date that is six
months before the end of the performance period, provided that: 

  

	 	i.	the Participant performs services continuously from the later of the beginning of the performance period or the date the criteria are established through the date the Compensation
Deferral Agreement is submitted; and 

  

	 	ii.	the Compensation is not readily ascertainable as of the date the Compensation Deferral Agreement is filed. 

 A Compensation Deferral Agreement becomes irrevocable with respect to Performance-Based Compensation as of the day immediately following the latest date
for filing such election. Any election to defer Performance-Based Compensation that is made in accordance with this paragraph and that becomes payable as a result of the Participant’s death or Disability or upon a Change in Control prior to the
satisfaction of the performance criteria, will be void. 
  

	 	(d)	Sales Commissions. Sales commissions (as defined in Treas. Reg. Section 1.409A-2(a)(12)(i)) are considered to be earned in the taxable year of the Participant in which
the sale occurs. The Compensation Deferral Agreement must be filed before the last day of the year preceding the year in which the sales commissions are earned and becomes irrevocable after that date. 

  

	 	(e)	Investment Commissions. Investment commissions (as defined in Treas. Reg. Section 1.409A-2(a)(12(ii)) are considered to be earned in the 12-month period immediately
preceding the date assets are valued for purposes of calculating the commission. Investment Commissions must be deferred under the timing rules set forth in this Section 4.2. 

  

	 	(f)	 Fiscal Year Compensation. A Participant may defer Fiscal Year Compensation by filing a Compensation Deferral Agreement prior to the first day of the fiscal
year 



  

 Page 11 of 30 








 Accredited Home Lenders Holding Co. Deferred Compensation Plan 
  


	 	 
or years in which such Fiscal Year Compensation is earned. The Compensation Deferral Agreement described in this paragraph becomes irrevocable on the first
day of the fiscal year or years to which it applies. 


  

	 	(g)	Short-Term Deferrals. Compensation that meets the definition of a “short-term deferral” described in Treas. Reg. Section 1.409A-1(b)(4) may be deferred in
accordance with the rules of Article VII, applied as if the date the Substantial Risk of Forfeiture lapses is the date payments were originally scheduled to commence, provided, however, that the provisions of Section 7.3 shall not apply to
payments attributable to a Change in Control. 

  

	 	(h)	Certain Forfeitable Rights. With respect to a legally binding right to a payment in a subsequent year that is subject to a forfeiture condition requiring the
Participant’s continued services for a period of at least twelve months from the date the Participant obtains the legally binding right, an election to defer such Compensation may be made on or before the 30th day after the Participant obtains
the legally binding right to the Compensation, provided that the election is made at least twelve months in advance of the earliest date at which the forfeiture condition could lapse. The Compensation Deferral Agreement described in this paragraph
becomes irrevocable after such 30th day. If the forfeiture condition applicable to the payment lapses before the end of the required service period as a result of the Participant’s death or Disability or upon a Change in Control, the
Compensation Deferral Agreement will be void unless it would be considered timely under another rule described in this Section. 

  

	 	(i)	Company Awards. Participating Employers may unilaterally provide for deferrals of Company awards prior to the date of such awards. Deferrals of Company awards (such as
sign-on, retention, or severance pay) may be negotiated with a Participant prior to the date the Participant has a legally binding right to such Compensation. 

  

	 	(j)	“Evergreen” Deferral Elections. The Committee, in its discretion, may provide in the Compensation Deferral Agreement that such Compensation Deferral Agreement will
continue in effect for each subsequent year or performance period. Such “evergreen” Compensation Deferral Agreements will become effective with respect to an item of Compensation on the date such election becomes irrevocable under this
Section 4.2. An evergreen Compensation Deferral Agreement may be terminated or modified prospectively with respect to Compensation for which such election remains revocable under this Section 4.2. A Participant whose Compensation Deferral
Agreement is cancelled in accordance with Section 4.6 will be required to file a new Compensation Deferral Agreement under this Article IV in order to recommence Deferrals under the Plan. 

  

 Page 12 of 30 








 Accredited Home Lenders Holding Co. Deferred Compensation Plan 
  


	4.3	Allocation of Deferrals. A Compensation Deferral Agreement may allocate Deferrals to one or more Specified Date Accounts and/or to the Retirement/Termination Account. The
Committee may, in its discretion, establish a minimum deferral period for Specified Date Accounts. 

  

	4.4	Deductions from Pay. The Committee has the authority to determine the payroll practices under which any component of Compensation subject to a Compensation Deferral Agreement
will be deducted from a Participant’s Compensation. 

  

	4.5	Vesting. Participant Deferrals shall be 100% vested at all times. 

  

	 4.6
	 Cancellation of Deferrals. The Committee shall cancel a Participant’s Deferrals (i) for the balance of
the Plan Year in which an Unforeseeable Emergency payment is made, (ii) if the Participant receives a hardship distribution under the Employer’s qualified 401(k) plan, through the end of the Plan Year in which the six-month anniversary of
the hardship distribution falls, and (iii) during periods in which the Participant is unable to perform the duties of his or her position or any substantially similar position due to a mental or physical impairment that can be expected to
result in death or last for a continuous period of at least six months, provided cancellation occurs by the later of the end of the taxable year of the Participant or the 15th day of the third month following the date the Participant incurs the disability (as defined in this paragraph (iii)). In the event a Participant receives a voluntary withdrawal from a Grandfathered Account, the
Participant shall not be permitted to make Deferrals to the Plan in the Plan Year following the Plan Year in which the withdrawal is made. 


 ARTICLE V 
 Company Contributions 
  

	5.1	Discretionary Company Contributions. The Company may, from time to time in its sole and absolute discretion, credit Company Contributions to any Participant in any amount
determined by the Company. 

  

	5.2	Allocation of Company Contributions. The Participant may allocate Company Contributions to one or more Specified Date Accounts and/or to the Retirement/Termination Account.
Separate Specified Date Accounts may be established for each portion of a Company Contribution that is scheduled to vest at a different time. A Participant may not select a distribution date for a Specified Date Account that is earlier than the date
the Company Contribution, or portion thereof, is scheduled to become vested. 

  

 Page 13 of 30 








 Accredited Home Lenders Holding Co. Deferred Compensation Plan 
  


	5.3	Vesting. Unless otherwise specified by the Committee at the time of any Company Contribution, each Company Contribution shall vest, with respect to Service to the Employer
after the date of any such Company Contribution, in accordance with the following vesting schedule: 

  

	 	(a)	Fifty percent (50%) of such Company Contribution shall become vested after two (2) consecutive Years of Service with the Employer; 

  

	 	(b)	An additional twenty-five percent (25%), for a total of seventy-five percent (75%), of any Company Contribution shall become vested after three (3) consecutive Years of Service
with the Employer; and 

  

	 	(c)	The final twenty-five percent (25%), for a total of one hundred percent (100%), of such Company Contribution shall become vested after four (4) consecutive Years of Service
with the Employer. 

 All Company Contributions shall become 100% vested upon the occurrence of the earliest of: (i) the
death of the Participant while actively employed; (ii) the Disability of the Participant, (iii) the Retirement of the Participant, (iv) the Participant’s termination of employment without Cause, or resignation for Good Reason,
within one (1) year after a Change in Control, or (v) upon termination of the Plan. The Committee shall determine whether a termination of Service is for Cause or on account of Good Reason in accordance with the Plan. Further, with respect
to any Participant who is a Director, such Participant shall become 100% vested in all Company Contributions in the event such Participant (i) resigns at the request of the Company in contemplation of a Change in Control following the Company
entering into a definitive transaction agreement, the consummation of which would result in a Change of Control, or (ii) resigns or is removed within one (1) year after a Change in Control. The Participating Employer may, at any time, in
its sole discretion, increase a Participant’s vested interest in a Company Contribution; provided, however that any Company Contributions that are scheduled to be paid with respect to the date such contributions become vested shall be paid on
the dates such payments would have been made had such increase in vesting not occurred. The portion of a Participant’s Accounts that remains unvested upon his or her Separation from Service after the application of the terms of this
Section 5.3 shall be forfeited. 
  

	5.4	Cessation of Deferrals. Notwithstanding any other provision in the Plan, all contributions to the Plan will cease with respect to Compensation earned after September 1,
2007. 

 ARTICLE VI 
 Benefits 
  

	6.1	Benefits, Generally. A Participant shall be entitled to the following benefits under the Plan: 

  

	 	(a)	Retirement Benefit. Upon the Participant’s Separation from Service due to Retirement, he or she shall be entitled to a Retirement Benefit. The Retirement Benefit shall
be equal to the vested portion of the Retirement/Termination Account and (i) if the Retirement/Termination Account is payable in a lump sum, the vested unpaid balances of any Specified Date Accounts, or (ii) if the Retirement/Termination
Account is payable in installments, the vested portion of any Specified Date Accounts with respect to which payments have not yet commenced. The Retirement Benefit shall be based on the value of those Accounts as of the end of the month in which
Separation from Service occurs. Payment of the Retirement Benefit will be made or begin in the month following the month in which Separation from Service occurs, provided, however, that with respect to a Participant who is a Specified Employee as of
the date such Participant incurs a Separation from Service, payment will be made or begin in the seventh month following the month in which such Separation from Service occurs. If the Retirement Benefit is to be paid in the form of installments, any
subsequent installment payments to a Specified Employee will be paid on the anniversary of the date the initial installment was made. 

  

 Page 14 of 30 








 Accredited Home Lenders Holding Co. Deferred Compensation Plan 
  


	 	(b)	Termination Benefit. Upon the Participant’s Separation from Service for reasons other than death, Disability or Retirement, he or she shall be entitled to a Termination
Benefit. The Termination Benefit shall be equal to the vested portion of the Retirement/Termination Account and (i) if the Retirement/Termination Account is payable in a lump sum, the vested unpaid balances of any Specified Date Accounts, or
(ii) if the Retirement/Termination Account is payable in installments, the vested portion of any Specified Date Accounts with respect to which payments have not yet commenced. The Termination Benefit shall be based on the value of the
Retirement/Termination Account as of the end of the month in which Separation from Service occurs. Payment of the Termination Benefit will be made or begin in the month following the month in which Separation from Service occurs, provided, however,
that with respect to a Participant who is a Specified Employee as of the date such Participant incurs a Separation from Service, payment will be made or begin in the seventh month following the month in which such Separation from Service occurs. If
the Termination Benefit is to be paid in the form of installments, any subsequent installment payments to a Specified Employee will be paid on the anniversary of the date the initial installment was made. 

  

	 	(c)	Specified Date Benefit. If the Participant has established one or more Specified Date Accounts, he or she shall be entitled to a Specified Date Benefit with respect to each
such Specified Date Account. The Specified Date Benefit shall be equal to the vested portion of the Specified Date Account, based on the value of that Account as of the end of the month designated by the Participant at the time the Account was
established. Payment of the Specified Date Benefit will be made or begin in the month following the designated month. 

  

 Page 15 of 30 








 Accredited Home Lenders Holding Co. Deferred Compensation Plan 
  


	 	(d)	Disability Benefit. Upon a determination by the Committee that a Participant is Disabled, he or she shall be entitled to a Disability Benefit. The Disability Benefit shall be
equal to the vested portion of the Retirement/Termination Account and (i) if the Retirement/Termination Account is payable in a lump sum, the vested unpaid balances of any Specified Date Accounts, or (ii) if the Retirement/Termination
Account is payable in installments, the vested portion of any Specified Date Accounts with respect to which payments have not yet commenced. The Disability Benefit shall be based on the value of the Accounts as of the last day of the month in which
Disability occurs and will be paid in the following month. 

  

	 	(e)	Death Benefit. In the event of the Participant’s death, his or her designated Beneficiary(ies) shall be entitled to a Death Benefit. The Death Benefit shall be equal to
the vested portion of the Retirement/Termination Account and the vested portion of any unpaid balances in any Specified Date Accounts. The Death Benefit shall be based on the value of the Accounts as of the end of the month in which death occurred,
with payment made in the following month. 

  

	 	(f)	Supplemental Death Benefit. In the event of the Participant’s death, his or her designated Beneficiary shall be entitled to a Supplemental Death Benefit in the amount of
$50,000, provided all of the following criteria have been satisfied prior to the Participant’s death: 

  

	 	1.	The Participant is eligible to participate in the Plan and, at the time of the Participant’s death, had a current account balance; 

  

	 	2.	The Participant was an active Employee with the Employer at the time of the Participant’s death; 

  

	 	3.	The Participant completed and submitted an insurance application to the Committee; and 

  


	 	4.	The Participating Employer subsequently purchased an insurance policy on the life of the Participant, with a death benefit of at least $50,000, and which policy was in effect at the
time of the Participant’s death. 

 Notwithstanding any provision of this Plan or any other document to the contrary, the
Supplemental Death Benefit payable pursuant to this paragraph shall be paid only if an insurance policy has been issued on the Participant’s life and such policy is in force at the time of the Participant’s death and the Participating


  

 Page 16 of 30 








 Accredited Home Lenders Holding Co. Deferred Compensation Plan 
  

 
Employer shall have no obligation with respect to the payment of the supplemental death benefit, or to maintain an insurance policy for any Participants. The
supplemental death benefit provided under this paragraph shall be taxable income when paid. The Supplemental Death Benefit shall be paid in the same month as the Death Benefit described in (e) above. 
  

	 	(g)	Unforeseeable Emergency Payments. A Participant who experiences an Unforeseeable Emergency may submit a written request to the Committee to receive payment of all or any
portion of Deferrals credited to his or her Accounts. Whether a Participant or Beneficiary is faced with an Unforeseeable Emergency permitting an emergency payment shall be determined by the Committee based on the relevant facts and circumstances of
each case, but, in any case, a distribution on account of Unforeseeable Emergency may not be made to the extent that such emergency is or may be reimbursed through insurance or otherwise, by liquidation of the Participant’s assets, to the
extent the liquidation of such assets would not cause severe financial hardship, or by cessation of Deferrals under this Plan. If an emergency payment is approved by the Committee, the amount of the payment shall not exceed the amount reasonably
necessary to satisfy the need, taking into account the additional compensation that is available to the Participant as the result of cancellation of deferrals to the Plan, including amounts necessary to pay any taxes or penalties that the
Participant reasonably anticipates will result from the payment. The amount of the emergency payment shall be subtracted first from the vested portion of the Participant’s Retirement/Termination Account until depleted and then from the vested
Specified Date Accounts, beginning with the Specified Date Account with the latest payment commencement date. Emergency payments shall be paid in a single lump sum within the 90-day period following the date the payment is approved by the Committee.


  

	 	(h)	Voluntary Withdrawals of Grandfathered Accounts. A Participant may elect at any time to voluntarily withdraw Deferrals credited to his or her Grandfathered Account. Company
Contributions are not eligible for early withdrawal. Ninety percent (90%) of the requested amount shall be paid in a single lump sum distribution as soon as administratively feasible following the Participant’s request. Upon such
withdrawal, the remaining ten percent (10%) of the requested amount shall be forfeited and the Participant shall have no further right thereto. The minimum amount of such an early withdrawal shall be the lesser of $5,000 or 100% of the
Deferrals credited to the Participant’s Grandfathered Account. 

  

	6.2	Form of Payment. 

  

	 	(a)	 Retirement Benefit. A Participant who is entitled to receive a Retirement Benefit shall receive payment of such benefit in a single lump sum, unless the
Participant elects on his or her initial Compensation Deferral Agreement to have such benefit 



  

 Page 17 of 30 








 Accredited Home Lenders Holding Co. Deferred Compensation Plan 
  


	 	 
paid in one of the following alternative forms of payment (i) substantially equal annual installments over a period of 5, 10, or 15 years, as elected by
the Participant; or (ii) a lump sum payment of a percentage of the balance in the Retirement/ Termination Account, with the balance paid in substantially equal annual installments over a period of 5, 10, or 15 years, as elected by the
Participant. 


  

	 	(b)	Termination Benefit. A Participant who is entitled to receive a Termination Benefit shall receive payment of such benefit in a single lump sum, unless the Participant elects
on his or her initial Compensation Deferral Agreement to have such benefit paid in one of the following alternative forms of payment (i) substantially equal annual installments over a period of 5 or 10 years, as elected by the Participant; or
(ii) a lump sum payment of a percentage of the balance in the Retirement/ Termination Account, with the balance paid in substantially equal annual installments over a period of 5 or 10 years, as elected by the Participant.


  

	 	(c)	Specified Date Benefit. The Specified Date Benefit shall be paid in a single lump sum, unless the Participant elects on the Compensation Deferral Agreement with which the
account was established to have the Specified Date Account paid in substantially equal annual installments over a period of two to four years, as elected by the Participant. 

 Notwithstanding any election of a form of payment by the Participant, upon a Separation from Service the unpaid balance of a Specified Date Account with
respect to which payments have not commenced shall be paid in accordance with the form of payment applicable to the Retirement, Termination, Disability or Death Benefit, as applicable. If such benefit is payable in a single lump sum, the unpaid
balance of all Specified Date Accounts (including those in pay status) will be paid in a lump sum. 
  

	 	(d)	Disability Benefit. A Participant who is entitled to receive a Disability Benefit shall receive payment of such benefit in a single lump sum, unless the Participant elects on
his or her initial Compensation Deferral Agreement to have such benefit paid in one of the following alternative forms of payment (i) substantially equal annual installments over a period of 5, 10, or 15 years, as elected by the Participant; or
(ii) a lump sum payment of a percentage of the balance in the Retirement/ Termination Account, with the balance paid in substantially equal annual installments over a period of 5, 10, or 15 years, as elected by the Participant.


  

	 	(e)	Death Benefit. A Designated Beneficiary who is entitled to receive a Death Benefit or a Supplemental Death Benefit shall receive payment of such benefit in a single lump sum.


  

 Page 18 of 30 








 Accredited Home Lenders Holding Co. Deferred Compensation Plan 
  


	 	(f)	Small Account Balances. The Committee may, in its sole discretion which shall be evidenced in writing no later than the date of payment, elect to pay the value of the
Participant’s Accounts upon a Separation from Service in a single lump sum if the balance of such Accounts is not greater than the applicable dollar amount under Code Section 402(g)(1)(B), provided the payment represents the complete
liquidation of the Participant’s interest in the Plan. 

  

	 	(g)	Rules Applicable to Installment Payments. If a Payment Schedule specifies installment payments, annual payments will be made beginning as of the payment commencement date for
such installments and shall continue on each anniversary thereof until the number of installment payments specified in the Payment Schedule has been paid. The amount of each installment payment shall be determined by dividing (a) by (b), where
(a) equals the Account Balance as of the Valuation Date and (b) equals the remaining number of installment payments. 

 For purposes of Article VII, installment payments will be treated as a single form of payment. If a lump sum equal to less than 100% of the Retirement/Termination Account is paid, the payment commencement date for the installment form of
payment will be the first anniversary of the payment of the lump sum. 
  

	 	(h)	Additional Provisions Applicable to Grandfathered Accounts. Notwithstanding Section 6.2(b), a Participant who is entitled to receive a Termination Benefit shall receive
payment of his Grandfathered Account in a lump sum unless the Participant elects on his or her initial Compensation Deferral Agreement to have such benefit paid in annual installments of equal amounts over a period as provided below:


  

			
	 Years of Service
	  	 Installment Period

	5+ Years of Service	  	5 Years
	10+ Years of Service	  	5/10 Years
	15+ Years of Service	  	5/10/15 Years

 If at the time payments are scheduled to commence, a Participant who elects an installment
distribution does not satisfy the requirements for an installment distribution or the installment term elected, then such Participant’s Grandfathered Account shall be distributed in a single lump sum if the Participant is not eligible for any
installment distribution or over the longest installment term for which the Participant is qualified. Additionally, if the Participant’s Grandfathered Account balance is less than $25,000 at the time installment payments are to begin, the
Participant’s Grandfathered Account will automatically be distributed in a single lump sum. 
  

 Page 19 of 30 








 Accredited Home Lenders Holding Co. Deferred Compensation Plan 
  


	6.3	Acceleration of or Delay in Payments. The Committee, in its sole and absolute discretion, may elect to accelerate the time or form of payment of a benefit owed to the
Participant hereunder, provided such acceleration is permitted under Treas. Reg. Section 1.409A-3(j)(4). The Committee may also, in its sole and absolute discretion, delay the time for payment of a benefit owed to the Participant hereunder, to
the extent permitted under Treas. Reg. Section 1.409A-2(b)(7). If the Plan receives a domestic relations order (within the meaning of Code Section 414(p)(1)(B)) directing that all or a portion of a Participant’s Accounts be paid to an
“alternate payee,” any amounts to be paid to the alternate payee(s) shall be paid in a single lump sum. 

  

	6.4	Limitation on Distributions to Covered Employees. Notwithstanding any other provision of this Article VI, in the event that the Participant is a “covered
employee” as that term is defined in Section 162(m)(3) of the Code, or would be a covered employee if payments from the Plan were distributed in accordance with Section 6.2, the maximum amount which may be distributed from the
Participant’s Account in any Plan Year shall not exceed one million dollars ($1,000,000) less the amount of compensation paid to the Participant in such Plan Year which is not “performance-based” (as defined in Code
Section 162(m)(4)(C)), which amount shall be reasonably determined by the Committee at the time of the proposed distribution. Any amount which is not distributed to the Participant in a Plan Year as a result of this limitation shall be
distributed to the Participant in the next Plan Year, subject to compliance with the foregoing limitations set forth in this Section 6.4. 

 ARTICLE VII 
 Modifications to Payment Schedules 
  

	7.1	Participant’s Right to Modify. A Participant may modify any or all of the alternative Payment Schedules with respect to an Account, consistent with the permissible
Payment Schedules available under the Plan, provided such modification complies with the requirements of this Article VII. 

  

	7.2	Time of Election. The date on which a modification election is submitted to the Committee must be at least twelve months prior to the date on which payment is scheduled to
commence under the Payment Schedule in effect prior to the modification. 

  

	7.3	Date of Payment under Modified Payment Schedule. Except with respect to modifications that relate to the payment of a Death Benefit or a Disability Benefit, the date payments
are to commence under the modified Payment Schedule must be no earlier than five years after the date payment would have commenced under the original Payment Schedule. Under no circumstances may a modification election result in an acceleration of
payments in violation of Code Section 409A. 

  

 Page 20 of 30 








 Accredited Home Lenders Holding Co. Deferred Compensation Plan 
  


	7.4	Effective Date. A modification election submitted in accordance with this Article VII is irrevocable upon receipt by the Committee and becomes effective 12 months after such
date. 

  

	7.5	Effect on Accounts. An election to modify a Payment Schedule is specific to the Account or payment event to which it applies, and shall not be construed to affect the Payment
Schedules of any other Accounts. 

  

	7.6	Modifications to Grandfathered Accounts. Notwithstanding the preceding provisions of this Article VII, a Participant may modify the form of payment applicable to a
Grandfathered Account at any time, provided the modification is submitted in writing at least 12 months in advance of the date the Grandfathered Account is scheduled to be paid. A Participant may not modify the distribution date applicable to a
Grandfathered Account scheduled to be paid as a Specified Date Benefit more than twice. 

 ARTICLE VIII 
 Valuation of Account Balances; Investments 
  

	8.1	Valuation. Deferrals shall be credited to appropriate Accounts on the date such Compensation would have been paid to the Participant absent the Compensation Deferral
Agreement. Company Contributions shall be credited to the Retirement/Termination Account at the times determined by the Committee. Valuation of Accounts shall be performed under procedures approved by the Committee. 

  

	8.2	Earnings Credit. Each Account will be credited with Earnings on each Business Day, based upon the Participant’s investment allocation among a menu of investment options
selected in advance by the Committee, in accordance with the provisions of this Article VIII (“investment allocation”). 

  

	8.3	Investment Options. Investment options will be determined by the Committee. The Committee, in its sole discretion, shall be permitted to add or remove investment options from
the Plan menu from time to time, provided that any such additions or removals of investment options shall not be effective with respect to any period prior to the effective date of such change. 

  

	8.4	Investment Allocations. A Participant’s investment allocation constitutes a deemed, not actual, investment among the investment options comprising the investment menu.
At no time shall a Participant have any real or beneficial ownership in any investment option included in the investment menu, nor shall the Participating Employer or any trustee acting on its behalf have any obligation to purchase actual securities
as a result of a Participant’s investment allocation. A Participant’s investment allocation shall be used solely for purposes of adjusting the value of a Participant’s Account Balances. 

  

 Page 21 of 30 








 Accredited Home Lenders Holding Co. Deferred Compensation Plan 
  

 A Participant shall specify an investment allocation for each of his Accounts in accordance with
procedures established by the Committee. Allocation among the investment options must be designated in increments of 1%. The Participant’s investment allocation will become effective on the same Business Day or, in the case of investment
allocations received after a time specified by the Committee, the next Business Day. 
 A Participant may change an investment allocation on
any Business Day, both with respect to future credits to the Plan and with respect to existing Account Balances, in accordance with procedures adopted by the Committee. Changes shall become effective on the same Business Day or, in the case of
investment allocations received after a time specified by the Committee, the next Business Day, and shall be applied prospectively. 
  

	8.5	Unallocated Deferrals and Accounts. If the Participant fails to make an investment allocation with respect to an Account, such Account shall be invested in an investment
option, the primary objective of which is the preservation of capital, as determined by the Committee. 

  

	8.6	Company Contributions Prior to Closing of Merger Agreement. Prior to the closing of the Merger Agreement, Company Contributions were made in the form of Company Stock and
could not be re-allocated into another investment option. Effective with the closing of the Merger Agreement, all Company Contributions made to the Plan will be converted to cash in accordance with the terms of the Merger Agreement, and affected
Participants shall thereafter be permitted to specify an investment allocation with respect to existing and future Company Contributions in accordance with the provisions of this Article VIII. Any Company Contributions for which no investment
allocation is made shall be invested in according with Section 8.5. 

 ARTICLE IX 
 Administration 
  

	9.1	Plan Administration. This Plan shall be administered by the Committee which shall have discretionary authority to make, amend, interpret and enforce all appropriate rules and
regulations for the administration of this Plan and to utilize its discretion to decide or resolve any and all questions, including but not limited to eligibility for benefits and interpretations of this Plan and its terms, as may arise in
connection with the Plan. Claims for benefits shall be filed with the Committee and resolved in accordance with the claims procedures in Article XII. 

  

	9.2	 Administration Upon Change in Control. Upon a Change in Control, the Committee, as constituted immediately prior to such Change in Control, shall continue to
act as the Committee. The individual who was the Chief Executive Officer of the Company (or if 



  

 Page 22 of 30 








 Accredited Home Lenders Holding Co. Deferred Compensation Plan 
  


	 	 
such person is unable or unwilling to act, the next highest ranking officer) prior to the Change in Control shall have the authority (but shall not be
obligated) to appoint an independent third party to act as the Committee. 


 Upon such Change in Control, the Company may
not remove the Committee, unless 2/3rds of the members of the Board of Directors of the Company and a majority of Participants and Beneficiaries with Account Balances consent to the removal and replacement Committee. Notwithstanding the foregoing,
neither the Committee nor the officer described above shall have authority to direct investment of trust assets under any rabbi trust described in Section 11.2. 
 The Participating Employer shall, with respect to the Committee identified under this Section, (i) pay all reasonable expenses and fees of the Committee, (ii) indemnify the Committee (including individuals
serving as Committee) against any costs, expenses and liabilities including, without limitation, attorneys’ fees and expenses arising in connection with the performance of the Committee hereunder, except with respect to matters resulting from
the Committee’s gross negligence or willful misconduct and (iii) supply full and timely information to the Committee on all matters related to the Plan, any rabbi trust, Participants, Beneficiaries and Accounts as the Committee may
reasonably require. 
  

	9.3	Withholding. The Participating Employer shall have the right to withhold from any payment due under the Plan (or with respect to any amounts credited to the Plan) any taxes
required by law to be withheld in respect of such payment (or credit). Withholdings with respect to amounts credited to the Plan shall be deducted from Compensation that has not been deferred to the Plan. 

  

	9.4	Indemnification. The Participating Employers shall indemnify and hold harmless each employee, officer, director, agent or organization, to whom or to which are delegated
duties, responsibilities, and authority under the Plan or otherwise with respect to administration of the Plan, including, without limitation, the Committee and its agents, against all claims, liabilities, fines and penalties, and all expenses
reasonably incurred by or imposed upon him or it (including but not limited to reasonable attorney fees) which arise as a result of his or its actions or failure to act in connection with the operation and administration of the Plan to the extent
lawfully allowable and to the extent that such claim, liability, fine, penalty, or expense is not paid for by liability insurance purchased or paid for by the Participating Employer. Notwithstanding the foregoing, the Participating Employer shall
not indemnify any person or organization if his or its actions or failure to act are due to gross negligence or willful misconduct or for any such amount incurred through any settlement or compromise of any action unless the Participating Employer
consents in writing to such settlement or compromise. 

  

	9.5	Delegation of Authority. In the administration of this Plan, the Committee may, from time to time, employ agents and delegate to them such administrative duties as it sees
fit, and may from time to time consult with legal counsel who shall be legal counsel to the Company. 

  

 Page 23 of 30 








 Accredited Home Lenders Holding Co. Deferred Compensation Plan 
  


	9.6	Binding Decisions or Actions. The decision or action of the Committee in respect of any question arising out of or in connection with the administration, interpretation and
application of the Plan and the rules and regulations thereunder shall be final and conclusive and binding upon all persons having any interest in the Plan. 

 ARTICLE X 
 Amendment and Termination 
  

	10.1	Amendment and Termination. The Company may at any time and from time to time amend the Plan or may terminate the Plan as provided in this Article X. Each Participating
Employer may also terminate its participation in the Plan. 

  

	10.2	Amendments. The Company, by action taken by its Board of Directors, may amend the Plan at any time and for any reason, provided that any such amendment shall not reduce the
vested Account Balances of any Participant accrued as of the date of any such amendment or restatement (as if the Participant had incurred a voluntary Separation from Service on such date or alter a Payment Schedule. The Committee may amend the Plan
without the consent of the Board of Directors for the purpose of (i) conforming the Plan to the requirements of law, or (ii) facilitating the administration of the Plan, provided no such amendment shall substantially increase the costs to
the Company unless it is contingent upon ratification by the Board before coming effective. 

  

	10.3	Termination. The Company, by action taken by its Board of Directors, may terminate the Plan and pay Participants and Beneficiaries their Account Balances in a single lump sum
at any time, to the extent and in accordance with Treas. Reg. Section 1.409A-3(j)(4)(ix). If a Participating Employer terminates its participation in the Plan, the benefits of affected Employees shall be paid at the time provided in Article VI.


  

	10.4	Accounts Taxable Under Code Section 409A. The Plan is intended to constitute a plan of deferred compensation that meets the requirements for deferral of income taxation
under Code Section 409A. The Committee, pursuant to its authority to interpret the Plan, may sever from the Plan or any Compensation Deferral Agreement any provision or exercise of a right that otherwise would result in a violation of Code
Section 409A. 

  

 Page 24 of 30 








 Accredited Home Lenders Holding Co. Deferred Compensation Plan 
  

 ARTICLE XI 
 Informal Funding 
  

	11.1	General Assets. Obligations established under the terms of the Plan may be satisfied from the general funds of the Participating Employers, or a trust described in this
Article XI. No Participant, spouse or Beneficiary shall have any right, title or interest whatever in assets of the Participating Employers. Nothing contained in this Plan, and no action taken pursuant to its provisions, shall create or be construed
to create a trust of any kind, or a fiduciary relationship, between the Participating Employers and any Employee, spouse, or Beneficiary. To the extent that any person acquires a right to receive payments hereunder, such rights are no greater than
the right of an unsecured general creditor of the Participating Employer. 

  

	11.2	Rabbi Trust. A Participating Employer may, in its sole discretion, establish a grantor trust, commonly known as a rabbi trust, as a vehicle for accumulating assets to pay
benefits under the Plan. Payments under the Plan may be paid from the general assets of the Participating Employer or from the assets of any such rabbi trust. Payment from any such source shall reduce the obligation owed to the Participant or
Beneficiary under the Plan. 

 ARTICLE XII 
 Claims 
  

	12.1	Filing a Claim. Any controversy or claim arising out of or relating to the Plan shall be filed in writing with the Committee which shall make all determinations concerning
such claim. Any claim filed with the Committee and any decision by the Committee denying such claim shall be in writing and shall be delivered to the Participant or Beneficiary filing the claim (the “Claimant”). 


 

	 	a.	In General. Notice of a denial of benefits (other than Disability benefits) will be provided within ninety (90) days of the Committee’s receipt of the
Claimant’s claim for benefits. If the Committee determines that it needs additional time to review the claim, the Committee will provide the Claimant with a notice of the extension before the end of the initial ninety (90) day period. The
extension will not be more than ninety (90) days from the end of the initial ninety (90) day period and the notice of extension will explain the special circumstances that require the extension and the date by which the Committee expects
to make a decision. 

  

	 	b.	 Disability Benefits. Notice of denial of Disability benefits will be provided within forty-five (45) days of the Committee’s receipt of the
Claimant’s claim for Disability benefits. If the Committee determines that it needs additional time to review the Disability claim, the Committee will provide the Claimant with a notice of the extension before the end of the initial forty-five
(45) day period. If 



  

 Page 25 of 30 








 Accredited Home Lenders Holding Co. Deferred Compensation Plan 
  


	 	 
the Committee determines that a decision cannot be made within the first extension period due to matters beyond the control of the Committee, the time period
for making a determination may be further extended for an additional thirty (30) days. If such an additional extension is necessary, the Committee shall notify the Claimant prior to the expiration of the initial thirty (30) day extension.
Any notice of extension shall indicate the circumstances necessitating the extension of time, the date by which the Committee expects to furnish a notice of decision, the specific standards on which such entitlement to a benefit is based, the
unresolved issues that prevent a decision on the claim and any additional information needed to resolve those issues. A Claimant will be provided a minimum of forty-five (45) days to submit any necessary additional information to the Committee.
In the event that a thirty (30) day extension is necessary due to a Claimant’s failure to submit information necessary to decide a claim, the period for furnishing a notice of decision shall be tolled from the date on which the notice of
the extension is sent to the Claimant until the earlier of the date the Claimant responds to the request for additional information or the response deadline. 


  

	 	c.	Contents of Notice. If a claim for benefits is completely or partially denied, notice of such denial shall be in writing and shall set forth the reasons for denial in plain
language. The notice shall (i) cite the pertinent provisions of the Plan document and (ii) explain, where appropriate, how the Claimant can perfect the claim, including a description of any additional material or information necessary to
complete the claim and why such material or information is necessary. The claim denial also shall include an explanation of the claims review procedures and the time limits applicable to such procedures, including a statement of the Claimant’s
right to bring a civil action under Section 502(a) of ERISA following an adverse decision on review. In the case of a complete or partial denial of a Disability benefit claim, the notice shall provide a statement that the Committee will provide
to the Claimant, upon request and free of charge, a copy of any internal rule, guideline, protocol, or other similar criterion that was relied upon in making the decision. 

  

	12.2	 Appeal of Denied Claims. A Claimant whose claim has been completely or partially denied shall be entitled to appeal the claim denial by filing a written
appeal with a committee designated to hear such appeals (the “Appeals Committee”). A Claimant who timely requests a review of the denied claim (or his or her authorized representative) may review, upon request and free of charge, copies of
all documents, records and other information relevant to the denial and may submit written comments, documents, records and other information relevant to the claim to the Appeals Committee. All written comments, documents, records, and other
information shall be considered “relevant” if the information (i) was relied upon in making a benefits determination, (ii) was submitted, considered or generated in the course of making a benefits decision regardless of whether it was
relied upon to make the decision, or (iii) demonstrates compliance with 



  

 Page 26 of 30 








 Accredited Home Lenders Holding Co. Deferred Compensation Plan 
  


	 	 
administrative processes and safeguards established for making benefit decisions. The Appeals Committee may, in its sole discretion and if it deems
appropriate or necessary, decide to hold a hearing with respect to the claim appeal. 


  

	 	(a)	In General. Appeal of a denied benefits claim (other than a Disability benefits claim) must be filed in writing with the Appeals Committee no later than sixty (60) days
after receipt of the written notification of such claim denial. The Appeals Committee shall make its decision regarding the merits of the denied claim within sixty (60) days following receipt of the appeal (or within one hundred and twenty
(120) days after such receipt, in a case where there are special circumstances requiring extension of time for reviewing the appealed claim). If an extension of time for reviewing the appeal is required because of special circumstances, written
notice of the extension shall be furnished to the Claimant prior to the commencement of the extension. The notice will indicate the special circumstances requiring the extension of time and the date by which the Appeals Committee expects to render
the determination on review. The review will take into account comments, documents, records and other information submitted by the Claimant relating to the claim without regard to whether such information was submitted or considered in the initial
benefit determination. 

  

	 	(b)	Disability Benefits. Appeal of a denied Disability benefits claim must be filed in writing with the Appeals Committee no later than one hundred eighty (180) days after
receipt of the written notification of such claim denial. The review shall be conducted by the Appeals Committee (exclusive of the person who made the initial adverse decision or such person’s subordinate). In reviewing the appeal, the Appeals
Committee shall (i) not afford deference to the initial denial of the claim, (ii) consult a medical professional who has appropriate training and experience in the field of medicine relating to the Claimant’s disability and who was
neither consulted as part of the initial denial nor is the subordinate of such individual and (iii) identify the medical or vocational experts whose advice was obtained with respect to the initial benefit denial, without regard to whether the
advice was relied upon in making the decision. The Appeals Committee shall make its decision regarding the merits of the denied claim within forty-five (45) days following receipt of the appeal (or within ninety (90) days after such
receipt, in a case where there are special circumstances requiring extension of time for reviewing the appealed claim). If an extension of time for reviewing the appeal is required because of special circumstances, written notice of the extension
shall be furnished to the Claimant prior to the commencement of the extension. The notice will indicate the special circumstances requiring the extension of time and the date by which the Appeals Committee expects to render the determination on
review. Following its review of any additional information submitted by the Claimant, the Appeals Committee shall render a decision on its review of the denied claim. 

  

 Page 27 of 30 








 Accredited Home Lenders Holding Co. Deferred Compensation Plan 
  

  

	 	(c)	Contents of Notice. If a benefits claim is completely or partially denied on review, notice of such denial shall be in writing and shall set forth the reasons for denial in
plain language. 

 The decision on review shall set forth (i) the specific reason or reasons for the denial,
(ii) specific references to the pertinent Plan provisions on which the denial is based, (iii) a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to and copies of all documents, records,
or other information relevant (as defined above) to the Claimant’s claim, and (iv) a statement describing any voluntary appeal procedures offered by the plan and a statement of the Claimant’s right to bring an action under
Section 502(a) of ERISA. 
  

	 	(d)	For the denial of a Disability benefit, the notice will also include a statement that the Appeals Committee will provide, upon request and free of charge, (i) any internal
rule, guideline, protocol or other similar criterion relied upon in making the decision, (ii) any medical opinion relied upon to make the decision and (iii) the required statement under Section 2560.503-1(j)(5)(iii) of the Department
of Labor regulations. 

  

	12.3	Claims Appeals Upon Change in Control. Upon a Change in Control, the Appeals Committee, as constituted immediately prior to such Change in Control, shall continue to act as
the Appeals Committee. Upon such Change in Control, the Company may not remove any member of the Appeals Committee, but may replace resigning members if 2/3rds of the members of the Board of Directors of the Company and a majority of Participants
and Beneficiaries with Account Balances consent to the replacement. 

 The Appeals Committee shall have the exclusive authority
at the appeals stage to interpret the terms of the Plan and resolve appeals under the Claims Procedure. 
 Each Participating Employer shall,
with respect to the Committee identified under this Section, (i) pay its proportionate share of all reasonable expenses and fees of the Appeals Committee, (ii) indemnify the Appeals Committee (including individual committee members)
against any costs, expenses and liabilities including, without limitation, attorneys’ fees and expenses arising in connection with the performance of the Appeals Committee hereunder, except with respect to matters resulting from the Appeals
Committee’s gross negligence or willful misconduct and (iii) supply full and timely information to the Appeals Committee on all matters related to the Plan, any rabbi trust, Participants, Beneficiaries and Accounts as the Appeals Committee
may reasonably require. 
  

 Page 28 of 30 








 Accredited Home Lenders Holding Co. Deferred Compensation Plan 
  

  

	12.4	Legal Action. A Claimant may not bring any legal action, including commencement of any arbitration, relating to a claim for benefits under the Plan unless and until the
Claimant has followed the claims procedures under the Plan and exhausted his or her administrative remedies under such claims procedures. 

  

	12.5	Discretion of Appeals Committee. All interpretations, determinations and decisions of the Appeals Committee with respect to any claim shall be made in its sole discretion,
and shall be final and conclusive. 

 ARTICLE XIII 
 GENERAL PROVISIONS 
  

	13.1	Anti-assignment Rule. No interest of any Participant, spouse or Beneficiary under this Plan and no benefit payable hereunder shall be assigned as security for a loan, and any
such purported assignment shall be null, void and of no effect, nor shall any such interest or any such benefit be subject in any manner, either voluntarily or involuntarily, to anticipation, sale, transfer, assignment or encumbrance by or through
any Participant, spouse or Beneficiary. Notwithstanding anything to the contrary herein, however, the Committee has the discretion to make payments to an alternate payee in accordance with the terms of a domestic relations order (as defined in Code
Section 414(p)(1)(B)). 

  

	13.2	No Legal or Equitable Rights or Interest. No Participant or other person shall have any legal or equitable rights or interest in this Plan that are not expressly granted in
this Plan. Participation in this Plan does not give any person any right to be retained in the service of the Participating Employer. The right and power of a Participating Employer to dismiss or discharge an Employee is expressly reserved. The
Participating Employers make no representations or warranties as to the tax consequences to a Participant or a Participant’s beneficiaries resulting from a deferral of income pursuant to the Plan. 

  

	13.3	No Employment Contract. Nothing contained herein shall be construed to constitute a contract of employment between an Employee and a Participating Employer.


  

	13.4	Notice. Any notice or filing required or permitted to be delivered to the Committee under this Plan shall be delivered in writing, in person, or through such electronic means
as is established by the Committee. Notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification. Written transmission shall be sent by
certified mail to: 

 ACCREDITED HOME LENDERS HOLDING CO. 
 ATTN: STEPHEN OSTIGUY, SR MANAGER, HUMAN RESOURCES 
 15253 AVENUE OF SCIENCE

 SAN DIEGO, CA 92128 
  

 Page 29 of 30 








 Accredited Home Lenders Holding Co. Deferred Compensation Plan 
  

 Any notice or filing required or permitted to be given to a Participant under this Plan shall be
sufficient if in writing or hand-delivered, or sent by mail to the last known address of the Participant. 
  

	13.5	Headings. The headings of Sections are included solely for convenience of reference, and if there is any conflict between such headings and the text of this Plan, the text
shall control. 

  

	13.6	Invalid or Unenforceable Provisions. If any provision of this Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other
provisions hereof and the Committee may elect in its sole discretion to construe such invalid or unenforceable provisions in a manner that conforms to applicable law or as if such provisions, to the extent invalid or unenforceable, had not been
included. 

  

	13.7	Lost Participants or Beneficiaries. Any Participant or Beneficiary who is entitled to a benefit from the Plan has the duty to keep the Committee advised of his or her current
mailing address. If benefit payments are returned to the Plan or are not presented for payment after a reasonable amount of time, the Committee shall presume that the payee is missing. The Committee, after making such efforts as in its discretion it
deems reasonable and appropriate to locate the payee, shall stop payment on any uncashed checks and may discontinue making future payments until contact with the payee is restored. 

  

	13.8	Governing Law. To the extent not preempted by ERISA, the laws of the State of California shall govern the construction and administration of the Plan.


 IN WITNESS WHEREOF, the undersigned executed this Plan as of the 18th day of September, 2007, to be effective as of the Effective Date. 
  


							
	 Accredited Home Lenders Holding Co.
	 		 	
				
	 By:
	 	 /s/ James A. Konrath
	 	By:	 	 /s/ Joseph J. Lydon

	 Its:
	 	 Chairman
	 	Its:	 	President

  

 Page 30 of 30