Document:

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                                                                    EXHIBIT 10.2

                          ACCREDITED HOME LENDERS, INC.

                       1995 STOCK OPTION PLAN, as Amended

     1.   Establishment, Purpose and Term of Plan.

          1.1  Establishment. The Accredited Home Lenders, Inc. 1995 Stock
Option Plan (the "Plan") is hereby established effective as of February 13, 1995
(the "Effective Date").

          1.2  Purpose. The purpose of the Plan is to advance the interests of
the Participating Company Group and its shareholders by providing an incentive
to attract, retain and reward persons performing services for the Participating
Company Group and to motivate such persons to contribute to the growth and
profitability of the Participating Company Group.

          1.3  Term of Plan. The Plan shall continue in effect until terminated
by the Board or until all of the shares of Stock available for issuance under
the Plan have been issued and all restrictions on such shares under the terms of
the Plan and the agreements evidencing Options granted under the Plan have
lapsed. However, all Options shall be granted, if at all, within ten (10) years
from the Effective Date.

     2.   Definitions and Construction.

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

               (a)  "Board" means the Board of Directors of the Company. If one
or more Committees have been appointed by the Board to administer the Plan,
"Board" shall also mean such Committee(s).

               (b)  "Code" means the Internal Revenue Code of 1986, as amended,
and any applicable regulations promulgated thereunder.

               (c)  "Committee" means the Compensation Committee or other
committee of the Board duly appointed to administer the Plan and having such
powers as shall be specified by the Board. Unless the powers of the Committee
have been specifically limited, the Committee shall have all of the powers of
the Board granted herein, including, without limitation, the power to amend or
terminate the Plan at any time, subject to the terms of the Plan and any
applicable limitations imposed by law.

               (d)  "Company" means Accredited Home Lenders, Inc., a California
corporation, or any successor corporation thereto.

               (e)  "Consultant" means any person, including an advisor, engaged
by a Participating Company to render services other than as an Employee or a
Director.

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               (f)  "Director" means a member of the Board or of the board of
directors of any other Participating Company.

               (g)  "Employee" means any common-law employee (including officers
and Directors who are also common-law employees) of a Participating Company;
provided, however, that neither service as a Director nor payment of a
director's fee shall be sufficient to constitute employment for this purpose.

               (h)  "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

               (i)  "Insider" means an officer or Director of the Company or any
other person whose transactions in the Stock are subject to Section 16 of the
Exchange Act.

               (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 sole
discretion.

               (k)  "Option" means a right to purchase Stock (subject to
adjustment as provided in Section 5.2) pursuant to the terms and conditions of
the Plan. An Option may be either (i) an Option intended to be an "Incentive
Stock Option" within the meaning of Section 422(b) of the Code or (ii) a
"Nonstatutory Stock Option" which is not intended to, or does not, qualify as an
Incentive Stock Option.

               (l)  "Optionee" means a person who has been granted one or more
Options.

               (m)  "Option Agreement" means a written agreement between the
Company and an Optionee setting forth the terms, conditions and restrictions of
the Option granted to the Optionee.

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

               (o)  "Participating Company" means the Company or any Parent
Corporation or Subsidiary Corporation.

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

               (q)  "Rule 16b-3" means Rule 16b-3 as promulgated under the
Exchange Act, as amended from time to time, or any successor rule or regulation.

               (r)  "Section 162(m)" means Section 162(m) of the Code, as
amended by the Revenue Reconciliation Act of 1993 (P.L. 103-66).

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               (s)  "Stock" means the common stock, without par value, of the
Company, as adjusted from time to time in accordance with Section 5.2.

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

               (u)  "Ten Percent Owner Optionee" means an Optionee who, at the
time an Option is granted to the Optionee, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of a
Participating Company within the meaning of Section 422(b)(6) of the Code.

          2.2  Construction. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of the Plan. 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.

     3.   Administration.

          3.1  Administration by the Board. The Plan shall be administered by
the Board, including any duly appointed Committee of the Board. All questions of
interpretation of the Plan or of any Option shall be determined by the Board,
and such determinations shall be final and binding upon all persons having an
interest in the Plan or such Option. Any officer of a Participating 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.

          3.2  Powers of the Board. In addition to any other powers set forth in
the Plan and subject to the provisions of the Plan, the Board shall have the
full and final power and authority, in its sole discretion:

               (a)  to determine the persons to whom, and the time or times at
which, Options shall be granted and the number of shares of Stock to be subject
to each Option;

               (b)  to designate Options as Incentive Stock Options or
Nonstatutory Stock Options;

               (c)  to determine the Fair Market Value of shares of stock or
other property;

               (d)  to determine the terms and conditions of each Option (which
need not be identical), including, without limitation, the exercise price of the
Option, the method of payment for shares purchased upon the exercise of the
Option, the method for satisfaction of any

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tax withholding obligation arising in connection with the Option, including by
the withholding or delivery of shares of stock, the timing and terms of the
exercisability and vesting of the Option, the time of the expiration of the
Option, the effect of the Optionee's termination of employment or service, and
all other terms and conditions of the Option not inconsistent with the terms of
the Plan;

               (e)  to approve one or more forms of Option Agreement;

               (f)  to amend, modify, extend, or renew, or grant a new Option in
substitution for, any Option or to waive any restrictions or conditions
applicable to any Option or the exercise thereof;

               (g)  to accelerate, continue, extend or defer the exercisability
or vesting of any Option, including with respect to the period following an
Optionee's termination of employment or service with the Participating Company
Group;

               (h)  to prescribe, amend or rescind rules, guidelines and
policies relating to the Plan, or to adopt supplements to, or alternative
versions of, the Plan, including, without limitation, as the Board deems
necessary or desirable to comply with the laws of, or to accommodate the tax
policy or custom of, foreign jurisdictions whose citizens may be granted
Options; and

               (i)  to correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Option Agreement and to make all other
determinations and take such other actions with respect to the Plan and any
Option as the Board may deem advisable, to the extent consistent with the Plan
and applicable law.

          3.3  Disinterested Administration. With respect to participation by
Insiders in the Plan, at any time that any class of equity security of the
Company is registered pursuant to Section 12 of the Exchange Act, the Plan shall
be administered by the Board in compliance with the "disinterested
administration" requirements of Rule 16b-3.

     4.   Eligibility and Option Limitations.

          4.1  Eligible Persons. Options may be granted only to Employees,
Consultants, and Directors. For purposes of the foregoing sentence, "Employees"
shall include prospective Employees to whom Options are granted in connection
with written offers of employment with the Participating Company Group, and
"Consultants" shall include prospective Consultants to whom Options are granted
in connection with written offers of engagement with the Participating Company
Group. Eligible persons may be granted more than one (1) Option.

          4.2  Directors Serving on Committee. At any time that any class of
equity security of the Company is registered pursuant to Section 12 of the
Exchange Act, no member of a Committee established to administer the Plan in
compliance with the "disinterested administration" requirements of Rule 16b-3,
while a member, shall be eligible to be granted an

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Option.

          4.3  Option Grant Restrictions. A Director may only be granted a
Nonstatutory Stock Option unless the Director is also an Employee. An individual
who is a Consultant, or who is a prospective Employee or prospective Consultant,
may only be granted a Nonstatutory Stock Option.

          4.4  Fair Market Value Limitation. To the extent that the aggregate
Fair Market Value (determined at the time the Option is granted) of stock with
respect to which Incentive Stock Options are exercisable by an Optionee for the
first time during any calendar year (under all stock option plans of the
Participating Company Group, including the Plan) exceeds One Hundred Thousand
Dollars ($100,000), such options shall be treated as Nonstatutory Stock Options.
This Section 4.4 shall be applied by taking Incentive Stock Options into account
in the order in which they were granted. If the Code is amended to provide for a
different limitation from that set forth in this Section 4.4, such different
limitation shall be deemed incorporated herein effective as of the date and with
respect to such Options as required by such amendment to the Code. If an Option
is treated as an Incentive Stock Option in part and as a Nonstatutory Stock
Option in part by reason of the limitation set forth in this Section 4.4,
separate certificates representing each such portion shall be issued upon the
exercise of the Option.

     5.   Shares Subject to Plan.

          5.1  Maximum Number of Shares Issuable. Subject to adjustment as
provided in Section 5.2, the maximum aggregate number of shares of Stock that
may be issued under the Plan shall be Six Hundred Seventy Four Thousand Nine
Hundred Forty Four (674,944) and shall consist of authorized but unissued shares
of Stock. In the event that any outstanding Option for any reason expires or is
terminated or canceled or shares of Stock acquired, subject to repurchase, upon
the exercise of an Option are repurchased by the Company, the shares of Stock
allocable to the unexercised portion of such Option, or such repurchased shares
of Stock, shall again be available for issuance under the Plan.

          5.2  Adjustments for Changes in Capital Structure. In the event of any
stock dividend, stock split, reverse stock split, recapitalization, combination,
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 the Plan and to any outstanding Options and in the exercise price of any
outstanding Options. If a majority of the shares which are of the same class as
the shares that are subject to outstanding Options are exchanged for, converted
into, or otherwise become (whether or not pursuant to a Transfer of Control (as
defined in Section 8.1) shares of another corporation (the "New Shares"), the
Board may unilaterally amend the outstanding Options to provide that such
Options are exercisable for New Shares. In the event of any such amendment, the
number of shares subject to and the exercise price of the outstanding Options
shall be adjusted in a fair and equitable manner as determined by the Board, in
its sole discretion. Notwithstanding the foregoing, any fractional share
resulting from an adjustment pursuant to this Section 5.2 shall be rounded up or
down to the nearest whole number, as determined by the Board, and in no event
may the exercise price of any Option be decreased to an amount less than

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the par value, if any, of the stock subject to the Option.

     6.   Terms and Conditions of Options. Options shall be evidenced by Option
Agreements specifying the number of shares of Stock covered thereby, in such
form as the Board shall from time to time establish, which Option Agreements may
incorporate all or any of the terms of the Plan by reference and shall comply
with and be subject to the following terms and conditions:

          6.1  Exercise Price. The exercise price for each Option shall be
established in the sole discretion of the Board; provided, however, that (a) the
exercise price per share for an Incentive Stock Option shall be not less than
the Fair Market Value of a share of Stock on date the Option is granted, (b) the
exercise price per share for a Nonstatutory Stock Option shall be not less than
eighty-five percent (85%) of the Fair Market Value of a share of Stock on the
date the Option is granted, and (c) no Option granted to a Ten Percent Owner
Optionee shall have an exercise price per share less than one hundred ten
percent (110%) of the Fair Market Value of a share of Stock on the date the
Option is granted. Notwithstanding the foregoing, an Option (whether an
Incentive Stock Option or a Nonstatutory Stock Option) may be granted with an
exercise price lower than the minimum exercise price set forth above if such
Option is granted pursuant to an assumption or substitution for another option
in a manner qualifying under the provisions of Section 424(a) of the Code.

          6.2  Exercise Period. Options shall be exercisable at such time or
times and subject to such terms, conditions, performance criteria, and
restrictions as shall be determined by the Board and set forth in the Option
Agreement evidencing such Option; provided, however, that (a) no Option shall be
exercisable after the expiration of ten (10) years after the date such Option is
granted, (b) no Incentive Stock Option granted to a Ten Percent Owner Optionee
shall be exercisable after the expiration of five (5) years after the date such
Option is granted, and (c) no Option granted to a prospective Employee or
prospective Consultant may become exercisable prior to the date on which such
individual commences service with a Participating Company.

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          6.3  Payment of Exercise Price.

               (a)  Forms of Payment Authorized. Except as otherwise provided
below, payment of the exercise price for the number of shares of Stock being
purchased pursuant to any Option shall be made (i) in cash, by check, or cash
equivalent, (ii) by tender to the Company of shares of Stock owned by the
Optionee having a Fair Market Value (determined without regard to any
restrictions on transferability applicable to such stock by reason of federal or
state securities laws or agreements with an underwriter for the Company) not
less than the exercise price, (iii) by the assignment of the proceeds of a sale
of some or all of the shares being acquired upon the exercise of the Option
(including, without limitation, through an exercise complying with the
provisions of Regulation T as promulgated from time to time by the Board of
Governors of the Federal Reserve System) (a "Same-Day Sale"), (iv) by the
Optionee's promissory note in a form approved by the Company, (v) by such other
consideration as may be approved by the Board from time to time to the extent
permitted by applicable law, or (vi) by any combination thereof. The Board may
at any time or from time to time, by adoption of or by amendment to the standard
forms of Option Agreement described in Section 7, or by other means, grant
Options which do not permit all of the foregoing forms of consideration to be
used in payment of the exercise price or which otherwise restrict one or more
forms of consideration.

               (b)  Tender of Stock. Notwithstanding the foregoing, an Option
may not be exercised by tender to the Company of shares of Stock to the extent
such tender of Stock would constitute a violation of the provisions of any law,
regulation or agreement restricting the redemption of the Company's stock.
Unless otherwise provided by the Board, an Option may not be exercised by tender
to the Company of shares of Stock unless such shares either have been owned by
the Optionee for more than six (6) months or were not acquired, directly or
indirectly, from the Company.

               (c)  Same-Day Sale. The Company reserves, at any and all times,
the right, in the Company's sole and absolute discretion, to establish, decline
to approve or terminate any program or procedures for the exercise of Options by
means of a Same-Day Sale.

               (d)  Payment by Promissory Note. No promissory note shall be
permitted if an exercise using a promissory note would be a violation of any
law. Any permitted promissory note shall be due and payable not more than four
(4) years after the Option is exercised, and interest shall be payable at least
annually and at a rate at least equal to the minimum interest rate necessary to
avoid imputed interest pursuant to all applicable sections of the Code. The
Board shall have the authority to permit or require the Optionee to secure any
promissory note used to exercise an Option with the shares of Stock acquired
upon the exercise of the Option or with other collateral acceptable to the
Company. Unless otherwise provided by the Board, in the event the Company at any
time is subject to the regulations promulgated by the Board of Governors of the
Federal Reserve System or any other governmental entity affecting the extension
of credit in connection with the Company's securities, any promissory note shall
comply with such applicable regulations, and the Optionee shall pay the unpaid
principal and accrued interest, if any, to the extent necessary to comply with
such applicable regulations.

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          6.4  Tax Withholding. The Company shall have the right, but not the
obligation, to deduct from the shares of Stock issuable upon the exercise of an
Option shares the Fair Market Value of which is equal to all or any part of the
federal, state, local and foreign taxes, if any, required by law to be withheld
by the Participating Company Group with respect to such Option. Alternatively,
in its sole discretion, the Company shall have the right to require the
Optionee, through payroll withholding or otherwise, to make adequate provision
for any such tax withholding obligations of the Participating Company Group
arising in connection with the Option. The Company shall have no obligation to
deliver shares of Stock or to release shares of Stock from an escrow established
pursuant to the Option Agreement until the Participating Company Group's tax
withholding obligations have been satisfied.

     7.   Standard Forms of Option Agreement.

          7.1  Incentive Stock Options. Unless otherwise provided for by the
Board at the time an Option is granted, an Option designated as an "Incentive
Stock Option" shall comply with and be subject to the terms and conditions set
forth in the form of Incentive Stock Option Agreement attached hereto as Exhibit
A.

          7.2  Nonstatutory Stock Options. Unless otherwise provided for by the
Board at the time an Option is granted, an Option designated as a "Nonstatutory
Stock Option" shall comply with and be subject to the terms and conditions set
forth in the form of Nonstatutory Stock Option Agreement attached hereto as
Exhibit B.

          7.3  Standard Term of Options. Except as otherwise provided in Section
6.2 or by the Board in the grant of an Option, any Option granted hereunder
shall be exercisable for a term of ten (10) years.

          7.4  Authority to Vary Terms. The Board shall have the authority from
time to time to vary the terms of any of the standard forms of Option Agreement
described in this Section 7 either in connection with the grant or amendment of
an individual Option or in connection with the authorization of a new standard
form or forms; provided, however, that the terms and conditions of such revised
or amended standard form or forms of Option Agreement shall be in accordance
with the terms of the Plan. Such authority shall include, but not by way of
limitation, the authority to grant Options which are immediately exercisable
subject to the Company's right to repurchase any unvested shares of Stock
acquired by an Optionee upon the exercise of an Option in the event such
Optionee's employment or service with the Participating Company Group is
terminated for any reason, with or without cause.

     8.   Transfer of Control.

          8.1  Definition. A "Transfer of Control" shall be deemed to have
occurred in the event any of the following occurs with respect to the Company:

               (a)  the direct or indirect sale or exchange by the shareholders
of the Company of all or substantially all of the stock of the Company where the
shareholders of the

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Company before such sale or exchange do not retain, directly or indirectly, as a
result of their ownership of shares of the Company's stock prior to such event,
beneficial ownership of at least a majority of the voting stock of the Company
after such sale or exchange;

               (b)  a merger or consolidation where the shareholders of the
Company before such merger or consolidation do not retain, directly or
indirectly, as a result of their ownership of shares of the Company's stock
prior to such event, beneficial ownership of at least a majority of the voting
stock of the Company after such merger or consolidation;

               (c)  the sale, exchange, or transfer of all or substantially all
of the assets of the Company (other than a sale, exchange, or transfer to one or
more Subsidiary Corporations of the Company);

               (d)  a liquidation or dissolution of the Company.

          8.2  Effect of Transfer of Control on Options. In the event of a
Transfer of Control, the Board, in its sole discretion, may arrange with the
surviving, continuing, successor, or purchasing corporation or parent
corporation thereof, as the case may be (the "Acquiring Corporation"), for the
Acquiring Corporation to either assume the Company's rights and obligations
under outstanding Options or substitute substantially equivalent options for the
Acquiring Corporation's stock for outstanding Options. Any Options which are
neither assumed or substituted for by the Acquiring Corporation in connection
with the Transfer of Control nor exercised as of the date of the Transfer of
Control shall terminate and cease to be outstanding effective as of the date of
the Transfer of Control.

     9.   Provision of Information. At least annually, copies of the Company's
balance sheet and income statement for the just completed fiscal year shall be
made available to each Optionee and purchaser of shares of Stock upon the
exercise of an Option. The Company shall not be required to provide such
information to persons whose duties in connection with the Company assure them
access to equivalent information.

     10.  Nontransferability of Options. During the lifetime of the Optionee, an
Option shall be exercisable only by the Optionee or the Optionee's guardian or
legal representative. No Option shall be assignable or transferable by the
Optionee, except by will or by the laws of descent and distribution.

     11.  Transfer of Company's Rights. In the event any Participating Company
assigns, other than by operation of law, to a third person, other than another
Participating Company, any of the Participating Company's rights to repurchase
any shares of Stock acquired upon the exercise of an Option, the assignee shall
pay to the assigning Participating Company the value of such right as determined
by the Company in the Company's sole discretion. Such consideration shall be
paid in cash. In the event such repurchase right is exercisable at the time of
such assignment, the value of such right shall be not less than the fair market
value of the shares of Stock which may be repurchased under such right (as
determined by the Company) minus the repurchase price of such shares. The
requirements of this Section 11 regarding the minimum

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consideration to be received by the assigning Participating Company shall not
inure to the benefit of the Optionee whose shares of Stock are being
repurchased. Failure of a Participating Company to comply with the provisions of
this Section 11 shall not constitute a defense or otherwise prevent the exercise
of the repurchase right by the assignee of such right.

     12.  Indemnification. In addition to such other rights of indemnification
as they may have as members of the Board, members of the Board and any officers
to whom authority to act for the Board is delegated shall be indemnified by the
Company against all reasonable expenses, including attorneys' fees, actually and
necessarily incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal therein, to which they or any of
them may be a party by reason of any action taken or failure to act under or in
connection with the Plan, or any right granted hereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
by independent legal counsel selected by the Company) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such person is liable for negligence or misconduct in duties;
provided, however, that within sixty (60) days after the institution of such
action, suit or proceeding, such person shall offer to the Company, in writing,
the opportunity at its own expense to handle and defend the same.

     13.  Termination or Amendment of Plan. The Board may terminate or amend the
Plan at any time. However, subject to changes in the law or other legal
requirements that would permit otherwise, without the approval of the Company's
shareholders, there shall be (a) no increase in the total number of shares of
Stock that may be issued under the Plan (except by operation of the provisions
of Section 5.2), (b) no change in the class of persons eligible to receive
Incentive Stock Options, (c) no expansion in the class of persons eligible to
receive Nonstatutory Stock Options, (d) no extension of the period during which
Options may be granted under the Plan, and (e) if a class of any equity security
of the Company is registered pursuant to Section 12 of the Exchange Act, no
amendment to the Plan which, in the opinion of the Board, would require
shareholder approval in order to comply with Rule 16b-3. In any event, no
termination or amendment of the Plan may adversely affect any then outstanding
Option or any unexercised portion thereof, without the consent of the Optionee,
unless such termination or amendment is required to enable an Option designated
as an Incentive Stock Option to qualify as an Incentive Stock Option or is
necessary to comply with any applicable law or government regulation.

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     IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies that
the foregoing Accredited Home Lenders, Inc. 1995 Stock Option Plan was duly
adopted by the Board on February 13, 1995.

                                             __________________________________
                                             Secretary

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                                  Plan History

February 13, 1995   Board adopts Plan, with an initial reserve of 782,977
                    shares.

February 13, 1995   Shareholders approve Plan, with an initial reserve of
                    782,977 shares.

January 31, 1997    Board approves transfer of 108,033 shares in reserve to the
                    1995 Executive Stock Option Plan for a total reserve of
                    674,944 shares.

January 31, 1997    Shareholders approve transfer of 108,033 shares in reserve
                    to the 1995 Executive Stock Option Plan for a total reserve
                    of 674,944 shares.

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                                   Exhibit A

IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY OR ANY INTEREST
THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN
CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT
AS PERMITTED IN THE COMMISSIONER'S RULES.

THE SECURITY REPRESENTED BY THIS CERTIFICATE HAS BEEN ACQUIRED FOR INVESTMENT
AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF.
NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

                          ACCREDITED HOME LENDERS, INC.

                        INCENTIVE STOCK OPTION AGREEMENT

      THIS INCENTIVE STOCK OPTION AGREEMENT (the "Option Agreement") is made and
entered into as of __________, by and between Accredited Home Lenders, Inc. and
_________________ (the "Optionee").

      The Company has granted to the Optionee an option to purchase certain
shares of Stock, upon the terms and conditions set forth in this Option
Agreement (the "Option").

      1. Definitions and Construction.

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

             (a) "Date of Option Grant" means __________.

             (b) "Number of Option Shares" means ______ shares of Stock, as
adjusted from time to time pursuant to Section 9.

             (c) "Exercise Price" means $ ____ per share of Stock, as adjusted
from time to time pursuant to Section 9.

             (d) "Initial Exercise Date" means the Initial Vesting Date.

             (e) "Initial Vesting Date" means the date occurring one (1) year
after (check one):

                 [X] the Date of Option Grant.

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                 [_] _______________ , ____ , the date the Optionee's Service
commenced.

             (f) "Vested Ratio" means, on any relevant date, the ratio
determined as follows:

                                                                    Vested Ratio

             Prior to Initial Vesting Date                                0

             On Initial Vesting Date, provided the                      1/4
             Optionee's Service is continuous from
             the later of the Date of Option Grant or
             the Optionee's Service commencement date
             until the Initial Vesting Date

             Plus

             For each full month of the Optionee's                     1/48
             continuous Service from  the Initial
             Vesting Date until fully vested, an
             additional

The Company may make a pro rata reduction in the Vested Ratio to account for any
periods of part-time employment by the Optionee.

             (g) "Option Expiration Date" means the date ten (10) years after
the Date of Option Grant.

             (h) "Board" means the Board of Directors of the Company. If one or
more Committees have been appointed by the Board to administer the Plan, "Board"
shall also mean such Committee(s).

             (i) "Code" means the Internal Revenue Code of 1986, as amended, and
any applicable regulations promulgated thereunder.

             (j) "Committee" means the Compensation Committee or other committee
of the Board duly appointed to administer the Plan and having such powers as
shall be specified by the Board. Unless the powers of the Committee have been
specifically limited, the Committee shall have all of the powers of the Board
granted in the Plan, including, without limitation, the power to amend or
terminate the Plan at any time, subject to the terms of the Plan and any
applicable limitations imposed by law.

             (k) "Company" means Accredited Home Lenders, Inc., a California
corporation, or any successor corporation thereto.

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             (l) "Consultant" means any person, including an advisor, engaged by
a Participating Company to render services other than as an Employee or a
Director.

             (m) "Director" means a member of the Board or of the board of
directors of any other Participating Company.

             (n) "Disability" means the inability of the Optionee, in the
opinion of a qualified physician, to perform the major duties of the Optionee's
position with the Participating Company Group because of the sickness or injury
of the Optionee.

             (o) "Employee" means any common-law employee (including officers
and Directors who are also common-law employees) of a Participating Company;
provided, however, that neither service as a Director nor payment of a
director's fee shall be sufficient to constitute employment for this purpose.

             (p) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

             (q) "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 sole discretion.

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

             (s) "Participating Company" means the Company or any Parent
Corporation or Subsidiary Corporation.

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

             (u) "Plan" means the Accredited Home Lenders, Inc. 1995 Stock
Option Plan.

             (v) "Securities Act" means the Securities Act of 1933, as amended.

             (w) "Service" means the Optionee's employment or service with the
Participating Company Group, whether in the capacity of an Employee, a Director
or a Consultant. The Optionee's Service shall not be deemed to have terminated
merely because of a change in the capacity in which the Optionee renders Service
to the Participating Company Group or a change in the Participating Company for
which the Optionee renders such Service, provided that there is no interruption
or termination of the Optionee's Service. The Optionee's Service shall be deemed
to have terminated either upon an actual termination of Service or upon the
corporation for which the Optionee performs Service ceasing to be a
Participating Company.

             (x) "Stock" means the common stock, without par value, of the
Company, as adjusted from time to time in accordance with Section 9.

                                       3

<PAGE>

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

          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 Option 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.   Tax Status of the Option. This Option is intended to be an Incentive
Stock Option within the meaning of Section 422(b) of the Code, but the Company
does not represent or warrant that this Option qualifies as such. The Optionee
should consult with the Optionee's own tax advisor regarding the tax effects of
this Option and the requirements necessary to obtain favorable income tax
treatment under Section 422 of the Code, including, but not limited to, holding
period requirements. (NOTE: If the aggregate Exercise Price of the Option (that
is, the Exercise Price multiplied by the Number of Option Shares) plus the
aggregate exercise price of any other Incentive Stock Options held by the
Optionee (whether granted pursuant to the Plan or any other stock option plan of
the Participating Company Group) is greater than One Hundred Thousand Dollars
($100,000), the Optionee should contact the Chief Financial Officer of the
Company to ascertain whether the entire Option qualifies as an Incentive Stock
Option.)

     3.   Administration. All questions of interpretation concerning this Option
Agreement shall be determined by the Board, including any duly appointed
Committee of the Board. All determinations by the Board shall be final and
binding upon all persons having an interest in the Option. Any officer of a
Participating 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.

     4.   Exercise of the Option.

          4.1 Right to Exercise. Except as otherwise provided herein, the Option
shall be exercisable on and after the Initial Exercise Date and prior to the
termination of the Option (as provided in Section 6) in an amount not to exceed
the Number of Option Shares multiplied by the Vested Ratio less the number of
shares previously acquired upon exercise of the Option, subject to the
Optionee's agreement that any shares purchased upon exercise are subject to the
Company's repurchase rights set forth in Section 11. In no event shall the
Option be exercisable for more shares than the Number of Option Shares.

          4.2 Method of Exercise. Exercise of the Option shall be by written
notice to the Company which must state the election to exercise the Option, the
number of whole shares of Stock for which the Option is being exercised and such
other representations and agreements as to the Optionee's investment intent with
respect to such shares as may be required pursuant to the provisions of this
Option Agreement. The written notice must be signed by the Optionee and must be
delivered in person, by certified or registered mail, return receipt requested,
by

                                       4

<PAGE>

confirmed facsimile transmission, or by such other means as the Company may
determine, to the Chief Financial Officer of the Company, or other authorized
representative of the Participating Company Group, prior to the termination of
the Option as set forth in Section 6, accompanied by (i) full payment of the
Exercise Price for the number of shares of Stock being purchased and (ii) an
executed copy, if required herein, of the then current forms of escrow and
security agreement referenced below. The Option shall be deemed to be exercised
upon receipt by the Company of such written notice, the aggregate Exercise
Price, and, if required by the Company, such executed agreements.

          4.3 Payment of Exercise Price.

              (a) Forms of Payment Authorized. Except as otherwise provided
below, payment of the aggregate Exercise Price for the number of shares of Stock
for which the Option is being exercised shall be made (i) in cash, by check, or
cash equivalent, (ii) by tender to the Company of shares of Stock owned by the
Optionee having a Fair Market Value (determined without regard to any
restrictions on transferability applicable to such stock by reason of federal or
state securities laws or agreements with an underwriter for the Company) not
less than the aggregate Exercise Price, (iii) by means of a Same-Day Sale, as
defined in Section 4.3(c), (iv) if expressly authorized by the Company, in its
sole discretion, at the time of Option exercise, by the Optionee's promissory
note for the aggregate Exercise Price, or (v) by any combination of the
foregoing.

              (b) Tender of Stock. Notwithstanding the foregoing, the Option may
not be exercised by tender to the Company of shares of Stock to the extent such
tender of Stock would constitute a violation of the provisions of any law,
regulation or agreement restricting the redemption of the Company's stock. The
Option may not be exercised by tender to the Company of shares of Stock unless
such shares either have been owned by the Optionee for more than six (6) months
or were not acquired, directly or indirectly, from the Company.

              (c) Same-Day Sale. A "Same-Day Sale" means the assignment in a
form acceptable to the Company of the proceeds of a sale of some or all of the
shares of Stock acquired upon the exercise of the Option pursuant to a program
or procedure approved by the Company (including, without limitation, through an
exercise complying with the provisions of Regulation T as promulgated from time
to time by the Board of Governors of the Federal Reserve System). The Company
reserves, at any and all times, the right, in the Company's sole and absolute
discretion, to decline to approve or terminate any such program or procedure.

              (d) Payment by Promissory Note. No promissory note shall be
permitted if an exercise of the Option using a promissory note would be a
violation of any law. Unless otherwise specified by the Board at the time the
Option is granted, the promissory note permitted in clause (iv) of Section
4.3(a) shall be a full recourse note in a form satisfactory to the Company, with
principal payable four (4) years after the date the Option is exercised.
Interest on the principal balance of the promissory note shall be payable in
annual installments at the minimum interest rate necessary to avoid imputed
interest pursuant to all applicable sections of the Code. Such recourse
promissory note shall be secured by the shares of Stock acquired pursuant to the
then current form of security agreement as approved by the Company. At any

                                       5

<PAGE>

time the Company is subject to the regulations promulgated by the Board of
Governors of the Federal Reserve System or any other governmental entity
affecting the extension of credit in connection with the Company's securities,
any promissory note shall comply with such applicable regulations, and the
Optionee shall pay the unpaid principal and accrued interest, if any, to the
extent necessary to comply with such applicable regulations. Except as the
Company in its sole discretion shall determine, the Optionee shall pay the
unpaid principal balance of the promissory note and any accrued interest thereon
upon termination of the Optionee's Service with the Participating Company Group
for any reason, with or without cause.

          4.4 Tax Withholding. At the time the Option is exercised, in whole or
in part, or at any time thereafter as requested by the Company, the Optionee
hereby authorizes withholding from payroll and any other amounts payable to the
Optionee, and otherwise agrees to make adequate provision for, any sums required
to satisfy the federal, state, local and foreign tax withholding obligations of
the Participating Company Group, if any, which arise in connection with the
Option, including, without limitation, obligations arising upon (i) the
exercise, in whole or in part, of the Option, (ii) the transfer, in whole or in
part, of any shares acquired upon exercise of the Option, (iii) the operation of
any law or regulation providing for the imputation of interest, or (iv) the
lapsing of any restriction with respect to any shares acquired upon exercise of
the Option. The Optionee is cautioned that the Option is not exercisable unless
the tax withholding obligations of the Participating Company Group are
satisfied. Accordingly, the Optionee may not be able to exercise the Option when
desired even though the Option is vested, and the Company shall have no
obligation to issue a certificate for such shares or release such shares from
any escrow provided for herein.

          4.5 Certificate Registration. Except in the event the Exercise Price
is paid by means of a Same-Day Sale, the certificate for the shares as to which
the Option is exercised shall be registered in the name of the Optionee, or, if
applicable, the heirs of the Optionee.

          4.6 Restrictions on Grant of the Option and Issuance of Shares. The
grant of the Option and the issuance of the shares upon exercise of the Option
shall be subject to compliance with all applicable requirements of federal,
state or foreign law with respect to such securities. The Option may not be
exercised if the issuance of shares upon exercise would constitute a violation
of any applicable federal, state or foreign securities laws or other law or
regulations. In addition, the Option may not be exercised unless (i) a
registration statement under the Securities Act shall at the time of exercise of
the Option be in effect with respect to the shares issuable upon exercise of the
Option or (ii) in the opinion of legal counsel to the Company, the shares
issuable upon exercise of the Option may be issued in accordance with the terms
of an applicable exemption from the registration requirements of the Securities
Act. THE OPTIONEE IS CAUTIONED THAT THE OPTION MAY NOT BE EXERCISED UNLESS THE
FOREGOING CONDITIONS ARE SATISFIED. ACCORDINGLY, THE OPTIONEE MAY NOT BE ABLE TO
EXERCISE THE OPTION WHEN DESIRED EVEN THOUGH THE OPTION IS VESTED. 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 and sale of any shares subject to the Option shall relieve the
Company of any liability in respect of the failure to issue or sell such shares
as to which such requisite authority shall not have been obtained. As a
condition to the exercise of the Option, the

                                       6

<PAGE>

Company may require the Optionee 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.

          4.7 Fractional Shares. The Company shall not be required to issue
fractional shares upon the exercise of the Option.

     5.   Nontransferability of the Option. The Option may be exercised during
the lifetime of the Optionee only by the Optionee or the Optionee's guardian or
legal representative and may not be assigned or transferred in any manner except
by will or by the laws of descent and distribution. Following the death of the
Optionee, the Option, to the extent provided in Section 7, may be exercised by
the Optionee's legal representative or by any person empowered to do so under
the deceased Optionee's will or under the then applicable laws of descent and
distribution.

     6.   Termination of the Option. The Option shall terminate and may no
longer be exercised on the first to occur of (a) the Option Expiration Date, (b)
the last date for exercising the Option following termination of the Optionee's
Service as described in Section 7, or (c) a Transfer of Control to the extent
provided in Section 8.

     7.   Effect of Termination of Service.

          7.1 Option Exercisability.

              (a) Disability. If the Optionee's Service with the Participating
Company Group is terminated because of the Disability of the Optionee, the
Option may be exercised by the Optionee (or the Optionee's guardian or legal
representative) at any time prior to the expiration of twelve (12) months after
the date on which the Optionee's Service terminated, but in any event no later
than the Option Expiration Date. (NOTE: If the Option is exercised more than
three (3) months after the date on which the Optionee's Service as an Employee
terminated as a result of a Disability other than a permanent and total
disability as defined in Section 22(e)(3) of the Code, the Option will
thereafter be treated as a Nonstatutory Stock Option and not as an Incentive
Stock Option to the extent required by Section 422 of the Code.)

              (b) Death. If the Optionee's Service with the Participating
Company Group is terminated because of the death of the Optionee, the Option may
be exercised by the Optionee (or the Optionee's legal representative or other
person who acquired the right to exercise the Option by reason of the Optionee's
death) at any time prior to the expiration of twelve (12) months after the date
on which the Optionee's Service terminated, but in any event no later than the
Option Expiration Date. The Optionee's Service shall be deemed to have
terminated on account of death if the Optionee dies within three (3) months
after the Optionee's termination of Service.

              (c) Other Termination of Service. If the Optionee's Service with
the Participating Company Group terminates for any reason, except Disability or
death, the Option, to the extent unexercised and exercisable by the Optionee on
the date on which the Optionee's

                                       7

<PAGE>

Service terminated, may be exercised by the Optionee within three (3) months
after the date on which the Optionee's Service terminated, but in any event no
later than the Option Expiration Date.

          7.2 Additional Limitations on Option Exercise. Except as the Company
and the Optionee otherwise agree, exercise of the Option pursuant to Section 7.1
following termination of the Optionee's Service may not be made by delivery of a
promissory note as provided in Section 4.3(a).

          7.3 Extension if Exercise Prevented by Law. Notwithstanding the
foregoing, if the exercise of the Option within the applicable time periods set
forth in Section 7.1 is prevented by the provisions of Section 4.6, the Option
shall remain exercisable until three (3) months after the date the Optionee is
notified by the Company that the Option is exercisable, but in any event no
later than the Option Expiration Date. The Company makes no representation as to
the tax consequences of any such delayed exercise. The Optionee should consult
with the Optionee's own tax advisor as to the tax consequences to the Optionee
of any such delayed exercise.

          7.4 Leave of Absence. For purposes of Section 7.1, the Optionee's
Service with the Participating Company Group shall not be deemed to terminate if
the Optionee takes any military leave, sick leave, or other bona fide leave of
absence approved by the Company of ninety (90) days or less. In the event of a
leave of absence in excess of ninety (90) days, the Optionee's Service shall be
deemed to terminate on the ninety-first (91st) day of such leave unless the
Optionee's right to reemployment with the Participating Company Group remains
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 Optionee's
Vested Ratio.

     8.   Ownership Change and Transfer of Control.

          8.1 Definitions.

              (a)  An "Ownership Change" shall be deemed to have occurred in the
event any of the following occurs with respect to the Company:

                   (i)   the direct or indirect sale or exchange by the
shareholders of the Company of all or substantially all of the stock of the
Company;

                   (ii)  a merger or consolidation in which the Company is a
party;

                   (iii) the sale, exchange, or transfer of all or
substantially all of the assets of the Company (other than a sale, exchange, or
transfer to one or more Subsidiary Corporations of the Company); or

                   (iv)  a liquidation or dissolution of the Company.

                                       8

<PAGE>

              (b) A "Transfer of Control" shall mean

                   (i) an Ownership Change described in Sections 8.1(a)(i) or
8.1(a)(ii) in which the shareholders of the Company before such Ownership Change
do not retain, directly or indirectly, as a result of their ownership of shares
of the Company's stock prior to such event, beneficial ownership of at least a
majority of the voting stock of the Company after such event; or

                   (ii) an Ownership Change described in Sections 8.1(a)(iii) or
8.1(a)(iv).

          8.2 Effect of Transfer of Control on Option. In the event of a
Transfer of Control, the Board, in its sole discretion, may arrange with the
surviving, continuing, successor, or purchasing corporation or parent
corporation thereof, as the case may be (the "Acquiring Corporation"), for the
Acquiring Corporation to either assume the Company's rights and obligations
under this Option Agreement or substitute a substantially equivalent option for
the Acquiring Corporation's stock for the Option. The Option shall terminate and
cease to be outstanding effective as of the date of the Transfer of Control to
the extent that the Option is neither assumed or substituted for by the
Acquiring Corporation in connection with the Transfer of Control nor exercised
as of the date of the Transfer of Control.

     9.   Adjustments for Changes in Capital Structure. In the event of any
stock dividend, stock split, reverse stock split, recapitalization, combination,
reclassification, or similar change in the capital structure of the Company,
appropriate adjustments shall be made in the number, Exercise Price and class of
shares of stock subject to the Option. If a majority of the shares which are of
the same class as the shares that are subject to the Option are exchanged for,
converted into, or otherwise become (whether or not pursuant to an Ownership
Change) shares of another corporation (the "New Shares"), the Board may
unilaterally amend the Option to provide that the Option is exercisable for New
Shares. In the event of any such amendment, the Number of Option Shares and the
Exercise Price shall be adjusted in a fair and equitable manner, as determined
by the Board, in its sole discretion. Notwithstanding the foregoing, any
fractional share resulting from an adjustment pursuant to this Section 9 shall
be rounded up or down to the nearest whole number, as determined by the Board,
and in no event may the Exercise Price be decreased to an amount less than the
par value, if any, of the stock subject to the Option.

     10.  Rights as a Shareholder, Employee, Director or Consultant. The
Optionee shall have no rights as a shareholder with respect to any shares
covered by the Option until the date of the issuance of a certificate for the
shares for which the Option has been exercised. 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 9. Nothing in
this Option Agreement shall confer upon the Optionee any right to continue in
the Service of a Participating Company or interfere in any way with any right of
the Participating Company Group to terminate the Optionee's Service as an
Employee, Director or Consultant, as the case may be, at any time.

                                       9

<PAGE>

     11.  Right of First Refusal.

          11.1 Grant of Right of First Refusal. Except as provided in Section
11.7 below, in the event the Optionee, the Optionee's legal representative, or
other holder of shares acquired upon exercise of the Option proposes to sell,
exchange, transfer, pledge, or otherwise dispose of any shares acquired upon
exercise of the Option (the "Transfer Shares") to any person or entity,
including, without limitation, any shareholder of the Participating Company
Group, the Company shall have the right to repurchase the Transfer Shares under
the terms and subject to the conditions set forth in this Section 11 (the "Right
of First Refusal").

          11.2 Notice of Proposed Transfer. Prior to any proposed transfer of
the Transfer Shares, the Optionee shall give a written notice (the "Transfer
Notice") to the Company describing fully the proposed transfer, including the
number of Transfer Shares, the name and address of the proposed transferee (the
"Proposed Transferee") and, if the transfer is voluntary, the proposed transfer
price, and containing such information necessary to show the bona fide nature of
the proposed transfer. In the event of a bona fide gift or involuntary transfer,
the proposed transfer price shall be deemed to be the Fair Market Value of the
Transfer Shares, as determined by the Board in good faith. If the Optionee
proposes to transfer any Transfer Shares to more than one Proposed Transferee,
the Optionee shall provide a separate Transfer Notice for the proposed transfer
to each Proposed Transferee. The Transfer Notice shall be signed by both the
Optionee and the Proposed Transferee and must constitute a binding commitment of
the Optionee and the Proposed Transferee for the transfer of the Transfer Shares
to the Proposed Transferee subject only to the Right of First Refusal.

          11.3 Bona Fide Transfer. If the Company determines that the
information provided by the Optionee in the Transfer Notice is insufficient to
establish the bona fide nature of a proposed voluntary transfer, the Company
shall give the Optionee written notice of the Optionee's failure to comply with
the procedure described in this Section 11, and the Optionee shall have no right
to transfer the Transfer Shares without first complying with the procedure
described in this Section 11. The Optionee shall not be permitted to transfer
the Transfer Shares if the proposed transfer is not bona fide.

          11.4 Exercise of Right of First Refusal. If the Company determines the
proposed transfer to be bona fide, the Company shall have the right to purchase
all, but not less than all, of the Transfer Shares (except as the Company and
the Optionee otherwise agree) at the purchase price and on the terms set forth
in the Transfer Notice by delivery to the Optionee of a notice of exercise of
the Right of First Refusal within thirty (30) days after the date the Transfer
Notice is delivered to the Company. The Company's exercise or failure to
exercise the Right of First Refusal with respect to any proposed transfer
described in a Transfer Notice shall not affect the Company's right to exercise
the Right of First Refusal with respect to any proposed transfer described in
any other Transfer Notice, whether or not such other Transfer Notice is issued
by the Optionee or issued by a person other than the Optionee with respect to a
proposed transfer to the same Proposed Transferee. If the Company exercises the
Right of First Refusal, the Company and the Optionee shall thereupon consummate
the sale of the Transfer Shares to the Company on the terms set forth in the
Transfer Notice within sixty (60) days after the date the Transfer Notice is
delivered to the Company (unless a longer period is offered by the Proposed

                                       10

<PAGE>

Transferee); provided, however, that in the event the Transfer Notice provides
for the payment for the Transfer Shares other than in cash, the Company shall
have the option of paying for the Transfer Shares by the present value cash
equivalent of the consideration described in the Transfer Notice as reasonably
determined by the Company. For purposes of the foregoing, cancellation of any
indebtedness of the Optionee to any Participating Company shall be treated as
payment to the Optionee in cash to the extent of the unpaid principal and any
accrued interest canceled.

          11.5 Failure to Exercise Right of First Refusal. If the Company fails
to exercise the Right of First Refusal in full (or to such lesser extent as the
Company and the Optionee otherwise agree) within the period specified in Section
11.4 above, the Optionee may conclude a transfer to the Proposed Transferee of
the Transfer Shares on the terms and conditions described in the Transfer
Notice, provided such transfer occurs not later than ninety (90) days following
delivery to the Company of the Transfer Notice. The Company shall have the right
to demand further assurances from the Optionee and the Proposed Transferee (in a
form satisfactory to the Company) that the transfer of the Transfer Shares was
actually carried out on the terms and conditions described in the Transfer
Notice. No Transfer Shares shall be transferred on the books of the Company
until the Company has received such assurances, if so demanded, and has approved
the proposed transfer as bona fide. Any proposed transfer on terms and
conditions different from those described in the Transfer Notice, as well as any
subsequent proposed transfer by the Optionee, shall again be subject to the
Right of First Refusal and shall require compliance by the Optionee with the
procedure described in this Section 11.

          11.6 Transferees of Transfer Shares. All transferees of the Transfer
Shares or any interest therein, other than the Company, shall be required as a
condition of such transfer to agree in writing (in a form satisfactory to the
Company) that such transferee shall receive and hold such Transfer Shares or
interest therein subject to all of the terms and conditions of this Option
Agreement, including this Section 11 providing for the Right of First Refusal
with respect to any subsequent transfer. Any sale or transfer of any shares
acquired upon exercise of the Option shall be void unless the provisions of this
Section 11 are met.

          11.7 Transfers Not Subject to Right of First Refusal. The Right of
First Refusal shall not apply to any transfer or exchange of the shares acquired
upon exercise of the Option if such transfer or exchange is in connection with
an Ownership Change. If the consideration received pursuant to such transfer or
exchange consists of stock of a Participating Company, such consideration shall
remain subject to the Right of First Refusal unless the provisions of Section
11.9 below result in a termination of the Right of First Refusal.

          11.8 Assignment of Right of First Refusal. The Company shall have the
right to assign the Right of First Refusal at any time, whether or not there has
been an attempted transfer, to one or more persons as may be selected by the
Company.

          11.9 Early Termination of Right of First Refusal. The other provisions
of this Section 11 notwithstanding, the Right of First Refusal shall terminate
and be of no further force and effect upon (a) the occurrence of a Transfer of
Control, unless the Acquiring Corporation assumes the Company's rights and
obligations under this Option Agreement or substitutes a

                                       11

<PAGE>

substantially equivalent option for the Acquiring Corporation's stock for any
portion of the Option remaining unexercised at the time of the Transfer of
Control, or (b) the existence of a public market for the class of shares subject
to the Right of First Refusal. A "public market" shall be deemed to exist if (i)
such stock is listed on a national securities exchange (as that term is used in
the Exchange Act) or (ii) such stock is traded on the over-the-counter market
and prices therefor are published daily on business days in a recognized
financial journal.

     12.  Escrow.

          12.1 Establishment of Escrow. To ensure that shares subject to the
Right of First Refusal or securing any promissory note will be available for
repurchase, the Company may require the Optionee to deposit the certificate
evidencing the shares which the Optionee purchases upon exercise of the Option
with an escrow agent designated by the Company under the terms and conditions of
escrow and security agreements approved by the Company. If the Company does not
require such deposit as a condition of exercise of the Option, the Company
reserves the right at any time to require the Optionee to so deposit the
certificate in escrow. The Company shall bear the expenses of the escrow.

          12.2 Delivery of Shares to Optionee. As soon as practicable after the
expiration of the Right of First Refusal, and after full repayment of any
promissory note secured by the shares in escrow, but not more frequently than
twice each calendar year, the escrow agent shall deliver to the Optionee the
shares no longer subject to such restriction and no longer securing any
promissory note.

          12.3 Notices and Payments. In the event the shares held in escrow are
subject to the Company's exercise of the Right of First Refusal, the notices
required to be given to the Optionee shall be given to the escrow agent, and any
payment required to be given to the Optionee shall be given to the escrow agent.
Within thirty (30) days after payment by the Company, the escrow agent shall
deliver the shares which the Company has purchased to the Company and shall
deliver the payment received from the Company to the Optionee.

     13.  Stock Dividends Subject to Option Agreement. If, from time to time,
there is any stock dividend, stock split, or other change in the character or
amount of any of the outstanding stock of the corporation the stock of which is
subject to the provisions of this Option Agreement, then in such event any and
all new, substituted or additional securities to which the Optionee is entitled
by reason of the Optionee's ownership of the shares acquired upon exercise of
the Option shall be immediately subject to the Right of First Refusal and any
security interest held by the Company with the same force and effect as the
shares subject to the Right of First Refusal and such security interest
immediately before such event.

     14.  Notice of Sales Upon Disqualifying Disposition. The Optionee shall
dispose of the shares acquired pursuant to the Option only in accordance with
the provisions of this Option Agreement. In addition, the Optionee shall
promptly notify the Chief Financial Officer of the Company if the Optionee
disposes of any of the shares acquired pursuant to the Option within one (1)
year after the date the Optionee exercises all or part of the Option or within
two (2) years after the Date of Option Grant. Until such time as the Optionee
disposes of such shares in a

                                       12

<PAGE>

manner consistent with the provisions of this Option Agreement, unless otherwise
expressly authorized by the Company, the Optionee shall hold all shares acquired
pursuant to the Option in the Optionee's name (and not in the name of any
nominee) for the one-year period immediately after the exercise of the Option
and the two-year period immediately after Date of Option Grant. At any time
during the one-year or two-year periods set forth above, the Company may place a
legend on any certificate representing shares acquired pursuant to the Option
requesting the transfer agent for the Company's stock to notify the Company of
any such transfers. The obligation of the Optionee to notify the Company of any
such transfer shall continue notwithstanding that a legend has been placed on
the certificate pursuant to the preceding sentence.

     15.  Rules of the Commissioner of Corporations. The Optionee is hereby
delivered a copy of Section 260.141.11 of the Rules of the Commissioner of
Corporations of the State of California, adopted pursuant to the California
Corporate Securities Act of 1968. References to the "Code" in the following text
are references to the California Corporations Code.

     260.141.11.  Restriction on Transfer.

          (a)  The issuer of any security upon which a restriction on transfer
has been imposed pursuant to Sections 260.102.6, 260.141.10 or 260.534 shall
cause a copy of this section to be delivered to each issuee or transferee of
such security at the time the certificate evidencing the security is delivered
to the issuee or transferee.

          (b)  It is unlawful for the holder of any such security to consummate
a sale or transfer of such security, or any interest therein, without the prior
written consent of the Commissioner (until this condition is removed pursuant to
Section 260.141.12 of these rules), except:

               (1) to the issuer;

               (2) pursuant to the order or process of any court;

               (3) to any person described in subdivision (i) of Section 25102
of the Code or Section 260.105.14 of these rules;

               (4) to the transferor's ancestors, descendants, or spouse, or any
custodian or trustee for the account of the transferor or the transferor's
ancestors, descendants, or spouse; or to a transferee by a trustee or custodian
for the account of the transferee or the transferee's ancestors, descendants, or
spouse;

               (5) to holders of securities of the same class of the same
issuer;

               (6) by way of gift or donation inter vivos or on death;

               (7) by or through a broker-dealer licensed under the Code (either
acting as such or as a finder) to a resident of a foreign state, territory or
country who is neither

                                       13

<PAGE>

domiciled in this state to the knowledge of the broker-dealer, nor actually
present in this state if the sale of such securities is not in violation of any
securities law of the foreign state, territory or country concerned;

               (8)  to a broker-dealer licensed under the Code in a principal
transaction, or as an underwriter or member of an underwriting syndicate or
selling group;

               (9)  if the interest sold or transferred is a pledge or other
lien given by the purchaser to the seller upon a sale of the security for which
the Commissioner's written consent is obtained or under this rule not required;

               (10) by way of a sale qualified under Sections 25111, 25112,
25113, or 25121 of the Code, of the securities to be transferred, provided that
no order under Section 25140 or subdivision (a) of Section 25143 is in effect
with respect to such qualification;

               (11) by a corporation to a wholly owned subsidiary of such
corporation, or by a wholly owned subsidiary of a corporation to such
corporation;

               (12) by way of an exchange qualified under Section 25111, 25112
or 25113 of the Code, provided that no order under Section 25140 or subdivision
(a) of Section 25143 is in effect with respect to such qualification;

               (13) between residents of foreign states, territories or
countries who are neither domiciled nor actually present in this state;

               (14) to the State Controller pursuant to the Unclaimed Property
Law or to the administrator of the unclaimed property law of another state; or

               (15) by the State Controller pursuant to the Unclaimed Property
Law or by the administrator of the unclaimed property law of another state if,
in either such case, such person (i) discloses to potential purchasers at the
sale that transfer of the securities is restricted under this rule, (ii)
delivers to each purchaser a copy of this rule, and (iii) advises the
Commissioner of the name of each purchaser;

               (16) by a trustee to a successor trustee when such transfer does
not involve a change in the beneficial ownership of the securities;

               (17) by way of an offer and sale of outstanding securities in an
issuer transaction that is subject to the qualification requirement of Section
25110 of the Code but exempt from that qualification requirement by subdivision
(f) of Section 25102; provided that any such transfer is on the condition that
any certificate evidencing the security issued to such transferee shall contain
the legend required by this section.

          (c)  The certificates representing all such securities subject to such
a restriction on transfer, whether upon initial issuance or upon any transfer
thereof, shall bear on their face a legend prominently stamped or printed
thereon in capital letters of not less than 10-point size

                                       14

<PAGE>

reading as follows: "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS
SECURITY OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR,
WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE
STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES."

     16.  Legends. The Company may at any time place legends referencing the
Right of First Refusal and any applicable federal, state or foreign securities
law restrictions on all certificates representing shares of stock subject to the
provisions of this Option Agreement. The Optionee shall, at the request of the
Company, promptly present to the Company any and all certificates representing
shares acquired pursuant to the Option in the possession of the Optionee in
order to carry out the provisions of this Section. Unless otherwise specified by
the Company, legends placed on such certificates may include, but shall not be
limited to, the following:

          16.1 "THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN
ACCORDANCE WITH RULE 144 OR RULE 701 UNDER THE ACT, OR THE COMPANY RECEIVES AN
OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO
THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT."

          16.2 Any legend required to be placed thereon by the Commissioner of
Corporations of the State of California.

          16.3 "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF THE CORPORATION OR ITS ASSIGNEE SET
FORTH IN AN AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED HOLDER, OR SUCH
HOLDER'S PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL
OFFICE OF THIS CORPORATION."

          16.4 "THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY THE
CORPORATION TO THE REGISTERED HOLDER UPON EXERCISE OF AN INCENTIVE STOCK OPTION
AS DEFINED IN SECTION 422 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
("ISO"). IN ORDER TO OBTAIN THE PREFERENTIAL TAX TREATMENT AFFORDED TO ISOs, THE
SHARES SHOULD NOT BE TRANSFERRED PRIOR TO ________. SHOULD THE REGISTERED HOLDER
ELECT TO TRANSFER ANY OF THE SHARES PRIOR TO THIS DATE AND FOREGO ISO TAX
TREATMENT, THE TRANSFER AGENT FOR THE SHARES SHALL NOTIFY THE CORPORATION
IMMEDIATELY. THE REGISTERED HOLDER SHALL HOLD ALL SHARES PURCHASED UNDER THE
INCENTIVE STOCK OPTION IN THE REGISTERED

                                      15

<PAGE>

HOLDER'S NAME (AND NOT IN THE NAME OF ANY NOMINEE) PRIOR TO THIS DATE OR UNTIL
TRANSFERRED AS DESCRIBED ABOVE."

     17. Public Offering. The Optionee hereby agrees that in the event of any
underwritten public offering of stock, including an initial public offering of
stock, made by the Company pursuant to an effective registration statement filed
under the Securities Act, the Optionee shall not offer, sell, contract to sell,
pledge, hypothecate, grant any option to purchase or make any short sale of, or
otherwise dispose of any shares of stock of the Company or any rights to acquire
stock of the Company for such period of time from and after the effective date
of such registration statement as may be established by the underwriter for such
public offering; provided, however, that such period of time shall not exceed
one hundred eighty (180) days from the effective date of the registration
statement to be filed in connection with such public offering. The foregoing
limitation shall not apply to shares registered in the public offering under the
Securities Act. The foregoing limitation shall remain in effect for the two (2)
year period immediately following the effective date of the Company's initial
public offering and shall thereafter terminate and cease to have any force or
effect. The Optionee shall be subject to this Section provided and only if the
officers and directors of the Company are also subject to similar arrangements.

     18. Binding Effect. Subject to the restrictions on transfer set forth
herein, this Option Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective heirs, executors, administrators,
successors and assigns.

     19. Termination or Amendment. The Board may terminate or amend the Plan or
the Option at any time; provided, however, that no such termination or amendment
may adversely affect the Option or any unexercised portion hereof without the
consent of the Optionee unless such termination or amendment is necessary to
comply with any applicable law or government regulation or is required to enable
the Option to qualify as an Incentive Stock Option. No amendment or addition to
this Option Agreement shall be effective unless in writing.

     20. Integrated Agreement. This Option Agreement constitutes the entire
understanding and agreement of the Optionee and the Participating Company Group
with respect to the subject matter contained herein, and there are no
agreements, understandings, restrictions, representations, or warranties among
the Optionee and the Participating Company Group other than those as set forth
or provided for herein. To the extent contemplated herein, the provisions of
this Option Agreement shall survive any exercise of the Option and shall remain
in full force and effect.

     21. Applicable Law. This Option 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.

                                       16

<PAGE>

                                                   ACCREDITED HOME LENDERS, INC.

                                                   By:_________________________
                                                          James A. Konrath
                                                          President

     The Optionee represents that the Optionee is familiar with the terms and
provisions of this Option Agreement, including the Right of First Refusal set
forth in Section 11, and hereby accepts the Option subject to all of the terms
and provisions thereof. The Optionee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Board upon any
questions arising under this Option Agreement.

     The undersigned acknowledges receipt of a copy of the Plan and a copy of
Section 260.141.11 of the Rules of the Commissioner of Corporations of the State
of California regarding restriction on transfer. The Optionee also agrees to
keep the nature and terms of this Option Agreement confidential.

                                                   OPTIONEE

                                                   Signature: __________________

Date signed by Optionee:________________

                                       17

<PAGE>

                                   Exhibit B

IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY OR ANY INTEREST
THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN
CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT
AS PERMITTED IN THE COMMISSIONER'S RULES.

THE SECURITY REPRESENTED BY THIS CERTIFICATE HAS BEEN ACQUIRED FOR INVESTMENT
AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF.
NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

                          ACCREDITED HOME LENDERS, INC.

                       NONSTATUTORY STOCK OPTION AGREEMENT

     THIS NONSTATUTORY STOCK OPTION AGREEMENT (the "Option Agreement") is made
and entered into as of _____________, by and between Accredited Home Lenders,
Inc. and _________________ (the "Optionee").

     The Company has granted to the Optionee an option to purchase certain
shares of Stock, upon the terms and conditions set forth in this Option
Agreement (the "Option").

     1.   Definitions and Construction.

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

               (a)  "Date of Option Grant" means _______, ____.

               (b)  "Number of Option Shares" means ______ shares of Stock, as
adjusted from time to time pursuant to Section 9.

               (c)  "Exercise Price" means $____ per share of Stock, as adjusted
from time to time pursuant to Section 9.

               (d)  "Initial Exercise Date" means the Initial Vesting Date.

               (e)  "Initial Vesting Date" means the date occurring one (1) year
after (check one):

<PAGE>

                    [X]  the Date of Option Grant.

                    [_]  __________________, ____, the date the Optionee's
                         Service commenced.

               (f)  "Vested Ratio" means, on any relevant date, the ratio
determined as follows:

                                                        Vested Ratio

          Prior to Initial Vesting Date                      0

          On Initial Vesting Date, provided the             1/4
          Optionee's Service is continuous from
          the later of the Date of Option Grant
          or the Optionee's Service commencement
          date until the Initial Vesting Date

          Plus

          For each full month of the Optionee's             1/48
          continuous Service from the Initial
          Vesting Date until fully vested, an
          additional

The Company may make a pro rata reduction in the Vested Ratio to account for any
periods of part-time employment by the Optionee.

               (g)  "Option Expiration Date" means the date ten (10) years after
the Date of Option Grant.

               (h)  "Board" means the Board of Directors of the Company. If one
or more Committees have been appointed by the Board to administer the Plan,
"Board" shall also mean such Committee(s).

               (i)  "Code" means the Internal Revenue Code of 1986, as amended,
and any applicable regulations promulgated thereunder.

                                       2

<PAGE>

               (j)  "Committee" means the Compensation Committee or other
committee of the Board duly appointed to administer the Plan and having such
powers as shall be specified by the Board. Unless the powers of the Committee
have been specifically limited, the Committee shall have all of the powers of
the Board granted in the Plan, including, without limitation, the power to amend
or terminate the Plan at any time, subject to the terms of the Plan and any
applicable limitations imposed by law.

               (k)  "Company" means Accredited Home Lenders, Inc., a California
corporation, or any successor corporation thereto.

               (l)  "Consultant" means any person, including an advisor, engaged
by a Participating Company to render services other than as an Employee or a
Director.

               (m)  "Director" means a member of the Board or of the board of
directors of any other Participating Company.

               (n)  "Disability" means the inability of the Optionee, in the
opinion of a qualified physician, to perform the major duties of the Optionee's
position with the Participating Company Group because of the sickness or injury
of the Optionee.

               (o)  "Employee" means any common-law employee (including officers
and Directors who are also common-law employees) of a Participating Company;
provided, however, that neither service as a Director nor payment of a
director's fee shall be sufficient to constitute employment for this purpose.

               (p)  "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

               (q)  "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 sole
discretion.

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

               (s)  "Participating Company" means the Company or any Parent
Corporation or Subsidiary Corporation.

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

               (u)  "Plan" means the Accredited Home Lenders, Inc. 1995 Stock
Option Plan.

                                       3

<PAGE>

               (v)  "Securities Act" means the Securities Act of 1933, as
amended.

               (w)  "Service" means the Optionee's employment or service with
the Participating Company Group, whether in the capacity of an Employee, a
Director or a Consultant. The Optionee's Service shall not be deemed to have
terminated merely because of a change in the capacity in which the Optionee
renders Service to the Participating Company Group or a change in the
Participating Company for which the Optionee renders such Service, provided that
there is no interruption or termination of the Optionee's Service. The
Optionee's Service shall be deemed to have terminated either upon an actual
termination of Service or upon the corporation for which the Optionee performs
Service ceasing to be a Participating Company.

               (x)  "Stock" means the common stock, without par value, of the
Company, as adjusted from time to time in accordance with Section 9.

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

          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 Option 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.   Tax Status of the Option. This Option is intended to be a Nonstatutory
Stock Option and shall not be treated as an Incentive Stock Option within the
meaning of Section 422(b) of the Code.

     3.   Administration. All questions of interpretation concerning this Option
Agreement shall be determined by the Board, including any duly appointed
Committee of the Board. All determinations by the Board shall be final and
binding upon all persons having an interest in the Option. Any officer of a
Participating 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.

                                       4

<PAGE>

     4.   Exercise of the Option.

          4.1  Right to Exercise. Except as otherwise provided herein, the
Option shall be exercisable on and after the Initial Exercise Date and prior to
the termination of the Option (as provided in Section 6) in an amount not to
exceed the Number of Option Shares multiplied by the Vested Ratio less the
number of shares previously acquired upon exercise of the Option, subject to the
Optionee's agreement that any shares purchased upon exercise are subject to the
Company's repurchase rights set forth in Section 11. In no event shall the
Option be exercisable for more shares than the Number of Option Shares.

          4.2  Method of Exercise. Exercise of the Option shall be by written
notice to the Company which must state the election to exercise the Option, the
number of whole shares of Stock for which the Option is being exercised and such
other representations and agreements as to the Optionee's investment intent with
respect to such shares as may be required pursuant to the provisions of this
Option Agreement. The written notice must be signed by the Optionee and must be
delivered in person, by certified or registered mail, return receipt requested,
by confirmed facsimile transmission, or by such other means as the Company may
determine, to the Chief Financial Officer of the Company, or other authorized
representative of the Participating Company Group, prior to the termination of
the Option as set forth in Section 6, accompanied by (i) full payment of the
Exercise Price for the number of shares of Stock being purchased and (ii) an
executed copy, if required herein, of the then current forms of escrow and
security agreement referenced below. The Option shall be deemed to be exercised
upon receipt by the Company of such written notice, the aggregate Exercise
Price, and, if required by the Company, such executed agreements.

          4.3  Payment of Exercise Price.

               (a)  Forms of Payment Authorized. Except as otherwise provided
below, payment of the aggregate Exercise Price for the number of shares of Stock
for which the Option is being exercised shall be made (i) in cash, by check, or
cash equivalent, (ii) by tender to the Company of shares of Stock owned by the
Optionee having a Fair Market Value (determined without regard to any
restrictions on transferability applicable to such stock by reason of federal or
state securities laws or agreements with an underwriter for the Company) not
less than the aggregate Exercise Price, (iii) by means of a Same-Day Sale, as
defined in Section 4.3(c), (iv) by the Optionee's promissory note for the
aggregate Exercise Price, or (v) by any combination of the foregoing.

               (b)  Tender of Stock. Notwithstanding the foregoing, the Option
may not be exercised by tender to the Company of shares of Stock to the extent
such tender of Stock would constitute a violation of the provisions of any law,
regulation or agreement restricting the redemption of the Company's stock. The
Option may not be

                                       5

<PAGE>

exercised by tender to the Company of shares of Stock unless such shares either
have been owned by the Optionee for more than six (6) months or were not
acquired, directly or indirectly, from the Company.

               (c)  Same-Day Sale. A "Same-Day Sale" means the assignment in a
form acceptable to the Company of the proceeds of a sale of some or all of the
shares of Stock acquired upon the exercise of the Option pursuant to a program
or procedure approved by the Company (including, without limitation, through an
exercise complying with the provisions of Regulation T as promulgated from time
to time by the Board of Governors of the Federal Reserve System). The Company
reserves, at any and all times, the right, in the Company's sole and absolute
discretion, to decline to approve or terminate any such program or procedure.

               (d)  Payment by Promissory Note. No promissory note shall be
permitted if an exercise of the Option using a promissory note would be a
violation of any law. Unless otherwise specified by the Board at the time the
Option is granted, the promissory note permitted in clause (iv) of Section
4.3(a) shall be a full recourse note in a form satisfactory to the Company, with
principal payable four (4) years after the date the Option is exercised.
Interest on the principal balance of the promissory note shall be payable in
annual installments at the minimum interest rate necessary to avoid imputed
interest pursuant to all applicable sections of the Code. Such recourse
promissory note shall be secured by the shares of Stock acquired pursuant to the
then current form of security agreement as approved by the Company. At any time
the Company is subject to the regulations promulgated by the Board of Governors
of the Federal Reserve System or any other governmental entity affecting the
extension of credit in connection with the Company's securities, any promissory
note shall comply with such applicable regulations, and the Optionee shall pay
the unpaid principal and accrued interest, if any, to the extent necessary to
comply with such applicable regulations. Except as the Company in its sole
discretion shall determine, the Optionee shall pay the unpaid principal balance
of the promissory note and any accrued interest thereon upon termination of the
Optionee's Service with the Participating Company Group for any reason, with or
without cause.

          4.4  Tax Withholding. At the time the Option is exercised, in whole or
in part, or at any time thereafter as requested by the Company, the Optionee
hereby authorizes withholding from payroll and any other amounts payable to the
Optionee, and otherwise agrees to make adequate provision for, any sums required
to satisfy the federal, state, local and foreign tax withholding obligations of
the Participating Company Group, if any, which arise in connection with the
Option, including, without limitation, obligations arising upon (i) the
exercise, in whole or in part, of the Option, (ii) the transfer, in whole or in
part, of any shares acquired upon exercise of the Option, (iii) the operation of
any law or regulation providing for the imputation of interest, or (iv) the
lapsing of any restriction with respect to any shares acquired upon exercise of
the Option. The Optionee is cautioned that the Option is not exercisable unless
the tax withholding obligations of the Participating Company Group are
satisfied. Accordingly, the Optionee

                                       6

<PAGE>

may not be able to exercise the Option when desired even though the Option is
vested, and the Company shall have no obligation to issue a certificate for such
shares or release such shares from any escrow provided for herein.

          4.5  Certificate Registration. Except in the event the Exercise Price
is paid by means of a Same-Day Sale, the certificate for the shares as to which
the Option is exercised shall be registered in the name of the Optionee, or, if
applicable, the heirs of the Optionee.

          4.6  Restrictions on Grant of the Option and Issuance of Shares. The
grant of the Option and the issuance of the shares upon exercise of the Option
shall be subject to compliance with all applicable requirements of federal,
state or foreign law with respect to such securities. The Option may not be
exercised if the issuance of shares upon exercise would constitute a violation
of any applicable federal, state or foreign securities laws or other law or
regulations. In addition, the Option may not be exercised unless (i) a
registration statement under the Securities Act shall at the time of exercise of
the Option be in effect with respect to the shares issuable upon exercise of the
Option or (ii) in the opinion of legal counsel to the Company, the shares
issuable upon exercise of the Option may be issued in accordance with the terms
of an applicable exemption from the registration requirements of the Securities
Act. THE OPTIONEE IS CAUTIONED THAT THE OPTION MAY NOT BE EXERCISED UNLESS THE
FOREGOING CONDITIONS ARE SATISFIED. ACCORDINGLY, THE OPTIONEE MAY NOT BE ABLE TO
EXERCISE THE OPTION WHEN DESIRED EVEN THOUGH THE OPTION IS VESTED. 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 and sale of any shares subject to the Option shall relieve the
Company of any liability in respect of the failure to issue or sell such shares
as to which such requisite authority shall not have been obtained. As a
condition to the exercise of the Option, the Company may require the Optionee 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.

          4.7  Fractional Shares. The Company shall not be required to issue
fractional shares upon the exercise of the Option.

     5.   Nontransferability of the Option. The Option may be exercised during
the lifetime of the Optionee only by the Optionee or the Optionee's guardian or
legal representative and may not be assigned or transferred in any manner except
by will or by the laws of descent and distribution. Following the death of the
Optionee, the Option, to the extent provided in Section 7, may be exercised by
the Optionee's legal representative or by any person empowered to do so under
the deceased Optionee's will or under the then applicable laws of descent and
distribution.

                                        7

<PAGE>

     6.   Termination of the Option. The Option shall terminate and may no
longer be exercised on the first to occur of (a) the Option Expiration Date, (b)
the last date for exercising the Option following termination of the Optionee's
Service as described in Section 7, or (c) a Transfer of Control to the extent
provided in Section 8.

     7.   Effect of Termination of Service.

          7.1  Option Exercisability.

               (a)  Disability. If the Optionee's Service with the Participating
Company Group is terminated because of the Disability of the Optionee, the
Option may be exercised by the Optionee (or the Optionee's guardian or legal
representative) at any time prior to the expiration of twelve (12) months after
the date on which the Optionee's Service terminated, but in any event no later
than the Option Expiration Date.

               (b)  Death. If the Optionee's Service with the Participating
Company Group is terminated because of the death of the Optionee, the Option may
be exercised by the Optionee (or the Optionee's legal representative or other
person who acquired the right to exercise the Option by reason of the Optionee's
death) at any time prior to the expiration of twelve (12) months after the date
on which the Optionee's Service terminated, but in any event no later than the
Option Expiration Date. The Optionee's Service shall be deemed to have
terminated on account of death if the Optionee dies within three (3) months
after the Optionee's termination of Service.

               (c)  Other Termination of Service. If the Optionee's Service with
the Participating Company Group terminates for any reason, except Disability or
death, the Option, to the extent unexercised and exercisable by the Optionee on
the date on which the Optionee's Service terminated, may be exercised by the
Optionee within three (3) months after the date on which the Optionee's Service
terminated, but in any event no later than the Option Expiration Date.

          7.2  Additional Limitations on Option Exercise. Except as the Company
and the Optionee otherwise agree, exercise of the Option pursuant to Section 7.1
following termination of the Optionee's Service may not be made by delivery of a
promissory note as provided in Section 4.3(a).

                                       8

<PAGE>

          7.3  Extension if Exercise Prevented by Law. Notwithstanding the
foregoing, if the exercise of the Option within the applicable time periods set
forth in Section 7.1 is prevented by the provisions of Section 4.6, the Option
shall remain exercisable until three (3) months after the date the Optionee is
notified by the Company that the Option is exercisable, but in any event no
later than the Option Expiration Date.

          7.4  Leave of Absence. For purposes of Section 7.1, the Optionee's
Service with the Participating Company Group shall not be deemed to terminate if
the Optionee takes any military leave, sick leave, or other bona fide leave of
absence approved by the Company of ninety (90) days or less. In the event of a
leave of absence in excess of ninety (90) days, the Optionee's Service shall be
deemed to terminate on the ninety-first (91st) day of such leave unless the
Optionee's right to reemployment with the Participating Company Group remains
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 Optionee's
Vested Ratio.

     8.   Ownership Change and Transfer of Control.

          8.1  Definitions.

               (a)  An "Ownership Change" shall be deemed to have occurred in
the event any of the following occurs with respect to the Company:

                    (i)    the direct or indirect sale or exchange by the
shareholders of the Company of all or substantially all of the stock of the
Company;

                    (ii)   a merger or consolidation in which the Company is a
party;

                    (iii)  the sale, exchange, or transfer of all or
substantially all of the assets of the Company (other than a sale, exchange, or
transfer to one or more Subsidiary Corporations of the Company); or

                    (iv)   a liquidation or dissolution of the Company.

               (b)  A "Transfer of Control" shall mean

                    (i)    an Ownership Change described in Sections 8.1(a)(i)
or 8.1(a)(ii) in which the shareholders of the Company before such Ownership
Change do not retain, directly or indirectly, as a result of their ownership of
shares of the Company's stock prior to such event, beneficial ownership of at
least a majority of the voting stock of the Company after such event; or

                                       9

<PAGE>

                    (ii)   an Ownership Change described in Sections 8.1(a)(iii)
or 8.1(a)(iv).

          8.2  Effect of Transfer of Control on Option. In the event of a
Transfer of Control, the Board, in its sole discretion, may arrange with the
surviving, continuing, successor, or purchasing corporation or parent
corporation thereof, as the case may be (the "Acquiring Corporation"), for the
Acquiring Corporation to either assume the Company's rights and obligations
under this Option Agreement or substitute a substantially equivalent option for
the Acquiring Corporation's stock for the Option. The Option shall terminate and
cease to be outstanding effective as of the date of the Transfer of Control to
the extent that the Option is neither assumed or substituted for by the
Acquiring Corporation in connection with the Transfer of Control nor exercised
as of the date of the Transfer of Control.

     9.   Adjustments for Changes in Capital Structure. In the event of any
stock dividend, stock split, reverse stock split, recapitalization, combination,
reclassification, or similar change in the capital structure of the Company,
appropriate adjustments shall be made in the number, Exercise Price and class of
shares of stock subject to the Option. If a majority of the shares which are of
the same class as the shares that are subject to the Option are exchanged for,
converted into, or otherwise become (whether or not pursuant to an Ownership
Change) shares of another corporation (the "New Shares"), the Board may
unilaterally amend the Option to provide that the Option is exercisable for New
Shares. In the event of any such amendment, the Number of Option Shares and the
Exercise Price shall be adjusted in a fair and equitable manner, as determined
by the Board, in its sole discretion. Notwithstanding the foregoing, any
fractional share resulting from an adjustment pursuant to this Section 9 shall
be rounded up or down to the nearest whole number, as determined by the Board,
and in no event may the Exercise Price be decreased to an amount less than the
par value, if any, of the stock subject to the Option.

     10.  Rights as a Shareholder, Employee, Director or Consultant. The
Optionee shall have no rights as a shareholder with respect to any shares
covered by the Option until the date of the issuance of a certificate for the
shares for which the Option has been exercised. 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 9. Nothing in
this Option Agreement shall confer upon the Optionee any right to continue in
the Service of a Participating Company or interfere in any way with any right of
the Participating Company Group to terminate the Optionee's Service as an
Employee, Director or Consultant, as the case may be, at any time.

                                       10

<PAGE>

     11.  Right of First Refusal.

          11.1 Grant of Right of First Refusal. Except as provided in Section
11.7 below, in the event the Optionee, the Optionee's legal representative, or
other holder of shares acquired upon exercise of the Option proposes to sell,
exchange, transfer, pledge, or otherwise dispose of any shares acquired upon
exercise of the Option (the "Transfer Shares") to any person or entity,
including, without limitation, any shareholder of the Participating Company
Group, the Company shall have the right to repurchase the Transfer Shares under
the terms and subject to the conditions set forth in this Section 11 (the "Right
of First Refusal").

          11.2 Notice of Proposed Transfer. Prior to any proposed transfer of
the Transfer Shares, the Optionee shall give a written notice (the "Transfer
Notice") to the Company describing fully the proposed transfer, including the
number of Transfer Shares, the name and address of the proposed transferee (the
"Proposed Transferee") and, if the transfer is voluntary, the proposed transfer
price, and containing such information necessary to show the bona fide nature of
the proposed transfer. In the event of a bona fide gift or involuntary transfer,
the proposed transfer price shall be deemed to be the Fair Market Value of the
Transfer Shares, as determined by the Board in good faith. If the Optionee
proposes to transfer any Transfer Shares to more than one Proposed Transferee,
the Optionee shall provide a separate Transfer Notice for the proposed transfer
to each Proposed Transferee. The Transfer Notice shall be signed by both the
Optionee and the Proposed Transferee and must constitute a binding commitment of
the Optionee and the Proposed Transferee for the transfer of the Transfer Shares
to the Proposed Transferee subject only to the Right of First Refusal.

          11.3 Bona Fide Transfer. If the Company determines that the
information provided by the Optionee in the Transfer Notice is insufficient to
establish the bona fide nature of a proposed voluntary transfer, the Company
shall give the Optionee written notice of the Optionee's failure to comply with
the procedure described in this Section 11, and the Optionee shall have no right
to transfer the Transfer Shares without first complying with the procedure
described in this Section 11. The Optionee shall not be permitted to transfer
the Transfer Shares if the proposed transfer is not bona fide.

          11.4 Exercise of Right of First Refusal. If the Company determines the
proposed transfer to be bona fide, the Company shall have the right to purchase
all, but not less than all, of the Transfer Shares (except as the Company and
the Optionee otherwise agree) at the purchase price and on the terms set forth
in the Transfer Notice by delivery to the Optionee of a notice of exercise of
the Right of First Refusal within thirty (30) days after the date the Transfer
Notice is delivered to the Company. The Company's exercise or failure to
exercise the Right of First Refusal with respect to any proposed transfer
described in a Transfer Notice shall not affect the Company's right to exercise
the Right of First Refusal with respect to any proposed transfer described in
any other

                                       11

<PAGE>

Transfer Notice, whether or not such other Transfer Notice is issued by the
Optionee or issued by a person other than the Optionee with respect to a
proposed transfer to the same Proposed Transferee. If the Company exercises the
Right of First Refusal, the Company and the Optionee shall thereupon consummate
the sale of the Transfer Shares to the Company on the terms set forth in the
Transfer Notice within sixty (60) days after the date the Transfer Notice is
delivered to the Company (unless a longer period is offered by the Proposed
Transferee); provided, however, that in the event the Transfer Notice provides
for the payment for the Transfer Shares other than in cash, the Company shall
have the option of paying for the Transfer Shares by the present value cash
equivalent of the consideration described in the Transfer Notice as reasonably
determined by the Company. For purposes of the foregoing, cancellation of any
indebtedness of the Optionee to any Participating Company shall be treated as
payment to the Optionee in cash to the extent of the unpaid principal and any
accrued interest canceled.

          11.5 Failure to Exercise Right of First Refusal. If the Company fails
to exercise the Right of First Refusal in full (or to such lesser extent as the
Company and the Optionee otherwise agree) within the period specified in Section
11.4 above, the Optionee may conclude a transfer to the Proposed Transferee of
the Transfer Shares on the terms and conditions described in the Transfer
Notice, provided such transfer occurs not later than ninety (90) days following
delivery to the Company of the Transfer Notice. The Company shall have the right
to demand further assurances from the Optionee and the Proposed Transferee (in a
form satisfactory to the Company) that the transfer of the Transfer Shares was
actually carried out on the terms and conditions described in the Transfer
Notice. No Transfer Shares shall be transferred on the books of the Company
until the Company has received such assurances, if so demanded, and has approved
the proposed transfer as bona fide. Any proposed transfer on terms and
conditions different from those described in the Transfer Notice, as well as any
subsequent proposed transfer by the Optionee, shall again be subject to the
Right of First Refusal and shall require compliance by the Optionee with the
procedure described in this Section 11.

          11.6 Transferees of Transfer Shares. All transferees of the Transfer
Shares or any interest therein, other than the Company, shall be required as a
condition of such transfer to agree in writing (in a form satisfactory to the
Company) that such transferee shall receive and hold such Transfer Shares or
interest therein subject to all of the terms and conditions of this Option
Agreement, including this Section 11 providing for the Right of First Refusal
with respect to any subsequent transfer. Any sale or transfer of any shares
acquired upon exercise of the Option shall be void unless the provisions of this
Section 11 are met.

          11.7 Transfers Not Subject to Right of First Refusal. The Right of
First Refusal shall not apply to any transfer or exchange of the shares acquired
upon exercise of the Option if such transfer or exchange is in connection with
an Ownership Change. If the consideration received pursuant to such transfer or
exchange consists of stock of a Participating Company, such consideration shall
remain subject to the Right of

                                       12

<PAGE>

First Refusal unless the provisions of Section 11.9 below result in a
termination of the Right of First Refusal.

          11.8 Assignment of Right of First Refusal. The Company shall have the
right to assign the Right of First Refusal at any time, whether or not there has
been an attempted transfer, to one or more persons as may be selected by the
Company.

          11.9 Early Termination of Right of First Refusal. The other provisions
of this Section 11 notwithstanding, the Right of First Refusal shall terminate
and be of no further force and effect upon (a) the occurrence of a Transfer of
Control, unless the Acquiring Corporation assumes the Company's rights and
obligations under this Option Agreement or substitutes a substantially
equivalent option for the Acquiring Corporation's stock for any portion of the
Option remaining unexercised at the time of the Transfer of Control, or (b) the
existence of a public market for the class of shares subject to the Right of
First Refusal. A "public market" shall be deemed to exist if (i) such stock is
listed on a national securities exchange (as that term is used in the Exchange
Act) or (ii) such stock is traded on the over-the-counter market and prices
therefor are published daily on business days in a recognized financial journal.

     12.  Escrow.

          12.1 Establishment of Escrow. To ensure that shares subject to the
Right of First Refusal or securing any promissory note will be available for
repurchase, the Company may require the Optionee to deposit the certificate
evidencing the shares which the Optionee purchases upon exercise of the Option
with an escrow agent designated by the Company under the terms and conditions of
escrow and security agreements approved by the Company. If the Company does not
require such deposit as a condition of exercise of the Option, the Company
reserves the right at any time to require the Optionee to so deposit the
certificate in escrow. The Company shall bear the expenses of the escrow.

          12.2 Delivery of Shares to Optionee. As soon as practicable after the
expiration of the Right of First Refusal, and after full repayment of any
promissory note secured by the shares in escrow, but not more frequently than
twice each calendar year, the escrow agent shall deliver to the Optionee the
shares no longer subject to such restriction and no longer securing any
promissory note.

                                       13

<PAGE>

          12.3 Notices and Payments. In the event the shares held in escrow are
subject to the Company's exercise of the Right of First Refusal, the notices
required to be given to the Optionee shall be given to the escrow agent, and any
payment required to be given to the Optionee shall be given to the escrow agent.
Within thirty (30) days after payment by the Company, the escrow agent shall
deliver the shares which the Company has purchased to the Company and shall
deliver the payment received from the Company to the Optionee.

     13.  Stock Dividends Subject to Option Agreement. If, from time to time,
there is any stock dividend, stock split, or other change in the character or
amount of any of the outstanding stock of the corporation the stock of which is
subject to the provisions of this Option Agreement, then in such event any and
all new, substituted or additional securities to which the Optionee is entitled
by reason of the Optionee's ownership of the shares acquired upon exercise of
the Option shall be immediately subject to the Right of First Refusal and any
security interest held by the Company with the same force and effect as the
shares subject to the Right of First Refusal and such security interest
immediately before such event.

     14.  Rules of the Commissioner of Corporations. The Optionee is hereby
delivered a copy of Section 260.141.11 of the Rules of the Commissioner of
Corporations of the State of California, adopted pursuant to the California
Corporate Securities Act of 1968. References to the "Code" in the following text
are references to the California Corporations Code.

     260.141.11. Restriction on Transfer.

          (a)  The issuer of any security upon which a restriction on transfer
has been imposed pursuant to Sections 260.102.6, 260.141.10 or 260.534 shall
cause a copy of this section to be delivered to each issuee or transferee of
such security at the time the certificate evidencing the security is delivered
to the issuee or transferee.

          (b)  It is unlawful for the holder of any such security to consummate
a sale or transfer of such security, or any interest therein, without the prior
written consent of the Commissioner (until this condition is removed pursuant to
Section 260.141.12 of these rules), except:

               (1)  to the issuer;

               (2)  pursuant to the order or process of any court;

               (3)  to any person described in subdivision (i) of Section 25102
of the Code or Section 260.105.14 of these rules;

                                       14

<PAGE>

               (4)  to the transferor's ancestors, descendants, or spouse, or
any custodian or trustee for the account of the transferor or the transferor's
ancestors, descendants, or spouse; or to a transferee by a trustee or custodian
for the account of the transferee or the transferee's ancestors, descendants, or
spouse;

               (5)  to holders of securities of the same class of the same
issuer;

               (6)  by way of gift or donation inter vivos or on death;

               (7)  by or through a broker-dealer licensed under the Code
(either acting as such or as a finder) to a resident of a foreign state,
territory or country who is neither domiciled in this state to the knowledge of
the broker-dealer, nor actually present in this state if the sale of such
securities is not in violation of any securities law of the foreign state,
territory or country concerned;

               (8)  to a broker-dealer licensed under the Code in a principal
transaction, or as an underwriter or member of an underwriting syndicate or
selling group;

               (9)  if the interest sold or transferred is a pledge or other
lien given by the purchaser to the seller upon a sale of the security for which
the Commissioner's written consent is obtained or under this rule not required;

               (10) by way of a sale qualified under Sections 25111, 25112,
25113, or 25121 of the Code, of the securities to be transferred, provided that
no order under Section 25140 or subdivision (a) of Section 25143 is in effect
with respect to such qualification;

               (11) by a corporation to a wholly owned subsidiary of such
corporation, or by a wholly owned subsidiary of a corporation to such
corporation;

               (12) by way of an exchange qualified under Section 25111, 25112
or 25113 of the Code, provided that no order under Section 25140 or subdivision
(a) of Section 25143 is in effect with respect to such qualification;

               (13) between residents of foreign states, territories or
countries who are neither domiciled nor actually present in this state;

               (14) to the State Controller pursuant to the Unclaimed Property
Law or to the administrator of the unclaimed property law of another state; or

               (15) by the State Controller pursuant to the Unclaimed Property
Law or by the administrator of the unclaimed property law of another state if,
in either such case, such person (i) discloses to potential purchasers at the
sale that transfer of the

                                       15

<PAGE>

securities is restricted under this rule, (ii) delivers to each purchaser a copy
of this rule, and (iii) advises the Commissioner of the name of each purchaser;

               (16) by a trustee to a successor trustee when such transfer does
not involve a change in the beneficial ownership of the securities;

               (17) by way of an offer and sale of outstanding securities in an
issuer transaction that is subject to the qualification requirement of Section
25110 of the Code but exempt from that qualification requirement by subdivision
(f) of Section 25102; provided that any such transfer is on the condition that
any certificate evidencing the security issued to such transferee shall contain
the legend required by this section.

          (c)  The certificates representing all such securities subject to such
a restriction on transfer, whether upon initial issuance or upon any transfer
thereof, shall bear on their face a legend prominently stamped or printed
thereon in capital letters of not less than 10-point size reading as follows:
"IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES."

     15.  Legends. The Company may at any time place legends referencing the
Right of First Refusal and any applicable federal, state or foreign securities
law restrictions on all certificates representing shares of stock subject to the
provisions of this Option Agreement. The Optionee shall, at the request of the
Company, promptly present to the Company any and all certificates representing
shares acquired pursuant to the Option in the possession of the Optionee in
order to carry out the provisions of this Section. Unless otherwise specified by
the Company, legends placed on such certificates may include, but shall not be
limited to, the following:

          15.1 "THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN
ACCORDANCE WITH RULE 144 OR RULE 701 UNDER THE ACT, OR THE COMPANY RECEIVES AN
OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO
THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT."

          15.2 Any legend required to be placed thereon by the Commissioner of
Corporations of the State of California.

                                       16

<PAGE>

          15.3 "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF THE CORPORATION OR ITS ASSIGNEE SET
FORTH IN AN AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED HOLDER, OR SUCH
HOLDER'S PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL
OFFICE OF THIS CORPORATION."

     16.  Public Offering. The Optionee hereby agrees that in the event of any
underwritten public offering of stock, including an initial public offering of
stock, made by the Company pursuant to an effective registration statement filed
under the Securities Act, the Optionee shall not offer, sell, contract to sell,
pledge, hypothecate, grant any option to purchase or make any short sale of, or
otherwise dispose of any shares of stock of the Company or any rights to acquire
stock of the Company for such period of time from and after the effective date
of such registration statement as may be established by the underwriter for such
public offering; provided, however, that such period of time shall not exceed
one hundred eighty (180) days from the effective date of the registration
statement to be filed in connection with such public offering. The foregoing
limitation shall not apply to shares registered in the public offering under the
Securities Act. The foregoing limitation shall remain in effect for the two (2)
year period immediately following the effective date of the Company's initial
public offering and shall thereafter terminate and cease to have any force or
effect. The Optionee shall be subject to this Section provided and only if the
officers and directors of the Company are also subject to similar arrangements.

     17.  Binding Effect. Subject to the restrictions on transfer set forth
herein, this Option Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective heirs, executors, administrators,
successors and assigns.

     18.  Termination or Amendment. The Board may terminate or amend the Plan or
the Option at any time; provided, however, that no such termination or amendment
may adversely affect the Option or any unexercised portion hereof without the
consent of the Optionee unless such termination or amendment is necessary to
comply with any applicable law or government regulation. No amendment or
addition to this Option Agreement shall be effective unless in writing.

     19.  Integrated Agreement. This Option Agreement constitutes the entire
understanding and agreement of the Optionee and the Participating Company Group
with respect to the subject matter contained herein, and there are no
agreements, understandings, restrictions, representations, or warranties among
the Optionee and the Participating Company Group other than those as set forth
or provided for herein. To the extent contemplated herein, the provisions of
this Option Agreement shall survive any exercise of the Option and shall remain
in full force and effect.

                                       17

<PAGE>

     20.  Applicable Law. This Option 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.

                                        ACCREDITED HOME LENDERS, INC.

                                        By:

                                        Title:

     The Optionee represents that the Optionee is familiar with the terms and
provisions of this Option Agreement, including the Right of First Refusal set
forth in Section 11, and hereby accepts the Option subject to all of the terms
and provisions thereof. The Optionee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Board upon any
questions arising under this Option Agreement.

     The undersigned acknowledges receipt of a copy of the Plan and a copy of
Section 260.141.11 of the Rules of the Commissioner of Corporations of the State
of California regarding restriction on transfer.

                                        OPTIONEE

Date:

                                       18<PAGE>

                                                                    EXHIBIT 10.3

                          ACCREDITED HOME LENDERS, INC.

                  1995 EXECUTIVE STOCK OPTION PLAN, as Amended

     1.   Purpose. The Accredited Home Lenders, Inc. 1995 Executive Stock Option
Plan (the "Plan") is established to attract, retain and reward persons providing
services to Accredited Home Lenders, Inc. and any successor corporation thereto
(collectively referred to as the "Company"), and any present or future parent
and/or subsidiary corporations of such corporation (all of whom along with the
Company being individually referred to as a "Participating Company" and
collectively referred to as the "Participating Company Group"), and to motivate
such persons to contribute to the growth and profits of the Participating
Company Group in the future. For purposes of the Plan, a parent corporation and
a subsidiary corporation shall be as defined in Sections 424(e) and 424(f) of
the Internal Revenue Code of 1986, as amended (the "Code").

     2.   Administration.

          (a)  General. The Plan shall be administered by the Board of Directors
of the Company (the "Board") and/or by a duly appointed committee of the Board
having such powers as shall be specified by the Board. Any subsequent references
herein to the Board shall also mean the committee if such committee has been
appointed and, unless the powers of the committee have been specifically
limited, the committee shall have all of the powers of the Board granted herein,
including, without limitation, the power to terminate or amend the Plan at any
time, subject to the terms of the Plan and any applicable limitations imposed by
law. All questions of interpretation of the Plan or of any options granted under
the Plan (an "Option") shall be determined by the Board, and such determinations
shall be final and binding upon all persons having an interest in the Plan
and/or any Option.

          (b)  Options Authorized. Options may be either incentive stock options
as defined in Section 422 of the Code ("Incentive Stock Options") or
nonstatutory stock options.

          (c)  Authority of Officers. Any officer of a Participating 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.

<PAGE>

          (d)  Disinterested Administration. With respect to the participation
in the Plan of employees who are also officers or directors of the Company
subject to Section 16 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the Plan shall be administered by the Board in compliance with
the "disinterested administration" requirement of Rule 16b-3, as promulgated
under the Exchange Act and amended from time to time or any successor rule or
regulation ("Rule 16b-3").

     3.   Eligibility.

          (a)  Eligible Persons. Options may be granted only to employees
(including officers and directors who are also employees) and directors of the
Participating Company Group or to individuals who are rendering services as
consultants, advisors or other independent contractors to the Participating
Company Group. The Board shall, in its sole discretion, determine which persons
shall be granted Options (an "Optionee"). Eligible persons may be granted more
than one (1) Option.

          (b)  Directors Serving on Committee. If a committee of the Board has
been established to administer the Plan in compliance with the "disinterested
administration" requirement of Rule 16b-3, no member of such committee, while a
member, shall be eligible to be granted an Option.

          (c)  Restrictions on Option Grants. A director of the Company may only
be granted a nonstatutory stock option unless the director is also an employee
of the Company. An individual who is rendering services as a consultant may only
be granted a nonstatutory stock option.

     4.   Shares Subject to Option. Options shall be for the purchase of shares
of the authorized but unissued common stock of the Company (the "Stock"),
subject to adjustment as provided in paragraph 10 below. The maximum number of
shares of Stock which may be issued under the Plan shall be One Million Six
Hundred Ninety Three Thousand Five Hundred Seventy Four (1,693,574) shares. In
the event that any outstanding Option for any reason expires or is terminated or
canceled and/or shares of Stock subject to repurchase are repurchased by the
Company, the shares allocable to the unexercised portion of such Option, or such
repurchased shares, may again be subject to an Option grant.

     5.   Time for Granting Options. All Options shall be granted, if at all,
within ten (10) years from the earlier of the date the Plan is adopted by the
Board or the date the Plan is duly approved by the shareholders of the Company.

     6.   Terms, Conditions and Form of Options. Subject to the provisions of
the Plan, the Board shall determine for each Option (which need not be
identical) the number of shares of Stock for which the Option shall be granted,
the exercise price of the Option, the timing and terms of exercisability and
vesting of the Option, the time of expiration of the option, the effect of the
Optionee's termination of employment or service, whether the Option is to be
treated as an Incentive Stock Option or as a nonstatutory stock option, the
method for satisfaction of any tax withholding obligation arising in connection
with an Option, including by withholding or

                                       2

<PAGE>

delivery of shares of stock, and all other terms and conditions of the Option
not inconsistent with the Plan. Options granted pursuant to the Plan shall be
evidenced by written agreements specifying the number of shares of Stock covered
thereby, in such form as the Board shall from time to time establish, which
agreements may incorporate all or any of the terms of the Plan by reference and
shall comply with and be subject to the following terms and conditions:

          (a)  Exercise Price. The exercise price for each Option shall be
established in the sole discretion of the Board; provided, however, that (i) the
exercise price per share for an Incentive Stock Option shall be not less than
the fair market value, as determined by the Board, of a share of Stock on the
date of the granting of the Option, (ii) the exercise price per share for a
nonstatutory stock option shall be not less than eighty-five percent (85%) of
the fair market value, as determined by the Board, of a share of Stock on the
date of the granting of the Option and (iii) no Option granted to an Optionee
who at the time the Option is granted owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of a
Participating Company within the meaning of Section 422(b)(6) of the Code (a
"Ten Percent Owner Optionee") shall have an exercise price per share less than
one hundred ten percent (110%) of the fair market value, as determined by the
Board, of a share of Stock on the date of the granting of the Option.
Notwithstanding the foregoing, an Option (whether an Incentive Stock Option or a
nonstatutory stock option) may be granted with an exercise price lower than the
minimum exercise price set forth above if such Option is granted pursuant to an
assumption or substitution for another option in a manner qualifying with the
provisions of Section 424(a) of the Code.

          (b)  Exercise Period of Options. The Board shall have the power to
set, including by amendment of an Option, the time or times within which each
Option shall be exercisable or the event or events upon the occurrence of which
all or a portion of each Option shall be exercisable and the term of each
Option; provided, however, that (i) no Option shall be exercisable after the
expiration of ten (10) years after the date such Option is granted, and (ii) no
Incentive Stock Option granted to a Ten Percent Owner Optionee shall be
exercisable after the expiration of five (5) years after the date such Option is
granted.

          (c)  Payment of Exercise Price.

               (i)  Forms of Payment Authorized. Payment of the exercise price
for the number of shares of Stock being purchased pursuant to any Option shall
be made (1) in cash, by check, or cash equivalent, (2) by tender to the Company
of shares of the Company's stock owned by the Optionee having a value, as
determined by the Board (but without regard to any restrictions on
transferability applicable to such stock by reason of federal or state
securities laws or agreements with an underwriter for the Company), not less
than the exercise price, (3) by the Optionee's recourse promissory note in a
form approved by the Company, (4) by the assignment of the proceeds of a sale of
some or all of the shares being acquired upon the exercise of the Option
(including, without limitation, through an exercise complying with the
provisions of Regulation T as promulgated from time to time by the Board of
Governors of the Federal Reserve System), or (5) by any combination thereof. The
Board may at any time or from time to

                                       3

<PAGE>

time grant Options which do not permit all of the foregoing forms of
consideration to be used in payment of the exercise price and/or which otherwise
restrict one (1) or more forms of consideration.

               (ii)  Tender of Company Stock. Notwithstanding the foregoing, an
Option may not be exercised by tender to the Company of shares of the Company's
stock to the extent such tender of stock would constitute a violation of the
provisions of any law, regulation and/or agreement restricting the redemption of
the Company's stock. Unless otherwise provided by the Board, an Option may not
be exercised by tender to the Company of shares of the Company's stock unless
such shares of the Company's stock either have been owned by the Optionee for
more than six (6) months or were not acquired, directly or indirectly, from the
Company.

               (iii) Promissory Notes. No promissory note shall be permitted if
an exercise using a promissory note would be a violation of any law. Any
permitted promissory note shall be due and payable not more than four (4) years
after the Option is exercised, and interest shall be payable at least annually
and be at least equal to the minimum interest rate necessary to avoid imputed
interest pursuant to all applicable sections of the Code. The Board shall have
the authority to permit or require the Optionee to secure any promissory note
used to exercise an Option with the shares of Stock acquired on exercise of the
Option and/or with other collateral acceptable to the Company. Unless otherwise
provided by the Board, in the event the Company at any time is subject to the
regulations promulgated by the Board of Governors of the Federal Reserve System
or any other governmental entity affecting the extension of credit in connection
with the Company's securities, any promissory note shall comply with such
applicable regulations, and the Optionee shall pay the unpaid principal and
accrued interest, if any, to the extent necessary to comply with such applicable
regulations.

               (iv)  Assignment of Proceeds of Sale. The Company reserves, at
any and all times, the right, in the Company's sole and absolute discretion, to
establish, decline to approve and/or terminate any program and/or procedures for
the exercise of Options by means of an assignment of the proceeds of a sale of
some or all of the shares of Stock to be acquired upon such exercise.

     7.   Standard Forms of Stock Option Agreement.

          (a)  Incentive Stock Options. Unless otherwise provided for by the
Board at the time an Option is granted, an Option designated as an "Incentive
Stock Option" shall comply with and be subject to the terms and conditions set
forth in the form of incentive stock option agreement attached hereto as Exhibit
A and incorporated herein by reference.

          (b)  Nonstatutory Stock Options. Unless otherwise provided for by the
Board at the time an Option is granted, an Option designated as a "Nonstatutory
Stock Option" shall comply with and be subject to the terms and conditions set
forth in the forms of nonstatutory stock option agreement attached hereto as
Exhibit B and incorporated herein by reference.

                                       4

<PAGE>

          (c)  Standard Term for Options. Except as provided in paragraph 6(b)
or otherwise provided for by the Board in the grant of an Option, any Option
granted hereunder shall be exercisable for a term of ten (10) years.

     8.   Authority to Vary Terms. The Board shall have the authority from time
to time to vary the terms of either of the standard forms of stock option
agreement described in paragraph 7 above either in connection with the grant or
amendment of an individual Option or in connection with the authorization of a
new standard form or forms; provided, however, that the terms and conditions of
such revised or amended standard form or forms of stock option agreement shall
be in accordance with the terms of the Plan. Such authority shall include, but
not by way of limitation, the authority to grant Options which are immediately
exercisable subject to the Company's right to repurchase any unvested shares of
Stock acquired by an Optionee on exercise of an Option in the event such
Optionee's employment with the Participating Company Group is terminated for any
reason, with or without cause.

     9.   Fair Market Value Limitation. To the extent that the aggregate fair
market value (determined at the time the Option is granted) of stock with
respect to which Incentive Stock Options are exercisable by an Optionee for the
first time during any calendar year (under all stock option plans of the
Participating Company Group, including the Plan) exceeds one hundred thousand
dollars ($100,000), such options shall be treated as nonstatutory stock options.
This paragraph shall be applied by taking Incentive Stock Options into account
in the order in which they were granted.

     10.  Effect of Change in Stock Subject to Plan. Appropriate adjustments
shall be made in the number and class of shares of Stock subject to the Plan and
to any outstanding Options and in the exercise price of any outstanding Options
in the event of a stock dividend, stock split, reverse stock split,
recapitalization, combination, reclassification, or like change in the capital
structure of the Company.

          In the event a majority of the shares which are of the same class as
the shares that are subject to outstanding Options are exchanged for, converted
into, or otherwise become (whether or not pursuant to a Transfer of Control (as
defined below)) shares of another corporation (the "New Shares"), the Company
may unilaterally amend the outstanding Options to provide that such Options are
exercisable for New Shares. In the event of any such amendment, the number of
shares and the exercise price of the outstanding Options shall be adjusted in a
fair and equitable manner.

     11.  Transfer of Control. A "Transfer of Control" shall be deemed to have
occurred in the event any of the following occurs with respect to the Company.

          (a)  the direct or indirect sale or exchange by the shareholders of
the Company of all or substantially all of the stock of the Company where the
shareholders of the Company before such sale or exchange do not retain, directly
or indirectly, at least a majority of the beneficial interest in the voting
stock of the Company after such sale or exchange;

                                       5

<PAGE>

          (b)  a merger or consolidation where the shareholders of the Company
before such merger or consolidation do not retain, directly or indirectly, at
least a majority of the beneficial interest in the voting stock of the Company
after such merger or consolidation;

          (c)  the sale, exchange, or transfer of all or substantially all of
the assets of the Company (other than a sale, exchange, or transfer to one (1)
or more subsidiary corporations (as defined in paragraph 1 above) of the
Company); or

          (d)  a liquidation or dissolution of the Company.

          In the event of a Transfer of Control, any unexercisable and/or
unvested portion of such outstanding Option shall be immediately exercisable and
fully vested as of the date thirty (30) days prior to the Transfer of Control.
The exercise and/or vesting of any Option that is permissible solely by reason
of this paragraph 11 shall be conditioned upon the consummation of the Transfer
of Control. Any Options which are not exercised as of the date of the Transfer
of Control shall terminate and cease to be outstanding effective as of the date
of the Transfer of Control.

     12.  Death or Disability. If an Optionee ceases to be an employee of the
Participating Company Group due to the death or disability (within the meaning
of Section 422(c) of the Code) of the Optionee, fifty percent (50%) of the
portion of any Option held by such Optionee which is then unexercisable and/or
unvested at such time shall become immediately exercisable and fully vested as
of the date the Optionee ceased to be an employee of the Participating Company
Group due to the Optionee's death or disability as defined in this Section 12.

     13.  Provision of Information. Each Optionee shall be given access to
information concerning the Company equivalent to that information generally made
available to the Company's common shareholders.

     14.  Options Non-Transferable. During the lifetime of the Optionee, the
Option shall be exercisable only by the Optionee. No Option shall be assignable
or transferable by the Optionee, except by will or by the laws of descent and
distribution.

     15.  Transfer of Company's Rights. In the event any Participating Company
assigns, other than by operation of law, to a third person, other than another
Participating Company, any of the Participating Company's rights to repurchase
any shares of Stock acquired on the exercise of an Option, the assignee shall
pay to the assigning Participating Company the value of such right as determined
by the Company in the Company's sole discretion. Such consideration shall be
paid in such form, including, without limitation, the performance of future
services, as the Company shall determine in the Company's sole discretion. In
the event such repurchase right is exercisable at the time of such assignment,
the value of such right shall be not less than the fair market value of the
shares of Stock which may be repurchased under such right (as determined
pursuant to the terms of the Option agreement) minus the repurchase price of
such shares. The requirements of this paragraph 14 regarding the minimum
consideration to be received by the assigning Participating Company shall not
inure to the benefit of the Optionee whose shares of

                                       6

<PAGE>

Stock are being repurchased. Failure of a Participating Company to comply with
the provisions of this paragraph 14 shall not constitute a defense or otherwise
prevent the exercise of the repurchase right by the assignee of such right.

     16.  Termination or Amendment of Plan or Options. The Board, including any
duly appointed committee of the Board, may terminate or amend the Plan or any
Option at any time; provided, however, that without the approval of the
Company's shareholders, there shall be (a) no increase in the total number of
shares of Stock covered by the Plan (except by operation of the provisions of
paragraph 10 above), (b) no change in the class of persons eligible to receive
Incentive Stock Options and (c) no expansion in the class of persons eligible to
receive nonstatutory stock options. In addition to the foregoing, the approval
of the Company's shareholders shall be sought for any amendment to the Plan for
which the Board deems shareholder approval necessary in order to comply with
Rule 16b-3. In any event, no amendment may adversely affect any then outstanding
Option or any unexercised portion thereof, without the consent of the Optionee,
unless such amendment is required to enable an Option designated as an Incentive
Stock Option to qualify as an Incentive Stock Option.

     IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies that
the foregoing Accredited Home Lenders, Inc. 1995 Executive Stock Option Plan was
duly adopted by the Board of Directors of the Company on the second day of
February, 1995.

                                                /s/ Ray W. McKewon
                                                ------------------
                                                Ray W. McKewon, Secretary

                                       7

<PAGE>

                                  Plan History

February 2, 1995     Board adopts the 1995 Executive Stock Option Plan with a
                     share reserve of 600,000 shares.

February 2, 1995     Shareholders approve the 1995 Executive Stock Option Plan
                     with a share reserve of 600,000 shares.

January 31, 1997     Board approves 100,000 increase in reserve and transfer of
                     108,033 shares from the 1995 Stock Option Plan to the
                     reserve for a total reserve of 808,033.

January 31, 1997     Shareholders approve 100,000 increase in reserve and
                     transfer of 108,033 shares from the 1995 Stock Option Plan
                     to the reserve for a total reserve of 808,033.

March 1, 1998        Board approves 6000 increase in reserve for a total reserve
                     of 814,033.

March 1, 1998        Shareholders approve 6000 increase in reserve for a total
                     reserve of 814,033.

May 8, 1998          Board approves 100,000 increase in reserve for a total
                     reserve of 914,033.

June 1, 1998         Board approves 50,000 increase in reserve for a total
                     reserve of 964,033.

June 1, 1998         Shareholders approve 150,000 increase in reserve for a
                     total reserve of 964,033.

January 29, 1999     Board approves 115,500 increase in reserve for a total
                     reserve of 1,079,533.

January 29, 1999     Shareholders approve 115,500 increase in reserve for a
                     total reserve of 1,079,533.

August 1, 1999       Board approves 546,541 increase in reserve for a total
                     reserve of 1,626,074.

August 1, 1999       Shareholders approve 546,541 increase in reserve for a
                     total reserve of 1,626,074.

January 1, 2000      Board approves transfer of 25,000 shares from the 1998
                     Stock Option Plan to the reserve for a total reserve of
                     1,651,074.

January 1, 2000      Shareholders approve transfer of 25,000 shares from the
                     1998 Stock Option Plan to the reserve for a total reserve
                     of 1,651,074.

February 3, 2000     Board approves 13,500 increase in reserve for a total
                     reserve of 1,664,574.

February 3, 2000     Shareholders approve 13,500 increase in reserve for a total
                     reserve of 1,664,574.

February 21, 2000    Board approves transfer of 18,500 shares from the 1998
                     Stock Option Plan to the reserve for a total reserve of
                     1,683,074.

February 21, 2000    Shareholders approve transfer of 18,500 shares from the
                     1998 Stock Option Plan to the reserve for a total reserve
                     of 1,683,074.

January 30, 2002     Board approves transfer of 10,500 shares from the 1998
                     Stock Option Plan to the reserve for a total reserve of
                     1,693,574.

January 30, 2002     Shareholders approve transfer of 10,500 shares from the
                     1998 Stock Option Plan to the reserve for a total reserve
                     of 1,693,574.

                                       8

<PAGE>

                                   EXHIBIT A

THE SECURITY REPRESENTED BY THIS CERTIFICATE HAS BEEN ACQUIRED FOR INVESTMENT
AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF.
NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

                          ACCREDITED HOME LENDERS, INC.

                        INCENTIVE STOCK OPTION AGREEMENT

                    [For use in an Exempt Issuer Transaction
                             under Section 25102(f)
                      of the California Corporations Code]

     Accredited Home Lenders, Inc. granted to the individual named below an
option to purchase certain shares of common stock of the Company, in the manner
and subject to the provisions of this Option Agreement.

     1.   Definitions:

          (a)  "Optionee" shall mean __________.

          (b)  "Date of Option Grant" shall mean ________________.

          (c)  "Number of Option Shares" shall mean _______ shares of common
stock of the Company as adjusted from time to time pursuant to paragraph 9
below.

          (d)  "Exercise Price" shall mean $____ per share as adjusted from time
to time pursuant to paragraph 9 below.

          (e)  "Initial Exercise Date" shall be the Initial Vesting Date.

          (f)  "Initial Vesting Date" shall be the date occurring one (1) year
after (check one):

          ____ the Date of Option Grant.

          X    _______________ (specify other date).
          ----

<PAGE>

          (g)  Determination of "Vested Ratio":

                                                                    Vested Ratio

               Prior to Initial Vesting Date                             0

               On Initial Vesting Date,                                1/4
               provided the Optionee is
               continuously employed by
               a Participating Company from
               the Date of Option Grant until
               the Initial Vesting Date

               Plus

               For each full month                                    1/48
               of the Optionee's
               continuous employment by a
               Participating Company from the
               Initial Vesting Date

               In no event shall the Vested Ratio exceed 1/1.

          (h)  "Option Term Date" shall mean the date ten (10) years after the
Date of Option Grant.

          (i)  "Code" shall mean the Internal Revenue Code of 1986, as amended.

          (j)  "Company" shall mean Accredited Home Lenders, Inc., a California
corporation, and any successor corporation thereto.

          (k)  "Participating Company" shall mean (i) the Company and (ii) any
present or future parent and/or subsidiary corporation of the Company while such
corporation is a parent or subsidiary of the Company. For purposes of this
Option Agreement, a parent corporation and a subsidiary corporation shall be as
defined in Sections 424(e) and 424(f) of the Code.

          (l)  "Participating Company Group" shall mean at any point in time all
corporations collectively which are then a Participating Company.

          (m)  "Plan" shall mean the Accredited Home Lenders, Inc. 1995
Executive Stock Option Plan.

                                       2

<PAGE>

     2.   Status of the Option. This Option is intended to be an incentive stock
option as described in Section 422 of the Code, but the Company does not
represent or warrant that this Option qualifies as such. The Optionee should
consult with the Optionee's own tax advisors regarding the tax effects of this
Option and the requirements necessary to obtain favorable income tax treatment
under Section 422 of the Code, including, but not limited to, holding period
requirements. (NOTE: If the aggregate Exercise Price of the Option (that is, the
Exercise Price multiplied by the Number of Option Shares) plus the aggregate
exercise price of any other incentive stock options held by the Optionee
(whether granted pursuant to the Plan or any other stock option plan of the
Participating Company Group) is greater than $100,000, the Optionee should
contact the Chief Financial Officer of the Company to ascertain whether the
entire Option qualifies as an incentive stock option.)

     3.   Administration. All questions of interpretation concerning this Option
Agreement shall be determined by the Board of Directors of the Company (the
"Board") and/or by a duly appointed committee of the Board having such powers as
shall be specified by the Board. Any subsequent references herein to the Board
shall also mean the committee if such committee has been appointed and, unless
the powers of the committee have been specifically limited, the committee shall
have all of the powers of the Board granted in the Plan, including, without
limitation, the power to terminate or amend the Plan at any time, subject to the
terms of the Plan and any applicable limitations imposed by law. All
determinations by the Board shall be final and binding upon all persons having
an interest in the Option. Any officer of a Participating 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.

     4.   Exercise of the Option.

          (a)  Right to Exercise. Except as provided in paragraph 4(f) below,
the Option shall first become exercisable on the Initial Exercise Date. The
Option shall be exercisable on and after the Initial Exercise Date and prior to
the termination of the Option in the amount equal to the Number of Option Shares
multiplied by the Vested Ratio as set forth in paragraph 1(g) above less the
number of shares previously acquired upon exercise of the Option, subject to the
Optionee's agreement that any shares purchased upon exercise are subject to the
Company's repurchase rights set forth in paragraph 12 below. In no event shall
the Option be exercisable for more shares than the Number of Option Shares. In
addition to the foregoing, in the event that the adoption of the Plan or any
amendment of the Plan is subject to the approval of the Company's shareholders
in order for the Option to comply with the requirements of Rule 16b-3,
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), the Option shall not be exercisable prior to such shareholder approval if
the Optionee is subject to Section 16(b) of the Exchange Act, unless the Board,
in its sole discretion, approves the exercise of the Option prior to such
shareholder approval.

                                       3

<PAGE>

          (b)  Method of Exercise. The Option may be exercised by written notice
to the Company which must state the election to exercise the Option, the number
of shares for which the Option is being exercised and such other representations
and agreements as to the Optionee's investment intent with respect to such
shares and other administrative matters as may be required pursuant to the
provisions of this Option Agreement and the exercise form used by the Company.
The written notice must be signed by the Optionee and must be delivered in
person or by certified or registered mail, return receipt requested, to the
Chief Financial Officer of the Company, or other authorized representative of
the Participating Company Group, prior to the termination of the Option as set
forth in paragraph 6 below, accompanied by (i) full payment of the exercise
price for the number of shares being purchased and (ii) an executed copy, if
required herein, of the then current forms of escrow and security agreement
referenced below.

          (c)  Payment of Exercise Price.

               (1)  Forms of Payment Authorized. Payment of the exercise price
for the number of shares for which the Option is being exercised shall be made
(i) in cash, by check, or cash equivalent, (ii) by tender to the Company of
shares of the Company's common stock owned by the Optionee having a value not
less than the exercise price, which either have been owned by the Optionee for
more than six (6) months or were not acquired, directly or indirectly, from the
Company, (iii) if expressly authorized by the Company, in its sole discretion,
at the time of Option exercise, by the Optionee's recourse promissory note in a
form approved by the Company; (iv) by Immediate Sales Proceeds, as defined
below, or (v) by any combination of the foregoing.

               (2)  Tender of Company Stock. Notwithstanding the foregoing, the
Option may not be exercised by tender to the Company of shares of the Company's
common stock to the extent such tender of stock would constitute a violation of
the provisions of any law, regulation and/or agreement restricting the
redemption of the Company's common stock.

               (3)  Promissory Note. Unless otherwise specified by the Board at
the time the Option is granted, a promissory note permitted in accordance with
clause (c)(1)(iii) above shall not exceed the amount permitted by law to be paid
by a promissory note and shall be a full recourse note in a form satisfactory to
the Company, with principal payable four (4) years after the date the Option is
exercised. Interest on the principal balance of the promissory note shall be
payable in annual installments at the minimum interest rate necessary to avoid
imputed interest pursuant to all applicable sections of the Code. Such recourse
promissory note shall be secured by the shares of stock acquired pursuant to the
then current form of security agreement as approved by the Company. In the event
the Company at any time is subject to the regulations promulgated by the Board
of Governors of the Federal Reserve System or any other governmental entity
affecting the extension of credit in connection with the Company's securities,
any promissory note shall comply with such applicable

                                       4

<PAGE>

regulations, and the Optionee shall pay the unpaid principal and accrued
interest, if any, to the extent necessary to comply with such applicable
regulations. Except as the Company in its sole discretion shall determine, the
Optionee shall pay the unpaid principal balance of the promissory note and any
accrued interest thereon upon termination of the Optionee's employment with the
Participating Company Group for any reason, with or without cause.

               (4)  Immediate Sales Proceeds. "Immediate Sales Proceeds" shall
mean the assignment in form acceptable to the Company of the proceeds of a sale
of some or all of the shares acquired upon the exercise of the Option pursuant
to a program and/or procedure approved by the Company (including, without
limitation, through an exercise complying with the provisions of Regulation T as
promulgated from time to time by the Board of Governors of the Federal Reserve
System). The Company reserves, at any and all times, the right, in the Company's
sole and absolute discretion, to decline to approve any such program and/or
procedure.

          (d)  Tax Withholding. At the time the Option is exercised, in whole or
in part, or at any time thereafter as requested by the Company, the Optionee
hereby authorizes payroll withholding and otherwise agrees to make adequate
provision for foreign, federal and state tax withholding obligations of the
Company, if any, which arise in connection with the Option, including, without
limitation, obligations arising upon (i) the exercise, in whole or in part, of
the Option, (ii) the transfer, in whole or in part, of any shares acquired on
exercise of the Option, (iii) the operation of any law or regulation providing
for the imputation of interest, or (iv) the lapsing of any restriction with
respect to any shares acquired on exercise of the Option. The Optionee is
cautioned that the Option is not exercisable unless the Company's withholding
obligations are satisfied. Accordingly, the Optionee may not be able to exercise
the Option when desired even though the Option is vested and the Company shall
have no obligation to issue a certificate for such shares until such time as the
Company's withholding obligations are satisfied.

          (e)  Certificate Registration. The certificate or certificates for the
shares as to which the Option shall be exercised shall be registered in the name
of the Optionee, or, if applicable, the heirs of the Optionee.

          (f)  Restrictions on Grant of the Option and Issuance of Shares. The
grant of the Option and the issuance of the shares upon exercise of the Option
shall be subject to compliance with all applicable requirements of federal,
state or foreign law with respect to such securities. The Option may not be
exercised if the issuance of shares upon such exercise would constitute a
violation of any applicable federal, state or foreign securities laws or other
law or regulations. In addition, no Option may be exercised unless (i) a
registration statement under the Securities Act of 1933, as amended (the
"Securities Act") shall at the time of exercise of the Option be in effect with
respect to the shares issuable upon exercise of the Option or (ii) in the
opinion of legal counsel to the Company, the shares issuable upon exercise of
the Option may be issued in accordance with the terms of an applicable exemption
from the registration

                                       5

<PAGE>

requirements of the Securities Act. THE OPTIONEE IS CAUTIONED THAT THE OPTION
MAY NOT BE EXERCISABLE UNLESS THE FOREGOING CONDITIONS ARE SATISFIED.
ACCORDINGLY, THE OPTIONEE MAY NOT BE ABLE TO EXERCISE THE OPTION WHEN DESIRED
EVEN THOUGH THE OPTION IS VESTED. Questions concerning this restriction should
be directed to the Chief Financial Officer of the Company. As a condition to the
exercise of the Option, the Company may require the Optionee 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.

          (g)  Fractional Shares. The Company shall not be required to issue
fractional shares upon the exercise of the Option.

     5.   Non-Transferability of the Option. The Option may be exercised during
the lifetime of the Optionee only by the Optionee and may not be assigned or
transferred in any manner except by will or by the laws of descent and
distribution. Following the death of the Optionee, the Option, to the extent
unexercised and exercisable by the Optionee on the date of death, may be
exercised by the Optionee's legal representative or by any person empowered to
do so under the deceased Optionee's will or under the then applicable laws of
descent and distribution.

     6.   Termination of the Option. The Option shall terminate and may no
longer be exercised on the first to occur of (a) the Option Term Date as defined
above, (b) the last date for exercising the Option following termination of
employment as described in paragraph 7 below, or (c) upon a Transfer of Control
as provided in paragraph 8 below.

     7.   Termination of Employment.

          (a)  Termination of the Option. If the Optionee ceases to be an
employee of the Participating Company Group for any reason, except death or
disability within the meaning of Section 422(c) of the Code, the Option, to the
extent unexercised and exercisable by the Optionee on the date on which the
Optionee ceased to be an employee, may be exercised by the Optionee within three
(3) months after the date on which the Optionee's employment terminated, but in
any event no later than the Option Term Date. If the Optionee ceases to be an
employee of the Participating Company Group because of the death or disability
of the Optionee within the meaning of Section 422(c) of the Code, the Option, to
the extent unexercised and exercisable by the Optionee on the date on which the
Optionee ceased to be an employee, may be exercised by the Optionee (or the
Optionee's legal representative) at any time prior to the expiration of twelve
(12) months from the date on which the Optionee's employment terminated, but in
any event no later than the Option Term Date. The Optionee's employment shall be
deemed to have terminated on account of death (solely for the purposes of
extending the termination date of the Option as provided in this section and for
no other reason whatsoever including, without limitation, for the purpose of
extending or accelerating any vesting calculation) if the Optionee dies

                                       6

<PAGE>

within three (3) months after the Optionee's termination of employment. Except
as provided in this paragraph 7(a), the Option shall terminate and may not be
exercised after the Optionee ceases to be an employee of the Participating
Company Group.

          (b)  Employee and Termination of Employment Defined. For purposes of
this paragraph 7, the term "employee" shall mean any person, including officers
and directors, employed by a Participating Company or performing services for a
Participating Company as a director, consultant, advisor or other independent
contractor who performs a minimum of twenty-five (25) hours per week of work or
other services on behalf of a Participating Company. For purposes of this
paragraph 7, the Optionee's employment shall be deemed to have terminated if the
Optionee ceases to be employed by a Participating Company for a minimum of
twenty-five (25) hours per week (whether upon an actual termination of
employment or upon the Optionee's employer ceasing to be a Participating
Company). The Optionee's employment shall not be deemed to have terminated
merely because of a change in the capacity in which the Optionee serves as an
employee, provided that there is no interruption or termination of the
Optionee's service as an employee. THE OPTIONEE IS CAUTIONED THAT IF THE OPTION
IS EXERCISED MORE THAN THREE (3) MONTHS AFTER THE DATE ON WHICH THE OPTIONEE'S
EMPLOYMENT (OTHER THAN AS A DIRECTOR, CONSULTANT, ADVISOR OR OTHER INDEPENDENT
CONTRACTOR) TERMINATED, THE OPTION MAY CEASE TO BE AN INCENTIVE STOCK OPTION.
THE OPTIONEE SHOULD CONSULT WITH THE OPTIONEE'S OWN TAX ADVISORS AS TO THE TAX
CONSEQUENCES OF ANY SUCH DELAYED EXERCISE.

          (c)  Extension if Exercise Prevented by Law. Notwithstanding the
foregoing, if the exercise of the Option within the applicable time periods set
forth above is prevented by the provisions of paragraph 4(f) above, the Option
shall remain exercisable until three (3) months after the date the Optionee is
notified by the Company that the Option is exercisable, but in any event no
later than the Option Term Date. The Company makes no representation as to the
tax consequences of any such delayed exercise. The Optionee should consult with
the Optionee's own tax advisors as to the tax consequences to the Optionee of
any such delayed exercise.

          (d)  Extension if Optionee Subject to Section 16(b). Notwithstanding
the foregoing, if the exercise of the Option within the applicable time periods
set forth above would subject the Optionee to suit under Section 16(b) of the
Exchange Act, the Option shall remain exercisable until the earliest to occur of
(i) the tenth (10th) day following the date on which the Optionee would no
longer be subject to such suit, (ii) the one hundred and ninetieth (190th) day
after the Optionee's termination of employment, or (iii) the Option Term Date.
The Company makes no representation as to the tax consequences of any such
delayed exercise. The Optionee should consult with the Optionee's own tax
advisors as to the tax consequences to the Optionee of any such delayed
exercise.

          (e)  Leave of Absence. For purposes hereof, the Optionee's

                                       7

<PAGE>

employment with the Participating Company Group shall not be deemed to terminate
if the Optionee takes any military leave, sick leave, or other bona fide leave
of absence approved by the Company of ninety (90) days or less. In the event of
a leave in excess of ninety (90) days, the Optionee's employment shall be deemed
to terminate on the ninety-first (91st) day of the leave unless the Optionee's
right to reemployment with the Participating Company Group remains guaranteed by
statute or contract. Notwithstanding the foregoing, however, a leave of absence
shall be treated as employment for purposes of determining the Optionee's Vested
Ratio if and only if the leave of absence is designated by the Company as (or
required by law to be) a leave for which vesting credit is given.

     8.   Ownership Change and Transfer of Control. An "Ownership Change" shall
be deemed to have occurred in the event any of the following occurs with respect
to the Company:

          (a)  the direct or indirect sale or exchange by the shareholders of
the Company of all or substantially all of the stock of the Company;

          (b)  a merger or consolidation in which the Company is a party;

          (c)  the sale, exchange, or transfer of all or substantially all of
the assets of the Company (other than a sale, exchange, or transfer to one or
more subsidiary corporations of the Company); or

          (d)  a liquidation or dissolution of the Company.

          A "Transfer of Control" shall mean an Ownership Change described in
(a) or (b) above in which the shareholders of the Company before such Ownership
Change do not retain, directly or indirectly, at least a majority of the
beneficial interest in the voting stock of the Company after such transaction or
any Ownership Change described in (c) or (d) above.

          In the event of a Transfer of Control, any unexercisable and/or
unvested portion of the Option shall be immediately exercisable and fully vested
as of the date thirty (30) days prior to the Transfer of Control. The exercise
and/or vesting of any portion of the Option that was permissible solely by
reason of this paragraph 8 shall be conditioned upon the consummation of the
Transfer of Control. The Option shall terminate and cease to be outstanding
effective as of the date of the Transfer of Control to the extent that the
Option is not exercised as of the date of the Transfer of Control.

     9.   Death or Disability. If the Optionee ceases to be an employee of the
Participating Company Group due to the death or disability (within the meaning
of Section 422(c) of the Code) of the Optionee, fifty percent (50%) of the
portion of this Option which is unvested at such time shall become fully vested
as of the date the Optionee ceased to be an employee of the Participating
Company Group due to the Optionee's death or disability as defined in this
Section 9 and the Vested Ratio shall be

                                       8

<PAGE>

adjusted accordingly.

     10.  Effect of Change in Stock Subject to the Option. Appropriate
adjustments shall be made in the number, exercise price and class of shares of
stock subject to the Option in the event of a stock dividend, stock split,
reverse stock split, recapitalization, combination, reclassification, or like
change in the capital structure of the Company. In the event a majority of the
shares which are of the same class as the shares that are subject to the Option
are exchanged for, converted into, or otherwise become (whether or not pursuant
to an Ownership Change) shares of another corporation (the "New Shares"), the
Company may unilaterally amend the Option to provide that the Option is
exercisable for New Shares. In the event of any such amendment, the number of
shares and the exercise price shall be adjusted in a fair and equitable manner.

     11.  Rights as a Shareholder or Employee. The Optionee shall have no rights
as a shareholder with respect to any shares covered by the Option until the date
of the issuance of a certificate or certificates for the shares for which the
Option has been exercised. No adjustment shall be made for dividends or
distributions or other rights for which the record date is prior to the date
such certificate or certificates are issued, except as provided in paragraph 10
above. Nothing in the Option shall confer upon the Optionee any right to
continue in the employ of a Participating Company or interfere in any way with
any right of the Participating Company Group to terminate the Optionee's
employment at any time.

     12.  Right of First Refusal.

          (a)  Right of First Refusal. In the event the Optionee proposes to
sell, pledge, or otherwise transfer any shares acquired upon the exercise of the
Option (the "Transfer Shares") to any person or entity, including, without
limitation, any shareholder of the Participating Company Group, the Company
shall have the right to repurchase the Transfer Shares under the terms and
subject to the conditions set forth in this paragraph 12 (the "Right of First
Refusal").

          (b)  Notice of Proposed Transfer. Prior to any proposed transfer of
the Transfer Shares, the Optionee shall give a written notice (the "Transfer
Notice") to the Company describing fully the proposed transfer, including the
number of Transfer Shares, the name and address of the proposed transferee (the
"Proposed Transferee") and, if the transfer is voluntary, the proposed transfer
price and containing such information necessary to show the bona fide nature of
the proposed transfer. In the event of a bona fide gift or involuntary transfer,
the proposed transfer price shall be deemed to be the fair market value of the
Transfer Shares as determined by the Company in good faith. In the event the
Optionee proposes to transfer any Transfer Shares to more than one (1) Proposed
Transferee, the Optionee shall provide a separate Transfer Notice for the
proposed transfer to each Proposed Transferee. The Transfer Notice shall be
signed by both the Optionee and the Proposed Transferee and must constitute a
binding commitment of the Optionee and the Proposed Transferee for the transfer
of the Transfer Shares to the Proposed Transferee subject only to the Right of

                                       9

<PAGE>

First Refusal.

          (c)  Bona Fide Transfer. In the event that the Company shall determine
that the information provided by the Optionee in the Transfer Notice is
insufficient to establish the bona fide nature of a proposed voluntary transfer,
the Company shall give the Optionee written notice of the Optionee's failure to
comply with the procedure described in this paragraph 12 and the Optionee shall
have no right to transfer the Transfer Shares without first complying with the
procedure described in this paragraph 12. The Optionee shall not be permitted to
transfer the Transfer Shares if the proposed transfer is not bona fide.

          (d)  Exercise of Right of First Refusal. In the event the proposed
transfer is deemed to be bona fide, the Company shall have the right to purchase
all, but not less than all, of the Transfer Shares (except as the Company and
the Optionee otherwise agree) at the purchase price and on the terms set forth
in the Transfer Notice by delivery to the Optionee of a notice of exercise of
the Right of First Refusal within thirty (30) days after the date the Transfer
Notice is delivered to the Company. The Company's exercise or failure to
exercise the Right of First Refusal with respect to any proposed transfer
described in a Transfer Notice shall not affect the Company's right to exercise
the Right of First Refusal with respect to any proposed transfer described in
any other Transfer Notice, whether or not such other Transfer Notice is issued
by the Optionee or issued by a person other than the Optionee with respect to a
proposed transfer to the same Proposed Transferee.

     If the Company exercises the Right of First Refusal, the Company and the
Optionee shall thereupon consummate the sale of the Transfer Shares to the
Company on the terms set forth in the Transfer Notice within sixty (60) days
after the date the Transfer Notice is delivered to the Company (unless a longer
period is offered by the Proposed Transferee); provided, however, that in the
event the Transfer Notice provides for the payment for the Transfer Shares other
than in cash, the Company shall have the option of paying for the Transfer
Shares by the present value cash equivalent of the consideration described in
the Transfer Notice as reasonably determined by the Company. For purposes of the
foregoing, cancellation of any indebtedness of the Optionee to any Participating
Company shall be treated as payment to the Optionee in cash to the extent of the
unpaid principal and any accrued interest canceled.

                                       10

<PAGE>

               (e)   Failure to Exercise Right of First Refusal. If the Company
fails to exercise the Right of First Refusal in full within the period specified
in paragraph 12(d) above, the Optionee may conclude a transfer to the Proposed
Transferee of the Transfer Shares on the terms and conditions described in the
Transfer Notice, provided such transfer occurs not later than one hundred twenty
(120) days following delivery to the Company of the Transfer Notice. The Company
shall have the right to demand further assurances from the Optionee and the
Proposed Transferee (in a form satisfactory to the Company) that the transfer of
the Transfer Shares was actually carried out on the terms and conditions
described in the Transfer Notice. No Transfer Shares shall be transferred on the
books of the Company until the Company has received such assurances, if so
demanded, and has approved the proposed transfer as bona fide. Any proposed
transfer on terms and conditions different from those described in the Transfer
Notice, as well as any subsequent proposed transfer by the Optionee, shall again
be subject to the Right of First Refusal and shall require compliance by the
Optionee with the procedure described in this paragraph 12.

               (f)   Transferees of Transfer Shares. All transferees of the
Transfer Shares or any interest therein, other than the Company, shall be
required as a condition of such transfer to agree in writing (in a form
satisfactory to the Company) that such transferee shall receive and hold such
Transfer Shares or interests subject to the provisions of this paragraph 12
providing for the Right of First Refusal with respect to any subsequent
transfer. Any sale or transfer of any shares acquired upon exercise of the
Option shall be void unless the provisions of this paragraph 12 are met.

               (g)   Transfers Not Subject to Right of First Refusal. The Right
of First Refusal shall not apply to any transfer or exchange of the shares
acquired pursuant to the exercise of the Option if such transfer is in
connection with an Ownership Change. If the consideration received pursuant to
such transfer or exchange consists of stock of a Participating Company, such
consideration shall remain subject to the Right of First Refusal unless the
provisions of paragraph 12(i) below result in a termination of the Right of
First Refusal.

               (h)   Assignment of Right of First Refusal. The Company shall
have the right to assign the Right of First Refusal at any time, whether or not
the Optionee has attempted a transfer, to one (1) or more persons as may be
selected by the Company.

               (i)   Early Termination of Right of First Refusal. The other
provisions of this paragraph 12 notwithstanding, the Right of First Refusal
shall terminate, and be of no further force and effect, upon (i) the occurrence
of a Transfer of Control or (ii) the existence of a public market for the class
of shares subject to the Right of First Refusal. A "public market" shall be
deemed to exist if (x) such stock is listed on a national securities exchange
(as that term is used in the Exchange Act) or (y) such stock is traded on the
over-the-counter market and prices therefor are published daily on business days
in a recognized financial journal.

                                       11

<PAGE>

         13.   Escrow.

               (a)   Establishment of Escrow. To ensure that shares subject to
the Right of First Refusal and/or security for any promissory note will be
available for repurchase, the Company may require the Optionee to deposit the
certificate or certificates evidencing the shares which the Optionee purchases
upon exercise of the Option with an agent designated by the Company under the
terms and conditions of escrow and security agreements approved by the Company.
If the Company does not require such deposit as a condition of exercise of the
Option, the Company reserves the right at any time to require the Optionee to so
deposit the certificate or certificates in escrow. The Company shall bear the
expenses of the escrow.

               (b)   Delivery of Shares to Optionee. As soon as practicable
after the expiration of the Right of First Refusal, and after full repayment on
any promissory note secured by the shares in escrow, but not more frequently
than twice each calendar year, the agent shall deliver to the Optionee the
shares no longer subject to such restriction and no longer security for any
promissory note.

               (c)   Notices and Payments. In the event the shares held in
escrow are subject to the Company's exercise of the Right of First Refusal, the
notices required to be given to the Optionee shall be given to the escrow agent
and any payment required to be given to the Optionee shall be given to the
escrow agent. Within thirty (30) days after payment by the Company, the escrow
agent shall deliver the shares which the Company has purchased to the Company
and shall deliver the payment received from the Company to the Optionee.

         14.   Stock Dividends Subject to Option Agreement. If, from time to
time, there is any stock dividend, stock split, or other change in the character
or amount of any of the outstanding stock of the corporation the stock of which
is subject to the provisions of this Option Agreement, then in such event any
and all new, substituted or additional securities to which the Optionee is
entitled by reason of the Optionee's ownership of the shares acquired upon
exercise of the Option shall be immediately subject to the Right of First
Refusal and/or any security interest held by the Company with the same force and
effect as the shares subject to the Right of First Refusal and such security
interest immediately before such event.

         15.   Notice of Sales Upon Disqualifying Disposition. The Optionee
shall dispose of the shares acquired pursuant to the Option only in accordance
with the provisions of this Option Agreement. In addition, the Optionee shall
promptly notify the Chief Financial Officer of the Company if the Optionee
disposes of any of the shares acquired pursuant to the Option within one (1)
year from the date the Optionee exercises all or part of the Option or within
two (2) years of the date of grant of the Option. Until such time as the
Optionee disposes of such shares in a manner consistent with the provisions of
this Option Agreement, the Optionee shall hold all shares acquired pursuant to
the Option in the Optionee's name (and not in the name of any nominee) for the
one-year period immediately after exercise of the Option and the

                                       12

<PAGE>

two-year period immediately after grant of the Option. At any time during the
one-year or two-year periods set forth above, the Company may place a legend or
legends on any certificate or certificates representing shares acquired pursuant
to the Option requesting the transfer agent for the Company's stock to notify
the Company of any such transfers. The obligation of the Optionee to notify the
Company of any such transfer shall continue notwithstanding that a legend has
been placed on the certificate or certificates pursuant to the preceding
sentence.

         16.   Representations and Warranties. In connection with the grant of
the Option and purchase of shares under the Option, the Optionee hereby agrees,
represents and warrants as follows:

               (a)   The Optionee will purchase the shares solely for the
Optionee's own account for investment and not with a view to, or for resale in
connection with any distribution thereof within the meaning of the Securities
Act. The Optionee further represents that the Optionee does not have any present
intention of selling, offering to sell or otherwise disposing of or distributing
the shares or any portion thereof; and that the entire legal and beneficial
interest in any shares the Optionee may acquire under the Option will be
purchased for, and will be held for the account of, the Optionee only and
neither in whole nor in part for any other person.

               (b)   The Optionee is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the shares. The Optionee
further represents and warrants that the Optionee has discussed the Company and
its plans, operations and financial condition with its officers, has received
all such information as the Optionee deems necessary and appropriate to enable
the Optionee to evaluate the financial risk inherent in making an investment in
the shares and has received satisfactory and complete information concerning the
business and financial condition of the Company in response to all inquiries in
respect thereof.

               (c)   The Optionee realizes that a purchase of shares under the
Option will be a highly speculative investment and that the Optionee is able,
without impairing his or her financial condition, to hold the shares for an
indefinite period of time and to suffer a complete loss on the Optionee's
investment.

               (d)   The Company has disclosed to the Optionee that:

                     (1)   The resale of the shares acquired under the Option
has not been registered under the Securities Act, and any shares acquired must
be held indefinitely unless a transfer of such shares is subsequently registered
under the Securities Act or an exemption from such registration is available,
and that the Company is under no obligation to register the shares;

                     (2)   The Optionee understands that the certificate or
certificates evidencing any shares acquired under the Option will be imprinted
with legends which

                                       13

<PAGE>

prohibit the transfer of the shares unless they are registered or such
registration is not required in the opinion of legal counsel satisfactory to the
Company. The Optionee does not have any contract, undertaking, agreement, or
arrangement with any person to sell, transfer, or grant participations to such
person or to any third person with respect to any of the shares.

               (e)   The Optionee is aware of the provisions of Rule 144,
promulgated under the Securities Act, which, in substance, permit limited public
resale of "restricted securities" acquired, directly or indirectly, from the
issuer thereof (or an affiliate of such issuer), in a nonpublic offering subject
to the satisfaction of certain conditions, including among other things: the
resale occurring not less than two years from the date the Optionee has
purchased and paid for the shares; the availability of certain public
information concerning the Company; the sale being through a broker in an
unsolicited "broker's transaction" or in a transaction directly with a market
maker (as said term is defined under the Exchange Act); and that any sale of the
shares may be made by him or her only in limited amounts during any three-month
period not exceeding specified limitations. The Optionee further represents that
the Optionee understands that at the time the Optionee wishes to sell the shares
there may be no public market upon which to make such a sale, and that, even if
such a public market then exists, the Company may not be satisfying the current
public information requirements of Rule 144, and that, in such event, the
Optionee would be precluded from selling the shares under Rule 144 even if the
two-year minimum holding period had been satisfied. The Optionee represents that
the Optionee understands that in the event all of the requirements of Rule 144
are not satisfied, registration under the Securities Act or compliance with an
exemption from registration will be required; and that, notwithstanding the fact
that Rule 144 is not exclusive, the Staff of the Securities and Exchange
Commission has expressed its opinion that persons proposing to sell private
placement securities other than in a registered offering and otherwise than
pursuant to Rule 144 will have a substantial burden of proof in establishing
that an exemption from registration is available for such offers or sales, and
that such persons and their respective brokers who participate in such
transactions do so at their own risk.

               (f)   Without in any way limiting the Optionee's representations
and warranties set forth above, the Optionee further agrees that the Optionee
will in no event make any disposition of all or any portion of the shares which
the Optionee may acquire under the Option unless:

                     (1)   There is then in effect a Registration Statement
under the Securities Act covering such proposed disposition and such disposition
is made in accordance with said Registration Statement; or

                     (2)   the Optionee will have notified the Company of the
proposed disposition and furnished the Company with a detailed statement of the
circumstances surrounding the proposed disposition, and either:

                           (i)   The Optionee will have furnished the Company
with

                                       14

<PAGE>

an opinion of the Optionee's own counsel to the effect that such disposition
will not require registration of such shares under the Securities Act, and such
opinion of the Optionee's counsel will have been concurred in by counsel for the
Company and the Company will have advised the Optionee of such concurrence; or

                       (ii) The disposition is made in compliance with Rule 144
or Rule 701 under the Securities Act after the Optionee has furnished the
Company such detailed statement and after the Company has had a reasonable
opportunity to discuss the matter with the Optionee.

            (g) The Optionee has (i) a preexisting personal or business
relationship with the Company or any of its officers, directors, or controlling
persons, consisting of personal or business contacts of a nature and duration to
enable the Optionee to be aware of the character, business acumen and general
business and financial circumstances of the person with whom such relationship
exists, or (ii) such knowledge and experience in financial and business matters
as to make the Optionee capable of evaluating the merits and risks of an
investment in the shares and to protect the Optionee's own interests in the
transaction, or (iii) both such relationship and such knowledge and experience.

            (h) The Optionee understands that the shares have not been qualified
under the Corporate Securities Law of 1968, as amended, of the State of
California by reason of a specific exemption therefrom, which exemption depends
upon, among other things, the bona fide nature of the Optionee's representations
as expressed herein. The Optionee understands that the Company is relying on the
Optionee's representations and warrants that the Company is entitled to rely on
such representations and that such reliance is reasonable.

     17.    Legends.  The Company may at any time place legends referencing the
Right of First Refusal set forth in paragraph 12 above, and any applicable
foreign, federal or state securities law restrictions on all certificates
representing shares of stock subject to the provisions of this Option Agreement.
The Optionee shall, at the request of the Company, promptly present to the
Company any and all certificates representing shares acquired pursuant to the
Option in the possession of the Optionee in order to effectuate the provisions
of this paragraph 17. Unless otherwise specified by the Company, legends placed
on such certificates may include, but shall not be limited to, the following:

            (a)   "THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN
ACCORDANCE WITH RULE 144 OR RULE 701 UNDER THE ACT, OR THE COMPANY RECEIVES AN
OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO
THE COMPANY, STATING THAT SUCH SALE, TRANSFER,

                                       15

<PAGE>

ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF SUCH ACT."

             (b)   Any legend required to be placed thereon by the Commissioner
of Corporations of the State of California.

             (c)   "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
A RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF THE CORPORATION OR ITS ASSIGNEE SET
FORTH IN AN AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED HOLDER, OR SUCH
HOLDER'S PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL
OFFICE OF THIS CORPORATION."

             (d)   "THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY
THE CORPORATION TO THE REGISTERED HOLDER UPON EXERCISE OF AN INCENTIVE STOCK
OPTION AS DEFINED IN SECTION 422 OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED ("ISO"). IN ORDER TO OBTAIN THE PREFERENTIAL TAX TREATMENT AFFORDED TO
ISOs, THE SHARES SHOULD NOT BE TRANSFERRED PRIOR TO _______. SHOULD THE
REGISTERED HOLDER ELECT TO TRANSFER ANY OF THE SHARES PRIOR TO THIS DATE AND
FOREGO ISO TAX TREATMENT, THE TRANSFER AGENT FOR THE SHARES SHALL NOTIFY THE
CORPORATION IMMEDIATELY. THE REGISTERED HOLDER SHALL HOLD ALL SHARES PURCHASED
UNDER THE INCENTIVE STOCK OPTION IN THE REGISTERED HOLDER'S NAME (AND NOT IN THE
NAME OF ANY NOMINEE) PRIOR TO THIS DATE OR UNTIL TRANSFERRED AS DESCRIBED
ABOVE."

       18.   Initial Public Offering. The Optionee hereby agrees that in the
event of an initial public offering of stock made by the Company pursuant to an
effective registration statement filed under the Securities Act, the Optionee
shall not offer, sell, contract to sell, pledge, hypothecate, grant any option
to purchase or make any short sale of, or otherwise dispose of any shares of
stock of the Company or any rights to acquire stock of the Company for such
period of time from and after the effective date of such registration statement
as may be established by the underwriter for such initial public offering;
provided, however, that such period of time shall not exceed one hundred eighty
(180) days from the effective date of the registration statement to be filed in
connection with such initial public offering. The foregoing limitation shall not
apply to shares registered in the initial public offering under the Securities
Act. The Optionee shall be subject to this paragraph provided and only if the
officers and directors of the Company are also subject to similar arrangements.

       19.   Binding Effect. This Option Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns.

       20.   Termination or Amendment. The Board, including any duly appointed

                                       16

<PAGE>

committee of the Board, may terminate or amend the Plan and/or the Option at any
time; provided, however, that no such termination or amendment may adversely
affect the Option or any unexercised portion hereof without the consent of the
Optionee unless such amendment is required to enable the Option to qualify as an
Incentive Stock Option.

       21.   Integrated Agreement. This Option Agreement constitutes the entire
understanding and agreement of the Optionee and the Participating Company Group
with respect to the subject matter contained herein, and there are no
agreements, understandings, restrictions, representations, or warranties among
the Optionee and the Company other than those as set forth or provided for
herein. To the extent contemplated herein, the provisions of this Option
Agreement shall survive any exercise of the Option and shall remain in full
force and effect.

       22.   Applicable Law. This Option 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.

                                      ACCREDITED HOME LENDERS, INC.

                                      By:

                                      Title:

       The Optionee represents that the Optionee is familiar with the terms and
provisions of this Option Agreement, including the Right of First Refusal set
forth in paragraph 12, and hereby accepts the Option subject to all of the terms
and provisions thereof. The Optionee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Board upon any
questions arising under this Option Agreement. The undersigned acknowledges
receipt of a copy of the Plan.

Date: __________________              __________________________________________

                                       17

<PAGE>

                                   EXHIBIT B

THE SECURITY REPRESENTED BY THIS CERTIFICATE HAS BEEN ACQUIRED FOR INVESTMENT
AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF.
NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

                          ACCREDITED HOME LENDERS, INC.

                       NONSTATUTORY STOCK OPTION AGREEMENT

                    [For use in an Exempt Issuer Transaction
                             under Section 25102(f)
                      of the California Corporations Code]

         Accredited Home Lenders, Inc. granted to the individual named below an
option to purchase certain shares of common stock of the Company, in the manner
and subject to the provisions of this Option Agreement.

         1. Definitions:

            (a) "Optionee" shall mean  _________________________.

            (b) "Date of Option Grant" shall mean ______________________.

            (c) "Number of Option Shares" shall mean _____________________
shares of common stock of the Company as adjusted from time to time pursuant to
paragraph 9 below.

            (d) "Exercise Price" shall mean $_________ per share as adjusted
from time to time pursuant to paragraph 9 below.

            (e) "Initial Exercise Date" shall be the Initial Vesting Date.

            (f) "Initial Vesting Date" shall be the date occurring one (1) year
after (check one):

            ________ the Date of Option Grant.

            ________ ________________________ (specify other date).

<PAGE>

            (g) Determination of "Vested Ratio":

                                                                   Vested Ratio

                Prior to Initial Vesting Date                             0

                On Initial Vesting Date,                                1/4
                provided the Optionee is
                continuously employed by
                a Participating Company from
                the Date of Option Grant until
                the Initial Vesting Date

                Plus

                For each full month                                    1/48
                of the Optionee's
                continuous employment by a
                Participating Company from the
                Initial Vesting Date

                In no event shall the Vested Ratio exceed 1/1.

            (h) "Option Term Date" shall mean the date ten (10) years after the
Date of Option Grant.

            (i) "Code" shall mean the Internal Revenue Code of 1986, as amended.

            (j) "Company" shall mean Accredited Home Lenders, Inc., a California
corporation, and any successor corporation thereto.

            (k) "Participating Company" shall mean (i) the Company and (ii) any
present or future parent and/or subsidiary corporation of the Company while such
corporation is a parent or subsidiary of the Company. For purposes of this
Option Agreement, a parent corporation and a subsidiary corporation shall be as
defined in Sections 424(e) and 424(f) of the Code.

            (l) "Participating Company Group" shall mean at any point in time
all corporations collectively which are then a Participating Company.

            (m) "Plan" shall mean the Accredited Home Lenders, Inc. 1995
Executive Stock Option Plan.

         2. Status of the Option. This Option is intended to be a nonstatutory
stock option and shall not be treated as an incentive stock option as described
in Section 422(b) of the Code.

                                        2

<PAGE>

         3. Administration. All questions of interpretation concerning this
Option Agreement shall be determined by the Board of Directors of the Company
(the "Board") and/or by a duly appointed committee of the Board having such
powers as shall be specified by the Board. Any subsequent references herein to
the Board shall also mean the committee if such committee has been appointed
and, unless the powers of the committee have been specifically limited, the
committee shall have all of the powers of the Board granted in the Plan,
including, without limitation, the power to terminate or amend the Plan at any
time, subject to the terms of the Plan and any applicable limitations imposed by
law. All determinations by the Board shall be final and binding upon all persons
having an interest in the Option. Any officer of a Participating 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.

         4. Exercise of the Option.

            (a) Right to Exercise. Except as provided in paragraph 4(f) below,
the Option shall first become exercisable on the Initial Exercise Date. The
Option shall be exercisable on and after the Initial Exercise Date and prior to
the termination of the Option in the amount equal to the Number of Option Shares
multiplied by the Vested Ratio as set forth in paragraph 1(g) above less the
number of shares previously acquired upon exercise of the Option, subject to the
Optionee's agreement that any shares purchased upon exercise are subject to the
Company's repurchase rights set forth in paragraph 12 below. In no event shall
the Option be exercisable for more shares than the Number of Option Shares. In
addition to the foregoing, in the event that the adoption of the Plan or any
amendment of the Plan is subject to the approval of the Company's shareholders
in order for the Option to comply with the requirements of Rule 16b-3,
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), the Option shall not be exercisable prior to such shareholder approval if
the Optionee is subject to Section 16(b) of the Exchange Act, unless the Board,
in its sole discretion, approves the exercise of the Option prior to such
shareholder approval.

            (b) Method of Exercise. The Option may be exercised by written
notice to the Company which must state the election to exercise the Option, the
number of shares for which the Option is being exercised and such other
representations and agreements as to the Optionee's investment intent with
respect to such shares and other administrative matters as may be required
pursuant to the provisions of this Option Agreement and the exercise form used
by the Company. The written notice must be signed by the Optionee and must be
delivered in person or by certified or registered mail, return receipt
requested, to the Chief Financial Officer of the Company, or other authorized
representative of the Participating Company Group, prior to the termination of
the Option as set forth in paragraph 6 below, accompanied by (i) full payment of
the exercise price for the number of shares being purchased and (ii) an executed
copy, if required herein, of the then current forms of escrow and security
agreement referenced

                                        3

<PAGE>

below.

            (c) Payment of Exercise Price.

                (i)   Forms of Payment Authorized. Payment of the exercise price
for the number of shares for which the Option is being exercised shall be made
(i) in cash, by check, or cash equivalent, (ii) by tender to the Company of
shares of the Company's common stock owned by the Optionee having a value not
less than the exercise price, which either have been owned by the Optionee for
more than six (6) months or were not acquired, directly or indirectly, from the
Company, (iii) if expressly authorized by the Company, in its sole discretion,
at the time of Option exercise, by the Optionee's recourse promissory note in a
form approved by the Company; (iv) by Immediate Sales Proceeds, as defined
below, or (v) by any combination of the foregoing.

                (ii)  Tender of Company Stock. Notwithstanding the foregoing,
the Option may not be exercised by tender to the Company of shares of the
Company's common stock to the extent such tender of stock would constitute a
violation of the provisions of any law, regulation and/or agreement restricting
the redemption of the Company's common stock.

                (iii) Promissory Note. Unless otherwise specified by the Board
at the time the Option is granted, a promissory note permitted in accordance
with clause (c)(1)(iii) above shall not exceed the amount permitted by law to be
paid by a promissory note and shall be a full recourse note in a form
satisfactory to the Company, with principal payable four (4) years after the
date the Option is exercised. Interest on the principal balance of the
promissory note shall be payable in annual installments at the minimum interest
rate necessary to avoid imputed interest pursuant to all applicable sections of
the Code. Such recourse promissory note shall be secured by the shares of stock
acquired pursuant to the then current form of security agreement as approved by
the Company. In the event the Company at any time is subject to the regulations
promulgated by the Board of Governors of the Federal Reserve System or any other
governmental entity affecting the extension of credit in connection with the
Company's securities, any promissory note shall comply with such applicable
regulations, and the Optionee shall pay the unpaid principal and accrued
interest, if any, to the extent necessary to comply with such applicable
regulations. Except as the Company in its sole discretion shall determine, the
Optionee shall pay the unpaid principal balance of the promissory note and any
accrued interest thereon upon termination of the Optionee's employment with the
Participating Company Group for any reason, with or without cause.

                (iv)  Immediate Sales Proceeds. "Immediate Sales Proceeds" shall
mean the assignment in form acceptable to the Company of the proceeds of a sale
of some or all of the shares acquired upon the exercise of the Option pursuant
to a program and/or procedure approved by the Company (including, without
limitation, through an exercise complying with the provisions of Regulation T as
promulgated

                                        4

<PAGE>

from time to time by the Board of Governors of the Federal Reserve System). The
Company reserves, at any and all times, the right, in the Company's sole and
absolute discretion, to decline to approve any such program and/or procedure.

            (d) Tax Withholding. At the time the Option is exercised, in whole
or in part, or at any time thereafter as requested by the Company, the Optionee
hereby authorizes payroll withholding and otherwise agrees to make adequate
provision for foreign, federal and state tax withholding obligations of the
Company, if any, which arise in connection with the Option, including, without
limitation, obligations arising upon (i) the exercise, in whole or in part, of
the Option, (ii) the transfer, in whole or in part, of any shares acquired on
exercise of the Option, (iii) the operation of any law or regulation providing
for the imputation of interest, or (iv) the lapsing of any restriction with
respect to any shares acquired on exercise of the Option. The Optionee is
cautioned that the Option is not exercisable unless the Company's withholding
obligations are satisfied. Accordingly, the Optionee may not be able to exercise
the Option when desired even though the Option is vested and the Company shall
have no obligation to issue a certificate for such shares until such time as the
Company's withholding obligations are satisfied.

            (e) Certificate Registration. The certificate or certificates for
the shares as to which the Option shall be exercised shall be registered in the
name of the Optionee, or, if applicable, the heirs of the Optionee.

            (f) Restrictions on Grant of the Option and Issuance of Shares. The
grant of the Option and the issuance of the shares upon exercise of the Option
shall be subject to compliance with all applicable requirements of federal,
state or foreign law with respect to such securities. The Option may not be
exercised if the issuance of shares upon such exercise would constitute a
violation of any applicable federal, state or foreign securities laws or other
law or regulations. In addition, no Option may be exercised unless (i) a
registration statement under the Securities Act of 1933, as amended (the
"Securities Act") shall at the time of exercise of the Option be in effect with
respect to the shares issuable upon exercise of the Option or (ii) in the
opinion of legal counsel to the Company, the shares issuable upon exercise of
the Option may be issued in accordance with the terms of an applicable exemption
from the registration requirements of the Securities Act. THE OPTIONEE IS
CAUTIONED THAT THE OPTION MAY NOT BE EXERCISABLE UNLESS THE FOREGOING CONDITIONS
ARE SATISFIED. ACCORDINGLY, THE OPTIONEE MAY NOT BE ABLE TO EXERCISE THE OPTION
WHEN DESIRED EVEN THOUGH THE OPTION IS VESTED. Questions concerning this
restriction should be directed to the Chief Financial Officer of the Company. As
a condition to the exercise of the Option, the Company may require the Optionee
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.

            (g) Fractional Shares. The Company shall not be required to issue

                                        5

<PAGE>

fractional shares upon the exercise of the Option.

         5. Non-Transferability of the Option. The Option may be exercised
during the lifetime of the Optionee only by the Optionee and may not be assigned
or transferred in any manner except by will or by the laws of descent and
distribution. Following the death of the Optionee, the Option, to the extent
unexercised and exercisable by the Optionee on the date of death, may be
exercised by the Optionee's legal representative or by any person empowered to
do so under the deceased Optionee's will or under the then applicable laws of
descent and distribution.

         6. Termination of the Option. The Option shall terminate and may no
longer be exercised on the first to occur of (a) the Option Term Date as defined
above, (b) the last date for exercising the Option following termination of
employment as described in paragraph 7 below, or (c) upon a Transfer of Control
as provided in paragraph 8 below.

         7. Termination of Employment.

            (a) Termination of the Option. If the Optionee ceases to be an
employee of the Participating Company Group for any reason, except death or
disability within the meaning of Section 422(c) of the Code, the Option, to the
extent unexercised and exercisable by the Optionee on the date on which the
Optionee ceased to be an employee, may be exercised by the Optionee within three
(3) months after the date on which the Optionee's employment terminated, but in
any event no later than the Option Term Date. If the Optionee ceases to be an
employee of the Participating Company Group because of the death or disability
of the Optionee within the meaning of Section 422(c) of the Code, the Option, to
the extent unexercised and exercisable by the Optionee on the date on which the
Optionee ceased to be an employee, may be exercised by the Optionee (or the
Optionee's legal representative) at any time prior to the expiration of twelve
(12) months from the date on which the Optionee's employment terminated, but in
any event no later than the Option Term Date. The Optionee's employment shall be
deemed to have terminated on account of death (solely for the purposes of
extending the termination date of the Option as provided in this section and for
no other reason whatsoever including, without limitation, for the purpose of
extending or accelerating any vesting calculation) if the Optionee dies within
three (3) months after the Optionee's termination of employment. Except as
provided in this paragraph 7(a), the Option shall terminate and may not be
exercised after the Optionee ceases to be an employee of the Participating
Company Group.

            (b) Employee and Termination of Employment Defined. For purposes of
this paragraph 7, the term "employee" shall mean any person, including officers
and directors, employed by a Participating Company or performing services for a
Participating Company as a director, consultant, advisor or other independent
contractor who performs a minimum of twenty-five (25) hours per week of work or
other services on behalf of a Participating Company. For purposes of this
paragraph 7, the Optionee's employment shall be deemed to have terminated if the
Optionee ceases to be employed by a Participating Company for a minimum of
twenty-five (25) hours

                                       6

<PAGE>

per week (whether upon an actual termination of employment or upon the
Optionee's employer ceasing to be a Participating Company). The Optionee's
employment shall not be deemed to have terminated merely because of a change in
the capacity in which the Optionee serves as an employee, provided that there is
no interruption or termination of the Optionee's service as an employee.

            (c) Extension if Exercise Prevented by Law. Notwithstanding the
foregoing, if the exercise of the Option within the applicable time periods set
forth above is prevented by the provisions of paragraph 4(f) above, the Option
shall remain exercisable until three (3) months after the date the Optionee is
notified by the Company that the Option is exercisable, but in any event no
later than the Option Term Date.

            (d) Extension if Optionee Subject to Section 16(b). Notwithstanding
the foregoing, if the exercise of the Option within the applicable time periods
set forth above would subject the Optionee to suit under Section 16(b) of the
Exchange Act, the Option shall remain exercisable until the earliest to occur of
(i) the tenth (10th) day following the date on which the Optionee would no
longer be subject to such suit, (ii) the one hundred and ninetieth (190th) day
after the Optionee's termination of employment, or (iii) the Option Term Date.

            (e) Leave of Absence. For purposes hereof, the Optionee's employment
with the Participating Company Group shall not be deemed to terminate if the
Optionee takes any military leave, sick leave, or other bona fide leave of
absence approved by the Company of ninety (90) days or less. In the event of a
leave in excess of ninety (90) days, the Optionee's employment shall be deemed
to terminate on the ninety-first (91st) day of the leave unless the Optionee's
right to reemployment with the Participating Company Group remains guaranteed by
statute or contract. Notwithstanding the foregoing, however, a leave of absence
shall be treated as employment for purposes of determining the Optionee's Vested
Ratio if and only if the leave of absence is designated by the Company as (or
required by law to be) a leave for which vesting credit is given.

         8. Ownership Change and Transfer of Control. An "Ownership Change"
shall be deemed to have occurred in the event any of the following occurs with
respect to the Company:

            (a) the direct or indirect sale or exchange by the shareholders of
the Company of all or substantially all of the stock of the Company;

            (b) a merger or consolidation in which the Company is a party;

            (c) the sale, exchange, or transfer of all or substantially all of
the assets of the Company (other than a sale, exchange, or transfer to one or
more subsidiary corporations of the Company); or

                                        7

<PAGE>

             (d) a liquidation or dissolution of the Company.

             A "Transfer of Control" shall mean an Ownership Change described in
(a) or (b) above in which the shareholders of the Company before such Ownership
Change do not retain, directly or indirectly, at least a majority of the
beneficial interest in the voting stock of the Company after such transaction or
any Ownership Change described in (c) or (d) above.

             In the event of a Transfer of Control, any unexercisable and/or
unvested portion of the Option shall be immediately exercisable and fully vested
as of the date thirty (30) days prior to the Transfer of Control. The exercise
and/or vesting of any portion of the Option that was permissible solely by
reason of this paragraph 8 shall be conditioned upon the consummation of the
Transfer of Control. The Option shall terminate and cease to be outstanding
effective as of the date of the Transfer of Control to the extent that the
Option is not exercised as of the date of the Transfer of Control.

         9.  Death or Disability. If the Optionee ceases to be an employee of
the Participating Company Group due to the death or disability (within the
meaning of Section 422(c) of the Code) of the Optionee, fifty percent (50%) of
the portion of this Option which is unvested at such time shall become fully
vested as of the date the Optionee ceased to be an employee of the Participating
Company Group due to the Optionee's death or disability as defined in this
Section 9 and the Vested Ratio shall be adjusted accordingly.

         10. Effect of Change in Stock Subject to the Option. Appropriate
adjustments shall be made in the number, exercise price and class of shares of
stock subject to the Option in the event of a stock dividend, stock split,
reverse stock split, recapitalization, combination, reclassification, or like
change in the capital structure of the Company. In the event a majority of the
shares which are of the same class as the shares that are subject to the Option
are exchanged for, converted into, or otherwise become (whether or not pursuant
to an Ownership Change) shares of another corporation (the "New Shares"), the
Company may unilaterally amend the Option to provide that the Option is
exercisable for New Shares. In the event of any such amendment, the number of
shares and the exercise price shall be adjusted in a fair and equitable manner.

         11. Rights as a Shareholder or Employee. The Optionee shall have no
rights as a shareholder with respect to any shares covered by the Option until
the date of the issuance of a certificate or certificates for the shares for
which the Option has been exercised. No adjustment shall be made for dividends
or distributions or other rights for which the record date is prior to the date
such certificate or certificates are issued, except as provided in paragraph 10
above. Nothing in the Option shall confer upon the Optionee any right to
continue in the employ of a Participating Company or interfere in any way with
any right of the Participating Company Group to terminate the Optionee's
employment at any time.

                                        8

<PAGE>

         12. Right of First Refusal.

             (a) Right of First Refusal. In the event the Optionee proposes to
sell, pledge, or otherwise transfer any shares acquired upon the exercise of the
Option (the "Transfer Shares") to any person or entity, including, without
limitation, any shareholder of the Participating Company Group, the Company
shall have the right to repurchase the Transfer Shares under the terms and
subject to the conditions set forth in this paragraph 12 (the "Right of First
Refusal").

             (b) Notice of Proposed Transfer. Prior to any proposed transfer of
the Transfer Shares, the Optionee shall give a written notice (the "Transfer
Notice") to the Company describing fully the proposed transfer, including the
number of Transfer Shares, the name and address of the proposed transferee (the
"Proposed Transferee") and, if the transfer is voluntary, the proposed transfer
price and containing such information necessary to show the bona fide nature of
the proposed transfer. In the event of a bona fide gift or involuntary transfer,
the proposed transfer price shall be deemed to be the fair market value of the
Transfer Shares as determined by the Company in good faith. In the event the
Optionee proposes to transfer any Transfer Shares to more than one (1) Proposed
Transferee, the Optionee shall provide a separate Transfer Notice for the
proposed transfer to each Proposed Transferee. The Transfer Notice shall be
signed by both the Optionee and the Proposed Transferee and must constitute a
binding commitment of the Optionee and the Proposed Transferee for the transfer
of the Transfer Shares to the Proposed Transferee subject only to the Right of
First Refusal.

             (c) Bona Fide Transfer. In the event that the Company shall
determine that the information provided by the Optionee in the Transfer Notice
is insufficient to establish the bona fide nature of a proposed voluntary
transfer, the Company shall give the Optionee written notice of the Optionee's
failure to comply with the procedure described in this paragraph 12 and the
Optionee shall have no right to transfer the Transfer Shares without first
complying with the procedure described in this paragraph 12. The Optionee shall
not be permitted to transfer the Transfer Shares if the proposed transfer is not
bona fide.

             (d) Exercise of Right of First Refusal. In the event the proposed
transfer is deemed to be bona fide, the Company shall have the right to purchase
all, but not less than all, of the Transfer Shares (except as the Company and
the Optionee otherwise agree) at the purchase price and on the terms set forth
in the Transfer Notice by delivery to the Optionee of a notice of exercise of
the Right of First Refusal within thirty (30) days after the date the Transfer
Notice is delivered to the Company. The Company's exercise or failure to
exercise the Right of First Refusal with respect to any proposed transfer
described in a Transfer Notice shall not affect the Company's right to exercise
the Right of First Refusal with respect to any proposed transfer described in
any other Transfer Notice, whether or not such other Transfer Notice is issued
by the Optionee or issued by a person other than the Optionee with respect to a
proposed transfer to the same Proposed Transferee.

                                        9

<PAGE>

     If the Company exercises the Right of First Refusal, the Company and the
Optionee shall thereupon consummate the sale of the Transfer Shares to the
Company on the terms set forth in the Transfer Notice within sixty (60) days
after the date the Transfer Notice is delivered to the Company (unless a longer
period is offered by the Proposed Transferee); provided, however, that in the
event the Transfer Notice provides for the payment for the Transfer Shares other
than in cash, the Company shall have the option of paying for the Transfer
Shares by the present value cash equivalent of the consideration described in
the Transfer Notice as reasonably determined by the Company. For purposes of the
foregoing, cancellation of any indebtedness of the Optionee to any Participating
Company shall be treated as payment to the Optionee in cash to the extent of the
unpaid principal and any accrued interest canceled.

         (e) Failure to Exercise Right of First Refusal. If the Company fails to
exercise the Right of First Refusal in full within the period specified in
paragraph 12(d) above, the Optionee may conclude a transfer to the Proposed
Transferee of the Transfer Shares on the terms and conditions described in the
Transfer Notice, provided such transfer occurs not later than one hundred twenty
(120) days following delivery to the Company of the Transfer Notice. The Company
shall have the right to demand further assurances from the Optionee and the
Proposed Transferee (in a form satisfactory to the Company) that the transfer of
the Transfer Shares was actually carried out on the terms and conditions
described in the Transfer Notice. No Transfer Shares shall be transferred on the
books of the Company until the Company has received such assurances, if so
demanded, and has approved the proposed transfer as bona fide. Any proposed
transfer on terms and conditions different from those described in the Transfer
Notice, as well as any subsequent proposed transfer by the Optionee, shall again
be subject to the Right of First Refusal and shall require compliance by the
Optionee with the procedure described in this paragraph 12.

         (f) Transferees of Transfer Shares. All transferees of the Transfer
Shares or any interest therein, other than the Company, shall be required as a
condition of such transfer to agree in writing (in a form satisfactory to the
Company) that such transferee shall receive and hold such Transfer Shares or
interests subject to the provisions of this paragraph 12 providing for the Right
of First Refusal with respect to any subsequent transfer. Any sale or transfer
of any shares acquired upon exercise of the Option shall be void unless the
provisions of this paragraph 12 are met.

         (g) Transfers Not Subject to Right of First Refusal. The Right of First
Refusal shall not apply to any transfer or exchange of the shares acquired
pursuant to the exercise of the Option if such transfer is in connection with an
Ownership Change. If the consideration received pursuant to such transfer or
exchange consists of stock of a Participating Company, such consideration shall
remain subject to the Right of First Refusal unless the provisions of paragraph
12(i) below result in a termination of the Right of First Refusal.

         (h) Assignment of Right of First Refusal. The Company shall have the

                                       10

<PAGE>

right to assign the Right of First Refusal at any time, whether or not the
Optionee has attempted a transfer, to one (1) or more persons as may be selected
by the Company.

             (i) Early Termination of Right of First Refusal. The other
provisions of this paragraph 12 notwithstanding, the Right of First Refusal
shall terminate, and be of no further force and effect, upon (i) the occurrence
of a Transfer of Control or (ii) the existence of a public market for the class
of shares subject to the Right of First Refusal. A "public market" shall be
deemed to exist if (x) such stock is listed on a national securities exchange
(as that term is used in the Exchange Act) or (y) such stock is traded on the
over-the-counter market and prices therefor are published daily on business days
in a recognized financial journal.

         13. Escrow.

             (a) Establishment of Escrow. To ensure that shares subject to the
Right of First Refusal and/or security for any promissory note will be available
for repurchase, the Company may require the Optionee to deposit the certificate
or certificates evidencing the shares which the Optionee purchases upon exercise
of the Option with an agent designated by the Company under the terms and
conditions of escrow and security agreements approved by the Company. If the
Company does not require such deposit as a condition of exercise of the Option,
the Company reserves the right at any time to require the Optionee to so deposit
the certificate or certificates in escrow. The Company shall bear the expenses
of the escrow.

             (b) Delivery of Shares to Optionee. As soon as practicable after
the expiration of the Right of First Refusal, and after full repayment on any
promissory note secured by the shares in escrow, but not more frequently than
twice each calendar year, the agent shall deliver to the Optionee the shares no
longer subject to such restriction and no longer security for any promissory
note.

             (c) Notices and Payments. In the event the shares held in escrow
are subject to the Company's exercise of the Right of First Refusal, the notices
required to be given to the Optionee shall be given to the escrow agent and any
payment required to be given to the Optionee shall be given to the escrow agent.
Within thirty (30) days after payment by the Company, the escrow agent shall
deliver the shares which the Company has purchased to the Company and shall
deliver the payment received from the Company to the Optionee.

         14. Stock Dividends Subject to Option Agreement. If, from time to time,
there is any stock dividend, stock split, or other change in the character or
amount of any of the outstanding stock of the corporation the stock of which is
subject to the provisions of this Option Agreement, then in such event any and
all new, substituted or additional securities to which the Optionee is entitled
by reason of the Optionee's ownership of the shares acquired upon exercise of
the Option shall be immediately subject to the Right of First Refusal and/or any
security interest held by the Company with the same force and effect as the
shares subject to the Right of First Refusal and such security interest

                                       11

<PAGE>

immediately before such event.

         15. Representations and Warranties. In connection with the grant of the
Option and purchase of shares under the Option, the Optionee hereby agrees,
represents and warrants as follows:

             (a) The Optionee will purchase the shares solely for the Optionee's
own account for investment and not with a view to, or for resale in connection
with any distribution thereof within the meaning of the Securities Act. The
Optionee further represents that the Optionee does not have any present
intention of selling, offering to sell or otherwise disposing of or distributing
the shares or any portion thereof; and that the entire legal and beneficial
interest in any shares the Optionee may acquire under the Option will be
purchased for, and will be held for the account of, the Optionee only and
neither in whole nor in part for any other person.

             (b) The Optionee is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the shares. The Optionee
further represents and warrants that the Optionee has discussed the Company and
its plans, operations and financial condition with its officers, has received
all such information as the Optionee deems necessary and appropriate to enable
the Optionee to evaluate the financial risk inherent in making an investment in
the shares and has received satisfactory and complete information concerning the
business and financial condition of the Company in response to all inquiries in
respect thereof.

             (c) The Optionee realizes that a purchase of shares under the
Option will be a highly speculative investment and that the Optionee is able,
without impairing his or her financial condition, to hold the shares for an
indefinite period of time and to suffer a complete loss on the Optionee's
investment.

             (d) The Company has disclosed to the Optionee that:

                 (i)  The resale of the shares acquired under the Option has not
been registered under the Securities Act, and any shares acquired must be held
indefinitely unless a transfer of such shares is subsequently registered under
the Securities Act or an exemption from such registration is available, and that
the Company is under no obligation to register the shares;

                 (ii) The Optionee understands that the certificate or
certificates evidencing any shares acquired under the Option will be imprinted
with legends which prohibit the transfer of the shares unless they are
registered or such registration is not required in the opinion of legal counsel
satisfactory to the Company. The Optionee does not have any contract,
undertaking, agreement, or arrangement with any person to sell, transfer, or
grant participations to such person or to any third person with respect to any
of the shares.

                                       12

<PAGE>

             (e) The Optionee is aware of the provisions of Rule 144,
promulgated under the Securities Act, which, in substance, permit limited public
resale of "restricted securities" acquired, directly or indirectly, from the
issuer thereof (or an affiliate of such issuer), in a nonpublic offering subject
to the satisfaction of certain conditions, including among other things: the
resale occurring not less than two years from the date the Optionee has
purchased and paid for the shares; the availability of certain public
information concerning the Company; the sale being through a broker in an
unsolicited "broker's transaction" or in a transaction directly with a market
maker (as said term is defined under the Exchange Act); and that any sale of the
shares may be made by him or her only in limited amounts during any three-month
period not exceeding specified limitations. The Optionee further represents that
the Optionee understands that at the time the Optionee wishes to sell the shares
there may be no public market upon which to make such a sale, and that, even if
such a public market then exists, the Company may not be satisfying the current
public information requirements of Rule 144, and that, in such event, the
Optionee would be precluded from selling the shares under Rule 144 even if the
two-year minimum holding period had been satisfied. The Optionee represents that
the Optionee understands that in the event all of the requirements of Rule 144
are not satisfied, registration under the Securities Act or compliance with an
exemption from registration will be required; and that, notwithstanding the fact
that Rule 144 is not exclusive, the Staff of the Securities and Exchange
Commission has expressed its opinion that persons proposing to sell private
placement securities other than in a registered offering and otherwise than
pursuant to Rule 144 will have a substantial burden of proof in establishing
that an exemption from registration is available for such offers or sales, and
that such persons and their respective brokers who participate in such
transactions do so at their own risk.

             (f) Without in any way limiting the Optionee's representations and
warranties set forth above, the Optionee further agrees that the Optionee will
in no event make any disposition of all or any portion of the shares which the
Optionee may acquire under the Option unless:

                 (i)  There is then in effect a Registration Statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with said Registration Statement; or

                 (ii) the Optionee will have notified the Company of the
proposed disposition and furnished the Company with a detailed statement of the
circumstances surrounding the proposed disposition, and either:

                      (1) The Optionee will have furnished the Company with an
opinion of the Optionee's own counsel to the effect that such disposition will
not require registration of such shares under the Securities Act, and such
opinion of the Optionee's counsel will have been concurred in by counsel for the
Company and the Company will have advised the Optionee of such concurrence; or

                      (2) The disposition is made in compliance with Rule 144

                                       13

<PAGE>

or Rule 701 under the Securities Act after the Optionee has furnished the
Company such detailed statement and after the Company has had a reasonable
opportunity to discuss the matter with the Optionee.

             (g) The Optionee has (i) a preexisting personal or business
relationship with the Company or any of its officers, directors, or controlling
persons, consisting of personal or business contacts of a nature and duration to
enable the Optionee to be aware of the character, business acumen and general
business and financial circumstances of the person with whom such relationship
exists, or (ii) such knowledge and experience in financial and business matters
as to make the Optionee capable of evaluating the merits and risks of an
investment in the shares and to protect the Optionee's own interests in the
transaction, or (iii) both such relationship and such knowledge and experience.

             (h) The Optionee understands that the shares have not been
qualified under the Corporate Securities Law of 1968, as amended, of the State
of California by reason of a specific exemption therefrom, which exemption
depends upon, among other things, the bona fide nature of the Optionee's
representations as expressed herein. The Optionee understands that the Company
is relying on the Optionee's representations and warrants that the Company is
entitled to rely on such representations and that such reliance is reasonable.

         16. Legends. The Company may at any time place legends referencing the
Right of First Refusal set forth in paragraph 12 above, and any applicable
foreign, federal or state securities law restrictions on all certificates
representing shares of stock subject to the provisions of this Option Agreement.
The Optionee shall, at the request of the Company, promptly present to the
Company any and all certificates representing shares acquired pursuant to the
Option in the possession of the Optionee in order to effectuate the provisions
of this paragraph 16. Unless otherwise specified by the Company, legends placed
on such certificates may include, but shall not be limited to, the following:

             (a) "THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN
ACCORDANCE WITH RULE 144 OR RULE 701 UNDER THE ACT, OR THE COMPANY RECEIVES AN
OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO
THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT."

             (b) Any legend required to be placed thereon by the Commissioner of
Corporations of the State of California.

                                       14

<PAGE>

             (c) "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF THE CORPORATION OR ITS ASSIGNEE SET
FORTH IN AN AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED HOLDER, OR SUCH
HOLDER'S PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL
OFFICE OF THIS CORPORATION."

         17. Initial Public Offering. The Optionee hereby agrees that in the
event of an initial public offering of stock made by the Company pursuant to an
effective registration statement filed under the Securities Act, the Optionee
shall not offer, sell, contract to sell, pledge, hypothecate, grant any option
to purchase or make any short sale of, or otherwise dispose of any shares of
stock of the Company or any rights to acquire stock of the Company for such
period of time from and after the effective date of such registration statement
as may be established by the underwriter for such initial public offering;
provided, however, that such period of time shall not exceed one hundred eighty
(180) days from the effective date of the registration statement to be filed in
connection with such initial public offering. The foregoing limitation shall not
apply to shares registered in the initial public offering under the Securities
Act. The Optionee shall be subject to this paragraph provided and only if the
officers and directors of the Company are also subject to similar arrangements.

         18. Binding Effect. This Option Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns.

         19. Termination or Amendment. The Board, including any duly appointed
committee of the Board, may terminate or amend the Plan and/or the Option at any
time; provided, however, that no such termination or amendment may adversely
affect the Option or any unexercised portion hereof without the consent of the
Optionee.

         20. Integrated Agreement. This Option Agreement constitutes the entire
understanding and agreement of the Optionee and the Participating Company Group
with respect to the subject matter contained herein, and there are no
agreements, understandings, restrictions, representations, or warranties among
the Optionee and the Company other than those as set forth or provided for
herein. To the extent contemplated herein, the provisions of this Option
Agreement shall survive any exercise of the Option and shall remain in full
force and effect.

                                       15

<PAGE>

         21. Applicable Law. This Option 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.

                                               ACCREDITED HOME LENDERS, INC.

                                               By:

                                               Title:

         The Optionee represents that the Optionee is familiar with the terms
and provisions of this Option Agreement, including the Right of First Refusal
set forth in paragraph 12, and hereby accepts the Option subject to all of the
terms and provisions thereof. The Optionee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Board upon any
questions arising under this Option Agreement. The undersigned acknowledges
receipt of a copy of the Plan.

Date: _____________________________________       ______________________________

                                                       _________________________

                                                         _______________________

                                       16

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