Stock Pledge Agreement

STOCK PLEDGE AGREEMENT


THIS STOCK PLEDGE AGREEMENT (this "Agreement") is made and entered into as of August 1, 2001, by and between Joseph J. Lydon ("Pledgor") and Accredited Home Lenders Inc., a California corporation ("Secured Party").


RECITALS


A. Concurrently with the execution and delivery of this Agreement, Pledgor has executed and delivered to Secured Promissory Note of even date herewith in the original principal amount of One Million Two Hundred Fifty Thousand and 00/100 Dollars ($1,250,000.00) (the "Note") in connection with the purchase by Pledgor of Common Stock of Secured Party through the exercise by Pledgor of options held by Pledgor to acquire such Common Stock.


B. Secured Party and Pledgor desire to secure performance of Pledgor's obligations and indebtedness under the Note.


AGREEMENT


1. Grant of Security Interest. Pledgor confirms, pledges and grants to Secured Party a security interest in all of its right, title, and interest in the property described in Paragraph 2 below (collectively and severally, the "Collateral"), to secure performance of the obligations described in Paragraph 3 below.


2. Collateral. The Collateral consists of the following:


(a) One million (1,000,000) shares of the Common Stock of Secured
Party, together with all new, substituted and additional securities issued
at any time during the term hereof with respect to those shares
(collectively and severally, the "Pledged Shares");


(b) All now existing and hereafter arising rights of the holder of
Pledged Shares with respect thereto, without limitation, all rights to cash
and non-cash dividends on account of the Pledged Shares; and


(c) All proceeds of the sale, collection, exchange or other
disposition of the Pledged Shares (including without limitation, by way of
distribution upon dissolution or merger of Secured Party), whether such
disposition is voluntary or involuntary.


3. Obligations. The obligations (the "Obligations") secured by this Agreement shall consist of any and all obligations and indebtedness of Pledgor under the Note and under this Agreement.


4. Administration of the Pledged Shares. The following provisions shall govern the administration of the Pledged Shares:


(a) Concurrently with the execution of this Agreement, Pledgor has
delivered to Secured Party the certificates representing the Pledged
Shares, together with a Stock Assignment Separate From Certificate, in the
form attached hereto as Exhibit A, signed by Pledgor, and such


items shall be held during the term of this Agreement by Secured Party and shall only be used by Secured Party upon the occurrence of an Event of Default (defined below). Any and all certificates representing the Pledged Shares shall be delivered to Secured Party bearing the following legend:


"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE PROVISIONS OF A STOCK PLEDGE AGREEMENT DATED AUGUST 1,
2001 BETWEEN THE REGISTERED HOLDER AND THE ISSUER, A COPY
OF WHICH MAY BE OBTAINED BY REQUEST FROM THE ISSUER."


(b) Until there shall have occurred an Event of Default, Pledgor s ...