Omnibus Amend. #1 to Note Purchase Agmt. and Amend. #2 to Loan Purchase Agmt.



 EXHIBIT 10.31 
  
 Execution Copy 
  
 OMNIBUS AMENDMENT NO. 1 
  
 This Omnibus Amendment No. 1 (the “Amendment”), dated as of January 18, 2005, among ENCORE SPV I, a Delaware statutory trust, ENCORE
CREDIT CORP., a California corporation, BRAVO CREDIT CORPORATION, a California corporation, ECC CAPITAL CORPORATION, a Maryland corporation, DEUTSCHE BANK NATIONAL TRUST COMPANY, as custodian and disbursement agent, and solely with respect to the
Custodial Agreement and UBS REAL ESTATE SECURITIES INC., a Delaware corporation, amends the following agreements (the “Amended Agreements”): 
  

(A) COMMITTED NOTE PURCHASE AND SECURITY AGREEMENT, dated as of August 1, 2002, among Encore SPV I, (the “Note Issuer”), UBS Real
Estate Securities Inc. (“UBS”, f/k/a UBS Warburg Real Estate Securities Inc.), as purchaser of Notes issued thereunder from time to time (UBS, in that capacity, and each other entity that from time to time may be a Purchaser as
provided therein, each a “Purchaser”), each Person that from time to time holds any of the Notes issued thereunder (each a “Noteholder”) and UBS Real Estate Securities Inc., as agent for the Purchasers and the
Noteholders (in that capacity, the “Agent”), as amended and restated in the AMENDED AND RESTATED COMMITTED NOTE PURCHASE AND SECURITY AGREEMENT, dated as of December 3, 2004, among the Note Issuer, the Agent, and each Purchaser and
Noteholder thereunder (as amended and restated, the “Note Purchase Agreement”); 
  
 (B) LOAN PURCHASE AGREEMENT, dated as of August 1, 2002, between the Note Issuer and Encore Credit Corp., as previously amended (as amended, the
“Loan Purchase Agreement”); 
  
 (C) CUSTODIAL
AGREEMENT, dated as of August 1, 2002, by and among Encore Credit Corp., the Note Issuer, Deutsche Bank National Trust Company, as custodian (in such capacity, the “Custodian”), Deutsche Bank National Trust Company, as disbursement
agent for the Agent pursuant to the Custodial Agreement (in such capacity, the “Disbursement Agent”), and the Agent (the “Custodial Agreement”); 
  
 (D) PRICING SIDE LETTER, dated as of December 3, 2004, between the Note Issuer, Encore Credit Corp., each party to the Note
Purchase Agreement as a purchaser or a noteholder from time to time and the Agent (the “Pricing Side Letter”). 
  
 This Amendment shall constitute Amendment No. 1 to the Note Purchase Agreement, Amendment No. 2 to the Loan Purchase Agreement, Amendment No. 1 to the
Custodial Agreement and Amendment No. 1 to the Pricing Side Letter. 
  










	A.	Amendments to the Note Purchase Agreement 

  

	1.	Bravo Credit Corporation, a California corporation, and ECC Capital Corporation, a Maryland corporation, are hereby added as parties to the Note Purchase Agreement and to this
Amendment as additional sellers (together with Encore Credit Corp., jointly and severally, the “Sellers”). All references in the Agreement to “the Seller” in the singular shall be to the Sellers in the plural or to
“the related Seller,” as appropriate. 

  

	2.	The defined term “Seller” in the Note Purchase Agreement is hereby amended to read as follows: 

  
 “Seller” shall mean each of Encore Credit,
Bravo Credit Corporation and ECC Capital Corporation, individually, and ‘Sellers’ shall mean Encore Credit, Bravo Credit Corporation and ECC Capital Corporation, collectively.” 
  

	3.	Section 9 (r)(i) is hereby amended to read as follows: 

  
 “(i) in the case of Steve Holder, failure to be the largest single equity owner of Encore Credit as well as Encore Credit’s
Chairman of the Board, and in the case of Shahid Asghar, failure to be Encore Credit’s President,;” 
  

	4.	Section 9 (r)(v) is hereby amended to read as follows: 

  
 “(v) such Individual fails to be actively engaged in the management of Encore Credit for six consecutive weeks, or the occurrence of
a condition or event which clearly results in his inability to be so actively engaged for a prolonged period, as determined by the Agent; or” 
  

	B.	Amendments to the Loan Purchase Agreement 

  

	1.	Bravo Credit Corporation, a California corporation, and ECC Capital Corporation, a Maryland corporation, are hereby added as parties to the Loan Purchase Agreement and to this
Amendment as additional sellers (together with Encore Credit Corp., jointly and severally, the “Sellers”). All references in the Loan Purchase Agreement to “the Seller” in the singular shall be to the Sellers in the plural
or to “the related Seller,” as appropriate. 

  

	2.	Section 2.01(a) of the Loan Purchase Agreement is hereby deleted and replaced in its entirety with the following: 

  
 “(a) On the Effective Date and on any Note Purchase
Date thereafter until and including the Termination Date, each Seller will sell and does hereby sell, and the Purchaser will purchase and does hereby purchase, the Eligible Mortgage Loans owned by such Seller, whether now existing or hereafter
arising, without recourse (except as provided in Sections 3.02 and 4.01(a) hereof). After each such sale, ownership in the Eligible Mortgage Loans will be vested in the Purchaser. In connection with such sale, to the extent that the fair market
value of the Eligible Mortgage Loans sold hereby by each Seller exceeds the cash consideration received by such Seller in connection therewith, then simultaneously with such sale to the Purchaser by such Seller of such Eligible Mortgage Loans, the
Purchaser shall be deemed to have made a new issuance of equity to such Seller in the amount of such excess and such Seller shall be deemed to 

  

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have made a similar dividend of such equity interest in the Purchaser to Encore Credit Corp.” 
  

	3.	Section 3.01(a)(xii) of the Loan Purchase Agreement is hereby deleted and replaced in its entirety with the following: 

  
 “(xiii) Tangible Net Worth. As of January 18,
2005, the combined Tangible Net Worth of the Sellers shall not be less than $20,000,000. As used in this Agreement, the “Tangible Net Worth” of the Sellers is the positive excess, if any, of (i) all amounts which would be included
under capital on the balance sheets of the Sellers at such date under GAAP, but disregarding (a) assets booked as “organizational expenses” or as “goodwill”, (b) notes due from Affiliates and (c) other intangible assets,
over (ii) liabilities;” 
  

	4.	The last sentence of Section 4.01(a) of the Agreement is hereby deleted and replaced in its entirety with the following: 

  
 “The aggregate amount of this recourse for the Sellers
on a combined basis shall not exceed 10% of the greater of (i) the total principal amount of Notes then outstanding under the Note Purchase Agreement and (ii) the Commitment Amount.” 
  

	5.	Sections 4.01(h), 4.01(i), 4.01(j) and 4.01(k) of the Agreement are hereby deleted and replaced in their entirety with the following: 

  
 “(h) Limitation on Guarantees. The Sellers shall
not create, incur, assume or suffer to exist any Guarantees by them of obligations of others, in excess of $100,000 in the aggregate. 
  
 (i) Maintenance of Tangible Net Worth. The Sellers shall not permit their combined consolidated Tangible Net Worth to be less than
the sum of (a) $20,000,000 plus (b) an amount equal to 50% of their consolidated aggregate or positive Net Income (without deduction for quarterly losses) since December 31, 2003 plus (c) 80% of all capital contributed to the Sellers since December
31, 2003, whether in the form of equity or subordinated debt having substantial equity features. 
  
 (j) Maintenance of Liquidity. The Sellers shall not permit their combined unencumbered cash and Cash Equivalents to be less than
$2,000,000. 
  
 (k) Maintenance of
Profitability. Each Seller shall not permit Net Income to be less than $1.00, for any period of three (3) consecutive months (each such period, a “Test Period”), before income taxes for such Test Period and distributions made during
such Test Period.” 
  

	6.	Section 4.01(n) of the Loan Purchase Agreement is hereby deleted and replaced in its entirety with the following: 

  
 “(n) Pair-Off Fee. The Sellers agree to convey
to the Purchaser a sufficient volume of Mortgage Loans such that the Purchaser will not be obligated to 

  

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pay any make-whole fee described in Section 4.04(b) of the Note Purchase Agreement. The Sellers further agree to indemnify, jointly and severally, and hold
the Purchaser harmless against any such make-whole fee assessed against the Purchaser pursuant to such Section 4.04(b) of the Note Purchase Agreement (the “Pair-Off Fee”).” 
  

	7.	Section 4.01(u) of the Loan Purchase Agreement is hereby deleted and replaced in its entirety with the following: 

  
 “(u) Indemnification. The Sellers, jointly and
severally, hereby agree to indemnify, defend and hold the Purchaser, the Agent, the Note Purchasers, the Noteholders, the Servicer, the Custodian and their respective Affiliates and each of their respective officers, directors, employees, agents,
trustees and advisors (each, an “Indemnified Party”) harmless from and against any and all loss, liability, damage, judgment, claim, deficiency, or expense (including interest, penalties, reasonable attorneys’ fees and amounts
paid in settlement) payable to a Person that is not a party to any of the Transaction Documents, or payable by a party to a Transaction Document to another party to a Transaction Document, if any of them may become subject thereto, insofar as such
loss, liability, damage, judgment, claim, deficiency, or expense arises out of or is based upon a breach by any Seller of its representations contained in Section 3.01 or its covenants contained in Section 4.01, or any information set forth in this
Loan Purchase Agreement or in any schedule delivered by any Seller hereunder or thereunder, being untrue in any material respect at any time or relating to or arising out of this Loan Purchase Agreement or any other Transaction Document that results
from anything other than any Indemnified Party’s gross negligence or willful misconduct. The Sellers may offer to assume the defense of any action brought against any Indemnified Party, provided that the counsel proposed to handle the defense
be satisfactory to such Indemnified Party in its sole reasonable discretion. If the Indemnified Party agrees to such an arrangement, then the Sellers shall not be liable for any separate counsel for such Indemnified Party. In no event will an
Indemnified Party be liable for a settlement effected without its prior consent. The obligations of the Sellers under this Section 4.01(u) shall be considered to have been relied upon by the Purchaser, the Agent, the Note Purchasers, the
Noteholders, the Servicer, and the Custodian and shall survive the execution, delivery, and performance of this Loan Purchase Agreement regardless of any investigation made by the Purchaser, the Agent, any Note Purchaser, any Noteholder, the
Custodian or on their behalf of any of them. THE INDEMNIFICATION OBLIGATIONS OF EACH SELLER PURSUANT TO THE PRECEDING PROVISIONS OF THIS PARAGRAPH SHALL APPLY REGARDLESS OF ANY NEGLIGENCE OR OTHER FAULT ON THE PART OF THE PURCHASER, THE AGENT, ANY
NOTE PURCHASER, ANY NOTEHOLDER, THE SERVICER, THE CUSTODIAN OR ANY OF THEIR RESPECTIVE OFFICERS, EMPLOYEES, TRUSTEES OR AGENTS EXCEPT AS EXPRESSLY STATED IN THIS PARAGRAPH. 
  
 The Sellers, jointly and severally, also agree to reimburse an Indemnified Party as and when billed by such
Indemnified Party for all such Indemnified Party’s reasonable costs and expenses incurred in connection with the enforcement or the preservation of such Indemnified Party’s rights (including third-party beneficiary rights 

  

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of the Agent, the Note Purchasers and the Noteholders) under this Loan Purchase Agreement, including without limitation the reasonable fees and disbursements
of one counsel for the Note Purchasers and the Noteholders as a group.” 
  

	8.	All references to “UBS Warburg Real Estate Securities Inc.” in the Loan Purchase Agreement shall be to “UBS Real Estate Securities Inc.”


  

	C.	Amendments to the Custodial Agreement 

  

	1.	Bravo Credit Corporation, a California corporation, and ECC Capital Corporation, a Maryland corporation, are hereby added as parties to the Custodial Agreement and to this Amendment
as additional sellers (together with Encore Credit Corp., jointly and severally, the “Sellers”). All references in the Custodial Agreement to “the Seller” in the singular shall be to the Sellers in the plural or to
“the related Seller,” as appropriate. 

  

	2.	All references to “UBS Warburg Real Estate Securities Inc.” in the Custodial Agreement shall be to “UBS Real Estate Securities Inc.” 

  

	D.	Amendment to the Pricing Side Letter 

  

	1.	Section 2 of the Pricing Side Letter is hereby deleted and replaced in its entirety with the following: 

  
 “Section 2 – Uncommitted Amount 
  
 Subject to the terms and conditions set forth herein and in the NPA, the parties agree that for the period beginning the
date hereof inclusive and ending on July 30, 2005 inclusive (the “Uncommitted Period”), if the making of any Note Purchase under the NPA would result in the aggregate principal amount of Notes outstanding to exceed $750,000,000,
then the maximum amount of such Note Purchase will be reduced such that aggregate principal amount of Notes outstanding will not exceed $750,000,000. The parties acknowledge that the $750,000,000 figure reflects an additional $250,000,000 which may
be advanced to the Note Issuer as an uncommitted amount during the Uncommitted Period, in the sole and absolute discretion of the Agent.” 
  

	E.	General Provisions 

  

	1.	Governing Law. This Amendment, in all respects, shall be governed by, and construed in accordance with, the laws of the State of New York, including all matters of
construction, validity and performance, without regard to principles of conflicts of law. 

  

	2.	Counterparts. This Amendment may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such
counterparts together shall constitute but one and the same instrument. 

  

	3.	 Merger and Integration. Upon execution of this Amendment by the parties to the Agreement, this Amendment shall be incorporated into and merged together with
the Agreement. Except as provided herein, all provisions, terms and conditions of the 



  

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Agreement shall remain in full force and effect and the Agreement as hereby amended is further ratified and reconfirmed in all respects.



  

	4.	Capitalized Terms. Capitalized terms used herein and not defined herein have their respective meanings as set forth in the Amended Agreements. 

  
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 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered as of
the date specified above. 
  

			
	 NOTE ISSUER

	
	ENCORE SPV I
		
	 By:
	 	 Encore Credit Corp., as Administrator

	 	 	 
	 By:
	 	 /s/    W.E. MOFFATT

	 	 	 Name: William E. Moffatt

	 	 	 Title: Treasurer

	 
	
	 Countersigned:

		
	 By:
	 	 /s/    CHRIS
DIANGELO

	Chris DiAngelo, not in his individual capacity, but solely as Special Manager
	
	 Address for Notices:

	
	 Encore SPV I
 c/o Encore Credit Corp.
 1833 Alton Parkway
 Irvine, California 92606
 Attention: John Kontoulis
          Alanna Darling
 Telecopier No:
(949) 856-8799
 Telephone No: (949) 856-8399

	
	 With a copy to:

	
	 Dewey Ballantine LLP
 1301 Avenue of the
Americas
 New York, New York 10019
 Attention: Chris
DiAngelo
 Telecopy No.: (212) 259-6719
 Telephone No.: (212)
259-6718



  
 [Signature page
to Omnibus Amendment No.1] 
  










			
	 SELLERS

	
	ENCORE CREDIT CORP.
		
	 By:
	 	 /s/    WILLIAM E. MOFFATT

	 	 	 Name: William E. Moffatt

	 	 	 Title: Treasurer

	
	 Address for Notices:

	 1833 Alton Parkway
 Irvine, California 92606
 Attention: Bill Moffatt
 Telecopier No: (949) 717-3076
 Telephone No: (949) 856-8300

	
	BRAVO CREDIT CORPORATION
		
	 By:
	 	 /s/    JOHN KONTOULIS

	 	 	 Name: John Kontoulis

	 	 	 Title: EVP

	
	 Address for Notices:

	 1833 Alton Parkway
 Irvine, California 92606
 Attention: Bill Moffatt
 Telecopier No: (949) 717-3076
 Telephone No: (949) 856-8300

	
	ECC CAPITAL CORPORATION
		
	 By:
	 	 /s/    WILLIAM E. MOFFATT

	 	 	 Name: William E. Moffatt

	 	 	 Title: Treasurer

	
	 Address for Notices:

	 1833 Alton Parkway
 Irvine, California 92606
 Attention: Bill Moffatt
 Telecopier No: (949) 717-3076
 Telephone No: (949) 856-8300



  
 [Signature page
to Omnibus Amendment No.1] 
  










					
	
	DEUTSCHE BANK NATIONAL TRUST COMPANY, as Custodian
		
	 By:
	 	 /s/    ANDREW HAYS

	 	 	 Name: Andrew Hays

	 	 	 Title: Associate

	
	 Address for Notices:

	
	 1761 East St. Andrew Place
 Santa Ana, California 92705
 Attention: Mortgage Custody-EN020C
 Telecopier No.: 714-247-6035
 Telephone No: 714-247-6000

	
	 DEUTSCHE BANK NATIONAL TRUST COMPANY,
 as Disbursement Agent

		
	 By:
	 	 /s/    CHRISTOPHER
CORCORAN

	 	 	 Name: Christopher Corcoran

	 	 	 Title: Assistant Vice President

	
	 Address for Notices:

	
	 1761 East St. Andrew Place
 Santa Ana, California 92705
 Attention: Mortgage Custody-EN020C
 Telecopier No.: 714-247-6085
 Telephone No: 714-247-6000



  
 [Signature page
to Omnibus Amendment No.1] 
  










					
	 AGENT

	
	UBS REAL ESTATE SECURITIES INC.
		
	 By:
	 	 /s/    ROBERT
CARPENTER

	 	 	 Name: Robert Carpenter

	 	 	 Title: Director

		
	 By:
	 	 /s/    GEORGE A.
MANGIARACINA

	 	 	 Name: George A. Mangiaracina

	 	 	 Title: Managing Director

	
	 Address for Notices:

	
	 1285 Avenue of the Americas
 New York, New York 10019
 Attention: Robert Carpenter
          George A. Mangiaracina
 Telecopier No: (212)
713-9597
 Telephone No: (212) 713-2000

	
	 PURCHASER

	
	UBS REAL ESTATE SECURITIES INC.
		
	 By:
	 	 /s/    ROBERT
CARPENTER

	 	 	 Name: Robert Carpenter

	 	 	 Title: Director

		
	 By:
	 	 /s/    GEORGE A.
MANGIARACINA

	 	 	 Name: George A. Mangiaracina

	 	 	 Title: Managing Director



  

					
	 Address for Notices:

	
	 1285 Avenue of the Americas
 New York, New York 10019
 Attention: Robert Carpenter
          George A. Mangiaracina
 Telecopier No: (212)
713-9597
 Telephone No: (212) 713-2000



  
 [Signature page
to Omnibus Amendment No.1] 
  










			
	 GUARANTORS

	
	Acknowledged and accepted by each of the undersigned as guarantor under the respective Personal Guaranty dated as of August 15, 2002, by the undersigned for the benefit of the
Agent.
		
	By:	 	/s/    STEVE HOLDER
	 	 	 Name: Steve Holder

		
	By:	 	 /s/    SHAHID ASGHAR

	 	 	 Name: Shahid Asghar

		
	By:	 	 /s/    MARIA
YI-SCHROEDER

	 	 	 Name: Maria Yi-Schroeder


  
 [Signature page to
Omnibus Amendment No.1]