Document:

Form of Stock Purchase Agreement

 Exhibit 10.48 
  
 FORM OF 
 STOCK PURCHASE AGREEMENT 
  
 THIS STOCK
PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of February , 2005, by and among ECC CAPITAL CORPORATION, a Maryland corporation (the “Company”), ENCORE CREDIT CORP., a California corporation
(“Encore Credit”) and FRIEDMAN, BILLINGS, RAMSEY GROUP, INC., a Virginia corporation (the “Investor”). 
  
 RECITALS 
  
 WHEREAS, the Company desires to issue and sell to the Investor, and the Investor desires to purchase from the Company, in a private transaction
that is exempt from registration under Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Regulation D and the rules and regulations promulgated under the Securities Act (the “Securities Act
Regulations”), shares of common stock on the terms and conditions set forth in this Agreement (the “Private Transaction”); 
  
 WHEREAS, the Company has delivered to the Investor certain information about the Company and its business and about the Private Transaction; and

  
 WHEREAS, concurrently with the Private Transaction, the
Company intends to make an initial public offering (the “Public Offering”) of 42,500,000 shares of its common stock (the “Public Offering Shares”) pursuant to a registration statement filed with the Securities and
Exchange Commission (the “Commission”) on Form S-11 (No. 333-118253) and a related prospectus for the registration of the common stock under the Securities Act and the Securities Act Regulations. 
  
 AGREEMENT 
  
 NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 
  
 ARTICLE 1 
  
 DEFINITIONS 
  
 The following defined terms used herein and not otherwise defined shall have the meaning set forth below: 
  
 “Agreement” shall have the meaning set forth in the preamble. 
  
 “Closing” shall have the meaning set forth in Article 3. 
  
 “Closing Time” shall have the meaning set forth in Article
3. 
  
 “Code” shall have the meaning set forth in
Section 4.1(kk). 
  

 “Commission” shall have the meaning set forth in the recitals. 
  
 “Common Stock” shall mean the common stock, $0.001 par
value, of the Company to be issued to the public in connection with the Public Offering and to be issued to the Investor pursuant to the terms hereof. 
  
 “Covered Entities” shall have the meaning set forth in Section 4.1(l). 
  
 “ECC Merger Sub” means ECC Merger Sub, a California corporation, a wholly-owned subsidiary of the Company
created for the interim purpose of effecting the Reorganization. 
  
 “Encore Credit” means Encore Credit Corp., a California corporation. 
  
 “Environmental Law” shall have the meaning set forth in Section 4.1(qq). 
  
 “ERISA” shall have the meaning set forth in Section 4.1(kk). 
  
 “Exchange Act” shall have the meaning set forth in Section 4.1(f). 
  
 “Exchange Act Regulations” shall have the meaning set forth
in Section 4.1(f). 
  
 “Hazardous Materials”
shall have the meaning set forth in Section 4.1(qq). 
  
 “Intangibles” shall have the meaning set forth in Section 4.1(aa). 
  
 “Investment Company Act” shall have the meaning set forth in Section 4.1(ww). 
  
 “Investor” shall have the meaning set forth in the preamble. 
  
 “Investor Indemnitees” shall have the meaning set forth in Section 8.14. 
  
 “Licenses and Permits” shall have the meaning set forth in
Section 4.1(g). 
  
 “Material Adverse Change”
shall have the meaning set forth in Section 4.1(b). 
  
 “Material Adverse Effect” shall have the meaning set forth in Section 4.1(b). 
  
 “Merger” means the merger occurring as part of the Reorganization (as defined below) whereby ECC Merger Sub will merge with and into
Encore Credit, with Encore Credit as the surviving entity, as set forth in the Prospectus. 
  
 “Merger Agreement” means the Agreement of Merger effecting the Merger, dated as of August 9, 2004, by and among the Encore Credit, ECC Merger Sub and the Company. 
  
 “NYSE” shall have the meaning set forth in Section 4.1(f).

  
 “Private Transaction” shall have the meaning
set forth in the recitals. 
  
 “Properties” shall
have the meaning set forth in Section (pp). 
  

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 “Prospectus” means the final prospectus, as first filed with the Commission pursuant to
paragraph (1) or (4) of Rule 424(b) of the Securities Act Regulations, and any amendments thereof or supplements thereto. 
  
 “Public Offering” shall have the meaning set forth in the recitals. 
  
 “Public Offering Shares” shall have the meaning set forth in the recitals. 
  
 “Registration Rights Agreement” shall have the meaning set
forth in Section 6.1(e). 
  
 “Registration
Statement” means the registration statement filed with the Commission on Form S-11 (No. 333-118253) in connection with the Public Offering, Pre-Effective Amendment No. 1 to such registration statement filed by the Company with the
Commission on October 29, 2004, Pre-Effective Amendment No. 2 to such registration statement filed by the Company with the Commission on December 17, 2004, Pre-Effective Amendment No. 3 to such registration statement filed by the Company with the
Commission on January 20, 2005, Pre-Effective Amendment No. 4 to such registration statement filed by the Company with the Commission on February 9, 2005 and as further amended at the time it became effective, including all information deemed to be
part of the registration statement at the time it became effective pursuant to Rule 430A of the Securities Act regulations. Any registration statement filed pursuant to Rule 462(b) of the Securities Act Regulations is hereinafter called the
“Rule 462(b) Registration Statement,” and after such filing the term “Registration Statement” shall include the 462(b) Registration Statement. 
  
 “REIT” shall have the meaning set forth in Section 4.1(yy). 
  
 “Reorganization” means the concurrent corporate
reorganization by Encore Credit and the Company whereby the Company will become the parent company of Encore Credit. 
  
 “Representative” shall mean Friedman, Billings, Ramsey & Co., Inc. 
  
 “Restricted Stock” shall mean, collectively, the Shares and shares of Common Stock to Milestone Advisors
LLC, pursuant to a Subscription Agreement dated February , 2005 by and among the Company, Encore Credit and Milestone. 
  
 “Securities Act” shall have the meaning set forth in the recitals. 
  
 “Securities Act Regulations” shall have the meaning set forth in the recitals. 
  
 “Selling Stockholders” shall have the meaning set forth in
the Underwriting Agreement. 
  
 “Shares” shall
have the meaning set forth in Article 2. 
  
 “State
Acts” shall have the meaning set forth in Section 7.2(a). 
  
 “Subsidiary” shall have the meaning set forth in Section 4.1(a). 
  
 “Subsidiaries” shall have the meaning set forth in Section 4.1(a). 
  
 “Transfer” shall have the meaning set forth in Section 7.2(a). 
  
 “Underwriting Agreement” means the Underwriting Agreement entered into in connection with the Public
Offering, dated as of February , 2005, by and among the Company, Encore Credit, the Selling Stockholders (as defined therein) and Friedman, Billings, Ramsey & Co., Inc., as representative (the “Representative”) to the several
Underwriters (as defined therein). 
  

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 ARTICLE 2 

 
 AGREEMENT TO PURCHASE AND SELL STOCK 
  
 Upon the basis of the warranties and representations and subject to the other
terms and conditions set forth herein, the Company agrees to sell to the Investor at the Closing Time, and the Investor agrees to purchase from the Company at the Closing Time,            
shares of the Company’s common stock (the “Shares”), at a price per share of $            , which is equal to the public offering price in the Public Offering less the
underwriting discount of % as set forth in Section 1(a) of the Underwriting Agreement. 
  
 ARTICLE 3 
  
 PAYMENT
AND DELIVERY; CLOSING 
  
 The purchase and sale of the
Shares shall take place at the offices of Clifford Chance US LLP, 31 West 52nd Street, New York, New York 10019, on
February , 2005 (the “Closing”). At the Closing, the Company shall deliver to the Investor a certificate representing the Shares and the Investor shall deliver the purchase price set forth in Article 2 hereof by wire transfer of
Federal (same-day) funds to the account specified to the Investor by the Company upon at least forty-eight hours’ prior notice. The time at which such payment and delivery are actually made is hereinafter sometimes called the “Closing
Time.” 
  
 ARTICLE 4 
  
 REPRESENTATIONS AND WARRANTIES 
 OF THE COMPANY AND ENCORE CREDIT 
  
 4.1. The Company and Encore Credit jointly and severally, represent and warrant to the Investor as of the date hereof and as of the Closing Time:

  
 (a) the Company has an authorized capitalization as set forth
in the Prospectus; the outstanding shares of capital stock of the Company and each significant subsidiary of the Company within the meaning of Rule 405 under the Act and Rule 1-02(w) of Regulation S-X (each such subsidiary, including Encore Credit
and Bravo Credit Corporation upon consummation of the Merger, a “Subsidiary” and collectively, the “Subsidiaries”) have been duly and validly authorized and issued and are fully paid and non-assessable, and all of the outstanding
shares of capital stock of the Subsidiaries are directly or indirectly owned of record and beneficially by the Company; except as disclosed in the Prospectus, there are no outstanding (A) securities or obligations of the Company or any of the
Subsidiaries convertible into or exchangeable for any capital stock of the Company or any such Subsidiary, (B) warrants, rights or options to subscribe for or purchase from the Company or any such Subsidiary any such capital stock or any such
convertible or exchangeable securities or obligations, or (C) obligations of the Company or any such Subsidiary to issue any securities or obligations, any such convertible or exchangeable securities or obligation, or any such warrants, rights or
options; each of the Company and the Subsidiaries (all of which are named in Exhibit 21.1 to the Registration Statement) has been duly incorporated and is validly existing as a corporation in good standing under the laws of its respective
jurisdiction of incorporation with full corporate power and authority to own its respective properties and to conduct its respective businesses as described in the Registration Statement and Prospectus and, in the case of the Company and Encore
Credit, to execute and deliver this Agreement and to consummate the transactions contemplated herein; 
  
 (b) the Company and the Subsidiaries are duly qualified or licensed and are in good standing in each jurisdiction in which they conduct their respective
businesses or in which they own or lease real 

  

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property or otherwise maintain an office and in which the failure, individually or in the aggregate, to be so qualified or licensed could reasonably be
expected to have, individually or in the aggregate, a material adverse effect on the assets, business, operations, earnings, properties or condition (financial or otherwise), present or prospective, of the Company and the Subsidiaries taken as a
whole, (any such effect or change, where the context so requires, is hereinafter called a “Material Adverse Effect” or “Material Adverse Change”); except as disclosed in the Prospectus and as set forth in Exhibits to the
Registration Statement, no Subsidiary is prohibited or restricted, directly or indirectly, from paying dividends to the Company, or from making any other distribution with respect to such Subsidiary’s capital stock or from repaying to the
Company or any other Subsidiary any amounts which may from time to time become due under any loans or advances to such Subsidiary from the Company or such other Subsidiary, or from transferring any such Subsidiary’s property or assets to the
Company or to any other Subsidiary; other than as disclosed in the Prospectus, the Company does not own, directly or indirectly, any capital stock or other equity securities of any other corporation or any ownership interest in any partnership,
joint venture or other association; 
  
 (c) neither the Company
nor any Subsidiary is (A) in breach or violation of or in default under (nor has any event occurred which with notice, lapse of time, or both would constitute a breach of, or default under) (i) its respective organizational documents, or (ii) in the
performance or observance of any obligation, agreement, covenant or condition contained in any license, indenture, mortgage, deed of trust, loan or credit agreement or other agreement or instrument to which the Company or any Subsidiary is a party
or by which any of them or their respective properties is bound, (B) in violation of any statute, law, rule, regulation, judgment, order or decree of any court, regulatory body, administrative agency, governmental, arbitrator or other authority
having jurisdiction over the Company or such Subsidiary or any of its properties, as applicable, including those relating to transactions with affiliates, except, in the case of clauses (A)(ii) or (B) above, for such breaches, defaults, or
violations could not have a Material Adverse Effect; 
  
 (d) the
execution, delivery and performance of this Agreement and the Registration Rights Agreement, the issuance and sale of the Shares and consummation of the transactions contemplated herein and therein will not (A) conflict with, or result in any breach
of, or constitute a default under (nor constitute any event which with notice, lapse of time, or both would constitute a breach of, or default under), (i) any provision of the organizational documents of the Company or any Subsidiary, or (ii) any
provision of any license, indenture, mortgage, deed of trust, loan or credit agreement or other agreement or instrument to which the Company or any Subsidiary is a party or by which any of them or their respective properties may be bound or
affected, or under any federal, state, local or foreign law, regulation or rule or any decree, judgment or order applicable to the Company or any Subsidiary, except in the case of this clause (ii) for such breaches or defaults which could not have a
Material Adverse Effect; or (B) result in the creation or imposition of any lien, charge, claim or encumbrance upon any property or asset of the Company or any Subsidiary; 
  
 (e) this Agreement and the Registration Rights Agreement have been duly authorized, executed and delivered by the Company
and Encore Credit, as the case may be, and each is a legal, valid and binding agreement of the Company and Encore Credit, as the case may be, enforceable in accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ rights generally, and by general equitable principles, and except to the extent that the indemnification provisions of Section 8.14 hereof may be limited by federal or state
securities laws and public policy considerations in respect thereof, except for such liens, charges, claims or encumbrances which individually or in the aggregate, could not have a Material Adverse Effect; 
  
 (f) no approval, authorization, consent or order of or filing with any
federal, state or local governmental or regulatory commission, board, body, authority or agency is required in connection with 

  

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the Company or Encore Credit’s execution, delivery and performance of, as applicable, this Agreement, the Registration Rights Agreement, the Company and
Encore Credit’s consummation of the transactions contemplated herein and therein, and the Company’s sale and delivery of the Shares, other than (A) such as have been obtained, or will have been obtained at the Closing Time under the
Securities Act and the Securities Exchange Act of 1934 (the “Exchange Act”) and the rules and regulations promulgated thereunder (the “Exchange Act Regulations”), (B) such approvals as have been obtained in connection with
the approval of the listing of the Shares on the New York Stock Exchange (the “NYSE”) and (C) any necessary qualification under the securities or blue sky laws of the various jurisdictions in which the Shares are being offered; 

 
 (g) except as disclosed in the Prospectus, each of the Company and the
Subsidiaries has all necessary licenses, authorizations, consents and approvals required under any federal, state or local law, regulation or rule (“Licenses and Permits”) and has made all necessary filings required under any
federal, state or local law, regulation or rule, and has obtained all necessary authorizations, consents and approvals from other persons, required in order to conduct their respective businesses as described in the Prospectus, except to the extent
that any failure to have any such licenses, authorizations, consents or approvals, to make any such filings or to obtain any such authorizations, consents or approvals could not have a Material Adverse Effect, neither the Company nor any of the
Subsidiaries is required by any applicable law to obtain accreditation or certification from any governmental agency or authority in order to provide the products and services which it currently provides or which it proposes to provide as set forth
in the Prospectus; except for the Licenses and Permits set forth on Schedule , neither the Company nor any of the Subsidiaries is in violation of, in default under, or has received any notice regarding a possible violation, default or revocation of
any such License or Permit or any federal, state, local or foreign law, regulation or rule or any decree, order or judgment applicable to the Company or any of the Subsidiaries the effect of which could result in a Material Adverse Change; and no
such license, authorization, consent or approval contains a materially burdensome restriction that is not adequately disclosed in the Registration Statement and the Prospectus; 
  
 (h) each of the Registration Statement and any Rule 462(b) Registration Statement has become effective under the Securities
Act, no stop order suspending the effectiveness of the Registration Statement or any Rule 462(b) Registration Statement has been issued under the Securities Act, no proceedings for that purpose have been instituted or are pending or, to the
knowledge of the Company or any Subsidiary, are threatened by the Commission, and the Company has complied to the Commission’s satisfaction with any request on the part of the Commission for additional information; 
  
 (i) the Preliminary Prospectus and the Registration Statement comply, and the
Prospectus and any further amendments or supplements thereto will, when they have become effective or are filed with the Commission, as the case may be, comply, in all material respects with the requirements of the Securities Act and the Securities
Act Regulations; the Registration Statement did not, and any amendment thereto will not, in each case as of the applicable effective date, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and the Preliminary Prospectus does not, and the Prospectus or any amendment or supplement thereto will not, as of the
applicable filing date and at the Closing Time contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that the Company and Encore Credit make no warranty or representation with respect to any statement contained in the Registration Statement or the Prospectus in reliance upon and in
conformity with the information concerning the Underwriters (as defined in the Underwriting Agreement) and furnished in writing by or on behalf of such Underwriters through the Representative to the Company expressly for use in the Registration
Statement or the Prospectus (that information being limited to that 

  

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described in the penultimate sentence of the first paragraph of Section 9(d) of the Underwriting Agreement); 
  
 (j) the Preliminary Prospectus was and the Prospectus delivered to the
Investors will be identical to the respective versions of the Preliminary Prospectus and Prospectus created to be transmitted to the Commission for filing via the Electronic Data Gathering Analysis and Retrieval System, except to the extent
permitted by Regulation S-T of the Securities Act; 
  
 (k) except
as set forth in the Registration Statement and Prospectus, there are no actions, suits, proceedings, inquiries or investigations pending or, to the knowledge of the Company or any Subsidiary, threatened against the Company or any Subsidiary or any
of their respective officers and directors or to which the properties, assets or rights of any such entity are, or will be upon completion of the Reorganization, subject, at law or in equity, before or by any federal, state, local or foreign
governmental or regulatory commission, board, body, authority, arbitral panel or agency which could result in a judgment, decree, award or order having a Material Adverse Effect; 
  
 (l) the financial statements, including the notes thereto, included in the Registration Statement and the Prospectus present
fairly the consolidated financial position of the entities to which such financial statements relate (the “Covered Entities”) as of the dates indicated and the consolidated results of operations and changes in financial position and cash
flows of the Covered Entities for the periods specified; such financial statements have been prepared in conformity with generally accepted accounting principles as applied in the United States and on a consistent basis during the periods involved
and in accordance with Regulation S-X promulgated by the Commission; the financial statement schedules included in the Registration Statement and the amounts in the Prospectus under the captions “Summary – Summary Consolidated Financial
and Other Data,” and “Selected Historical Consolidated Financial and Other Data” fairly present the information shown therein and have been compiled on a basis consistent with the financial statements included in the Registration
Statement and the Prospectus; no other financial statements or supporting schedules are required to be included in the Registration Statement; 
  
 (m) Grant Thornton LLP, whose reports on the consolidated financial statements of the Company and Encore Credit are filed with the Commission as part of
the Registration Statement and Prospectus are, and were during the periods covered by their reports, independent public accountants as required by the Securities Act and the Securities Act Regulations; 
  
 (n) since the date of the most recent audited financial statements included
in the Prospectus, neither the Company nor any of the Subsidiaries has sustained any Material Adverse Effect, whether or not arising from transactions in the ordinary course of business, fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action, order or decree; 
  
 (o) subsequent to the respective dates as of which information is given in the Registration Statement and the Prospectus, and except as may be otherwise
stated in the Registration Statement or Prospectus, there has not been (A) any Material Adverse Change or any development that could reasonably be expected to result in a Material Adverse Change, whether or not arising in the ordinary course of
business, (B) any transaction that is material to the Company and the Subsidiaries taken as a whole, contemplated or entered into by the Company or any Subsidiary, (C) any obligation, contingent or otherwise, directly or indirectly incurred by the
Company or any Subsidiary that is material to the Company and the Subsidiaries taken as a whole, (D) any dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock or by any Subsidiary on any class
of its capital stock, (E) any purchase by the Company of any of its outstanding capital stock, or (F) any change 

  

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in the capital stock (except as may result from the exercise of any currently outstanding convertible securities, options or warrants or as a result of the
Merger as described in the Registration Statement and Prospectus ), long-term debt or, outside the ordinary course of business, short-term debt of the Company or any Subsidiary or as a result of the Merger; 
  
 (p) the Shares conform in all material respects to the description thereof
contained in this Agreement, the Registration Rights Agreement and the Registration Statement and the Prospectus and are consistent with the laws of the State of Maryland; 
  
 (q) there are no persons with registration or other similar rights to have any equity or debt securities, including
securities which are convertible into or exchangeable for equity securities, registered pursuant to the Registration Statement or otherwise registered by the Company under the Securities Act, (A) except for the Selling Stockholders, to the extent of
the equity securities to be offered and sold by such Selling Stockholders as contemplated by the Underwriting Agreement, (B) except for those registration or similar rights which have been waived in writing with respect to the offering contemplated
by this Agreement, and (C) except for those registration or similar rights which will be granted to the Investor and Milestone in connection with Restricted Stock upon completion of the Public Offering, all of which registration or similar rights
described in clauses (A), (B) and (C) are fairly summarized in the Prospectus; 
  
 (r) the Shares have been duly authorized and, when the Shares are issued and duly delivered against payment therefor as contemplated by this Agreement, they will be validly issued, fully paid and non-assessable, free
and clear of any pledge, lien, encumbrance, security interest or other claim, and the issuance and sale of the Shares by the Company is not subject to preemptive or other similar rights arising by operation of law, under the organizational documents
of the Company or any Subsidiary or under any agreement to which the Company or any Subsidiary is a party or otherwise; the issuance by the Company of the Shares is exempt from, or otherwise not subject to, the registration requirements of the
Securities Act and applicable state securities and blue sky laws; 
  
 (s) the Shares have been approved for listing on the NYSE, subject to official notice of issuance; 
  
 (t) the Company and Encore Credit have not taken, and will not take, directly or indirectly, any action which is designed to or which has constituted or
which might reasonably be expected to cause or result in stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares; 
  
 (u) neither the Company nor any of its affiliates (A) is required to register as a “broker” or “dealer”
in accordance with the provisions of the Exchange Act, or the Exchange Act Regulations, or (B) directly, or indirectly through one or more intermediaries, controls or has any other association with (within the meaning of Article I of the Bylaws of
the NASD) any member firm of the NASD; 
  
 (v) the Company and
Encore Credit have not relied upon the Investor or legal counsel for the Investor for any legal, tax or accounting advice in connection with the offering and sale of the Shares; 
  
 (w) any certificate signed by any officer of the Company or any Subsidiary, on behalf of the Company or any Subsidiary
delivered to the Investor or to counsel for the Investor pursuant to or in connection with this Agreement shall be deemed a representation and warranty by the Company and Encore Credit to the Investor as to the matters covered thereby; 

 

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 (x) the form of certificate used to evidence the Shares complies in all material respects with all
applicable statutory requirements, with any applicable requirements of the organizational documents of the Company and the requirements of the NYSE; 
  
 (y) the Company and the Subsidiaries have good and marketable title in fee simple to all real property, if any, and good title to all personal property
owned by them, in each case free and clear of all liens, security interests, pledges, charges, encumbrances, mortgages and defects, except such as are disclosed in the Prospectus or such as do not materially and adversely affect the value of such
property and do not interfere with the use made or proposed to be made of such property by the Company and the Subsidiaries; and any real property and buildings held under lease by the Company or any Subsidiary are held under valid, existing and
enforceable leases, with such exceptions as are disclosed in the Prospectus or are not material and do not interfere with the use made or proposed to be made of such property and buildings by the Company or such Subsidiary; 
  
 (z) the descriptions in the Registration Statement and the Prospectus of the
legal or governmental proceedings, contracts, leases and other legal documents therein described present fairly the information required to be shown, and there are no legal or governmental proceedings, contracts, leases, or other documents of a
character required to be described in the Registration Statement or the Prospectus or to be filed as exhibits to the Registration Statement which are not described or filed as required; all agreements between the Company or any Subsidiary and third
parties which are filed as Exhibits to the Registration Statement are legal, valid and binding obligations of the Company or one or more of the Subsidiaries, enforceable in accordance with their respective terms, except to the extent enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general equitable principles; 
  
 (aa) each of the Company and the Subsidiaries owns or possesses or can acquire on reasonable terms adequate licenses or
otherwise has the right to use all patents, trademarks, service marks, trade names, copyrights, software and design licenses, trade secrets, manufacturing processes, or other intangible property rights and know-how (collectively,
“Intangibles”) necessary to entitle the Company and each Subsidiary to conduct its business as described in the Prospectus except such Intangibles as could not reasonably be expected to have a Material Adverse Effect, and, except as
otherwise disclosed in the Prospectus, neither the Company nor any Subsidiary has received notice of infringement of or conflict with (and neither the Company nor any Subsidiary knows of any such infringement of or conflict with) asserted rights of
others with respect to any Intangibles which, individually or in the aggregate, could have a Material Adverse Effect; 
  
 (bb) each of the Company and the Subsidiaries maintains a system of internal accounting controls sufficient to provide reasonable assurance that (A)
transactions are executed in accordance with management’s general or specific authorizations, (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles
as applied in the United States and to maintain asset accountability, (C) access to assets is permitted only in accordance with management’s general or specific authorization, and (D) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken with respect to any differences; 
  
 (cc) the Company has established and maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the
Exchange Act Regulations); such disclosure controls and (A) procedures are designed to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to the Company’s Co-Chief Executive Officers
and its Chief Financial Officer by others within those entities; (B) have been evaluated for effectiveness, and (C) are effective in all material respects to perform the functions for which they were established; the 

  

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Company’s auditors and the audit committee of the Board of Directors or, if the audit committee has not yet been established on the date of this
Agreement, the Board of Directors, have been advised of: (A) any significant deficiencies in the design of internal controls which could adversely affect the Company’s, including its consolidated Subsidiaries’ ability to record, process,
summarize, and report financial data, and (B) any fraud, whether or not material, that involves management or other employees who have a role in the Company’s internal controls; any material weaknesses in internal controls have been identified
for the Company’s auditors; and since the date of the establishment of such disclosure controls and procedures, there have been no significant changes in internal controls or in other factors that could significantly affect internal controls,
including any corrective actions with regard to significant deficiencies and material weaknesses; 
  
 (dd) the Company and the Subsidiaries have provided the Investor true, correct, and complete copies of all documentation pertaining to any extension of
credit in the form of a personal loan made, directly or indirectly, by the Company to any director or executive officer of the Company or any Subsidiary, or to any family member or affiliate of any director or executive officer of the Company or any
Subsidiary since July 30, 2002 or that is outstanding; and, except as disclosed in the Prospectus, neither the Company nor any Subsidiary has, directly or indirectly, (A) extended credit, arranged to extend credit, or renewed any extension of
credit, in the form of a personal loan, to or for any director or executive officer of the Company or any Subsidiary, or to or for any family member or affiliate of any director or executive officer of the Company or any Subsidiary, or (B) made any
material modification, including any renewal thereof, to any term of any personal loan to any director or executive officer of the Company or any Subsidiary, or any family member or affiliate of any director or executive officer; 
  
 (ee) any statistical and market-related data included in the Registration
Statement and the Prospectus are based on or derived from sources that the Company and the Subsidiaries believe to be reliable and accurate, and the Company has obtained the written consent to the use of such data from such sources to the extent
required; 
  
 (ff) the Company, the Subsidiaries and any of the
officers and directors of the Company and the Subsidiaries, in their capacities as such, are, and at the Closing Time will be, in compliance in all material respects with the provisions of the Sarbanes-Oxley Act of 2002 and the rules and regulations
promulgated thereunder; 
  
 (gg) each of the Company and the
Subsidiaries has filed on a timely basis all necessary federal, state, local and foreign income and franchise tax returns required to be filed through the date hereof which tax returns are complete and accurate and have paid all taxes due and owing
by any of the Company and the Subsidiaries on or before the date hereof (whether or not shown on any tax returns); and no tax deficiency has been asserted against the Company or any Subsidiary, nor does the Company or any Subsidiary know of any tax
deficiency which is likely to be asserted against any such entity which, individually or in the aggregate, if determined adversely to any such entity, could have a Material Adverse Effect; all tax liabilities are adequately provided for on the
respective books of such entities; 
  
 (hh) each of the Company
and the Subsidiaries maintains insurance (issued by insurers of recognized financial responsibility) of the types and in the amounts generally deemed adequate for their respective businesses and consistent with insurance coverage maintained by
similar companies in similar businesses, including, but not limited to, insurance covering real and personal property owned or leased by the Company and the Subsidiaries against theft, damage, destruction, acts of vandalism and all other risks
customarily insured against, all of which insurance is in full force and effect; neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage in all material respects as and when
such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a comparable cost; neither the Company 

  

 10 

 
nor any Subsidiary has been denied any insurance coverage which it has sought or for which it has applied for; 
  
 (ii) neither the Company nor any Subsidiary is in violation, or has received
notice of any violation with respect to, any applicable environmental, safety or similar law applicable to the business of the Company or any Subsidiary; the Company and the Subsidiaries have received all permits, licenses or other approvals
required of them under applicable federal and state occupational safety and health and environmental laws and regulations to conduct their respective businesses, and the Company and the Subsidiaries are in compliance with all terms and conditions of
any such permit, license or approval, except any such violation of law or regulation, failure to receive required permits, licenses or other approvals or failure to comply with the terms and conditions of such permits, licenses or approvals which
could not have a Material Adverse Change; 
  
 (jj) neither the
Company nor any Subsidiary is in violation of or has received notice of any violation with respect to any federal or state law relating to discrimination in the hiring, promotion or pay of employees, nor any applicable federal or state wages and
hours law, nor any state law precluding the denial of credit due to the neighborhood in which a property is situated, the violation of any of which individually or in the aggregate could have a Material Adverse Effect; 
  
 (kk) each of the Company and the Subsidiaries is in compliance in all
material respects with all presently applicable provisions of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations thereunder (“ERISA”); no “reportable event”
(as defined in ERISA) has occurred with respect to any “pension plan” (as defined in ERISA) for which the Company or any Subsidiary would have any liability; each of the Company and the Subsidiaries has not incurred and does not expect to
incur liability under (A) Title IV of ERISA with respect to termination of, or withdrawal from, any “pension plan” or (B) Section 412 or 4971 of the Internal Revenue Code of 1986, as amended, including the regulations and published
interpretations thereunder (the “Code”); and each “pension plan” for which each of the Company and the Subsidiaries would have any liability that is intended to be qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by failure to act, which would cause the loss of such qualification or could result in a Material Adverse Effect; 
  
 (ll) neither the Company nor any Subsidiary nor any officer or director purporting to act on behalf of the Company or any
Subsidiary has at any time (A) made any contributions to any candidate for political office, or failed to disclose fully any such contributions, in violation of law, (B) made any payment to any state, federal or foreign governmental officer or
official, or other person charged with similar public or quasi-public duties, other than payments required or allowed by applicable law, (C) made any payment outside the ordinary course of business to any investment officer or loan broker or person
charged with similar duties of any entity to which the Company or any Subsidiary sells or from which the Company or any Subsidiary buys loans or servicing arrangements for the purpose of influencing such agent, officer, broker or person to buy loans
or servicing arrangements from or sell loans to the Company or any Subsidiary, or (D) engaged in any transactions, maintained any bank account or used any corporate funds except for transactions, bank accounts and funds which have been and are
reflected in the normally maintained books and records of the Company and the Subsidiaries; 
  
 (mm) except as otherwise disclosed in the Prospectus there are no material outstanding loans or advances or material guarantees of indebtedness by the Company or any Subsidiary to or for the benefit of any of the
officers or directors of the Company or any Subsidiary or any of the members of the families of any of them; 
  

 11 

 (nn) neither the Company nor any Subsidiary nor, to the knowledge of the Company or any Subsidiary, any
employee or agent of the Company or any Subsidiary, has made any payment of funds of the Company or any Subsidiary or received or retained any funds in violation of any law, rule or regulation or of a character required to be disclosed in the
Prospectus; 
  
 (oo) all securities issued by the Company, any
Subsidiary or any trusts established by the Company or any Subsidiary, have been issued and sold in compliance with (A) all applicable federal and state securities laws, (B) the laws of the applicable jurisdiction of incorporation of the issuing
entity and, (C) to the extent applicable to the issuing entity, the requirements of the NYSE; 
  
 (pp) neither the Company nor any Subsidiary knows of any violation of any municipal, state or federal law, rule or regulation (including those pertaining to environmental matters) concerning any real property leased,
owned or controlled or to be leased, owned or controlled by the Company or any Subsidiary (the “Properties”) or any part thereof which could have a Material Adverse Effect; (A) each of the Properties complies with all applicable zoning
laws, ordinances, regulations and deed restrictions or other covenants in all material respects and, if and to the extent there is a failure to comply, such failure does not materially impair the value of any of the Properties and will not result in
a forfeiture or reversion of title; (B) neither the Company nor any Subsidiary has received from any governmental authority any written notice of any condemnation of or zoning change affecting the Properties or any part thereof, and neither the
Company or any Subsidiary knows of any such condemnation or zoning change which is threatened and which if consummated could have a Material Adverse Effect; (C) all liens, charges, encumbrances, claims, or restrictions on or affecting the properties
and assets (including the Properties) of any Subsidiary that is required to be described in the Prospectus (or, the most recent Preliminary Prospectus) are disclosed therein; (D) no lessee of any portion of any of the Properties is in default under
any of the leases governing such properties and there is no event which, but for the passage of time or the giving of notice or both would constitute a default under any of such leases, except such defaults that could not have a Material Adverse
Effect; and (E) no tenant under any lease pursuant to which any Subsidiary leases the Properties has an option or right of first refusal to purchase the premises leased thereunder or the building of which such premises are a part, except as such
options or rights of first refusal which, if exercised, could not have a Material Adverse Effect, and except as provided by law; 
  
 (qq) each of the Company and the Subsidiaries is in compliance with Environmental Laws (as defined below) and is in compliance with the material terms of
any required permits, licenses, authorizations and approvals required under, any Environmental Laws, except to the extent that failure to so comply or to hold such permits, authorizations or approvals could not have a Material Adverse Effect; there
are no past or present or, to the knowledge of the Company or any Subsidiary’s knowledge, reasonably anticipated future events, conditions, circumstances, activities, practices, actions, omissions or plans that could reasonably be expected to
give rise to any material costs or liabilities to the Company or the Subsidiaries under, or to interfere with or prevent compliance by the Company or the Subsidiaries with, any Environmental Laws; except as could not have a Material Adverse Effect,
neither the Company nor any Subsidiary (A) is the subject of any investigation, (B) has received any notice or claim, (C) is a party to or affected by any pending or threatened action, suit or proceeding, (D) is bound by any judgment, decree or
order, or (E) has entered into any agreement, in each case relating to any alleged violation of any Environmental Law or any actual or alleged release or, to the knowledge of the Company or any Subsidiary, threatened release or cleanup at any
location of any Hazardous Materials (as defined below) (as used herein, “Environmental Law” means any federal, state, local or foreign law, statute, ordinance, rule, regulation, order, decree, judgment, injunction, or other binding
requirement, or common law, relating to health, safety or the protection, cleanup or restoration of the environment or natural resources, including those relating to the distribution, processing, generation, treatment, storage, disposal,
transportation, other handling or release or threatened release of Hazardous Materials, and “Hazardous Materials” means any material (including, without limitation, pollutants, 

  

 12 

 
contaminants, hazardous or toxic substances or wastes) that is regulated by or may give rise to liability under any Environmental Law); 
  
 (rr) in the ordinary course of its business, each of the Company and the
Subsidiaries conducts a periodic review of the effect of the Environmental Laws on its business, operations and properties, in the course of which it identifies and evaluates associated costs and liabilities (including, without limitation, any
capital or operating expenditures required for cleanup, closure of properties or compliance with the Environmental Laws or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third
parties); 
  
 (ss) in connection with the Private Transaction, and
assuming the truthfulness of the representations and warranties of the Investor herein and the purchase and sale of the Shares as contemplated by this Agreement, the Company has not offered and will not offer its Common Stock or any other securities
convertible into or exchangeable or exercisable for Common Stock in a manner in violation of the Securities Act; the Company has not distributed and will not distribute any Prospectus or other offering material in connection with the offer and sale
of the Shares; 
  
 (tt) the Company has complied and will comply
with all the provisions of Florida Statutes, Section 517.075 (Chapter 92-198, Laws of Florida); and neither the Company nor any Subsidiary or affiliates does business with the government of Cuba or with any person or affiliate located in Cuba;

  
 (uu) except for the fees contained in the amended and restated
engagement letter and advisory agreement and, both dated as of August 13, 2004, by and between Encore Credit and the Representative, each of which as further amended on January 13, 2005, and the financial advisory agreement by and between Encore
Credit Corp. and Milestone Advisors, LLC, neither the Company nor Encore Credit has incurred any liability for any finder’s fees or similar payments in connection with the transactions herein contemplated; 
  
 (vv) no relationship, direct or indirect, exists between or among the Company
or any Subsidiary on the one hand, and the directors, officers, stockholders, customers or suppliers of the Company or any Subsidiary on the other hand, which is required by the Securities Act and the Securities Act Regulations to be described in
the Registration Statement and the Prospectus and which is not so described; 
  
 (ww) neither the Company nor any Subsidiary is and, after giving effect to the offering and sale of the Shares, will be an “investment company” or an entity “controlled” by an “investment
company,” as such terms are defined in the Investment Company Act of 1940, as amended (the “Investment Company Act”); 
  
 (xx) there are no existing or, to the knowledge of the Company or any Subsidiary, threatened labor disputes with the employees of the Company or any
Subsidiary which, individually or in the aggregate, could have a Material Adverse Effect; 
  
 (yy) commencing with the taxable year ending December 31, 2005, the Company will be organized in conformity with the requirements for qualification as a real estate investment trust (a “REIT”) under the
Code; the present and contemplated method of operation of the Company and the Subsidiaries does and will enable the Company to meet the requirements for taxation as a REIT under the Code; and the Company intends to continue to qualify as a REIT
under the Code for all subsequent years; and the Company does not know of any event that could reasonably be expected to cause the Company to fail to qualify as a REIT under the Code at any time; and 
  

 13 

 (zz) the Merger should be treated as a reorganization within the meaning of section 368(a) of the Code,
and none of the Company, Encore Credit or ECC Merger Sub will recognize any gain or loss as a result of the Merger. 
  

 14 

 ARTICLE 5 
  

REPRESENTATIONS AND WARRANTIES OF INVESTOR 
  
 The Investor hereby represents and warrants as of the date hereof and as of the Closing Time to the Company that: 
  
 5.1. Authorization. 
  
 This Agreement has been duly authorized, executed and delivered by the
Investor and is a legal, valid and binding agreement of the Investor enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ rights generally, and by general equitable principles, and except to the extent that the indemnification and contribution provisions of Section 8.14 hereof may be limited by federal or state securities laws and public policy
considerations in respect thereof; 
  
 5.2. Purchase Entirely
for Own Account. 
  
 This Agreement is made with the Investor
in reliance upon the Investor’s representation to the Company, which by the Investor’s execution of this Agreement the Investor hereby confirms, that the Shares to be received by the Investor will be acquired for investment for the
Investor’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that the Investor has no present intention of selling, granting any participation in, or otherwise distributing the
same. By executing this Agreement, the Investor further represents that the Investor does not have any 

  

 15 

 
contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to such person or to any third person, with respect
to any of the Shares. 
  
 5.3. Disclosure of Information.

  
 The Investor (or its representative(s)) has received all the
information it considers necessary or appropriate for deciding whether to purchase the Shares. The Investor further represents that it (or its representative(s)) has had an opportunity to ask questions of and receive answers from the Company
regarding the terms and conditions of the offering of Shares and the business, properties, prospects and financial condition of the Company. 
  
 5.4. Investment Experience. 
  
 The Investor understands that the purchase of the Shares involves substantial risk. The Investor: (i) has experience as an investor in securities and
acknowledges that the Investor is able to fend for itself, can bear the economic risk of the Investor’s investment in the Shares and has such knowledge and experience in financial or business matters that the Investor is capable of evaluating
the merits and risks of this investment in the Shares and protecting its own interests in connection with this investment and/or (ii) has a preexisting personal or business relationship with the Company and certain of its officers, directors or
controlling persons of a nature and duration that enables the Investor to be aware of the character, business acumen and financial circumstances of such persons. 
  
 5.5. QIB Status. 
  
 The Investor is a “Qualified Institutional Buyer” within the meaning of Rule 144A promulgated under the Securities Act. 
  
 5.6. Restricted Securities. 
  
 The Investor understands that the Shares are characterized as
“restricted securities” under the Securities Act inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under the Securities Act and applicable rules and regulations thereunder such
securities may be resold without registration under the Securities Act only in certain limited circumstances. 
  
 ARTICLE 6 
  
 CONDITIONS TO CLOSING 
  
 6.1. The
obligation of the Investor to close the transaction contemplated by this Agreement is subject to the satisfaction on or prior to the Closing Time of the following conditions: 
  
 (a) The Company and Encore Credit shall have executed this Agreement and delivered the same to the Investor. 
  
 (b) All outstanding options, warrants or other securities exercisable or
exchangeable for or convertible into shares of capital stock of Encore Credit shall have been terminated or shall otherwise cease to be outstanding. 
  
 (c) The Investor shall have received copies of all documents and information which it may have reasonably requested in connection with the purchase and
sale of the Shares. 
  

 16 

 (d) The Company and Encore Credit, as applicable, shall have delivered to the Investor a certificate of
its Chief Executive Officer and its Chief Financial Officer, dated as of the Closing Time, to the effect that, the representations and warranties of the Company or such Encore Credit, as applicable, set forth in this Agreement are true and correct
and the conditions set forth in this Section 6.1 have been satisfied, in each case as of such date. 
  
 (e) The Company shall have executed a registration rights agreement by and among the Company, the Investor and Milestone Advisors, LLC substantially in
the form attached hereto as Exhibit A (the “Registration Rights Agreement”) and delivered the same to the Investor. 
  
 (f) The Company shall have successfully completed the closing of the Public Offering of Common Stock to the satisfaction of the Investor. 
  
 (g) The Company shall have furnished to the Investor an opinion of Latham
& Watkins LLP, counsel for the Company, Encore Credit, the other Subsidiaries and the Selling Stockholders, addressed to the Representative substantially to the effect set forth on Exhibit B hereto. 
  
 (h) The Company shall have furnished to the Investor a letter from Latham
& Watkins LLP, special tax counsel for the Company, Encore Credit and the Subsidiaries, addressed to the Representative substantially to the effect set forth on Exhibit C hereto. 
  
 (i) The Company shall have furnished to the Investor an opinion of Venable
LLP, Maryland counsel for the Company, addressed to the Representative substantially to the effect set forth on Exhibit D hereto. 
  
 (j) The Company shall have furnished to the Investor an opinion of Kirkpatrick & Lockhart Nicholson Graham LLP, regulatory counsel for the Company
addressed to the Representative substantially to the effect set forth on Exhibit E hereto. 
  
 (k) Between the time of execution of this Agreement and the Closing Time, no Material Adverse Change or any development involving a prospective Material
Adverse Change in the business, properties, management, financial condition or results of operations of the Company, Encore Credit and the Subsidiaries taken as a whole shall occur or become known. 
  
 6.2. The obligation of the Company to close the transaction contemplated by
this Agreement is subject to the satisfaction on or prior to the Closing Time of the following conditions: 
  
 (a) The Investor shall have executed this Agreement and delivered the same to the Company. 
  
 (b) The Investor shall have executed the Registration Rights Agreement, and delivered the same to the Company. 

 
 (c) The Company shall have successfully completed the closing of the
Public Offering of Common Stock. 
  
 (d) The Investor shall have
delivered the Purchase Price as specified in Article 3. 
  

 17 

  
 ARTICLE 7 

 
 COVENANTS OF THE PARTIES 
  
 7.1. Legends. 
  
 It is understood that the certificates evidencing the Shares will bear the
legends set forth below: 
  
 (a) THE SECURITIES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR UNDER THE SECUTIRIES LAWS OF CERTAIN STATES, AND CANNOT BE SOLD OR TRANSFERRED UNLESS (i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, IS THEN IN EFFECT WITH RESPECT TO THE SECURITIES REPRESENTED HEREBY; OR (ii) A WRITTEN OPINION FROM LEGAL COUNSEL TO THE ISSUER IS OBTAINED TO THE EFFECT THAT AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
ANY APPLICABLE STATE SECURITIES LAWS IS AVAILABLE WITH RESPECT TO THE PROPOSED SALE OR TRANSFER AND THAT NO SUCH REGISTRATION IS REQUIRED. 
  
 (b) Any legend required by the laws of the State of Maryland or any other state securities laws. 
  
 The legend set forth in (a) above shall be removed by the Company from any
certificate evidencing the Shares upon delivery to the Company of an opinion by counsel, reasonably satisfactory to the Company, that a registration statement under the Securities Act is at that time in effect with respect to the legended security
or that such security can be freely transferred in a public sale without such a registration statement being in effect and that such transfer will not jeopardize the exemption or exemptions from registration pursuant to which the Company issued the
Shares. 
  
 7.2. Restrictions on Transfer; Registration
Rights. 
  
 (a) The Investor agrees that, for a period of 180
days from the date of the Prospectus, it will not, without the prior written consent of the Company, sell, assign, transfer or otherwise dispose of (“Transfer”) any of the Shares and will not, at any time, Transfer any Shares in
violation of the Securities Act or any applicable state or other securities laws (“State Acts”). 
  
 (b) The Shares issued pursuant to this Agreement may not be transferred except in a transaction which is in compliance with the Securities Act and State
Acts. Except as provided hereafter with respect to registration of the Shares as contemplated in Exhibit A, it shall be a condition to any such transfer that the Company shall be furnished with an opinion of counsel, which counsel and opinion
shall be reasonably satisfactory to the Company, to the effect that the proposed transfer would be in compliance with the Securities Act and State Acts. Notwithstanding the foregoing, furnishing such opinion of counsel shall not be a condition to
any transfer of the Shares to an affiliate of the Investor, including for this purpose if the Investor is an investment company, any fund or account advised by the Investor’s investment adviser or any affiliate thereof. 
  

 18 

  
 ARTICLE 8 

 
 MISCELLANEOUS 
  
 8.1. Payment of Expense. 
  
 The Company shall be responsible for all of its costs and expenses associated
with the issuance of Shares contemplated by this Agreement. 
  
 8.2. Survival of Representations, Warranties and Covenants. 
  
 The representation, warranties and covenants of the Company, Encore Credit, and the Investor contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated herein and shall in no way be affected by any investigation of the subject matter thereof made by or on behalf of the Investor, its counsel or the Company or its counsel, as the case may be. 

 
 8.3. Successors and Assigns. 
  
 The terms and conditions of this Agreement shall inure to the benefit of and
be binding upon the respective successors and assigns of the parties. This Agreement may not be assigned by any party without the prior written consent of the other parties; provided, however, that the Investor may assign its rights,
but may not delegate its obligations, hereunder to a wholly-owned subsidiary. In no event will a sale by the Investor of all or substantially all of its capital stock or assets, or a merger, consolidation, share exchange or other business
combination transaction involving the Investor constitute an assignment for purposes of this Section 8.3. 
  
 8.4. Governing Law. 
  
 This Agreement and any claim, counterclaim or dispute of any kind or nature whatsoever arising out of or in any way relating to this Agreement, directly
or indirectly, shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to conflicts of laws principles. 
  
 8.5. Counterparts; Facsimile Signatures. 
  
 This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and
the same instrument. Signatures delivered by facsimile shall be deemed to be original signatures. 
  
 8.6. Headings. 
  
 The headings and captions used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.
All references in this Agreement to sections, paragraphs, exhibits and schedules shall, unless otherwise provided, refer to sections and paragraphs hereof and exhibits and schedules attached hereto, all of which exhibits and schedules are
incorporated herein by this reference. 
  
 8.7. Notices.

  
 Unless otherwise provided, any notice required or permitted
under this Agreement shall be given in writing and shall be deemed effectively given upon personal delivery to the party to be notified or upon 

  

 19 

 
deposit with the United States Postal Service, by registered or certified mail, postage prepaid and addressed, by a nationally recognized overnight courier
service or by facsimile, as follows: 
  
 If to the Company or
Encore Credit, to: 
  
 ECC Capital Corporation 
 1833 Alton Parkway 
 Irvine, California 92606

 Attention: Shahid S Asghar, President and 
   Co-Chief Executive Officer 
 Fax: (949) 856-8300 
  
 With a copy to: 
  
 Latham & Watkins LLP 
 650 Town Center Drive, 20th Floor 
 Costa
Mesa, California 92626-1925 
 Attention: William J. Cernius, Esq. 
 Fax: (714) 540-1235 
  
 If to the Investor, to: 
  
 Friedman, Billings, Ramsey Group, Inc. 
 1001
19th Street North, 
 Arlington, Virginia 22209 
 Attention: 
 Fax: 
  
 With a copy to: 
  
 Clifford Chance US LLP 
 31 West 52nd Street

 New York, New York 10019 
 Attention: Jay L. Bernstein, Esq. 
 Fax: (212) 878-8375 
  
 or at such other address as the Investor or the Company may designate by giving ten days advance written notice to the other parties.

  
 8.8. Attorneys’ Fees. 
  
 If any action at law or in equity, proceeding or counterclaim is necessary to
enforce or interpret the terms of this Agreement or to recover damages, costs and expenses in connection with any breach of the Agreement, the prevailing party shall be entitled to be reimbursed by the opposing party for all of the prevailing
party’s reasonable attorneys’ fees, costs and other reasonable out-of-pocket expenses incurred in connection with such action, proceeding or counterclaim in addition to any other relief to which such party may be entitled. 
  

 20 

 8.9. Amendments and Waivers. 
  
 Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Investor. Any amendment or waiver effected in accordance with this Section shall be binding upon each party hereto and each
holder of any Shares at the time outstanding and each future holder of such Shares. 
  
 8.10. Termination. 
  
 In
the event any of the conditions to a party’s obligations to close the transactions contemplated under this Agreement is not satisfied or waived, that party shall have the right to terminate this Agreement. In addition, in the event that either
(i) the Company does not complete the Public Offering of its Common Stock by March 31, 2005 or (ii) the Representative terminates the Underwriting Agreement in accordance with Section 7 thereof, the Investor shall have the right to terminate this
Agreement. 
  
 8.11. Severability. 
  
 If one or more provisions of this Agreement are held to be unenforceable
under applicable law, such provision(s) shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision(s) were so excluded and shall be enforceable in accordance with its terms. 
  
 8.12. Entire Agreement. 
  
 This Agreement, together with all exhibits and schedules hereto, constitutes
the entire agreement and understanding of the parties with respect to the subject matter hereof and supersedes any and all prior negotiations, correspondence, agreements, understandings, duties or obligations between the parties with respect to the
subject matter hereof. The Exhibits hereto shall be deemed a part of this Agreement for all purposes. 
  
 8.13. Further Assurances. 
  
 From and after the date of this Agreement, upon the request of the Investor or the Company, the Company and the Investor shall execute and deliver such
instruments, documents or other writings as may be reasonably necessary or desirable to confirm and carry out and to effectuate fully the intent and purposes of this Agreement. 
  
 8.14. Indemnity. 
  
 The Company and Encore Credit shall, jointly or severally, indemnify, defend and hold harmless Investor and each of its agents, partners, members,
officers, directors, representatives and affiliates (each an “Investor Indemnitee” and collectively, the “Investor Indemnitees”) from and against any and all losses, liabilities, claims and expenses, including
reasonable attorneys’ fees, sustained by any Investor Indemnitee resulting from, arising out of, or connected with any material inaccuracy in, breach of, or non-fulfillment of any representation, warranty, covenant or agreement made by or other
obligation of the Company or Encore Credit contained in this Agreement (including the exhibits and schedules hereto) or in any document delivered in connection herewith. 

  

 21 

 The Investor shall indemnify, defend and hold harmless the Company, Encore Credit and each of their
agents, partners, members, officers, directors, representatives and affiliates (each a “Company Indemnitee” and collectively, the “Company Indemnitees”) from and against any and all actual damages sustained or
incurred by any Company Indemnitee upon a finding by a court of competent jurisdiction in a final non-appealable judgment that the Investor has in fact breached its representations and warranties under Article 5 of this Agreement and that the
Company Indemnitee has in fact been damaged as a direct result of such breach. 
  
 8.15. Press Release. 
  
 Neither of the Company nor Encore Credit shall issue any public statement or press release, or otherwise disclose in any manner the identity of the Investor or that Investor has purchased the Shares, without the prior written consent of the
Investor, except as may be required by applicable law or as is disclosed in the Registration Statement; provided, however, that the Company may disclose such information in any registration statement filed with the Commission pursuant
to the Registration Rights Agreement to be executed and delivered by the parties on the Closing Time pursuant to Sections 6.1(e) and 6.2 (c) hereof. 
  
 [Signature page follows] 
  

 22 

 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above
written. 
  

			
	COMPANY:
	
	ECC CAPITAL CORPORATION
		
	By:	 	 
	 	 	Name:
	 	 	Title:
	
	ENCORE CREDIT CORP.
		
	By:	 	 
	 	 	Name:
	 	 	Title:
	
	INVESTOR:
	
	FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
		
	By:	 	 
	 	 	Name:
	 	 	Title:

  

 S-I-1 

  
 Exhibit A 

 
 Registration Rights Agreement 
  

 Exh. A-1Form of Registration Rights Agreement

 Exhibit 10.49 
  
 FORM OF 
 REGISTRATION RIGHTS AGREEMENT 
  
 THIS
REGISTRATION RIGHTS AGREEMENT (the “Agreement”) is made and entered into as of February , 2005 (the “Closing Date”), by and between ECC CAPITAL CORPORATION, a Maryland corporation (the
“Company”) and FRIEDMAN, BILLINGS, RAMSEY GROUP, INC., a Virginia corporation (“FBR”) and MILESTONE ADVISORS LLC, a limited liability company (“Milestone”). 
  
 RECITALS 
  
 WHEREAS, the Company desires to issue and sell to FBR, and FBR desires
to purchase from the Company, shares of common stock, par value $0.001 per share, of the Company (the “Common Stock”), pursuant to a stock purchase agreement dated as of February
             , 2005 between the Company and FBR (the “FBR Purchase Agreement”); 
  
 WHEREAS, the Company desires to issue and sell to Milestone              shares of
Common Stock pursuant to a Subscription Agreement dated as of February             , 2005 between the Company and Milestone (the “Milestone Purchase Agreement”); and 

 
 WHEREAS, it is a condition precedent to the obligation of FBR to
close the transactions contemplated by the FBR Purchase Agreement that the Company execute and deliver this Agreement to FBR. 
  
 AGREEMENT 
  
 NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows: 
  
 1.
Definitions. (a) As used in this Agreement, the following terms shall have the meanings set forth below: 
  
 (i) “Affiliate,” of any specified Person means any other Person who directly, or indirectly through one or more
intermediaries, is in control of, is controlled by, or is under common control with, such specified Person. For purposes of this definition, control of a Person means the power, directly or indirectly, to direct or cause the direction of the
management and policies of such Person whether by contract, securities ownership or otherwise; and the terms “controlling” and “controlled” have the respective meanings correlative to the foregoing. 
  
 (ii) “Agreement” means this Registration
Rights Agreement, as the same may be amended, supplemented or modified from time to time in accordance with the terms hereof. 
  
 (iii) “Business Day” means, with respect to any act to be performed hereunder, each Monday, Tuesday, Wednesday, Thursday
and Friday that is not a day on which banking institutions in New York, New York are authorized or obligated by applicable law, regulation or executive order, to close. 
  
 (iv) “Commission” means the Securities and Exchange Commission. 
  

 (v) “Exchange Act” means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder, or any similar successor statute. 
  
 (vi) “Holder” means each of FBR, Milestone and any permitted transferee or assignee of Registrable Securities who agrees
to become bound by all of the terms and provisions of this Agreement, the FBR Purchase Agreement (with respect to FBR and its permitted assignees and transferees only) and the Milestone Purchase Agreement (with respect to Milestone and its permitted
assignees and transferees only). 
  
 (vii)
“Person” means any individual, partnership, corporation, limited liability company, joint stock company, association, trust, unincorporated organization, or a government agency or political subdivision thereof. 
  
 (viii) “Prospectus” means the prospectus
(including any preliminary prospectus and/or any final prospectus filed pursuant to Rule 424(b) under the Securities Act and any prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration
statement in reliance on Rule 430A under the Securities Act) included in the Registration Statements, as amended or supplemented by any prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities
covered by the Registration Statements and by all other amendments and supplements to such prospectus, including all material incorporated by reference in such prospectus and all documents filed after the date of such prospectus by the Company under
the Exchange Act and incorporated by reference therein. 
  
 (ix) “Public Offering” means an offering registered with the Commission and the appropriate state securities commissions by the Company of its Common Stock and made pursuant to the Securities Act.

  
 (x) “Registrable Securities”
means (i)              shares of Common Stock purchased by FBR pursuant to the FBR Purchase Agreement and (ii)             shares
of Common Stock purchased by Milestone pursuant to the Milestone Purchase Agreement; provided, however, a share of Common Stock shall cease to be a Registrable Security for purposes of this Agreement when it no longer is a Restricted
Security. 
  
 (xi) “Registration
Expenses” means any and all expenses incident to performance of or compliance with this Agreement, including without limitation: (i) all Commission, stock exchange, NASD registration, listing and filing fees, (ii) all fees and expenses
incurred in connection with compliance with federal or state securities or blue sky laws (including any registration, listing and filing fees and reasonable fees and disbursements of counsel in connection with blue sky qualification of any of the
Registrable Securities and the preparation of a Blue Sky Memorandum and compliance with the rules of the NASD), (iii) all expenses of printing, delivering and distributing any Registration Statement, any Prospectus, any amendments or supplements
thereto, any certificates and other documents relating to the performance of and compliance with this Agreement, (iv) all fees and expenses incurred in connection with the listing of any of the Registrable Securities on any securities exchange or
the New York Stock Exchange pursuant to Section 2 hereof, (v) the fees and disbursements of counsel for the Company and of the independent public accountants (including, without limitation, the expenses of any special audit and “cold
comfort” letters required by or incident to such performance) of the Company and (vi) any fees and disbursements customarily paid by issuers or sellers of securities (including the fees and expenses of any experts retained by the Company in
connection with any Registration Statement), provided, however, that Registration Expenses shall exclude brokers’ commissions, 

  

 2 

 
selling discounts, underwriter discounts and commissions and transfer taxes, if any, relating to the sale or disposition of Registrable Securities by each
Holder and the fees and expenses of any counsel to such Holder. 
  
 (xii) “Registration Statement” means any registration statement of the Company, which covers any of the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus,
amendments and supplements to such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference, if any, in such
registration statement. 
  
 (xiii)
“Restricted Security” means any share of Common Stock except any that (i) have been registered pursuant to an effective Registration Statement under the Securities Act and sold in a manner contemplated by the prospectus included in
such Registration Statement, (ii) have been transferred in compliance with the resale provisions of Rule 144 under the Securities Act (or any successor provision thereto) or is transferable pursuant to paragraph (k) of Rule 144 under the Securities
Act (or any successor provision thereto), or (iii) otherwise has been transferred and a new share of Common Stock not subject to transfer restrictions under the Securities Act has been delivered by or on behalf of the Company. 
  
 (xiv) “Securities Act” means the Securities
Act of 1933, as amended, and the rules and regulations of the Commission thereunder, or any similar successor statute. 
  
 (b) All capitalized terms used and not defined herein have the respective meaning assigned to them in the FBR Purchase Agreement (with respect to FBR and
its permitted assignees and transferees only) and the Milestone Purchase Agreement (with respect to Milestone and its permitted assignees and transferees only). 
  

2. Registration. 
  
 Filing and Effectiveness of Registration Statement. 
  
 (a) As soon as practicable after the one year anniversary of the date the Company’s registration statement on Form S-11 (No. 333-118253) is declared
effective by the Commission (the “S-11 Effective Date”), but in no event more than 30 days following the one year anniversary of the S-11 Effective Date (the “Filing Deadline”), the Company shall prepare and file
with the Commission a Registration Statement on Form S-3 under the Securities Act (or any successor thereto or any other appropriate form under the Securities Act) relating to the offer and sale of the Registrable Securities by each Holder and will
promptly take all actions that are necessary or advisable in connection with such registration, including without limitation providing written responses to any comments made by the Commission regarding such Registration Statement and filing any
necessary pre-effective amendments and all necessary exhibits thereto, and will use its good faith best efforts to cause such Registration Statement to be declared effective by the Commission as soon as possible after the initial filing and in any
event within 90 days after the date of the initial filing. The Company will, subject to customary blackout periods as necessary, use its good faith best efforts to keep such Registration Statement effective for the period beginning on the date such
Registration Statement becomes effective (the “Effectiveness Date”) and terminating on the earlier of (x) the second anniversary of the Effectiveness Date and (y) the date upon which all shares then held by each Holder may be resold
without restriction of any kind and without need for such Registration Statement to be effective. 
  

 3 

 (b) If the Company shall furnish to each Holder a certificate signed by the Chief Executive Officer or
the President of the Company stating that in the good faith judgment of the Board of Directors it would be seriously detrimental to the Company or its stockholders for a Registration Statement to be filed at such time, then the Company’s
obligation to use its good faith best efforts to register, qualify or comply under this Section 2(a) shall be deferred for a period not to exceed 45 days from the date of the Filing Deadline, provided, however, that the Company may not
utilize this right more than once. 
  
 3. Obligations of the
Company. In connection with the registration of the Registrable Securities, the Company shall use its good faith best efforts to: 
  
 (a) prepare and file with the Commission a Registration Statement, within the relevant time period specified in Section 2, on the appropriate form under
the Securities Act (as shall be selected by the Company), which Registration Statement (i) shall be available for the sale of the Registrable Securities by each Holder, (ii) shall comply as to form in all material respects with the requirements of
the applicable form and include or incorporate by reference all financial statements required by the Commission to be filed therewith or incorporated by reference therein, and (iii) shall comply in all respects with the requirements of Regulation
S-T under the Securities Act, and use good faith best efforts to cause such Registration Statement to become effective and remain effective in accordance with Section 2 of this Agreement; 
  
 (b) prepare and file with the Commission such amendments and post-effective amendments to each Registration Statement as may
be necessary under applicable law to keep such Registration Statement effective for the applicable period; and cause each Prospectus to be supplemented by any required prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
(or an similar provision then in force) under the Securities Act and comply with the provisions of the Securities Act, the Exchange Act and the rules and regulations thereunder applicable to them with respect to the disposition of all securities
covered by each Registration Statement during the applicable period in accordance with the intended method or methods of distribution by each Holder thereof (including sales by any broker-dealer); 
  
 (c) during such time as a Registration Statement is effective or such shorter
period that will terminate when all the Registrable Securities have been sold (the “Registration Period”), comply with the provisions of the Securities Act with respect to the Registrable Securities of the Company covered by the
Registration Statement until such time as all of such Registrable Securities have been disposed of in accordance with the intended methods of disposition by each Holder as set forth in the Prospectus forming part of the Registration Statement;

  
 (d) (i) prior to the filing with the Commission of any
Registration Statement (including any amendments thereto) and the distribution or delivery of any Prospectus (including any supplements thereto), provide draft copies thereof (including a copy of the accountant’s consent letter to be included
in the filing) to each Holder and reflect in such documents all such comments as such Holder reasonably may propose; and 
  
 (ii) Furnish to each Holder (A) promptly after the same is prepared and publicly distributed, filed with the Commission, or received by
the Company, one copy of the Registration Statement, each Prospectus, and each amendment or supplement thereto, and (B) such number of copies of the Prospectus and all amendments and supplements thereto and such other documents, as each Holder may
reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Holder; 
  

 4 

 (e) (i) register or qualify the Registrable Securities covered by a Registration Statement under such
securities or “blue sky” laws of all jurisdictions requiring blue sky registration or qualification, 
  
 (ii) prepare and file in such jurisdictions such amendments (including post-effective amendments) and supplements to such registrations
and qualifications as may be necessary to maintain the effectiveness thereof at all times during the Registration Period, 
  
 (iii) take all such other lawful actions as may be necessary to maintain such registrations and qualifications in effect at all times
during the Registration Period, and 
  
 (iv) take
all such other lawful actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided, however, that the Company shall not be required in connection with any of its obligations under this
Section 3(e) to (A) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(e), (B) subject itself to general taxation in any such jurisdiction or (C) file a general consent to service of
process in any such jurisdiction; 
  
 (f) use its good faith best
efforts to cause all Registrable Securities covered by such Registration Statement to be registered and approved by such other domestic state or local governmental agencies or authorities in the United States, if any, as may be necessary to enable
each Holder thereof to consummate the disposition of such Registrable Securities; 
  
 (g) as promptly as practicable after becoming aware of such event, notify each Holder of the occurrence of any event during the period such Registration Statement is effective as a result of which such Registration
Statement or the related Prospectus or any document incorporated by reference therein contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, and promptly prepare an amendment to a Registration Statement and supplement to the Prospectus or amendment to the document incorporated by reference therein, as applicable, to
correct such untrue statement or omission, and deliver a number of copies of such supplement and amendment to each Holder as such Holder may reasonably request; 
  

(h) notify each Holder (or, in the event of an underwritten Public Offering, the managing underwriters) of (i) the issuance by the Commission or any
state securities authority of any stop order or other suspension of the effectiveness of a Registration Statement on the date of receipt of any such stop order or other suspension, and take all lawful action to effect the withdrawal, rescission or
removal of such stop order or other suspension and (ii) any request by the Commission or any other federal or state governmental authority for amendments or supplements to such Registration Statement or related Prospectus or for additional
information (such notice to be accompanied by an instruction to suspend the use of the Prospectus until the requisite changes have been made); 
  
 (i) during the period of time referred to in Section 2 above, use its good faith best efforts to avoid the issuance of, or if issued, to obtain the
withdrawal of, any order enjoining or suspending the use or effectiveness of a Registration Statement or suspending the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, as promptly as
practicable; 
  
 (j) subject to each Holder entering into a
confidentiality agreement at the request of and reasonably satisfactory to the Company, provide to such Holder and its counsel within three Business Days of receipt by the Company or its counsel, copies of any material correspondence with or from
the Commission or its staff with respect to a Registration Statement; and upon request, furnish to each requesting Holder with Registrable Securities covered by a Registration Statement, without charge, at 

  

 5 

 
least one conformed copy of such Registration Statement and any post-effective amendment or supplement thereto (without documents incorporated therein by
reference or exhibits thereto, unless requested); 
  
 (k) in the
case of an underwritten Public Offering, use its commercially reasonable efforts to furnish or caused to be furnished to each Holder of Registrable Securities covered by such Registration Statement and the underwriters a signed counterpart,
addressed to each such Holder and the underwriters, of: (i) an opinion of counsel for the Company, dated the date of each closing under the underwriting agreement, reasonably satisfactory to such Holder and the underwriters; and (ii) a
“comfort” letter, dated the effective date of such Registration Statement and the date of each closing under the underwriting agreement, signed by the independent public accountants who have certified the Company’s financial
statements included in such Registration Statement, covering substantially the same matters with respect to such Registration Statement (and the Prospectus included therein) and with respect to events subsequent to the date of such financial
statements, as are customarily covered in accountants’ letters delivered to underwriters in underwritten public offerings of securities and such other financial matters as such Holder and the underwriters may reasonably request and customarily
obtained by underwriters in underwritten public offerings; 
  
 (l)
enter into customary agreements (including in the case of an underwritten Public Offering, an underwriting agreement in customary form) and take all other action reasonably required in connection therewith in order to expedite or facilitate the
distribution of the Registrable Securities included in such Registration Statement and, in the case of an underwritten Public Offering, make representations, warranties and agreements (including indemnities) to each Holder of Registrable Securities
covered by such Registration Statement and to the underwriters in such form and scope as are customarily made by issuers to underwriters and Holders in underwritten public offerings and confirm the same in writing to the extent customary if and when
requested; 
  
 (m) in connection with an underwritten Public
Offering, make available for inspection by one representative appointed by the Holders of a majority of the Registrable Securities and the representative of any underwriters participating in any disposition pursuant to a Registration Statement and
any counsel and accounting firm retained by the Holders and underwriters, respectively, all financial and other records, pertinent corporate documents and properties of the Company, if reasonably requested, and cause the respective officers,
directors, employees and agents of the Company to supply all information reasonably requested by any such representatives, the representative of the underwriters, counsel thereto or accountants in connection with a Registration Statement; provided,
however, that such records, documents or information that the Company determines, in good faith, to be confidential and notifies such representative of the Holders, representative of the underwriters, counsel thereto or accountants thereto are
confidential shall not be disclosed by the representatives, representative of the underwriters, counsel thereto or accountants unless (i) the disclosure of such records, documents or information is necessary to avoid or correct a misstatement or
omission in a Registration Statement or Prospectus, (ii) the release of such records, documents or information is ordered pursuant to a subpoena or other order from a court of competent jurisdiction, or (iii) such records, documents or information
have been generally made available to the public; provided further, that to the extent practicable, the foregoing inspection and information gathering shall be coordinated on behalf of the Holders and the other parties entitled thereto by one
counsel designated by and on behalf of the Holders and the other parties; 
  
 (n) cause all the Registrable Securities covered by a Registration Statement to be listed on the New York Stock Exchange or, if applicable, to be listed on such other national securities exchange or included in such
inter-dealer quotation system of a registered national securities association as securities of the same class or series issued by the Company are then listed including, without limitation, registering the applicable class of Registrable Securities
under the Exchange Act, if appropriate, and use its good 

  

 6 

 
faith best efforts to cause such registration to become effective pursuant to the rules of the Commission and thereafter use its good faith best efforts to
maintain such listing; 
  
 (o) prepare and timely file all
documents, reports and certifications required by the Securities Act and the Exchange Act at all times beginning from the date the Company is first subject to such filing, reporting or certification requirements through the date no Holders hold
Registrable Shares; 
  
 (p) provide a CUSIP number for all
Registrable Securities, not later than the effective date of the Registration Statement; 
  
 (q) (i) otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the Commission and the New York Stock Exchange or other listing standard, (ii) make generally available
to its stockholders, as soon as reasonably practicable, earnings statements covering at least 12 months that satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 (or any similar rule promulgated under the Securities Act )
thereunder, no later than 45 days after the end of each fiscal year of the Company and (iii) delay filing any Registration Statement or Prospectus or amendment or supplement to such Registration Statement or Prospectus to which the Holders of a
majority of Registrable Securities covered by any Registration Statement shall have reasonably objected on the grounds that such Registration Statement or Prospectus or amendment or supplement does not comply in all material respects with the
requirements of the Securities Act, such Holders having been furnished with a copy thereof at least five Business Days prior to the filing thereof, provided that the Company may file such Registration Statement or Prospectus or amendment or
supplement following such time as the Company shall have made a good faith effort to resolve any such issue with the objecting Holders and shall have advised the Holders in writing of its reasonable belief that such filing complies with the
requirements of the Securities Act; 
  
 (r) provide and cause to
be maintained a transfer agent and registrar, which may be a single entity, for all Registrable Securities covered by any Registration Statement from and after a date not later than the effective date of the first Registration Statement; 

 
 (s) cooperate with each Holder to facilitate the timely preparation and
delivery of certificates for the Registrable Securities to be offered pursuant to a Registration Statement or in connection with any sale, transfer or other disposition by any such Holder of any Registrable Securities pursuant to Rule 144
promulgated under the Securities Act and enable such certificates for the Registrable Securities to be in such denominations or amounts, as the case may be, as such Holder reasonably may request and registered in such names as such Holder may
request; and, within three Business Days after a Registration Statement which includes Registrable Securities is declared effective by the Commission, deliver and cause legal counsel selected by the Company to deliver to the transfer agent for the
Registrable Securities (with copies to such Holder an appropriate instruction and, to the extent necessary, an opinion of such counsel); and 
  
 (t) in connection with any sale or transfer of the Registrable Shares (whether or not pursuant to a Registration Statement) that will result in the
security being delivered no longer being Registrable Shares, cooperate with each Holder and the representative of the underwriters, if any, to facilitate the timely preparation and delivery of certificates representing the Registrable Shares to be
sold, which certificates shall not bear any transfer restrictive legends (other than as required by the Company’s Charter) and to enable such Registrable Shares to be in such denominations and registered in such names as the representative of
the underwriters, if any, or such Holder may request at least two Business Days prior to any sale of the Registrable Shares; 
  

 7 

 (u) notify each Holder, promptly after it shall receive notice thereof, of the time when such
Registration Statement, or any post-effective amendments to the Registration Statement, shall have become effective, or a supplement to any prospectus forming part of such Registration Statement has been filed or when any document is filed with the
Commission which would be incorporated by reference into the prospectus; and 
  
 (v) take all such other lawful actions reasonably necessary to expedite and facilitate the disposition by each Holder of its Registrable Securities in accordance with the intended methods therefor provided in the
Prospectus which are customary under the circumstances. 
  
 4.
Obligations of Each Holder. In connection with the registration of the Registrable Securities, each Holder shall have the following obligations: 
  
 (a) It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the
Registrable Securities that each Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it as shall be reasonably
required to effect the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request. At least ten Business Days prior to the first anticipated filing date of
a Registration Statement, the Company shall notify each Holder and its counsel, whether in-house or otherwise (“Counsel”), of the information the Company requires from each Holder (the “Requested Information”). If
at least four Business Days prior to the anticipated filing date the Company has not received the Requested Information from each Holder or its Counsel, then the Company shall send such Holder and its Counsel a reminder of such information request.
If at least two Business Days prior to the anticipated filing date the Company still has not received the Requested Information from such Holder or its Counsel, then the Company may file the Registration Statement without including Registrable
Securities of such Holder. However, promptly upon receipt of the Requested Information, and at such Holder’s expense, the Company shall file such amendment(s) to the Registration Statement as may be necessary to include therein the Registrable
Securities. 
  
 (b) Each Holder by its acceptance of the
Registrable Securities agrees to cooperate with the Company in connection with the preparation and filing of such Registration Statement hereunder, unless such Holder has notified the Company in writing of its election to exclude all of its
Registrable Securities from such Registration Statement; the Company shall, on its part, ensure that Item 507 of Regulation S-K of the Securities Act (regarding information on the selling security holders) be complied with in connection with its
preparation and filing of such Registration Statement hereunder; 
  
 (c) As promptly as practicable after becoming aware of such event, notify the Company of the occurrence of any event, as a result of which the Prospectus included in a Registration Statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and 
  
 (d) Each Holder agrees that, upon receipt of any notice from the Company of
the occurrence of any event of the kind described in Section 3(g) or 3(h), it shall immediately discontinue its disposition of Registrable Securities pursuant to a Registration Statement covering such Registrable Securities until such Holder’s
receipt of the copies of the supplemented or amended Prospectus contemplated by Section 3(g) and, if so directed by the Company, such Holder shall deliver to the Company (at the expense of the Company) or destroy (and deliver to the Company a
certificate of destruction) all copies in such Holder’s possession, of the Prospectus covering such Registrable Securities current at the time of receipt of such notice. 
  

 8 

 5. Expenses of Registration. All Registration Expenses shall be paid by the Company. 

 
 6. Indemnification and Contribution. (a) The Company shall
indemnify and hold harmless each Holder and each of its respective officers and directors and each person who controls each Holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (each such person being
sometimes hereinafter referred to as an “Indemnified Person”) from and against any losses, claims, damages or liabilities, joint or several, to which such Indemnified Person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Registration Statement or an omission or
alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstance in which they were made, not misleading, or arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in any Prospectus or an omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and the Company hereby agrees to reimburse such Indemnified Person for all reasonable legal and other expenses incurred by them in connection with investigating or defending any such action
or claim as and when such expenses are incurred; provided, however, that the Company shall not be liable to any such Indemnified Person in any such case to the extent that any such loss, claim, damage or liability arises out of or is
based upon (i) an untrue statement or alleged untrue statement made in, or an omission or alleged omission from, such Registration Statement or Prospectus in reliance upon and in conformity with written information furnished to the Company by such
Indemnified Person regarding such Indemnified Person expressly for use therein or (ii) in the case of the occurrence of an event of the type specified in Section 3(g), the use by the Indemnified Person of an outdated or defective Prospectus after
the Company has provided to such Indemnified Person written notice that such Prospectus is outdated or defective. 
  
 (b) Indemnification by the Holders. Each Holder severally agrees, as a consequence of and upon the inclusion of any of its Registrable Securities
in a Registration Statement which facilitates the disposition of Registrable Securities, to indemnify and hold harmless the Company, its directors, its officers and each person, if any, who controls the Company within the meaning of either Section
15 of the Securities Act or Section 20 of the Exchange Act, against any losses, claims, damages or liabilities to which the Company or such other persons may become subject, under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in such Registration Statement or Prospectus or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in light of the circumstances under which they were made, in the case of the Prospectus), not misleading, in
each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by such Holder
expressly for use therein; provided, however, that such Holder shall not be liable under this Section 6(b) for any amount in excess of the gross proceeds paid to such Holder in respect of shares sold by it. 
  
 (c) Notice of Claims, etc. Promptly after receipt by a party seeking
indemnification pursuant to this Section 6 (an “Indemnified Party”) of written notice of any investigation, claim, proceeding or other action in respect of which indemnification is being sought (each, a “Claim”),
the Indemnified Party promptly shall notify the party against whom indemnification pursuant to this Section 6 is being sought (the “Indemnifying Party”) of the commencement thereof; but the omission to so notify the Indemnifying
Party shall not relieve it from any liability that it otherwise may have to the Indemnified Party, except to the extent that the Indemnifying Party is materially prejudiced and forfeits substantive rights and defenses by reason of such failure. In
connection with any Claim as to which both the Indemnifying Party and the 

  

 9 

 
Indemnified Party are parties, the Indemnifying Party shall be entitled to assume the defense thereof. Notwithstanding the assumption of the defense of any
Claim by the Indemnifying Party, the Indemnified Party shall have the right to employ separate legal counsel and to participate in the defense of such Claim, and the Indemnifying Party shall bear the reasonable fees, out-of-pocket costs and expenses
of such separate legal counsel to the Indemnified Party if (and only if): (i) the Indemnifying Party shall have agreed to pay such fees, costs and expenses, (ii) the Indemnified Party and the Indemnifying Party shall reasonably have concluded that
representation of the Indemnified Party by the Indemnifying Party by the same legal counsel would not be appropriate due to actual or, as reasonably determined by legal counsel to the Indemnified Party, potentially differing interests between such
parties in the conduct of the defense of such Claim, or if there may be legal defenses available to the Indemnified Party that are in addition to or disparate from those available to the Indemnifying Party, or (iii) the Indemnifying Party shall have
failed to employ legal counsel reasonably satisfactory to the Indemnified Party within a reasonable period of time after notice of the commencement of such Claim. If the Indemnified Party employs separate legal counsel in circumstances other than as
described in clauses (i), (ii) or (iii) above, the fees, costs and expenses of such legal counsel shall be borne exclusively by the Indemnified Party. Except as provided above, the Indemnifying Party shall not, in connection with any Claim in the
same jurisdiction, be liable for the fees and expenses of more than one firm of counsel for the Indemnified Party (together with appropriate local counsel). The Indemnified Party shall not, without the prior written consent of the Indemnifying Party
(which consent shall not unreasonably be withheld), settle or compromise any Claim or consent to the entry of any judgment that does not include an unconditional release of the Indemnifying Party from all liabilities with respect to such Claim or
judgment. 
  
 (d) Contribution. If the indemnification
provided for in this Section 6 is unavailable to or insufficient to hold harmless an Indemnified Person under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein,
then each Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party and the Indemnified Party in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable
considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by such Indemnifying Party or by such Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The
parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 6(d) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations
referred to in this Section 6(d). The amount paid or payable by an Indemnified Party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above shall be deemed to include any legal or other fees or
expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such action or claim. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The obligations of the each Holder in this Section 6(d) to contribute shall be several (in proportion to the percentage of Registrable Securities
registered or underwritten, as the case may be, by it) and not joint. 
  
 (e) Notwithstanding any other provision of this Section 6, in no event shall any Holder be required to undertake liability to any person under this Section 6 for any amounts in excess of the dollar amount of the gross proceeds to be
received by each Holder from the sale of its Registrable Securities pursuant to any Registration Statement under which such Registrable Securities are to be registered under the Securities Act. 
  

 10 

 (f) The obligations of the Company under this Section 6 shall be in addition to any liability which the
Company may otherwise have to any Indemnified Person, and the obligations of any Indemnified Person under this Section 6 shall be in addition to any liability which such Indemnified Person may otherwise have to the Company. The remedies provided in
this Section 6 are not exclusive and shall not limit any rights or remedies which may otherwise be available to an indemnified party at law or in equity. 
  
 7. Compliance with Exchange Act Reporting. The Company agrees to file with the Commission in a timely manner all reports and other documents
required to be filed by the Company pursuant to Section 13 or 15(d) under the Exchange Act. 
  
 8. Assignment. The rights to have the Company register Registrable Securities pursuant to this Agreement may be assigned or transferred to a maximum of 15 individuals or entities and only with the prior written
consent of the Company, and any such assignment or transfer without such consent shall be void and of no effect. Notwithstanding the foregoing, such consent of the Company shall not be required with respect to any assignment or transfer of
Registrable Securities to an Affiliate of each Holder, including for this purpose if such Holder is an investment company, any fund or account advised by such Holder’s investment adviser or any Affiliate thereof. 
  
 9. Amendment and Waiver. 
  
 (a) Any provision of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and FBR; provided, however, that the provisions of this Agreement may not be amended
or waived without the consent of the Holders of all the Registrable Securities adversely affected by such amendment or waiver if such amendment or waiver adversely affects a portion of the Registrable Securities but does not so adversely affect all
of the Registrable Securities; provided, further, that the provisions of the preceding provision may not be amended or waived except in accordance with this sentence. Any waiver, permit, consent or approval of any kind or character on
the part of any such Holders of any provision or condition of this Agreement must be made in writing and shall be effective only to the extent specifically set forth in writing. Any amendment or waiver effected in accordance with this paragraph
shall be binding upon each Holder of Registrable Securities and the Company. 
  
 (b) Any amendment or waiver effected in accordance with this Section 9 shall be binding upon each Holder and the Company. 
  
 10. Covenants Relating To Rule 144. At such times as the Company becomes obligated to file reports in compliance with either Section 13 or 15(d) of
the Exchange Act, the Company covenants that it will file any reports required to be filed by it under the Securities Act and the Exchange Act and that it will take such further action as any Holder may reasonably request, all to the extent required
from time to time to enable the Holders to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (a) Rule 144 under the Securities Act, as such rule may be amended from time to
time or (b) any similar rule or regulation hereafter adopted by the Commission. Upon the request of any Holder, the Company will deliver to such Holder a written statement as to whether it has complied with such requirements. 
  
 11. Miscellaneous. (a) If the Company (i) fails to file any
Registration Statement pursuant to Section 2 within the agreed time frame, (ii) fails to cause any Registration Statement pursuant to Section 2 to become effective within the agreed time frame, or (iii) fails to keep any Registration Statement
pursuant to Section 2(a) current and effective for the agreed period of time, then each Holder will be entitled as a remedy for any and all concurrent breaches of this Agreement related to one or more 

  

 11 

 
concurrent such failures, to liquidated and agreed upon damages payable on each Registrable Share for each day of any such delay or failure, as the case may
be. Such liquidated damages shall be payable quarterly in arrears, provided that multiple penalties shall not accrue for multiple defaults that overlap, in arrears within 10 days of the end of each fiscal quarter and shall accrue at a daily rate of
(i) 10% of the initial purchase price per Registrable Share per annum during the first 90 days of the delay or failure and (ii) after the first 90 days of the delay or failure, the rate will escalate by an additional 5% of the initial purchase price
per Registrable Share per annum. 
  
 (b) A person or entity shall
be deemed to be a holder of Registrable Securities whenever such person or entity owns of record such Registrable Securities. If the Company receives conflicting instructions, notices or elections from two or more persons or entities with respect to
the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from the registered owner of such Registrable Securities. 
  
 (c) Except as may be otherwise provided herein, any notice or other communication or delivery required or permitted
hereunder shall be in writing and shall be delivered personally or sent by certified mail, postage prepaid, by a nationally recognized overnight courier service or by facsimile as follows, and shall be deemed given when actually received.

  
 If to the Company, to: 
  
 ECC Capital Corporation 
 1833 Alton Parkway 
 Irvine, California 92606

 Attention: Shahid S. Asghar, President and 
                   Co-Chief Executive Officer 
 Fax: (949) 856-8300 
  
 With a
copy to: 
  
 Latham & Watkins LLP 
 650 Tour Center Drive, 20th Floor 
 Costa Mesa, California 92626 
 Attention: William J. Cernius, Esq. 
 Fax: (714) 540-1523 
  
 If to FBR, to: 
  
 Friedman, Billings, Ramsey Group, Inc. 
 1001 19th Street North, 
 Arlington, Virginia 22209 
 Attention: 
 Fax: 
  
 With a copy to: 
  
 Clifford Chance LLP 
 31 West 52nd Street

 New York, New York 10019-6131 
 Attention: Jay Bernstein, Esq. 
 Fax: (212) 878-8375 
  

 12 

 If to Milestone, to: 
  
 The Company or each Holder may change the foregoing address by notice given pursuant to this Section 11(c). 
  
 (d) Failure of any party to exercise any right or remedy under this Agreement
or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof. 
  
 (e) This Agreement shall be governed by and interpreted in accordance with the laws of the State of New York. 
  
 (f) If any term, provision, covenant or restriction of this Agreement is held
by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use good faith best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or
unenforceable. 
  
 (g) The Company shall not enter into any
agreement with respect to its securities that is inconsistent with the rights granted to the Holders of Registrable Securities in this Agreement or otherwise conflicts with the provisions hereof. Without limiting the generality of the foregoing, the
Company shall not grant to any person after the date hereof the right to request it to register any of its securities under the Securities Act unless the rights so granted are pari passu to the rights of the Holders of Registrable Securities set
forth herein, and are not otherwise in conflict or inconsistent with the provisions of this Agreement. 
  
 (h) This Agreement, the FBR Purchase Agreement (with respect to FBR and its permitted assignees and transferees only) and the Milestone Purchase Agreement
(with respect to Milestone and its permitted assignees and transferees only), constitute the entire agreement among the parties hereto with respect to the subject matter hereof. There are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein or with respect to FBR, in the FBR Purchase Agreement, or with respect to Milestone, in the Milestone Purchase Agreement. This Agreement, the FBR Purchase Agreement (with respect to FBR and its permitted
assignees and transferees only) and the Milestone Purchase Agreement (with respect to Milestone and its permitted assignees and transferees only) supersede all prior agreements and undertakings among the parties hereto with respect to the subject
matter hereof and with respect to FBR and Milestone, thereof. 
  
 (i) Subject to the requirements of Section 8 hereof, this Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto. 
  
 (j) All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context
may require. 
  

 13 

 (k) The headings in this Agreement are for convenience of reference only and shall not limit or otherwise
affect the meaning thereof. 
  
 (l) From and after the date of
this Agreement, upon the request of each Holder or the Company, the Company and such Holder shall execute and deliver such instruments, documents or other writings as may be reasonably necessary or desirable to confirm and carry out and to
effectuate fully the intent and purposes of this Agreement. 
  
 (m) This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. Signatures delivered by facsimile shall be
deemed to be original signatures. 
  
 [Signature Page Follows]

  

 14 

 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

  

			
	COMPANY:
	
	 ECC CAPITAL CORPORATION,
a Maryland corporation

		
	By:	 	 
	 	 	 Name:
 Title:

  

			
	HOLDERS:
	
	 FRIEDMAN, BILLINGS, RAMSEY GROUP, INC., a Virginia corporation

		
	By:	 	 
	 	 	 Name:
 Title:

  

			
	 MILESTONE ADVISORS LLC
a
                     limited liability company

		
	By:	 	                        , its Managing Member
		
	By:	 	 
	 	 	 Name:
 Title:

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