EXECUTION COPY
MORGAN STANLEY ABS CAPITAL I INC.
MORTGAGE PASS-THROUGH CERTIFICATES
Series 2006-HE2
UNDERWRITING AGREEMENT
New York, New York
May 25, 2006
Morgan Stanley & Co. Incorporated
as representative of the several underwriters listed on
the attached Schedule A
1585 Broadway
New York, New York 10036
Dear Sirs and Madams:
Morgan Stanley ABS Capital I Inc., a Delaware corporation (the
"Company"), proposes to sell to you, as representative (the
"Representative") of
yourself, Bank of America Securities LLC ("Bank of America") and
Countrywide
Securities, Inc. ("Countrywide") (together, the "Underwriters"),
IXIS Real
Estate Capital Trust 2006-HE2, Mortgage Pass-Through Certificates,
Series
2006-HE2 in the original principal amount and with the designation
described on
Schedule A attached hereto (the "Offered Certificates"). The
Offered
Certificates will be issued pursuant to a pooling and servicing
agreement dated
as of May 1, 2006 (the "Pooling and Servicing Agreement") among
Morgan Stanley
ABS Capital I, Inc., as depositor (the "Depositor"), Master
Financial, Inc., as
a servicer ("Master Financial"), Saxon Mortgage Services, as a
servicer
("Saxon"), JPMorgan Chase Bank, National Association, as securities
administrator, master servicer and backup servicer (in each such
capacity, the
"Securities Administrator", "Master Servicer" and "Backup
Servicer",
respectively), and Deutsche Bank National Trust Company, as trustee
and
custodian (in each such capacity, the "Trustee" and the
"Custodian",
respectively), and IXIS Real Estate Capital Inc., as unaffiliated
seller (the
"Unaffiliated Seller"). In addition to the Offered Certificates,
the Depositor
will authorize for issuance the Mortgage Pass-Through Certificates,
Series
2006-HE2, Class X, Class P and Class R pursuant to the Pooling and
Servicing
Agreement (the "Private Certificates" and together with the Offered
Certificates, the "Certificates").
The Company has filed with the Securities and Exchange Commission
(the
"Commission") a registration statement, including a prospectus,
relating to the
Offered Certificates and has filed with, or mailed for filing to,
the Commission
a prospectus supplement specifically relating to the Offered
Certificates
pursuant to Rule 424 under the Securities Act of 1933 (the
"Securities Act").
The term "Registration Statement" means such registration statement
as amended
to the Closing Date (as defined herein). The term "Base Prospectus"
means the
prospectus included in the Registration Statement. The term
"Prospectus" means
the Base Prospectus together with the prospectus supplement
specifically
relating to the Offered Certificates, as filed with, or mailed for
filing to,
the Commission pursuant to Rule 424 (the "Prospectus Supplement").
The term
"preliminary prospectus" means a preliminary prospectus supplement
specifically
relating to the Offered Certificates together with the Base
Prospectus. Any
reference in this underwriting agreement (the "Agreement") to the
Registration
Statement, any preliminary prospectus or the Prospectus shall be
deemed to refer
to and include the documents incorporated by reference therein
pursuant to
Item 12
of Form S-3 under the Securities Act, including the Free Writing
Prospectus,
dated April 21, 2006, and any ABS Informational and Computational
Materials (as
defined herein), as of the effective date of the Registration
Statement, the
date of such preliminary prospectus or the Prospectus or the
Closing Date, as
the case may be. Terms not otherwise defined in this Agreement are
used herein
as defined in the Pooling and Servicing Agreement.
I.
The Company represents and warrants to and agrees with the
Underwriters
that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in
effect,
and no proceedings for such purpose are pending before or
threatened by the
Commission.
(b) Each part of the Registration Statement, when such part became
effective, did not contain, and each such part, as amended or
supplemented,
if applicable, will not contain any 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 not misleading, (ii) the Registration
Statement
and the Prospectus comply, and, as amended or supplemented, if
applicable,
will comply in all material respects with the Securities Act and
the
applicable rules and regulations of the Commission thereunder and
(iii) the
Prospectus does not contain and, as amended or supplemented, if
applicable,
will not contain any untrue statement of a material fact or omit to
state a
material fact necessary to make the statements therein, in the
light of the
circumstances under which they were made, not misleading, except
that the
representations and warranties set forth in this paragraph I(b) do
not
apply to the Excluded Information (as defined in paragraph VII
hereof).
(c) The Company has been duly incorporated, is validly existing as
a
corporation in good standing under the laws of the State of
Delaware, has
the corporate power and authority to own its property and to
conduct its
business as described in the Prospectus and to enter into and
perform its
obligations under this Agreement and the Pooling and Servicing
Agreement.
(d) This Agreement has been duly authorized, executed and delivered
by the
Company.
(e) The Pooling and Servicing Agreement has been duly authorized,
executed
and delivered by the Company and is a valid and binding agreement
of the
Company, enforceable in accordance with its terms except as the
enforceability thereof may be limited by bankruptcy, insolvency or
similar
laws affecting creditors' rights generally and to general
principles of
equity regardless of whether enforcement is sought in a proceeding
in
equity or at law.
(f) The direction by the Company to the Trustee to execute,
authenticate
and deliver the Offered Certificates has been duly authorized by
the
Company, and the
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Certificates, when executed and authenticated in the manner
contemplated in
the Pooling and Servicing Agreement, and delivered to and paid for
by the
Underwriters in accordance with the terms of this Agreement, will
be
validly issued and outstanding and entitled to the benefits of the
Pooling
and Servicing Agreement.
(g) Neither the execution and delivery by the Company of, nor the
performance by the Company of its obligations under, this Agreement
or the
Pooling and Servicing Agreement, will contravene any provision of
applicable law or the certificate of incorporation or by-laws of
the
Company or any agreement or other instrument binding upon the
Company that
is material to the Company or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the
Company or
any subsidiary, and no consent, approval, authorization or order
of, or
qualification with, any governmental body or agency is required for
the
performance by the Company of its obligations under this Agreement
and the
Pooling and Servicing Agreement, except such as may be required by
the
securities or Blue Sky laws of the various states in connection
with the
offer and sale of the Offered Certificates.
(h) There has not occurred any material adverse change, or any
development
involving a prospective material adverse change, in the condition,
financial or otherwise, or in the earnings, business or operations
of the
Company and its subsidiaries, taken as a whole, from that set forth
in the
Prospectus.
(i) There are no legal or governmental proceedings pending or
threatened to
which the Company is a party or to which any of the properties of
the
Company are subject that are required to be described in the
Registration
Statement or the Prospectus and that are not so described, nor are
there
any statutes, regulations, contracts or other documents required to
be
described in the Registration Statement or the Prospectus or to be
filed as
exhibits to the Registration Statement that are not described or
filed as
required.
(j) Each preliminary prospectus filed as part of the Registration
Statement
as originally filed or as a part of any amendment thereto, or filed
pursuant to Rule 424 under the Securities Act, complied as to form,
when so
filed, in all material respects with the Securities Act and the
rules and
regulations of the Commission thereunder.
(k) The Company is not 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.
II. The Company hereby agrees to sell the Offered Certificates to
the
Underwriters, and the Underwriters, upon the basis of the
representations and
warranties herein contained, but subject to the conditions
hereinafter stated,
agrees to purchase the Offered
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Certificates from the Company, for a purchase price which is the
sum of
approximately 99.75% of the original principal amount of the
Offered
Certificates.
III.
(a) The Underwriters propose to make a public offering of the
Offered
Certificates as soon as this Agreement is entered into. The terms
of the
public offering of the Offered Certificates are set forth in the
Prospectus.
(b) It is understood that the Underwriters may prepare and provide
to
prospective investors certain ABS Informational and Computational
Materials
(as defined below) in connection with the offering of the Offered
Certificates, subject to the following conditions:
i)
In connection with the use of ABS Informational and Computational
Materials, the Underwriters shall comply with all applicable
requirements of Regulation AB.
ii)
"ABS Informational and Computational Materials" as used herein
shall have the meaning given such term in item 1101(a) of
Regulation AB but shall include only those ABS Informational and
Computational Materials that have been prepared or delivered to
prospective investors by or at the direction of the Underwriters.
iii) All ABS Informational and Computational Materials provided to
prospective investors that are required to be filed pursuant to
Regulation AB shall bear a legend on each page including the
following statement:
"THIS MATERIAL IS NOT A SOLICITATION OF ANY OFFER TO BUY OR SELL
ANY SECURITY OR OTHER FINANCIAL INSTRUMENT OR TO PARTICIPATE IN
ANY TRADING STRATEGY. THIS MATERIAL WAS NOT PREPARED BY THE
MORGAN STANLEY RESEARCH DEPARTMENT. PLEASE REFER TO IMPORTANT
INFORMATION AND QUALIFICATIONS AT THE END OF THIS MATERIAL."
The Company shall have the right to require additional specific
legends or notations to appear on any ABS Informational or
Computational Materials, the right to require changes regarding
the use of terminology and the right to determine the types of
information appearing therein. Notwithstanding the foregoing,
paragraph III(B)(c) will be satisfied if all ABS Informational
and Computational Materials referred to therein bear a legend in
a form previously approved in writing by the Company.
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iv)
Any ABS Informational and Computational Materials are subject to
the review by and approval of the Company prior to their
distribution to any prospective investors and a copy of such ABS
Informational and Computational Materials as are delivered to
prospective investors shall, in addition to the foregoing
delivery requirements, be delivered to the Company simultaneously
with delivery to prospective investors.
v)
The Underwriters shall provide to the Company, for filing on Form
8-K as provided in paragraph VI(e), five (5) copies (in such
format as required by the Company) of all ABS Informational and
Computational that are required to be filed with the Commission
pursuant to Regulation AB. The Underwriters may provide copies of
the forgoing in a consolidated or aggregate form that includes
all information required to be filed. All ABS Informational and
Computational Materials described in this paragraph III(B)(e)
must be provided to the Company not later than 10:00 a.m. New
York time one business day before filing thereof is required
pursuant to the terms of this Agreement. Each Underwriter agrees
that it will not provide to any investor or prospective investor
in the Offered Certificates any ABS Informational and
Computational Materials on or after the day on which ABS
Informational and Computational Materials are required to be
provided to the Company pursuant to this paragraph III(B)(e)
(other than copies of ABS Informational and Computational
Materials previously submitted to the Company in accordance with
this paragraph III(B)(e) for filing pursuant to paragraph VI(e)),
unless such ABS Informational and Computational Materials are
preceded or accompanied by the delivery of a Prospectus to such
investor or prospective investor.
vi)
All information included in the Computational ABS Informational
and Computational Materials shall be generated based on
substantially the same methodology and assumptions that are used
to generate the information in the Prospectus Supplement as set
forth therein; provided, however, that the ABS Informational and
Computational Materials may include information based on
alternative methodologies or assumptions if specified therein.
vii) The Company shall not be obligated to file any ABS
Informational
and Computational Materials that in the reasonable determination
of the Company are not required to be filed pursuant to
Regulation AB.
(c) Each Underwriter severally represents and warrants and agrees
with the
Company that as of the date hereof and as of the Closing Date that:
(i) the
ABS Informational and Computational Materials furnished to the
Company
pursuant to paragraph III(B)(e) constitute (either in original,
aggregated
or consolidated form) all of the materials furnished to prospective
investors by the Underwriter prior to the time of delivery thereof
to the
Company that are required to be filed with the
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Commission with respect to the Offered Certificates in accordance
with
Regulation AB; (ii) on the date any such ABS Informational and
Computational Materials with respect to such Certificates (or any
written
or electronic materials furnished to prospective investors on which
the ABS
Informational and Computational Materials are based) were last
furnished to
each prospective investor and on the date of delivery thereof to
the
Company pursuant to paragraph III(B)(e) and on the related Closing
Date,
such ABS Informational and Computational Materials (or materials)
were
accurate in all material respects when read in conjunction with the
Prospectus; (iii) the Underwriters have not and will not represent
to
potential investors that any ABS Informational and Computational
Materials
were prepared or disseminated on behalf of the Company; and (iv)
all ABS
Informational and Computational Materials (or underlying materials
distributed to prospective investors on which the ABS Informational
and
Computational Materials were based) contained and will contain the
legend
in the form set forth in paragraph III(B)(c) (or in such other form
previously approved in writing by the Company).
Notwithstanding the foregoing, the Underwriters make no
representation or
warranty as to whether any ABS Informational and Computational
Materials
(or any written or electronic materials furnished to prospective
investors
on which the ABS Informational and Computational Materials are
based)
included or will include any inaccurate statement resulting
directly from
any error contained in the information (i) regarding the Mortgage
Loans,
the related mortgagors and/or the related Mortgaged Properties (but
only to
the extent any untrue statement or omission arose from errors or
omissions
in the information concerning the Mortgage Loans, the related
mortgagors
and/or the related Mortgage Properties, as applicable, provided to
the
Underwriters by the Company (the "Pool Information") or (ii)
contained in
(but not incorporated by reference in) any Prospectus; provided,
however,
in each case, that if any information that would otherwise
constitute Pool
Information or Prospectus Information is presented in any ABS
Informational
and Computational Materials (or any written or electronic materials
furnished to prospective investors on which the ABS Informational
and
Computational Materials are based) in a way that is either
inaccurate or
misleading in any material respect, such information shall not be
Pool
Information or Prospectus Inform
