MORGAN STANLEY ABS CAPITAL I INC.
MORTGAGE PASS-THROUGH CERTIFICATES
Series 2006-HE3
UNDERWRITING AGREEMENT
New York, New York
September 26, 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 and Bank of America Securities LLC ("Bank of America")
(together, the
"Underwriters"), the IXIS Real Estate Capital Trust 2006-HE3,
Mortgage
Pass-Through Certificates, Series 2006-HE3 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 September 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"), Wells Fargo 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-HE3, Class B-5, 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
August 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 Certificates, when executed and
authenticated in the manner contemplated in the
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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 [____]% 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 (the "Prospectus Information");
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
