Exhibit 1.1
HSBC HOME EQUITY LOAN TRUST (USA)
2006-4
HSBC HOME EQUITY LOAN CORPORATION
II
(Depositor)
HSBC FINANCE CORPORATION
(Servicer)
Closed-End Home Equity Loan
Asset-Backed Certificates,
Series 2006-4
UNDERWRITING
AGREEMENT
December 5, 2006
HSBC SECURITIES (USA)
INC.
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as Representative of the Underwriters
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452 Fifth Avenue
New York, New York 10018
Ladies and Gentlemen:
HSBC Home Equity Loan Corporation
II, a Delaware corporation (the “Depositor”), will
enter into a Pooling and Servicing Agreement (the “Pooling
and Servicing Agreement”) with HSBC Finance Corporation
(“HSBC Finance”), as servicer, HSBC Bank USA, National
Association, as administrator (the “Administrator”),
and U.S. Bank National Association, as trustee (the
“Trustee”), creating HSBC Home Equity Loan Trust (USA)
2006-4 (the “Trust”), and pursuant to which the Trust
will issue Closed-End Home Equity Loan Asset-Backed Certificates
Series 2006-4, in the classes and principal amounts specified in
the Terms Agreement (defined below) (the “Offered
Certificates”) and the Closed-End Home Equity Loan
Asset-Backed Certificates Series 2006-4, Class R (the
“Residual Certificate” and, together with the Offered
Certificates, the “Securities”).
Only the Offered Certificates are
being purchased by the several underwriters named in Schedule II to
the terms agreement (the “Terms Agreement”) executed by
the parties with respect to the Offered Certificates (collectively,
the “Underwriters”), for whom HSBC Securities (USA)
Inc. is acting as representative (the
“Representative”). The Certificates will represent a
fractional undivided interest in the assets of the Trust consisting
of, among other things, a pool of closed-end, fixed-rate and
declining-rate home equity loans conveyed to the Trustee at the
Closing Time and any eligible home equity loan substituted for a
loan pursuant to the Pooling and Servicing Agreement (each, an
“Eligible Substitute Home Equity Loan” and, together
with the home equity loans conveyed to the Trustee at the Closing
Time, the “Home Equity Loans”),
secured primarily by first and
second lien mortgages on residential properties that are primarily
one- to four-family properties and certain monies due thereunder.
The Depositor will acquire the Home Equity Loans pursuant to the
Home Equity Loan Purchase Agreement, as described below. The
Depositor is a subsidiary of HSBC Finance.
The Depositor will acquire the Home
Equity Loans, simultaneously with the execution of the Pooling and
Servicing Agreement, pursuant to a Home Equity Loan Purchase
Agreement dated as of the date of the Closing Time (the “Home
Equity Loan Purchase Agreement”) between the Depositor, as
purchaser, and certain originators, each of which is a subsidiary
of HSBC Finance (collectively, the “Sellers” and each
individually, a “Seller”).
Pursuant to the Home Equity Loan
Purchase Agreement, the Sellers will sell to the Depositor all of
their right, title and interest in and to the unpaid principal
balance of the Home Equity Loans, including all interest and
principal payments in respect thereof received on or after the
close of business on November 15, 2006 (the “Cut-Off
Date”), and certain other rights with respect to the
collateral supporting the Home Equity Loans. Pursuant to the
Pooling and Servicing Agreement, the Depositor will assign and
grant to the Trustee all of its right, title and interest in and to
the unpaid principal balance of the Home Equity Loans. In addition,
the Sellers will enter into an agreement dated as of the date of
the Closing Time (the “Transfer Agreement”) between the
Trustee and each Seller, pursuant to which the Sellers will assign
to the Trustee all of their right, title and interest in and to the
collateral supporting the Home Equity Loans, including the loan
agreements and mortgage notes relating thereto (collectively, the
“Transferred Assets”) not otherwise transferred
pursuant to the Home Equity Loan Purchase Agreement.
A form of the Pooling and Servicing
Agreement has been filed as an exhibit to the Registration
Statement (hereinafter defined).
The Depositor has filed with the
Securities and Exchange Commission (the “Commission”) a
registration statement on Form S-3 (File No. 333-132348) relating
to the Certificates and the offering thereof from time to time in
accordance with Rule 415 under the Securities Act of 1933, as
amended (the “1933 Act”), and has filed all amendments
thereto that are required as of the date hereof pursuant to the
1933 Act and the rules of the Commission thereunder (the
“1933 Act Regulations”). The registration statement, as
amended, has been declared effective by the Commission. Such
registration statement, as amended at the time of effectiveness,
including all material incorporated by reference therein and
including all information (if any) deemed to be part of the
registration statement at the time of effectiveness pursuant to
Rule 430B under the 1933 Act, is referred to in this Agreement as
the “Registration Statement.” The Depositor has filed
or will file with the Commission pursuant to Rule 424(b) of the
1933 Act Regulations (“Rule 424(b)”) a supplement (the
“Prospectus Supplement”) to the prospectus included in
the Registration Statement (such prospectus, in the form it appears
in the Registration Statement or in the form most recently revised
and filed with the Commission pursuant to Rule 424(b), is
hereinafter referred to as the “Base Prospectus”)
relating to the Offered Certificates and the method of distribution
thereof. The Base Prospectus and the Prospectus Supplement,
together with any amendment thereof or supplement thereto, is
hereinafter referred to as the “Prospectus.”
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For the purposes of this Agreement,
“Time of Sale” is the date specified in the Terms
Agreement and is time the first “contract of sale”
within the meaning contemplated by Rule 159 of the 1933 Act
Regulations (a “Contract of Sale”) for the Offered
Certificates was entered into. Prior to the Time of Sale, the
Depositor prepared a preliminary Prospectus, dated as of the date
hereof (subject to completion). As used herein, “Preliminary
Prospectus” means, with respect to any date or time referred
to herein, the most recent preliminary Prospectus (as amended or
supplemented, if applicable), which has been prepared and delivered
by the Depositor to the Underwriters in accordance with the
provisions hereof.
For purposes of this Agreement, all
references to the Registration Statement, the Preliminary
Prospectus, the Prospectus or any amendment or supplement to any of
the foregoing shall be deemed to be the copy filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval system (“EDGAR”).
All references in this Agreement to
financial statements and schedules and other information that is
“contained”, “included” or
“stated” in the Registration Statement, the Preliminary
Prospectus or the Prospectus (or other references of like import)
shall be deemed to mean and include all such financial statements
and schedules and other information which are incorporated by
reference in the Registration Statement, the Preliminary Prospectus
or the Prospectus, as the case may be; and all references in this
Agreement to amendments or supplements to the Registration
Statement, the Preliminary Prospectus or the Prospectus shall be
deemed to mean and include the filing of any document under the
Securities Exchange Act of 1934, as amended (the “1934
Act”), which is incorporated by reference in the Registration
Statement, the Preliminary Prospectus or the Prospectus, as the
case may be.
Capitalized terms used but not
otherwise defined herein shall have the meanings assigned thereto
in the Pooling and Servicing Agreement or the Preliminary
Prospectus or the Prospectus, as applicable.
SECTION 1. Representations and
Warranties .
(a) Each of HSBC Finance and the
Depositor, individually, represents and warrants to, and agrees
with, each Underwriter as set forth in this Section
1(a):
(i) The Depositor meets the
requirements for use of Form S-3 under the 1933 Act, as set forth
in the General Instructions to Form S-3, and the conditions of Rule
415 of the 1933 Act Regulations have been satisfied. The
Registration Statement was filed with the Commission and has been
declared effective by the Commission and is effective as of the
date hereof. “Effective Date” shall mean the most
recent date as of which the Registration Statement was declared
effective by the Commission, or any later effective date determined
pursuant to Rule 430(B)(f)(2) under the 1933 Act. The Commission
has not issued any order preventing or suspending the use of the
Preliminary Prospectus or the Prospectus or any “free writing
prospectus” (as defined in Rule 405 of the 1933 Act
Regulations) relating to the Offered Certificates (each, a
“Free Writing Prospectus”) or suspending the
effectiveness of the Registration Statement, and no proceedings for
such purpose are pending or, to the Depositor’s knowledge,
threatened by the Commission.
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(ii) On the Effective Date, the
Registration Statement complied in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations and the
1934 Act and the rules and regulations of the Commission thereunder
(the “1934 Act Regulations”), and did 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, and on the Closing Time, the
Registration Statement and any amendments and supplements thereto,
and the Prospectus, including documents incorporated or deemed to
be incorporated by reference in the Registration Statement or the
Prospectus, will comply in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations and the
1934 Act and 1934 Act Regulations, and neither of such documents
will include an untrue statement of a material fact or will omit to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; provided , however , that the
Depositor makes no representations or warranties as to any
statements in, or omissions from, the Registration Statement or the
Prospectus made in reliance upon and in conformity with the
Underwriter Information (as defined in subsection 9(b)
below).
(iii) The Preliminary Prospectus at
the Time of Sale did not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under
which they were made, not misleading (it being understood that no
representation or warranty is made with respect to the omission of
pricing and price-dependent information, which information shall of
necessity appear only in the final Prospectus); provided ,
however , that the Depositor makes no representations or
warranties as to any statements in, or omissions from, the
Preliminary Prospectus made in reliance upon and in conformity with
the Underwriter Information.
(iv) Each Issuer Free Writing
Prospectus, at the time of filing thereof and at the Time of Sale,
did not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to the statements therein,
in the light of the circumstances under which they were made, not
misleading, and each Issuer Free Writing Prospectus does not
conflict with the information contained in the Registration
Statement, the Preliminary Prospectus or the Prospectus;
provided, however , that the Depositor makes no
representations or warranties as to any statements in, or omissions
from, any Issuer Free Writing Prospectus made in reliance upon and
in conformity with the Underwriter Information. “Issuer Free
Writing Prospectus” means a “written
communication” (as defined in Rule 405 of the 1933 Act
Regulations) that constitutes an “issuer free writing
prospectus” within the meaning contemplated by Rule 433(h)(1)
of the 1933 Act Regulations. Other than the Preliminary Prospectus,
the Prospectus and any Issuer Free Writing Prospectus, the
Depositor (including its agents and representatives other than the
Underwriters in their capacity as such) has not made, used,
prepared, authorized, approved or referred to and will not make,
use, prepare, authorize, approve or refer to any “written
communication” (as defined in Rule 405 of the 1933 Act
Regulations) that constitutes an offer to sell or solicitation of
any offer to buy the Offered Certificates.
(v) Since the respective dates as of
which information is given in the Preliminary Prospectus and the
Prospectus, there has not been any material adverse
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change in the general affairs,
management, financial condition, or results of operations of any of
the Sellers or the Depositor or of their subsidiaries, other than
as disclosed in the Preliminary Prospectus and the Prospectus or in
reports filed by HSBC Finance with the Commission pursuant to the
1934 Act and the 1934 Act Regulations.
(vi) Each of the Sellers and the
Depositor has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its respective
jurisdiction of incorporation, with the full right, power and
authority (corporate and other) to own, lease and operate its
properties and conduct its business as described in the Preliminary
Prospectus and the Prospectus and to enter into and perform its
obligations under this Agreement, the Pooling and Servicing
Agreement, the Transfer Agreement and the Home Equity Loan Purchase
Agreement, as applicable, and to cause the Securities to be issued;
each of the Sellers and the Depositor is duly qualified as a
foreign corporation to transact business and is in good standing in
each jurisdiction which requires such qualification, except where
failure to be so qualified would not have a material adverse effect
on the business or consolidated financial condition of any such
Seller or the Depositor or the transactions contemplated by this
Agreement; and each Seller is duly authorized under the statutes
that regulate the business of making loans or of financing the sale
of goods (commonly called “small loan laws”,
“consumer finance laws” or “sales finance
laws”), or is permitted under the general interest statutes
and related laws and court decisions, to conduct in the various
jurisdictions in which any of them do business the businesses as
currently conducted therein by any of them.
(vii) There are no legal or
governmental proceedings pending to which any Seller or the
Depositor is a party or of which any property of any Seller or the
Depositor is the subject, other than proceedings which are not
reasonably expected, individually or in the aggregate, to have a
material adverse effect on the financial position,
shareholders’ equity or results of operations of such Seller
or the Depositor or the transactions contemplated by the
Transaction Documents, and to the best knowledge of the Depositor,
no such proceedings are threatened or contemplated by governmental
authorities or threatened by others.
(viii) This Agreement has been duly
authorized, executed and delivered by the Depositor, and the
Pooling and Servicing Agreement and the Home Equity Loan Purchase
Agreement, when executed and delivered as contemplated hereby and
thereby, will have been duly authorized, executed and delivered by
the Depositor, and the Home Equity Loan Purchase Agreement and the
Transfer Agreement when executed and delivered as contemplated
hereby and thereby, will have been duly authorized, executed and
delivered by each Seller. This Agreement constitutes, and the
Pooling and Servicing Agreement, the Transfer Agreement and the
Home Equity Loan Purchase Agreement, when executed and delivered as
contemplated herein and therein will constitute, legal, valid and
binding instruments enforceable against the Depositor or the
Sellers, as applicable, in accordance with their respective terms,
subject as to enforceability (A) to applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws
affecting creditors’ rights generally, (B) to general
principles of equity (regardless of whether enforcement is sought
in a proceeding in equity or at law) and (C) with respect
to
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rights of indemnity under this
Agreement, to limitations of public policy under applicable
securities laws.
(ix) The issuance and delivery of
the Securities, the consummation of any other of the transactions
contemplated herein or in the Pooling and Servicing Agreement, the
Transfer Agreement and the Home Equity Loan Purchase Agreement, and
the fulfillment of the terms of this Agreement, the Pooling and
Servicing Agreement, the Transfer Agreement and the Home Equity
Loan Purchase Agreement, do not and will not conflict with or
violate any term or provision of the Certificate or Articles of
Incorporation or Bylaws of any of the Sellers or the Depositor, as
applicable, any statute, order or regulation applicable to any of
the Sellers or the Depositor, as applicable, of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over any of the Sellers or the Depositor, as
applicable, and do not and will not conflict with, result in a
breach or violation or the acceleration of, or constitute a default
under, or result in the creation or imposition of any lien, charge
or encumbrance upon any of the property or assets of any of the
Sellers or the Depositor, as applicable, pursuant to the terms of,
any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which any of the Sellers or the
Depositor is a party or by which any of the Sellers or the
Depositor may be bound or to which any of the property or assets of
any of the Sellers or the Depositor may be subject, except for
conflicts, violations, breaches, accelerations and defaults which
would not, individually or in the aggregate, be materially adverse
to any of the Sellers or the Depositor or materially adverse to the
transactions contemplated by this Agreement.
(x) KPMG LLP is an independent
registered public accounting firm with respect to the Sellers and
the Depositor as required by the 1933 Act and 1933 Act
Regulations.
(xi) The issuance and sale of the
Offered Certificates has been duly authorized and, when the Offered
Certificates have been executed and authenticated in accordance
with the terms of the Pooling and Servicing Agreement and delivered
to and paid for by the Underwriters pursuant to this Agreement, the
Offered Certificates will be validly issued and outstanding and
entitled to the benefits of the Pooling and Servicing Agreement,
subject to (A) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors’ rights generally, and
(B) the remedy of specific performance and injunctive and
other forms of equitable relief that may be subject to equitable
defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(xii) No consent, approval,
authorization, order, registration or qualification of or with any
court or governmental agency or body of the United States is
required for the issuance or sale of the Offered Certificates, or
was or is required, as the case may be, for the consummation by any
of the Sellers or the Depositor of the other transactions
contemplated by this Agreement, the Pooling and Servicing
Agreement, the Transfer Agreement and the Home Equity Loan Purchase
Agreement, as applicable, except for (A) the registration
under the 1933 Act of the Offered Certificates, (B) such
consents, approvals, authorizations, orders, registrations,
filings, qualifications, licenses or permits
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as have been obtained or as may be
required under the State securities or Blue Sky laws in connection
with the issuance of the Offered Certificates and the subsequent
purchase and distribution of the Offered Certificates by the
Underwriters, or (C) where the failure to obtain such
consents, approvals, authorizations, orders, registrations,
filings, qualifications, licenses or permits would not have a
material adverse effect on the business or consolidated financial
condition of the Depositor or any of the Sellers or the
transactions contemplated by such agreements.
(xiii) Each of the Sellers and the
Depositor possesses all material licenses, certificates,
authorities or permits issued by the appropriate state, federal or
foreign regulatory agencies or bodies necessary to conduct the
business now conducted by it and as described in the Preliminary
Prospectus and the Prospectus, and none of the Sellers or the
Depositor has received notice of proceedings relating to the
revocation or modification of any such license, certificate,
authority or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would
materially and adversely affect the conduct of its business,
operations or financial condition or the transactions contemplated
by this Agreement.
(xiv) At the time of execution and
delivery of the Home Equity Loan Purchase Agreement and the
Transfer Agreement each Seller (A) will have good and
marketable title to the unpaid principal balance of the Home Equity
Loans and the Transferred Assets being transferred by it to the
Depositor or the Trustee, as the case may be, free and clear of any
lien, mortgage, pledge, charge, encumbrance, adverse claim or other
security interest (collectively “Liens”), (B) will
not have assigned to any person any of its right, title or interest
in or to the unpaid principal balance of the Home Equity Loans
under the Home Equity Loan Purchase Agreement or the Transferred
Assets under the Transfer Agreement, and (C) will have the
power and authority to sell the unpaid principal balance of the
Home Equity Loans to the Depositor and transfer and assign the
Transferred Assets to the Trustee; and upon the consummation of the
sale, transfer and assignment provided for pursuant to the terms of
the Home Equity Loan Purchase Agreement, the Depositor will have
acquired beneficial ownership of all the related Seller’s
right, title and interest in and to the unpaid principal balance of
the Home Equity Loans.
(xv) At the time of execution and
delivery of the Pooling and Servicing Agreement, the Depositor
(A) will have good and marketable title to the unpaid
principal balance of the Home Equity Loans being transferred by it
to the Trustee pursuant to the Pooling and Servicing Agreement,
free and clear of Liens, (B) will not have assigned to any
person any of its right, title or interest in or to the unpaid
principal balance of the Home Equity Loans and (C) will have
the power and authority to sell the unpaid principal balance of the
Home Equity Loans to the Trustee and to sell the Offered
Certificates to the Underwriters; and upon execution and delivery
of the Pooling and Servicing Agreement by the Trustee, the Trustee
will have acquired beneficial ownership of all of the
Depositor’s right, title and interest in and to the unpaid
principal balance of the Home Equity Loans; and upon delivery to
the Underwriters of the Offered Certificates in return for the
agreed upon consideration the Underwriters will have good and
marketable title to the Offered Certificates, in each case free of
Liens, except to the extent disclosed in the Preliminary Prospectus
and the Prospectus.
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(xvi) As of the Cut-Off Date, each
of the Home Equity Loans will meet the eligibility criteria
described in the Preliminary Prospectus and the Prospectus and, as
of the related Cut-Off Date for any Eligible Substitute Home Equity
Loan, each Eligible Substitute Home Equity Loan will meet the
eligibility criteria applicable thereto described in the Pooling
and Servicing Agreement.
(xvii) None of the Sellers or the
Depositor will conduct their operations while any of the Offered
Certificates are outstanding in a manner that would require any
Seller, the Depositor or the Trust to be registered as an
“investment company” under the Investment Company Act
of 1940, as amended (the “1940 Act”), as in effect on
the date hereof.
(xviii) The Depositor is not, and on
the date on which the first bona fide offer of the Offered
Certificates is made will not be, an “ineligible
issuer” as defined in Rule 405 under the 1933 Act.
(b) HSBC Finance represents and
warrants to, and agrees with, each Underwriter as set forth in this
Section 1(b):
(i) HSBC Finance is a corporation
duly organized and validly existing and in good standing under the
laws of its jurisdiction of incorporation. HSBC Finance has all
requisite power and authority to own its properties and conduct its
business as presently conducted and is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction which requires such qualification, except where the
failure to have such power and authority or to be so qualified
would not have a material adverse effect on the business or
consolidated financial condition of HSBC Finance and its
subsidiaries taken as a whole or the transactions contemplated by
this Agreement.
(ii) HSBC Finance is not in
violation of its restated articles of incorporation or in default
in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture,
mortgage, loan agreement, note, lease or other instrument material
to the business HSBC Finance and its subsidiaries, taken as a
whole, to which HSBC Finance is a party or by which it may be
bound, or to which any of the property or assets of HSBC Finance is
subject, except where any such violation would not have a material
adverse effect on the business or consolidated financial condition
of HSBC Finance or the transactions contemplated by this
Agreement.
(iii) The execution, delivery and
performance by HSBC Finance of this Agreement and the Pooling and
Servicing Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly and validly
authorized by all necessary action or proceedings and will not
conflict with or constitute a breach of, or default under, or
result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of HSBC Finance pursuant
to, any contract, indenture, mortgage, loan agreement, note, lease
or other instrument to which HSBC Finance is a party or by which it
may be bound, or to which any of the property or assets of HSBC
Finance is subject, nor will such action result in any violation of
the provisions of the charter or by-laws of HSBC Finance or any
applicable law, administrative regulation or
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administrative or court decree,
except where any such conflict, breach, default, encumbrance or
violation would not have a material adverse effect on the business
or consolidated financial condition of HSBC Finance or the
transactions contemplated by this Agreement.
(iv) This Agreement and the Pooling
and Servicing Agreement have been duly executed and delivered by
HSBC Finance; and this Agreement and the Pooling and Servicing
Agreement constitute legal, valid and binding instruments
enforceable against HSBC Finance in accordance with their
respective terms, subject as to enforceability (A) to
applicable bankruptcy, reorganization, insolvency, moratorium or
other similar laws affecting creditors’ rights generally,
(B) to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law) and
(C) with respect to rights of indemnity under this Agreement,
to limitations of public policy under applicable securities
laws.
(v) Except as set forth in or
contemplated in reports filed by HSBC Finance with the Commission
pursuant to the 1934 Act and the 1934 Act Regulations, there has
been no material adverse change in the business or consolidated
financial condition of HSBC Finance and its subsidiaries taken as a
whole since the respective dates as of which any information
relating to HSBC Finance is given in the Preliminary Prospectus and
the Prospectus.
(vi) There are no legal or
governmental proceedings pending, or to the knowledge of HSBC
Finance threatened, to which HSBC Finance is a party or of which
any of its property is the subject, other than proceedings which
are not reasonably expected, individually or in the aggregate, to
have a material adverse effect on the shareholder’s equity or
consolidated financial position of HSBC Finance and its
subsidiaries taken as a whole or which would have a material
adverse effect upon the transactions contemplated by this
Agreement.
(vii) No consent, approval,
authorization, order, registration, filing, qualification, license
or permit of or with any court or governmental agency or body of
the United States is required for the consummation by HSBC Finance
of the transactions contemplated by this Agreement and the Pooling
and Servicing Agreement, except for (A) the registration under
the 1933 Act of the Offered Certificates, (B) such consents,
approvals, authorizations, orders, registrations, filings,
qualifications, licenses or permits as have been obtained or as may
be required under state securities or Blue Sky laws in connection
with the issuance of the Offered Certificates and the subsequent
purchase and distribution of the Offered Certificates by the
Underwriters or (C) where the failure to obtain such consents,
approvals, authorizations, orders, registrations, filings,
qualifications, licenses or permits would not have a material
adverse effect on the business or consolidated financial condition
of HSBC Finance and its subsidiaries taken as a whole or the
transactions contemplated by such agreements.
(viii) KPMG LLP is an independent
registered public accounting firm with respect to HSBC
Finance.
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(c) Any certificates signed by an
officer of the Depositor or HSBC Finance and delivered to you or
your counsel in connection with the offering of the Offered
Certificates shall be deemed, and shall state that it is, a
representation and warranty as to the matters covered thereby to
each person to whom the representations and warranties in this
Section 1 are made.
SECTION 2. Purchase and Sale
. Subject to the terms and conditions and in reliance upon the
covenants, representations and warranties herein set forth, the
Depositor agrees to sell to each of the Underwriters, and each of
the Underwriters agrees, severally and not jointly, to purchase
from the Depositor the principal amount of each class of Offered
Certificates at the purchase price set forth opposite such
Underwriter’s name in Schedule II to the Terms Agreement
pursuant to the terms of this Agreement and the Terms
Agreement.
SECTION 3. Delivery and
Payment . Payment of the purchase price for, and delivery of,
the Offered Certificates to be purchased by the Underwriters shall
be made at the offices of Sidley Austin LLP, 787 Seventh Avenue,
New York, New York 10019, or at such other place as shall be agreed
upon by you, the Depositor and HSBC Finance, at the time on or
about the date and time of delivery and payment for the Offered
Certificates set forth in the Terms Agreement, such date and time
being herein referred to as the “Closing Time,” which
date, time or place may be postponed or changed by agreement
between you, the Depositor and HSBC Finance. Delivery of one or
more global certificates representing the Offered Certificates
shall be made to the accounts of the several Underwriters against
payment by them of the purchase price therefor, to or upon the
order of the Depositor by one or more wire transfers in immediately
available funds. The global certificates to be so delivered shall
be registered in the name of Cede & Co., as nominee for
The Depository Trust Company (“DTC”). The interests of
beneficial owners of the Offered Certificates will be represented
by book entries on the records of DTC and participating members
thereof. Definitive certificates representing the Offered
Certificates will be available only under limited circumstances as
described in the Pooling and Servicing Agreement.
SECTION 4. Offering by the
Underwriters . Each Underwriter severally represents, warrants
and covenants as follows:
(a) Such Underwriter shall offer
and/or solicit offers for the Offered Certificates for sale to the
public as set forth in the Preliminary Prospectus and the
Prospectus and agrees that all offers, solicitations and sales
shall be made in compliance with all applicable laws and
regulations. Furthermore, such Underwriter shall comply with all
applicable laws and regulations in connection with the use of Free
Writing Prospectuses, including but not limited to Rules 164 and
433 of the 1933 Act Regulations.
(b) Unless preceded or accompanied
by the Prospectus, no Underwriter may convey or deliver any
“written communication” within the meaning of Rule 405
of the 1933 Act Regulations to any person in connection with the
offering of the Offered Certificates, unless such written
communication is: (i) the Prospectus; (ii) the Preliminary
Prospectus; (iii) an Underwriter Free Writing Prospectus that
contains only subscription information regarding the Offered
Certificates, Approved Issuer Information or ABS ICM (which, to the
extent it constitutes Issuer Information, must also be Approved
Issuer Information); (iv) an Underwriter Free Writing
10
Prospectus that constitutes a
Bloomberg Information; (v) an Issuer Free Writing Prospectus; or
(vi) a written confirmation of sale or a notice of allocation of
securities sold or to be sold made in reliance on Rule 172 of the
1933 Act Regulations. “Underwriter Free Writing
Prospectus” means a Free Writing Prospectus prepared by or on
behalf of an Underwriter with respect to the Offered Certificates
that is not an Issuer Free Writing Prospectus. “ABS
ICM” means “ABS informational and computational
materials” with the meaning of Item 1101(a) of Regulation AB.
“Issuer Information” means “issuer
information” within the meaning set forth in Rule 433(h)(2)
of the 1933 Act Regulations with respect to the Offered
Certificates and includes, without limitation, the information with
respect to the Offered Certificates specified in footnote 271 of
Commission Release No. 33-8591 (Securities Offering Reform) other
than Underwriter Derived Information. “Approved Issuer
Information” has the meaning set forth in subsection 4(c)
below. “Bloomberg Information” means information
provided by an Underwriter to Bloomberg, Intex or a similar entity,
for use by investors and prospective investors together with or
after the delivery of an Issuer Free Writing Prospectus or the
Preliminary Prospectus that does not contain information other than
identifying information relating to the Trust and the Offered
Certificates or any class of Offered Certificates; the asset type
supporting the Offered Certificates; expected ratings; the expected
pricing date, expected closing date and first payment date for the
Offered Certificates or any class of Offered Certificates; expected
principal amount and class amounts; principal payment windows;
pricing speeds/prepayment assumptions; duration/modified duration;
expected weighted average life, expected final payment date,
expected legal final payment date and clean-up call or other
redemption features; expected interest rate index; preliminary
guidance as to the interest rate and/or yield for any class of
Offered Certificates (but not final interest rate or yield
information); names of lead managers and co-managers; information
about the principal amount of the Offered Certificates of each
class offered by each Underwriter; average lives; ratings and
ratings agencies; credit enhancement provider, if any; 100% pot vs.
retention status; percent interest only; geographic concentration;
public, 144A or Reg S offering; 2a-7 and SMMEA eligibility; other
similar or related information such as expected pricing parameters
and benchmarks; pricing guidance; status of subscriptions and
Underwriters’ retentions and ERISA eligibility. References to
“expected” in the foregoing includes ranges, windows or
references to benchmarks. “Underwriter Derived
Information” means information of the type described in
clause (5) of footnote 271 of Commission Release No. 33-8591
(Securities Offering Reform) when prepared by an Underwriter,
including traditional computational and analytical materials
prepared by an Underwriter.
(c) Such Underwriter will not
include any Issuer Information in any Underwriter Free Writing
Prospectus with respect to the Offered Certificates unless the
Issuer Information was accurately extracted from the Microsoft
Excel file provided by the Depositor entitled “HELT 2006-4
Investor Tape for SEC.xls,” an Issuer Free Writing Prospectus
previously filed with the Commission, the Preliminary Prospectus or
the Prospectus or was provided by the Depositor or HSBC Finance
expressly for inclusion therein, or such Underwriter or the
Representative has obtained the prior written consent of the
Depositor to the use of that Issuer Information in such Underwriter
Free Writing Prospectus (any such Issuer Information,
“Approved Issuer Information”).
(d) Such Underwriter will not enter
into a Contract of Sale with a prospective investor for any Offered
Certificates until the Preliminary Prospectus has been delivered to
such investor.
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(e) After the final Prospectus is
available, such Underwriter will not distribute any written
information concerning the Offered Certificates to a prospective
investor unless such information is preceded or accompanied by the
final Prospectus.
(f) If such Underwriter distributes
any “written communication” within the meaning of Rule
405 of the 1933 Act Regulations “in a manner reasonably
designed to lead to its broad unrestricted dissemination”
within the meaning contemplated by Rule 433(d)(ii) of the 1933 Act
Regulations, such Underwriter will provide a copy of such written
communication to the Depositor at a time reasonably in advance of
the time for filing with the Commission specified by Rule 433(d) of
the 1933 Act Regulations.
(g) Each Underwriter Free Writing
Prospectus prepared by it will not, as of the date such Underwriter
Free Writing Prospectus was conveyed or delivered to any
prospective purchaser of Offered Certificates, include any untrue
statement of a material fact or omit to state any material fact
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading;
provided, however , that no Underwriter makes such
representation, warranty or agreement to the extent such
misstatements or omissions were the result of any inaccurate
information that was included in an Issuer Free Writing Prospectus
previously filed with the Commission, the Preliminary Prospectus,
the Prospectus or Approved Issuer Information, which information
was not corrected by information subsequently provided by the
Depositor or HSBC Finance to the related Underwriter prior to the
time of first use of such Underwriter Free Writing
Prospectus.
(h) Such Underwriter has in place,
and covenants that it shall maintain, internal controls and
procedures that it reasonably believes to be sufficient to ensure
full compliance with all applicable legal requirements of the
1933 Act Regulations
with respect to the generation and use of
Free Writing Prospectuses in connection with
the offering of the Offered Certificates. In addition, such
Underwriter will maintain written and/or electronic records of the
following for a period of at least three years after the date
thereof:
(i) a copy of any Underwriter Free
Writing Prospectus used by such Underwriter to solicit offers to
purchase the Offered Certificates to the extent not filed with the
Commission;
(ii) regarding each Free Writing
Prospectus delivered by such Underwriter to a prospective investor,
the date of such delivery and identity of such investor;
and
(iii) regarding each Contract of
Sale entered into by such Underwriter, the date, identity of the
investor and the terms of such Contract of Sale, as set forth in
the related confirmation of trade.
(i) In
relation to each Member State of the European Economic Area which
has implemented the Prospectus Directive (each, a “Relevant
Member State”), with effect from and including the date on
which the Prospectus Directive is implemented in that Relevant
Member State (the “Relevant Implementation Date”), such
Underwriter has not made and will not make an offer of Offered
Certificates to the public in that Relevant Member State prior to
the publication of a prospectus in relation to the Offered
Certificates that has been approved by the
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competent authority in that Relevant
Member State or, where appropriate, approved in another Relevant
Member State and notified to the competent authority in that
Relevant Member State, all in accordance with the Prospectus
Directive, except that it may, with effect from and including the
Relevant Implementation Date, make an offer of Offered Certificates
to the public in that Relevant Member State at any time:
(i) to legal entities that are
authorized or regulated to operate in the financial markets or, if
not so authorized or regulated, whose corporate purpose is solely
to invest in securities;
(ii) to any legal entity that has
two or more of (1) an average of at least 250 employees during the
last financial year; (2) a total balance sheet of more than
€43,000,000 and (3) an annual net turnover of more than
€50,000,000, as shown in its last annual or consolidated
accounts; or
(iii) in any other circumstances
that do not require the publication by the issuer entity of a
prospectus pursuant to Article 3 of the Prospectus
Directive.
For the purposes of this provision,
(A) the expression an “offer of Offered Certificates to the
public” in relation to any Offered Certificates in any
Relevant Member State means the communication in any form and by
any means of sufficient information on the terms of the offer and
the Offered Certificates to be offered so as to enable an investor
to decide to purchase or subscribe the Offered Certificates, as the
same may be varied in that Member State by any measure implementing
the Prospectus Directive in that Member State and (B) the
expression “Prospectus Directive” means Directive
2003/71/EC and includes any relevant implementing measure in each
Relevant Member State.
The countries comprising the
“European Economic Area” are Austria, Belgium, Cyprus,
Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece,
Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta,
Netherlands, Poland, Portugal, Slovak Republic, Slovenia, Spain,
Sweden, United Kingdom, Iceland, Liechtenstein and
Norway.
(j) Such Underwriter:
(i) has only communicated or caused
to be communicated and will only communicate or cause to be
communicated any invitation or inducement to engage in investment
activity, within the meaning of section 21 of the Financial
Services and Markets Act 2000 (the “FSMA”), received by
it in connection with the issue or sale of any Offered Certificates
in circumstances in which section 21(1) of the FSMA does not apply
to the Depositor; and
(ii) has complied and will comply
with all applicable provisions of the FSMA with respect to anything
done by it in relation to the Offered Certificates in, from or
otherwise involving the United Kingdom.
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(k) Such Underwriter and each of its
affiliates (i) has anti-money laundering policies and procedures in
place in accordance with the requirements imposed by Title III of
the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001, as
amended, and any rules and regulations promulgated thereunder, and
the Foreign Assets Control Regulations issued by the Office of
Foreign Assets Control of the United States Department of the
Treasury, in each case to the extent applicable to them; and (ii)
has implemented an anti-money laundering compliance program
pursuant to NASD Rule 3011, to the extent applicable to
them.
(l) Such Underwriter shall deliver
to the Depositor, at a time reasonably in advance of the time for
filing with the Commission specified in Section 5(o) below, each
Underwriter Free Writing Prospectus that includes Issuer
Information and each Underwriter Free Writing Prospectus that
constitutes Bloomberg Information and that sets forth the final
terms and pricing for the Offered Certificates. To facilitate
filing with the Commission to the extent required by Section 5(o)
below, all Issuer Information included in any Underwriter Free
Writing Prospectus shall be set forth in a document separate from
any Underwriter Derived Information included in such Underwriter
Free Writing Prospectus.
SECTION 5. Covenants of the
Depositor . The Depositor covenants with each of the
Underwriters as follows:
(a) The Depositor agrees to prepare
the Preliminary Prospectus and the Prospectus and to file the
Preliminary Prospectus and the Prospectus with the Commission
pursuant to Rule 424(b) of the 1933 Act Regulations, in each case
no later than the time specified by such Rule. The Depositor will
notify the Underwriters immediately, and confirm the notice in
writing, (i) when any post-effective amendment to the
Registration Statement becomes effective, or any supplement to the
Prospectus or any amended Prospectus has been filed, (ii) of
the receipt of any comments from the Commission with respect to the
Prospectus, (iii) of any request by the Commission for any
amendment to the Registration Statement or any amendment or
supplement to the Prospectus or for additional information, (iv)
when any Issuer Free Writing Prospectus is used by the Depositor,
and (v) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement, or of
the suspension of the qualification of any Offered Certificates for
offering or sale in any jurisdiction, or of the initiation or
threatening of any proceedings for any of such purposes. The
Depositor will use all reasonable efforts to prevent the issuance
of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(b) The Depositor agrees to file
each Issuer Free Writing Prospectus, any Approved Issuer
Information required to be filed and the final terms of the Offered
Certificates with the Commission pursuant to Rule 433(d) of the
1933 Act Regulations, in each case no later than the time specified
by such Rule.
(c) The Depositor will give the
Underwriters notice of its intention to file any amendment to the
Registration Statement or any amendment, supplement or revision to
any of the Base Prospectus, the Preliminary Prospectus or the
Prospectus, whether pursuant to the 1933 Act, the 1934 Act or
otherwise (other than reports to be filed pursuant to the 1934
Act),
14
will furnish the Representative with
copies of any such documents a reasonable amount of time prior to
such proposed filing or use, as the case may be, and will not file
or use any such document to which the Representative or counsel for
the Underwriters shall reasonably object.
(d) The Depositor has furnished or
will deliver to the Underwriters and counsel for the Underwriters,
without charge, conformed copies of the Registration Statement as
originally filed and of each amendment thereto (including exhibits
filed therewith or incorporated by reference therein and documents
incorporated or deemed to be incorporated by reference therein) and
conformed copies of all consents and certificates of experts. The
copies of the Registration Statement and each amendment thereto
furnished to the Underwriters will be identical, in all material
respects, to the electronic versions thereof filed with the
Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(e) The Depositor will furnish to
the Underwriters, without charge, during the period when the
Prospectus is required to be delivered under the 1933 Act or the
1934 Act, such number of copies of the Preliminary Prospectus and
the Prospectus (both as amended or supplemented) as the
Underwriters may reasonably request. The Preliminary Prospectus and
the Prospectus and any amendments or supplements thereto furnished
to the Underwriters will be identical, in all material respects, to
the electronic versions thereof filed with the Commission pursuant
to EDGAR, except to the extent permitted by Regulation
S-T.
(f) The Depositor will comply with
the 1933 Act and the 1933 Act Regulations, the 1934 Act and the
1934 Act Regulations so as to permit the completion of the
distribution of the Offered Certificates as contemplated in this
Agreement and in the Preliminary Prospectus and the Prospectus. If
at any time when a prospectus is required by the 1933 Act to be
delivered in connection with sales of the Offered Certificates, any
event shall occur or condition shall exist as a result of which it
is necessary, in the opinion of counsel for the Underwriters or for
the Depositor, to amend the Registration Statement or amend or
supplement the Prospectus in order that the Prospectus will not
include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances existing at the time it is delivered
to a purchaser, not misleading, or if it shall be necessary, in the
opinion of such counsel, at any such time to amend the Registration
Statement or amend or supplement the Preliminary Prospectus or the
Prospectus in order to comply with the requirements of the 1933 Act
or the 1933 Act Regulations, the Depositor will, at its expense,
promptly prepare and file with the Commission, subject to
subsection 5(b) above, such amendment or supplement as may be
necessary to correct s
