Document:

2012.6.30-EX.10.7

Exhibit 10.7

LETTER AGREEMENT
Dated as of July 31, 2012
To the holders of the Notes
(collectively, “you” or the “Holders”)
issued pursuant to the Note Purchase Agreement referred to below

Ladies and Gentlemen:

We refer to the Note Purchase Agreement, dated as of November 23, 2010 (the “Note Purchase Agreement”), among Avon Products, Inc., a New York corporation (“us” or “API”), and each of the Holders.  Capitalized terms not otherwise defined in this Letter Agreement have the same meanings as specified in the Note Purchase Agreement.
For good and valuable consideration, including but not limited to the execution and delivery by the holders of the Notes of that Letter Waiver dated as of the date hereof (the “Letter Waiver”), API hereby agrees that it shall: 
(a) no later than August 1, 2012, pay to each of the holders of the Notes a fee in the amount of 10 basis points of the then outstanding principal amount of the Notes held by such holder and 
(b) no later than August 15, 2012, 
(i)  pay the reasonable fees, costs and expenses of Chapman and Cutler, LLP, special counsel to the Holders, in connection with the Letter Waiver, this Letter Agreement, the transactions contemplated hereby and thereby and as set forth in Section 15.1 of the Note Purchase Agreement, and
(ii)  enter into an amendment (together with corporate authorizations, certificates, legal opinions, and reaffirmations of the Subsidiary Guaranty, as reasonably requested by the Required Holders) to the Note Purchase Agreement (in form and substance reasonably satisfactory to the Required Holders and API), amending the Note Purchase Agreement as follows (and the applicable related definitions thereto):
1.    The addition of a leverage ratio covenant (the “Leverage Ratio”) substantially identical (except as provided below) to the ratio contained in Section 7.01(d) of the Credit Agreement dated as of June 29, 2012 by and among API, certain Subsidiaries of API named therein, Citibank, N.A., as administrative agent, and the other financial institutions party thereto (the “Term Loan Agreement”); provided however, the Funded Debt to Consolidated EBITDA ratio for the fiscal quarter ending March 31, 2014 and thereafter shall be 3.75:1.00 unless the Bank Credit Agreement, the Term Loan Agreement or any other principal bank facility or any amendment, restatement, replacement or refinancing thereof contains a ratio more favorable to the holders of the Notes, then such more favorable ratio shall apply; 
2.    The addition of a most favored lender provision with respect to financial covenants (however expressed) and related definitions contained in the existing Bank Credit Agreement, the Term Loan Agreement or any other principal bank facility and any amendment, restatement, replacement and refinancing thereof, which most favored lender provision shall include the Interest Coverage Ratio and the Leverage Ratio; provided such most favored lender provision shall be a “two 

way” provision such that if the covenants contained in the Bank Credit Agreement, Term Loan Agreement or other principal bank facility subject to the most favored lender provision are excluded, terminated, amended, loosened or otherwise modified or if the relevant agreement is terminated and not replaced then such financial covenants shall unconditionally be deemed on the date of execution of any such amendment or modification or termination to be and thereupon shall be so excluded, terminated, loosened or otherwise amended or modified under the Note Purchase Agreement; further provided that in no event shall the Interest Coverage Ratio and the Leverage Ratio be less favorable to the holders of the Notes than the Interest Coverage Ratio contained in the Note Purchase Agreement and the Leverage Ratio described above, in each case, as of the date of this Letter Agreement.  In the event that any compensation shall have been paid to the creditors under the Bank Credit Agreement, Term Loan Agreement or other principal bank facility in order to exclude, terminate, amend, loosen or modify such covenant subject to the most favored lender provision as set forth in such Bank Credit Agreement, Term Loan Agreement or other principal bank facility, then a corresponding and pro rata payment of compensation shall be made to the holders of Notes in connection with such exclusion, termination, amendment, loosening or modification of such covenant subject to such most favored lender provision in the Note Purchase Agreement.
3.    A 150 basis point increase to the applicable interest rate of the Notes if API's unsecured and unsubordinated Debt is not rated above Investment Grade (a “Downgrade”) by (a) two or more of the three Rating Agencies, or (b) one Rating Agency if such Debt is rated by two or less than two Rating Agencies.  If after an increase in the interest rate of the Notes a Rating Agency subsequently increases its rating of API's unsecured and unsubordinated Debt to Investment Grade such that such Debt is then rated Investment Grade by two or more of the Rating Agencies or all Rating Agencies (if such Debt is rated by two or less than two Rating Agencies), the interest rate on the Notes will be decreased to the interest rate payable on the Notes on the date of their issuance.  
4.    The addition of an affirmative covenant requiring API to arrange, if requested by any holder of the Notes, a quarterly call among the holders of the Notes and the Chief Financial Officer and/or Treasurer of API.
5.    The definition of “Interest Coverage Ratio” shall be amended to add back to the consolidated pre-tax income of API and its Consolidated Subsidiaries actual non-cash impairment charges related solely to API's Silpada business in an amount not to exceed $125,000,000 in the aggregate during the term of the Note Purchase Agreement. For clarification, this is in addition to the Silpada Non-cash Charge as set forth in the Letter Waiver. 
API represents and warrants that no Default or Event of Default has occurred and is continuing under the Note Purchase Agreement as of the date hereof.
Any breach of this Letter Agreement may result in irreparable damage to the holders of the Notes for which holders of the Notes will not have an adequate remedy at law. If any breach of this Letter Agreement has occurred and is continuing, the holder of any Note at the time outstanding may proceed to protect and enforce the rights of such holder by action at law, suit in equity or other appropriate proceeding, whether in a suit for damages or for the specific performance of any agreement contained herein or for an injunction against a violation of any of the terms hereof, or in aid of the exercise of any power granted hereby or by law or otherwise.  API agrees to pay the costs and expenses of the holders of the Notes (including attorneys' fees) in connection with this Letter Agreement and the enforcement and defense hereof to the same extent as set forth in Section 15.1 of the Note Purchase Agreement.

Additionally, API agrees that in the event any of the requirements set forth in (a) or (b) above are not satisfied on or before the dates set forth therein and that the holders of the Notes are negotiating the amendments provided in (b) above in good faith, the applicable interest rate of the Notes shall automatically increase (without further action) by 200 basis points until all of such requirements have been satisfied and the Note Purchase Agreement and the Notes shall be deemed to be amended to reflect such increase.  API also agrees that nothing in this section is intended to limit the rights of the holders of the Notes set forth in the immediate preceding paragraph.
 All parties agree that the holders of the Notes (and any permitted successors and assigns under the Note Purchase Agreement) shall be, and is hereby, named as an express beneficiary of this Letter Agreement, with full rights as such and to the same extent as if such holders were signatories hereto.

This Letter Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of a signature page to this Letter Agreement by telecopier or other electronic means shall be effective as delivery of a manually executed counterpart of this Letter Agreement.

This Letter Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, excluding choice-of-law principles of the law of such State that would prohibit the application of the laws of a jurisdiction other than such State.
	
					
	 
	 
	Very truly yours,
	 

	 
	 
	 
	 
	 

	 
	 
	AVON PRODUCTS, INC.

	 
	 
	 
	 
	 

	 
	 
	By:
	/s/ Richard J. Valone
	 

	 
	 
	 
	Name:  Richard J. Valone

	 
	 
	 
	Title:  Vice President & Treasurer

The Subsidiary Guarantor agrees that the Subsidiary Guaranty shall remain in full force and effect and reaffirms its obligations under the Subsidiary Guaranty.
	
					
	 
	 
	AVON CAPITAL CORPORATION

	 
	 
	 
	 
	 

	 
	 
	By:
	/s/ Richard J. Valone
	 

	 
	 
	 
	Name:  Richard J. Valone

	 
	 
	 
	Title:  Vice President & TreasurerDOW-Q2-6.30.2012 EX. 10(ccc)

	
			
	 
	The Dow Chemical Company and Subsidiaries
	EXHIBIT 10(ccc)

PERFORMANCE SHARES DEFERRED STOCK AGREEMENT PURSUANT TO 
THE DOW CHEMICAL COMPANY 2012 Stock Incentive Plan
The Dow Chemical Company (“the Company” or “Dow”) has delivered to you prospectus material pertaining to shares of Dow Common Stock covered by The Dow Chemical Company 2012 Stock Incentive Plan (“the Plan”). This document is referred to herein as “this Agreement.” Terms that are used herein and defined in the Plan are used as defined in the Plan. THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
TERMS AND CONDITIONS
		
	1.
	This Agreement is in all respects subject to the provisions of the Plan, as the Plan may be amended from time to time. The Plan is incorporated by reference. In the event of any conflict between this Agreement and the Plan, as the Plan may be amended from time to time, the provisions of the Plan shall govern and this Agreement shall be deemed to be modified accordingly. 

		
	2.
	The target number of performance shares of Deferred Stock you are awarded under this Agreement (“Target Shares”) is outlined in the accompanying award letter with [grant date] as the effective date of the grant. Shares are earned over a [duration] beginning [performance period begin date] and ending on [performance period end date] (the "Performance Period"). The maximum number of shares that can be earned totals [percent] of Target Shares. 

		
	3.
	The total number of shares earned under this grant will be determined and released into your account as soon as administratively possible in [the year following the end of the performance period]. Prior to issuance and delivery of the Deferred Stock you shall have no rights as a stockholder with respect to the Deferred Stock earned under this Agreement. In each year prior to issuance and delivery, you (or your successors) shall make arrangements satisfactory to the Company for the payment of any taxes required to be withheld in connection with your right to shares of Deferred Stock under all applicable laws and regulations of any governmental authority, whether federal, state or local and whether domestic or foreign. The Company and its Subsidiaries or Affiliates (collectively and individually a “Dow Company”) and their directors, officers, employees, or agents shall not be liable for any delay in issuance or receipt of any shares pursuant to this Agreement. 

		
	4.
	This Agreement shall terminate and your rights under this Agreement shall be forfeited if your employment with any Dow Company is terminated for any reason other than death, disability or retirement, or a Special Separation Situation. In the event of your retirement death or disability, your current year's Performance Share Grant will be prorated based on the period of time worked during the year. If you take a leave of absence from a Dow Company, for any reason, your grant under this Agreement will be subject to the leave of absence policy established by the Compensation and Leadership Development Committee for Plan awards.     Your death or disability shall not accelerate the time of payment of Deferred Stock under this Agreement. 

		
	5.
	A “Special Separation Situation” is defined as a situation in which (a) a Dow Company terminates your employment by employer action for a reason that qualifies you for a severance benefit (which includes the Special Stock Treatment described in this section 5) under a severance plan sponsored by a Dow Company, and (i) you fulfill the requirements of the severance plan in order to qualify for payment of the severance benefit, and (ii) you and the Dow Company sign a Release that provides for the Special Stock Treatment described in this section 5; or (b) a Dow Company terminates your employment by employer action, and i) you do not qualify for a severance benefit under a severance plan sponsored by the Dow Company under the circumstances specified in paragraph 5a, and ii) the reason for termination was not because of the violation of an employer rule, or a law, regulation or other such government requirement, or dishonesty or theft, or because you engaged in activity harmful to the interests of, or in competition with, a Dow Company, and iii) you and the Dow Company sign a Release that provides for the Special Stock Treatment described in this section 5. If your employment is terminated under a Special Separation Situation, then your Award will receive Special Stock Treatment. Special Stock Treatment means that (i) the target number of shares in your grant shall be reduced to a new target number of shares that is proportionate to the period of time you were employed by the Dow Company during the stated performance period and (ii) the number of shares actually earned and delivered, if any, under the grant shall be determined by applying the performance measures applicable to the grant to the proportionally reduced target number of shares determined in accordance with subclause (i) above. This proportionally reduced amount of the target shares shall be calculated by dividing (x) the period of time between the beginning of the performance period and the date of termination of employment by (y) the performance period. 

	
			
	 
	The Dow Chemical Company and Subsidiaries
	EXHIBIT 10(ccc)

		
	6.
	For each Dow Common Stock dividend record date between during the Performance Period and until the shares are delivered, an account in your name will be credited with a sum of money equal to the amount that you would have 

received in dividends if the Shares Earned had been issued to you (the "Dividend Equivalents"). The Dividend Equivalents associated with each share delivered to you pursuant to Section 3 will be paid in cash to you as additional compensation on the most administratively possible salary payment following delivery of the shares. Awardees regularly paid compensation by a Dow Company in other than U.S. dollars will receive such payment of Dividend Equivalents converted from U.S. dollars at the Dow inter-company trading rate in effect at the time of delivery. 
		
	7.
	The Company is under no obligation to grant you the right to receive any cash payment under any law, federal, local, domestic or foreign. 

		
	8.
	Your right to future issuance and delivery of Deferred Stock may not be sold, pledged, assigned or otherwise transferred (except as hereinafter provided) and any attempt to sell, pledge, assign or otherwise transfer shall be void and your rights to Deferred Stock shall therefore be forfeited. Your right to such future issuance and delivery shall, however, be transferable by will or pursuant to the laws of descent and distribution or you may make a written designation of a beneficiary on the form prescribed by the Company, which beneficiary (if any) shall succeed to your rights under this Agreement in the event of your death. 

		
	9.
	Upon the occurrence of a Change of Control as defined in the Plan, your right to receive the number of shares of Performance Shares credited to your account under this Agreement shall not be forfeitable under any circumstances, and your Performance Shares will generally continue to be delivered based on the original deferral period schedule and Payment Date. If you also experience an involuntary Separation from Service from Dow or an affiliate thereof within two years following a Change of Control, and prior to the Payment Date, the Company shall deliver the Performance Shares credited to your account to you on the 30th day following such Separation from Service.  Shares credited to Awardees account will be determined based on reported company performance prior to the date of Separation from Service.

		
	10.
	If at any time during the term of this Agreement you engage in any act of Unfair Competition (as defined below), this Agreement shall terminate effective on the date on which you enter into such act of Unfair Competition, unless terminated sooner by operation of another term or condition of this Agreement or the Plan. In addition, if at any time within three years after issuance and delivery of this Deferred Stock you engage in any act of Unfair Competition, you shall promptly pay to the Company the Fair Market Value of Shares Earned and Dividend Equivalents paid. The Compensation and Leadership Development Committee shall, in its sole discretion, determine when any act of Unfair Competition has occurred, and the determination of the Compensation and Leadership Development Committee shall be final and binding as to all parties. For purposes of this Agreement, the term “Unfair Competition” shall mean and include activity on your part that is in competition with a Dow Company or is or may be harmful to the interests of a Dow Company, including but not limited to conduct related to your employment for which either criminal or civil penalties against you may be sought, or your acceptance of employment with an employer that is in competition with a Dow Company. 

		
	11.
	In the event that additional shares of Common Stock of the Company are issued pursuant to a stock split or a stock dividend, the Board of Directors shall make appropriate adjustments in the number and kind of Target Shares credited to your account on the books of the Company as deemed appropriate. 

		
	12.
	Nothing contained in this Agreement shall confer or be deemed to confer upon you any right with respect to continuance of employment by a Dow Company, nor interfere in any way with the right of a Dow Company to terminate your employment at any time with or without assigning a reason therefore. 

		
	13.
	This document shall constitute a Performance Shares Deferred Stock Agreement between the Company and you, and this Agreement shall be deemed to have been made on [grant date]. To the extent that federal laws do not otherwise control, this Agreement shall be governed by the laws of the state of Delaware and construed accordingly. Subject to earlier termination by operation of another term or condition of this Agreement or the Plan, this Agreement will expire when Shares Earned are delivered or when it is determined by the Compensation and Leadership Development Committee that the Company's strategic financial performance objectives have not been achieved, whichever date is earlier. You may choose to reject this award by written notice delivered to the Company within ninety days of your receipt of this instrument. Individuals who reject this Deferred Stock will not receive additional cash or non-cash compensation in lieu of the Deferred Stock. 

[mmm-yyyy of grant date]

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