Document:

EXHIBIT 10.1

                         ADDITIONAL TRANSFER INSTRUMENT

     Pursuant to this Additional Transfer Instrument, dated August 30, 2006 (the
"Instrument"), between Asset Backed Funding Corporation (the "Depositor"), as
seller, and Wells Fargo Bank, N.A., as trustee of the ABFC 2006-OPT1 Trust (the
"Trust"), as purchaser (the "Trustee"), and pursuant to the Pooling and
Servicing Agreement, dated as of July 1, 2006 (the "Pooling and Servicing
Agreement"), among the Depositor, Option One Mortgage Corporation, as servicer
(the "Servicer"), and the Trustee, the Depositor and the Trustee agree to the
sale by the Depositor and the purchase by the Trustee, on behalf of the Trust,
of the Mortgage Loans listed on the attached Schedule of Additional Group 3
Mortgage Loans set forth in Attachment B (the "Additional Group 3 Mortgage
Loans").

     Capitalized terms used but not otherwise defined herein shall have the
meanings set forth in the Pooling and Servicing Agreement.

     Section 1. Conveyance of Additional Group 3 Mortgage Loans.

     (a) The Depositor, concurrently with the execution and delivery hereof,
does hereby sell, transfer, assign, set over and otherwise convey to the
Trustee, on behalf of the Trust, without recourse for the benefit of the
Certificateholders, all the right, title and interest of the Depositor,
including any security interest therein for the benefit of the Depositor, in and
to (i) each Additional Group 3 Mortgage Loan, including all amounts due on the
Additional Group 3 Mortgage Loans including the related Cut-off Date Principal
Balance, all interest accruing thereon after the Subsequent Cut-off Date and all
collections in respect of interest and principal due after the Subsequent
Cut-off Date, and all items with respect to the Additional Group 3 Mortgage
Loans to be delivered pursuant to Section 2.01 of the Pooling and Servicing
Agreement; provided, however that the Depositor reserves and retains all right,
title and interest in and to amounts due on the Additional Group 3 Mortgage
Loans on or prior to the related Subsequent Cut-off Date, (ii) property which
secured each such Additional Group 3 Mortgage Loan and which has been acquired
by foreclosure or deed in lieu of foreclosure; (iii) its interest in any
insurance policies in respect of the Additional Group 3 Mortgage Loans; (iv) all
proceeds of any of the foregoing and (v) the rights of the Depositor under the
Additional Mortgage Loan Purchase Agreement. The Depositor, contemporaneously
with the delivery of this Agreement, has delivered or caused to be delivered to
the Trustee each item set forth in Section 2.01 of the Pooling and Servicing
Agreement. The transfer to the Trustee by the Depositor of the Additional Group
3 Mortgage Loans identified on Attachment B shall be absolute and is intended by
the Depositor, the Servicer, the Trustee and the Certificateholders to
constitute and to be treated as a sale by the Depositor to the Trust Fund.

     (b) The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey to the Trustee
without recourse for the benefit of the Certificateholders all the right, title
and interest of the Depositor, in, to and under the Additional Mortgage Loan
Purchase Agreement and the Depositor herewith delivers to the Trustee executed
copies of the Additional Mortgage Loan Purchase Agreement.

     (c) The Trustee acknowledges the assignment to it of the Additional Group 3
Mortgage Loans and the delivery to it of the related Mortgage Files, subject to
the provisions of Sections 2.01 and 2.02 of the Pooling and Servicing Agreement.

     (d) Additional terms of the sale are set forth on Attachment A hereto.

     Section 2. Representations and Warranties; Conditions Precedent.

     (a) The Depositor hereby confirms that each of the conditions precedent and
the representations and warranties set forth in Section 2.04 of the Pooling and
Servicing Agreement are satisfied as of the date hereof.

     (b) The Depositor hereby confirms that each of the representations and
warranties in Section 2.06 of the Pooling and Servicing Agreement are true and
correct as of the date hereof, provided, however that any references in such
section to Mortgage Loan shall be deemed to refer to Additional Group 3 Mortgage
Loan.

     (c) All terms and conditions of the Pooling and Servicing Agreement are
hereby ratified and confirmed; provided, however, that in the event of any
conflict, the provisions of this Instrument shall control over the conflicting
provisions of the Pooling and Servicing Agreement.

     Section 3. Recordation of Instrument.

     To the extent permitted by applicable law, this Instrument, or a memorandum
thereof if permitted under applicable law, is subject to recordation in all
appropriate public offices for real property records in all of the counties or
other comparable jurisdictions in which any or all of the properties subject to
the Mortgages are situated, and in any other appropriate public recording office
or elsewhere, such recordation to be effected by the Servicer at the
Certificateholders' expense on direction of the related Certificateholders, but
only when accompanied by an Opinion of Counsel to the effect that such
recordation materially and beneficially affects the interests of the
Certificateholders or is necessary for the administration or servicing of the
Mortgage Loans.

     Section 4. Governing Law.

     This Instrument shall be construed in accordance with the laws of the State
of New York and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws, without giving effect to
principles of conflicts of law.

     Section 5. Counterparts.

     This Instrument may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same instrument.

     Section 6. Successors and Assigns.

     This Instrument shall inure to the benefit of and be binding upon the
Depositor and the Trustee and their respective successors and assigns.

<PAGE>

                              ASSET BACKED FUNDING CORPORATION

                              By: /s/ Juanita L. Deane-Warner
                                  ----------------------------------
                              Name:   Juanita L. Deane-Warner
                              Title:  Vice President

                              WELLS FARGO BANK, N.A., as Trustee for Asset
                              Backed Funding Corporation Asset-Backed
                              Certificates, Series 2006-OPT1

                              By: /s/ Peter A. Gobell
                                  ----------------------------------
                              Name:   Peter A. Gobell
                              Title:  Vice President

<PAGE>

                                  ATTACHMENT A
                                  ------------

                            ADDITIONAL TERMS OF SALE

     A. General

        1.   Subsequent Cut-off Date: August 1, 2006

        2.   Additional Transfer Date: August 30, 2006

        3.   Aggregate Principal Balance of the Additional Group 3 Mortgage
             Loans as of the Subsequent Cut-off Date: $86,052,992.99

        4.   Purchase Price: 100.00%

     B. The obligation of the Trust Fund to purchase an Additional Group 3
Mortgage Loan on any Additional Transfer Date is subject to the satisfaction of
the conditions set forth in the following paragraphs and the accuracy of the
following representations and warranties with respect to each Additional Group 3
Mortgage Loan determined as of the applicable Subsequent Cut-off Date: (i) such
Additional Group 3 Mortgage Loan is not 30 or more days delinquent as of the
last day of the month preceding the Subsequent Cut-off Date; (ii) the original
term to stated maturity of such Additional Group 3 Mortgage Loan is not less
than 120 months and does not exceed 360 months; (iii) the Additional Group 3
Mortgage Loan does not provide for negative amortization; (iv) such Additional
Group 3 Mortgage Loan does not have a Combined Loan-to-Value Ratio greater than
100.00%; (v) all of the Additional Group 3 Mortgage Loans have, as of the
Subsequent Cut-off Date, a weighted average term to stated maturity not in
excess of 360 months; (vi) each Additional Group 3 Mortgage Loan that is a
Fixed-Rate Mortgage Loan has a Mortgage Interest Rate that is not less than
3.000% or greater than 14.700%; (vii) each Additional Group 3 Mortgage Loan has
been serviced by the Servicer since origination or the date of purchase; (viii)
each Additional Group 3 Mortgage Loan has a first payment date occurring on or
before September 1, 2006 and will include 30 days of interest thereon, (ix) each
Additional Group 3 Mortgage Loan that is an Adjustable-Rate Mortgage Loan has a
Gross Margin not less than 0.500%, a Maximum Mortgage Interest Rate not less
than 9.500% and a Minimum Mortgage Interest Rate not less than 5.500% and (x)
such Additional Group 3 Mortgage Loan has been underwritten in accordance with
the criteria set forth under "Underwriting Standards" in the Prospectus
Supplement.

     C. Following the purchase of any Additional Group 3 Mortgage Loan by the
Trust, no Group 3 Mortgage Loan (including such Additional Group 3 Mortgage
Loans) has as of the Subsequent Cut-off Date: (i) a Mortgage Interest Rate less
than 3.000% per annum or greater than 14.700% per annum; (ii) a Combined
Loan-to-Value Ratio greater than 100.00%; (iii) a Principal Balance greater than
$1,700,000; or (iv) a credit score less than 500. In addition, no
Adjustable-Rate Mortgage Loan in Group 3 will have a Gross Margin less than
0.500% per annum and all of the Group 3 Mortgage Loans will have a weighted
average original term to stated maturity of not more than 360 months.

     D. Notwithstanding the foregoing, any Additional Group 3 Mortgage Loan may
be rejected by (i) the NIMs Insurer, if any, or (ii) any Rating Agency if the
inclusion of such Additional Group 3 Mortgage Loan would adversely affect the
ratings on any class of Certificates.

<PAGE>

                                  ATTACHMENT B
                                  ------------

                  SCHEDULE OF ADDITIONAL GROUP 3 MORTGAGE LOANS

           [Available Upon Request from the Depositor or the Trustee]LOAN AGREEMENT

August 28, 2006

AVON PRODUCTS, INC. 

1345 Avenue of the Americas

New York, New York 10105

Ladies and Gentlemen: 

     We are pleased to make available to you an uncommitted credit facility for general corporate purposes, including the repayment of outstanding indebtedness owing to us, on the terms
set forth in this letter. 

     1. We agree to consider from time to time your requests that we make advances ("Advances") in our sole and absolute discretion, in an aggregate amount not to exceed at any one time
outstanding the amount set forth on Schedule I hereto as the "Facility Amount", on the terms and conditions set forth below. All Advances shall be in the
currency set forth on Schedule 1 and you agree to make all payments of principal and interest with respect to each Advance in the same currency in which
such Advance was made. Unless directed otherwise by us, all other amounts hereunder shall be payable by you in the lawful currency of the United States of America. If so directed by us, you will pay any such other amounts in the currency or
currencies of any one or more Advances made pursuant hereto. This letter is not a commitment to lend but rather to set forth the procedures to be used in connection with your requests for our making of Advances to you from time to time on or prior
to August 28, 2007 (the “Termination Date”) on which date this uncommitted facility shall expire pursuant to paragraph 11 hereof. The Advances shall be evidenced by the "grid" promissory note executed by you in substantially the form of
Exhibit A  hereto (hereafter referred to as the "Note"). You shall pay in full the principal amount of each Advance made hereunder at the maturity of that
Advance. No Advance shall mature after the Termination Date and all principal, interest and other amounts owing pursuant hereto shall be due and payable in full on such date. 

     2. Each Advance shall be in an amount at least equal to the amount set forth on Schedule I hereto as the "Minimum Advance Amount" and shall be made upon (i) your request to us by telephone, in each case followed by written confirmation, in the form of Exhibit C hereto, by facsimile or other electronic transmission or letter, given by any of the persons listed on Exhibit B   hereto or
otherwise designated by you in writing ("Designated Persons"), that you wish to borrow money on a specified date, which shall be a Business Day, in a specified amount and for a specified term (which shall, in no event, be longer than the number of
days set forth on Schedule I  hereto as the "Maximum Term"); and (ii) our mutual agreement as to such date, amount and term and as to the interest rate per
annum. We must receive your written Notice of Borrowing at least 3 Business Days (as defined herein) prior to the proposed borrowing date for an Advance.  Any notice of borrowing shall be irrevocable.  On the date of any such Advance, we will make
such Advance available to you in same day funds by transfer by wire of the proceeds of such Advance to an account designated in writing by a Designated Person. Promptly after the date of each Advance, we will send you a written confirmation of such
Advance and the amount and term thereof and the interest rate per annum. 

     3. Your agreement and acceptance of this letter, together with your furnishing to us certified copies of (i) your charter and by-laws and (ii) resolutions of your board of directors,
shall constitute a representation and warranty by you that (a) the execution, delivery and performance of this letter has been duly authorized by all necessary corporate action and does not contravene any law, or any contractual or legal
restriction, applicable to you and (b) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for such execution, delivery and performance or for the making of any
Advance. 

      4. Each request by you for an Advance shall constitute a representation and warranty by you, as of the making of such Advance and giving effect to the application of the proceeds therefrom, that (i) no payment
default has occurred and is continuing under any agreement or instrument relating to any of your indebtedness for borrowed money in an aggregate amount in excess of $100,000,000, (ii) such Advance when made will constitute your legal, valid and
binding obligation and (iii) such Advance is being incurred, and will be repaid, in the ordinary course of your business, and the proceeds of such Advance will be used for general corporate purposes including working capital and the repayment of
outstanding indebtedness to us.  

     5. Each request by you for an Advance shall constitute a representation and warranty by you that, as of the making of such Advance and giving effect to the application of the proceeds
therefrom, to your knowledge no event has occurred and no circumstance exists as a result of which the information which you have provided to us in connection herewith, taken as a whole, would include an untrue statement of a material fact or omit
to state any material fact necessary to make the statements contained therein, in the light of the circumstances under which they were made, not materially misleading. 

     6. (a) You shall repay principal of and interest on, each Advance in accordance with the terms hereof and of the Note.  All outstanding accrued interest on an Advance shall be payable
on the maturity date thereof and interest on any Advance having a maturity of longer than three months shall be due and payable quarterly on the day (the “Interest Payment Date”) in the third month following (i) the month in which such
Advance was made or (ii) the last Interest Payment Date with respect to such Advance, as the case may be, that corresponds numerically to the date such Advance was made or such previous Interest Payment Date, as the case may be (in the event there
is no such numerically corresponding date, such date shall be the last day of such third month).

        (b) Any Advance may be prepaid in whole or in part prior to the stated maturity thereof, together with accrued interest on the amount prepaid to the date of prepayment, upon the
receipt by us of two Business Days (as defined below) irrevocable prior written notice from you.  You shall, on the date of any prepayment (regardless of the reason for such prepayment and including a prepayment of any Advance upon the acceleration
thereof following an event specified in paragraph 16) and in the event that you fail to borrow an Advance or make a prepayment on any date scheduled by you for such borrowing or prepayment, indemnify and compensate us for any and all losses, costs,
expenses, damages, fees and other disbursements

incurred or paid by us resulting from or attributable to such prepayment or failure to prepay or borrow, including, without limitation, any and all costs relating to such Advance or to the breaking of any of our
funding arrangements with respect to such Advance or to the redeployment of funds (excluding any margin contained in the interest rate applicable to the Advance).  We shall provide to you a certificate specifying such losses, costs, expenses,
damages, fees and other disbursements, which certificate shall be conclusive and binding upon you in the absence of manifest error. It is understood and agreed that the preceding provisions of this paragraph 6 (b) shall not be applicable to the
prepayment of outstanding Advances which bear interest at a rate that fluctuates or may fluctuate daily (for example, the Bank’s base or prime rate of interest). 

     7. You shall make all payments (other than U.S. Dollar payments) required hereunder or under the Note by wire transfer prior to 12:00 noon (Tokyo time) on the day when due in the
currency specified in Section 1, to us for the credit of The Bank of Tokyo-Mitsubishi UFJ, Ltd., Tokyo, Japan, SWIFT ID: BOTKJPJT, A/C#315-0111-007, attention: Rolando Uy, Loan Operations Group, Reference: Avon Products, Inc., in same day funds. Any
U.S. Dollar payments required hereunder or under the Note shall be made by wire transfer prior to 12:00 noon (New York City time) on the day when due to such account of ours in the United States as we may direct in same day funds. All computations
of interest shall be made by us on the basis of a year of 360 days, for the actual number of days (including the first day but excluding the last day) elapsed. All payments required to be made by you shall be made without reduction, set-off or
withholding of any nature, including on account of taxes other than Excluded Taxes (as defined below), and should any withholding (other than with respect to Excluded Taxes) be required by applicable law you will increase the amount of any payment
to be made such that the actual amount received by us following such withholding will be the same as would otherwise have been received by us absent such withholding. On the date hereof we shall furnish to you, and at any later time, upon your
request, we will furnish to you (but only so long as we remain lawfully able to do so and can do so without suffering any monetary or other detriment), Internal Revenue Service Form W-8BEN or W-8ECI, as appropriate, or any successor or other form
prescribed by the Internal Revenue Service, certifying that we, or our branch holding the applicable Advance, are exempt from United States withholding tax on the payment of interest on Advances. For purposes of this paragraph 7, “Excluded
Taxes” shall mean all present and future taxes imposed on or measured by our (or any office, branch or subsidiary of ours) overall net income or any franchise taxes, taxes on doing business or taxes measured by capital or net worth imposed on
us (or any office, branch or subsidiary of ours), in each case imposed by the United States of America or any political subdivision or taxing authority thereof or therein, or taxes on or measured by the overall net income of any office, branch or
subsidiary of ours or any franchise taxes, taxes imposed on doing business or taxes measured by capital or net worth imposed on any office, branch or subsidiary of ours, in each case imposed by any foreign country or subdivision thereof in which
such office, branch or subsidiary is doing business. 

     8. Whenever any payment to be made hereunder shall be otherwise due on a Saturday, a Sunday or other day of the year on which banks are required or authorized to close in either New
York or Tokyo (any other day being a "Business Day"), such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest. 

     9. You agree that you will not apply the proceeds of any Advance in violation of Regulations U or X issued by the Board of Governors of the Federal Reserve System. 

     10. We shall incur no liability to you in acting upon any telephone, facsimile, electronic or letter request or other communication which we believe in good faith to have been given
by a Designated Person or in otherwise acting in good faith and without gross negligence or willful misconduct under this letter. Further, all documents required to be executed in conjunction with Advances under this letter may be signed by any
Designated Person. 

     11. This letter shall remain in effect until the Termination Date, or terminated by either you or us by giving prior written notice of termination hereof to the other party hereto,
but no such termination shall affect your obligations with respect to the Advances hereunder outstanding at the time of such termination. 

     12. All written communications hereunder shall be mailed, sent via facsimile or delivered to the address specified on Schedule I hereto for you and for us, or as to each party, to
such other address as shall be designated by such party in a written notice to the other party. Written communication shall be effective upon receipt unless such communication is mailed in which case it shall be effective three Business Days after
deposit in first class mail. 

     13. You hereby authorize us from time to time to record the principal amount of any Advance, the applicable rate of interest with respect to any Advance, the maturity date with
respect to any advance, and any and all payments of principal and interest thereon. Such recordation may be made in our internal records and/or on the Note itself. Our internal records and/or the Note shall be conclusive evidence of the information
so recorded, absent manifest error, provided, any failure to so record shall not affect your obligations hereunder or under the Note.  If for the purpose of obtaining a judgment or award in any action or proceeding or otherwise it is appropriate to
convert a sum due from you hereunder or under the Note in a particular currency (the “Specified Currency”) into another currency, the rate of exchange used shall be that at which in accordance with normal banking procedures we could
purchase the Specified Currency with such other currency at our office in New York City or, if we then have no such office, at another office of ours reasonably selected by us on the Business Day preceding that on which such judgment or award is
given or, as the case may be, the day such conversion is otherwise appropriate.  Your obligations in respect of any sum due to us hereunder shall, notwithstanding any judgment or award in a currency other than the Specified Currency, be discharged
only to the extent that on the Business Day following receipt by us of any sum adjudged or awarded in such other currency we may in accordance with normal, reasonable banking procedures purchase the Specified Currency with such other currency. If
the amount of the Specified Currency so purchased is less than the sum originally due to us in the Specified Currency, you agree, as a separate obligation and notwithstanding any such judgment or award, to pay on demand and indemnify us against the
amount of such loss.  If the amount of the Specified Currency so purchased exceeds the sum originally due to us in the Specified Currency, we shall remit such excess to you.

     14. You agree to pay on demand all reasonable costs and expenses, including, without limitation, reasonable fees and disbursements of legal counsel, if any, incurred by us in
connection with the enforcement of, or our protection of our rights under, this letter or the Note, including, without limitation, any such reasonable costs and expenses associated with any restructuring or work-out associated with this letter, the
Note or any Advance.  You agree to indemnify and hold us harmless from and against all claims, expenses (including reasonable expenses of legal counsel), and losses that may be suffered by, or asserted against, us in connection with any Advance,
this letter or the Note, including, without limitation, (i) in connection with the enforcement of this Agreement or (ii) in connection with our rights hereunder; provided that such indemnity shall not, as to us, be available to the extent that such
claims, expenses and losses are determined by a court of competent jurisdiction by a final and nonappealable judgment to have resulted from the gross negligence, willful misconduct or bad faith by us. This indemnification shall survive any
termination hereof. Any overdue principal of an Advance and overdue interest thereon and other amounts required to be paid hereunder or under the Note, shall, to the fullest extent permitted by law, bear interest payable on demand (i) in the case of
overdue principal of, or interest on, any Advance, at the rate of interest otherwise payable in respect of such Advance, plus 2% and (ii) in the case of any other overdue amount, at the fluctuating rate per annum from time to time designated by us
in the United States as our prime rate (or equivalent) (which is not necessarily our lowest or best rate), plus 2%. 

     15. You agree promptly to furnish us with such financial statements or other information regarding you and/or your affiliates as we may reasonably request from time to time.

     16. If any of the following events (each an “Event of Default”) or any other amount required to be paid by you pursuant to the terms of this letter or the Note shall occur
and be continuing: 

         (a) you shall fail to pay any principal of any Advance when the same becomes due and payable or any interest, fee or other amount payable hereunder within three (3) Business Days of
    the date when the same becomes due and payable; or 

          (b) any representation or warranty made by you (or any of your officers) in connection with any Advance or otherwise in connection with this letter or the Note shall prove to have been incorrect in any material
    respect when made; or 

          (c) you shall, without our prior written consent, merge or consolidate with or into any person or entity (except for a merger in which you are the surviving entity), or convey, transfer, lease or dispose of
    (whether in one transaction or in a series of transactions) all or substantially all of your assets to any person or entity; or 

          (d) you shall fail to perform or observe any other term, covenant or agreement in connection with any Advance or otherwise in connection with this letter or the Note on your part to be performed or observed for
    thirty (30) days after written notice thereof has been given to you by us; or 

          (e) you shall fail to pay any principal of or premium or interest on any indebtedness for borrowed money exceeding $100,000,000 in the aggregate (excluding indebtedness evidenced by the Note), when the same
    becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such
    indebtedness; or any other event shall occur or condition shall exist under any agreement or instrument relating to such indebtedness and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the
    effect of such event or condition is to allow or permit the acceleration of the maturity of such indebtedness; or any such indebtedness shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required
    prepayment), prior to the stated maturity thereof; or 

          (f) you shall generally not pay your debts as such debts become due, or shall admit in writing your inability to pay your debts generally, or shall make a general assignment for the benefit of creditors; or any
    proceeding shall be instituted by or against you (but if against, only if it remains undismissed or unstayed for a period of 60 days) seeking to adjudicate you as bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
    arrangement, adjustment, protection, relief, or composition of you or your debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver,
    trustee, custodian or other similar official for you or any substantial part of your property; or you shall take any corporate action to authorize any of the actions set forth above in this subsection (f); or 

          (g)  any one or more judgments or orders for the payment of money in excess of $100,000,000 in the aggregate shall be rendered against you and there shall be any period of 30 consecutive days during which a
    stay of enforcement of such judgment(s) or order(s), by reason of pending appeal or otherwise, shall not be in effect.; 

then, and in any such event, we may declare the Note, all interest thereon, and all other amounts payable thereunder and hereunder to be forthwith due and payable, whereupon the Note, such interest, and other
amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind all of which you hereby expressly waive; provided however, that upon the occurrence of an Event of Default described in subsection (f) above, the Note, all such interest, and all such other amounts shall automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by you. 

     17. THIS LETTER SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK. THE PARTIES HEREBY AGREE THAT ANY LEGAL ACTION OR PROCEEDING AGAINST YOU WITH RESPECT TO THIS AGREEMENT, ANY ADVANCE OR ANY OF THE AGREEMENTS, DOCUMENTS OR INSTRUMENTS DELIVERED IN CONNECTION HEREWITH OR THEREWITH
MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY OR

TO THE FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK AS WE MAY ELECT, AND, BY EXECUTION AND DELIVERY HEREOF, YOU ACCEPT AND CONSENT TO, FOR
YOURSELF AND IN RESPECT TO YOUR PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. YOU HEREBY WAIVE TO THE FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW ANY RIGHT TO STAY OR TO DISMISS ANY ACTION OR PROCEEDING BROUGHT
BEFORE SAID COURTS ON THE BASIS THAT SUCH ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. YOU AGREE TO SERVICE OF PROCESS BY MAIL OR ANY OTHER MEANS PERMITTED BY LAW. 

     18. You hereby irrevocably agree that we shall not be liable for, and you waive and agree not to seek, any special, indirect or consequential damages arising out of any claim related
to this Agreement or the Note.  YOU AND WE EACH HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS LETTER OR THE NOTE OR
ANY ADVANCES HEREUNDER. 

     19. You agree that you will not institute against or join any other person in instituting against us any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding,
or other proceeding under any federal or state bankruptcy or similar law, for one year and a day after the latest maturing Advance issued is paid in full. 

     20. USA Patriot Act . We hereby notify you that pursuant to the requirements of the USA
Patriot Act (Title III of Pub. L. 107-56 (signed into law on October 26, 2001)) (the “Act”), we are required to obtain, verify and record information that identifies you, which information includes your name and address and other
information that will allow us to identify you in accordance with the Act. 

     21. You may not assign any of your rights and obligations hereunder or under the Note without our prior written consent. 

     If the terms of this letter are satisfactory to you, please indicate your agreement and acceptance thereof by signing a counterpart of this letter and returning it to us. 

 

  	Very truly yours,
	 
	THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.
	 
	 	 	 
	By:	/s/ Naomi Saffra
	 	Name:	Naomi Saffra
	 	Title:	Authorized Signatory

 

  	Agreed and Accepted:
	 
	AVON PRODUCTS, INC.
	 	 	 
	By:	/s/ Richard J. Valone
	 	Name:	Richard J. Valone 
	 	Title:	Vice President and Treasurer

 

  

SCHEDULE I 

to 

Loan Agreement

dated as of August 28, 2006

between The Bank of Tokyo-Mitsubishi UFJ, Ltd.

and Avon Products, Inc.

     (i) For the purpose of Sections 1 and 2 of this Loan Agreement: 

  
    
      The "Facility Amount" is Japanese Yen11,000,000,000 and the currency available for borrowing is Japanese Yen. 

    
      The "Minimum Advance Amount" is Japanese Yen 500,000,000 

    
      The "Maximum Term" is six months, provided the maturity of each Advance shall not extend beyond the Termination Date. 

  

     (ii) For the purpose of Section 12 of this Loan Agreement:

  
    The address for written communications to you is:

  
    Avon Products, Inc. 

    1345 Avenue of the Americas

    New York, New York 10105

    Attn: Richard J. Valone 

         Tel. 212-282-5242 

         Fax. 212-282-6116 
  

  
    Wire Instructions are such instructions as Avon Products, Inc., the borrower, shall have provided to The Bank of Tokyo-Mitsubishi UFJ, Ltd., the lender, in writing from time to time. 

  
    The address for written communications to us is:

  
    The Bank of Tokyo-Mitsubishi UFJ, Ltd.

    1251 Avenue of the Americas

    New York, NY 10020-1104

    Thomas Miressi, Loan Control Dept.

    Tel. 212 782-4466

    Fax 201 521-2304/2305 

  
    CC: Naomi Saffra

    Tel. 212 782-4224

    Fax. 212 782-6445;
  

  
    Wire Instructions are: 

    For all payments in Yen: 

    The Bank of Tokyo-Mitsubishi UFJ, Ltd., Tokyo, Japan 

    A/C#: 315-0111-007

    SWIFT ID: BOTKJPJT 

    Attn: Loan Operations Group

    Reference: Avon Products, Inc. 

  
    For all other payments: As The Bank of Tokyo-Mitsubishi UFJ, Ltd. may direct.

EXHIBIT A 

to 

the Loan Agreement

SHORT-TERM PROMISSORY GRID NOTE

	JPY11,000,000,000	August 28, 2006
	 	 

     FOR VALUE RECEIVED, the undersigned (the "Borrower"), HEREBY PROMISES TO PAY to the order of THE BANK OF TOKYO-MITSUBISHI UFJ, LTD. (the "Lender") with respect to each Advance (as
defined below): 

          The principal amount of such Advance made by the Lender to the Borrower, on the date mutually agreed to by the Lender and the Borrower at the time of such Advance as the maturity date thereof, together with
    interest (computed on the basis of a year of 360 days) for the actual number of days, including the first day but excluding the last day, elapsed) on the principal amount of such Advance outstanding from time to time from and including the date on
    which such Advance is made until the maturity date of such Advance, at an interest rate per annum mutually agreed to by the Lender and the Borrower at the time of such Advance (the "Quoted Rate"). In addition to paying such principal and interest on
    such maturity date, outstanding interest shall be due and payable on each Interest Payment Date. 

Any overdue principal and overdue interest, fees or other amounts payable hereunder or under the Loan Agreement referred
to below shall bear interest, payable on demand, at a rate per annum designated in the Loan Agreement. 

     The Borrower shall have the right to prepay any unpaid principal amount of any Advance consistent with provisions of the Loan Agreement.

The Borrower shall make wire transfers of each payment of principal and interest hereunder so as to be received by Lender as required by the Loan Agreement on the day when due in the currency specified in Section
1 of the Loan Agreement, in same day funds. Whenever any payment to be made hereunder shall be otherwise due on a day which is not a Business Day (as that term is defined in the Loan Agreement), such payment shall be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the computation of payment of interest. 

     The Borrower hereby authorizes the Lender to endorse on the grid attached hereto the date and amount of each Advance made by the Lender to the Borrower hereunder, the maturity date
thereof, all payments made on account of principal thereof and the Quoted Rate applicable thereto, provided that the failure to do so shall not affect the obligations of the Borrower to the Lender.  Borrower agrees that the internal records of the
Lender shall be conclusive evidence of all of the preceding information, in the absence of manifest error, as provided in the Loan Agreement. 

      Amounts under this Promissory Note may become automatically, or be declared by Lender to be, due and payable upon certain events set forth in the Loan Agreement. 

     The Borrower also agrees to pay on demand all reasonable costs and expenses (including fees and expenses of counsel) incurred by the Lender in enforcing this Promissory Note.

     THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK. 

     THE BORROWER AND THE LENDER HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT
OF OR RELATING TO THIS PROMISSORY NOTE OR ANY ADVANCES HEREUNDER. 

      This Promissory Note is the "grid" promissory note referred to in, and is entitled to the benefits of, the Loan Agreement dated August 28, 2006 (the "Loan Agreement"), between the Borrower and the Lender, which
Loan Agreement, among other things, sets forth procedures to be used in connection with the Borrower's periodic requests that the Lender make advances (the "Advances") to it from time to time in an aggregate amount not to exceed at any time
outstanding the amount first above mentioned. All capitalized terms used but not defined in this Promissory Note shall have the meanings assigned to them in the Loan Agreement. 

  	AVON PRODUCTS, INC.
	 	 	 
	By:	 
	 	

	 	Name:	 
	 	Title:	 

	
Date of

Advance
		
Amount of

Advance
		
Maturity of

Advance
		
Interest Rate

on Advance
		
Notation

Made by
	
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 

EXHIBIT B 

TO 

THE LOAN AGREEMENT

For the purposes of Section 2 of this Loan Agreement, the “Designated Persons” are:

	
Name
		
Title
		Signature
	
Richard J. Valone
		
Vice President and

Treasurer
		
/s/ Richard J. Valone
	
	
Suzanna Quinn
		
Director, International

Treasury Planning
		
/s/ Suzanna Quinn
	
	 
		 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 

EXHIBIT C 

TO 

THE LOAN AGREEMENT

FORM OF NOTICE OF BORROWING

_______, 200__

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

1251 Avenue of the Americas

New York, NY 10020-1104

Attention: Thomas Miressi, LCD,

  Tel. 212 782-4466

Fax 201 521-2304/2305 

CC: Naomi Saffra, USCBG

  Tel. 212 782-4224

  Fax. 212 782-6445 

      The undersigned, Avon Products, Inc., refers to the Loan Agreement dated as of August 28, 2006 (as it may be amended, modified, extended or restated from time to time, the “Loan
Agreement”), between The Bank of Tokyo-Mitsubishi UFJ, Ltd. and Avon Products, Inc. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Loan Agreement. Avon Products, Inc., hereby
gives you notice pursuant to the Loan Agreement that it requests an Advance under the Loan Agreement, and in that connection sets forth below the terms on which such Advance is requested to be made: 

	 	
(A)
		
Date of Advance (which is a Business Day)
		 ________________________

	
		
		
		 	
	 	
(B)
		
Principal Amount of Advance
		
JPY ________________________	
	 	 	 	 
	 	
(C)
		
Interest rate basis
		
Unless otherwise expressly
	
	 	 

		 

		
agreed, BTMU Yen LIBOR
	
	 	 

		 

		
(being the rate BTMU offers in
	
	 	 

		 

		
the London Interbank market
	
	 	 

		 

		
for Yen deposits for a term most
	
	 	 

		 

		
closely approximating the term
	
	 	 

		 

		
of the Advance) plus 25 basis
	
	 	 

		 

		
points per annum
	

     The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Advance:

     The representations and warranties contained in the Loan Agreement are correct and will be correct on the date of the Advance, before and after giving effect to the
Advance and to the application of the proceeds therefrom, as though made on and as of such date and no Event of Default exists under the Loan Agreement. 

  	Very truly yours,
	 
	Avon Products, Inc.
	 	 	 
	By:	 
	 	

	 	Name:	 
	 	Title:

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