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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
__________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 20, 1997
-----------------
THE FEMALE HEALTH COMPANY
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(Exact name of registrant as specified in its charter)
Wisconsin
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(State or other jurisdiction or incorporation)
0-18849 39-1144397
----------------------- -----------------------------
(Commission File Number) (I.R.S. Employer I.D. Number)
919 North Michigan Avenue
Suite 2208
Chicago, Illinois 60611
- ------------------------------- ----------
(Address of Principal Executive
Offices) (Zip Code)
312-280-2281
----------------------------------------------------
(Registrant's telephone number; including area code)
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Item 9. Sales of Equity Securities Pursuant to Regulation S.
On February 20, 1997, The Female Health Company (the "Company") closed a
sale of $2,020,000 of 8% convertible debentures and related warrants to eight
foreign investors pursuant to an exemption from the securities registration
requirement provided by Regulation S promulgated under the Securities Act of
1933, as amended. The convertible debentures mature on January 31, 2000 and
bear interest at 8% per annum, payable semianually.
The convertible debentures are convertible at the election of the
investors into shares of the $.01 par value common stock of the Company as
follows: (1) commencing 45 days after the closing of the sale of the
debentures, one-half of the principal amount of the debentures, plus accrued
interest, is convertible into shares of the Company's common stock; and (2)
commencing 65 days after the closing, the balance of the principal amount, plus
accrued interest, is convertible into shares of the Company's common stock.
The conversion price for conversion of the debentures is equal to the lesser of
(a) $ 3.00 (representing the "market price" on the date of closing) or
(b) 80% of the "market price" on the conversion date. The "market price" is
equal to the average last sale price of the common stock for the five trading
days immediately preceding the closing date or the conversion date, as
applicable. In connection with this offering, the foreign investors also
received warrants to purchase up to 67,333 shares of the Company's common stock
at an exercise price of $5.00 per share. These warrants are exercisable
commencing May 1, 1997 and for a period of 36 months thereafter.
As required by Regulation S, the Company offered and sold the convertible
debentures and warrants in an offshore transaction only to non-U.S. persons.
The Company did not use the services of an underwriter in this offering but,
rather, European American Securities, Inc. acted as distributor for the
offering. For its services as the distributor, European American Securities,
Inc. received a placement fee of 7% of the principal amount of the debentures
sold ($141,400). In addition, the Company agreed to pay the legal fees of the
distributor's counsel, which the Company anticipates will be less than $4,000.
In addition, the Company paid an escrow fee of one-half of 1% of the aggregate
amount subscribed for (for a total escrow fee of $10,100) to the law firm of
Krieger & Prager, Esqs., who acted as escrow agent for the offering.
Accordingly, the Company received $1,868,500 of net proceeds from this
offering, before deducting the Company's expenses in this offering, including
the legal fees of the distributor's counsel, which are estimated to be
approximately $15,000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, The
Female Health Company has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
THE FEMALE HEALTH COMPANY
Date: February 28, 1997
BY /s/ O.B. Parrish
-----------------------------------
O.B. Parrish, Chairman and
Chief Executive Officer
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EXHIBIT INDEX
Exhibit Page No.
------- --------
99.1 Joint Escrow Instructions
99.2 Form of Offshore Securities
Subscription Agreement
99.3 Form of 8% Convertible
Debenture
99.4 Form of Warrant
99.5 Irrevocable Instructions to
Transfer Agent
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JOINT ESCROW INSTRUCTIONS
Dated as of the date of the Offshore
Securities Subscription Agreement to
Which These Joint Escrow
Instructions Are Attached
Krieger & Prager, Esqs.
319 Fifth Avenue
New York, New York 10016
Attention: Samuel M. Krieger, Esq.
Dear Mr. Krieger:
As escrow agent for both The Female Health Company, Inc., a Wisconsin
corporation (the "Company"), and the Purchaser (the "Purchaser") of 8%
Convertible Debentures (the "Debentures") of the Company, who is named in the
Offshore Securities Subscription Agreement between the Company and the Purchaser
to which a copy of these Joint Escrow Instructions is attached as ANNEX II (the
"Agreement"), you (hereafter, the "Escrow Agent") are hereby authorized and
directed to hold the documents and funds (together with any interest thereon,
the "Escrow Funds") delivered to the Escrow Agent pursuant to the terms of the
Agreement in accordance with the following instructions:
1. The Escrow Agent shall, as promptly as feasible, notify the Company of
receipt of the purchase price from the Purchaser, and notify the Purchaser (or
such agent as the Purchaser may designate in writing) of receipt of Debentures.
As promptly as feasible upon receipt of notice (whether oral or in written form)
from the Company and the Purchaser that the respective conditions precedent to
the purchase and sale have been satisfied (which notice shall not be
unreasonably withheld), the Escrow Agent shall, after reduction by the amounts
referred to in the next succeeding sentence of this paragraph, release the
Escrow Funds to or upon the order of the Company, and shall release the
Debentures to the Purchaser. After receipt of such notice, an amount equal to
the fees due to the Distributor and the Escrow Agent shall be released to or
upon the order of Escrow Agent. If such Debentures are not deposited with the
Escrow Agent within ten (10) days after receipt by the Company of notice of
receipt by the Escrow Agent of the funds from the Purchaser, Escrow Agent shall
notify the Purchaser and Purchaser shall be entitled to cancel the subscription
and demand repayment of the funds. If the Company or the Purchaser notify the
Escrow Agent that on the proposed Closing Date
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(as defined in the Agreement) the conditions precedent to the obligations of
the Company or the Purchaser, as the case may be, under the Agreement were not
satisfied or waived, then the Escrow Agent shall return the Escrow Funds to the
Purchaser and shall return the Debentures to the Company. Prior to return of the
Escrow Funds to the Purchaser, the Purchaser shall furnish such tax reporting or
other information as shall be appropriate for the Escrow Agent to comply with
applicable United States laws. The Escrow Agent shall deposit all funds
received hereunder in the Escrow Agent's attorney escrow account at The Bank of
New York.
2. The Escrow Agent's duties hereunder may be altered, amended, modified
or revoked only by a writing signed by the Company, the Purchaser and the Escrow
Agent.
3. The Escrow Agent shall be obligated only for the performance of such
duties as are specifically set forth herein and may rely and shall be protected
in relying or refraining from acting on any instrument reasonably believed by
the Escrow Agent to be genuine and to have been signed or presented by the
proper party or parties. The Escrow Agent shall not be personally liable for
any act the Escrow Agent may do or omit to do hereunder as Escrow Agent while
acting in good faith, and any act done or omitted by the Escrow Agent pursuant
to the advice of the Escrow Agent's attorneys-at-law shall be conclusive
evidence of such good faith.
4. The Escrow Agent is hereby expressly authorized to disregard any and
all warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law and is hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court. In case the Escrow Agent obeys or complies with any such order, judgment
or decree, the Escrow Agent shall not be liable to any of the parties hereto or
to any other person, firm or corporation by reason of such decree being
subsequently reversed, modified, annulled, set aside, vacated or found to have
been entered without jurisdiction.
5. The Escrow Agent shall not be liable in any respect on account of the
identity, authorities or rights of the parties executing or delivering or
purporting to execute or deliver the Agreement or any documents or papers
deposited or called for hereunder.
6. The Escrow Agent shall be entitled to employ such legal counsel and
other experts as the Escrow Agent may deem necessary properly to advise the
Escrow Agent in connection with the Escrow Agent's duties hereunder, may rely
upon the advice of such counsel, and may pay such counsel reasonable
compensation therefor. The Escrow Agent has acted as legal counsel for one or
more of the financial advisors herein, and may continue to act as legal counsel
for one or more of the financial advisors herein, from time to time,
notwithstanding its duties as Escrow Agent hereunder.
7. The Escrow Agent's responsibilities as Escrow Agent hereunder shall
terminate if the Escrow Agent shall resign by written notice to the Company and
the Purchaser. In the
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event of any such resignation, the Purchaser and the Company shall appoint a
successor Escrow Agent.
8. If the Escrow Agent reasonably requires other or further instruments
in connection with these Joint Escrow Instructions or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.
9. It is understood and agreed that should any dispute arise with respect
to the delivery and/or ownership or right of possession of the documents or
Escrow Funds held by the Escrow Agent hereunder, the Escrow Agent is authorized
and directed in the Escrow Agent's sole discretion (1) to retain in the Escrow
Agent's possession without liability to anyone all or any part of said documents
or Escrow Funds until such disputes shall have been settled either by mutual
written agreement of the parties concerned or by a final order, decree or
judgment of a court of competent jurisdiction after the time for appeal has
expired and no appeal has been perfected, but the Escrow Agent shall be under no
duty whatsoever to institute or defend any such proceedings or (2) to deliver
the Escrow Funds and any other property and documents held by the Escrow Agent
hereunder to a state or federal court having competent subject matter
jurisdiction and located in the State and City of New York in accordance with
the applicable procedure therefor.
10. The Company and the Purchaser agree jointly and severally to
indemnify and hold harmless the Escrow Agent from any and all claims,
liabilities, costs or expenses in any way arising from or relating to the duties
or performance of the Escrow Agent hereunder other than any such claim,
liability, cost or expense to the extent the same shall (a) have been tax
obligations in connection with Escrow Agent's fee hereunder, or (b) have been
determined by final, unappealable judgment of a court of competent jurisdiction
to have resulted from the gross negligence or willful misconduct of the Escrow
Agent, or (c) be a liability, or arise from liability, to either the Company or
the Purchaser.
11. Any notice required or permitted hereunder shall be given in writing
(unless otherwise specified herein) and shall be deemed effectively given upon
personal delivery or three business days after deposit in the United States
Postal Service, by registered or certified mail with postage and fees prepaid,
addressed to each of the other parties thereunto entitled at the following
addresses, or at such other addresses as a party may designate by ten days
advance written notice to each of the other parties hereto.
COMPANY: The Female Health Company, Inc.
919 N. Michigan Avenue
Chicago, Illinois
ATT:Chief Financial Officer
PURCHASER: At the address set forth on the first page of the Agreement.
ESCROW AGENT: Krieger & Prager, Esqs.
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319 Fifth Avenue
New York, New York 10016
Telecopier No. (212) 213-2077
12. By signing these Joint Escrow Instructions, the Escrow Agent becomes
a party hereto only for the purpose of these Joint Escrow Instructions; the
Escrow Agent does not become a party to the Agreement. The Company and the
Purchaser have become parties hereto by their execution and delivery of the
Agreement, as provided therein.
13. This instrument shall be binding upon and inure to the benefit of the
parties hereto, and their respective successors and permitted assigns and shall
be governed by the laws of the State of New York without giving effect to
principles governing the conflicts of laws. A facsimile transmission of these
instructions signed by the Escrow Agent shall be legal and binding on all
parties hereto.
14. Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings provided in the Agreement.
15. The rights and obligations of any party hereto are not assignable
without the written consent of the other parties hereto. These Joint Escrow
Instructions constitute the entire agreement amongst the parties with respect to
the subject matter hereof.
THE FEMALE HEALTH COMPANY, INC.
By: ______________________________________
Its _________________________________
ACCEPTED BY ESCROW AGENT:
KRIEGER & PRAGER
By: _______________________________________
Date: _____________________________________
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OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
This Offshore Securities Subscription Agreement ("Agreement") is executed
in reliance upon the transaction exemption afforded by Regulation S
("Regulation S") as promulgated by the Securities and Exchange Commission
("SEC"), under the Securities Act of 1933, as amended ("1933 Act").
This Agreement has been executed by the undersigned in connection with the
private placement of up to $3,000,000 8% Convertible Debentures due January 31,
2000 (hereinafter referred to as the "Debentures") of The Female Health
Company, a corporation organized and existing under the laws of the State of
Wisconsin, U.S.A., American Stock Exchange Symbol "FHC" (hereinafter referred
to as the "COMPANY"). The Debentures being sold pursuant to this Agreement,
and the Shares (as defined below), have not been registered under the 1933 Act
and may not be offered or sold in the United States or to U.S. Persons, other
than distributors (as such terms are defined in Regulation S), unless the
Debentures or the Shares, as the case may be, are registered under the 1933
Act, or an exemption from the registration provisions of the 1933 Act is
available. The terms on which the Debentures may be converted into common
stock (the "Shares") and the other terms of the Debentures are set forth in the
pro forma Debenture in ANNEX I annexed hereto. This subscription and, if
accepted by the COMPANY, the offer and sale of Debentures and the Shares
issuable upon conversion thereof (collectively the "Securities"), are being
made in reliance upon the provisions of Regulation S ("Regulation S") under the
1933 Act.
The undersigned
NAME:____________________________________________________________
(Print Name Exactly As It Will Appear On Debenture And Stock Certificates)
ADDRESS:_________________________________________________________
__________________________________________________________
__________________________________________________________
__________________________________________________________
(Jurisdiction of Organization or residence)
if applicable, a [Corporation][Partnership][Trust] organized under the laws of
__________, a non USA jurisdiction (hereinafter referred to as the "PURCHASER")
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hereby represents and warrants to, and agrees with, the COMPANY as follows:
1. AGREEMENT TO SUBSCRIBE.
a. SUBSCRIPTION AMOUNT. The undersigned hereby subscribes for
$______________ in principal amount of 8% Debentures.
b. FORM OF PAYMENT. The PURCHASER shall pay the purchase price for the
Debentures by delivering good funds in United States Dollars to the
escrow agent identified in the Joint Escrow Instructions attached
hereto as ANNEX II (the "Escrow Agent"). Delivery of such funds to
the COMPANY by the Escrow Agent shall be made against delivery by the
COMPANY of one or more Debentures in accordance with this Agreement.
By signing this Agreement, the PURCHASER and the COMPANY each agrees
to all of the terms and conditions of, and becomes a party to, the
Joint Escrow Instructions attached hereto as ANNEX II, all of the
provisions of which are incorporated herein by this reference as if
set forth in full.
c. METHOD OF PAYMENT. Payment of the purchase price for the Debentures
shall be made by wire transfer of funds to:
Bank of New York
350 Fifth Avenue
New York, New York 10001
ABA# 021000018
for credit to the account of Krieger & Prager, Attorneys
Escrow Account No. 105-0036843
Not later than three (3) business days after acceptance and execution
of this Agreement by the COMPANY, the PURCHASER shall deposit with the
Escrow Agent the aggregate subscription price for the Debentures.
2. SUBSCRIBER REPRESENTATIONS AND COVENANTS; ACCESS TO INFORMATION;
INDEPENDENT INVESTIGATION.
a. OFFSHORE TRANSACTION. PURCHASER represents, warrants and
covenants to COMPANY as follows:
(i) PURCHASER is not a U.S. Person as that term is defined
under Regulation S, as set forth in Annex III.
(ii) PURCHASER is outside the United States as of the date of
the execution and delivery of this Agreement.
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(iii) PURCHASER is purchasing the Debentures for its own
account and not on behalf of any U.S. Person, and
PURCHASER is the sole beneficial owner of the
Debentures, and has not pre-arranged any sale with any
purchaser or purchasers in the United States.
(iv) PURCHASER represents and warrants and hereby agrees that
all offers and sales of the Debentures prior to the
expiration of a period commencing on the date of the
receipt of funds by the COMPANY and ending 40 days
thereafter (the "Restricted Period") shall only be made
in compliance with the safe harbor contained in
Regulation S, pursuant to the registration provisions
under the 1933 Act or pursuant to an exemption from
registration, and all offers and sales after the
expiration of the 40-day period shall be made only
pursuant to such registration or to an exemption from
registration.
(v) PURCHASER acknowledges that the purchase of the
Debentures involves a high degree of risk, is aware of
the risks and further acknowledges that it can bear the
economic risk of the purchase of the Debentures,
including the total loss of its investment.
(vi) PURCHASER understands that the Debentures are being
offered and sold to it in reliance on specific
exemptions from the registration requirements of U.S.
securities laws and that the COMPANY is relying upon the
truth and accuracy of the representations, warranties,
agreements, acknowledgements and understandings of
PURCHASER set forth herein in order to determine the
applicability of such exemptions and the suitability of
PURCHASER to acquire the Debentures, and the Shares
issuable upon conversion thereof. PURCHASER represents
and warrants that the information contained herein is
complete and accurate. PURCHASER further represents and
warrants that it will notify the COMPANY immediately
upon the occurrence of any material change therein
occurring prior to the issuance of Shares upon
conversion of the Debenture.
(vii) PURCHASER is sufficiently experienced in financial and
business matters to be capable of evaluating the merits
and risks of its investments, and to make an informed
decision relating thereto.
(viii) In evaluating its investment, PURCHASER has consulted
its own investment and/or legal and/or tax advisors.
PURCHASER is not relying on the COMPANY respecting the
tax and other
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economic considerations of an investment in the
Debentures.
(ix) PURCHASER understands that in the view of the SEC the
statutory basis for the exemption claimed for this
transaction would not be present if the offering of
Debentures, and the Shares issuable upon conversion
thereof, although in technical compliance with
Regulation S, is part of a plan or scheme to evade the
registration provisions of the 1933 Act. PURCHASER is
acquiring the Debentures for investment purposes and has
no present intention to sell the Debentures, or the
Shares issuable upon conversion thereof, in the United
States or to a U.S. Person or for the account or benefit
of a U.S. Person either now or after the expiration of
the Restricted Period.
(x) PURCHASER is not an underwriter of, or dealer in, the
Securities, and PURCHASER is not participating, pursuant
to a contractual agreement, in the distribution of the
Securities.
(xi) During the period commencing on the Closing Date (as
defined herein) and ending on the 45th day following
such date, neither PURCHASER nor any of its affiliates
will, directly or indirectly, maintain any short
position in the securities of the COMPANY.
(xii) During the period commencing on the Closing Date (as
defined herein) and ending on the 45th day following
such date, PURCHASER will not sell, commit or agree to
sell or pledge any shares of Common Stock of the COMPANY
or any other securities convertible into or exercisable
for shares of Common Stock of the COMPANY.
(xiii) PURCHASER has taken no action which would give rise to
any claim by any person for brokerage commission,
finders' fees or the like relating to this Agreement or
the transactions contemplated hereby.
b. CURRENT PUBLIC INFORMATION. PURCHASER acknowledges that
PURCHASER has been furnished with or has acquired copies of the
COMPANY'S Form S-1 Registration Statement Prospectus dated June
17, 1996, its most recent Annual Report on the Form 10-K filed
with the SEC, and its forms 10-Q and 8-K filed thereafter
(collectively the "SEC Filings"). PURCHASER is not relying upon
any representations or other information (whether oral or
written) other than as set forth in the
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SEC filings or in Annex IV.
c. INDEPENDENT INVESTIGATION; ACCESS. PURCHASER acknowledges that
PURCHASER, in making the decision to purchase the Debentures
subscribed for, has relied upon independent investigations made
by it and its representatives, if any, and PURCHASER and such
representatives, if any, have, prior to any sale to it, been
given access and the opportunity to examine all material publicly
available, books and records of the COMPANY, all material
contracts and documents relating to this offering and an
opportunity to ask questions of, and to receive answers from the
COMPANY or any person acting on its behalf concerning the terms
and conditions of this offering. PURCHASER and its advisors, if
any, have been furnished with access to all publicly available
materials relating to the business, finances and operation of the
COMPANY and materials relating to the offer and sale of the
Debentures which have been requested. PURCHASER and its advisors,
if any, have received complete and satisfactory answers to any
such inquiries.
d. NO GOVERNMENT RECOMMENDATION OR APPROVAL. PURCHASER understands
that no federal or state agency has passed on or made any
recommendation or endorsement of the Debentures.
e. ENTITY PURCHASERS. If PURCHASER is a partnership, corporation or
trust, the person executing this Agreement on its behalf
represents and warrants that:
(i) He or she has made due inquiry to determine the
truthfulness of the representations and warranties made
pursuant to this Agreement.
(ii) He or she is duly authorized (if the undersigned is a
trust, by the trust agreement) to make this investment
and to enter into and execute this Agreement on behalf
of such entity.
f. INDIVIDUAL PURCHASERS. PURCHASER, if an individual, represents
that he or she has reached the age of 21 and has adequate means
for providing for his or her current and anticipated financial
needs and possible contingencies for emergencies and has no need
for liquidity in the proposed investment.
g. BINDING COMMITMENT. This Agreement constitutes a legal, valid
and binding obligation of the PURCHASER. The PURCHASER has full
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power, right and authority to enter into and perform this
Agreement. The execution and delivery and performance of this
Agreement will not violate or be in conflict with any order,
judgment, injunction, agreement or controlling document to which
the PURCHASER is a party or by which it is bound. If the
PURCHASER is an entity, it was not formed for the specific
purpose of acquiring the Debenture.
h. FOREIGN LAWS. PURCHASER hereby covenants that it will comply
with all laws and regulations in each foreign jurisdiction in
which it purchases, offers, sells or deliver the Securities, or
has in its possession or distributes any offering material.
3. COMPANY REPRESENTATIONS.
a. REPORTING COMPANY STATUS. The COMPANY is a reporting issuer as
defined by Rule 902 of Regulation S. The COMPANY is in full
compliance, to the extent applicable, with all reporting
obligations under either Section 12(b), 12(g) or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
The COMPANY has registered its common stock pursuant to Section
12 of the Exchange Act and the common stock trades on the
AMERICAN STOCK EXCHANGE, and has received no notice, either oral
or written, with respect to its continued eligibility for such
listing.
b. OFFSHORE TRANSACTION. The COMPANY has not offered these
securities to any person in the United States or to any U.S.
Person as that term is defined in Regulation S.
c. NO DIRECTED SELLING EFFORTS. In regard to this transaction, the
COMPANY has not conducted any "directed selling efforts" as that
term is defined in Rule 902 of Regulation S nor has the COMPANY
conducted any general solicitation relating to the offer and sale
of the within securities to persons resident within the United
States or elsewhere.
d. TERMS OF DEBENTURES. The COMPANY will issue the Debentures in
accordance with the terms of ANNEX I attached hereto.
e. LEGALITY. The COMPANY has the requisite corporate power and
authority to enter into this Agreement and to sell and deliver
the Debentures; this Agreement and the issuance of the Debentures
have been duly and validly authorized by all necessary corporate
action by the COMPANY; this Agreement has been duly and validly
executed and
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delivered by and on behalf of the COMPANY, and is a valid and
binding agreement of the COMPANY, enforceable against it in
accordance with its terms, except as enforceability may be
limited by general equitable principles, bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other laws
affecting creditors rights generally.
f. NON-CONTRAVENTION. The execution and delivery of this Agreement
and the consummation of the issuance of the Debentures, and the
consummation of the transactions contemplated by this Agreement
by the COMPANY do not and will not conflict with or result in a
breach by the COMPANY of any of the terms or provisions of, or
constitute a default under, the Articles of Organization or
by-laws of the COMPANY, or any material indenture, mortgage, deed
of trust, or other material agreement or instrument to which the
COMPANY is a party or by which it or any of its properties or
assets are bound or (assuming that the representations and
warranties of the PURCHASER in Section 2 hereof, are true and
correct), any existing applicable U.S. law, rule, or regulation
or any applicable decrees, judgment or order of any U.S. court,
federal or state regulatory body, administrative agency or other
U.S. governmental body having jurisdiction over the COMPANY or
any of its properties or assets, the conflict, breach, violation
or default of or under which would have a material adverse effect
on the COMPANY'S business or financial condition.
g. FILINGS. The COMPANY undertakes and agrees to make all necessary
filings in connection with the sale of the Debentures as required
by United States laws and regulations or any domestic securities
exchange or trading market, with a copy to counsel for
Distributor.
h. ABSENCE OF CERTAIN CHANGES. Since September 30, 1996, there has
been no material adverse development in the assets, liabilities,
business, properties, operations, financial condition or results
of operations of the COMPANY, except as disclosed in the SEC
Filings or in Annex V.
i. The Company has legally available sufficient authorized and
unissued Shares as may be reasonably necessary to effect the
conversion of the Debentures.
4. TRANSFER AGENT INSTRUCTIONS.
a. Debentures. Upon the conversion of the Debentures, the PURCHASER
thereof shall submit such Debenture and the COMPANY's Transfer
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Agent shall, pursuant to Irrevocable Instructions to Transfer
Agent annexed hereto, within three (3) business days of receipt
of such Debenture issue one or more certificates representing
that number of shares of Common Stock into which the Debenture or
Debentures are convertible in accordance with the provisions
regarding conversion set forth in ANNEX I hereto. The COMPANY
shall act as Debenture Registrar and shall maintain an
appropriate ledger containing the necessary information with
respect to each Debenture.
b. Subject to the completeness and accuracy of the PURCHASER'S
representations and warranties herein, upon the conversion of any
Debenture by a person who is a non-U.S. Person, the COMPANY'S
transfer agent shall issue stock certificates without restrictive
legend in the name of PURCHASER (or its nominee (being a non-U.S.
Person) or such non-U.S. Persons as may be designated by
PURCHASER) and in such denominations to be specified at
conversion representing the number of shares of Common Stock
issuable upon such conversion, as applicable; provided, however,
that if the nominee or other non-U.S. Person in whose name a
certificate or certificates for shares are requested to be
registered is other than PURCHASER, or if there has been a
regulatory development including, but not limited to, an
amendment or proposed amendment of Regulation S, or any
"no-action" or interpretive guidance whether oral or written from
the Securities and Exchange Commission, which call into question
the ability of COMPANY to issue to PURCHASER the Securities
without registration under the United States Securities Act of
1933, COMPANY may require prior to issuance of a certificate in
the name of PURCHASER or such other person, that it receive
reasonable transfer documentation including opinions of counsel
acceptable to COMPANY that the issuance of certificates without
restrictive legend and/or in such other name does not and will
not cause a violation of the Act or any applicable state or
foreign securities laws. The COMPANY warrants that no
instructions other than these instructions, instructions to
impose a "stop transfer" instruction with respect to the
Debenture until the end of the Restricted Period and the
Irrevocable Instructions to Transfer Agent annexed hereto have
been or will be given to the transfer agent and that the Shares
will not be subject to any transfer limitations other than those
imposed by applicable securities laws. Nothing in this Section
4, however, shall affect in any way PURCHASER'S or such nominee's
obligations and agreement to comply with all applicable
securities laws upon resale of the Securities.
c. If upon conversion of the Debentures effected by the PURCHASER
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pursuant to the terms of this Agreement and the Form of Debenture
following the expiration of the Restricted Period, the COMPANY
fails to issue certificates for Shares issuable upon such
conversion to the PURCHASER bearing no restrictive legend for any
reason other than the COMPANY'S reasonable good faith belief that
the representations and warranties made by the PURCHASER in this
Agreement were untrue when made, the COMPANY shall pay to the
PURCHASER by wire transfer, as liquidated damages for such
failure and not as a penalty, an amount in cash equal to $50,000
provided, however, that the payment of such liquidated damages
shall not relieve the COMPANY from its obligations to register
the Shares pursuant to Section 9.
5. EXEMPTION; RELIANCE ON REPRESENTATION. PURCHASER understands that the
offer and sale of the Debentures, and the Shares issuable upon conversion
thereof, is not being registered under the 1933 Act. The COMPANY is relying on
the rules governing offers and sales made outside the United States pursuant to
Regulation S. Rules 901 through 904 of Regulation S govern this transaction.
6. CLOSING DATE AND ESCROW AGENT. The date of the issuance of the
Debentures and the sale of the Debentures as evidenced by receipt by the
COMPANY from the Escrow Agent of PURCHASER'S purchase funds (the "Closing
Date") shall be no later than ten (10) business days after execution hereof by
all parties or such other mutually agreed to time. PURCHASER shall, within
three (3) business days after acceptance and execution of this Agreement by the
COMPANY, deliver the necessary funds as indicated in Paragraph 1 to the Escrow
Agent. Debentures will be delivered to the Escrow Agent at the instructions of
the COMPANY. PURCHASER agrees that the Escrow Agent has no liability as a
result of any fraudulent or unlawful conduct of any other party, and agrees to
hold the Escrow Agent harmless for costs arising out of such fraudulent or
unlawful conduct of others.
7. WARRANTS. The Company agrees to issue to PURCHASER within ten (10)
days after the Closing Date, transferable divisible warrants (the
"Warrants") under Regulation S for Shares of Common Stock equal to 10% of the
number of shares of Common Stock into which the Debentures would be convertible
as at such Closing Date. Such Warrants shall bear an exercise price per share
of Common Stock equal to $5.00, and shall be exercisable commencing May 1, 1997
and for a period of 36 months thereafter, in the form annexed hereto as Exhibit
VI.
8. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. PURCHASER understands
that COMPANY'S obligation to sell the Debentures is conditioned upon:
a. PURCHASER'S and the Company's execution of this Agreement;
b. Delivery to the Escrow Agent by each PURCHASER of good funds
as
9
<PAGE> 10
payment in full for the purchase of the Debentures; and
c. The accuracy on the Closing Date of the representations and
warranties of PURCHASER contained in this Agreement and the
performance by PURCHASER on or before the Closing Date of all
covenants and agreements of PURCHASER required to be performed on
or before the Closing Date.
d. There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby,
or requiring any consent or approval which shall not have been
obtained.
9. CONDITIONS TO PURCHASER'S OBLIGATION TO PURCHASE. The COMPANY
understands that PURCHASER'S obligation to purchase the Debentures is
conditioned upon:
a. The receipt and acceptance by the COMPANY of this Agreement as
evidenced by execution of this Agreement by the President or any
Vice President of the COMPANY. The acceptance of funds by the
COMPANY shall be deemed to be constructive acceptance of this
Agreement;
b. Delivery of Debentures and Warrants to Escrow Agent as herein
set forth;
c. The accuracy on the Closing Date of the representations and
warranties of the COMPANY contained in this Agreement and the
performance by the COMPANY on or before the Closing Date of all
covenants and agreements of the COMPANY required to be performed
on or before the Closing Date; and
d. Delivery to the Escrow Agent of (a) duly executed Irrevocable
Instructions to Transfer Agent and (b) an opinion of counsel for
the COMPANY, dated the Closing Date and addressed to PURCHASER,
in the form attached hereto as ANNEX III.
10. REGISTRATION OF THE SECURITIES. COMPANY hereby agrees that, upon
demand of a majority in interest of holders of the Securities as a result of a
regulatory development including, but not limited to, an amendment or proposed
amendment of Regulation S, or any "no-action" or interpretive guidance whether
oral or written from the Securities and Exchange Commission, which call into
question the ability of PURCHASER to resell the Securities without registration,
COMPANY will file, and use its reasonable best efforts to cause to become
effective a registration statement on Form S-3 or other appropriate form under
the 1933 Act covering the resale of the Shares issuable upon conversion of the
Debentures. The Company shall use its best efforts to keep any such
registration statement effective for up to twelve (12) months, or until all of
the Securities are sold, whichever is earlier. The
10
<PAGE> 11
COMPANY shall provide the PURCHASER with such number of copies of the prospectus
as shall be reasonably requested to facilitate the sale of the Shares issuable
upon conversion of the Debentures. The COMPANY shall bear and pay
all expenses incurred in connection with any such registration, excluding
discounts and commissions.
11. FURTHER OFFERINGS. Other than issuing shares in acquisitions or as
compensation for services rendered by employees and consultants, and in the
exercise of existing options or warrants issued and outstanding as of the date
hereof or issued hereafter, the COMPANY agrees that if all $3 million of
Debentures are sold it will not for a period of 90 days after the Closing Date,
offer for sale or sell any securities other than the Shares issuable upon
conversion of the Debentures issued to the PURCHASER and to other purchasers
contemporaneously herewith. COMPANY hereby warrants that it has not engaged in
any such offering during the six months prior to the Closing Date, except for
the sales pursuant to the Company's public offering under its Form S-1
Registration Statement dated June 17, 1996, a Regulation S offering of 8%
convertible debentures dated September 12, 1996 in the principal amount of
$2,000,000, and certain warrants and bridge loans as disclosed in such
Registration Statement or as otherwise disclosed in ANNEX V hereof.
12. GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of Wisconsin without giving effect to principles
governing the conflicts of laws. Each of the parties consents to the
jurisdiction of the federal courts whose districts encompass any part of
Milwaukee or the state courts of the State of Wisconsin sitting in the City of
Milwaukee in connection with any dispute arising under this Agreement and hereby
waives, to the maximum extent permitted by law, any objection, including any
objection based on forum non coveniens, to the bringing of any such proceeding
in such jurisdictions. A facsimile transmission of this signed Agreement shall
be legal and binding on all parties hereto. This Agreement may be signed in one
or more counterparts, each of which shall be deemed an original. The headings
of this Agreement are for convenience of reference and shall not form part of,
or affect the interpretation of, this Agreement. If any provision of this
Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction. This Agreement may be amended only by an instrument
in writing signed by the party to be charged with enforcement. This Agreement
supersedes all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof.
13. NOTICES. Any notice required or permitted hereunder shall be given
in writing (unless otherwise specified herein) and shall be deemed effectively
given upon personal delivery or three business days after deposit in the United
States Postal Service, by registered or certified mail with postage and fees
prepaid, addressed to each of the other parties thereunto entitled at the
following addresses, or at such other addresses as a party may designate by ten
days advance written notice to each of the other parties hereto.
11
<PAGE> 12
COMPANY: The Female Health Company
919 N. Michigan Avenue
Chicago, Illinois
ATT:Chief Financial Officer
PURCHASER: At the address set forth on the first page of this Agreement.
ESCROW AGENT: Krieger & Prager, Esqs.
319 Fifth Avenue
New York, New York 10016
14. Survival of Representations and Warranties. PURCHASER'S
representations and warranties shall survive the execution and delivery hereof
of this Agreement and the delivery of the Debenture.
15. Each of the parties shall pay its own fees and expenses in connection
with this Agreement and the transactions contemplated hereby whether or not
consummated.
SIGNATURE(S) FOR INDIVIDUAL SUBSCRIBER(S)
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that he, she or they have executed this
Offshore Securities Subscription Agreement this ______ day of ______________,
1997.
______________________________________ ___________________________________
Printed Name (exactly as will appear Signature
on Debentures and Shares)
______________________________________
Jurisdiction of Organization or Residence)
_____________________________________ ___________________________________
Printed Name (exactly as will appear Signature
on Debentures and Shares)
_____________________________________
(Jurisdiction of Organization or Residence)
12
<PAGE> 13
SIGNATURES FOR ENTITIES
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that it has caused this Offshore Securities
Subscription Agreement to be duly executed on its behalf this ________ day of
___________________, 1997.
____________________________________________
Printed Name of Subscriber (Exactly as will appear on
Debentures and Shares)
____________________________________________
(Jurisdiction of Organization or Residence)
By: _________________________________
(Signature of Authorized Person)
_____________________________________
Printed Name and Title
Accepted this __________ day of the month of ___________________, 199___.
THE FEMALE HEALTH COMPANY
By: __________________________________________
Title: _______________________________
13
<PAGE> 14
All correspondence and delivery of certificates and confirmations should be
addressed to the above named person and sent by the COMPANY to his _____
business _____ home address (check one).
Capacity of Subscriber (check one):
Individual __________
Corporation __________
Partnership __________
Other __________ (please specify)
Ownership of Debentures (check one):
Individual __________
Joint Tenants, with right of survivorship __________*
Tenants in Common __________*
Tenants in Entirety __________*
Community Property __________*
Country of Citizenship: ______________________________________________
Country of incorporation or formation: _________________________________
* If you are purchasing Debentures with only your spouse as co-owner, both
you and your spouse must sign the signature page. If any co-owner is not
your spouse, all co-owners must sign the signature page.
Name of PURCHASER Representative, if any: ___________________________________
Address: ___________________________________
___________________________________
Telephone: ___________________________________
14
<PAGE> 15
FULL NAME AND ADDRESS OF PURCHASER FOR REGISTRATION PURPOSES:
NAME: _______________________________________________________________________
ADDRESS: ____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
TEL. NO. ____________________________________________________________________
FAX. NO. ____________________________________________________________________
CONTACT NAME: _______________________________________________________________
JURISDICTION OF
ORGANIZATION OR
RESIDENCE: _________________________________________________________________
DELIVERY INSTRUCTIONS (IF DIFFERENT FROM REGISTRATION NAME):
NAME: _______________________________________________________________________
ADDRESS: ____________________________________________________________________
________________________________________________________________________
________________________________________________________________________
15
<PAGE> 16
TEL. NO. ____________________________________________________________________
FAX. NO. ____________________________________________________________________
CONTACT NAME: _______________________________________________________________
SPECIAL
INSTRUCTIONS: _______________________________________________________________
________________________________________________________________________
________________________________________________________________________
16
<PAGE> 17
EXHIBIT B
INDEMNIFICATION AGREEMENT
In consideration of the agreement of European American Securities, Inc.
("Distributor") to act on behalf of THE FEMALE HEALTH COMPANY, INC. (the
"Company") pursuant to the Distribution Agreement (the "Agreement") dated
______________, 1997, the Company agrees to indemnify and hold harmless
Distributor, its affiliates, and each of their respective partners, directors,
officers, agents, consultants, employees and controlling persons (within the
meaning of the Securities Act of 1933) (Distributor and each such other person
or entity are hereinafter referred to as an "Indemnified Person"), from and
against any losses, claims, damages, expenses and liabilities or actions in
respect thereof (collectively "Losses"), as they may be incurred including all
reasonable legal fees and other expenses incurred in connection with
investigating, preparing, defending, paying, settling or compromising any Losses
(whether or not in connection with any pending or threatened litigation in which
any Indemnified Person is a named party) to which any of them may become subject
(including in any settlement effected with the Company's consent) and which are
related to or arise out of any act, omission, transaction or event, required of
the Company as contemplated by the Agreement. The Company will not, however, be
responsible under the foregoing provisions with respect to any Losses (a) from
actions taken or omitted to be taken by an Indemnified Person due to its gross
negligence, bad faith, willful misconduct, violation of the provisions of the
Agreement and related agreements, or breach of the representations or warranties
made by the Indemnified Person in the Agreement or the related agreements, or
(b) resulting from one or more decreases in the market price of the Company's
common stock.
If the indemnity referred to in this agreement should be, for any reason
whatsoever, unenforceable, unavailable or otherwise insufficient to hold such
Indemnified Person harmless, the Company shall pay to or on behalf of each
Indemnified Person contributions for Losses so that each Indemnified Person
ultimately bears only a portion of such Losses as is appropriate (i) to reflect
the relative benefits received by each such Indemnified Person, respectively, on
the one hand and the Company on the other hand in connection with the
transaction, or (ii) if the allocation on that basis is not permitted by
applicable law, to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of each such Indemnified Person,
respectively, and the Company as well as any other relevant equitable
considerations; provided, however, that in no event shall the aggregate
contribution of all Indemnified Persons to all Losses in connection with any
transaction exceed the value of the consideration actually received by
Distributor pursuant to the Agreement. The respective relative benefits
received by Distributor and the Company in connection with any transaction shall
be deemed to be in
<PAGE> 18
the same proportion as the aggregate consideration received by Distributor in
connection with the transaction bears to the total consideration of the
transaction. The relative fault of each Indemnified Person and the Company
shall be determined by reference to, among other things, whether the actions or
omissions to act were by such Indemnified Person or the Company, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action or omission to act.
The Company also agrees that no Indemnified Person shall have any liability
to the Company or its affiliates, directors, officers, employees, agents or
shareholders, directly or indirectly, related to or arising out of the
Agreement, except that each Indemnified Person shall indemnify and hold harmless
the Company, its directors, officers, agents, consultants and controlling
persons from and against any Losses, which result from actions taken or omitted
to be taken by such Indemnified Person due to its gross negligence, bad faith,
willful misconduct, violation of the provisions of the Agreement or the related
agreements, or breach of the Indemnified Person's representations and warranties
in the Agreement or the related agreements. In no event, regardless of the
legal theory advanced, shall the Company or any Indemnified Person be liable for
any consequential, indirect, incidental or special damages of any nature.
If any action is brought against any Indemnified Person in respect of which
indemnity may be sought against the Company hereunder, such Indemnified Person
shall promptly notify the Company in writing of such action and the Company
shall be entitled to participate therein and, to the extent the Company shall
wish, assume the defense thereof. Upon the request of an Indemnified Person,
the Company shall retain counsel reasonably satisfactory to such Indemnified
Person (the parties agreeing that the firm of Reinhart, Boerner, Van Deuren,
Norris & Reiselbach, s.c. is satisfactory) to represent such Indemnified Person
and any others the Company may designate in such action and shall pay the
reasonable fees and expenses of such counsel related thereto as they are
incurred. In any such action, an Indemnified Person shall have the right to
retain its own counsel at its own expense, except that the Company shall pay as
they are incurred the reasonable fees and expenses of counsel retained by the
indemnified party only in the event that (i) the Company and such Indemnified
Person shall have mutually agreed to the retention of such counsel or (ii) the
Company has directed counsel to represent one or more parties in addition to
such Indemnified Person in such action and representation of both such
Indemnified Person and such other party or parties by the same counsel would be
inappropriate, in the reasonable opinion of such Indemnified Person, due to
actual or potential differing interests between them, it being understood that
the Company shall not be liable for the reasonable fees and expenses of more
than one separate firm for all the Indemnified Persons. No indemnification
provided for herein shall be available to any Indemnified Person that fails to
give notice as provided above if the Company was unaware of the action to which
such notice would have related and was substantially prejudiced by such failure
or to any Indemnified Person that retains its own counsel in accordance with the
immediately preceding sentence except in the circumstances set forth in clauses
(i) and (ii) thereof. The Company agrees that without Distributor's prior
written consent, which shall not
<PAGE> 19
be unreasonably withheld, it shall not settle, compromise or consent to the
entry of any judgment in any pending or threatened claim, action, suit or
proceeding related to the Distribution Agreement unless the settlement,
compromise or consent also includes an express unconditional release of all
Indemnified Persons from all liability and obligations arising therefrom.
The respective obligations of the Company and the Indemnified Persons
referred to above shall be in addition to any rights that any Indemnified Person
or the Company, as the case may be, may otherwise have and shall be binding upon
and inure to the benefit of any successors, assigns, heirs and personal
representatives of any Indemnified Person and the Company. It is understood
that the respective obligations of the Company and the Indemnified Persons will
remain operative regardless of any termination or completion of Distributor's
services pursuant to the Agreement.
EUROPEAN AMERICAN SECURITIES, INC.
By: _____________________________________
Title: __________________________
THE FEMALE HEALTH COMPANY, INC.
By: _____________________________________
Title: __________________________
<PAGE> 1
NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON
CONVERSION HEREOF HAVE BEEN REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF
ANY STATE OR UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE
SECURITIES ARE RESTRICTED AND MAY NOT BE OFFERED, RESOLD, PLEDGED
OR TRANSFERRED EXCEPT IN ACCORDANCE WITH REGULATION S UNDER THE
ACT, OR AS PERMITTED UNDER THE ACT PURSUANT TO REGISTRATION OR
EXEMPTION OR SAFE HARBOR THEREFROM.
NNo. _________ US $___________
THE FEMALE HEALTH COMPANY
8% CONVERTIBLE DEBENTURE DUE January 31, 2000
THIS DEBENTURE is one of a duly authorized issue of $3,000,000 in
Debentures of THE FEMALE HEALTH COMPANY, a corporation duly organized and
existing under the laws of the State of Wisconsin (the "Company") designated as
its 8% Convertible Debenture Due January 31, 2000.
FOR VALUE RECEIVED, the Company promises to pay to
___________________________, the registered holder hereof (the "Holder"), the
principal sum of __________________________ (US $____________) on January 31,
2000 (the "Maturity Date") and to pay interest on the principal sum outstanding
from time to time in arrears on ______________, 19___ and semi-annually
thereafter, at the rate of 8% per annum accruing from the date of initial
issuance. Accrual of interest shall commence on the first such business day to
occur after the date hereof until payment in full of the principal sum has been
made or duly provided for. Subject to the provisions of Paragraph 4 below,
the principal of, and interest on, this Debenture are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts, at the address last appearing
on the Debenture Register of the Company as designated in writing by the Holder
from time to time. The Company will pay the principal of and interest upon
this Debenture on the Maturity Date, less any amounts required by law to be
deducted, to the registered holder of this Debenture as of the tenth day prior
to the Maturity Date and addressed to such holder at the last address appearing
on the Debenture Register. The forwarding of such check shall constitute a
payment of interest hereunder and shall satisfy and discharge the liability for
principal and interest on this Debenture to the extent of the sum represented
by such check plus any amounts so deducted.
This Debenture is subject to the following additional provisions:
1. The Debentures are issuable in denominations of Fifty Thousand
Dollars (US$ 50,000) and integral multiples thereof. The Debentures are
exchangeable for an equal aggregate principal amount of Debentures of
different authorized denominations, as requested by the Holders surrendering
the same. No service charge will be made for such registration or transfer or
exchange.
1
<PAGE> 2
2. The Company shall be entitled to withhold from all payments of
principal of, and interest on, this Debenture any amounts required to be
withheld under the applicable provisions of the United States income tax laws or
other applicable laws at the time of such payments, and Holder shall execute and
deliver all required documentation in connection therewith, prior to any payment
herein.
3. This Debenture has been issued subject to investment representations
of the original purchaser hereof and may be transferred or exchanged only in
compliance with the Securities Act of 1933, as amended (the "Act"), and other
applicable state and foreign securities laws. In the event of any proposed
transfer of this Debenture, the Company may require, prior to issuance of a new
Debenture in the name of such other person, that it receive reasonable transfer
documentation including opinions that the issuance of the Debenture in such
other name does not and will not cause a violation of the Act or any applicable
state or foreign securities laws. Prior to due presentment for transfer of
this Debenture, the Company and any agent of the Company may treat the person in
whose name this Debenture is duly registered on the Company's Debenture Register
as the owner hereof for the purpose of receiving payment as herein provided and
for all other purposes, whether or not this Debenture be overdue, and neither
the Company nor any such agent shall be affected by notice to the contrary.
4. The Holder of this Debenture is entitled, at its option, to convert at
any time (a) commencing forty-five (45) days after the closing of the sale of
the Debenture (the "Closing"), one-half (1/2) of the principal amount of this
Debenture, and (b) commencing sixty-five (65) days after the Closing, the
balance of the principal amount, provided that the principal amount is at least
US $50,000 (unless if at the time of such election to convert the aggregate
principal amount of all Debentures registered to the Holder is less than Fifty
Thousand Dollars (US $50,000), then the whole amount thereof, or unless the
Company agrees to the conversion of a lesser amount), into shares of Common
Stock of the Company at a conversion price for each share of Common Stock equal
to the lesser of (a) the Market Price on the Closing, or (b) 80% of the Market
Price on the Conversion Date. For purposes of this Section 4, the Market Price
shall be the average last sale price of the Common Stock on the five (5) trading
days immediately preceding the Closing or Conversion Date, as may be applicable,
as reported in the Wall Street Journal. Conversion shall be effectuated by
surrendering the Debentures to be converted to the Company's Transfer Agent,
Firstar Trust Company, Corporate Trust Services, 615 East Michigan Street,
Milwaukee, Wisconsin 53202, with the form of conversion notice attached hereto
as Exhibit A, executed by the Holder of the Debenture evidencing such Holder's
intention to convert this Debenture or a specified portion (as above provided)
hereof, and accompanied, if required by the Company, by proper assignment hereof
in blank. Interest accrued or accruing from the prior interest payment date to
the date of conversion shall, at the option of the Holder, be paid in cash or
kind upon conversion. No fraction of Shares or scrip representing fractions of
shares will be issued on conversion, but the number of shares issuable shall be
rounded to the nearest whole share. The date on which notice of conversion is
given (the "Conversion Date") shall be deemed to be the date on which the Holder
has delivered this Debenture, with the conversion notice duly executed, to the
Company's Transfer Agent or, if earlier, the date set forth in such notice of
conversion if the Debenture is received by the Transfer Agent within three (3)
business days therefrom. Facsimile delivery of the conversion notice shall be
accepted by the Transfer Agent at telephone number (414) 276-4226. Certificates
representing Common Stock upon conversion will be mailed by express courier
within three (3) business days from the date the notice of conversion and
original Debentures are delivered to the Transfer Agent.
5. Except for a conversion of the Debenture, no provision of this
Debenture shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of, and interest on, this Debenture at
the time, place, and rate, and in the coin or currency, herein proscribed. This
Debenture and all other Debentures now or hereafter issued of similar terms are
direct obligations of the
2
<PAGE> 3
Company. This Debenture ranks equally with all other Debentures, excluding
Senior Debt (hereinafter defined) now or hereafter issued under the terms set
forth herein.
6. (a) If the Market Price on any Conversion Date is $1.00 or less, the
Company shall have the right, in its sole discretion, upon receipt of a notice
of conversion to redeem in whole or in part, any Debenture submitted for
conversion.
(b) The Company shall effect each such redemption by giving notice of
its election to redeem, by facsimile within one (1) business day following
receipt of a Notice of Conversion with a copy by 2-day courier, to the holder of
the Debentures submitted for conversion at the address and facsimile number of
such holder appearing in the Company's register for the Debentures. Such
redemption notice shall indicate whether the Company will redeem all or part of
the Debentures submitted for conversion and the applicable redemption price.
The Company shall not be entitled to send any notice of redemption and begin the
redemption procedure unless it has the full amount of the redemption price, in
cash or liquid assets, available in a demand or other immediately available
account in a bank or similar financial institution on the date the redemption
notice is sent to shareholders.
(c) The redemption price per Debenture shall be the principal amount
submitted for conversion and accrued interest. The redemption price shall be
paid to the Holder of Debentures within five (5) business days of the delivery
of the notice of such redemption to such holder.
7. No recourse shall be had for the payment of the principal of, or the
interest on, this Debenture, or for any claim based hereon, or otherwise in
respect hereof, against any incorporator, shareholder, officer or director, as
such, past, present or future, of the Company or any successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
8. If the Company merges or consolidates with another corporation or
sells or transfers all or substantially all of its assets to another person and
the holders of the Common Stock are entitled to receive stock, securities or
property in respect of or in exchange for Common Stock, then as a condition of
such merger, consolidation, sale or transfer, the Company and any such
successor, purchaser or transferee shall amend this Debenture to provide that it
may thereafter be converted on the terms and subject to the conditions set forth
above into the kind and amount of stock, securities or property receivable upon
such merger, consolidation, sale or transfer by a holder of the number of shares
of Common Stock into which this Debenture might have been converted immediately
before such merger, consolidation, sale or transfer, subject to adjustments
which shall be as nearly equivalent as may be practicable. In the event of any
proposed merger, consolidation or sale or transfer of all or substantially all
of the assets of the Company (a "Sale"), the Holder hereof shall have the right
to convert by delivering a Notice of Conversion to the Company within fifteen
(15) days of receipt of notice of such Sale from the Company. In the event the
Holder hereof shall elect not to convert, the Company may prepay all outstanding
principal and accrued interest on this Debenture, less all amounts required by
law to be deducted, upon which tender of payment following such notice, the
right of conversion shall terminate.
9. The Holder of the Debenture, by acceptance hereof, agrees that this
Debenture is being acquired for investment and that such Holder will not offer,
sell or otherwise dispose of this Debenture or the Shares of Common Stock
issuable upon conversion thereof except under circumstances which will not
result in a violation of the Act or any applicable state Blue Sky or foreign
laws or similar laws relating to the sale of securities.
3
<PAGE> 4
10. This Debenture shall be governed by and construed in accordance with
the laws of the State of Wisconsin.
11. The following shall constitute an "Event of Default":
a. The Company shall default in the payment of principal or interest
on this Debenture; or
b. Any of the representations or warranties made by the Company
herein, in the Subscription Agreement, or in any certificate or
financial or other written statements heretofore or hereafter
furnished by or on behalf of the Company in connection with the
execution and delivery of this Debenture or the Subscription
Agreement shall be false or misleading in any material respect at
the time made; or
c. The Company shall fail to perform or observe, in any material
respect, any other covenant, term, provision, condition,
agreement or obligation of the Company under this Debenture and
such failure shall continue uncured for a period of thirty (30)
days after written notice from the Holder of such failure; or
d. The Company shall (1) admit in writing its inability to pay its
debts generally as they mature; (2) make an assignment for the
benefit of creditors or commence proceedings for its dissolution;
or (3) apply for or consent to the appointment of a trustee,
liquidator or receiver for its or for a substantial part of its
property or business; or
e. A trustee, liquidator or receiver shall be appointed for the
Company or for a substantial part of its property or business
without its consent and shall not be discharged within sixty (60)
days after such appointment; or
f. Any governmental agency or any court of competent jurisdiction at
the instance of any governmental agency shall assume custody or
control of the whole or any substantial portion of the properties
or assets of the Company and shall not be dismissed within sixty
(60) days thereafter; or
g. Any money judgment, writ or warrant of attachment, or similar
process in excess of Two Hundred Thousand ($200,000) Dollars in
the aggregate shall be entered or filed against the Company or
any of its properties or other assets and shall remain unpaid,
unvacated, unbonded or unstayed for a period of sixty(60) days or
in any event later than five (5) days prior to the date of any
proposed sale thereunder; or
h. Bankruptcy, reorganization, insolvency or liquidation proceedings
or other proceedings for relief under any bankruptcy law or any
law for the relief of debtors shall be instituted by or against
the Company and, if instituted against the Company, shall not be
dismissed within sixty (60) days after such institution or the
Company shall by any action or answer approve of, consent to, or
acquiesce in any such proceedings or admit the material
allegations of, or default in answering a petition filed in any
such proceeding; or
4
<PAGE> 5
i. The Company shall have its Common Stock suspended or delisted
from an exchange or over-the-counter market from trading.
Then, or at any time thereafter during which the applicable Event of Default is
continuing, and in each and every such case, unless such Event of Default shall
have been waived in writing by the Holder (which waiver shall not be deemed to
be a waiver of any subsequent default) at the option of the Holder and in the
Holder's sole discretion, the Holder may consider this Debenture immediately due
and payable, without presentment, demand, protest or notice of any kinds, all of
which are hereby expressly waived, anything herein or in any note or other
instruments contained to the contrary notwithstanding, and the Holder may
immediately, and without expiration of any period of grace, enforce any and all
of the Holder's rights and remedies provided herein or any other rights or
remedies afforded by law.
12. Nothing contained in this Debenture shall be construed as conferring
upon the Holder the right to vote or to receive dividends or to consent or
receive notice as a shareholder in respect of any meeting of shareholders or any
rights whatsoever as a shareholder of the Company, unless and to the extent
converted in accordance with the terms hereof.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.
Dated: __________________, 1997
THE FEMALE HEALTH COMPANY
By: ____________________________________
________________________________________
(Print Name)
________________________________________
(Title)
ATTEST:
___________________________________
NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON
CONVERSION HEREOF HAVE BEEN REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF
ANY STATE OR UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE
SECURITIES ARE RESTRICTED AND MAY NOT BE OFFERED, RESOLD,
5
<PAGE> 1
WARRANT TO PURCHASE
____________ SHARES
THE FEMALE HEALTH COMPANY, INC.
(A WISCONSIN COMPANY)
WARRANT FOR THE PURCHASE OF
COMMON STOCK, $0.01 PAR VALUE PER SHARE
THIS WARRANT WILL BE VOID
AFTER 12:00 MIDNIGHT ON OCTOBER 30, 1999
This certifies that, for value received, __________________________________
_____________________________________, or registered assigns, is entitled, at
any time prior to 12:00 midnight Eastern time on October 30, 1999 (the
"Expiration Date"), to purchase from The Female Health Company, Inc., a
Wisconsin corporation, hereinafter referred to as the "Company", the number of
shares shown above (the "Warrant Shares") of common stock, par value $0.01, of
the Company (the "Common Stock") by surrendering this warrant with the purchase
form attached hereto, duly executed, at the principal office of the Company in
Chicago, Illinois, and by paying in full and in lawful money of the United
States of America by cash or cashiers' check, the purchase price of the Warrant
Shares as to which this warrant is exercised, on all the terms and conditions
hereinafter set forth.
1. The purchase price at which the Warrant Shares are purchasable
(hereinafter referred to as the "Warrant Price") is $_____ per share.
2. On the exercise of all or any portion of this warrant in the manner
provided above, the person exercising the same shall be deemed to have become a
holder of record of Common Stock (or of the other securities or properties to
which he or it is entitled on such exercise) for all purposes, and certificates
for the securities so purchased shall be delivered to the purchaser within a
reasonable time, but in no event longer than ten (10) days after the warrants
shall have been exercised as set forth above. If this warrant shall be
exercised in respect to only a part of the Warrant Shares covered hereby, the
holder shall be entitled to receive a similar warrant of like tenor and date
covering the number of Warrant Shares with respect to which this warrant shall
not have been exercised.
3. This warrant is exchangeable, on the surrender hereby by the holder
at the office of the Company, for new warrants of like tenor and date
representing in the aggregate the right to subscribe for and purchase the number
of Warrant Shares which may be subscribed
<PAGE> 2
for and purchased hereunder.
4. The Company covenants and agrees that the Warrant Shares which may
be issued on the exercise of the rights represented by this warrant will, on
issuance, be fully paid and nonassessable, and free from all taxes, liens, and
charges with respect tot he issue thereof. The Company further covenants and
agrees that during the period within which the rights represented by this
warrant may be exercised, the Company will have authorized and reserved a
sufficient number of shares of Common Stock to provide for the exercise of the
rights represented by this warrant.
5. The Warrant Price and number of Warrant Shares purchasable pursuant
to this warrant may be subject to adjustment from time to time as follows:
(a) If the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend in shares,
the Warrant Price in effect immediately prior to such record date shall be
proportionately decreased, such adjustment to become effective immediately after
the opening of business on the day following such record date.
(b) If the Company shall subdivide the outstanding shares of
Common Stock into a greater number of shares, combine the outstanding shares of
Common Stock into a smaller number of shares, or issue by reclassification any
of its shares, the Warrant Price in effect immediately prior thereto shall be
adjusted so that the holder of the warrant hereafter surrendered for exercise
shall be entitled to receive, after the occurrence of any of the events
described, the number of Warrant Shares to which the holder would have been
entitled had such warrant been exercised immediately prior to the occurrence of
such event. Such adjustment shall become effective immediately after the
opening of business on the day following the date on which such subdivision,
combination or reclassification, as the case may be, becomes effective.
(c) If any capital reorganization or reclassification of the
Company's Common Stock, or consolidation or merger of the Company with another
corporation or the sale of all or substantially all of its assets to another
corporation shall be effected in such a way that holders of Common Stock shall
be entitled to receive stock, securities, or assets with respect to or in
exchange for Common Stock, then, as a condition of such reorganization,
reclassification, consolidation, merger, or sale, lawful adequate provisions
shall be made whereby the holder of this warrant shall thereafter have the right
to acquire and receive an exercise hereof such shares of stock, securities, or
assets as would have been issuable or payable (as part of the reorganization,
reclassification, consolidation, merger, or sale) with respect to or in exchange
for such number of outstanding shares of the Company's Common Stock as would
have been received on exercise of this warrant immediately before such
reorganization, reclassification, consolidation, merger, or sale. In any such
case, appropriate provision shall be made with respect to the rights and
interests of the holder of this warrant to the end that the provisions hereby
shall thereafter be applicable in relation to any shares of stock, securities,
or assets thereafter deliverable on the exercise of this warrant. In the event
2
<PAGE> 3
of a merger or consolidation of the Company with or into another corporation or
the sale of all or substantially all of its assets as a result of which a number
of shares of common stock of the surviving or purchasing corporation greater or
less than the number of shares of Common Stock of the Company outstanding
immediately prior to such merger, consolidation, or purchase are issuable to
holders of Common Stock of the Company, then the Warrant Price in effect
immediately prior to such merger, consolidation, or purchase shall be adjusted
in the same manner as thought there was a subdivision or combination of the
outstanding shares of Common Stock of the Company. The Company will not effect
any such consolidation, merger or sale unless prior to the consummation thereof
the successor corporation resulting from such consolidation or merger or the
corporation purchasing such assets shall assume by written instrument mailed or
delivered to the holder hereof at its last address appearing on the books of the
Company, the obligation to deliver to such holder such shares of stock,
securities, or assets as, in accordance with the foregoing provisions, such
holder may be entitled to acquire an exercise of this warrant.
(d) No fraction or a share shall be issued on exercise, but, in
lieu thereof, the Company, notwithstanding any other provision hereof, may pay
therefor in cash at the fair value of any such fractional share at the time of
exercise.
(e) Neither the purchase or other acquisition by the Company of
any shares of Common Stock nor the sale or other disposition by the Company of
any shares of Common Stock shall affect any adjustment of the Warrant Price or
be taken into account in computing any subsequent adjustment of the Warrant
Price.
6. This warrant and the shares issuable on exercise of this warrant (the
"Warrant Shares"), are being sold in reliance on the safe harbor from
registration set forth in Regulation S promulgated under the Securities Act of
1933, as amended (the "Securities Act"). Accordingly,
________________________________ hereby represents, warrants, and agrees as
follows:
(a) __________________ is not a U.S. Person as that term is
defined under Regulation S promulgated under the Securities Act.
(b) __________________ is outside of the United States as of the
date of the execution and delivery of this Agreement.
(c) __________________ is purchasing this warrant for its own
account and not on behalf of or for the account of any U.S. Person, and
___________________ is the sole beneficial owner of this warrant and has not
prearranged any sale with purchasers in the United States.
(d) __________________ represents, warrants and covenants that all
offers and sales of this Warrant prior to the expiration of a period commencing
on the date hereof and ending forty days thereafter shall only be made in
compliance with the safe harbor contained in Regulation S, pursuant to the
registration provisions under the Securities Act, or
3
<PAGE> 4
pursuant to an exemption from registration, and all offers and sales after the
expiration of the forty-day period shall be made only pursuant to such safe
harbor or to such registration or to such exemption from registration.
(e) During the forty-day period following the date hereof,
____________ represents, warrants and covenants that neither _________________
nor any of its affiliates will, directly or indirectly, maintain any short
position in the securities of the Company.
7. Subject to the restrictions set forth in paragraph 6 above, this
warrant is transferable at the offices of the Company. On such transfer, every
holder hereof agrees that the Company may deem and treat the registered holder
of this warrant as the true and lawful owner thereof for all purposes, and the
Company shall not be affected by any notice to the contrary.
8. As used herein, the term "Common Stock" shall mean and include the
Company's Common Stock authorized on the date of the original issue of this
warrant, and shall also include any capital stock of any class of the Company
thereafter authorized that shall not be limited to a fixed sum or percentage in
respect of the rights of the holders thereof to participate in dividends and in
the distribution of assets on the voluntary or involuntary liquidation,
dissolution, or winding up of the Company; provided, that the Warrant Shares
purchasable pursuant to this warrant shall include only shares of the class
designated in the Company's articles of incorporation as Common Stock on the
date of the original issue of this warrant or, in the case of any
reorganization, reclassification, consolidation, merger or sale of assets of the
character referred to in paragraph 5(c) hereof, the stocks, securities, or
assets provided for in such paragraph.
9. This agreement shall be construed under and be governed by the laws
of the State of New York.
10. Any notices required or permitted hereunder shall be sufficiently
given if delivered by hand or sent by registered or certified mail, postage
prepaid, addressed s follows:
If to , to:
with a copy to:
Samuel M. Krieger, Esq.
Krieger & Prager, Esqs.
319 Fifth Avenue
New York, New York 10016
If to the Company, to:
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<PAGE> 5
The Female Health Company, Inc.
919 N. Michigan Avenue
Chicago, Illinois
or such other address as shall be furnished in writing by any party to the
other, and any such
notice or communication shall be deemed to have been given as of the date so
delivered or three days after being so deposited in the mails.
EFFECTIVE as of this day of , 1996.
THE FEMALE HEALTH COMPANY, INC.
By: ______________________________________
Title:_______________________________
_________________________________________
By: ______________________________________
Title: ______________________________
5
<PAGE> 6
FORM OF PURCHASE
(TO BE SIGNED ONLY UPON EXERCISE OF WARRANT)
TO: THE FEMALE HEALTH COMPANY, INC.
The undersigned, the owner of the attached warrant, hereby irrevocably
elects to exercise the purchase rights represented by the warrant for, and to
purchase thereunder, [number] of shares of common stock (the "Warrant Shares")
of The Female Health Company, Inc. ("Company") and herewith makes payment of
___________ therefor, and requests that the certificate(s) for the Warrant
Shares be delivered to _____________________________ at
____________________________________________, and if such shall not be all of
the shares purchasable hereunder, that a new warrant of like tenor for the
balance of the shares purchasable under the attached warrant be delivered to the
undersigned. In connection with such exercise, the undersigned represents,
warrants and covenants as follows:
(a) The undersigned is not a U.S. Person as that term is defined under
Regulation S promulgated under the Securities Act.
(b) The undersigned is outside of the United States as of the date of
the execution and delivery of this exercise form.
(c) The undersigned is purchasing the Warrant Shares for its own
account and not on behalf of or for the account of any U.S. Person, and the
undersigned is the sole beneficial owner of the Warrant Shares and has not
prearranged any sale with purchasers in the United States.
(d) The undersigned represents, warrants and covenants that all offers
and sales of the Warrant Shares shall only be made in compliance with the safe
harbor contained in Regulation S, pursuant to the registration provisions under
the Securities Act, or pursuant to an exemption or safe harbor from
registration.
(e) During the forty-day period following the date payment of the
purchase price for the Warrant Shares is made to the Company, the undersigned
represents, warrants and covenants that neither the undersigned nor any of its
affiliates will, directly or indirectly, maintain any short position in the
securities of the Company.
Dated this day of , 19 .
_________________________________________
Signature
<PAGE> 1
THE FEMALE HEALTH COMPANY, INC.
IRREVOCABLE INSTRUCTIONS TO TRANSFER AGENT
These irrevocable instructions ("Irrevocable Instructions"), dated as of ,
1997, are given by The Female Health Company, Inc., a Wisconsin corporation (the
"Company"), to its registrar and transfer agent, Firstar Trust Company
("Transfer Agent"), with respect to the following:
R E C I T A L S
A. The Company is offering to sell up to $3,000,000 8% Convertible
Debentures due January 31, 2000 (the "Debentures") of the Company under the
terms set forth in Debentures (the "Debentures") and the "Offshore Securities
Subscription Agreement" (the "Subscription Agreement") executed by the Company
and the other signatories thereto (the "Subscribers").
B. Any Subscriber issued Debentures pursuant to a Subscription
Agreement is entitled to convert its Debentures into shares of Common Stock of
the Company, $.01 par value (the "Converted Stock"), on the terms and conditions
set forth in Section 4 of the Debenture.
C. Assuming that each Subscriber warrants that the representations and
warranties made by the Subscriber in the Subscription Agreement (except for
those representations and warranties in the Subscription Agreement which are not
applicable), are true on the date the Subscriber presents the Debenture for
transfer, conversion or legend removal, as applicable, including the fact that
he, she or it is not or was not engaged in a plan or scheme to evade the
registration provisions of the Securities Act of 1933, as amended, and delivers
to the Transfer Agent either a duly executed Notice of Conversion (in the case
of conversion into shares of unrestricted Conversion Stock) or a duly executed
letter requesting legend removal (together with evidence of a bona fide pledge
or intention to deposit in a margin account, if applicable)(in the case of
legend removal) then,
(i) at any time beginning forty-five (45) days following the Last
Closing Date, any Subscriber issued Debentures pursuant to a Subscription
Agreement is entitled to submit one-half (1/2) of its Debentures held by
such Holder to the Transfer Agent to convert such Subscribers' Debentures
into shares of Converted Stock, the certificates for which shall bear no
Restrictive Legend; and
<PAGE> 2
(ii) at any time beginning sixty-five (65) days following the Last
Closing Date, any Subscriber issued Debentures pursuant to a Subscription
Agreement is entitled to submit all of its Debentures held by such Holder to the
Transfer Agent to convert such Subscribers' Debentures into shares of Converted
Stock, the certificates for which shall bear no Restrictive Legend (the time
beginning sixty-five (65) days after the Last Closing is referred to as the
"Unrestricted Conversion Period").
D. Any conversion of the Debenture shall be at the conversion prices
(the "Conversion Price") specified in Section 4 of the Debenture (which Section
is set forth in this Irrevocable Instructions Agreement at Exhibit A). Any such
conversion shall be accomplished by delivering the Debentures, duly executed for
transfer, to be converted along with the notice required by said Section 5
("Notice of Conversion") to the Transfer Agent. The Debenture so delivered will
be converted into shares of Converted Stock.
E. The Company and Subscribers have agreed that Company will provide
the Transfer Agent with irrevocable instructions to convert one or more of any
Subscriber's Debenture into shares of Converted Stock upon receipt of a Notice
of Conversion from a Subscriber and the Debenture, duly executed for transfer.
The number of shares of Converted Stock into which the Debenture may be
converted is hereinafter referred to as the "Conversion Rate" for such
Debenture.
F. The Transfer Agent has agreed to act as conversion transfer agent
on behalf of the Company on the terms and conditions set forth in these
Irrevocable Instructions;
NOW, THEREFORE, in consideration of the premises, the Company and Transfer
Agent agree and the Company irrevocably instructs Transfer Agent as follows:
1. ISSUANCE OF UNRESTRICTED CONVERTED SHARES. Upon receipt by the
Transfer Agent of one or more Debentures at a time permitted for conversion
hereunder, which the Holder desires to convert into Common Stock of the Company,
duly executed for transfer as to such Debentures and a duly executed Notice of
Conversion specifying the number of shares of Converted Stock to which that
Subscriber is entitled (which number is determined by the formula in Section 4
of the Debenture which Section 4 is attached to this Irrevocable Instructions
Agreement as Exhibit A and by this reference is incorporated in this document as
though set forth in full herein) the Company irrevocably directs the Transfer
Agent to (a) calculate the number of shares of Converted Stock to which the
Subscriber is entitled (which number is determined by the provisions contained
in Section 4 of the Debenture), (b) notify the Company in writing, by facsimile,
including a facsimile of the conversion documents presented to the Transfer
Agent, within three (3) business days after receipt of a facsimile of the Notice
of Conversion, of the number of shares of Converted Stock to be issued, and (c)
subject to the provisions of Section 4 hereof, issue and mail via express
courier the appropriate number of shares of Converted Stock directly to the
Subscriber within
2
<PAGE> 3
three (3) business days of the date of receipt of the Notice of Conversion and
the Debenture, duly executed for transfer, to be converted in accordance with
Section 4 of the Debenture. The certificates representing the Converted Stock
issued in the name of the Subscriber (during the Unrestricted Conversion Period
as to the Debentures submitted for conversion) shall not bear a Restrictive
Legend.
2. DISPUTE AS TO NUMBER OF CONVERTED SHARES TO BE ISSUED. In the
event that the number of shares that the Transfer Agent reasonably calculates to
be due a particular Subscriber upon conversion is different from the number of
shares claimed by the Subscriber, the Transfer Agent shall nevertheless issue
and deliver to the Subscriber a number of shares equal to the lesser of the two
numbers, and shall proceed in good faith to resolve the dispute with the Holder
and the Company. If the dispute cannot be resolved, either the Company or the
Holder can request that the dispute be submitted to the Company's usual outside
accounting firm ("Accountant") for determination of the number of shares of
Converted Stock to be issued. In the event of such a dispute, the Company
agrees to instruct its Accountant, at the Company's expense, to resolve any such
dispute and notify the parties of the result within three (3) business days
after receipt of notice of such dispute. Within three (3) business days of its
receipt of the Accountant's results, the Transfer Agent shall issue and deliver
to the Subscriber any additional shares to which the Subscriber is entitled,
based upon the Accountant's results. The Transfer Agent is authorized to rely
on the Accountant's results.
3. FEES. The Company hereby agrees to pay the Transfer Agent for all
services rendered hereunder.
4. NOTICES. Any notice or demand to be given or that may be given
under this Agreement shall be in writing and shall be (a) delivered by hand, or
(b) delivered through or by expedited mail or package service, or (c)
transmitted by telecopy, in which case with personal deliver acknowledged,
addressed to the parties as follows:
As to the Company:
The Female Health Company, Inc.
919 N. Michigan Avenue
Chicago, Illinois
ATT: Chief Financial Officer
Tel:
Fax:
As to the Transfer Agent:
Firstar Trust Company
675 East Michigan Street
Milwaukee, Wisconsin
3
<PAGE> 4
Tel: (414) 287-3971
Fax: (414) 276-4226
5. CANCELLATION OF DEBENTURES. Upon issuance of any Converted Stock, the
Company shall mark on the face of the Debenture so converted the word
"cancelled".
6. INDEMNIFICATION. The Company agrees to indemnify and hold harmless
the Transfer Agent, each officer, director, employee and agent of the Transfer
Agent, and each person, if any, who controls the Transfer Agent within the
meaning of the Securities Act of 1933, as amended (the "Act") or the Securities
Exchange Act of 1934, as amended (the "Exchange Act") against any losses,
claims, damages or liabilities, joint or several, to which it, they or any of
them, or such controlling person, may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon the performance by the Transfer
Agent of its duties pursuant to this Agreement; and will reimburse the Transfer
Agent, and each officer, director, employee and agent of the Transfer Agent, and
each such controlling person for any legal or other expenses reasonably incurred
by it or any of them in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the Company
will not be liable in any case if such loss, claim, damage or liability arises
out or is based upon any action not taken in good faith, or any action or
omission that constitutes gross negligence or willful misconduct.
Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action giving rise to indemnification
hereunder, such indemnified party will notify the Company, in writing, of the
commencement thereof. The failure to so notify the Company will relieve the
Company from any liability under this Section as to the particular item for
which indemnification is then being sought, but not from any other liability
which it may have to any indemnified party. In case any such action is brought
against any indemnified party, and it notifies the Company of the commencement
thereof, the Company will be entitled, at its option, to assume the defense
thereof, with counsel who shall be to the reasonable satisfaction of such
indemnified party (the parties hereby agree that the firm of Reinhart, Boerner,
Van Deuren, Norris and Reiselbach, s.c. is acceptable), and after notice from
indemnifying party to such indemnified party under this Section that it will
assume the defense, the Company shall not be liable for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof. The Company shall not be liable to any such indemnified party
on account of any settlement of any claim of action effected without the consent
of the company.
7. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Wisconsin without giving effect to
conflicts of law provisions.
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<PAGE> 5
8. ENTIRE AGREEMENT; AMENDMENTS. This Agreement, together with the
Exhibits hereto, the Subscription Agreement and the Debentures constitute the
full and entire understanding of the parties with respect to the subject matter
hereof. Neither this Agreement nor any term hereof may be amended, waived,
discharged or terminate other than by a written instrument signed by the party
against whom enforcement of such amendment, waiver discharge or termination is
sought. Each of the undersigned acknowledge that Holders of Debenture are third
party beneficiaries to this Agreement and that, notwithstanding the above, no
provision herein that adversely affects the rights of the Holders of Debentures
or the Common Stock issuable upon conversion of Debentures may be amended
without the consent of all Holders of the then outstanding Debentures.
5
<PAGE> 6
IN WITNESS WHEREOF, the undersigned have executed this Agreement this
____ day of _______________, 1997.
THE FEMALE HEALTH COMPANY, INC.
By: ______________________________________
Title: ______________________________
Date Signed: ________________________
FIRSTAR TRUST COMPANY
By: ______________________________________
Title: ______________________________
Date Signed: ________________________
6
