STOCK PURCHASE AGREEMENT
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June 14, 2000
The John W. Dearholt Trust
Stephen M. Dearholt, Trustee
741 North Milwaukee Street
Suite 500
Milwaukee, Wisconsin 53202
THE FEMALE HEALTH COMPANY, a Wisconsin corporation (the "Company"),
desires to issue and sell 400,000 shares (the "Shares") of its Common Stock, par
value $0.01 per share (the "Common Stock") to The John W. Dearholt Trust (the
"Purchaser"), and the Purchaser desires to purchase the Shares, on the terms and
conditions set forth below.
ARTICLE I
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THE SHARES
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1.1 Purchase of the Shares. On the date hereof, the Purchaser
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shall purchase from the Company, and the Company shall sell and issue to the
Purchaser, 400,000 Shares at a purchase price of $0.50 per Share. On the date
hereof, the Purchaser shall deliver to the Company a certified check or wire
transfer of the full amount of the purchase price for the Shares and the Company
shall deliver to the Purchaser a stock certificate representing the Shares to be
issued to the Purchaser hereunder.
ARTICLE II
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REPRESENTATIONS AND WARRANTIES OF COMPANY
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The Company represents and warrants to the Purchaser as follows:
2.1 Organization. The Company is a corporation duly organized and
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existing in active status under the laws of the State of Wisconsin, and has all
requisite power and authority, corporate or otherwise, to conduct its business
and to own its properties.
2.2 Authority. The execution, delivery and performance of this
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Agreement are within the corporate powers of the Company, have been duly
authorized by all necessary corporate action and do not and will not (i) require
any consent or
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approval of the shareholders of the Company; (ii) violate any provision of the
amended and restated articles of incorporation or amended and restated by-laws
of the Company or of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to the Company; (iii) require the consent or approval of, or
filing or registration with, any governmental body, agency or authority except
for any required filings with the Securities and Exchange Commission ("SEC") and
applicable state securities regulatory agencies as required to register the
resale of any of the Shares under the Securities Act of 1933, as amended (the
"Securities Act"), and the securities laws of all applicable states; or (iv)
result in a breach of or constitute a default under, or result in the imposition
of any lien, charge or encumbrance upon any property of the Company pursuant to,
any indenture or other agreement or instrument under which the Company is a
party or by which it or its properties may be bound or affected. This Agreement
constitutes legal, valid and binding obligations of the Company enforceable
against the Company in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency or similar laws now or hereafter in
effect affecting the enforceability of creditors' rights generally and subject
to general principles of equity.
2.3 Authority. The issuance of the Shares has been duly
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authorized and the Shares, upon issuance, will be validly issued, fully paid and
nonassessable, except as set forth in Wisconsin Statutes section 180.0622 as
interpreted.
2.4 Capital Stock. The authorized capital stock of the Company
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consists of 27,000,000 shares of Common Stock, $.01 par value per share,
5,000,000 shares of Class A Preferred Stock, $.01 par value per share, and
15,000 shares of Class B Preferred Stock, $0.50 par value per share. As of the
date of this Agreement, there are outstanding ________ shares of Common Stock
and 660,000 shares of Class A Convertible Preferred Stock - Series 1.
2.5 Full Disclosure. The Company is subject to the informational
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requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and has within the previous 12 months filed with the SEC all reports,
proxy statements and other information in respect to the Company required under
the Exchange Act. No such report or information filed with the SEC within the
previous two years, and no information or report furnished by the Company to the
Purchaser in connection with the negotiation or execution of this Agreement (all
of which information or reports so furnished are set forth in Section 4.2(e)
hereof), contained any misstatement of a material fact as of the date when made
or omitted to state a material fact required to be stated therein or necessary
to make the statements contained therein, in light of the circumstances under
which they were made, not misleading as of the date when made.
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ARTICLE III
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REGISTRATION RIGHTS
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3.1 Registration. The Company shall use reasonable efforts to
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register all of the Registrable Securities on Form SB-2, Form S-1 or any similar
long-form registration or, in the Company's sole discretion, on Form S-2 or Form
S-3 or any similar short-form registration, if available under applicable rules
of the SEC, on or prior to September 30, 2000.
3.2 Obligations of the Holder. It shall be a condition precedent
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to the obligation of the Company to register the Registrable Securities pursuant
to Section 3.1 hereof that the Holder shall furnish to the Company such
information regarding the Registrable Securities held by it and the intended
method of disposition thereof and other information concerning the Holder as the
Company shall reasonably request and as shall be required in connection with the
registration statement to be filed by the Company.
3.3 Registration Proceedings. From the date of this Agreement
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until the Registrable Securities covered by the registration statement have been
sold or for six months after effectiveness, whichever is the shorter period of
time (the "Registration Period"), the Company shall:
(a) Prepare and file with the SEC a registration statement
with respect to the Registrable Securities and use all reasonable efforts to
cause such registration statement to become effective on or before September 30,
2000 and to remain effective until the end of the Registration Period;
(b) Prepare and file with the SEC such amendments to such
registration statement and supplements to the prospectus contained therein as
may be necessary to keep such registration statement effective until the end of
the Registration Period;
(c) Furnish to the Holder such reasonable number of copies of
the registration statement, preliminary prospectus, final prospectus and such
other documents as the Holder may reasonably request in order to facilitate the
public offering of such securities;
(d) Use all reasonable efforts to register or qualify the
securities covered by such registration statement under such state securities or
"Blue Sky" laws of such jurisdictions as the Holder may reasonably request
within 20 days prior to the original filing of such registration statement,
except that the Company shall not for any purpose be required to qualify to do
business as a foreign corporation in any jurisdiction wherein it is not so
qualified, and except that the Company shall not be required to so register or
qualify in more than 20 such jurisdictions;
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(e) Notify the Holder, promptly after it shall receive notice
thereof, of the time when such registration statement has become effective or a
supplement to any prospectus forming a part of such registration statement has
been filed;
(f) Notify the Holder promptly of any request by the SEC for
the amending or supplementing of such registration statement or prospectus or
for additional information;
(g) Prepare and file with the SEC, promptly upon the request
of the Holder, any amendments or supplements to such registration statement or
prospectus which, in the opinion of counsel for the Holder, are required under
the Securities Act or the rules and regulations thereunder in connection with
the distribution of Common Stock by the Holder;
(h) Prepare and promptly file with the SEC and promptly
notify the Holder of the filing of such amendment or supplement to such
registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to such
securities is required to be delivered under the Securities Act, any event shall
have occurred as the result of which any such prospectus or any other prospectus
as then in effect would include an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading;
(i) In case the Holder is required to deliver a prospectus at
a time when the prospectus then in circulation is not in compliance with the
Securities Act, the Company will prepare and file such supplements or amendments
to such registration statement and such prospectus or prospectuses as may be
necessary to permit compliance with the requirements of the Securities Act;
(j) Advise the Holder, promptly after it shall receive notice
or obtain knowledge thereof, of the issuance of any stop order by the SEC
suspending the effectiveness of such registration statement or the initiation or
threatening of any proceeding for that purpose and promptly use all reasonable
efforts to prevent the issuance of any stop order or to obtain its withdrawal if
such stop order should be issued; and
(k) Not file any amendment or supplement to such registration
statement or prospectus to which the Holder shall reasonably have objected on
the grounds that such amendment or supplement does not comply in all material
respects with the requirements of the Securities Act or the rules and
regulations thereunder, after having been furnished with a copy thereof at least
two business days prior to the filing thereof.
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3.4 Expenses. With respect to the inclusion of Registrable
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Securities in a registration statement pursuant to Section 3.1 hereof, all
registration expenses, fees, costs and expenses of and incidental to such
registration, including any pubic offering in connection therewith, shall be
borne by the Company (including the reasonable fees and disbursements of counsel
acting solely on behalf of the Holder); provided, however, that the Holder shall
bear its own brokerage commissions and fees. The fees, costs and expenses of
registration to be borne by the Company shall include, without limitation, all
registration, filing fees, printing expenses, fees and disbursements of counsel
and accountants for the Company (including the cost of any special audit
requested in order to effect such registration), all legal fees and
disbursements and other expenses of complying with state securities or "Blue
Sky" laws of any jurisdiction in which the securities to be offered are to be
registered or qualified.
3.5 Indemnification of the Holder. Subject to the conditions set
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forth below, in connection with any registration of securities pursuant to
Section 3.1 hereof, the Company agrees to indemnify and hold harmless each
Holder as follows:
(a) Against any and all loss, claim, damage and expense
whatsoever arising out of or based upon (including, but not limited to, any and
all expense whatsoever reasonably incurred in investigating, preparing or
defending any litigation, commenced or threatened, or any claim whatsoever based
upon) any untrue or alleged untrue statement of a material fact contained in any
preliminary prospectus (if used prior to the effective date of the registration
statement), the registration statement or the final prospectus (as from time to
time amended and supplemented if the Company shall have filed with the SEC any
amendment thereof or supplement thereto) if used within the period during which
the Company is required to keep the registration statement or prospectus
current, or in any application or other document executed by the Company or
based upon written information furnished by the Company filed in any
jurisdiction in order to qualify the Company's securities under the securities
laws thereof; or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; or any
other violation of applicable federal or state statutory or regulatory
requirements or limitations relating to action or inaction by the Company in the
course of preparing, filing, or implementing such registered offering; provided,
however, that the indemnity agreement contained in this Section 3.5(a) shall not
apply to any loss, claim, damage, liability or action arising out of or based
upon (i) any untrue or alleged untrue statement or omission made in reliance
upon and in conformity with any information furnished in writing to the Company
by or on behalf of the Holder expressly for use in connection therewith, (ii)
the Holder's failure to deliver a prospectus relating to such registration, if
the Company had previously furnished copies thereof, or (iii) the Holder's
failure to deliver an amended or supplemental prospectus after the Company had
previously provided the notice and the supplemental or amended prospectus as
specified in Section 3.4 if such loss, claim, damage, liability or action would
not have arisen had such delivery occurred;
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(b) Subject to the proviso contained in the last sentence of
Section 3.5(a) above, against any and all loss, liability, claim, damage and
expense whatsoever to the extent of the aggregate amount paid in settlement of
any litigation, commenced or threatened, or of any claim whatsoever based upon
any such untrue statement or omission or any such alleged untrue statement or
omission (including, but not limited to, any and all expense whatsoever
reasonably incurred in investigating, preparing or defending against any such
litigation or claim) if such settlement is effected with the written consent of
the Company and no indemnity shall inure to the benefit of the Holder if the
person asserting the claim failed to receive a copy of the final prospectus at
or prior to the written confirmation of the sale of shares of Common Stock to
such person if the untrue statement or omission had been corrected in such final
prospectus and the failure to receive such final prospectus is not a necessary
element of such person's claim;
(c) In no case shall the Company be liable under this
indemnity agreement with respect to any claim made against the Holder unless the
Company shall be notified, by letter or by telegram confirmed by letter, of any
claim made or action commenced against it, reasonably promptly (but in any event
within 20 days of receipt of such claim or, in the event that any summons or
other service of process requires a responsive pleading within 30 days or less
time, within ten days after receipt of such summons or other process) after the
Holder shall have received notice of such claim or been served with the summons
or other legal process giving information as to the nature and basis of the
claim, but failure to so notify the Company shall not relieve it from any
liability which it may have otherwise than on account of this indemnity
agreement. The Company shall be entitled to participate at its own expense in
the defense of any suit brought to enforce any such claim, but if the Company
elects to assume the defense, such defense shall be conducted by counsel chosen
by it, provided that such counsel is reasonably satisfactory to the Holder. In
the event the Company elects to assume the defense of any such suit and retain
such counsel, the Holder shall, after the date the Holder is notified of such
election, bear the fees and expenses of any counsel thereafter retained by the
Holder as well as any other expenses thereafter incurred by the Holder in
connection with the defense thereof; provided, however, that the Company shall
bear the fees and expenses of any such separate counsel retained by the Holder
if the counsel representing the Company has a conflict of interest (which is not
waived) with the Holder which would prohibit such counsel from representing the
Holder.
3.6 Indemnification of Company. In connection with any registered
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offering pursuant to Section 3.1 above, the Holder agrees to indemnify and hold
harmless the Company and each of the officers and directors and agents of it and
each other person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act against any and all such losses, liabilities,
claims, damages and expenses as are indemnified against by the Company under
Section 3.5 hereof; provided, however,
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that such indemnification shall be limited to statements or omissions, if any,
made (or in settlement of any litigation effected with the written consent of
the Holder alleged to have been made) in any preliminary prospectus, the
registration statement or prospectus or any amendment or supplement thereof or
any application or other document in reliance upon, and in conformity with,
written information furnished in respect of the Holder, by or on behalf of the
Holder expressly for use in any preliminary prospectus, the registration
statement or prospectus or any amendment or supplement thereof or in any such
application or other document. In case any action shall be brought against the
Company, or any other person so indemnified based on any preliminary prospectus,
the registration statement or prospectus or any amendment or supplement thereof
or any such application or other documents, in respect of which indemnity may be
sought against the Holder, it shall have the rights and duties given to the
Company, and each other person so indemnified shall have the rights and duties
given to the Holder, by the provisions of Section 3.5(c) hereof. The Company
agrees to notify the Holder promptly after the assertion of any claim against
the Company in connection with the sale of securities covered by this Agreement.
3.7 Future Registration Rights. The Company may agree with its
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shareholders other than the Holder to allow their participation in the
registered offering pursuant to Section 3.1 hereof, provided all such rights of
participation under Section 3.1 hereof shall be subordinated to the rights of
the Holder herein, in a manner reasonably satisfactory to the Holder and its
counsel.
3.8 Certain Defined Terms. The following terms shall have the
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following respective meanings for purposes of this Agreement:
(a) "Holder" or "Holders" means (i) the Purchaser, and (ii)
each person holding Registrable Securities as a result of a permitted transfer
or assignment to that person of Registrable Securities.
(b) "Registrable Securities" shall mean the Shares and any
securities issued to any Holder in exchange or substitution for the Shares;
provided, however, that such Shares or securities shall cease to be Registrable
Securities when (i) a registration statement with respect to the sale of such
Shares or securities shall have become effective under the Securities Act and
all such Shares or securities have been disposed of in accordance with such
registration statement, (ii) such Shares or the securities shall have been
resold by the Holder thereof in accordance with Rule 144 under the Securities
Act, (iii) such Shares or securities shall have been otherwise transferred and
new certificates not subject to transfer restrictions under the Securities Act
and not bearing any legend restricting further transfer shall have been
delivered by the Company, and no other applicable and legally binding
restriction on transfer under federal and state securities laws shall exist, or
(iv) such Shares or securities may be sold in accordance with Rule 144(k) under
the Securities Act.
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ARTICLE IV
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MISCELLANEOUS
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4.l Expenses. The Company shall pay, or reimburse the Purchaser
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for (a) all out-of-pocket costs and expenses (including, without limitation,
attorneys' fees and expenses not to exceed $2,500) paid or incurred by the
Purchaser in connection with the negotiation, preparation, execution and
delivery of this Agreement and any other document required hereunder; (b) all
out-of-pocket costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses) paid or incurred by the Purchaser in connection
with the negotiation, preparation, execution and delivery of any amendment,
supplement, modification or waiver of any of the documents referenced above or
before and after judgment in enforcing, protecting or preserving its rights
under this Agreement and other documents required hereunder; and (c) any and all
recording and filing fees and any and all stamp, excise, intangibles and other
taxes (other than income taxes), if any, which may be payable or determined to
be payable in connection with the negotiation, preparation, execution, delivery,
administration or enforcement of this Agreement or any other document required
hereunder or any amendment, supplement, modification or waiver of or to any of
the foregoing, or consummation of any of the transactions contemplated hereby or
thereby, including all costs and expenses incurred in contesting the imposition
of any such tax, and any and all liability with respect to or resulting from any
delay in paying the same, whether such taxes are levied upon the Purchaser, the
Company or otherwise.
4.2 Securities Act of 1933. With respect to the Shares to be
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issued to the Purchaser, the Purchaser hereby represents, warrants and covenants
as follows:
(a) It understands that the issuance of the Shares has not
been registered under the Securities Act or applicable state securities laws
(collectively, the "Laws") on the basis that the issuance of the Shares is
exempt from such registration under the Securities Act and Laws based in part
upon the representations made herein.
(b) It does not presently intend to sell or otherwise dispose
of the Shares being issued to it hereunder.
(c) It is acquiring the Shares for investment purposes only
and for its own account and not with a present view to sell or otherwise
distribute the same, and it will not sell or otherwise distribute the Shares
without registration under the Securities Act and applicable Laws or pursuant to
applicable exemptions therefrom. The Purchaser understands that the Company may
place the following legend on the certificate for the shares of Common Stock:
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THE OFFER OR SALE OF THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
STATE SECURITIES LAW. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL SUCH TRANSFER
IS REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY IS OBTAINED TO THE EFFECT THAT SUCH
REGISTRATION IS NOT REQUIRED.
(d) It is an "accredited investor" under the Securities Act
and the rules promulgated thereunder.
(e) It has been given access to and has carefully reviewed
the Company's Form 10-QSB reports for the first two fiscal quarters of 2000, the
Company's Form 10-KSB and annual report to shareholders for the year ended
September 30, 1999, and the Company's Proxy Statement for the 2000 annual
meeting of shareholders. It desires no additional information to evaluate the
merits and risks of the issuance of the Shares hereunder, and it is not relying
upon any other information in connection therewith.
(f) It has been given an opportunity to ask questions of, and
receive answers from, management of the Company concerning the issuance of the
Shares hereunder, and has been given access to all information which it has
deemed necessary to verify the accuracy of the information furnished to it.
(g) It has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of the
transactions contemplated by this Agreement, has carefully reviewed all
information indicated above and, by virtue of such review, understands and has
evaluated the merits and risks of its participation in such transactions and has
decided to go forward with such transactions.
(h) It understands that the Company is relying on the
accuracy of the statements contained herein in entering into this Agreement and
the transactions contemplated herein.
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4.3 Successors. The provisions of this Agreement shall inure to
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the benefit of any holder of the Shares, and shall inure to the benefit of and
be binding upon any successor to any of the parties hereto. No delay on the
part of the Purchaser or any holder of the Shares in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise of any right, power or privilege hereunder preclude other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein specified are cumulative and are not exclusive of
any rights or remedies which the Purchaser, the holder of the Shares or the
Company would otherwise have.
4.4 Survival. All agreements, representations and warranties made
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herein shall survive the execution of this Agreement and the issuance of the
Shares hereunder.
4.5 Wisconsin Law. This Agreement shall be governed by and
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construed in accordance with the internal laws of the State of Wisconsin, except
to the extent superseded by federal law.
4.6 Counterparts. This Agreement may be signed in any number of
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counterparts with the same effect as if the signatures thereto and hereto were
upon the same instrument.
4.7 Notices. All communications or notices required under this
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Agreement shall be deemed to have been given on the date when deposited in the
United States mail, postage prepaid, and addressed as follows (unless and until
any of such parties advises the other in writing of a change in such address):
(a) if to the Company, with the full name and address of the Company as shown on
this Agreement below; and (b) if to the Purchaser, with the full name and
address of the Purchaser as shown on this Agreement above.
4.8 Entire Agreement; No Agency. This Agreement and the other
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documents referred to herein contain the entire agreement between the Purchaser
and the Company with respect to the subject matter hereof, superseding all
previous communications and negotiations, and no representation, undertaking,
promise or condition concerning the subject matter hereof shall be binding upon
the Purchaser unless clearly expressed in this Agreement or in the other
documents referred to herein. Nothing in this Agreement or in the other
documents referred to herein and no action taken pursuant hereto shall cause
either the Company or the Purchaser to be treated as an agent of the other, or
shall be deemed to constitute a partnership, association, joint venture or other
entity.
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4.9 Consent to Jurisdiction. The parties hereto hereby consent to
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the exclusive jurisdiction of any state or federal court situated in Ozaukee
County or Milwaukee County, Wisconsin, and waive any objection based on lack of
personal jurisdiction, improper venue or forums non conveniens, with regard to
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any actions, claims disputes or proceedings relating to this Agreement or any
other document delivered hereunder or in connection herewith, or any transaction
arising from or connected to any of the foregoing. Nothing herein shall affect
the parties' rights to serve process in any manner permitted by law.
4.10 Waiver of Jury Trial. The Company and the Purchaser hereby
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jointly and severally waive any and all right to trial by jury in any action or
proceeding relating to this Agreement or any other document delivered hereunder
or in connection herewith, or any transaction arising from or connected to any
of the foregoing. The Company and the Purchaser each represent that this waiver
is knowingly, willingly and voluntarily given.
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If the foregoing is satisfactory to you please sign the form of
acceptance below and return a signed counterpart hereof to the Company,
whereupon this instrument will evidence a binding agreement between the
Purchaser and the Company.
Very truly yours,
THE FEMALE HEALTH COMPANY
Address: Suite 3660
875 North Michigan Avenue
Chicago, Illinois 60611
By:
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Chairman of the Board and
Chief Executive Officer
The foregoing Agreement is hereby confirmed and accepted as of the date
hereof.
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The John W. Dearholt Trust,
Stephen M. Dearholt Trustee
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