Exhibit 10.3

SECOND AMENDMENT TO
COMMERCIAL SECURITY AGREEMENT

THIS SECOND AMENDMENT TO COMMERCIAL SECURITY AGREEMENT (hereinafter referred to
as this “Amendment”), is made and entered into as of this 1st day of August,
2011, by The Female Health Company, a Wisconsin corporation, whose mailing
address is 515 N. State Street, Suite 2225, Chicago, Illinois 60654 (“Grantor”),
to and for the benefit of Heartland Bank, a federal savings bank, whose mailing
address is 212 South Central Ave., Suite 200, Clayton, Missouri 63105
(“Lender”). This Amendment amends that certain Commercial Security Agreement
dated as of November 1, 2004 by and between the parties hereto, as amended by
that certain First Amendment to Commercial Security Agreement dated as of July
1, 2010 (collectively, and together with this Amendment, the “Security
Agreement”).
 
WITNESSETH:
 
WHEREAS, the Lender and Grantor entered into an Amended and Restated Loan
Agreement dated as of July 20, 2004, as amended by the First Amendment to
Amended and Restated Loan Agreement dated November 1, 2004, as further amended
by the Second Amendment to Amended and Restated Loan Agreement dated July ___,
2005, as further amended by the Third Amendment to Amended and Restated Loan
Agreement dated July 1, 2006, as further amended by the Fourth Amendment to
Amended and Restated Loan Agreement dated July 1, 2007, as further amended by
the Fifth Amendment to Amended and Restated Loan Agreement dated as of July 1,
2008, as further amended by the Sixth Amendment to Amended and Restated Loan
Agreement dated as of July 1, 2009, as further amended by the Seventh Amendment
to Amended and Restated Loan Agreement dated as of January 4, 2010, and as
further amended by the Eighth Amendment to Amended and Restated Loan Agreement
dated as of July 1, 2010 (as so amended, the “Loan Agreement”), pursuant to
which Lender has made available to Grantor from time to time certain term and
revolving credit facilities;
 
WHEREAS, Grantor and Lender have agreed to amend and restate the Loan Agreement
by executing a Second Amended and Restated Loan Agreement to change the terms
and conditions of two (2) revolving credit facilities, including closing a
certain revolving credit facility in the amount of One Million Dollars
($1,000,000) (Loan Number 303301693) and increasing the other revolving credit
facility from One Million Dollars ($1,000,000) to Two Million Dollars
($2,000,000) (the “Two Million Dollar Loan”), and are desirous of amending and
restating the promissory note evidencing the Two Million Dollar Loan to reflect
the same, and in order to induce the Lender to do so, and as a condition
precedent thereto, the parties hereto have agreed to modify certain provisions
contained in the Security Agreement, all on the terms and conditions hereafter
set forth; and
 
NOW, THEREFORE, in consideration of the mutual covenants herein contained and of
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto agree as follows:

Section 1.              Definitions, References.  Capitalized terms used and not
otherwise defined herein shall have the meanings assigned to such terms in the
Security Agreement.  Each reference to “hereof,” “hereunder,” “herein,” and
“hereby” and each other similar reference and each reference to “this Agreement”
and each other similar reference contained in the Security Agreement shall from
the date hereof refer to the Security Agreement as amended hereby.
 
 
 

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Section 2.               Amendment to the Security Agreement.  The Security
Agreement is hereby amended as follows:
 
2.1           The definition of “Loan Agreement” is hereby deleted in its
entirety and is hereby replaced with the following:
 
Loan Agreement.  The words “Loan Agreement” mean that certain Second Amended and
Restated Loan Agreement dated as of August 1, 2011, as the same may be amended,
renewed, or extended.
 
2.2           The definition of “Notes” is hereby deleted in its entirety and is
hereby replaced with the following:
 
Notes.  The word “Notes” means the Promissory Note dated as of August 1, 2011,
made by Grantor payable to the order of Lender evidencing the obligation of
Grantor to pay the aggregate unpaid principal amount of the loan made by Lender
to Grantor in the principal face amount of $2,000,000, and all extensions,
renewals and modifications thereto.
 
2.3           The following definition of “Related Documents” is hereby added to
the Security Agreement:
 
Related Documents.  The words “Related Documents” mean, collectively, the Loan
Agreement, the Notes, and each other instrument, agreement and document executed
and delivered by Grantor in connection with the Loan Agreement and each other
instrument, agreement or document referred to in the Loan Agreement or
contemplated thereby.
 
Section 3.               Representations and Warranties. The Grantor hereby
represents and warrants to the Lender that all of the representations and
warranties of Grantor set forth in the Security Agreement remain true, correct
and accurate in all respects.
 
Section 4.               Voluntary Agreement.  Each party represents and
warrants to the other that it has consulted or has had the opportunity to
consult with counsel regarding this Amendment that it is fully aware of the
terms contained herein and that it has voluntarily and without coercion or
duress of my kind entered into this Amendment.
 
Section 5.               Benefit of Security Agreement.  This Amendment shall be
binding upon and shall inure to and for the benefit of the parties hereto, their
heirs, administrators, personal representatives, successors and assigns.
 
Section 6.               Authority.  By his or her execution hereof, each of the
persons signing on behalf of the parties hereto hereby represents and warrants
that each is fully authorized to act and execute this Amendment on behalf of
their respective party.
 
 
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Section 7.               Counterparts.  This Amendment may be executed in one or
more counterparts, each of which shall be deemed to be an original, and all of
which shall constitute together but one and the same agreement.
 
Section 8.               Severability.  The invalidity of any portion hereof
shall not affect the validity, force or effect of the remaining portions
hereof.  If it is ever held that any restriction hereunder is too broad to
permit enforcement of such restriction to its fullest extent, such restriction
shall be enforced to the maximum extent permitted by law.
 
Section 9.              Headings; Recitals.  The various headings of this
Amendment are inserted for convenience only and shall not affect the meaning or
interpretation of this Amendment or any provisions hereof.  The recitals set
forth herein are hereby incorporated into this Amendment and form a part hereof,
the truth and accuracy of which is evidenced by each party's execution hereof.
 
Section 10.            Governing Law.  This Amendment shall be binding upon and
inure to and for the benefit of the parties hereto and their respective
successors and assigns and shall be governed by and construed in accordance with
the laws of the State of Missouri. Without limitation of the foregoing, Grantor
may not assign or transfer the Security Agreement without the prior written
consent of the Lender.
 
Section 11.            Missouri Revised Statute §432.047.  ORAL AGREEMENTS OR
COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FOREBEAR FROM ENFORCING REPAYMENT
OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE,
REGARDLESS OF THE LEGAL THEORY UPON WHICH IT IS BASED THAT IS IN ANY WAY RELATED
TO THE CREDIT AGREEMENT.  TO PROTECT YOU (GRANTOR(S)) AND US (LENDER) FROM
MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH
MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE
STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING
TO MODIFY IT.
 
Section 12.            Full Force and Effect.  Except as specifically amended
hereby, all of the terms and conditions of the Security Agreement and all loan
documents, instruments and agreements executed and/or delivered in connection
therewith, shall remain in full force and effect, and the same are hereby
ratified and confirmed. No reference to this Amendment need be made in any
instrument or document at any time referring to the Security Agreement, a
reference to the Security Agreement in any of such to be deemed to be reference
to the Security Agreement, as amended hereby.
 
[Remainder of Page Intentionally Left Blank]

 
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COUNTERPART SIGNATURE PAGE TO SECOND AMENDMENT TO
COMMERCIAL SECURITY AGREEMENT

 
IN WITNESS HEREOF, this Second Amendment to Commercial Security Agreement has
been duly executed as of the day and year first written above.
 

 
“GRANTOR”

The Female Health Company,
a Wisconsin corporation

By:           /s/  O.B. Parrish
Name:      O.B. Parrish
Title:        Chairman and CEO

STATE OF ILLINOIS                    )
) SS
COUNTY OF COOK                      )

On this 1st day of August, 2011, before me appeared O.B. Parrish, in his/her
capacity as Chairman and CEO of The Female Health Company, a Wisconsin
corporation, to me personally known, who, being by me duly sworn, did say that
he/she is the Chairman and CEO of The Female Health Company, a Wisconsin
corporation, and that said instrument was signed in behalf of said corporation
by authority of its Board of Directors, and said O.B. Parrish, as Chairman and
CEO, acknowledged said instrument to be the free act and deed of said
corporation.
 
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal
in the County and State aforesaid, the day and year first above written.
 

/s/  Jacqueline F. Martin
Notary Public

My Commission Expires:  02/26/2014
 
 
 

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COUNTERPART SIGNATURE PAGE TO SECOND AMENDMENT TO
COMMERCIAL SECURITY AGREEMENT

 
IN WITNESS HEREOF, this Second Amendment to Commercial Security Agreement has
been duly executed as of the day and year first written above.
 

“LENDER”

Heartland Bank,
a federal savings bank

By:           /s/  Colin McNulty
Name:      Colin McNulty
Title:        Assistant Vice President

STATE OF MISSOURI                 )
) SS
COUNTY OF ST. LOUIS              )
 
On this 1st day of August, 2011, before me appeared Colin McNulty, to me
personally known, who being by me duly sworn did say that he/she is a Assistant
Vice President of Heartland Bank, a federal savings bank, and that said
instrument was signed on behalf of said bank and said Colin McNulty, as
Assistant Vice President, acknowledged said instrument to be the free act and
deed of said bank.
 
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal on
the day and year last above written.
 

/s/  Michelle Brewer
Notary Public

My Commission Expires:  09/19/2011