Exhibit 10.1
 
SECOND AMENDED AND RESTATED
LOAN AGREEMENT
 
$2,000,000
 
By and Between
 
THE FEMALE HEALTH COMPANY
 
as Borrower
 
and
 
HEARTLAND BANK
 
as Lender
 
Dated as of August 1, 2011
 
 
 

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TABLE OF CONTENTS
 

     
Page
ARTICLE 1 - DEFINITIONS
1
 
Section 1.1
Definitions
1
 
Section 1.2
Other Provisions
8
 
Section 1.3
Exhibits and Schedules
9
ARTICLE 2 - CREDIT FACILITY
10
 
Section 2.1
Loan
10
 
Section 2.2
Repayment of Loan
10
 
Section 2.3
Note
10
 
Section 2.4
Prepayment of Loan
10
ARTICLE 3 - GENERAL LOAN PROVISIONS
10
 
Section 3.1
Interest
10
 
Section 3.2
Increased Costs and Reduced Returns
11
 
Section 3.3
Manner of Payment
11
 
Section 3.4
Payments; Fees
12
 
Section 3.5
Collateral
13
ARTICLE 4 - CONDITIONS PRECEDENT
13
 
Section 4.1
Conditions Precedent to the Loan
13
 
Section 4.2
Conditions Precedent to Subsequent Loan Advances
14
 
Section 4.3
Conditions Precedent to UNFPA as an Eligible Receivable
15
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF BORROWER
15
 
Section 5.1
Representations and Warranties
15
 
Section 5.2
Survival of Representations and Warranties, Etc.
18
ARTICLE 6 - AFFIRMATIVE COVENANTS
18
 
Section 6.1
Preservation of Corporate Existence and Similar Matters
18
 
Section 6.2
Compliance with Applicable Law
18
 
Section 6.3
Payment of Taxes and Claims
18
 
Section 6.4
Accounting Methods and Financial Records
18
 
Section 6.5
Restrictions on Use of Proceeds
18
 
Section 6.6
Hazardous Waste and Substances; Environmental Requirements
19
 
Section 6.7
Accuracy of Information
19
 
Section 6.8
Revisions or Updates to Schedules
19
 
Section 6.9
Conduct of Business
19
 
Section 6.10
Insurance
19
 
Section 6.11
Change of Management
19
ARTICLE 7 - INFORMATION
19
 
Section 7.1
Financial Statements; Borrowing Base Certificate; Compliance Certificate
19
 
Section 7.2
Copies of Other Reports
20
 
Section 7.3
Notice of Litigation and Other Matters
20
 
Section 7.4
ERISA
21

 
 
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ARTICLE 8 - NEGATIVE COVENANTS
21
 
Section 8.1
Merger, Consolidation and Sale of Assets
21
 
Section 8.2
Transactions with Affiliates
21
 
Section 8.3
Protection of Lender’s Rights
21
 
Section 8.4
Dividends/Distributions/Payments
21
 
Section 8.5
Borrower’s United Kingdom Subsidiaries
21
 
Section 8.6
Reserved
22
 
Section 8.7
Reserved
22
 
Section 8.8
Liens
22
ARTICLE 9 - DEFAULT
22
 
Section 9.1
Events of Default
22
 
Section 9.2
Remedies
24
 
Section 9.3
Application of Proceeds
24
 
Section 9.4
Miscellaneous Provisions Concerning Remedies
24
ARTICLE 10 - MISCELLANEOUS
25
 
Section 10.1
Notices
25
 
Section 10.2
Expenses
26
 
Section 10.3
Stamp and Other Taxes
26
 
Section 10.4
Setoff
26
 
Section 10.5
Dispute Resolution
26
 
Section 10.6
Reversal of Payments
27
 
Section 10.7
Injunctive Relief
27
 
Section 10.8
Accounting Matters
27
 
Section 10.9
Assignment; Participation
27
 
Section 10.10
Amendments
27
 
Section 10.11
Performance of Borrower’ Duties
27
 
Section 10.12
Indemnification
28
 
Section 10.13
All Powers Coupled with Interest
28
 
Section 10.14
Survival
28
 
Section 10.15
Severability of Provisions
28
 
Section 10.16
Governing Law
28
 
Section 10.17
Counterparts
28
 
Section 10.18
Final Agreement
28
 
Section 10.19
Purchase of Insurance
28
 
Section 10.20
Oral Agreements
29
EXHIBIT A
32
EXHIBIT B
42
EXHIBIT C
44
SCHEDULE 5.1(m)
45
SCHEDULE 5.1(p)
46
SCHEDULE 5.1(r)
47

 
 
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SECOND AMENDED AND RESTATED
LOAN AGREEMENT
 
THIS SECOND AMENDED AND RESTATED LOAN AGREEMENT (this “Agreement”) is entered
into as of this 1st day of August, 2011 by and between The Female Health
Company, a Wisconsin corporation (“Borrower”) and Heartland Bank, a federal
savings bank (the “Lender”);
 
WITNESSETH:
 
WHEREAS, the Borrower has existing revolving credit facilities with Lender
(collectively, the “Existing Loan”), pursuant to an Amended and Restated Loan
Agreement dated as of July 20, 2004 between Borrower and Lender, 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 “Original Loan
Agreement”);
 
WHEREAS, Borrower and Lender now desire to amend and restate in its entirety the
Original Loan Agreement pursuant to the terms and conditions of this Agreement,
in order to modify certain terms and conditions of the Existing Loan, including,
but not limited to, an extension of the maturity date;
 
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants, and agreements herein contained, and for other good and valuable
consideration, the sufficiency of which is hereby acknowledged, the parties
hereto represent and agree as follows:
 
ARTICLE 1 - DEFINITIONS
 
Section 1.1                      Definitions.  For the purposes of this
Agreement:
 
“Affiliate” means, with respect to a Person, (a) any officer, director,
employee, member or managing agent of such Person, (b) any spouse, parents,
brothers, sisters, children and grandchildren of such Person, (c) any
association, partnership, trust, entity or enterprise in which such Person is a
director, officer or general partner, (d) any other Person that, (i) directly or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with, such given Person, (ii) directly or indirectly
beneficially owns or holds 5% or more of any class of voting stock or
partnership, membership or other interest of such Person or any Subsidiary of
such Person, or (iii) 5% or more of the voting stock or partnership, membership
or other interest of which is directly or indirectly beneficially owned or held
by such Person or a Subsidiary of such Person.  The term “Control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities or partnership or other interests, by contract or
otherwise.
 
“Agreement” means this Agreement, including the Exhibits and Schedules hereto,
and all amendments, modifications and supplements hereto and thereto and
restatements hereof and thereof.
 
“Agreement Date” means the date as of which this Agreement is dated.
 
 
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“Benefit Plan” means an employee benefit plan as defined in Section 3(35) of
ERISA (other than a Multiemployer Plan) in respect of which a Person or any
Related Company is, or within the immediately preceding 6 years was, an
“employer” as defined in Section 3(5) of ERISA, including such plans as may be
established after the Agreement Date.
 
“Borrower” means The Female Health Company, a Wisconsin corporation and its
successors and assigns.
 
“Borrowing Base” means at any time an amount equal to the sum of:
 
(a)           80% of the face value of Eligible Receivables due and owing at
such time, except for the Semina Eligible Receivables, if any, of which only 70%
of the face value due and owing at such time may be included; plus
 
(b)           50% of the lesser of (i) cost (computed on a basis of standard
cost) and (ii) fair market value of Eligible Inventory
 
“Borrowing Base Certificate” means the certificate delivered by the Borrower in
accordance with Section 7.1(c) in the form of Exhibit B attached.
 
“Borrowing Officer” means each individual of Borrower who is duly authorized by
Borrower to submit a request for a Loan Advance.
 
“Business Day” means any day other than a Saturday, Sunday or other day on which
banks in St. Louis, Missouri are authorized to close.
 
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
 
“Compliance Certificate” means the certificate in the form of Exhibit C
attached, and shall contain statements by the signing officer to the effect
that, except as explained in reasonable detail in such Compliance Certificate,
(i) the attached Financial Statements are complete and correct in all material
respects and have been prepared in accordance with GAAP applied consistently
throughout the periods covered thereby and with prior periods (except as
disclosed therein), (ii) all of the representations and warranties of Borrower
contained in this Agreement and other Loan Documents are true and correct in all
material respects as of the date such certification is given as if made on such
date (other than representations and warranties, which, by their terms, are
applicable only to the Agreement Date or other specified date, which shall be
true and correct only as of that date) and, (iii) there exists no Default or
Event of Default which is continuing that has not been cured by Borrower or
waived in writing by Lender, and (iv) shall set forth the current Leverage Ratio
of Borrower.  If any Compliance Certificate discloses that a representation or
warranty is not true and correct in any material respect, or that a Default or
Event of Default has occurred that has not been cured by Borrower or waived in
writing by Lender, such Compliance Certificate shall set forth what action
Borrower has taken or proposes to take with respect thereto.
 
“Default” means any of the events specified in Section 9.1 that, with the
passage of time or giving of notice or both, would constitute an Event of
Default.
 
“Default Rate” means the annual rate described in Section 3.1(b).
 
“Dollar” and “$” means freely transferable United States dollars.
 
 
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“EDGAR” means the Electronic Data Gathering, Analysis, and Retrieval system
established by the U.S. Securities and Exchange Commission (“SEC”).
 
“Effective Date” means the later of (a) the Agreement Date, and (b) the first
date on which all of the conditions set forth in Section 4.1 shall have been
fulfilled by Borrower or waived by the Lender.
 
“Effective Interest Rate” means the rate of interest per annum on the Loan in
effect from time to time pursuant to the provisions of Section 3.1.

“Eligible Inventory” means items of Inventory of the Borrower held for sale in
the ordinary course of the business of the Borrower which are deemed by the
Lender in the exercise of its sole and absolute discretion to be eligible for
inclusion in the calculation of the Borrowing Base.  Unless otherwise approved
in writing by the Lender, no Inventory shall be deemed to be Eligible Inventory
unless it meets all of the following requirements:  (a) such Inventory is owned
by the Borrower, is subject to the Security Interest, which is perfected as to
such Inventory, and is subject to no other Lien whatsoever other than a
Permitted Lien; (b) such Inventory is in good condition and meets, in all
material respects, all standards applicable to such goods, their use or sale
imposed by any governmental agency, or department or division thereof, having
regulatory authority over such matters; (c) such Inventory is currently either
usable or saleable, at prices approximating at least the cost thereof, in the
normal course of the Borrower’s business; (d) such Inventory is not obsolete or
repossessed goods taken in trade; (e) such Inventory is located at one of the
locations listed in Schedule 5.1(m) or leased or owned by Borrower and disclosed
to Lender; and (f) such Inventory is in the possession and control of the
Borrower and not any third party, or, if located in a warehouse or other
facility leased by the Borrower, the warehouseman or lessor has delivered to the
Lender a waiver and consent in form and substance satisfactory to the
Lender.  If Borrower includes certain Inventory in the Borrowing Base that meets
the requirements of (a) – (f) above that Lender in its sole discretion
determines is not eligible for inclusion in the calculation of the Borrowing
Base, Lender agrees to promptly provide notice to Borrower of such exclusion.
 
“Eligible Receivable” means, collectively, all Receivables of Borrower other
than the following: (i) Receivables payable by any account debtor that is
located outside of the United States of America or payable in any currency other
than the currency of the United States of America provided, however, that Semina
Industria e Comercio shall not be excluded by virtue of this sub-clause (i)
(“Semina”); (ii) Receivables which remain unpaid ninety (90) or more days past
the due date; (iii) Receivables with respect to which the account debtor is an
Affiliate of Borrower; (iv) Receivables with respect to which the account debtor
is the United States of America or any department, agency, instrumentality
thereto unless filings in accordance with the U.S. Claims Act have been
completed and filed, acknowledged and processed in a manner satisfactory to
Lender; (v) Receivables with respect to goods that have been rejected as
unsatisfactory by the account debtor; (vi) Receivables which are not invoiced
(and dated as of the date of such invoice) and sent to the account debtor within
30 days after delivery of the underlying goods to or performance of the
underlying services for the account debtor; (vii) Receivables with respect to
which Lender does not have a first and valid, fully perfected security interest;
(viii) Receivables with respect to which the account debtor is the subject of
bankruptcy or a similar insolvency proceeding or has made an assignment for the
benefit of creditors or whose assets have been conveyed to a receiver or
trustee; (ix) Receivables with respect to which the account debtor’s obligation
to pay the Receivable is conditional upon the account debtor’s approval or is
otherwise subject to any repurchase obligation or return right, as with sales
made on a bill-and-hold, guarantied sale, sale-and-return, sale on approval
(except with respect to Receivables in connection with which account debtors are
entitled to return inventory solely on the basis of the quality of such
inventory) or consignment basis; (x) Receivables owing by any supplier to
Borrower and subject to offset against trade accounts payable owing to such
account debtor to the extent of such offset; (xi) Receivables owing from a
single account debtor to the extent the Receivables cause the Eligible
Receivables owing from such account debtor to be in excess of 20% of all of the
Eligible Receivables, (xii) Receivables generated from COD accounts, cash or
miscellaneous accounts, accounts on credit hold, and for finance charges or
service charges (xiii) Receivables consisting of retainage or retention, (xiv)
Receivables consisting of debit memos or chargebacks, and (xv) any Receivable of
an account debtor with respect to particular goods still in the possession of
Borrower or included in inventory against which the account debtor has filed a
financing statement under the UCC or has obtained or purported to have obtained
a Lien or security interest.  If a previously scheduled Eligible Receivable
ceases to be an Eligible Receivable under the above criteria, Borrower shall
notify Lender thereof (which notice obligation will be satisfied by the
submission of accurate Borrowing Base Certificates as required hereinafter).
 
 
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Eligible Receivable shall also include those Receivables of Borrower’s wholly
owned second-tier subsidiary, The Female Health Company (UK) PLC, payable by the
United Nations Population Fund (“UNFPA”),  provided such Receivables are not
excluded by any of the foregoing criteria for exclusion except for sub-clause
(vii).
 
“Environmental Laws” means all federal, state, local and foreign laws now or
hereafter in effect relating to pollution or protection of the environment,
including laws relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or wastes into the environment (including, without
limitation, ambient air, surface water, ground water or land) or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, removal, transport or handling of pollutants, contaminants, chemicals
or industrial, toxic or hazardous substances or wastes, and any and all
regulations, notices or demand letters issued, entered, promulgated or approved
thereunder.
 
“ERISA” means the Employee Retirement Income Security Act of 1974, as in effect
from time to time, and any successor statute.
 
“Event of Default” means any of the events specified in Section 9.1.
 
“Financing Statements” means the Uniform Commercial Code financing statements
naming the Lender as secured party and Borrower as debtor, in connection with
the perfection of the security interests granted by this Agreement or the
Security Agreement.
 
“GAAP” means generally accepted accounting principles in the United States
consistently applied and maintained throughout the period indicated and
consistent with the prior financial practice of the Person referred to.
 
“Governmental Approvals” means all authorizations, consents, approvals, licenses
and exemptions of, registrations and filings with, and reports to, all
governmental bodies, whether federal, state, local, foreign national or
provincial, and all agencies thereof.
 
“Governmental Authority” means any government or political subdivision or any
agency, authority, bureau, central bank, commission, department or
instrumentality of either, or any court, tribunal, grand jury or arbitrator, in
each case whether foreign or domestic.
 
“Guaranty”, “Guaranteed” or to “Guarantee,” as applied to any obligation of
another Person shall mean and include:
 
 
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(a)          a guaranty (other than by endorsement of negotiable instruments for
collection in the ordinary course of business), directly or indirectly, in any
manner, of any part or all of Such obligation of such other Person, and
 
(b)          an agreement, direct or indirect, contingent or otherwise, and
whether or not constituting a guaranty, the practical effect of which is to
assure the payment or performance (or payment of damages in the event of
nonperformance) of any part or all of such obligation of such other Person
whether by (i) the purchase of securities or obligations, (ii) the purchase,
sale or lease (as lessee or lessor) of property or the purchase or sale of
services primarily for the purpose of enabling the obligor with respect to such
obligation to make any payment or performance (or payment of damages in the
event of nonperformance) of or on account of any part or all of such obligation
or to assure the owner of such obligation against loss, (iii) the supplying of
funds to, or in any other manner investing in, the obligor with respect to such
obligation, (iv) repayment of amounts drawn down by beneficiaries of letters of
credit, or (v) the supplying of funds to or investing in a Person on account of
all or any part of such Person’s obligation under a guaranty of any obligation
or indemnifying or holding harmless, in any way, such Person against any part or
all of such obligation.
 
“Indebtedness” of any Person means, without duplication (a) all obligations for
money borrowed or for the deferred purchase price of property or services
(excluding trade payables incurred in the ordinary course of business) or in
respect of reimbursement obligations under letters of credit, (b) all
obligations represented by bonds, debentures, notes and accepted drafts that
represent extensions of credit, (c) all obligations (including, during the
noncancellable term of any lease in the nature of a title retention agreement,
all future payment obligations under such lease discounted to their present
value in accordance with GAAP) secured by any Lien to which any property or
asset owned or held by such Person is subject, whether or not the obligation
secured thereby shall have been assumed by such Person, (d) all obligations of
other Persons which such Person has Guaranteed, including, but not limited to,
all obligations of such Person consisting of recourse liability with respect to
accounts receivable sold or otherwise disposed of by such Person, (e) the sum of
all undrawn amounts and all drawings under any letters of credit for which the
Person has reimbursement obligations, and (f) in the case of Borrower (without
duplication), the Loan.
 
“Inventory” means and includes, as to any Person, all of such Person’s then
owned or existing and future acquired or arising (a) finished goods intended for
sale or lease or for display or demonstration, (b) work in process, (c) raw
materials and other materials and supplies of every nature and description used
or which might be used in connection with the manufacture, packing, shipping,
advertising, selling, leasing or furnishing of goods or otherwise used or
consumed in the conduct of business, and (d) documents evidencing and general
intangibles relating to any of the foregoing.
 
“Lender” means Heartland Bank, a federal savings bank, and its successors and
assigns.
 
“Lender’s Office” means the office of the Lender specified in or determined in
accordance with the provisions of Section 10.1(c).
 
“Leverage Ratio” means the ratio of Borrower’s “Total Liabilities” to “Total
Stockholders’ Equity”, as each of those terms is set forth or properly
determined in the Borrower’s consolidated balance sheet for the most recently
completed fiscal quarter contained in Borrower’s Form 10-Q report or 10-K
report, as applicable, filed with the SEC, as prepared in accordance with GAAP,
adjusted accordingly if any previous Permitted Distribution during the current
fiscal quarter has decreased the amount of “Total Stockholders’ Equity”.
 
 
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“Liabilities” means all liabilities of a Person determined in accordance with
GAAP and includable on a balance sheet of such Person prepared in accordance
with GAAP.
 
“Lien” as applied to the property of any Person means: (a) any mortgage, deed to
secure debt, deed of trust, lien, pledge, charge, lease constituting a
capitalized lease obligation, conditional sale or other title retention
agreement, or other security interest, security title or encumbrance of any kind
in respect of any property of such Person or upon the income or profits
therefrom, (b) any arrangement, express or implied, under which any property of
such Person is transferred, sequestered or otherwise identified for the purpose
of subjecting the same to the payment of Indebtedness or performance of any
other obligation in priority to the payment of the general, unsecured creditors
of such Person, (c) any Indebtedness which is unpaid more than 30 days after the
same shall have become due and payable and which if unpaid might by law
(including, but not limited to, bankruptcy and insolvency laws) or otherwise be
given any priority whatsoever over general unsecured creditors of such Person,
and (d) the filing of, or any agreement to give, any financing statement under
the UCC or its equivalent in any jurisdiction, except a filing for precautionary
purposes made with respect to a true lease or other true bailment.
 
“Loan” means, collectively, the loans made to Borrower pursuant to Section 2.1
and all extensions, renewals and modifications thereto.
 
“Loan Documents” means, collectively, this Agreement, the Note, the Security
Agreement, the Pledge Agreement and each other instrument, agreement and
document executed and delivered by Borrower in connection with this Agreement
and each other instrument, agreement or document referred to herein or
contemplated hereby.
 
 “Material Adverse Effect” means any act, omission, event or undertaking which
would, singly or in the aggregate, have a material adverse effect upon (a) the
business, assets, properties, liabilities, condition (financial or otherwise),
results of operations or business prospects of Borrower, (b) upon the ability of
Borrower to perform any obligations under this Agreement or any other Loan
Document to which it is a party, or (c) the legality, validity, binding effect,
enforceability or admissibility into evidence of any Loan Document or the
ability of Lender to enforce any rights or remedies under or in connection with
any Loan Document; in any case, whether resulting from any single act, omission,
situation, status, event, or undertaking, together with other such acts,
omissions, situations, statuses, events, or undertakings.
 
“Maturity Date” means August 1, 2012.

“Maximum Available Amount” means the lesser of (a) the Borrowing Base and (b)
$2,000,000.
 
“Multiemployer Plan” means a “multiemployer plan” as defined in Section
4001(a)(3) of ERISA to which Borrower or a Related Company is required to
contribute or has contributed within the immediately preceding 6 years.
 
“Note” means the Promissory Note dated as of even date herewith executed by
Borrower and payable to the order of Lender, the form of which is attached
hereto and incorporated herein as Exhibit A, and any amendments, modifications,
restatements, replacements, renewals or refinancings thereof.
 
“Obligations” means, in each case whether now in existence or hereafter arising,
(a) the principal of and interest and premium, if any, on, and expenses related
to, the Loan and (b) all indebtedness, liabilities, obligations, overdrafts,
covenants and duties of Borrower to the Lender of every kind, nature and
description, direct or indirect, absolute or contingent, due or not due,
contractual or tortious, liquidated or unliquidated, and whether or not
evidenced by any note and whether or not for the payment of money, under or in
respect of the Loan, this Agreement, the Note or any of the other Loan
Documents.
 
 
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“Obligor” means Borrower, and each other party at any time primarily or
secondarily, directly or indirectly, liable on any of the Obligations, and any
Subsidiary of Borrower.
 
“PBGC” means the Pension Benefit Guaranty Corporation or any successor agency.
 
“Permitted Distribution” means (a) any retirement, redemption, repurchase, or
other acquisition for value by Borrower of any capital stock or other equity
securities issued by Borrower, or (b) any declaration or payment of a dividend
or distribution on or with respect to any shares of Borrower’s capital stock, as
long as the payment of the proposed retirement, redemption, repurchase or other
acquisition or the proposed dividend or distribution will not cause Borrower’s
Leverage Ratio to exceed 1:1.
 
“Person” means an individual, corporation, partnership, association, trust or
unincorporated organization or a government or any agency or political
subdivision thereof.
 
“Pledge Agreement” means the pledge agreement executed by Borrower, whereby a
first priority lien is granted to Lender upon sixty-five percent (65%) of the
outstanding equity of its wholly owned first tier subsidiary, The Female Health
Company Limited.
 
“Prime Rate” means the per annum rate of interest publicly announced by Lender
at its principal office as its “prime rate” as in effect from time to time.
Prime Rate is a reference used by Lender in determining interest rates on
certain loans and is not intended to be the lowest rate of interest charged on
any extension of credit to any debtor. Each change in the Prime Rate shall
result in a concurrent charge in the interest rate on the Loan for which
interest is based upon the Prime Rate.
 
“Receivables” means and includes, as to any Person, all of such Person’s then
owned or existing and future acquired or arising (a) rights to the payment of
money or other forms of consideration of any kind (whether as accounts, contract
rights, chattel paper, general intangibles, instruments, investment related
property or otherwise) including, but not limited to, accounts receivable,
letters of credit rights, tax refunds, insurance proceeds, notes, drafts,
instruments, documents, acceptances and all other debts, obligations and
liabilities in whatever form from any Person and guaranties, security and Liens
securing payment thereof, (b) goods, whether now owned or hereafter acquired,
and whether sold, delivered, undelivered, in transit or returned, which may be
represented by, or the sale or lease of which may have given rise to, any such
right to payment or other debt, obligation or liability, and (c) cash and
non-cash proceeds of any of the foregoing.
 
“Related Company” means, as to any Person, any (a) corporation which is a member
of the same controlled group of corporations (within the meaning of Section
414(b) of the Code) as such Person, (b) partnership or other trade or business
(whether or not incorporated) under common control (within the meaning of
Section 414(m) of the Code) with such Person, or (c) member of the same
affiliated service group (within the meaning of Section 414(m) of the Code) as
such Person or any corporation described in clause (a) above or any partnership,
trade or business described in clause (b) above.
 
“Restricted Distribution” by any Person means (a) its retirement, redemption,
purchase, or other acquisition for value of any capital stock or other equity
securities or partnership interests issued by such Person, (b) the declaration
or payment of any dividend or distribution on or with respect to any such
securities or, partnership interests, (c) any loan or advance by such Person to,
or other investment by such Person in, the holder of any of such securities or
partnership interests, and (d) any other payment by such Person in respect of
such securities or partnership interests.
 
 
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“Restricted Payment” means (a) any redemption, repurchase or prepayment or other
retirement, prior to the stated maturity thereof or prior to the due date of any
regularly scheduled installment or amortization payment with respect thereto, of
any Indebtedness of a Person (other than the Obligations and trade debt), and
(b) the payment by any Person of the principal amount of or interest on any
Indebtedness (other than trade debt) owing to an Affiliate of such Person.
 
“Security Agreement” means, collectively, the security agreement to be executed
by Borrower to the benefit of Lender, granting a security interest in all of the
assets of Borrower to secure the obligations of Borrower under the Loan and any
amendments thereto, together with the agreement of the Subsidiary of Borrower
creating a lien upon the Receivables of such Subsidiary.
 
“Security Interest” means the Liens of the Lender on and in any collateral
effected by the Security Agreement, or pursuant to the terms hereof or thereof.
 
“Subsidiary” means a Person of which an aggregate of 50% or more of the stock of
any class or classes or 50% or more of membership or other ownership interests
is owned of record or beneficially by such other Person or by one or more
Subsidiaries of such other Person or by such other Person and one or more
Subsidiaries of such Person, (i) if the holders of such stock or other ownership
interests (A) are ordinarily, in the absence of contingencies, entitled to vote
for the election of a majority of the directors (or other individuals performing
similar functions) of such Person, even though the right so to Vote has been
suspended by the happening of such a contingency, or (B) are entitled, as such
holders, to vote for the election of a majority of the directors (or individuals
performing similar functions) of such Person, whether or not the right so to
vote exists by reason of the happening of a contingency, or (ii) in the case of
such other ownership interests, if such ownership interests constitute a
majority voting interest.
 
“Termination Event” means (a) a “Reportable Event” as defined in Section 4043(b)
of ERISA, but excluding any such event as to which the provision for 30 days’
notice to the PBGC is waived under applicable regulations, (b) the filing of a
notice of intent to terminate a Benefit Plan or the treatment of a Benefit Plan
amendment as a termination under Section 4041 of ERISA, or (c) the institution
of proceedings to terminate a Benefit Plan by the PBGC under Section 4042 of
ERISA or the appointment of a trustee to administer any Benefit Plan.
 
“UCC” means the Uniform Commercial Code as in effect from time to time in the
State of Missouri.
 
“United Kingdom Subsidiaries” means The Female Health Company Limited, a first
tier Subsidiary of Borrower, and The Female Health Company (UK) PLC, a second
tier Subsidiary of Borrower.
 
“Unfunded Vested Accrued Benefits” means, with respect to any Benefit Plan at
any time, the amount (if any) by which (a) the present value of all vested
nonforfeitable benefits under such Benefit Plan exceeds (b) the fair market
value of all Benefit Plan assets allocable to such benefits, as determined using
such reasonable actuarial assumptions and methods as are specified in the
Schedule B (Actuarial Information) to the most recent Annual Report (Form 5500)
filed with respect to such Benefit Plan.
 
Section 1.2                      Other Provisions.
 
(a)          All terms in this Agreement, the Exhibits and Schedules hereto
shall have the same defined meanings when used in any other Loan Documents,
unless the context shall require otherwise.
 
 
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(b)          Except as otherwise expressly provided herein, all accounting terms
not specifically defined or specified herein shall have the meanings generally
attributed to such terms under GAAP including, without limitation, applicable
statements and interpretations issued by the Financial Accounting Standards
Board and bulletins, opinions, interpretations and statements issued by the
American Institute of Certified Public Accountants or its committees.
 
(c)          All personal pronouns used in this Agreement, whether used in the
masculine, feminine or neuter gender, shall include all other genders; the
singular shall include the plural, and the plural shall include the singular.
 
(d)          The words “hereof”, “herein” and “hereunder” and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provisions of this Agreement.
 
(e)          Titles of Articles and Sections in this Agreement are for
convenience only, do not constitute part of this Agreement and neither limit nor
amplify the provisions of this Agreement, and all references in this Agreement
to Articles, Sections, Subsections, paragraphs, clauses, subclauses, Schedules
or Exhibits shall refer to the corresponding Article, Section, Subsection,
paragraph, clause or subclause of, or Schedule or Exhibit attached to, this
Agreement, unless specific reference is made to the articles, sections or other
subdivisions or divisions of, or to schedules or exhibits to, another document
or instrument.
 
(f)          Each definition of a document in this Agreement shall include such
document as amended, modified, supplemented or restated from time to time in
accordance with the terms of this Agreement.
 
(g)          Except where specifically restricted, reference to a party to a
Loan Document includes that party and its successors and assigns permitted
hereunder or under such Loan Document.
 
(h)          Unless otherwise specifically stated, whenever a time is referred
to in this Agreement or in any other Loan Document, such time shall be the local
time in St. Louis, Missouri.
 
(i)          Whenever the phrases “to the knowledge of Borrower,” or “known to,”
or words of similar import relating to the knowledge of Borrower are used
herein, such phrase shall mean and refer to the actual knowledge of the
President, the chief financial officer or any officer or manager of the
Borrower, or the knowledge that such Persons would have obtained if they had
engaged in good faith in the diligent performance of their duties, including the
making of such reasonable specific inquiries (excepting those situations and
circumstances wherein a reasonably prudent person would not consider it
appropriate to make any such inquiry) as may be necessary of the appropriate
persons in a good faith attempt to ascertain the accuracy of the matter to which
such phrase relates.
 
(j)          The terms accounts, chattel paper, documents, equipment,
instruments, general intangibles and inventory, as and when used (without being
capitalized) in this Agreement or the Security Agreement, shall have the
meanings given those terms in the UCC.
 
Section 1.3                      Exhibits and Schedules.  All Exhibits and
Schedules attached hereto are by reference made a part hereof.
 
 
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ARTICLE 2 - CREDIT FACILITY
 
Section 2.1                      Loan.  Upon the terms and subject to the
conditions of, and in reliance upon the representations and warranties made
under, this Agreement, the Lender has made or shall make loans to Borrower from
time to time from the date hereof to the Maturity Date (each, a “Loan Advance”),
as requested by Borrower in accordance with the terms of Section 2.1.2, in an
aggregate principal amount outstanding not to exceed at any time $2,000,000.

2.1.1           Limitation on Loan Advances.  Notwithstanding anything to the
contrary contained herein, no Loan Advance shall be made if such advance would
result in the aggregate amount of all Loan Advances to exceed the Maximum
Available Amount. No Loan Advance will be made on or after the Maturity Date.

2.1.2           Loan Advance Borrowing Procedure. Subject to the limitations set
forth herein, Borrower may request a Loan Advance by submitting a Loan Advance
Request to Lender via mail or facsimile in the form of Exhibit A attached to the
Note. Every such request for a Loan Advance shall be irrevocable. Only a request
from a Borrowing Officer to Lender that specifies (i) the amount of the Loan
Advance to be made and (ii) the date the proceeds of such Loan Advance is
requested to be made available to Borrower (the “Loan Advance Date”) shall be
treated as a “Loan Advance Request”. Each Loan Advance Request shall be written.
Provided that all conditions precedent thereto hereunder have been met and all
limitations thereto are in compliance. Lender will make the amount of each such
requested advance available to Borrower in immediately available funds in
Dollars at the Lender’s Office.
 
Section 2.2                      Repayment of Loan.  The Loan is due and payable
and shall be repaid in full by the Borrower on the Maturity Date in the amount
of the then unpaid balance of that Loan and all accrued and unpaid interest
thereon.
 
Section 2.3                      Note.  The Loan and the obligation of Borrower
to repay such Loan shall be evidenced by the Note, payable to the order of the
Lender. The Note shall be dated the Effective Date and be duly and validly
executed and delivered by Borrower.
 
Section 2.4                      Prepayment of Loan.
 
(a)          Voluntary Prepayments.  Borrower shall have the right at any time
and from time to time to wholly or partially repay the Loan at any time without
premium or penalty. Any amount prepaid may, subject to compliance with the
conditions and limitations herein, be re-borrowed.
 
(b)          Mandatory Prepayments.  If at any time the principal balance
outstanding of the Loan exceeds the Maximum Available Amount, Borrower shall on
demand make a payment to Lender in the amount of the excess. Each such
prepayment shall be applied to reduce such Loan.

ARTICLE 3 - GENERAL LOAN PROVISIONS
 
Section 3.1                      Interest.
 
(a)          Interest Rate of Loan. The Loan shall bear interest at a per annum
rate as described in the Note.
 
 
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(b)          Default Rate. From and after the occurrence of an Event of Default,
the unpaid principal amount of each Obligation shall bear interest until paid in
full (or, if earlier, until such Event of Default is cured or waived in writing
by the Lender) at a rate per annum equal to four percent (4%) plus the rate
otherwise in effect under Section 3.1, payable on demand. The interest rate
provided for in this Section 3.1(b) shall to the extent permitted by applicable
law apply to and accrue on the amount of any judgment entered with respect to
any Obligation and shall continue to accrue at such rate during any proceeding
described in Section 9.1(g) or (h).
 
(c)          The interest rates provided for in Sections 3.1(a) and (b) shall be
computed on the basis of a year of 360 days and the actual number of days
elapsed.
 
(d)          It is not intended by the Lender, and nothing contained in this
Agreement, the Note or any other Loan Document shall be deemed, to establish or
require the payment of a rate of interest in excess of the maximum rate
permitted by applicable law (the “Maximum Rate”). If, in any month, the
Effective Interest Rate, absent such limitation, would have exceeded the Maximum
Rate, then the Effective Interest Rate for that month shall be the Maximum Rate,
and if, in future months, the Effective Interest Rate would otherwise be less
than the Maximum Rate, then the Effective Interest Rate shall remain at the
Maximum Rate until such time as the amount of interest paid hereunder equals the
amount  of interest which would have been paid if the same had not been limited
by the Maximum Rate. In the event the Lender receives, collects or applies as
interest any sum in excess of the Maximum Rate, such excess amount shall be
applied to the reduction of the principal balance of the applicable Obligation,
and, if no such principal is then outstanding, such excess or part thereof
remaining shall be paid to Borrower.
 
Section 3.2                      Increased Costs and Reduced Returns. Borrower
agrees that if any law now or hereafter in effect and whether or not presently
applicable to the Lender or any request, guideline or directive of any
Governmental Authority (whether or not having the force of law and whether or
not failure to comply therewith would be unlawful) or the interpretation or
administration thereof by any Governmental Authority, shall either (a)(i)
impose, affect, modify or deem applicable any reserve, special deposit, capital
maintenance or similar requirement against the Loan, (ii) impose on the Lender
any other condition regarding the Loan, this Agreement, the Note or the
facilities provided hereunder, or (iii) result in any requirement regarding
capital adequacy (including any risk-based capital guidelines) affecting the
Lender being imposed or modified or deemed applicable to the Lender, or (b)
subject the Lender to any taxes, not including taxes on the income of Lender, on
the recording, registration, notarization or other formalization of the Loan or
the Note, and the result of any event referred to in clause (a) or (b) above
shall be to increase the cost to the Lender of making, funding or maintaining
the Loan or to reduce the amount of any sum receivable by the Lender or the
Lender’s rate of return on capital with respect to the Loan to a level below
that which the Lender could have achieved but for such imposition, modification
or deemed applicability (taking into consideration the Lender’s policies with
respect to capital adequacy) by an amount deemed by Lender (in the exercise of
its discretion) to be material, then, upon demand by the Lender, Borrower shall
immediately pay to the Lender additional amounts which shall be sufficient to
compensate the Lender for such increased cost, tax or reduced rate of return,
and which amount shall be reimbursed to Borrower if Lender receives a refund or
credit therefor. A certificate of the Lender to Borrower claiming compensation
under this Section 3.2 shall be final, conclusive and binding on all parties for
all purposes in the absence of manifest error. Such certificate shall set forth
the nature of the occurrence giving rise to such compensation, the additional
amount or amounts to be paid to it hereunder, and the method by which such
amounts were determined. In determining such amount, the Lender may use any
reasonable averaging and attribution methods.
 
Section 3.3                      Manner of Payment. Each payment (including
prepayments) by Borrower on account of the principal of or interest on the Loan
or of any fee or other amounts payable to the Lender under this Agreement or the
Note shall be made not later than 2:00 p.m. on the date specified for payment
under this Agreement (or if such day is not a Business Day, the next succeeding
Business Day) to the Lender at the Lenders Office, in Dollars, in immediately
available funds and shall be made without any setoff, counterclaim or deduction
whatsoever. Borrower hereby irrevocably authorizes the Lender and each Affiliate
of the Lender to charge any account of Borrower maintained with the Lender or
such Affiliate with such amounts as may be necessary from time to time to pay
any Obligations when due.
 
 
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Section 3.4                      Payments; Fees.
 
(a)          Scheduled Payments on Loan. Borrower shall make payments of
interest accrued on the Loan monthly, in arrears, beginning on the first day of
the first full calendar month following the Effective Date and continuing on the
first day of each calendar month thereafter and on the Maturity Date. Borrower
shall pay interest accrued on the Loan after the Maturity Date, on demand.
 
(b)          Final Payment. On the Maturity Date, Borrower shall pay to the
Lender, in same day funds, an amount equal to the aggregate amount of the Loan
outstanding and due on such date, together with accrued interest thereon, all
fees payable to the Lender pursuant to the provisions of this Agreement, and any
and all other Obligations then due and outstanding.
 
(c)          Interest Calculation. For purposes of interest calculation only,
(i) a payment by check, draft or other instrument received on a Business Day
shall be deemed to have been applied to the relevant Obligation on the second
following Business Day, (ii) a payment in cash or by wire transfer received at
or before 2:00 p.m., St. Louis, Missouri time, on a Business Day shall be deemed
to have been applied to the relevant Obligation on the Business Day when it is
received, and (iii) a payment in cash or by wire transfer received on a day that
is not a Business Day or after 2:00 p.m., St. Louis, Missouri time, on a
Business Day shall be deemed to have been applied to the relevant Obligation on
the next Business Day.
 
(d)          Returned Instruments. If a payment is made by check, draft or other
instrument and the check, draft or other instrument is returned to Lender
unpaid, the application of the payment to the Obligation will be reversed and
will be treated as never having been made.
 
(e)          Compelled Return of Payments or Proceeds. If Lender is for any
reason compelled to surrender any payment or any proceeds of any collateral
under the Security Agreement because such payment or the application of such
proceeds is for any reason invalidated, declared fraudulent, set aside, or
determined to be void or voidable as a preference, an impermissible setoff, or a
diversion of trust funds, then this Agreement and the Obligations to which such
payment or proceeds was applied or intended to be applied shall be revived as if
such application was never made; and Borrower shall be liable to pay to Lender,
and shall indemnify Lender for and hold Lender harmless from any loss with
respect to, the amount of such payment or proceeds surrendered. This Section
shall be effective notwithstanding any contrary action that Lender may take in
reliance upon its receipt of any such payment or proceeds. Any such contrary
action so taken by Lender shall be without prejudice to Lender’s rights under
this Agreement and shall be deemed to have been conditioned upon the application
of such payment or proceeds having become final and irrevocable. The provisions
of this Section shall survive the payment and satisfaction of all of the
Obligations.
 
(f)          Due Dates Not on Business Days. If any payment required hereunder
becomes due on a date that is not a Business Day, then such due date shall be
deemed automatically extended to the next Business Day.
 
(g)          Renewal Fee.  Borrower has paid to Lender a fee in an amount equal
to Two Thousand Five Hundred and NO/100 Dollars ($2,500.00) in connection with
the renewal of the Loan and in order to compensate Lender for the costs
associated with structuring, processing, approving and closing the Loan renewal,
but excluding expenses for which Borrower has agreed elsewhere in this Agreement
to reimburse Lender.  The fee shall be fully earned by Lender when received and,
except as otherwise set forth herein, shall not be subject to refund or
rebate.  All fees are for compensation for services and are not, and shall not
be deemed to be, interest or a charge for the use of money.
 
 
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(h)          Nonusage fee.  The Borrower shall pay to Lender a monthly nonusage
fee in an amount equal to one half of one percent (0.50%) per annum of the
difference between (i) the Maximum Available Amount and (ii) the average
principal amount of the Loan Advances during such monthly period.  Such nonusage
fee shall be calculated on a monthly basis, in arrears, and shall payable to
Lender within three (3) Business Days of delivery of a statement from Lender
relating thereto.
 
Section 3.5                      Collateral. The Loan shall be secured by the
Pledge Agreement, and the Collateral as defined in the Security Agreement.
 
ARTICLE 4 - CONDITIONS PRECEDENT
 
Section 4.1                      Conditions Precedent to the Loan.
Notwithstanding any other provision of this Agreement, the Lender’s obligation
to make the Loan is subject to the fulfillment of each of the following
conditions prior to or contemporaneously with the making of such Loan:
 
 
(a)          Closing Documents. The Lender shall have received each of the
following documents, or otherwise shall confirm-in the continuing effectiveness
of any such documents, all of which shall be satisfactory in form and substance
to the Lender and its counsel:
 
(1) this Agreement, duly executed and delivered by Borrower;
 
(2) A Certificate of No Change, together with any amendments to the Articles of
Incorporation and By-Laws of Borrower since July 15, 2004;
 
(3) a certificate evidencing the good standing of Borrower in the jurisdiction
of its incorporation and in each other jurisdiction in which it is qualified as
a foreign corporation to transact business;
 
(4) the Financing Statements (and required continuations thereof) and evidence
satisfactory to the Lender that the Financing Statements have been filed in each
jurisdiction where such filing may be necessary or appropriate to perfect the
Security Interest;
 
(5) copies of all the financial statements referred to in Section 5.1 and
meeting the requirements thereof;
 
(6) copies of each of the other Loan Documents (excluding the Pledge Agreement),
duly executed by the parties thereto with evidence satisfactory to the Lender
and its counsel of the due authorization, binding effect and enforceability of
each such Loan Document (excluding the Pledge Agreement) on each such party and
such other documents and instruments as the Lender may reasonably request;
 
(7) opinion of Borrower’s counsel opining to such matters as Lender and/or its
legal counsel may require; and
 
 
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(8) with respect to any Loan Advance request, a  Borrowing Base Certificate.
 
(b)          No Injunctions, Etc. Except as disclosed in Borrower’s Form 10-Q
report for the quarter ended March 31, 2011, no action, proceeding,
investigation, regulation or  legislation shall have been instituted, threatened
or proposed before any court, governmental agency or legislative body to enjoin,
restrain or prohibit or to obtain substantial damages in respect of or which is
related to or arises out of this Agreement or the consummation of the
transactions contemplated hereby or which, in the Lender’s sole discretion,
would make it inadvisable to consummate the transactions contemplated by this
Agreement.
 
(c)          Material Adverse Change. As of the Effective Date, there shall not
have occurred any change which, in the Lender’s sole discretion, has had or may
have a Material Adverse Effect as compared to the condition of Borrower
presented by the most recent financial statements of Borrower.
 
(d)          Solvency. The Lender shall have received evidence satisfactory to
it that, after giving effect to any such Loan (i) Borrower has assets having
value, both at fair value and at present fair saleable value, greater than the
amount of its liabilities, and (ii) Borrower’s assets are sufficient in value to
provide Borrower with sufficient working capital to enable it profitably to
operate its businesses and to meet its obligations as they become due, and (iii)
Borrower has adequate capital to conduct the business in which it is and
proposes to be engaged.
 
(e)          No Default or Event of Default. There shall be no Default or Event
of Default and all of the representations and warranties made or deemed to be
made under this Agreement shall be true and correct in all material respects at
such time both with and without giving effect to the Loan to be made at such
time and the application of the proceeds thereof except that representations and
warranties which, by their terms, are applicable only to the Agreement Date or
other specified date shall be true and correct only as of that date.
 
Section 4.2                      Conditions Precedent to Subsequent Loan
Advances. Notwithstanding any other provision of this Agreement, the Lender’s
obligation to make any subsequent advance under the Loan is subject to the
fulfillment of each of the following conditions prior to or contemporaneously
with the making of each such future Loan:
 
(a)          All of the conditions in Section 4.1 have been and remain
satisfied;
 
(b)          The representations and warranties contained in the Loan Documents
shall be true and correct in all material respects as of the time of any such
advance and with the same force and effect as if made at such time except that
representations and warranties which, by their terms, are applicable only to the
Agreement Date or other specified date shall be true and correct only as of that
date, with such exceptions as have been disclosed to Lender in writing by
Borrower as addenda to the Schedules and are reasonably satisfactory to Lender,
such representations and warranties shall be deemed made with respect to the
most recent Financial Statements and other financial data delivered by Borrower
to Lender;
 
(c)          There shall be no Existing Default and no Default or Event of
Default will occur as a result of the making of the Loan Advance, as the case
may be, or Borrower’s use of the proceeds thereof;
 
(d)          Since the date of the most recent prior Loan Advance, as
applicable, there shall not have been any change which has had or is reasonably
likely to have a Material Adverse Effect on Borrower; and
 
 
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(e)          Borrower shall have submitted to Lender (a) written documentation
certifying the proceeds of the Loan will be used for the purpose authorized
pursuant to Section 6.5 of this Agreement, and (b) a completed Borrowing Base
Certificate.
 
Section 4.3                      Conditions Precedent to UNFPA as an Eligible
Receivable.  Prior to the inclusion of the UNFPA as an Eligible Receivable in
the Borrowing Base, each of the following conditions must be satisfied:
 
(a)          Borrower shall cause an opinion of United Kingdom counsel opining
on the due incorporation and valid existence of each of the Borrower’s United
Kingdom Subsidiaries, and on the valid issuance of the share capital of each of
the Borrower’s United Kingdom Subsidiaries, all in form and substance reasonably
satisfactory to Lender and its counsel and addressing such other matters
reasonably required by Lender;
 
(b)          Lender shall have received, at Borrower’s cost and expense, current
and appropriate records searches with respect to Borrower’s United Kingdom
Subsidiaries, showing only permitted and anticipated Liens reasonably acceptable
to Lender, and, if required, Lender shall also have received bankruptcy,
litigation, tax and other lien searches on Borrower’s United Kingdom
Subsidiaries, reasonably satisfactory to Lender in all respects; and
 
(c)          Borrower shall deliver an executed Pledge Agreement in form and
substance satisfactory to Lender.
 
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF BORROWER
 
 
Section 5.1                      Representations and Warranties. Borrower-
represents and warrants to the Lender as follows:
 
(a)          Organization; Power; Qualification. Borrower is a corporation, duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, has the power and authority to own properties
and to carry on business as now being and hereafter proposed to be conducted and
is duly qualified and authorized to do business in each jurisdiction in which
failure to be so qualified and authorized would have a Material Adverse Effect.
 
(b)          Subsidiaries and Ownership of Borrower. The Subsidiaries of
Borrower are set forth in Exhibit 21 of Borrower’s most recent Form 10-K filed
with the SEC.
 
(c)          Authorization of Agreement, Note, Loan Documents and Borrowing.
Borrower has the right and power and has taken all necessary action to authorize
it to execute, deliver and perform this Agreement and each of the other Loan
Documents to which it is a party in accordance with their respective terms and
to borrow hereunder. This Agreement and each of the other Loan Documents to
which it is a party have been duly executed and delivered by the duly authorized
officers of Borrower and each is, or when executed and delivered in accordance
with this Agreement will be, a legal, valid and binding obligation of Borrower
enforceable in accordance with its terms.
 
(d)          Compliance of Agreement, Note, Loan Documents and Borrowing with
Laws, Etc. The execution, delivery and performance of this Agreement and each of
the other Loan Documents to which Borrower is a party in accordance with their
respective terms and the borrowings hereunder do not and will not, by the
passage of time, the giving of notice or otherwise, (i) require any Governmental
Approval or violate any applicable law relating to Borrower or any of its
Affiliates, (ii) conflict with, result in a breach of or constitute a default
under (A) the articles of incorporation or by-laws of Borrower, (B) any
indenture, agreement or other instrument to which Borrower is a party or by
which any of its property may be bound or (C) any Governmental Approval relating
to Borrower, or, (iii) result in or require the creation or imposition of any
Lien upon or with respect to any property now owned or hereafter acquired by
Borrower, except the Lien in favor of Lender created by the Security Agreement.
 
 
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(e)          Compliance with Law; Governmental Approvals. Borrower (i) has all
Governmental Approvals, including permits relating to federal, state and local
Environmental Laws, ordinances and regulations required by any applicable law
for it to conduct its business, each of which is in full force and effect, is
final and not subject to review on appeal and is not the subject of any pending
attack by direct or collateral proceeding, and (ii) is in compliance with each
Governmental Approval applicable to it and in compliance with all other
applicable laws relating to it, including, without being limited to, all
Environmental Laws and all occupational health and safety laws applicable to
Borrower or its properties, except in the case of both (i) and (ii) above for
instances of noncompliance which would not, singly or in the aggregate, cause a
Default or Event of Default or have a Material Adverse Effect and in respect of
which adequate reserves have been established on the books of Borrower.
 
(f)          Litigation. Except as disclosed in Borrower’s Form 10-Q report for
the quarter ended March 31, 2011, there are no actions, suits or proceedings
pending against or in any other way relating adversely to or affecting Borrower
or any of its, his, her or their property in any court or before any arbitrator
of any kind or before or by any governmental body.
 
(g)          Tax Returns and Payments. All United States federal, state and
local and foreign national, provincial and local and all other tax returns of
Borrower required by applicable law to be filed have been duly filed, and all
United States federal, state and local and foreign national, provincial and
local and all other taxes, assessments and other governmental charges or levies
upon such entities and their properties, income, profits and assets which are
due and payable have been paid, except any such nonpayment which is at the time
permitted under Section 8.3. The charges, accruals and reserves on the books of
Borrower in respect of United States federal, state and local taxes and foreign
national, provincial and local taxes for all fiscal years and portions thereof
since the organization of such entities are in the judgment of Borrower
adequate.
 
(h)          Burdensome Provisions. Borrower is not a party to any indenture,
agreement, lease or other instrument, or subject to any charter or corporate
restriction, Governmental Approval or applicable law, compliance with the terms
of which might have a Material Adverse Effect.
 
(i)          Financial Statements. Borrower has furnished to the Lender a copy
of (i) its certified audited financial statement of September 30, 2010, and the
related statements of income, cash flow and retained earnings for the
twelve-month period then ended and a summary of adjustments to such statements
to comply with GAAP, and (ii) the balance sheet as of March 31, 2011 and the
related statement of income for the 12 (and 6) month period, respectively, then
ended. Such financial statements are complete and correct in all material
respects and present fairly and in all material respects the financial position
of Borrower as at the dates thereof and the results of operations of Borrower
for the periods then ended, subject to normal year-end adjustments. Except as
disclosed or reflected in such financial statements or the notes thereto,
Borrower did not have any material liabilities, contingent or otherwise, and
there were no material unrealized or anticipated losses of Borrower.
 
(j)          Adverse Change. Since the date of the financial statements
described in clause (i) of Section 5.1(i), (i) no change in the business,
assets, liabilities, condition (financial or otherwise), results of operations
or business prospects of Borrower has occurred that has had, or may have, a
Material Adverse Effect, and (ii) no event has occurred or failed to occur which
has had, or may have, a Material Adverse Effect.
 
 
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(k)          Absence of Defaults. Borrower is not in default under its articles
of incorporation or by-laws and no event has occurred which has not been
remedied, cured or waived (i) that constitutes a Default or an Event of Default
or (ii) that constitutes or that, with the passage of time or giving of notice,
or both, would constitute a default or event of default by Borrower under any
material agreement (other than this Agreement) or judgment, decree or order to
which Borrower is a party or by which Borrower or any of its properties may be
bound or which would require Borrower to make any payment thereunder prior to
the scheduled maturity date therefor.
 
(l)          Accuracy and Completeness of Information. All written information,
reports and other papers and data produced by or on behalf of Borrower and
furnished to the Lender were, at the time the same were so furnished, complete
and correct in all material respects to the extent necessary to give the
recipient a true and accurate knowledge of the subject matter, no fact is known
to Borrower which has had, or may in the future have, a Material Adverse Effect
which has not been set forth in the financial statements or disclosure delivered
prior to the Effective Date, in each case referred to in Section 5.1(i), or in
such written information, reports or other papers or data or otherwise disclosed
in writing to the Lender prior to the Effective Date. The documents furnished or
written statements, taken as a whole, made to the Lender by Borrower in
connection with the negotiation, preparation or execution of this Agreement or
any of the Loan Documents do not contain any untrue statement of a fact material
to the creditworthiness of Borrower and do not omit to state a material fact
necessary in order to make the statements contained therein not misleading.
 
(m)          Place of Business. The chief executive office and business
locations of Borrower are set forth in Schedule 5.1(m).
 
(n)          Federal Regulations. Borrower is not engaged, principally or as one
of its important activities, in the business of extending credit for the purpose
of “purchasing” or “carrying” any “margin stock” (as each of the quoted terms is
defined or used in Regulations G and U of the Board of Governors of the Federal
Reserve System).
 
(o)          Investment Company Act. Borrower is not an “investment company” or
a company “controlled” by an “investment company” (as each of the quoted terms
is defined or used in the Investment Company Act of 1940, as amended).
 
(p)          ERISA. Neither Borrower nor any Related Company maintains or
contributes to any Benefit Plan other than those listed on Schedule 5.1(p). Each
Benefit Plan is in substantial compliance with ERISA, and neither Borrower nor
any Related Company has received any notice asserting that a Benefit Plan is not
in compliance with ERISA. No material liability to the PBGC or to a
Multiemployer Plan has been, or is expected by Borrower to be, incurred by
Borrower or any Related Company.
 
(q)          Employee Relations. Borrower is not party to any collective
bargaining agreement. Borrower knows of no pending, threatened or contemplated
strikes, work stoppage or other labor disputes involving its employees or those
of its Subsidiaries.
 
(r)          Intellectual Property. Borrower and its Subsidiaries own and
possess or have the right to use all intellectual property (such as copyrights,
patents, trademarks and trade names) required to conduct their business as now
and presently planned to be conducted without, to its knowledge, conflict in any
material respect with the rights of others.  Schedule 5.1(r) lists all patents,
registered trademarks, registered copyrights and applications for any of the
foregoing owned by Borrower and its Subsidiaries.
 
 
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(s)          United Kingdom Subsidiaries.  Each of Borrower’s United Kingdom
Subsidiaries is directly or indirectly owned 100% by Borrower and is duly
incorporated and validly existing under the laws of the jurisdiction of its
incorporation, has the power and authority to own properties and to carry on
business as now being conducted and is duly qualified and authorized to do
business in each jurisdiction in which failure to be so qualified and authorized
would have a Material Adverse Effect.  The stock of each United Kingdom
Subsidiary has been validly issued.  Upon execution of the Pledge Agreement,
Lender shall have a first priority lien on sixty-five percent (65%) of the
outstanding share capital in the first-tier United Kingdom Subsidiary and there
are no other liens or encumbrances on such share capital.  There are no liens or
encumbrances on the share capital of Borrower’s second-tier United Kingdom
Subsidiary.
 
Section 5.2                      Survival of Representations and Warranties,
Etc. All representations and warranties set forth in this Article 5 and in other
Loan Documents (including, but not limited to, any such representation, warranty
or statement made in or in connection with any amendment thereto) shall
constitute representations and warranties made under this Agreement. All
representations and warranties made under this Agreement shall be made or deemed
to be made at and as of the Agreement Date, at and as of the Effective Date and
at and as of the date of each Loan, including, but not limited to, each Loan
Advance, except that representations and warranties which, by their terms are
applicable only to one such date shall be deemed to be made only at and as of
such date. All representations and warranties made or deemed to be made under
this Agreement shall survive and not be waived by the execution and delivery of
this Agreement, any investigation made by or on behalf of the Lender or any
borrowing hereunder.
 
ARTICLE 6 - AFFIRMATIVE COVENANTS
 
Until all of the Obligations have been indefeasibly paid in full, Borrower and
each of its Subsidiaries will:
 
Section 6.1                      Preservation of Corporate Existence and Similar
Matters. With respect to each of Borrower and Borrower’s United Kingdom
Subsidiaries, preserve and maintain its corporate existence, rights, franchises,
licenses and privileges in the jurisdiction of its incorporation and qualify and
remain qualified as a foreign corporation and authorized to do business in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification or authorization, except to the extent the
failure to do so would not have a Material Adverse Effect.
 
Section 6.2                      Compliance with Applicable Law. Comply with all
applicable laws relating to Borrower and its United Kingdom Subsidiaries.
 
Section 6.3                      Payment of Taxes and Claims. Pay or discharge
when due (a) all taxes, assessments and governmental charges or levies imposed
upon it or upon its income or profits or upon any properties belonging to it,
and (b) all lawful claims of materialmen, mechanics, carriers, warehousemen and
landlords for labor, materials, supplies and rentals which, if unpaid, would
become a Lien on any properties of Borrower.
 
Section 6.4                      Accounting Methods and Financial Records.
Maintain a system of accounting, and keep such books, records and accounts
(which shall be true and complete), as may be required or as may be necessary to
permit the preparation of financial statements in accordance with GAAP
consistently applied.
 
Section 6.5                      Restrictions on Use of Proceeds. Borrower will
use the proceeds of the Loan only for Borrower’s and its Subsidiaries’ working
capital purposes.
 
 
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Section 6.6                      Hazardous Waste and Substances; Environmental
Requirements. In addition to, and not in derogation of, the requirements of
Section 6.2 and of the Security Agreement, governmental standards and
regulations applicable to Borrower or to any of its assets in respect of
occupational health and safety laws, rules and regulations and Environmental
Laws, promptly notify the Lender of its receipt of any notice of a violation of
any such law, rule, standard or regulation and indemnify and hold the Lender
harmless from all loss, cost, damage, liability, claim and expense incurred by
or imposed upon the Lender on account of Borrower’s failure to perform its
obligations under this Section 6.6.
 
Section 6.7                      Accuracy of Information. All written
information, reports, statements and other papers and data furnished to the
Lender, whether pursuant to Article 7 or any other provision of this Agreement
or any of the other Loan Documents, shall be, at the time the same is so
furnished, complete and correct in all material respects to the extent necessary
to give the Lender true and accurate knowledge of the subject matter.
 
Section 6.8                      Revisions or Updates to Schedules. Should any
of the information or disclosures provided on any of the Schedules originally
attached hereto become incorrect in any material respect, Borrower shall provide
as soon as possible (but by no later than the end of the then current fiscal
quarter of Borrower) to the Lender such revisions or updates to such Schedule(s)
as may be necessary or appropriate to update or correct such Schedule(s);
provided that no such revisions or updates to any Schedule(s) shall be deemed to
have cured any breach of warranty or representation resulting from the
inaccuracy or incompleteness of any such Schedule(s) unless and until the
Lender, in its sole discretion, shall have accepted in writing such revisions or
updates to such Schedule(s).
 
Section 6.9                      Conduct of Business. Engage only in businesses
in substantially the same fields as the businesses conducted on the Effective
Date.
 
Section 6.10                    Insurance. Borrower shall at all times maintain,
in addition to the insurance required by the Security Agreement, insurance with
responsible insurance companies against such risks, in such amounts as in
amounts and under policies issued by insurers acceptable to the Lender,
including such theft, hazard, public liability, products liability, third party
property damage and business interruption insurance as is consistent with
reasonable business practices. All premiums on such insurance shall be paid by
Borrower and copies of the policies delivered to the Lender.
 
Section 6.11                    Change of Management. Borrower shall give prior
written notice to Lender of any change in the following executive officers of
Borrower: Chief Executive Officer.
 
ARTICLE 7 - INFORMATION
 
Until all of the Obligations have been indefeasibly paid in full, Borrower will
furnish to the Lender at the Lender’s Office:
 
Section 7.1                      Financial Statements; Borrowing Base
Certificate; Compliance Certificate.

(a)          Certified Year-End Statements. As soon as available, but in any
event within 120 days after the end of each fiscal year of Borrower, copies of
the consolidated and consolidating balance sheet of Borrower, as at the end of
such fiscal year and the related statements of income, shareholders’ equity and
cash flow for such fiscal year, in each case setting forth in comparative form
the figures for the previous year-end and reported on, without qualification,
certified by independent certified public accountants selected by Borrower, and
acceptable to the Lender.

 
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(b)          Quarterly Financial Statements. As soon as available, but in any
event within 45 days after the end of each fiscal quarter of Borrower copies of
the unaudited consolidated and consolidating balance sheet of Borrower as at the
end of such fiscal quarter and the related unaudited income statement for such
fiscal quarter and for the portion of the fiscal year of Borrower through such
quarter, and, with respect to such quarterly financial statements delivered at
the end of each fiscal year of Borrower, such financial statement shall be
certified by the chief financial officer of Borrower to the best of his or her
knowledge as presenting fairly the financial condition and results of operations
of Borrower as at the date thereof and for the periods ended on such date,
subject to normal year end adjustments.

All such financial statements shall be complete and correct in all material
respects, and all such financial statements shall be prepared in accordance with
GAAP (except, with respect to interim financial statements, for the omission of
footnotes) applied consistently throughout the periods reflected therein.
 
(c)          Borrowing Base Certificate. Within thirty (30) days after the end
of each quarter, a Borrowing Base Certificate as of the close of business on the
last Business Day of the preceding quarter.
 
(d)          Compliance Certificate.  Borrower shall deliver to Lender,
concurrently with Borrower’s delivery of the financial statements set forth in
section 7.1(a) above, a Compliance Certificate prepared as of the close of
business on the last Business Day of such fiscal year.
 
(e)          Authorization. Borrower authorizes the Lender to discuss the
financial condition of Borrower with Borrower’s independent certified public
accountants and agrees that such discussion or communication shall be without
liability to either the Lender or Borrower’s independent certified public
accountants.
 
Section 7.2                      Copies of Other Reports.
 
(a)          Promptly upon receipt thereof, copies of all reports, if any,
submitted to Borrower by its independent public accountants, including, without
limitation, all management reports.
 
(b)          To the extent not available on Borrower’s web site or EDGAR,
promptly upon preparation and filing of the same, copies of any and all filings
by Borrower with the SEC, including, but not limited to, Forms 10-K, 10-Q and
any other material reports filed by Borrower with the SEC.
 
(c)          Within thirty (30) days following the end of each fiscal quarter of
Borrower, an Accounts Receivable aging report showing the name, address and
outstanding account balances of each account debtor, and the aging of the
account balances of each such debtor by the following aging categories; 0-30
days, 31-60 days, 61-90 days, and over 90 days.
 
(d)          From time to time and promptly upon each request, such forecasts,
data, certificates, reports, statements, opinions of counsel, documents or
further information regarding the business, assets, liabilities, financial
condition, results of operations or business prospects of Borrower and its
Subsidiary as the Lender may reasonably request. The rights of the Lender under
this Section 7.2(d) are in addition to and not in derogation of its rights under
any other provision of this Agreement or any Loan Document.
 
Section 7.3                      Notice of Litigation and Other Matters.
 
Notice of: (a) the commencement of all proceedings and investigations by or
before any governmental or nongovernmental body and all actions and proceedings
in any court or before any arbitrator against or in any other way relating
adversely to, or adversely affecting, Borrower, any Subsidiary of Borrower or
any of their respective property, assets or businesses, (b) any amendment of the
articles of incorporation and/or by-laws of Borrower, (c) any change in the
business, assets, liabilities, financial condition, results of operations or
business prospects of Borrower, any Subsidiary of Borrower  and any change in
the executive officers of Borrower which would reasonably be expected to have a
Material Adverse Effect, and (d) any (i) Default or Event of Default, or (ii)
event that constitutes or that, with the passage of time or giving of notice or
both, would constitute a default or event of default by Borrower under any
material agreement (other than this Agreement) to which Borrower or it
Subsidiary is a party or by which Borrower or its Subsidiary or any of its or
their property may be bound if the exercise of remedies thereunder by the other
party to such agreement would have, either individually or in the aggregate, a
Material Adverse Effect.
 
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Section 7.4                      ERISA, As soon as possible and in any event
within 30 days after Borrower knows, or has reason to know, that: (a) any
Termination Event with respect to a Benefit Plan has occurred or will occur, (b)
the aggregate present value of the Unfunded Vested Accrued Benefits under all
Plans has increased to an amount in excess of $0, or (c) Borrower are in
“default” (as defined in Section 4219(c)(5) of ERISA) with respect to payments
to a Multiemployer Plan required by reason of its complete or partial withdrawal
(as described in Section 4203 or 4205 of ERISA) from such Multiemployer Plan,
(d) a certificate of the President or the chief financial officer of Borrower
setting forth the details of such of the events described in clauses (a) through
(c) as applicable and the action which is proposed to be taken with respect
thereto and, simultaneously with the filing thereof, copies of any notice or
filing which may be required by the PBGC or other agency of the United States
government with respect to such of the events described in clauses (a) through
(c) as applicable.
 
ARTICLE 8 - NEGATIVE COVENANTS
 
Until all of the Obligations have been indefeasibly paid in full, Borrower will
not directly or indirectly, and will not permit any Subsidiary directly or
indirectly:
 
Section 8.1                      Merger, Consolidation and Sale of Assets. Merge
or consolidate with any other Person or sell, lease or transfer or otherwise
dispose of all or a substantial portion of its assets to any Person.
 
Section 8.2                      Transactions with Affiliates. Effect any
transaction with any Affiliate on a basis less favorable to Borrower than would
be the case if such transaction had been effected with a Person not an
Affiliate.
 
Section 8.3                      Protection of Lender’s Rights. By any amendment
of the Borrower’s Articles of Incorporation or By-laws, or the equivalent
document of any United Kingdom Subsidiary of Borrower, or through any
consolidation, merger, reorganization, transfer of assets, dissolution, issue or
sale of securities or any other voluntary action, seek to avoid the observance
or performance of the terms to be observed or performed hereunder by Borrower,
but will at all times take such actions as are necessary or appropriate in order
to protect the rights of Lender under the Loan Documents, including, but not
limited to, this Agreement, and at all times in good faith assist in the
carrying out of all the provisions of the Loan Documents and in the taking of
all such actions as may be necessary or appropriate in order to protect the
rights of the Lender against impairment.
 
Section 8.4                      Dividends/Distributions/Payments. Declare, pay,
or set apart for payment any Restricted Payment or Restricted Distribution other
than a Permitted Distribution.
 
Section 8.5                      Borrower’s United Kingdom
Subsidiaries.  Borrower shall not permit any of its United Kingdom Subsidiaries
to place any lien or other encumbrance securing funded indebtedness upon any of
the assets of either United Kingdom Subsidiary.  Borrower shall not permit the
issuance of any share capital or equivalent interest in either of its United
Kingdom Subsidiaries.
 
 
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Section 8.6                      [Reserved].
 
Section 8.7                      [Reserved].
 
Section 8.8                      Liens. Other than in favor of Lender, grant any
Lien other than purchase money security interests in capital assets, not to
exceed in the aggregate $250,000 for any consecutive twelve month period.
 
ARTICLE 9 - DEFAULT
 
Section 9.1                      Events of Default. Each of the following shall
constitute an Event of Default, whatever the reason for such event and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment or order of any court or any order, rule or regulation
of any governmental or nongovernmental body:
 
(a)          Default in Payment of Loan. Borrower shall default in any payment
of principal of, or interest on, the Loan or the Note on the due date thereof
(whether at maturity, by reason of acceleration or otherwise).
 
(b)          Other Payment Default. Borrower shall default in the payment, as
and when due, of principal of or interest on, any other Obligation, and such
default shall continue for five (5) days after demand.
 
(c)          Misrepresentation. Any representation or warranty made or deemed to
be made by any of the Borrower under this Agreement or any other Loan Document
or any amendment hereto or thereto shall at any time prove to have been
incorrect or misleading in any material respect when made.
 
(d)          Default in Performance. (i) Borrower shall default in the
performance or observance of a term, covenant, condition or agreement contained
in Articles 6, 7 or 8; (ii) Borrower shall default in the performance or
observance of any other term, covenant, condition or agreement contained in this
Agreement and the default is not cured to the satisfaction of Lender within ten
(10) days after the sooner to occur of Borrower’s receipt of notice of such
default from Lender or the date on which such default first became known to any
officer of Borrower; or (iii) Borrower shall default in the performance or
observance of any non-payment term, covenant, condition or agreement related to
the Loan and the passage without cure of the applicable cure period, if any.
 
(e)          Indebtedness Cross-Default. (i) Borrower or any Subsidiary shall
fail to pay when due and payable the principal of or interest on any
Indebtedness (other than the Loan or Note), which indebtedness is in an amount
equal to or greater than $250,000.00 or (ii) the maturity of any Indebtedness in
excess of $250,000.00 shall have been accelerated as a result of such default or
event of default in accordance with the provisions of any indenture, contract or
instrument providing for the creation of or concerning such Indebtedness, where
such Indebtedness is in an amount equal to or greater than $250,000.00 or (iii)
any event shall have occurred and be continuing which, with or without the
passage of time or the giving of notice, or both, would permit any holder or
holders of such Indebtedness, any trustee or agent acting on behalf of such
holder or holders or any other Person, to accelerate such maturity where such
Indebtedness is in an amount equal to or greater than $250,000,00.
 
 
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(f)          Voluntary Bankruptcy Proceeding. Any Obligor shall (i) commence a
voluntary case under the federal bankruptcy laws (as now or hereafter in
effect), (ii) commence a proceeding seeking to take advantage of any other laws,
domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding
up or composition for adjustment of debts, (iii) consent to or fail to contest
in a timely and appropriate manner any petition filed against it in an
involuntary case under such bankruptcy laws or other laws, (iv) apply for or
consent to, or fail to contest in a timely and appropriate manner, the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of a substantial part of its property, domestic or
foreign, (v) admit in writing its inability to pay its debts as they become due,
(vi) make a general assignment for the benefit of creditors, or (vii) take any
corporate action for the purpose of authorizing any of the foregoing.
 
(g)          Involuntary Bankruptcy Proceeding. A case or other proceeding shall
be commenced against any Obligor in any court of competent jurisdiction seeking
(i) relief under the federal bankruptcy laws (as now or hereafter in effect) or
under any other laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up or adjustment of debts, or (ii) the appointment of a
trustee, receiver, custodian, liquidator or the like of any Obligor or of all or
any substantial part of the assets, domestic or foreign, of any Obligor, and
such case or proceeding shall continue undismissed or unstayed for a period of
90 consecutive calendar days, or an order granting the relief requested in such
case or proceeding against any Obligor (including, but not limited to, an order
for relief under such federal bankruptcy laws) shall be entered.
 
(h)          Loan Documents. Any Event of Default under any other Loan
 
Document shall exist or any Obligor shall default in the performance or
observance of any material term, covenant, condition or agreement contained in,
or the payment of any other sum covenanted to be paid by any Obligor under, any
such Loan Document; or any provision of this Agreement, or of any other Loan
Document after delivery thereof hereunder, shall for any reason cease to be
valid and binding, or any Obligor or other party thereto (other than the Lender)
shall so state in writing; or this Agreement or any other Loan Document, after
delivery thereof hereunder, shall for any reason cease to create a valid,
perfected and first priority Lien on, or security interest in, any of the
collateral purported to be covered thereby.
 
(i)          Judgment. A judgment or judgments in an amount, individually or in
the aggregate, in excess of $100,000.00 shall be entered against any Obligor by
any court and such judgment or order shall continue undischarged or unstayed for
60 days.
 
(j)          Attachment. A warrant or writ of attachment or execution or similar
process shall be issued against any property of any Obligor and such warrant or
process shall continue undischarged or unstayed for 90 days.
 
(k)          Material Adverse Change. There occurs any act, omission, event,
undertaking or circumstance or series of acts, omissions, events, undertakings
or circumstances which have, or in the sole judgment of the Lender would have,
either individually or in the aggregate, a Material Adverse Effect.
 
(l)          ERISA. (i) Any Termination Event with respect to a Benefit Plan
shall occur that, after taking into account the excess, if any, of (A) the fair
market value of the assets of any other Benefit Plan with respect to which a
Termination Event occurs on the same day (but only to the extent that such
excess is the property of Borrower) over (B) the present value on such day of
all vested nonforfeitable benefits under such other Benefit Plan, results in an
Unfunded Vested Accrued Benefit in excess of $50,000, (ii) any Benefit Plan
shall incur an “accumulated funding deficiency” (as defined in Section 412 of
the Code or Section 302 of ERISA) for which a waiver has not been obtained in
accordance with the applicable provisions of the Code and ERISA, or (iii)
Borrower are in “default” (as defined in Section 4219(c)(5) of ERISA) with
respect to payments to a Multiemployer Plan resulting from Borrower’s complete
or partial withdrawal (as described in Section 4203 or 4205 of ERISA) from such
Multiemployer Plan.
 
 
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Section 9.2                      Remedies.
 
(a)          Automatic Acceleration and Termination of Facilities. Upon the
occurrence of an Event of Default specified in Section 9.1(f) or Section 9.1(g),
(i) the principal of and the interest on the Loan and the Note at the time
outstanding. and all other amounts owed to the Lender under this Agreement or
any of the Loan Documents and all other Obligations, shall thereupon become due
and payable without presentment, demand, protest or other notice of any kind,
all of which are expressly waived, anything in this Agreement or any of the Loan
Documents to the contrary notwithstanding, and (ii) the commitment of the Lender
to make advances under this Agreement shall immediately terminate.
 
(b)          Other Remedies. If any Event of Default (other than as specified in
Section 9.1(f) or Section 9.1(g)) shall have occurred and be continuing, the
Lender, in its sole and absolute discretion, may do any of the following: (i)
declare the principal of and interest on the Loan and the Note at the time
outstanding, and all other amounts owed to the Lender under this Agreement or
any of the Loan Documents and all other Obligations, to be forthwith due and
payable, whereupon the same shall immediately become due and payable without
presentment, demand, protest or other notice of any kind, all of which are
expressly waived, anything in the Agreement or the Loan Documents to the
contrary notwithstanding, together with interest on such amounts at the Default
Rate and (ii) terminate the Loan and any commitment of the Lender to make
advances hereunder.
 
(c)          Further Remedies. If any Event of Default shall have occurred and
be continuing, the Lender, in its sole and absolute discretion, may exercise any
and all of its rights under the Security Agreement.
 
Section 9.3                      Application of Proceeds. All proceeds from each
sale of, or other realization upon, all or any part of any collateral under the
Security Agreement following an Event of Default shall be applied or paid over
as follows: (a) First: to the payment of all costs and expenses incurred in
connection with such sale or other realization, including reasonable attorneys’
fees, (b) Second: to the payment of the Obligations (with Borrower remaining
liable for any deficiency) in any order which the Lender may elect, and (c)
Third: the balance (if any) of such proceeds shall be paid to Borrower or,
subject to any duty imposed by law or otherwise, to whomsoever is entitled
thereto.
 
Section 9.4                      Miscellaneous Provisions Concerning Remedies.
 
(a)          Rights Cumulative. The rights and remedies of the Lender under this
Agreement, the Note and each of the Loan Documents shall be cumulative and not
exclusive of any rights or remedies which it would otherwise have. In exercising
such rights and remedies, the Lender may be selective and no failure or delay by
the Lender in exercising any right shall operate as a waiver of such right nor
shall any single or partial exercise of any power or right preclude its other or
further exercise or the exercise of any other power or right.
 
(b)          Limitation of Liability. Nothing contained in this Article 9 or
elsewhere in this Agreement or in any of the Loan Documents shall be construed
as requiring or obligating the Lender or any agent or designee of the Lender to
make any demand or to make any inquiry as to the nature or sufficiency of any
payment received by it or to present or file any claim or notice, and neither
the Lender nor any of its agents or designees shall have any liability to
Borrower for actions taken pursuant to this Article 9, any other provision of
this Agreement or any of the Loan Documents, so long as the Lender or such agent
or designee shall act reasonably and in good faith.
 
 
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(c)          Appointment of Receiver. In any action under this Article 9, the
Lender shall be entitled to the appointment of a receiver, without notice of any
kind whatsoever, to exercise such power as the court shall confer upon such
receiver.
 
ARTICLE 10 - MISCELLANEOUS
 
Section 10.1                    Notices.
 
(a)          Method of Communication. All notices and the communications
hereunder and thereunder shall be in writing. Notices in writing shall be
delivered personally or sent by overnight courier service, by certified or
registered mail, postage pre-paid, or by facsimile transmission and shall be
deemed received, in the case of personal delivery, when delivered, in the case
of overnight courier service, on the next Business Day after delivery to such
service, in the case of mailing, on the third day after mailing (or, if such day
is a day on which deliveries of mail are not made, on the next succeeding day on
which deliveries of mail are made) and, in the case of facsimile transmission,
upon transmittal.
 
(b)          Addresses for Notices. Notices to any party shall be sent to it at
the following addresses, or any other address of which all the other parties are
notified in writing.
 
If to Borrower:                The Female Health Company
515 N. State Street, Suite 2225
Chicago, IL  60654
Attention: Donna Felch
Facsimile No.: (312) 280-9360
 
With a copy to:              Reinhart Boerner Van Deuren s.c.
1000 North Water Street, Suite 1700
Milwaukee, WI  53202
Attention:  Benjamin G. Lombard
Facsimile No.:  (414) 298-8097

If to the Lender:              Heartland Bank
212 S. Central Avenue
St. Louis, MO  63105
Attention:  Colin McNulty
Facsimile No.:  (314) 512-8501

With a copy to:               Carmody MacDonald P.C.
120 S. Central Ave., Suite 1800
St. Louis, MO 63105
Attention: Mark B. Hillis
Facsimile No.: (314) 854-8660
 
(c)          Lender’s Office. The Lender hereby designates its office designated
above or any subsequent office which shall have been specified for such purpose
by written notice to Borrower, as the office to which payments due are to be
made and at which Loan will be disbursed.
 
 
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Section 10.2                    Expenses. Borrower agrees to pay or reimburse on
demand all costs and expenses incurred by the Lender, including, without
limitation, the reasonable fees and disbursements of counsel, in connection with
the preparation, due diligence, administration, enforcement and termination of
this Agreement and each of the other Loan Documents. The foregoing shall not be
construed to limit any other provisions of the Loan Documents regarding costs
and expenses to be paid by Borrower.
 
Section 10.3                    Stamp and Other Taxes. Borrower will pay any and
all stamp, registration, recordation and similar taxes, fees or charges and
shall indemnify the Lender against any and all liabilities with respect to or
resulting from any delay in the payment or omission to pay any such taxes, fees
or charges, which may be payable or determined to be payable in connection with
the execution, delivery, performance or enforcement of this Agreement and any of
the Loan Documents or the perfection of any rights or security interest
thereunder.
 
Section 10.4                    Setoff. In addition to any rights now or
hereafter granted under applicable law, and not by way of limitation of any such
rights, upon and after the occurrence of any Default or Event of Default, the
Lender is hereby authorized by Borrower at any time or from time to time,
without notice to Borrower or to any other Person, any such notice being hereby
expressly waived, to set off and to appropriate and to apply any and all
deposits (general or special, time or demand, including, but not limited to,
indebtedness evidenced by certificates of deposit, whether matured or unmatured)
and any other indebtedness at any time held or owing by the Lender to or for the
credit or the account of Borrower against and on account of the Obligations
irrespective of whether or not (a) the Lender shall have made any demand under
this Agreement or any of the Loan Documents, or (b) the Lender shall have
declared any or all of the Obligations to be due and payable as permitted by
Section 9.2 and although such Obligations shall be contingent or unmatured.
 
Section 10.5                    Dispute Resolution.
 
(a)            Consent to Jurisdiction; Waiver of Venue Objection; Service of
Process. WITHOUT LIMITING THE RIGHT OF THE LENDER TO BRING ANY ACTION OR
PROCEEDING AGAINST THE BORROWER OR AGAINST PROPERTY OF THE BORROWER ARISING OUT
OF OR RELATING TO THIS AGREEMENT (AN “ACTION”) IN THE COURTS OF OTHER
JURISDICTIONS, THE BORROWER HEREBY IRREVOCABLY SUBMITS TO AND ACCEPTS THE
NON-EXCLUSIVE JURISDICTION OF ANY MISSOURI STATE COURT IN ST. LOUIS COUNTY, OR
THE UNITED STATES FEDERAL DISTRICT COURT FOR THE EASTERN DISTRICT OF MISSOURI,
AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ANY ACTION MAY BE HEARD AND
DETERMINED IN SUCH MISSOURI STATE COURT OR IN SUCH FEDERAL COURT. THE BORROWER
HEREBY IRREVOCABLY WAIVES AND DISCLAIMS, TO THE FULLEST EXTENT THAT THE BORROWER
MAY EFFECTIVELY DO SO, ANY DEFENSE OR OBJECTION (INCLUDING, WITHOUT LIMITATION,
ANY DEFENSE OR OBJECTION TO VENUE BASED ON THE GROUNDS OF FORUM NON CONVENIENS)
WHICH THE BORROWER MAY NOW OR HEREAFTER HAVE TO THE MAINTENANCE OF ANY ACTION IN
ANY JURISDICTION. THE BORROWER HEREBY IRREVOCABLY AGREES THAT THE SUMMONS AND
COMPLAINT OR ANY OTHER PROCESS IN ANY ACTION IN ANY JURISDICTION MAY BE SERVED
BY MAILING (USING CERTIFIED OR REGISTERED MAIL, POSTAGE PREPAID) TO THE
BORROWER’S ADDRESS. SUCH SERVICE WILL BE COMPLETE ON THE DATE SUCH PROCESS IS SO
DELIVERED, AND THE BORROWER WILL HAVE THIRTY DAYS FROM SUCH COMPLETION OF
SERVICE IN WHICH TO RESPOND IN THE MANNER PROVIDED BY LAW. THE BORROWER MAY ALSO
BE SERVED IN ANY OTHER MANNER PERMITTED BY LAW, IN WHICH EVENT THE BORROWER’S
TIME TO RESPOND SHALL BE THE TIME PROVIDED BY LAW.
 
 
26

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(b)            Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY LAW, THE
BORROWER HEREBY WAIVES AND DISCLAIMS ANY RIGHT TO TRIAL BY JURY (WHICH THE
LENDER ALSO WAIVES AND DISCLAIMS) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATING TO THIS NOTE.
 
Section 10.6                    Reversal of Payments. To the extent Borrower
makes a payment or payments to the Lender or the Lender receives any payment or
proceeds of any collateral for the Security Agreement for Borrower’s benefit,
which payment(s) or proceeds or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law, state
or federal law, common law or equitable cause, then, the Lender shall have the
continuing and exclusive right to apply, reverse and reapply any and all
payments to any portion of the Obligations, and, to the extent of such payment
or proceeds received, the Obligations or part thereof intended to be satisfied
shall be revived and continued in full force and effect, as if such payment or
proceeds had not been received by the Lender.
 
Section 10.7                    Injunctive Relief. Borrower recognizes that, in
the event Borrower fails to perform, observe or discharge any of its obligations
or liabilities under this Agreement, any remedy of law may prove to be
inadequate relief to the Lender; therefore, Borrower agrees that the Lender, at
the Lender’s option, shall be entitled to temporary and permanent injunctive
relief in any such case without the necessity of proving actual damages.
 
Section 10.8                    Accounting Matters. All financial and accounting
calculations, measurements and computations made for any purpose relating to
this Agreement, including, without limitation, all computations utilized by
Borrower to determine whether it is in compliance with any covenant contained
herein, shall, unless there is an express written direction or consent by the
Lender to the contrary, be performed in accordance with GAAP.
 
Section 10.9                    Assignment; Participation. All the provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, except that Borrower may not
assign or transfer any of its rights under this Agreement. The Lender may assign
or participate to one or more Persons, all or a portion of its rights and
obligations hereunder and under the Note and, in connection with any such
assignment, may assign its rights and obligations under the Security Agreement,
provided, however, that Lender shall obtain the prior written consent of
Borrower so long as no Event of Default exists if Lender desires to assign the
Loan.  The Lender may, in connection with any assignment or participation,
disclose to the assignee or participant any information relating to Borrower
furnished to the Lender by or on behalf of Borrower.
 
Section 10.10                  Amendments. Any term, covenant, agreement or
condition of this Agreement or any of the other Loan Documents may be amended or
waived and any departure therefrom may be consented to if, but only if, such
amendment, waiver or consent is in writing signed by the Lender and, in the case
of an amendment, by Borrower. Unless otherwise specified in such waiver or
consent, a waiver or consent given hereunder shall be effective only in the
specific instance and for the specific purpose for which given.
 
Section 10.11                  Performance of Borrower’ Duties. Borrower’s
obligations under this Agreement and each of the Loan Documents shall be
performed by Borrower at its sole cost and expense. If Borrower shall fail to do
any act or thing which it has covenanted to do under this Agreement or any of
the Loan Documents, the Lender may (but shall not be obligated to) do the same
or cause it to be done either in the name of the Lender or in the name and on
behalf of Borrower, and Borrower hereby irrevocably authorizes the Lender so to
act.
 
 
27

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Section 10.12                  Indemnification. Borrower agrees to reimburse the
Lender for all reasonable costs and expenses, including counsel fees and
disbursements, incurred and to indemnify and hold the Lender harmless from and
against all losses suffered by the Lender, other than losses resulting from the
Lender’s gross negligence or willful misconduct, in connection with (a) the
exercise by the Lender of any right or remedy granted to it under this Agreement
or any of the Loan Documents, (b) any claim, and the prosecution or defense
thereof arising out of or in any way connected with this Agreement or any of the
Loan Documents.
 
Section 10.13                  All Powers Coupled with Interest. All powers of
attorney and other authorizations granted to the Lender and any Persons
designated by the Lender pursuant to any provisions of this Agreement or any of
the Loan Documents shall be deemed coupled with an interest and shall be
irrevocable so long as any of the Obligations remain unpaid or unsatisfied or
the Loan has not been terminated.
 
Section 10.14                  Survival. Notwithstanding any termination of this
Agreement, (a) until all Obligations have been paid in full and this Agreement
terminated, the Lender shall retain its security interest and shall retain all
rights under this Agreement and the Security as fully as though this Agreement
had not been terminated, and (b) the indemnities to which the Lender is entitled
under the provisions of this Article 10 and any other provision of this
Agreement and the Loan Documents shall continue in full force and effect and
shall protect the Lender against events arising after such termination as well
as before.
 
Section 10.15                  Severability of Provisions. Any provision of this
Agreement or any other Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remainder of
such provision or the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
 
Section 10.16                  Governing Law. This Agreement and the Note and
the other Loan Documents shall be construed in accordance with and governed by
the law of the State of Missouri, exclusive of its choice of law rules.
 
Section 10.17                  Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and shall be binding upon all parties, their successors and assigns, and all of
which taken together shall constitute one and the same agreement.
 
Section 10.18                  Final Agreement. This Agreement and the other
Loan Documents are intended by the parties hereto as the final, complete and
exclusive expression of the agreement among them with respect to the subject
matter hereof and thereof. This Agreement and the other Loan Documents supersede
any and all prior oral or written agreements between the parties hereto relating
to the subject matter hereof and thereof.
 
Section 10.19                  Purchase of Insurance. UNLESS YOU, BORROWER,
PROVIDE EVIDENCE OF THE INSURANCE COVERAGE REQUIRED BY YOUR AGREEMENT WITH US,
THE LENDER, WE MAY PURCHASE INSURANCE AT YOUR EXPENSE TO PROTECT OUR INTERESTS
UNDER THIS AGREEMENT. THIS INSURANCE MAY, BUT NEED NOT, PROTECT YOUR INTERESTS.
THE COVERAGE THAT WE PURCHASE MAY NOT PAY ANY CLAIM THAT YOU MAKE OR ANY CLAIM
THAT IS MADE AGAINST YOU. YOU MAY LATER CANCEL ANY INSURANCE PURCHASED BY US,
BUT ONLY AFTER PROVIDING EVIDENCE THAT YOU HAVE OBTAINED INSURANCE AS REQUIRED
BY THIS AGREEMENT. IF WE PURCHASE INSURANCE, YOU WILL BE RESPONSIBLE FOR THE
COSTS OF THAT INSURANCE, INCLUDING THE INSURANCE PREMIUM, INTEREST AND ANY OTHER
CHARGES WE MAY IMPOSE IN CONNECTION WITH THE PLACEMENT OF THE INSURANCE, UNTIL
THE EFFECTIVE DATE OF THE CANCELLATION OF EXPIRATION OF THE INSURANCE. THE COSTS
OF THE INSURANCE MAY BE ADDED TO YOUR TOTAL OUTSTANDING BALANCE OR OBLIGATION
THE COSTS OF THE INSURANCE MAY BE MORE THAN THE COST OF INSURANCE YOU MAY BE
ABLE TO OBTAIN ON YOUR OWN.
 
 
28

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Section 10.20                  Oral Agreements. ORAL AGREEMENTS OR COMMITMENTS
TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT
INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO PROTECT
YOU (BORROWER) AND US (CREDITOR) 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. THE LOAN DOCUMENTS, AS AMENDED,
MODIFIED AND SUPPLEMENTED HEREBY, ARE INCORPORATED HEREIN BY THIS REFERENCE AND
SHALL BE DEEMED TO CONSTITUTE A PART OF THIS WRITING.
 

[The remainder of this page is intentionally blank.]

 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement as of the day
and year first written above.

 
THIS AGREEMENT CONTAINS A BINDING JURY WAIVER PROVISION WHICH MAY BE ENFORCED BY
THE PARTIES.
 
 

  BORROWER:            
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  

 
Signature Page

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement as of the day
and year first written above.

 
THIS AGREEMENT CONTAINS A BINDING JURY WAIVER PROVISION WHICH MAY BE ENFORCED BY
THE PARTIES.
 

  “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  

 
 
 
Signature Page

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EXHIBIT A

Note

PROMISSORY NOTE
 

US $2,000,000.00 St. Louis, Missouri   Dated as of August 1, 2011

 
FOR VALUE RECEIVED, the undersigned, THE FEMALE HEALTH COMPANY, a Wisconsin
corporation (the “Borrower”), hereby promises to pay to the order of HEARTLAND
BANK, a federal savings bank (the “Lender”), at its office at 212 S. Central
Avenue, Clayton, Missouri 63105 (the “Lender’s Address”), or at such other
office as the Lender may subsequently designate in writing, (i) on August 1,
2012 (the “Maturity Date”), the principal amount of Two Million Dollars (US
$2,000,000.00), or, if less, the aggregate unpaid principal amount of all
advances made hereunder by the Lender to the Borrower prior to said date, (ii)
interest on such principal amount at the interest rate per annum for each
advance, as determined in accordance with the terms specified below (but in no
event in excess of the maximum rate permitted by applicable law), and (iii) any
and all other sums which may be owing to the Lender by the Borrower pursuant to
this Note.  All advances made hereunder by the Lender to the Borrower and all
payments made on account of principal hereof and interest hereunder shall be
recorded by the Lender and, prior to any transfer hereof, endorsed on the grid
attached hereto; provided, however, that the Lender’s failure to record any such
advance or payment shall not limit or otherwise affect the obligations of the
Borrower under this Note.
 
1.           Definitions.  Each initially capitalized term used herein shall
have the meaning set forth in Schedule A.  Any capitalized terms used herein,
but not otherwise defined herein or on Schedule A attached hereto, shall have
the meaning ascribed to such term(s) as set forth in the Loan Agreement.
 
2.           Advances.  Subject to the terms and conditions hereof and the Loan
Agreement, and in reliance upon the representations and warranties of the
Borrower contained in the Loan Agreement, the Lender agrees to make advances to
the Borrower from time to time during the period commencing on the date of this
Note and ending on the Maturity Date in an aggregate principal amount at any
time outstanding not to exceed the Commitment.  The Borrower agrees that it will
use the proceeds of any such advance for the purposes set forth in the Loan
Agreement.  Borrower further agrees that it will not use the proceeds of any
such advance for any illegal or unlawful purpose.  Each request for an advance
hereunder shall be made by a Borrowing Officer on written notice received by the
Lender in the form set forth on Exhibit A attached hereto not later than 12:00
noon (St. Louis time) of the Business Day of such advance, shall specify the
amount thereof, and shall be irrevocable and binding upon the Borrower.  Except
as the Borrower and the Lender may otherwise mutually agree, the proceeds of
each advance hereunder shall be wired to an account specified by the Borrower.
 
3.           Interest Rate.  For the period from the date hereof until maturity
(whether by acceleration or otherwise) the Borrower promises to pay interest, in
arrears, on the from time to time unpaid principal amount of each advance
hereunder on the first Business Day of each month beginning the second calendar
month following the Effective Date, at the Stated Rate; provided, however, that
with respect to any advance or other obligation of the Borrower hereunder which
is not paid at maturity, or which remains unpaid following the commencement, by
or against the Borrower, of a case under Title 11 of the United States Code, the
Borrower promises to pay interest on such advance or other obligation from the
date of maturity or the date such case is commenced, until such advance or other
obligation is paid in full, payable upon demand, at a rate per annum (in lieu of
the Stated Rate in effect at such time) equal at all times to the Overdue Rate,
but in no event in excess of the maximum rate permitted by law.  All
computations of interest with respect to each advance hereunder shall be made by
the Lender on the basis of a year of 360 days for the actual number of days
(including the first day, but excluding the last day) in the period for which
such interest is payable.  After maturity, by acceleration or otherwise, and/or
upon an Event of Default, this Note shall bear interest at the Default Rate.  A
late charge equal to five percent (5%) of the payment amount shall be assessed
for each payment not received by Lender by the date ten (10) days after the due
date therefor.
 
 
Exhibit A

--------------------------------------------------------------------------------

 
4.           Payments.
 
(a)           Time of Payments.  All payments of principal, interest, fees, and
other amounts due under this Note shall be made to the Lender at the Lender’s
Address in lawful money of the United States not later than 2:00 p.m. (St. Louis
time) on the day when due, without defense, claim, counterclaim, setoff or right
of recoupment.
 
(b)           Final Payment.  On the Maturity Date of this Note as provided in
the Loan Agreement, Borrower shall pay to the Lender, in same day funds, an
amount equal to the aggregate principal amount outstanding under this Note and
due on such date, together with accrued interest thereon, all fees payable to
the Lender pursuant to the provisions of this Note and the Loan Agreement and
any and all other Obligations then outstanding and due and payable.
 
(c)           Interest Calculation.  For purposes of interest calculation only,
(i) a payment by check, draft, or other instrument received on a Business Day
shall be deemed to have been applied to the relevant Obligation on the second
following Business Day, (ii) a payment in cash or by wire transfer received at
or before 2:00 p.m., St. Louis, Missouri time, on a Business Day shall be deemed
to have been applied to the relevant Obligation on the Business Day when it is
received, and (iii) a payment in cash or by wire transfer received on a day that
is not a Business Day or after 2:00 p.m., St. Louis, Missouri time, on a
Business Day shall be deemed to have been applied to the relevant Obligation on
the next Business Day.
 
(d)           Due Dates Not on Business Days.  If any payment required hereunder
becomes due on a date that is not a Business Day, then such payment shall be due
on the next Business Day, the amount of such payment, in such case, to include
all interest accrued to the date of actual payment.
 
(e)           Prepayments Generally.  The Borrower shall have the right to
prepay the unpaid principal balance of the indebtedness evidenced by this Note
in whole or in part, without penalty.  All prepayments, whether voluntary or
mandatory pursuant to acceleration, shall be applied first to any expenses due
Lender under this Note or under any other documents securing or evidencing
obligations of Borrower to Lender with respect to the Loan, then to accrued
interest on the unpaid principal balance of this Note, and the balance, if any,
shall be applied to the principal sum hereof in inverse order of maturity and
shall not relieve Borrower of making installment payments hereon when
due.  Amounts prepaid may be re-advanced to Borrower in accordance with the
terms and conditions of the Loan Agreement.
 
5.           Oral Agreements.  ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY,
EXTEND CREDIT OR TO FORBEAR 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 (BORROWER(S)) AND US (CREDITOR) 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.
 
 
Exhibit A

--------------------------------------------------------------------------------

 
6.           Default; Remedies after a Default.  Any one or more of the
following constitutes an Event of Default hereunder:  (a) the occurrence of any
Event of Default under (or as defined in) the Loan Agreement; or (b) the
occurrence of an Event of Default under (or as defined in) any of the other Loan
Documents.  Upon the occurrence of an Event of Default, the remedies available
to Lender shall include, but will not necessarily be limited to, the right to
declare the entire principal balance hereof and accrued and unpaid interest
thereon immediately due and payable and those other remedies specified in the
Loan Agreement and in the other Loan Documents.
 
7.           Expenses; Indemnification.  The Borrower agrees to pay on demand
all reasonable costs and expenses incurred by the Lender in connection with the
preparation, execution, delivery, administration, modification, amendment, and
enforcement (whether through legal proceedings, negotiations or otherwise) of
this Note or any of the other Loan Documents (such costs and expenses to
include, without limitation, the reasonable fees and disbursements of legal
counsel).  The Borrower agrees to indemnify and hold harmless the Lender and
each of its directors, officers, employees, agents, affiliates, and advisors
from and against any and all claims, damages, losses, liabilities, and expenses
(including, without limitation, the reasonable fees and disbursements of legal
counsel) which may be incurred by or asserted against the Lender or any such
director, officer, employee, agent, affiliate, or advisor in connection with or
arising out of any investigation, subpoena, litigation, or proceeding related to
or arising out of this Note or any of the other Loan Documents or any
transaction contemplated hereby or thereby (but in any case excluding any such
claims, damages, losses, liabilities, costs, or expenses incurred by reason of
the gross negligence, willful misconduct, or bad faith of the indemnitee).  The
obligations of the Borrower under this paragraph shall survive the payment in
full of the indebtedness evidenced by this Note or by any Other Note.
 
8.           Assignment.  The Lender may assign to one or more banks or other
entities all or a portion of its rights under this Note.  In the event of an
assignment of all of its rights, the Lender may transfer this Note to the
assignee.  The Lender may, in connection with any assignment or proposed
assignment, disclose to the assignee or proposed assignee any information
relating to the Borrower furnished to the Lender by or on behalf of the
Borrower.
 
9.           Amendments, etc.  No amendment or waiver of any provision of this
Note, nor consent to any departure by the Borrower therefrom, shall in any event
be effective unless the same shall be in writing and separately acknowledged in
writing by the Lender, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
 
10.           Governing Law.  This Note shall be governed by, and construed and
enforced in all respects in accordance with, the laws of the State of Missouri
applicable to contracts made and to be performed entirely within such State,
without giving effect to its conflicts of laws, principles or rules.
 
11.           Right of Set-off. At any time that an Event of Default exists, the
Lender is hereby authorized at any time and from time to time, to the fullest
extent permitted by law, to place an administrative hold upon or to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by the Lender
to or for the credit or the account of the Borrower against any and all of the
Obligations, irrespective of whether or not the Lender shall have made any
demand under this Note or any Other Note and although the Obligations may be
unmatured.  The Lender agrees promptly to notify the Borrower after any such
administrative hold, set-off and/or application made by the Lender; provided,
however, that the failure to give such notice shall not affect the validity of
such administrative hold, set-off and/or application.  The rights of the Lender
under this paragraph shall be in addition to all other rights and remedies
(including, without limitation, other rights of set-off) which the Lender may
have under applicable law.
 
 
Exhibit A

--------------------------------------------------------------------------------

 
12.           Notices.  All notices hereunder and under the Loan Documents shall
be in writing and sent by certified or registered mail, return receipt
requested, or by overnight delivery service, with all charges prepaid.  Notices
to the Lender shall be sent to the Lender’s Address.  Notices to the Borrower
shall be sent to the Borrower’s Address until the Borrower specifies another
address in a notice delivered to the Lender in accordance with this
paragraph.  Notice will be deemed received upon actual receipt at the Lender’s
Address or the Borrower’s Address, as the case may be.
 
13.           Consent to Jurisdiction; Waiver of Venue Objection; Service of
Process.  WITHOUT LIMITING THE RIGHT OF THE LENDER TO BRING ANY ACTION OR
PROCEEDING AGAINST THE BORROWER OR AGAINST PROPERTY OF THE BORROWER ARISING OUT
OF OR RELATING TO THIS NOTE (AN “ACTION”) IN THE COURTS OF OTHER JURISDICTIONS,
THE BORROWER HEREBY IRREVOCABLY SUBMITS TO AND ACCEPTS THE NON-EXCLUSIVE
JURISDICTION OF ANY MISSOURI STATE COURT OR ANY FEDERAL COURT SITTING IN ST.
LOUIS CITY OR COUNTY, AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ANY ACTION
MAY BE HEARD AND DETERMINED IN SUCH MISSOURI STATE COURT OR IN SUCH FEDERAL
COURT.  THE BORROWER HEREBY IRREVOCABLY WAIVES AND DISCLAIMS, TO THE FULLEST
EXTENT THAT THE BORROWER MAY EFFECTIVELY DO SO, ANY DEFENSE OR OBJECTION
(INCLUDING, WITHOUT LIMITATION, ANY DEFENSE OR OBJECTION TO VENUE BASED ON THE
GROUNDS OF FORUM NON CONVENIENS) WHICH THE BORROWER MAY NOW OR HEREAFTER HAVE TO
THE MAINTENANCE OF ANY ACTION IN ANY JURISDICTION.  THE BORROWER HEREBY
IRREVOCABLY AGREES THAT THE SUMMONS AND COMPLAINT OR ANY OTHER PROCESS IN ANY
ACTION IN ANY JURISDICTION MAY BE SERVED BY MAILING (USING CERTIFIED OR
REGISTERED MAIL, POSTAGE PREPAID) TO THE BORROWER’S ADDRESS.  SUCH SERVICE WILL
BE COMPLETE ON THE DATE SUCH PROCESS IS SO DELIVERED, AND THE BORROWER WILL HAVE
THIRTY DAYS FROM SUCH COMPLETION OF SERVICE IN WHICH TO RESPOND IN THE MANNER
PROVIDED BY LAW.  THE BORROWER MAY ALSO BE SERVED IN ANY OTHER MANNER PERMITTED
BY LAW, IN WHICH EVENT THE BORROWER’S TIME TO RESPOND SHALL BE THE TIME PROVIDED
BY LAW.
 
14.           Waiver of Jury Trial.  TO THE FULLEST EXTENT PERMITTED BY LAW, THE
BORROWER HEREBY WAIVES AND DISCLAIMS ANY RIGHT TO TRIAL BY JURY (WHICH THE
LENDER ALSO WAIVES AND DISCLAIMS) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATING TO THIS NOTE.
 
15.           Collateral.  This Note is secured as provided in the Loan
Agreement.
 
16.           Miscellaneous.  No failure on the part of the Lender to exercise,
and no delay in exercising, any right under this Note shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right preclude any
other or further exercise thereof or the exercise of any other right.  The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
 
17.           Superseding Note.  This Note supersedes and replaces all other
promissory notes labeled “Loan Number Two” executed between the parties hereto
in connection with the Loan Agreement, including the Promissory Note dated July
20, 2004, in the principal face amount of $500,000 executed by Borrower to the
order of Lender, the Promissory Note dated July, 2005, in the principal face
amount of $500,000 executed by Borrower to the order of Lender, the Promissory
Note dated July 1, 2006, in the principal face amount of $500,000 executed by
Borrower to the order of Lender, the Promissory Note dated July 1, 2007 in the
principal face amount of $500,000 executed by Borrower to the order of Lender,
the Promissory Note dated July 1, 2008 in the principal face amount of $500,000
executed by Borrower to the order of Lender, the Promissory Note dated July 1,
2009, in the principal face amount of $500,000 executed by Borrower to the order
of Lender, and the Promissory Note dated July 1, 2010, in the principal face
amount of $1,000,000 executed by Borrower to the order of Lender (collectively,
the “Prior Notes”).  

 
Exhibit A

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Upon the Lender’s acceptance of this Note and the satisfaction and occurrence of
each of the conditions precedent to the effectiveness of this Note, the Prior
Notes shall be deemed canceled and of no further force or effect; provided,
however, that (i) nothing in the foregoing shall be deemed to waive any
outstanding principal, accrued interest, fees, or late charges under the Prior
Notes, and (ii) the execution, delivery, and/or acceptance of this Note shall
not be deemed to have terminated, extinguished, released, constituted a novation
of, or discharged the indebtedness evidenced under the Prior Notes, which
indebtedness shall continue under and be governed by this Note.  No reference to
this Note need be made in any instrument or document at any time referring to
the Prior Notes, a reference to the Prior Notes in any such instrument or
document to be deemed to be reference to this Note as the same may be amended,
restated, modified, extended, and/or supplemented from time to time.  Nothing
herein is intended to extinguish, cancel or impair the lien priority or effect
of any security agreement, pledge agreement or mortgage with respect to the
Borrower’s obligations hereunder and under any other document relating hereto.
 
 
[Remainder of page intentionally left blank.]
 

 
 
Exhibit A

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IN WITNESS WHEREOF, the Borrower has executed this Note as of the date first
above written.
 
THIS AGREEMENT CONTAINS A BINDING JURY WAIVER PROVISION.
 

 
THE FEMALE HEALTH COMPANY
            By:       Name:       Title:    

 
 
 
STATE OF ______________________
)

 
) SS

COUNTY OF ____________________
)

 
On this __ day of ___________, 2011, before me appeared _________________, in
his/her capacity as ______________ 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 _____________ of The Female Health Company, a Wisconsin
corporation, and that said instrument was signed in behalf of said corporation
by authority of its ________________, and said ________________, as
__________________, 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.
 

            Notary Public               My Commission
Expires:  ______________________________  

 
 
Borrower’s Address:
515 N. State Street
Suite 2225
Chicago, Illinois  60654

 
Exhibit A

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ADVANCES AND PAYMENTS OF PRINCIPAL AND INTEREST
 
DATE
AMOUNT
OF
ADVANCE
AMOUNT OF
PRINCIPAL
PAID OR
PREPAID
AMOUNT OF
INTEREST
PAID
UNPAID PRINCIPAL
BALANCE OF
ADVANCES
NOTATION
MADE BY
                                                                               
                                                                               
                                                                               
           

 
 
 
Exhibit A

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SCHEDULE A

Definitions

“Affiliate” means, with respect to a Person, (a) any officer, director,
employee, member or managing agent of such Person, (b) any spouse, parents,
brothers, sisters, children and grandchildren of such Person, (c) any
association, partnership, trust, entity or enterprise in which such Person is a
director, officer or general partner, (d) any other Person that, (i) directly or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with, such given Person, (ii) directly or indirectly
beneficially owns or holds 5% or more of any class of voting stock or
partnership, membership or other interest of such Person or any Subsidiary of
such Person, or (iii) 5% or more of the voting stock or partnership, membership
or other interest of which is directly or indirectly beneficially owned or held
by such Person or a Subsidiary of such Person.  The term “control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities or partnership or other interests, by contract or
otherwise.
 
“Base Rate” means, for any day, the prime rate established and announced by
Lender from time to time in the ordinary course of its business (which rate may
not be the best or lowest rate offered to Lender’s corporate customers),
provided, that if such Base Rate is discontinued or replaced by a comparable
rate, then it shall mean the comparable rate.
 
“Borrower” means THE FEMALE HEALTH COMPANY, a Wisconsin corporation.
 
“Borrower’s Address” means 515 N. State Street, Suite 2225, Chicago, Illinois
60654.
 
 “Borrowing Officer” means each individual of Borrower who is duly authorized by
Borrower to submit a request for a Loan Advance.
 
“Business Day” means any day other than a Saturday, Sunday, or other day on
which banks in St. Louis, Missouri are authorized to close.
 
“Commitment” means the agreement of the Lender to fund advances to the Borrower
in an aggregate principal amount not to exceed, at any time outstanding, US
$2,000,000.00.
 
“Default Rate” means a rate of interest equal to four percent per annum (4%) in
excess of the Stated Rate.
 
“Dollar” and “$” means freely transferable United States dollars.
 
“Effective Date” means the later of (a) the Agreement Date, as defined in the
Loan Agreement, and (b) the first date on which all of the conditions set forth
in Section 4.1 of the Loan Agreement shall have been fulfilled or waived by the
Lender.
 
“Events of Default” has the meaning specified in paragraph 6 of this Note, or
any Event of Default as defined in the Loan Agreement.
 
“Lender” means Heartland Bank, a federal savings bank, and its successors and
assigns.
 
“Lender’s Address” means 212 S. Central Avenue, Clayton, Missouri 63105.
 
 
Exhibit A

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“Loans” means any loan made to Borrower pursuant to Section 2.1 of the Loan
Agreement and all extensions, renewals and modifications thereto, as well as all
such Loans collectively.
 
“Loan Agreement” means that certain Second Amended and Restated Loan Agreement
dated as of the date hereof, as the same may be amended, modified, or restated.
 
“Loan Documents” means, collectively, this Note, the Loan Agreement, the
Security Agreement, and each other instrument, agreement and document executed
and delivered by Borrower in connection with this Note and each other
instrument, agreement, or document referred to herein or contemplated hereby.
 
“Material Adverse Effect” means any act, omission, event or undertaking which
would, singly or in the aggregate, have a material adverse effect upon (a) the
business, assets, properties, liabilities, condition (financial or otherwise),
results of operations or business prospects of Borrower, (b) upon the ability of
Borrower to perform any obligations under this Note or any other Loan Document
to which it is a party, or (c) the legality, validity, binding effect,
enforceability or admissibility into evidence of any Loan Document or the
ability of Lender to enforce any rights or remedies under or in connection with
any Loan Document; in any case, whether resulting from any single act, omission,
situation, status, event, or undertaking, together with other such acts,
omissions, situations, statuses, events, or undertakings.
 
“Maturity Date” means August 1, 2012.
 
“Note” means this Note and any and all amendments, modifications, restatements,
renewals or refinancings thereof.
 
“Obligations” means, in each case whether now in existence or hereafter arising,
(a) the principal of and interest and premium, if any, on, and expenses related
to, the Loans and (b) all indebtedness, liabilities, obligations, overdrafts,
covenants and duties of Borrower to the Lender of every kind, nature and
description, direct or indirect, absolute or contingent, due or not due,
contractual or tortious, liquidated or unliquidated, and whether or not
evidenced by any note and whether or not for the payment of money under or in
respect of the Loans, this Note, any Note or any of the other Loan Documents.
 
“Obligors” means Borrower, and each other party at any time primarily or
secondarily, directly or indirectly, liable on any of the Obligations.
 
“Other Note” means any promissory note which may be given in renewal or
extension of all or any part of the indebtedness evidenced by this Note or which
may amend or restate the terms pursuant to which such indebtedness is to remain
outstanding.
 
“Overdue Rate” means, in respect of any amount not paid when due under this Note
or any Other Note, a rate per annum during the period commencing on the due date
of such amount until such amount is paid in full equal to 4% per annum in excess
of the Stated Rate.
 
“Person” means an individual, corporation, partnership, association, trust or
unincorporated organization or a government or any agency or political
subdivision thereof.
 
“Stated Rate” means a rate of interest of Base Rate plus .50% per annum (each
change in the Base Rate will result in a simultaneous change in the Stated
Rate).
 
 
Exhibit A

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EXHIBIT A

FORM OF REQUEST FOR AN ADVANCE
 
Heartland Bank
212 South Central Avenue
St. Louis, Missouri  63105
Attn.: ___________
 
Re:
Promissory Note, dated as of August 1, 2011 between THE FEMALE HEALTH COMPANY
(“Borrower”) and HEARTLAND BANK (“Lender”), as it may be amended, modified,
restated, or replaced from time to time (the “Note”)

 
Ladies and Gentlemen:
 
The undersigned is a Borrowing Officer and, as such is authorized to make and
deliver this request for an advance pursuant to the Note.  All capitalized words
used herein that are defined in the Note have the meanings defined in the Note.
 
Borrower hereby requests that Lender make a Loan of $__________ to Borrower
under the terms of the Note dated August 1, 2011.  The proceeds of the advance
should be deposited in account number ___________________________ with [Lender].
 
The undersigned hereby certifies on behalf of Borrower that:
 

 
(i) 
There is no Event of Default.

 
 
(ii)
The representations and warranties of Borrower in the Loan Agreement are true as
if made on the date hereof (other than representations and warranties, which, by
their terms, are applicable only to the Agreement Date (as defined in the Second
Amended and Restated Loan Agreement entered into in connection with the Note) or
other specified date, which shall be true and correct only as of that date).

 
 
(iii)
The amount of the requested advance will not, when added to the current amount
of the aggregate Loans exceed the Commitment.

 
 
(iv)
All conditions precedent to an advance as set forth in the Loan Agreement have
been satisfied.

 
 
(v)
The proceeds of this advance will be used for the following purpose:
____________________________________________________.

 
Executed this _____ day of _______, 20__.
 
 

  THE FEMALE HEALTH COMPANY                 By:           Name:         Title:  
 

 
 
 
 
Exhibit A

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EXHIBIT B

Borrowing Base Certificate

TO: Heartland Bank
As of the quarter ending _______________, 20__

 (“Effective Date”)

Pursuant to the Second Amended and Restated Loan Agreement dated as of August 1,
2011 between The Female Health Company and Heartland Bank (the “Loan
Agreement”), as the same may be amended, the undersigned officer of The Female
Health Company hereby certifies to Heartland Bank that the following information
is true, correct and complete in all material respects as of
_____________________, 20___.
 
 

  1.
Face Value of Eligible Receivables as of preceding Business Day
$              
2.
80% of Line 11
$              
3.
Cost of Eligible Inventory, figured on a first-in first-out basis
$              
4.
Fair Market Value of Eligible Inventory
$              
5.
Lesser of Line Item “3” or “4” x 50%
$              
6.
Total Borrowing Base (Add Line Item “2” and “5”)
$              
7.
Total Revolving Credit Facility $ 2,000,000.00            
8.
Borrower’s Maximum Revolving Credit Availability (Lesser of Line Item “6” or
Line Item “7”) $              
9.
Aggregate principal amount of outstanding Loan $              
10.
Unused Revolving Credit Availability (Line Item “8” minus Line Item “9”) $  

 
If Line Item “10” is negative, this Certificate is accompanied by the mandatory
repayment, as required by Section 2.4(b) of the Loan Agreement.
 
Capitalized terms not otherwise defined herein shall have the meaning ascribed
to them in the Loan Agreement.
 
The undersigned represents and warrants that the foregoing is true, complete and
correct, and that the information reflected in this Certificate complies with
the representations and warranties set forth in the Loan Agreement.  The
undersigned also represents and warrants that there is no Default or Event of
Default under the said Loan Agreement.
 
___________________
1Except for Semina Eligible Receivables, if any, of which only 70% of the face
value due and owing at such time may be included
 
 
Exhibit B

--------------------------------------------------------------------------------

 

 
Dated this ____ day of ____________, 20__

 

  THE FEMALE HEALTH COMPANY                 By:       Name:       Title:    

 

 
 
Exhibit B

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EXHIBIT C

Compliance Certificate

To:   Heartland Bank
 
Except as explained in reasonable detail below under Exceptions,
 

 
(i)  
the attached Financial Statements are complete and correct in all material
respects (subject, in the case of Financial Statements other than annual
statements, to normal year-end audit adjustments and absence of footnotes) and
have been prepared in accordance with GAAP applied consistently throughout the
periods covered thereby and with prior periods (except as disclosed therein),

 

 
(ii)  
all of the representations and warranties of Borrower contained in that certain
Second Amended and Restated Loan Agreement dated as of August 1, 2011 (the “Loan
Agreement”) and other Loan Documents (as defined in the Loan Agreement) are true
and correct in all material respects as of the date of this Certificate, other
than representations and warranties, which, by their terms, are applicable only
to the date of the Loan Agreement and the Loan Documents,

 

 
(iii)  
there exists no Default or Event of Default (as defined in the Loan Agreement)
which is continuing that has not been waived in writing by Lender and no Event
of Default has occurred that has not been waived in writing by Lender, and

 

 
(iv)  
the Leverage Ratio of the Borrower as of the end of the month preceding the date
hereof is:  ____:___.

 
Note: If disclosing that a representation or warranty is not true and correct in
any material respect, or that a Default or Event of Default has occurred that
has not been waived in writing by Lender, set forth what action Borrower has
taken or proposes to take with respect thereto.
 

Exceptions, explanations and actions taken or proposes to be taken:

 
Dated this ____ day of ____________, 20__
 
 

  THE FEMALE HEALTH COMPANY                 By:       Name:       Title:    

 
 
 
Exhibit C

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SCHEDULE 5.1(m)
Borrower’s Locations
 
 
 
 
 
 
 

 

 
Schedule 5.1(m)

--------------------------------------------------------------------------------

 

SCHEDULE 5.1(p)
ERISA
 
 
 
 
 
 
 

 
 

 
Schedule 5.1(p)

--------------------------------------------------------------------------------

 
SCHEDULE 5.1(r)
Intellectual Property of Borrower and its Subsidiaries

 
 
 
 
 
 
 
 
 
 

Schedule 5.1(r)

--------------------------------------------------------------------------------