| 1.     | Purpose.  The      purpose of the 1997 Stock Option Plan (the "Plan") is to provide      a special incentive to employees, officers and key executives of The      Female Health Company (the "Company") and its subsidiaries to promote the      Company's business.  The Plan is designed to accomplish this      purpose by offering such employees, officers and key executives an      opportunity to purchase shares of the common stock of the Company and      thereby share in the Company's long-term success.  For purposes      of the Plan, a subsidiary is any corporation in which the Company owns,      directly or indirectly, stock possessing 50% or more of the total combined      voting power of all classes of stock or over which the Company has      effective operating control. |
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| 2.     | Administration.  The      Plan shall be administered by the Board of Directors of      the Company or by a stock option committee established by the Board of      Directors and consisting of two or more non-employee directors qualified      to serve on such committee pursuant to Section 16 of the Securities      Exchange Act of 1934 and the rules promulgated thereunder (the Board of      Directors and the stock option committee collectively and individually      referred to herein as the "Administrator").  The Administrator      shall have authority, consistent with the    Plan:                                                                                                                                                                                                               |
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|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | to determine which      employees shall be granted options; |
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|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | to determine      the time or times when options shall be granted and the number of shares      of common stock to be subject to each option; |
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|   | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | to determine the      option price of option shares and the method of payment      of such price; |
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|   | (d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | to determine the      time or times when each option becomes exercisable      and the duration of the exercise period, subject to the limitations      contained in paragraph 6(b); |
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|   | (e)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | to prescribe, from      time to time, the form of the instruments evidencing      any options granted under the Plan and of any other instruments required      under the Plan; |
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|   | (f)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | to adopt, amend and      rescind rules and regulations for the administration      of the Plan and the options and for its own acts and proceedings;      and |

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|   | (g)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | to decide all      questions and settle all controversies and disputes which      may arise in connection with the Plan. |
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|   | All decisions,      determinations and interpretations of the Administrator shall be binding      on all parties concerned.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
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| 3.     | Participants.  The      participants in the Plan shall be employees, officers and key      executives of the Company or its subsidiaries, as may be selected from      time to time by the Administrator in its discretion.  Directors      who are not employees shall not be eligible to participate in the      Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
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| 4.     | Limitations.  No      option shall be granted under the Plan after December 31, 2006      but options theretofore granted may extend beyond that      date.  Subject to adjustment as provided in section 8, the      number of shares of common stock of the Company which may be issued under      the Plan shall not exceed 600,000 shares in the aggregate nor shall any      one participant be granted more than 120,000 options under the      Plan.  To the extent that any option granted under the Plan      shall expire or terminate unexercised or for any reason become      unexercisable as to any shares subject thereto, such shares shall      thereafter be available for further grants under the Plan.  No      participant may exercise any option if, for any reason, the exercise of      such options would cause the participant to have any compensation from the      Company which is nondeductible by the Company under Section 162(m) of the      Internal Revenue Code of 1986.  The exercise of any such options      shall be deferred and exercised by the participant at such time, if ever,      that the resulting compensation will be fully deductible by the      Company. |
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| 5.     | Stock To Be      Issued.  Stock to be issued under the Plan may constitute      an original      issue of authorized stock or may consist of previously issued stock      acquired by the Company, as shall be determined by the Board of      Directors.  The Board of Directors and the proper officers of      the Company shall take any appropriate action required for such      issuance.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
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| 6.     | Terms and Conditions      of Options.  All options granted under the Plan shall      be      subject to the following terms and conditions (except as provided in      section 7) and to such other terms and conditions as the Administrator      shall determine to be appropriate to accomplish the purposes of the      Plan:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
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|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | Exercise      Price.  The exercise price shall be determined by the      Administrator.                        |

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|   | (b)    | Period of      Options.  The period of an option shall not exceed ten      years from the date of grant.  Any option which has not vested      pursuant to section 6(c) below within ten years from the date of its grant      shall expire.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
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|   | (c)    | Vesting of      Options.  Options issued to a participant under the Plan      shall vest as determined by the Administrator and as specified in the      Participant's grant agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
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|   | (d)    | Exercise of      Options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
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|   |   | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | Each option      shall be exercisable at any time after it has vested. |
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|   |   | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | A person      electing to exercise an option shall give written notice to the Company,      as specified by the Administrator, of such person's election and of the      number of shares elected to be purchased.  Such notice shall be      accompanied by such other instruments or documents as may be required by      the administrator. |
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|   | (e)    | Payment for      Shares.  Upon exercise of any option granted hereunder,      payment      in full shall be made at the time of such exercise for all such shares      then being purchased.  The exercise price of an option shall be      paid in cash or, in the sole discretion of the Administrator, by      permitting the holder of the option to elect to direct the Company to      withhold a sufficient number of shares otherwise deliverable upon exercise      to satisfy the exercise price (valuing the shares for this purpose at      their Fair Market Value).  In the event that the exercise price      is paid by withholding shares otherwise deliverable upon exercise to      satisfy the exercise price (or to satisfy any tax withholding requirements      pursuant to section 11), no fractional shares shall be issued, and      the Company shall in lieu thereof, at its option, either make payment to      the holder of the option of cash in the amount of such fraction multiplied      by the Fair Market Value of the shares or round such fraction to the      nearest whole share.                                                                                                                                                                 |
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|   |   | For      purposes of this Plan, "Fair Market Value" shall mean the value of the      Company's common stock determined as follows as of the business day      immediately preceding the date of exercise of the      option:  (i) if the common stock is listed on any      established stock exchange or a national market system, including, without      limitation, the NASDAQ Stock Market, its Fair Market Value shall be the      closing sales price for such stock (or the closing bid, if no sales were      reported) as quoted on such exchange or system for the day of      determination, as reported in The      Wall Street Journal or such other source as the Administrator deems      reliable, (ii) if the common stock is regularly quoted by a      recognized securities dealer but selling prices are not reported, the Fair      Market Value of a share of common stock shall be the mean between the high      bid and low asked prices for the common stock for the day of      determination, as reported in The      Wall Street Journal or such other source as the Administrator deems      reliable; or (iii) in the absence of an established market for the      common stock, the Fair Market Value shall be determined in good faith by      the Administrator. |

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|   |   | The      Company shall not be obligated to issue any shares unless and until,      in the opinion of the Company's counsel, all applicable laws and      regulations have been complied with and, in the event the outstanding      common stock is at the time listed upon any stock exchange, unless and      until the shares to be issued have been listed or authorized to be added      to the list upon official notice of issuance upon such exchange, and      unless and until all other legal matters in connection with the issuance      and delivery of the shares have been approved by the Company's      counsel.  Without limiting the generality of the foregoing, the      Company may require from the participant such investment representation or      such agreement, if any, as counsel for the Company may consider necessary      in order to comply with the Securities Act of 1933 as then in effect, and      may require that the participant agree that any sale of the shares will be      made only in such manner as is permitted by the Administrator and that the      participant will notify the Company when the participant intends to make      any disposition of the shares whether by sale, gift or      otherwise.  The participant shall take any action reasonably      requested by the Company in such connection.  A participant      shall have the rights of a stockholder only as to shares actually acquired      by the participant under the Plan.                                                                                |
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|   | (f)    | Nontransferability of      Options.  No option may be transferred by a participant      otherwise than by will or by the laws of descent and distribution, and      during the participant's lifetime the option may be exercised only by the      participant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
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|   | (g)    | Termination of      Employment.  Except as otherwise determined by the Administrator,      if the employment of a participant is terminated by the Company or any of      its subsidiaries for cause, the Company shall have the right, in the      discretion of the Administrator, to rescind any unexercised      options.  If the Company does not rescind such unexercised stock      options the participant shall have ten days from the date of such      termination to exercise any options which were vested as of the date of      termination and all nonvested options and options not exercised in such      ten day period shall be forfeited.  If a participant's      employment with the Company or any of its subsidiaries is terminated by      the Company or any of its subsidiaries without cause, the participant      shall have six months from the date of such termination to exercise any      vested options as of the date of such termination and any options which      become vested during such six month period.  If a participant      voluntarily terminates employment with the Company or any of its      subsidiaries, the participant shall have ten days to exercise any options      which are vested as of the date of termination and any options which      become vested during such ten-day period.  Notwithstanding the      foregoing, a participant shall not be deemed to have terminated employment      if the participant serves as a director of or consultant to the Company or      any of itssubsidiaries. |

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|   |   | For      purposes of the Plan, "cause" shall mean fraud, dishonesty, acts      of      gross negligence in the course of employment, misrepresentation to      shareholders or directors of the Company, a material breach of the terms      of any written employment agreement between the participant and the      Company or the commission of a felony.  In no event, however,      may a participant exercise an option at a time when the option would not      be exercisable had the participant remained an  employee.                                                                                                                                                                                                                                                                            |
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|   |   | For      purposes of this section (g), a participant's employment shall not      be      considered terminated in the case of sick leave or other bona fide leave      of absence approved by the Company, or in the case of a transfer to the      employment of a subsidiary or to the employment of the      Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
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|   | (h)    | Death.  If      a participant's employment terminates due to death, the participant's      executor or administrator or the person or persons to whom the option is      transferred by will or the applicable laws of descent and distribution      shall have 12 months from the date of death to exercise any options which      were vested as of the date of death and any options which become vested      during such 12-month period.                                                                                                                                                                                                                                                                                                                                                               |
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|   | (i)    | Disability.  If      the participant's employment terminates due to Permanent Disability      (defined below), the participant shall have 12 months from the date of      notice of termination to exercise any options which are vested as of the      date of termination and any options which become vested during such      12-month period.  For purposes of this Plan, "Permanent      Disability" shall be a disability which, in the sole and absolute      discretion of the Administrator, is likely to prevent the participant's      return to work within 6 months after the onset of such      disability.  The determination of Permanent Disability and the      date of termination shall be determined by the Administrator in its sole      and absolutediscretion. |

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| 7.     | Replacement      Options.  The Company may grant options under the Plan on      terms      differing from those provided for in section 6 where such options are      granted in substitution for options held by employees of other      corporations who become employees of the Company or a subsidiary as the      result of a merger, consolidation or other reorganization of the employing      corporation with the Company or a subsidiary, or the acquisition by the      Company or a subsidiary of the business, property or stock of the      employing corporation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
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|   | The      Administrator may direct that the substitute options be granted on such      terms      and conditions as the Administrator considers appropriate in the      circumstances.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
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| 8.     | Changes in      Stock.  In the event of a stock dividend, stock split or      merger      in which the Company is the surviving corporation, or other similar      capital change, the number and kind of stock or securities of the Company      to be subject to the Plan and to options then outstanding or to be granted      thereunder, the maximum number of shares or securities which may be issued      or sold under the Plan, the option price and other relevant provisions      shall be appropriately adjusted by the Board of Directors of the Company,      the determination of which shall be binding on all      persons.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
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| 9.     | Employment      Rights.  The adoption of the Plan does not confer upon      any employee      of the Company or a subsidiary any right to continue employment with the      Company or a subsidiary, as the case may be, nor shall it interfere in any      way with the right of the Company or a subsidiary to terminate the      employment of any of its employees at any time.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
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| 10.    | Change of      Control.  Notwithstanding anything to the contrary      contained herein,      all outstanding stock options under this Plan shall become fully      exercisable immediately upon a “change of control” without regard to any      holding period limitations or other requirements for vesting      thereof.  The term “change of control” for the purposes hereof      means (i) a third party, including a “group” as defined in Section      13(d)(3) of the Securities Exchange Act of 1934 but excluding the current      directors of the Company, becoming the beneficial owner of shares of the      Company having twenty-five percent (25%) or more of the total number of      votes that may be cast for the election of directors of the Company; or      (ii) as the result of, or in connection with, any cash tender or exchange      offer, merger or other business combination, sale of assets or contested      election, or any combination of the foregoing transactions (a      “Transaction”), (A) the persons who were directors of the Company before      the Transaction shall cease to constitute a majority of the Board of      Directors of the Company or any successor to the Company, or (B) there is      the sale, exchange or other disposition of all or substantially all of the      Company’s assets to a thirdparty. |

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| 11.    | Tax      Withholding.  Whenever shares are to be issued in      satisfaction of of      options exercised under this Plan, the Company shall have the power to      require the recipient of the shares to remit to the Company an amount      sufficient to satisfy federal, state and local withholding tax      requirements.  The Administrator may, in its sole discretion, in      lieu of all or any portion of such cash payment regarding such withholding      taxes, permit the holder of the option to elect to direct the Company to      withhold a sufficient number of shares otherwise deliverable upon exercise      to satisfy all or a portion of such withholding taxes (valuing the shares      for this purpose at the Fair Market Value).                                         |
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| 12.    | Amendments.  The      Administrator may at any time discontinue granting options      under the Plan.  The Board of Directors of the Company may at      any time or times amend the Plan or amend any outstanding option or      options for the purpose of satisfying the requirements of any changes in      applicable laws or regulations or for any other purpose which may at the      time be permitted by law, provided that except to the extent permitted      under the Plan no amendment shall, without the consent of the participant,      void or diminish options previously granted, nor increase or accelerate      the conditions and actions required for the exercise of the same, except      if the participant shall be discharged from the Company's employment for      cause. |

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